M/S STAR WIRE (INDIA) VIDYUT PVT. LTD. & ANR. versus HARYANA ELECTRICITY REGULATORY COMMISSION on 2 July 2019

[2019] 8 S.C.R. 1095

M/S STAR WIRE (INDIA) VIDYUT PVT. LTD. & ANR.

v.

HARYANA ELECTRICITY REGULATORY COMMISSION

(Civil Appeal No. 5139 of 2019)

JULY 02, 2019

[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]

Haryana Electricity Regulatory Commission (Terms andConditions for Determination of Tariff from Renewable EnergySources, Renewable Purchase Obligation and Renewable EnergyCertificate) Regulations, 2010:

s. 4 (As amended vide Notification dated 12 August, 2015) –Amendment to s. 4 for revision of tariff for second control periodi.e. period starting from 1.4.2013 – By Notification dated 12.8.2015– Giving prospective effect to the amendment – Appellant No. 1(who had commenced its commercial operation on 3.5.2013), thuswas denied the applicability of tariff norms adjustments (as providedby third proviso to unamended Regulation 4) – Writ petitionchallenging the amendment was dismissed by High Court – Appealto Supreme Court – Held: High Court order is cryptic and cannotstand the test of judicial scrutiny – Therefore, the matter is relegatedto High Court for consideration of the writ petition afresh.

Allowing the appeal, the Court

HELD : 1. The High Court has committed manifest erroror so to speak, failed to exercise jurisdiction vested in it foradjudicating the relevant issues raised by the appellants. For,there is hardly any intelligible discussion in the impugnedjudgment in that regard. It is cryptic and cannot stand the test ofjudicial scrutiny. No logic can be deduced as to why the Courtwas persuaded to reject the argument despite the multifacetedissues raised by the appellants. The High Court has not analysedthe grounds of challenge regarding the validity of the impugnedAmended Regulations and including the competency to framesuch a regulation, appropriately. The High Court merely notedthat the appellants failed to point out any prejudice caused tothem because of exclusion from the benefit flowing from the

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Aprincipal Regulations. The argument of prejudice was raised bythe appellants to the detail but the High Court has failed to dealwith the same, to say the least satisfactorily. Similarly, the detailarguments regarding the validity of the impugned AmendedRegulations and the competency to frame such a regulation hasnot been analysed by the High Court. The writ petition wasBdisposed of in a most casual and cavalier manner. It would beappropriate to relegate the parties before the High Court forfresh consideration of the writ petition on its own merits inaccordance with law. [Paras 8 and 9] [1104-F-G; 1105-A-G]

2. The validity of the regulations can be decided only inCjudicial review proceedings before the courts and not by way ofappeal or review. The appellants having invoked such a remedybefore the High Court, all contentions available to the appellantsin that regard ought to have been adjudicated in properperspective. The nature of elaborate order passed by theDCommission on 4[th] August, 2015, which culminated with theframing of Amendment Regulations, the only remedy availableto challenge the same was by way of a writ petition under Article226/227 of the Constitution of India. [Para 10] [1106-B-C]

PTC India Ltd. v. Central Electricity RegulatoryECommission, Through Secretary (2010) 4 SCC 603 :[2010] 3 SCR 609 – relied on.

Case Law Reference

[2010] 3 SCR 609relied onPara 10

CIVIL APPELLATE JURISDICTION : Civil Appel No. 5139 ofF2019.

From the Judgment and Order dated 23.11.2016 of the HighCourt of Punjab and Haryana at Chandigarh in Civil Writ Petition No.25337 of 2015.GC. A. Sundaram, Sr. Adv., Ms. Radhika Singh, P. S. Sudheer,Rishi Maheshwari, Ms. Anne Mathew, Abhishek Gupta, Jaafar Inayat,Bharat Sood, Ms. Shruti Jose, Advs. for the Appellants.

Pallav Mongia, Mridul Chakravarty, Advs. for the Respondent.

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The Judgment of the Court was delivered by

A. M. KHANWILKAR, J. 1. Leave granted.

2. This appeal takes exception to the judgment and order of theHigh Court of Punjab and Haryana at Chandigarh passed in C.W.P.No.25337 of 2015 (O & M) dated 23[rd] November, 2016. The appellantshad challenged the fourth amendment to Haryana Electricity RegulatoryCommission (Terms and Conditions for determination of Tariff fromRenewable Energy Sources, Renewable Purchase Obligation andRenewable Energy Certificate) Regulations, 2010 (for short, “principalRegulations”) published vide notification dated 12[th] August, 2015 (forshort, “impugned Amended Regulations”) which sought to amendthe principal Regulations. The appellants had also challenged the orderpassed by the respondent-Commission dated 4[th] August, 2015, infurtherance whereof, the impugned Amended Regulations were framedby the appropriate authority for revision of norms for determination ofgeneric tariff for the second control period beginning from 1[st] April, 2013.

3. The appellants had set up a 9.90 MW independent BiomassPower Plant, which was declared commercially operational on 3[rd] May,2013. The principal Regulations were notified on 3[rd] February, 2011,providing for the norms and parameters for determination of tariff forvarious renewal energy project developers. As per Regulation 4 of theprincipal Regulations, the first control period of three years was to endon 31[st] March, 2013. The third proviso of Regulation 4 posits that incase, the regulations for the next control period were not notified afterthe expiry of the first control period, the tariff norms as per theseregulations (principal Regulations) would continue to apply until notificationof the revised regulations, subject to adjustments as per the revisedregulations. As the first control period had already ended, the appropriateauthority initiated suo motu proceedings for revision of tariff and issueddraft fourth amendment to the principal Regulations, seeking to amendRegulation 4 and including Regulation 5 of the principal Regulations.This draft amendment was issued on 29[th] December, 2014. Pursuantthereto, the concerned parties submitted their response. After givingopportunity to all concerned, the Commission proceeded to pass an orderdated 4[th] August, 2015, which attempts to analyse and adjudicate all theissues raised by the concerned parties. On the basis of the said order,the impugned Amended Regulations came to be notified. The effect A

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SUPREME COURT REPORTS

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SUPREME COURT REPORTS

Awhereof was to deny the applicability of tariff norms adjustments to theappellant No.1, which had commenced its commercial operations on 3[rd]May, 2013. The said amendment has been given prospective effect quathe appellants. It has made classification between the projectscommissioned/to be commissioned in financial years 2013-14 on the onehand and 2014-15, 2015-16 and 2016-17 on the other, without anyBintelligible differentia or any rational basis therefor. Neither the principalRegulations nor the impugned Amended Regulations envisageclassification on the basis of commissioning of renewable energy projectsin a particular financial year during the same control period. Similarly,the regulations do not envisage determination of separate tariff on suchCdifferentiation. Indeed, the authority has been invested with power todetermine project specific tariff under Regulation 6. In the present case,however, the power exercised by the Commission is indisputably withreference to Regulation 4 namely, to determine a generic tariff for thecontrol period commencing from 1[st] April, 2013 and ending with financialyear 2016-17 i.e. 31[st] March, 2017, for a period of 4 years.D4. In this back drop, the appellants filed writ petition and prayedfor the following reliefs:

“PRAYER

It is therefore most respectfully prayed that this Hon’bleECourt may graciously be pleased to:

a.Issue an appropriate writ under Article 226/227 of theConstitution of India for issuance of, order or directionin the nature of Certiorari for setting aside the ImpugnedNotification dated 12.08.2015 (Annexure P-1) and theFImpugned Order dated 04.08.2015 (Annexure P-2)passed by the Respondent to the extent the same seeksto apply the revised regulations with effect from thedate of the Impugned Notification; and b.Issue an appropriate writ under Article 226/227 of theGConstitution of India for issuance of, order or directionin the nature of Mandamus directing the Respondentto apply the revised regulations on and from the date ofcommencement of the Second Control Period i.e. witheffect from 01.04.2013; and H

c.Issue an appropriate writ under Article 226/227 of theAConstitution of India for issuance of, order or directionin the nature of Mandamus directing the Respondentto publish the revised tariff after adjusting the same asper the revised regulations from the first day of theSecond Control Period i.e. 01.04.2013, and to furtherBallow carrying cost on the overdue amounts; and A

d.Issue an appropriate interim direction granting ad-interimex-parte stay of operation of the Impugned Notificationdated 12.08.2015 (Annexure P-1) and the ImpugnedOrder dated 04.08.2015 (Annexure P-2) passed by theRespondent; and C

e.Dispense with serving advance notice upon theRespondent; and f.Costs of the Writ Petition be awarded to the Petitioners;and D

g.Dispense with filing of certified copies/true typed copiesof Annexures P-1 to P-10, and the photo/typed copiesof the Annexures may kindly taken on record and therequirement of filing typed/certified copies thereof bedispensed with; and E

h.Pass such other order(s) as this Hon’ble Court maydeem fit and proper in the facts of the case.”

5. The appellants raised almost thirty grounds as articulated in thewrit petition, in support of the reliefs claimed by them. They haveattempted to demonstrate as to how the amended regulations werearbitrary, unreasonable, capricious and discriminatory. The respondentrefuted the stand taken by the appellants by filing elaborate counteraffidavit and mainly relied on the order passed by the Commission dated4[th] August, 2015, which was the foundation for the amendment of therelevant provisions of the principal Regulations. The reply affidavit filedby the respondents before the High Court runs into about 60 typed pages(forming part of volume II of the paper book). Accordingly, the writpetition proceeded before the Division Bench of the High Court. TheHigh Court in the impugned judgment has noted that the appellants hadraised only two contentions, as can be discerned from paragraph 6 ofthe impugned judgment. The same reads thus:

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A “6. The grievance of the petitioners is two fold. Firstly with theissuance of notification of the Amended Regulations on 12.8.2015,there would be different treatment for the persons operating inthe same control period; namely, who had commissioned theirprojects in the year 2013-14 and the persons, who hadcommissioned thereafter, the control period being same i.e. forBthe years from 2013-14 to 2016-17. Further, it was submitted thatout of the control period prior to the date of notification of theAmended Regulations only financial year 2013-14 has beenisolated for different treatment, which is discriminatory. How anyof alleged Regulation is affecting the petitioner was not specificallyCpointed out.”

We would proceed on the basis that this was the limited argumentcanvassed before the High Court during the hearing of the writ petition.However, what is intriguing to note is that even these two points havebeen disposed of by the Division Bench of the High Court in a mostDcursory manner without analysing the issues in proper perspective, ascan be discerned from the discussion in paragraph Nos.13 to 15 of theimpugned judgment. The same reads thus:

“13. It is not in dispute that exercise for revision of the 2010Regulations was not started six months before the expiry of theexisting control period on 31.3.2013. The exercise was startedonly in the year 2015. Public hearing was held in which even thepetitioner-company was represented. Vide order dated 4.8.2015,the Commission approved the proposed amendments in the 2010Regulations. The Amended Regulations in terms of the orderpassed by the Commission were notified on 12.8.2015. Regulation1(2) of the Amended Regulations provides that the Regulationsshall be applicable to all the Renewable Energy ProjectsCommissioned/to be commissioned from Financial Years 2013-14to 2016-17, as the control period of four years was provided.Regulation 1(3) of the Amended Regulations provides that for theexisting projects commissioned from Financial year 2013-14onwards, the revised norms shall be applicable prospectively fromthe date of notification of the Amended Regulations unlessotherwise provided in the Amended Regulations. For the periodprior to the date of notification, existing norms as per the 2010Regulations shall continue to be applicable. The Amended E

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Regulations were to come into force from the date of publicationin the official gazette. The Amended Regulation (4) provides thatthe second control period shall be of four years commencing fromFinancial year 2013-14. 3[rd] proviso thereto provides that in caserevised regulations for the next control period are not notified onor before the commencement of that period, the tariff norms asper the Amended Regulations shall continue to remain applicable,until notification of the revised regulations and the second controlperiod shall be deemed to have been extended upto the date ofnotification of the regulations for the next control period.

14. The contention raised by learned counsel for the petitionersthat there is discriminatory application of regulations qua thepetitioners’ company only because it started operation in theFinancial year 2013-14, as compared to the other projects, whichstarted functioning after Financial year 2013-14 is merely to benoticed and rejected. Though the control period is from theFinancial Years 2013-14 to 2016-17, however, the AmendedRegulations clearly provide that for the existing projects fromFinancial year 2013-14 onwards, the revised norms shall beapplicable prospectively, from the date of notification of theAmended Regulations.

15. As far as the second contention raised by learned counsel forthe petitioners regarding application of the Amended Regulationsin terms of 3[rd] proviso to Regulation 4 of the 2010 Regulations isconcerned, it clearly provides that the existing norms, even forthe period subsequent to the expiry of control period, shall beapplicable till such time revised Regulations are notified. However,the same shall be subject to adjustments as per revised regulations.That would mean, adjustments, if any, are to be specificallyprovided for in the Amended Regulations for the period prior tothe notification of Amended Regulations. Wherever specialconditions have been provided for in the Amended Regulationsfor different years, learned counsel for the petitioners did not pointout how that prejudiced the petitioners. It is all matter ofcalculations for which facts were examined by the Commissionwhile passing the order on 4.8.2015, on the basis of which, theRegulations were amended.”

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AAs a matter of fact, paragraph 13 of the impugned judgment merelynotices some factual aspects. The reason which weighed with the HighCourt to negative the issues agitated by the appellants can be noticedonly from paragraph Nos.14 and 15, which ex facie to say the least iscryptic.B6. Resultantly, the appellants have approached this Court by wayof present appeal. The main argument of the appellants is that theprincipal Regulations which indeed, applied to the control period from 3[rd]February, 2011 until 31[st] March, 2013, but envisaged that the same wouldcontinue to remain applicable until notification of the revised regulationsis issued, subject to adjustments as per revised regulations. TheseCregulations make no distinction on the basis of commissioning of projecton financial year basis during the same block period or thereafter untilits application during the extended period. Rather, the control periodreferred to in Regulation 4 encompasses all the projects commissionedduring that block period and including extended period and must be treatedDalike. In other words, the same generic tariff must apply to all the projectscommissioned during the relevant block period i.e. from 3[rd] February,2011 to 31[st] March, 2013 and until the issue of revised regulations, subjectto adjustments as per revised regulations. Therefore, the amendedregulations must be read in light of the principal Regulations. However,the amended regulations entail in denying the applicability of the revisedEregulations to R.E. projects commissioned in FY 2013-14, such as theappellant, which was commissioned on 3[rd] May, 2013. The amendedregulations are for the second control period commencing from 1[st] April,2013 and ending on 31[st] March, 2017 for a period of four years, of whichthe first year has been defined as FY 2013-14. Despite this position, theFamended regulation 1(3) makes exception to the applicability of the revisedregulations to the projects commissioned during FY 2013-14, by makingit applicable prospectively from the date of notification of the impugnedRegulations on 12[th] August, 2015. Whereas, the projects commissionedduring 20014-15 and onwards during the selfsame second control period referred to therein would get the benefit of the revised regulations forGthe entire period from the date of commissioning commercial production,without there being any intelligible differentia. In other words, theappellants have been denied benefit of the revised regulations for theperiod between 3[rd] May, 2013 to 12[th] August, 2015. The effect of such aprovision is to take away the benefit which had enured to the appellants H

in terms of Regulation 4 of the principal Regulations, which predicatesthat the tariff norms as per the principal Regulations shall continue toremain applicable until notification of the revised regulations, subject toadjustments as per the revised regulations. Resultantly, the impugnedAmended Regulations suffer from the vice of hostile discriminationbetween persons similarly placed namely, projects commissioned duringthe block of second control period governed by the Amended Regulations,without any intelligible differentia. We need not elaborate on otherarguments which are either to buttress the above-mentioned points or ifwe may say so, in the nature of another shade of the same argumentwith reference to factual aspects relevant for examining the same. Thesum and substance of the argument is that the appellants have beendenuded of their right to get adjustments in the same manner as extendedto projects commissioned in the same control period and despite thestipulation in the third proviso of the Regulation 4 of the principalRegulations. Inasmuch as, the impugned Amended Regulations werenotified on 12[th] August, 2015, therefore, the rights accrued to theappellants in terms of Regulation 4 would take effect from commissioningof their project on 3[rd] May, 2013 because the principal Regulations werestill applicable and in force. Taking away that fructified right, isimpermissible in law. Further, the impugned Amended Regulations, exfacie, discriminates between the projects commissioned during the samecontrol period i.e. second control period from 1[st] April, 2013 till 31[st]March, 2017, by singling out the projects commissioned in FY 2013-14.It is not open to make such classification in respect of projectscommissioned during the same control period. Further, there can be notwo tariffs operating during the same control period. In that, no expressprovision to prescribe two sets of tariffs concerning the same controlperiod is found in the principal Regulations or the impugned AmendedRegulations. Therefore, classification sought to be done in the impugnedAmended Regulations, cannot be countenanced.

7. Indeed, the respondents have vehemently supported theimpugned decision of the High Court and would contend that the provisionsengrafted in the impugned notification are manifestation of the orderpassed by the Commission dated 4[th] August, 2015. The Commission hadelaborately analysed all aspects of the matter before passing the saidorder. In other words, the respondents have drawn support from theanalysis done by the Commission in the suo moto proceedings initiated AB

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Aby it for revision of norms (for tariff operation for the second controlperiod commencing from 1[st] April, 2013). That order runs into over 100typed pages and has analysed the necessity of revision vis-à-vis eachhead to be reckoned for determination of tariff. The appellants hadparticipated in the said proceedings. However, the stand taken by theappellants did not commend to the Commission, as can be discernedBfrom the discussion in the order passed by it on 4[th] August, 2015. Further,it was open to the appellants to approach the Commission by way of areview if they had any reservation with regard to the view taken byCommission in the said order. It was also open to the appellants to fileappeal against the said order. However, without resorting to suchCremedies, the appellants chose to file writ petition and have raised groundswhich are untenable in light of the discussion recorded by the Commissionin its order dated 4[th] August, 2015. It is certainly not a case of hostilediscrimination considering the fact that Commission has recorded tangiblereasons as to why the applicability of the revised regulations was requiredto be made prospective in respect of projects commissioned during FYD2013-14. It is urged that the exercise of power in framing regulations -be it principal Regulations or impugned Amended Regulations - in termsof Section 61 read with Section 181 of the Electricity Act, 2003 permitsclassification on the basis of the date of commissioning of the projectduring the relevant period and which may inevitably result in providingEfor two sets of tariffs during the same control period. It is submitted thateven though the impugned judgment of the High Court is brief, theconclusions reached therein are unexceptionable and therefore, thisappeal ought to be dismissed.

8. After perusing the impugned judgment, we have no hesitationFin taking the view that the High Court has committed manifest error orso to speak, failed to exercise jurisdiction vested in it for adjudicating therelevant issues raised by the appellants. For, there is hardly any intelligiblediscussion in the impugned judgment in that regard. If we may say so, itis cryptic and cannot stand the test of judicial scrutiny. We say so because,up to paragraph 9 of the judgment the High Court has only reproducedGthe rival stand. Paragraph 11 refers to the relevant provisions. Paragraph12 is mere narration of some facts concerning this case. Paragraph 13,broadly refers to the purport of the provisions in the principal Regulationsand the impugned Amended Regulations. The discussion with regard tothe merits of the challenge, can be discerned only from paragraph Nos.14Hand 15 reproduced hitherto. Paragraph 14 even if fairly analysed, merely

adverts to the argument of discriminatory application of regulations quathe appellant company and proceeds to reject the same. No logic can bededuced as to why the Court was persuaded to reject the argumentdespite the multifaceted issues raised by the appellants. The secondsentence in the said paragraph then proceeds to record that the controlperiod may be from FY 2013-14 onwards, however, the impugnedAmended Regulations envisage application of revised norms to projectscommissioned in FY 2013-14 prospectively from the date of notificationof the impugned Amended Regulations. In other words, the High Courthas not analysed the grounds of challenge regarding the validity of theimpugned Amended Regulations and including the competency to framesuch a regulation, appropriately. Strikingly, the High Court thenstraightaway proceeds to examine the second contention raised by theappellants in reference to the third proviso in the principal Regulationsproviding for adjustments as per revised regulations. The Court merelynoted that the appellants failed to point out any prejudice caused to thembecause of exclusion from the benefit flowing from the principalRegulations. The appellants, on the other hand, have invited our attentionto the specific grounds taken by the appellants in the writ petition andalso noted in the order of the Commission dated 4[th] August, 2015 andadditionally articulated in the ground No. B of the special leave petition,giving comparative chart indicating substantial disparity regarding thenorms applicable as per principal Regulations and the impugned AmendedRegulations. In other words, the argument of prejudice was raised bythe appellants to the detail but the High Court has failed to deal with thesame, to say the least satisfactorily. Similarly, the detail argumentsregarding the validity of the impugned Amended Regulations and thecompetency to frame such a regulation has not been analysed by theHigh Court.

9. Suffice it to observe that the discussion in two paragraphs (para14 and 15), to say the least, is one of disposing of the writ petition in amost casual and cavalier manner. That cannot be countenanced. Havingsaid this, we are of the considered opinion that it would be appropriate torelegate the parties before the High Court for fresh consideration of thewrit petition on its own merits in accordance with law. We refrain fromexpressing any opinion either way on the merits of the controversy orthe grounds of challenge regarding the impugned Amended Regulations.In other words, the High Court must consider all relevant aspects of the AB

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Amatter agitated by the appellants and deal with the same appropriately inaccordance with law.

10. For completion of the record, we must note the decision of theConstitution Bench of this Court in PTC India Ltd. Vs. CentralElectricity Regulatory Commission, Through Secretary[ 1], which hasBheld that the challenge to the validity of the regulations can be decidedonly in judicial review proceedings before the courts and not by way ofappeal or review. The appellants having invoked such a remedy beforethe High Court, all contentions available to the appellants in that regardought to have been adjudicated in proper perspective. We agree withthe appellants that the nature of elaborate order passed by the CommissionCon 4[th] August, 2015, which culminated with the framing of AmendmentRegulations the only remedy available to challenge the same is by wayof a writ petition under Article 226/227 of the Constitution of India.

11. Accordingly, this appeal is allowed. The impugned judgmentand order is set aside. The CWP No.285337 of 2015 (O&M) is restoredDto the file of the High Court to its original number, for being consideredafresh by the High Court on its own merits in accordance with law. Allpending applications are disposed of. No order as to costs.

EKalpana K. Tripathy

Appeal allowed.

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