EUROTEX INDUSTRIES AND EXPORTS LIMITED vs MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. & Anr on 28 April 2026

JUDGMENT

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER (ORAL)

The Appellant - a High Tension consumer in the State of Maharashtra has, in this Appeal, assailed order dated 12.07.2021 passed by the 3rd Respondent - Maharashtra Electricity Regulatory Commission (hereinafter referred to as “MERC/Commission”) whereby the petition filed by the Appellant bearing No. 17 of 2021 has been dismissed. The prayers made in the petition by the Appellant are quoted herein below: -

a) That this Hon’ble Commission be pleased to declare that no amounts shown as arrears in the bills for Connection 25101 9402196 from October 1999 to September 2006, for Connection 25101 9402510 from October 1999 to March 2019 for Connection

25101 9402668 from November 1999 to till latest bill of December 2020 are due and payable by the Petitioner to the Respondent;

b) That this Hon’ble Commission be pleased to declare that the Respondent has wrongly denied the Petitioner the various incentives by wrongly treating the Petitioner to be in arrears;

c) That this Hon’ble Commission be pleased to declare that the Petitioner is entitled to refund of an amount of Rs. 10,36,76,259/- (Rs. Ten Crore thirty six lakh seventy six thousand and two hundred fifty nine only) as per the tabular statement annexed as Exhibit N hereto and direct the Respondents to pay the same to the Petitioner including interest thereon at the rate of 18% p.a. from the date of the filing of this Petition till realization;

d) That this Hon’ble Commission be pleased to direct the Respondents to issue rectified bills showing no arrears toward the contract demand charges for the period of October 99 to current monthly bills.

e) That this Hon’ble Commission be pleased to direct the Respondents to pay to the Petitioner a sum of Rs. 5,00,000/- towards legal expenses incurred by the Petitioner in connection with this Petition; We may note that the Appellant was granted permission by the 1st Respondent-Maharashtra State Electricity Distribution Company Limited

(hereinafter referred to as “MSEDCL”) (previously Maharashtra State Electricity Board) to install liquid fuel based Captive Power Plant (CPP) of 7 MW capacity at its Plant at Gokul Shirgaon vide letter dated 7 January, 1998. It appears that the CPP was commissioned and has been in the regular operation from 28.08.1998.

On 19.09.1998, the Appellant applied for permission to draw power from its CPP installed at Plot E-23 for its new Unit at E-1, which was adjacent to Plot E-23 with just an internal MIDC road in between, through its own underground cable.

On 23.09.1998, the Appellant applied for reduction of its contract demand from 5300 kVA to 3000 kVA purportedly as permitted to it in terms of the permission dated 07.01.1998. However, MSEDCL did not accord permission and continued to raise energy bills at the old contract demand of 5300 kVA.

Vide subsequent letter dated 30.10.1999, MSEDCL informed the Appellant that it has extended power supply from Unit No. 2 at E-23 to Unit at E-1 without specific permission of MSEDCL and was asked to disconnect the supply.

Aggrieved by these actions/directions of MSEDCL, the Appellant had approached the Commission by way of Case No. 35 of 2002 seeking reliefs arising out of Captive Power Policy of the erstwhile Maharashtra State Electricity Board (Now succeeded by MSEDCL) as well as the conditions imposed by the Board on Captive Power Plants through various circulars

particularly with regard to take or pay provisions for 25% of power requirement and restriction on reduction in contract demand. Upon analysis of the contentions of the parties in that petition, following three issues were framed by Commission for its consideration:- “(1) whether the MSEB is authorized under law to require Eurotex to maintain a certain level of contract demand and to refuse reduction of contract demand as being sought by them:

(2) whether Eurotex should be allowed by the MSEB to supply electricity from the CPP at Plot E-23 to their unit at Plot E-1; and

(3) whether the MSEB are authorized under law to unilaterally Impose on all the Petitioners the condition to draw a certain minimum power from the MSEB and levy an additional tariff as per the said Circular. Circular:”

The Commission vide its order dated 21.05.2004 allowed the petition and decided all the three issues in favour of the Appellant.

Paras 76 and 82 of the said order of the Commission on material which are extracted herein below:-

76. Thus, in view of the foregoing, the imposition of a take-or-pay condition on CPP holders by the MSEB through the said Circular, and all other Circulars, viz., Circular No. 663 dated 5th October 2001 which provided for the supercession of certain Circulars, including

Circular No. 602 dated 23rd July 1998, Circular No. 619 dated 25th May 1999, Circular No. 627 dated 2nd September 1999 and Circular No. 651 dated 19th September 2000, insofar as they purport to Impose the take-or-pay obligation and minimum off-take requirement as also any additional tariff on CPP holders without the approval of the Commission, are hereby quashed and set aside. These are not only without the authority of the Commission, but are neither authorized by Section 44 of the Electricity (Supply) Act, 1948 nor can be deemed to have any nexus with it, for the same reasons as cited by the Commission for holding the conditionality regarding contract demand as bad in law in the ONGC case. (It may also be mentioned that, at paras 43 and 44 of its Order in the ONGC case cited earlier, the Commission had held further that even the provisions of Section 49 of the Electricity (Supply) Act could not protect a condition of maintaining a minimum contract demand except at the MSEB's discretion. The same would apply mutadis mutandis to the take-or-pay condition imposed by way of the Impugned Circular).

82. In summary, in view of the foregoing, the MSEB shall allow Eurotex the liberty to decide its level of contract demand, as clearly contemplated by their sanction letter dated 3.4.1997, and refund to Eurotex, by adjustment in energy bills or otherwise, any excess amount paid by them, on the basis of contract demand being 3000 KVA, Further, in the case of Eurotex, no prior permission of the MSEB is required for the extension of supply from their CPP at plot E-23 to their unit at plot E-1. Moreover, the condition imposed on the

Petitioners to draw at least 25% of their energy from MSEB through the said Circular cannot be operative and must be deemed to be withdrawn from the date when it was Imposed or sought to be imposed on them. In fact, the imposition of a take-or-pay condition on CPP holders by the MSEB through the said Circular and all other Circulars, viz., Circular No. 663 dated 5th October 2001 which provided for the supercession of certain Circulars, Including Circular No. 602 dated 23rd July 1998, Circular No. 619 dated 25th May 1999, Circular No. 627 dated 2nd September 1999 and Circular No. 651 dated 19th September 2000, insofar as they purport to impose the take-or-pay obligation and minimum off-take requirement as also any additional tariff on CPP holders without the approval of the Commission, are hereby quashed and set aside. The amounts representing such additional tariff and notional drawal of energy as contained in the bills raised on the Petitioners shall be withdrawn by the MSEB, and payments made by the Petitioners to MSEB on that basis ought to be refunded by the MSEB by way of adjustment through energy bills or otherwise. (emphasis supplied)

Thus, the Commission quashed the circulars issued by erstwhile MSEB in so far they imposed the take-or-pay obligation and minimum offtake requirement as well as the additional tariff On the Captive Power Plants. Further, the Commission allowed the Appellant to decide its level of contract demand and directed the MSEB to refund, by way of adjustment in the tariff bills or otherwise, any excess amount paid by Appellant to it on the basis of contract demand being 3000 MVA.

This order of the Commission was assailed by MSEDCL before this Tribunal by way of Appeal No. 29 of 2007 which came to be dismissed vide judgment dated 30.05.2007.

Para Nos. 19 and 21 of the said judgment of this Tribunal are material and are extracted herein below:- “19. So far as Eurotex's prayer for reduction of contract demand is concerned, the appellant Board says that Eurotex had, in its application for permission to set up the CPP, had assured that it will not reduce the contract demand for the next 8 to 10 months and, therefore, the contract demand could not be reduced immediately after the establishment of the CPP which Eurotex has prayed for. This argument does not hold any water as the NOC issued subsequent to the application which does not indicate any bar for reducing the contract demand. In fact the NOC dated 07.01.1998 has the following clause regarding contract demand:

"iv. You will have the liberty to decide the level of your contract demand to the extent you desire after commissioning of the set. For such reduction one month advance intimation may please be given to SE (O&M) Circle, Kolhapur. In case of increase in connected load /contract demand service line charges as per then existing rules will be payable."

After the appellant issued an NOC with this condition it could not decline to reduce the contract demand on the plea mentioned above.”

………. ……….

21. Our attention has been drawn to two clauses of the NOC which are as under: "A(x) The NOC is as per the present policy of board However, changes, applicable for paralleling interconnection etc. would be governed as per the board's rules from time to time. B(i) Operation of the captive power plant will be governed by the Government directives in force from time to time. None of these two clauses specifically refer to any minimum drawal of energy or reduction in contract demand. These two clauses refer to paralleling interconnection etc. and the operation of the captive plant. Both these matters will have to be governed by Board's rules or by the government directives. Thus so far as the contract demand was concerned it was only to go by the term in the NOC.”

This Tribunal, thus, upheld the findings/observations/directions of the Commission contained in the order dated 21.05.2004.

Ultimately this Tribunal held in para Nos. 27 and 28 of the said judgment as under:- “27. The proviso to Section 44 stipulates that the permission to install the CPP is to be granted unless where the licensee is able to supply electricity required by the applicant within a reasonable time and more economically from any other source. The Commission held that when permission under Section 44 is granted there is an implicit

admission of the licensee's inability to provide electricity from any other source within a reasonable time and on reasonable terms.

28. We are also of the opinion that despite this being the condition for grant of permission under Section 44 it will be contradiction in terms if the MSEB is allowed by a circular to impose upon the CPP holders a condition, alter the CPP is installed, requiring them to consume a minimum amount of electricity or to pay the penalty for not doing so. We are in Agreement with the view taken by the Commission in this regard.

29. In view of the forgoing we find no force in the appeal. The appeal is dismissed”

Aggrieved by the said judgment of this Tribunal, the MSEDCL approached the Hon’ble Supreme Court by way of Civil Appeal No. 4304 of 2007 which has been allowed vide judgment dated 28.02.2020. The Supreme Court set aside the orders passed by the Commission as well as this Tribunal and held that circulars and the policy decisions issued before the establishment of the Commission were illegally quashed. Accordingly, the order concerning refund of amount recovered by MSEB also was set aside.

We have already noted the prayers made by the Appellant in the petition before the Commission which has been disposed off vide impugned order dated 12.07.2021 and from which the instant appeal emanates.

Perusal of the impugned order of the Commission would reveal that the Commission found that the prayers made in the petition by the Appellant as well as the contentions raised therein have already been decided in the first round of litigation commencing from filing of petition No. 35 of 2002 before the Commission and culminating in passing of the judgment dated 28.02.2020 by the Hon’ble Supreme Court in Civil Appeal No. 4304 and accordingly dismissed the petition.

We have heard Mr. Haresh Jagtiani, Learned Senior Counsel for the Appellant and Mr. Tushar Mathur, Learned Counsel for the Respondent Nos.1 and 2.

It is argued by the Learned Senior Counsel for the Appellant that in the judgment dated 28.02.2020, the Hon’ble Supreme Court was mainly concerned about the various circulars issued by the MSEDCL and on finding those circulars legal as well as valid and holding that the Commission had no power to quash those circulars, the Apex Court allowed the Civil Appeal. It is his submission that the other two issues namely reduction contract demand and extension of supply from CPP to Unit E-1 raised by the Appellant in the previous petition before the Commission have been left untouched by the Hon’ble Supreme Court and therefore the previous order of the Commission dated 21.05.2004 in petition No. 35 of 2002 as upheld by this Tribunal in Appeal No. 29 of 2007 hold the field and are applicable in this regard and therefore the Appellant is entitled to the amounts from MSEDCL as sought for in the instant petition which was filed before the Commission.

Learned Counsel appearing on behalf of the 1st Respondent-MSEDCL has refuted the submission of the Learned Senior Counsel for the Appellant saying that the parties had raised all these contentions in the Civil Appeal before the Hon’ble Supreme Court which were duly considered and since the Appeal has been allowed, it cannot be said that any issue has been left undecided by the Apex Court.

We are unable to countenance the submission of the Learned Senior Counsel for the Appellant.

In this regard we note para 1 of the Civil Appeal which was filed by the MSEDCL before the Hon’ble Supreme Court and the same is extracted herein below:- “1. That the present Memo of Appeal under Section 125 of Electricity Act 2003 is being filed against order dated 30.5.2007 passed in Appeal No.29 of 2007 by the Appellate Tribunal for Electricity, dismissing the appeal of the petitioner against order dated 21.5.2004 passed by the respondent Maharashtra State Electricity Regulatory Commission (hereinafter referred to as "MERC"), quashing Circular No.602 dated 23.7.1998, Circular No.619 dated 25.5.1999, Circular No.627 dated 2.9.1999, Circular No.651 dated 19.9.2000 and Circular No.663 dated 5.10.2001 in so far as they purport to impose "Take or Pay" obligation and minimum off-take requirement as also of any additional tariff for captive power plant holders on the ground that they had no approval of the State Electricity Regulatory Commission constituted in terms of the provisions of Electricity Regulatory Act, 1998 (hereinafter referred

as the "Act"). The said circulars dealt with Captive Power Plant Policy (hereinafter referred as CPP] of the Appellant. By way of said order the Tribunal has upheld the quashing / setting aside of the above-mentioned circulars with retrospective effect and has further upheld the directions of MERC to refund Respondent No. 3 to 7. As a result of the said orders, the Appellant herein, which is Government of Maharashtra owned company would be saddled with a financial burden of approximately 75 crores of rupees. The said directions are not sustainable in Law on account of the fact that the Tribunal as well as MERC failed to appreciate that the revenue collected by the Appellant herein through Annual Revenue Return was approved by the MERC. Subsequently in various other orders the MERC has categorically observed that the circulars Issued by Appellant on the issue of Captive Power Plant continue to be in force. It may not be further out of place to mention here that Appellant herein as early as in 2000 when the MERC Itself came into existence on 5th August 1999 had submitted all its circulars to MERC for approval and MERC sat over the entire matter for four years and all of a sudden by way of present impugned orders has quashed / set aside the circular with retrospective effect. The financial condition of the Appellant herein is not sound enough to sustain such kind of liability as on 1st of April 2007, the Appellant herein has defaulted its liability up to the tune of Rs. 504 crores, which it had to pay to the parties.”

It is manifest from the perusal of the said paragraph of the Civil Appeal as well as the entire memorandum of appeal that MSEDCL had not restricted

its challenge to the judgment of this Tribunal in Appeal No. 29 of 2007 to any particular aspect. In fact, it is evident that MSEDCL had assailed each and every finding given by the Commission in order dated 21.05.2004, as upheld by this Tribunal in judgment dated 30.05.2007 in Appeal No. 29 of 2007.

Para 7 and 8 of the grounds raised in the Civil Appeal before the Hon’ble Supreme Court are also relevant in this regard and are extracted herein below:- “7. Because the Appellate Tribunal failed to appreciate that so far as the case of respondent No. 3 is concerned, Govt. of India issues a letter dated 22.8.1994 clearly contemplating both the units of respondent No.3 as separate units and as such the Tribunal erred in holding that there is no power vested in the appellant to refuse reduction of the contract demand.

8. Because the Appellate Tribunal also failed to take note of the Government of Maharashtra policy dated 20.12.1997 relating to the CPP which clearly provide for establishment of power plant and its utilization and the same being located on the same industrial plot. The Appellate Tribunal also erred in relying upon the sanction dated 3.4.1997 which was revoked by the appellant. The Appellate Tribunal also failed to take note of the letter dated 13.10.1999 issued by the appellant to respondent No.3 in respect of unauthorized act of connecting supply from plot No. E-23 to plot No. E-1 without any sanction from the appellant. The unauthorized use breached the sanction issued u/s 44 of the Electricity Supply Act."

Upon being questioned in this regard, Learned Senior Counsel for the Appellant is unable to point out anything in the memorandum of appeal filed by the MSEDCL before the Hon’ble Supreme Court or in the entire judgment of the Hon’ble Supreme Court to show that MSEDCL had restricted challenge in the Civil Appeal to any particular aspect leaving aside its challenge on the two issues namely reduction in contract demand and extension of supply from CPP to Unit E-1 by the Appellant. Further nothing in this regard can also be found in the judgment of the Supreme Court to show or suggest that the Hon’ble Supreme Court has left open the contentions/submissions of the parties on these two issues without disturbing the findings of the Commission, as upheld by this Tribunal.

We may also note that in the initial order dated 21.05.2004 passed in Petition No. 35 of 2002, the Commission had held that the circulars issued by MSEB imposing take-or-pay obligation as well as minimum offtake requirement, being issued without its approval, are not valid and hence quashed the same. IT is on this basis that Commission asked MSEB to refund excess amount collected from Appellant on the basis of these circulars. So, the petition was allowed and claims of the Appellant were allowed only upon quashing of these circulars. However, the Supreme Court restored these circulars by holding that these were illegally quashed by the Commission and accordingly, set aside the order of concerning refund of amount recovered by MSEB under these circulars. Once the circulars were restored, the take-or-pay obligation and minimum off-take requirement imposed upon the CPPs by them also got restored. Therefore, it cannot be

said that the issue of reduction of contract demand was not considered by the Apex Court.

In view of the same, we are of the opinion that the petition filed by the Appellant before the Commission was totally misconceived and a malafide attempt to obtain what was devised to it by the Supreme Court in judgment dated 28.02.2020 in the first round of litigation and therefore was rightly dismissed by the Commission.

Having regard to these facts and circumstances of the instant case and the manner in which the instant petition has been filed claiming the reliefs identical to that which had been claimed in the earlier litigation and negated by the Hon’ble Supreme Court in judgment dated 28.02.2020, we do not find any error or infirmity in the impugned order of the Commission. The appeal is found sans any merit and is, accordingly, dismissed.

PRONOUNCED IN THE VIRTUAL COURT ON THIS 28TH DAY OF APRIL, 2026.

Ajay Talegaonkar

Virender Bhat Technical Member

Judicial Member mk/mc