Dr. Babasaheb Ambedkar Sahakari Sakhar Karkhana Limited vs Maharashtra Electricity Regulatory Commission & Ors on 9 March 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. Order dated 13th July, 2019 passed by 1st Respondent – Maharashtra Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in case No. 83 of 2019, as affirmed by the Commission vide order dated 13th November, 2019 passed in Review Petition bearing case No. 254 of 2019, is assailed in this appeal.

2. Brief facts of the case, relevant for the disposal of the instant appeal, are that the Appellant has commissioned its 25.7 MW Bagasse-based Co-generation project on 6th March, 2015 and is connected at 132 KV sub-station of 4th Respondent - Maharashtra State Electricity Transmission Company Limited (in short MSETCL). The Appellant has executed an Energy Purchase Agreement (EPA) dated 7th June, 2004 with 3rd Respondent – Maharashtra State Electricity Distribution Company Limited (in short MSEDCL) which was later on amended on 22nd February, 2011 for change of connectivity from 33 KV to 132 KV. This EPA was again amended on 18th March, 2014 for capacity augmentation of the power plant from 16 MW to 25.7 MW.

3. Connectivity to the project at 132 KV to Ujaini sub-station of MSETCL was granted by State Transmission Utility (STU). MSETCL approved the scheme of power evacuation on 11th May, 2011 at an estimated cost of Rs.768.75 lakhs (Rs.710.34 lakhs as refundable and Rs.57.41 lakhs and Rs. 1 lakh as non-refundable amount). The Appellant deposited Rs.414 lakhs with MSEDCL on 21st January, 2011 out of which Rs.355.17 lakhs were in the nature of interest free advance as 50% of the above noted approved estimated cost of the

evacuation arrangement and the balance amount towards cost of metering, supervision charges etc.

4. According to the Appellant, as per the Government of Maharashtra Policy, 2008 (in short GoM Policy, 2008) and Procedural Guidelines issued by Government of Maharashtra for energy generation from unconventional energy sources in 2010 (2010 procedure), 5th Respondent – Maharashtra Energy Development Agency (MEDA) was to refund maximum amount of Rs.200 lakhs to Appellant and an amount of Rs.155.17 lakhs was to be refunded to the Appellant by MSETCL in 5 equal installments starting from one year after the date of commissioning of the project. As the power project of the Appellant was commissioned on 6th March, 2015, MSETCL has to start refund of the aforesaid amount from 7th March, 2016 till 7th March, 2021.

5. Since neither MEDA nor MSETCL refunded any amount to the Appellant, petition No. 83 of 2019 was filed by the Appellant before the Commission seeking directions to MSETCL/MSEDCL as well as MEDA to refund the amount of Rs.155.17 lakhs and Rs.200 lakhs respectively to the Appellant immediately.

6. In the impugned order dated 18th July, 2019, the Commission after noting the relevant provisions of EPA as well as GoM Policy 2008 and 2010 procedure held as under:- “13. The Commission notes that MEDA, a nodal agency to implement the renewable energy projects, vide letter dated 13 November 2013 has issued infrastructure clearance for the project under GoM Policy, 2008 and Procedure 2010. Also, EPA signed between DBASSKL and MSEDCL and as amended on 18 March 2014, specifically provides the applicability of the GoM Resolutions. Also, DBASSKL at Para 5 of its Petition has asked for refund on the basis of GoM Policy. Hence, it is undisputed fact that the project is executed as per GoM Policy, and

Procedure. Accordingly, refund of evacuation expenses needs to be treated as per these Government Orders.

14. The Commission finds that, as per MSETCL’s BRs dated 30 December 2010 and 17 August 2012 as quoted at Para 5.3 and 5.4 above, if work for

evacuation arrangement is carried out by MSETCL then the developer is required to pay 100% interest free advance to MSETCL before starting of the execution work. However, DBASSKL vide its letter dated 5 October 2010 requested for evacuation arrangement of entire works and deposited only Rs. 414 Lakhs as interest free advance on 21 January 2011, which is only 50% of estimate instead of 100 % of estimate. Details of amount deposited by DBASSKL are as below:

Sr. No. Description Amount Rs. Lakh

50% of approved cost estimate as refundable amount (i.e. Rs 710.34 Lakhs) 355.17

Cost of metering etc. as non-refundable amount 57.41

Supervision charges as non-refundable amount 1.00

Total (Rounded off 1+2+3) 414.00

15. The Commission further notes that MSETCL has approved Rs. 768.75 Lakhs as estimated cost for the evacuation arrangement and out of which Rs 710.34 Lakhs was refundable amount. However, DBASSKL has deposited Rs. 414 Lakhs (50% of

cost estimate) only instead of Rs. 768.75 lakhs (100% of cost estimate). For construction of the evacuation works, MSETCL has incurred Rs. 636.87 Lakhs which is also not denied by DBASSKL. Had the evacuation arrangement work been carried out by DBASSKL as required under GoM Policy, it would have incurred expenditure of Rs. 636.87 Lakhs. MSETCL has already incurred additional expenditure of Rs. 222.87 Lakhs (i.e. over and above the amount deposited by DBASSKL for execution of scheme). Considering, MSETCL’s share of refund to be Rs. 200 Lakhs as worked out on the basis of maximum amount of 400 lakhs to be paid by MEDA and MSETCL in equal proportion, it is clear that MSETCL has incurred Rs. 22.87 lakhs (Rs. 222.87 Lakhs – Rs 200 Lakhs) more than its refundable share.

16. In view of the foregoing, the Commission finds that prayer of the DBASSKL for refund of Rs. 155.17 Lakhs from MSETCL is without taking into

consideration the relevant provisions agreed between the parties especially with regards to the stipulations in the Government policies applicable during that period. As per the policy, the upper limit for refund for evacuation cost for cogeneration projects is clearly specified which in this case works out to Rs 400 lakhs. Thus, the Commission rules that MSETCL has to recover additional expenditure of Rs 22.87 Lakhs from DBASSKL. As such, prayer of DBASSKL seeking refund from MSETCL is devoid of any merit, void ab initio and hence needs to be rejected in toto. Hence, the Commission thinks it fit to direct DBASSKL to refund/pay Rs.22.87 Lakhs to MSETCL within one month from the date of this Order.” (Emphasis supplied)

7. Accordingly, the Commission directed the Appellant to pay Rs.22.87 lakhs to MSETCL and at the same time directed MEDA to refund the amount of Rs.200 lakhs to the Appellant within a period of one month from the submission of requisite document by the

Appellant. Notably, the prayer of the Appellant to direct the MSETCL/MSEDCL to refund the amount of Rs.155.17 lakhs has been declined by the Commission.

8. The Appellant again approached the Commission by way of Petition No. 254 of 2019 seeking a review of the above said order dated 18th July, 2019 in so far as the Appellant’s prayer for directions to MSETCL/MSEDCL to refund Rs.155.17 lakhs was declined. The Review Petition was dismissed by the Commission on this aspect vide order dated 13th November, 2019. However, vide the said order, the liability of the Appellant towards MSETCL has been reduced from 22.87 lakhs to 8.51 lakhs. Thus, in these circumstances, the Appellant has approached this Tribunal by way of the instant appeal.

9. We have heard the Learned Counsel for the Appellant as well as the Learned Counsels for Respondent Nos. 3, 4 & 5. Written submissions filed by Learned Counsels have also been perused.

10. The entire case of the Appellant is based upon Regulation 17 of MERC - Renewable Purchase Obligation, its compliance and implementation of Renewable Energy Certificate framework, Regulation, 2010 and clause 4 of the EPA executed between it and MSEDCL (successor in interest of MSEB).

11. Regulation 17 of these Regulations reads as under :-

“17.1 The licensees shall be responsible for development of evacuation infrastructure beyond the inter-connection point while developer/generating company will have to develop evacuation infrastructure from generation facility up to the interconnection point at its own expense; Provided that, the evacuation infrastructure cost beyond the Inter-connection Point shall be borne by the licensees and shall be recovered from the consumers as per suitable pricing framework developed by the State Commission;”

12. Clause 4 of the EPA executed between Appellant and MSEDCL (erstwhile MSEB) is extracted hereinbelow:- CLAUSE 4 : EVACUATION FACILITIES The Generator shall bear the cost of project switchyard and interconnection facilities at the project site upto the point of energy metering. The MSEB will bear the cost of transmission lines and associated facilities beyond the point of energy metering for the evacuation of power. The Generator(s) shall provide an interest free advance to the MSEB equivalent to an amount of 50% of the cost of

works to be carried out by the MSEB for power evacuation purposes. In case there is more than one Generator sharing the transmission line evacuation facilities to be set up by the MSEB, the advance amount shall be shared amongst the Generator(s) in equal proportion. The MSEB shall refund the above interest free advance to the Generator(s), in five equal instalments, spread over the period of five years, commencing from one year after the date of commissioning of the respective co-generation projects. Supervision Charges : The Generator shall pay the MSEB, an amount equivalent to 15% of the cost of synchronizing arrangement towards supervision charges.

13. It is the case of the Appellant that since it had paid Rs.355.17 lakhs to MSETCL as 50% of approved estimated cost as interest free advance in terms of Clause 4 of the EPA, the said amount was refundable to it in 5 equal installments spread over the period of 5 years commencing from one year after the date of commissioning of the power project in terms of the said provision in the EPA. It is

further case of the Appellant, as contended during course of argument, that out of the said amount Rs.200 lakhs was to be refunded by MEDA and the balance amount of Rs.155.17 lakhs was to be refunded by MSEDCL/MSETCL.

14. We note that Regulation 17 of MERC (RPO-REC) Regulation, 2010 specifies and demarcates the responsibilities for development of evacuation infrastructure. It clearly envisages that a power developer/generating company is required to develop evacuation infrastructure from the generating facility upto inter-connection point only at its own expense whereas the development of evacuation infrastructure beyond the inter-connection point shall be the responsibility of the licensee. It further provides that the evacuation infrastructure cost beyond the inter-connection point shall be recovered by the licensee from the consumers as per suitable pricing framework developed by the State Commission.

15. Same arrangement is envisaged and reiterated in Clause 4 of the EPA. This clause further provides that the generators shall provide an interest free advance equivalent to the amount of 50% of the cost of works to be carried out by MSEB (MSETCL/MSEDCL) for power evacuation purposes, which shall be refunded to the generator in 5 equal installments spread over the 5 years

commencing from one year after the date of commissioning of the power project.

16. Upon bare perusal of the above noted Regulations 17 of MERC (RPO-REC) Regulation, 2010 as well as clause 4 of the EPA, no doubt can be entertained with regards the fact that the entire interest free advance to be provided by generator to licensee as 50% cost of the evacuation infrastructure beyond the inter-connection point has to be refunded to it in 5 equal installments as specified in Clause 4 of the EPA.

17. The Commission, while directing MEDA to refund the amount of Rs.200 lakhs to Appellant and declining to direct MSETCL/MSEDCL to refund the balance amount of Rs.155.17 lakhs to the Appellant has relied upon the GoM Policy 2008 and 2010Pprocedure. The relevant provisions of GoM Policy 2008 are reproduced hereinbelow :- I. The GoM Policy, 2008 stipulated that: 4.01.4 Expenditure of Evacuation System: - For payment through Green Energy Fund, the amount of estimated expenditure approved by MSEDCL / MSETCL or the actual expenditure on evacuation arrangement

whichever is less will be treated as evacuation expenditure. 4.01.5 Refund from Green Energy Fund for Evacuation Arrangement: Subsidy: - After the Evacuation Arrangement is completely transferred to MSEDCL / MSETCL, MEDA will reimburse 50% of the approved expenses on the Evacuation Arrangement, to Investor from Green Energy Fund as a subsidy as per the availability of funds.

18. The relevant provisions of 2010 Procedure in respect of Bagasse-based Co-generation project are extracted hereinbelow:- “The evacuation arrangements were to be undertaken by the Developer at its cost on the basis of the specifications of MSETCL/MSEDCL; - The assets would be transferred to MSETCL/MSEDCL after commissioning;

- After completion, MEDA would reimburse 50% of the cost to the Developer from the Green Energy Fund (GEF), depending on the availability of funds; - The remaining 50% would be reimbursed by MSETCL/MSEDCL in 5 equal annual installments starting from the year following the commissioning of the Project; - Submission of certification from SLDC stating that 100 % power has been sold in the Maharashtra - The total amount of reimbursement to be made to the Developer would be the approved estimate, or the actual cost, or Rs 4 crore, whichever is less.”

19. A bare scrutiny of these provisions would also reveal that after completion of evacuation system, 50% of the cost would be reimbursed to the developer by MEDA from green energy fund and remaining 50% would be reimbursed by MSETCL/MSEDCL in 5 equal installments starting from the year following the commissioning of the project. However, 2010 Procedure puts a cap on the total amount of reimbursement to be made to the developer

and limits it to the approved estimate or the actual cost or Rs.4 crore whichever is less.

20. In this case, as noted by the Commission itself in the impugned order, MSETCL has incurred an amount of Rs.636.87 lakhs for construction of evacuation works, which has to be treated as the actual cost of these works. Since 400 lakhs (or Rs. 4 crore) as mentioned in 2010 Procedure is a lesser amount, same was refundable to the Appellant herein. The Appellant has been claiming only an amount of Rs.355.17 lakhs which is much less than Rs.400 lakhs and, therefore, was entitled to the entire amount from MSEDCL/MSETCL as well as MEDA in equal proportion as envisaged in the 2010 Procedure.

21. We do not find any conflict between the provisions of Regulation 17 of MERC (RPO-REC) Regulation, 2010, Clause 4 of the EPA, GoM Policy 2008 and 2010 procedure. Even if any such contradiction is to be found, as noted by the Commission in the impugned order, in that case also, the Regulation would prevail over the policies/guidelines issued by the Government of Maharashtra. It is the settled legal position that the Regulation issued the State Electricity Regulatory Commission under Section 181 of the Electricity Act, 2003 being in the nature of “delegated legislation”

stand on a higher pedestal than the policies/guidelines issued by the Govt. and the latter must yield to the former.

22. The findings of the Commission that such claim of the Appellant is contrary to the relevant provisions of the agreement executed between the parties especially the stipulations in the applicable Government policies, is baseless and erroneous. In fact, the claim of the Appellant is absolutely in consonance with the Regulations, the provisions of the EPA as well as the policy guidelines issued by the Government of Maharashtra as already quoted hereinabove.

23. Concededly, a sum of Rs.355.17 lakhs has been deposited by the Appellant with MSETCL as interest free advance being 50% of the approved estimated cost of the evacuation infrastructure beyond the inter-connection point, in terms of Clause 4 of the EPA. As envisaged by Regulation 17 of MERC (RPO-REC) 2010 as well as clause 4 of the EPA, the said amount is to be refunded fully to the Appellant in the manner as provided by said clause 4 of the EPA. Therefore, there does not arise any reason or occasion to hold the Appellant entitled to refund a sum of Rs.2 crores from MEDA and disentitle it from the refund of the balance amount of Rs.155.17 lakhs from the transmission licensee.

24. The argument raised on behalf of the MSETCL that the claim of the Appellant is based upon the provisions of EPA executed by it with MSEDCL, which are not applicable to MSETCL and, therefore, no liability can be fasten upon MSETCL, does not bear any merit. Even though, the amount of Rs.355.17 lakhs was deposited by Appellant with MSETCL as 50% of the approved estimated cost of evacuation infrastructure beyond the inter-connection point in terms of Clause 4 of the EPA executed by it with MSEDCL, the fact remains that this amount has been utilized by MSETCL for development of the said evacuation infrastructure for transmission of the electricity from the power project of the Appellant beyond the inter-connection point. It is no where the case of MSETCL that it had received the amount of Rs.355.17 lakhs from the Appellant not as an interest free advance to be refunded later on but as a non- refundable deposit. Nothing has been pointed out from the records by Learned Counsel for MSETCL which authorized MSETCL to receive any such non-refundable deposits from the Appellant for development of evacuation infrastructure beyond the inter- connection point. In fact, it is clearly mentioned in the written submissions filed on behalf of MSETCL that scheme for evacuation of power from Appellant’s project was approved considering the

Appellant’s request for depositing 50% interest free advance. We find pertinent to extract the relevant portion of the written submissions filed on behalf of MSETCL herein :-

• “It is further submitted that, Appellant vide its letter dated 10.09.2010 had requested the Respondent No. 4 for carrying out all the works of evacuation arrangement with deposit of 50% amount of estimated cost as interest free advance. Respondent No. 4 considered the request of the Appellant and informed it for payment of 50% interest free advance and full amount of non-refundable portion of work vide letter dated 03.11.2010.

• It is submitted that, scheme for evacuation of power from Appellant’s project was approved considering the request of Appellant for depositing 50% interest free advance and the works were to be executed by Answering Respondent. Respondent No. 4 carried out works of evacuation arrangement with 50% interest free advance of Rs. 414 Lakhs deposited by Appellant. The balance cost was borne by the Respondent No. 4.”

25. Hence, MSETCL is liable to refund the amount of Rs.155.17 lakhs to the Appellant over and above the same of Rs.200 lakhs which is to be refunded by MEDA as directed by the Commission vide impugned order.

26. The Commission has given totally extraneous reasons for declining the claim of the Appellant and hence the impugned order cannot be sustained to that extent. The reasoning of the Commission stems out of total misreading and misinterpretation of the relevant regulations/contractual clauses/guidelines.

27. Accordingly, we direct MSETCL to refund the amount of Rs.155.17 lakhs to the Appellant. As already noted in the foregoing paragraphs that MSETCL had to start refund of the said amount from 7th March, 2016 and to complete the refund process by 7th March, 2021, it shall now refund the entire amount to the Appellant within one month from the date of this judgement. We also take note of the fact that the Appellant has been deprived of the said amount unlawfully and without any fault attributable to it. The Appellant will, therefore, be entitled to carrying cost also on the said amount which shall be in accordance with the SBI prime lending rate prevalent since March, 2016.

28. Thus, the appeal stands allowed and the impugned order stands set aside to the extent indicated herein above. Pronounced in the open court on this 9th day of March, 2026.

(Virender Bhat)

(Seema Gupta)

Judicial Member

Officiating Chairperson

✓ REPORTABLE / NON REPORTABLE

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