TATA POWER COMPANY LTD. versus ADANI ELECTRICITY MUMBAI LTD. & ORS. on 2 May 2019

[2019] 6 S.C.R. 845

TATA POWER COMPANY LTD.

v.

ADANI ELECTRICITY MUMBAI LTD. & ORS.

(Civil Appeal No. 415 of 2007)

MAY 02, 2019

[ARUN MISHRA AND S. ABDUL NAZEER, JJ.]

Electricity Regulatory Commission Act, 1998: s. 22(2)(n) and29(3) – Standby charges – Quantum of – Appellant-TPC, distributionlicensee supplying electricity to entire Mumbai and BSES/REL,distribution licensee supplying electricity only in suburbs of Mumbai– From 1998 to 2006, BSES/REL used to purchase electricity fromTPC between 29% to 37% – Tariff payable by BSES to TPC includeda component of standby charge – Standby charges paid by TPC toMaharashtra State Electricity Board-MSEB were being recoveredby TPC from its customers through its tariff – Order of Governmentof Maharashtra stipulating a sum of Rs.3.5 crores per month to bepaid by BSES/REL to TPC by way of standby charges – Issue asregards quantum of standby charges required to be paid by BSES/REL to TPC – Order by MERC directing BSES/REL to bearapproximately 23% of the total standby charges incurred by TPCqua MSEB – Appeal before APTEL – Case of the TPC that standbycharges should be borne in ratio of 50:50 – Chairman held thatliability to be in proportion of 2:1 tariff, whereas Judicial Memberand Technical Member differed – Decisions of MERC, as well asthe Technical and Judicial Members, working out the percentageof standby charges as 23:77 with respect to BSES/REL and TPCrespectively for the period – On appeal, held: Electricity used to bepurchased by BSES/REL from TPC and the standby charges used tobe realised which were factored in the tariff, which liability wasultimately passed on to the retail consumers – Ratio had beenappropriately worked out in the most equitable manner by applyingthe level playing field – Considering the standby charges of Rs.24.75crores recovered by MSEB from TPC with effect from 1.10.1996and as per the Government order and Principles of Agreement Rs.3.5crores was additionally being available and a difference of standbywhich was made to increase the liability Rs.24.75 crore per month

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Ato Rs.30.25 crores per month – Thus, the decision of the Technicaland Judicial Members is appropriate and reasonable while workingout the percentage of the standby charges to be paid by BSES/RELto TPC for the said period – Majority opinion that standby facilityprovided by TPC was out of its own generating capacity and 90%of the times energy has been drawn by BSES/REL from TPC, isBaccepted – Thus, there is no justification for TPC to claim 50:50%sharing of the standby charges –Implementation of the order of theAPTEL would mean that the determination made by it has been actedupon and corresponding liability factored into tariff has been passedon the customers and actual consumers and realised from them sinceCthere was no such interim stay on implementation of the order –Submission that order of APTEL has already been worked out evenotherwise it is found to be just and equitable is accepted – Orderpassed by Technical and Judicial Members of APTEL upheld.

Dismissing the appeals, the CourtDHELD: 1.1 The standby facility was made available to TPCin the event there was a failure of power in TPC’s generation of1777 MW. BSES/REL used to purchase electricity from TPCbetween 29 % to 37 % from 1998 to 2006. The standby chargeswere factored into the tariff charged from its retail customers.EThe standby charges to the extent of supply were borne by BSES/REL for optimum supply from TPC when interconnectivity wasprovided at Borivali point as per the Government order. Thedispute arose between TPC and BSES/REL as to whether BSES/REL entitlement to draw 275 MVA from TPC in the case of outageand failure of electricity supply, the charges which were requiredFto be paid were over and above the charges that would be paidfor energy actually drawn. TPC was paying an amount of Rs.24.75crores per month-Rs.297 crores per annum to MSEB by way ofstandby charges which was built into the tariff. The said amountwas recovered by TPC from its customers who in turn recoveredGit from their retail consumers. [Para 25][866-E-G]

1.2 The Government of Maharashtra formed a Committeeto resolve the issue of quantum of standby charges required tobe paid by BSES/REL to TPC. The Government of Maharashtrapassed an order dated 19.1.1998 whereby stipulating a sum of H

Rs.3.5 crores per month should be paid by BSES/REL to TPC byway of standby charges. The decision was taken by the Committeeinter alia considering the generation by TPC and MSEB. Theorder was based upon six factors-generation of TPC and MSEB;electricity supplied by TPC to BSES/REL as a consumer; TPC’sstandby supply from MSEB; charges paid for said sub–standbysupply by TPC to MSEB; the financial position of TPC and BSES/REL; and stability of better Mumbai grid. [Para 26][866-H;867-A-B]

1.3 The main principles on the basis of which Agreementwas to be reached between TPC and BSES/REL were settled. Asper clause 2 of the Principles of Agreement, BSES/REL had topay to TPC for 220 KV interconnection at Borivali at Rs.3.5 croresper month. The parties had agreed to cooperate in order to ensurethat Government order dated 19.1.1998 is implemented in thespirit of it. A detailed power supply agreement was to be enteredinto by 21.4.1998. The agreement could not be executed asconsensus with respect to several aspects could not be reached.The order dated 22.3.2000 has been set aside by the High Court,which order was not interfered with by this Court and the casewas remitted for the decision to MERC, which is an expert body.The power was conferred upon the MERC vide notification dated27.10.2000 under the provision of Section 22(2)(n) of ElectricityRegulatory Commission Act, 1998, to adjudicate upon thedisputes and differences between licensees and utilities. On4.12.2000, BSES/REL had filed an application to MERC in respectof sharing of standby charges between BSES/REL and TPC. Theprayers were made to regulate action and standby charges leviedby them and to fix and determine the standby charges payable bythem. [Para 27][867-C-F]

1.4 Ultimately, the APTEL by the impugned orders hasdecided the matter. The Chairman held that liability to be inproportion of 2:1 tariff, whereas Judicial Member has concurredwith the Technical Member when Technical Member differed withthe opinion of Chairman, but the fact remains that MERC, aswell as the APTEL, concurrently have not accepted the case ofthe TPC that standby charges should be borne in ratio of 50:50.

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AThe decisions of MERC, as well as the Technical and JudicialMembers, are found to be correct while terming ratio as 23:77with respect to BSES/REL and TPC respectively.[Para 28][867-F-G]

1.5 In view of the facts and circumstances of the case and,Bin particular, several factors were required to be taken intoconsideration, on that basis said figure has been worked out. Ithas also been considered that electricity used to be purchasedby BSES/REL from TPC to the aforesaid extent and the standbycharges used to be realised which were factored in the tariff, whichliability was ultimately passed on to the retail consumers. EvenCwhen the Principles of Agreement have been reached as tostandby charges though it was subject to revision basis was fixedwhich could not have been departed from, it was on considerationof several aspects. The ratio had been appropriately worked outin the most equitable manner by applying the level playing field.DConsidering the standby charges of Rs.24.75 crores recoveredby MSEB from TPC with effect from 1.10.1996 and as per theGovernment order and Principles of Agreement Rs.3.5 croreswas additionally being available and a difference of standby whichwas made to increase the liability Rs.24.75 crore pm to Rs.30.25crores pm. Thus, the decision of the Technical and JudicialEMembers is found to be appropriate and reasonable while workingout the percentage of the standby charges to be paid by BSES/REL to TPC for the period in question. [Para 29][867-H;868-A-D]

1.6 The MERC directed sharing of standby charges payableFto MSEB between TPC and BSES/REL on the basis of theirrespective peak load requirements and directed TPC to pay toBSES/REL a sum of Rs.315.30 crores within 15 days. Thequantum of standby capacity is related to the larger unit size ofthe generation in either system. The majority opinion that standbyGfacility provided by TPC was out of its own generating capacityand 90 percent of the times energy has been drawn by BSES/REL from TPC, is accepted. Thus, there is no justification forTPC to claim 50:50 percent sharing of the standby charges in thefacts of this case on consideration of various factors the decisionhas been reached. [Para 31][870-G]H

1.7 There was no stay on the order passed by the APTELby this Court. The plea of non–implementation of the order takenby TPC is not understandable. It was only the bank guaranteewhich was submitted by TPC, in addition, to deposit of a sum ofRs.227 crores with the Registrar General of this Court. Theimplementation of the order of the APTEL would mean that thedetermination made by it has been acted upon and correspondingliability factored into tariff has been passed on the customers andactual consumers and realised from them since there was no suchinterim stay on implementation of the order. The submission thatorder of APTEL has already been worked out even otherwise itis found to be just and equitable is accepted. [Para 32][870-H;871-A-B]

1.8 There is no question of applicability of Article 14 of theConstitution. As a matter of fact, what was agreed in the Principlesof Agreement more amount than that has been ordered to bepaid on the basis of principles of business equilibrium and other factors. [Para 33][871-C]

1.9 The order passed by Technical and Judicial Membersof APTEL is upheld. The amount which is payable to RELdeposited or secured by way of bank guarantee by TPC alongwith interest lying with the Registrar of this Court, be paid to the respondent company. [Para 35][871-E-F]

BSES Ltd. v. Tata Power Co. Ltd. (2004) 1 SCC

195 : [2003] 4 Suppl. SCR 932 ; Binani Zinc Ltd. v.

Kerala State Electricity Board, (2009) 11 SCC 244 :[2009] 4 SCR 636 – referred to.

Case Law Reference

[2003] 4 Suppl. SCR 932referred toPara 14[2009] 4 SCR 636referred toPara 22

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 415 of2007.

From the Judgment and Order dated 20.12.2006 of the AppellateTribunal for Electricity at Mumbai in Appeal No. 202 of 2005.

With

Civil Appeal No. 3229 of 2007.

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AGopal Jain, J. J. Bhatt, Sr. Advs., R. N. Karanjawala, Ms. RubySingh Ahuja, Parag Kabadi, Ms. Deepti Sarin, Sanjeet Ranjan, SaurabhKumar, Mrs. Manik Karanjawala, Ms. Anjali Chandurkar, HasanMurtaza, Ms. Divya Anand, Kartik Anand, Kumar Anurag Singh, Ms.Ramni Taneja, Anil Shrivastav, Advs. for the appearing parties BThe Judgment of the Court was delivered by ARUN MISHRA, J.

1. The appellant – Tata Power Company (in short ‘the TPC’) is adistribution licensee supplying electricity to the entire city of Mumbai,whereas BSES/Reliance Energy Limited (in short ‘REL’) is a distributionClicensee supplying electricity only in the suburbs of Mumbai. Prior to1998, the TPC was the only generator of the electricity supplyingelectricity to BSES for further supply to BSES customers. The TPChad 108 customers in the entire city of Mumbai. The tariff payable byBSES to TPC included a component of standby charge. The entireDstandby charges paid by TPC to Maharashtra State Electricity Board(for short ‘the MSEB’) were being recovered by TPC from its customersthrough its tariff. Due to change in shareholding pattern, the BSES waschanged to Reliance Energy Limited on 24.2.2004.

2. The brief facts indicate that TPC and MSEB met on 12.3.1985Eto finalise the interconnection between representatives of TPC andMSEB with respect to demand charges. Following decision was arrivedat:

“A) Demand Charges:

Effective 1-2-84 a monthly firmed demand of 300 MVA would beFbilled by MSEB. This would increase by 50 MVA each yeareffective 1-4-1985 to take care of TEC’s own load growth annually.This is irrespective of TEC’s actual net off-take recorded at the 4interconnecting points of supply and also irrespective of MSEB’stotal off-take from TEC system”

G3. Prior to 1985, the TPC was supplying entire electricity generatedby it to the distributors of electricity in Mumbai. Since the quantitygenerated by TPC was not sufficient to meet the entire demand, TPCused to buy electricity from MSEB. BSES/REL was purchasing itsentire requirement of electricity from TPC in bulk to supply to its customersin suburban Mumbai.H

4. With effect from 1985, TPC wanted to increase its generatingcapacity thereby reducing its offtake of electricity from MSEB to zerothereby causing loss of revenue to MSEB. In order to compensateMSEB for loss of revenue caused as a result of stoppage of purchase ofelectricity by TPC from MSEB, the TPC and MSEB entered intoaforesaid arrangement whereby TPC was required to pay to MSEBstandby facility initially for 300 MVA to be increased by 50 MVA everyyear, charges to be paid at the rate fixed by MSEB. The quantum ofstandby increased from 300 MVA to 550 MVA by the year 1990,whereafter the MSEB and the TPC agreed not to increase the saidstandby beyond 550 MVA. The standby facility was meant to enableTPC to draw upon the energy generated by MSEB in the event therewas outage/failure of power in TPC’s generation capacity of 1777 MWconsisting of multiple units of different sizes i.e., 500 MW, 180 MW, 150MW, 72 MW, 75 MW and 300 MW, which is supplied to BSES/RELalong with its own consumers and BEST, another distribution licensee inMumbai. The standby facilities charges paid by TPC to MSEB werefactored into tariff charged by TPC from its customers including BSES/REL. The BSES/REL was a purchaser of electricity from TPC to theextent of TPC’s generation between 29% to 37% from 1998 to 2006,thus the standby charges to the extent of aforesaid varying percentagesfor the respective years were borne by BSES/REL which in turn werefactored into tariff and charged by BSES/REL to its retail customers.

5. Initially, BSES was permitted to set up its generating plant atDahanu to generate 500 MW (550 MVA approximately). There was acondition that it would achieve interconnection with the supply of TPCat a point known as Borivali Interconnection Point in case there was anyoutage of BSES generation. It could draw upon the power supplied bythe TPC. The charges for such interconnections were to be determined.On 30.5.1992, a notification was issued amending the BSES license. Anew clause 7B was introduced for providing aforesaid interconnectivity.Provisions of clause 13A were also amended to authorise the StateGovernment in the event of a dispute to decide the same. On 29.6.1992,a meeting was held between TPC and BSES and it was agreed thatinterconnection would be provided at Borivali GIS switching station totake care of emergencies in BSES 220 KV system. The TPC alreadyhave arrangements with MSEB wherein standby capacity is providedby MSEB to TPC in case of emergencies in TPC system. Standby AB

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Acapacity to BSES may be provided from the standby capacity reservedby TPC with MSEB and appropriate sharing of charges by BSES couldbe worked out as provided in clause 12.0. The BSES prior to September1995 was purchasing its entire requirement of power from TPC anddistributing it within its licensed area as TPC distributing licensee. Afterits two Dahanu generating units were commissioned in January/MarchB1995, BSES started bringing the power generated by Dahanu to supplyto its consumers after September 1995 in the suburbs of Mumbai city.As supply was started from the Dahanu, TPC surplus capacity began toincrease. The TPC after 1995 required only 275 MVA standby facilityagainst the standby capacity of 550 MVA.

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6. The MSEB issued notice on 28.6.1996 revising its tariff to TPCeffective from 1.10.1996. The MSEB raised its maximum demandcharges per month with respect of standby facility/supply fromRs.190/- per KVA to Rs.450/- per KVA. Consequently, MSEB gavenotice to TPC, inter alia, revising its standby charges with effect fromD1.10.1996 recoverable from TPC to Rs.24.75 crores per month i.e.,Rs.297 crores per year.

7. TPC had issued a notice on 30.7.1996 to the Government ofMaharashtra and MSEB under Schedule VI to the Electricity (Supply)Act, 1948, showing its intention to enhance tariff charges with effectEfrom 1.10.1996 which included maximum demand charges and energycharges to various consumers. It also provided for payment of maximumdemand charges and energy charges by BSES for standby facility. Witheffect from 1.1.1997, TPC revised its tariff inter alia to BSES, therebyfactoring in the monthly demand charges of Rs.24.75 crores payable byTPC to MSEB for standby supply. In order to resolve the issue ofFquantum of standby charges to be paid by BSES to TPC, the Governmentof Maharashtra appointed a Committee and an order dated 19.1.1998was passed whereby the Government of Maharashtra, based on therecommendation of the Committee, stipulated that a sum of Rs.3.5 croresper month should be paid by BSES/REL to TPC by way of standbyGfacility for the period 1998-1999. This sum of Rs.3.5 crores per monthi.e., Rs.42 crores per annum was over and above the sum Rs.24.75crores per month i.e., Rs.297 crores per annum which TPC used torecover in the form of its tariff from its customer. In fixing the aforesaidamount, the following factors were taken into consideration by the saidCommittee:

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TATA POWER COMPANY LTD. v. ADANI ELECTRICITYMUMBAI LTD. & ORS. [ARUN MISHRA, J.]

“(i) the generation of TPC and MSEB;

(ii) the electricity supplied by TPC on BSES/ REL as a consumer.

(iii) TPC’s standby supply from MSEB;

(iv) Charges paid thereof by TPC;

(v) TPC’s and BSES/REL’s financial position;

(vi) That standby was being supplied for the stability of the GreaterMumbai Grid.”

8. On 17.12.1997, TPC contended that it was fully capable andwilling to supply standby to BSES for its Dahanu plant and TPC should,therefore, be billed only for 275 MVA standby facility for their consumersother than BSES. The Government of Maharashtra issued an order on19.1.1998, following is the relevant portion of the said order:

“it has come to the notice of the Government that due to disputeon commercial terms between BSES and TEC, interconnection isnot established at Borivali even though technical arrangementsare ready. Similarly, additional electricity generated at Dahanu isbeing sold to the Western Regional Grid through MSEB’s BiosarInterconnection. As a result, the government’s main objectivethat electricity generated at Dahanu should be used within theBSES area of supply has not been met and BSES license conditionsare violated. For this Government had appointed a Committeeunder the Chairmanship of the Principal Secretary, Energy. Inthis committee, representatives of MSEB, TEC, and BSES weremembers. This Committee has examined the total situation andhas submitted its report to the Government.

GOM thereafter ordered as follows:

“Taking into account the recommendations of the Committee,following are orders of the Government.

1. BSES should complete interconnection at Borivli by January26, 1998.

2. BSES should take 275 MVA standby power supply from TECfor Dahanu generating station.

3. For taking above standby supply, BSES should pay standbycharges to TEC.

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A4. After the interconnection is commissioned, BSES should stopselling electricity through MSEB’s Boisar sub-station toWestern Regional Grid.

5. TEC may charge stand-by charges for 275 MVA supply toBSES.

B6. Whenever required during an emergency, additional electricitymay be taken for areas outside Mumbai region throughMSEB’s Boisar sub-station. For this purpose, MSEB shouldtake proper arrangements.

7. As per Committee’s recommendations and taking into account,CTEC’s electricity supply to BSES, TEC’s standby supply fromMSEB, charges thereof and TEC’s and BSES’s financialconditions, BSES should make a payment of Rs.3.5 crores everymonth for standby supply. On this basis, the rate per KVAshould be fixed and commercial arrangement finalized.

D8. The above standby charges are passed on TEC’s & BSES’sexisting electricity supply tariff. The standby charges may bereviewed during tariff revision in the future.”

9. Since the agreement was to be finalised as per theGovernment’s order, the Government had no power to give directions toEgenerators and distributors, TPC and BSES had entered into Principlesof Agreement on 30.1.1998, the clauses 2 to 9 are extracted hereunder:

“(2) BSES shall pay to TEC for the 220 KV interconnection atBorivali Rs.3.5 crores per month as standby charges for 275 MVAas per Government orders.

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(3) BSES offtake of energy at 220 KV Borivli interconnectionwill be billed at Rs.2.09 per kWh plus F.A.C. (which is presentlyat Rs.0.45) as applicable from time to time at other points of supply.This average energy charge is based on an estimated annual flowof 250 million units of energy through Borivli interconnection.

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(5) As soon as the interconnection between TEC and BSES at220 KV Borivli is established.

(6) The interconnection between MSEB and BSES at Boisar willbe opened out.

TATA POWER COMPANY LTD. v. ADANI ELECTRICITYMUMBAI LTD. & ORS. [ARUN MISHRA, J.]

(7) BSES shall use this interconnection at Borivali fully for thestandby type of service.

(8) Both the parties have agreed to cooperate in order to ensurethat the orders of the Government dated 19-01-1998 areimplemented in the spirit of it.

(9) A detailed Power Supply Agreement on a mutually agreedbasis incorporating the above will be executed by 21stof April,1998.”

(emphasis supplied)

Though the aforesaid principles of the agreement were enteredinto between the parties, for one reason or the other, no agreement hasbeen executed between them.

10. The TPC under the Principles of Agreement dated 31.1.1998was bound to supply standby power as and when required by BSES/REL. Whether the TPC was drawing from MSEB or not is immaterial.The agreement of BSES was with TPC, not with MSEB. The agreementbetween TPC and BSES was independent than the agreement betweenTPC and MSEB.

11. Even after providing the standby facility of 275 MVA to BSES/REL, TPC still enjoyed the standby facility of 550 MVA from MSEB.The TPC entitlement to avail 550 MVA standby facility from MSEB didnot change.

12. The standby facility that has been availed of by BSES/RELthrough TPC since then it actually drew on about 119 occasions till May2004, of which 57 occasions in excess of 275 MVA. It has been observedby the Appellate Tribunal for Electricity (in short ‘the APTEL’) thatTPC in 90 percent of the above occurrences has supplied standby powersfrom its own generation and never drawn back the power from MSEB.The TPC has actually drawn standby from MSEB on a large number ofoccasions and on several occasions far in excess of 275 MVA. Thestandby drawn by TPC from MSEB is as under:

“439 MVA highest in 1998-1999

271 MVA highest in 1999-2000

358 MVA highest in 2000-2001

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856SUPREME COURT REPORTS

[2019] 6 S.C.R.

A325 MVA highest in 2002-2003415 MVA highest in 2002-2003

763 MW highest in 2004"

13. It is also pertinent to mention that even after BSES/REL startedBdrawing power from its Dahanu generation station, BSES/REL continuedto purchase approximately 35 percent of TPC’s generation from TPC tosupply energy to BSES/REL consumers. With effect from 1.2.1998, theBSES/REL paid a sum of Rs.3.5 crores per month to TPC as chargesfor standby. The TPC objected and sought the revision of standbycharges, which was fixed at Rs.3.5 crores per month, by writing a letterCto the Government of Maharashtra on 8.7.1998. With effect from1.12.1998, the MSEB revised its tariff by issuing a notice under theagreement between the MSEB and TPC. The charges for standbyfacility were also increased from Rs.450 KVA per month to Rs.550KVA per month i.e., Rs.363 crores per annum equal to Rs.30.250 croresDper month. These standby charges enhanced from Rs.24.75 crore permonth to Rs.30.25 crores per month with effect from 1.12.1998 i.e.,from Rs.297 crores to Rs.363 crores annually. The TPC instead ofrequiring a pro-rata share of the incremental standby charges from BSES/REL purported to divide the amount of Rs.30.25 crores in the ratio of50:50 and demanded a sum of Rs.15.125 crores per month i.e., Rs.181.5Ecrores per annum by way of standby charges from BSES/REL. TheTPC was already recovering Rs.24.75 crores per month through its tariffas said amount was factored in tariff from its customers and additionalrecovery of Rs.3.5 crores was also being made from BSES/REL underthe Principles of Agreement. Thus, the total recovery of Rs.28.25 croresFper month by way of standby charge was already made by TPC from itscustomers as on September 1998. By demanding a sum of Rs.15.125crores per month from BSES/REL, TPC was attempting to demand anadditional sum of approximately Rs.11.625 crores per month from BSES/REL under the guise of standby charges instead of demanding a pro-rata amount of the incremental standby charges of Rs.2 crores.G

14. TPC issued notice dated 30.9.1998 under Schedule VI to theElectricity (Supply) Act, 1948 to the Government of Maharashtraproposing revision of its tariff and other matters. It was indicated in thenotice that it would pay only Rs.181.5 crores per annum and remainingshould be the liability of BSES/REL. It has also been contended on H

behalf of TPC that other revision in tariff had not been proposed byTPC which would otherwise have needed an increase of 6 percent onall consumers in Mumbai. It served a notice on BSES/REL demandingthe aforesaid charges of 35 percent of the component which waspurchased by BSES/REL as a consumer. The standby charges used tobe paid and otherwise included in the tariff. BSES/REL has received 35percent of the energy supplied from TPC as a consumer and for thesame, TPC was recovering an amount of Rs.24.75 crores per monthand an additional sum of Rs.3.5 crores per month. This Court in BSESLtd. v. Tata Power Co. Ltd., (2004) 1 SCC 195 has observed that tariffnotice as being illegal. Since the dispute between the TPC and BSES/REL could not be sorted out, an order dated 22.3.2000 was passed bythe Government of Maharashtra endorsing the Committee’s Report. Videaforesaid order, BSES/REL was directed to pay Rs.9 crores as observedin BSES Ltd. v. Tata Power Co. Ltd. (supra) by this Court.

15. The Electricity Regulatory Commission Act, 1998 (in short‘the Act of 1998’) came to be promulgated which conferred jurisdictionon Maharashtra Electricity Regulatory Commission (in short ‘the MERC’)to determine the tariff of supply of electricity and later on to adjudicatethe dispute between the parties. The dispute came to be referred toMERC by the parties. The order dated 22.3.2000 passed by the StateGovernment has been set aside by the High Court, which decision hasbeen affirmed by this Court in BSES Ltd. v. Tata Power Co. Ltd. (supra).

16. The MERC passed an order on 7.12.2001 directing BSES/REL to bear 25 percent of the standby charges. This order waschallenged by both the parties before the High Court. The High Courtremitted the matter back to MERC and directed BSES/REL to deposit50 percent of the standby amount as an interim arrangement. The matterhad further travelled to this Court in the aforesaid decision namely BSESLtd. v. Tata Power Co. Ltd. (supra).

17. After the matter was remitted, MERC after hearing the partiespassed an order dated 31.5.2004 and directed the BSES/REL to bearapproximately 23 percent of the total standby charges incurred by TPCqua MSEB. While noticing that TPC has already recovered a sum ofRs.24.75 crores per month through its tariff and an additional sum ofRs.3.5 crores per month as per the Principles of Agreement, it wasfound that large part of standby charges has already been recovered byTPC through tariffs and otherwise. Against the demand made on A

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A31.5.2004, both the parties filed an appeal before the APTEL. It washeard by a Bench consisting of Chairman and Technical Member. Theydelivered separate judgments, both of them rejected the contentions ofTPC claiming standby charges in the ratio of 50:50. The Chairmanopined that standby charges should be shared in the proportion of 2:1i.e., TPC paying 2/3[rd] and BSES/REL paying 1/3[rd], while TechnicalBMember held BSES/REL should bear 23 percent while TPC should bearapproximately 77 percent.

18. In view of the divergence of opinion, the matter was referredto the third Member being Judicial Member, who agreed with theconclusion of the Technical Member that BSES/REL should bear 23Cpercent of the standby charges. In view of the majority judgment, theAPTEL passed an order dated 20.12.2006, acknowledging the majorityview of the Judicial Member and the Technical Member and directedthat 23 percent of the standby charges for the period in question shouldbe borne by BSES/REL and balance should be borne by TPC and furtherDdirected refund of the excess amount that was deposited by BSES/RELpursuant to the interim orders passed. The MERC in the appeal hasacknowledged that TPC has withdrawn a sum of Rs.24.75 crores fromits customers through electricity tariff and an additional sum of Rs.3.5crores per month by way of standby charges from BSES/REL did notgive credit for the said sum in the computation of standby charges to theEextent of 23 percent held to be payable by BSES/REL. The appeal ofBSES/REL in respect of the aforesaid was rejected by the APTEL videjudgment and order dated 20.4.2007. TPC filed Civil Appeal No.415 of2007 before this Court. BSES/REL has also filed Civil Appeal No.3229of 2007 aggrieved by the judgment and order dated 20.4.2007 of APTEL.F

19. Shri Gopal Jain learned senior counsel appearing on behalf ofTPC has contended that TPC has not recovered standby charges fromits customers for the facility in excess of 275 MVA out of 550 MVAstandby facility for the period April 1999 to March 2004 provided byMSEB. Thereafter as provided by tariff order dated 11.6.2004, TPCGhas recovered from its customers to the extent of 78 percent of thestandby charges. This Court has granted interim stay on 7.2.2007 andrequired the appellant to furnish bank guarantee in the sum of Rs.227crores and in addition, deposit a sum of Rs.227 crores with the RegistrarGeneral of this Court, which may be withdrawn by respondent no.1subject to their furnishing an undertaking to this Court that in the eventHof this appeal being decided against them, the amount as may be found refundable by them shall be refunded without demur with interest asmay be determined by this Court. The TPC has complied with theseconditions and it is not correct to say that all concerned have compliedwith the impugned order dated 20.12.2006. The amount of Rs.3.5 croresper month was only for the year 1997-1998, though the actual liabilitycame to be Rs.8.25 crores per month, Rs.3.5 crores were fixed so as toavoid disturbance in the tariff in the current year. The MSEB is notproviding standby facility of 1777 MW (TPC’s total installed capacity)nor is REL provided standby facility of 550 MVA by TPC. Therefore,the standby charges cannot be apportioned in the ratio of the total installedcapacity of TPC and REL. The obligation to pay to MSEB for thestandby facility is independent. If the generator for some reason is notable to recover from its customers, it will not be absolved of its obligationto pay the standby charges to MSEB. The liability of the BSES/REL topay for standby charges in 50:50 ratio is absolute and cannot be linkedwith the means of recovery. It would result in disturbing and distortinglevel playing field conditions which are a facet of Article 14 of theConstitution and also distort competition. It is also urged by learnedsenior counsel that it would run contrary to the objects of the Act of1998, in particular, the mandate of Section 29(3) which is extractedhereunder:

“29. Determination of Tariff by State Commission.

(3) The State Commission, while determining the tariff under thisAct, shall not show undue preference to any consumer ofelectricity, but may differentiate according to the consumer’s loadfactor, power factor, total consumption of energy during anyspecified period or the time at which the supply is required or thegeographical position of any area, the nature of supply and thepurpose for which the supply is required.”

20. It was further urged that the prayer was made by BSES/RELbefore the MERC to fix the standby charges payable by BSES/REL(complainant) to the TPC (respondents). Its liability would be morethan Rs.3.5 crores per month. TPC is paying Rs.363 crores as standbycharges to MSEB. On principles of parity and proportionality, the BSES/REL should pay for 275 MVA as the quantum of 275 MVA standby isout of the same block of 550 MVA standby facility given by MSEB.The TPC and BSES/REL should share in the ratio of 50:50. The APTELhas not followed the decision of this Court in BSES Ltd. v. Tata Power A

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ACo. Ltd. (supra). This Court in the aforesaid decision has observed asunder:

“16. The word “tariff” has not been defined in the Act. “Tariff” isa cartel of commerce and normally it is a book of rates. It willmean a schedule of standard prices or charges provided to thecategory or categories of customers specified in the tariff. Sub-section (1) of Section 22 clearly lays down that the StateCommission shall determine the tariff for electricity (wholesale,bulk, grid or retail) and also for use of transmission facilities. Ithas also the power to regulate power purchase of the distributionutilities including the price at which the power shall be procuredfrom the generating companies for transmission, sale, distribution,and supply in the State. “Utility” has been defined in Section 2(l)of the Act and it means any person or entity engaged in thegeneration, transmission, sale, distribution or supply, as the casemay be, of energy. Section 29 lays down that the tariff for theintra-State transmission of electricity and tariff for supply ofelectricity — wholesale, bulk or retail — in a State shall be subjectto the provisions of the Act and the tariff shall be determined bythe State Commission. Sub-section (2) of Section 29 shows thatthe terms and conditions for fixation of the tariff shall be determinedby Regulations and while doing so, the Commission shall be guided B

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by the factors enumerated in clauses (a) to (g) thereof. TheRegulations referred to earlier show that generating companiesand utilities have to first approach the Commission for approvalof their tariff whether for generation, transmission, distribution orsupply and also for terms and conditions of supply. They can chargefrom their customers only such tariff which has been approvedby the Commission. Charging of a tariff which has not beenapproved by the Commission is an offence which is punishableunder Section 45 of the Act. The provisions of the Act andRegulations show that the Commission has the exclusive powerto determine the tariff. The tariff approved by the Commission isfinal and binding and it is not permissible for the licensee, utility oranyone else to charge a different tariff.

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“18. Electricity is not a commodity which may be stored or kept inreserve. It has to be continuously generated and it is so continuously H

generated electricity which is made available to consumers. Anygenerator of electricity has to have some alternate arrangementto fall back upon in the event of its generating machinery comingto a halt. The standby arrangement for 550 MVA made by TPCwas for the purpose that in the event its generation fell short forany reason, it will be able to immediately draw the aforesaidquantity of power from MSEB. Similarly, the arrangement enteredinto by BSES with TPC ensured the former of immediateavailability of 275 MVA power in the event of any breakdown orstoppage of generation in its Dahanu generation facility. Heavyinvestment is required for generation of power. For this kind of aguarantee and availability of power, TPC had to pay charges forthe same to MSEB. This payment was in addition to the chargesor price which TPC had to pay to MSEB for the actual draw ofelectrical energy. The same is the case with BSES qua TPC.The charges paid for this kind of an arrangement whereby a fixedquantity of electrical energy was guaranteed to TPC and BSESat their desire, is bound to constitute a component of the pricewhich they (BSES and TPC) would be charging from theirconsumers towards the cost of the electrical energy actuallyconsumed by them. The determination or quantification of theamount which is payable for this kind of standby arrangementmade in favour of TPC and BSES would, in reality, meandetermination of the price or charges for wholesale or bulk supplyof electricity. It will, therefore, clearly fall within the expression“determine the tariff for electricity, wholesale, bulk, grid or retail”as used in clause (a) of sub-section (1) of Section 22 and also inthe expression “regulate power purchase … including the price atwhich the power shall be procured from the generating companies…” as used in clause (c) of sub-section (1) of Section 22.Therefore, the determination or quantification of the amount whichBSES has to pay to TPC falls within the jurisdiction of the StateCommission under Section 22 of the Act. This legal position isalso reflected by Section 29 of the Act which confers an overridingpower and clearly lays down that notwithstanding anythingcontained in any other law the tariff for supply of electricity —wholesale, bulk or retail — shall be subject to the provisions ofthe Act and shall be determined by the State Commission. Thisclearly ousts the jurisdiction of any other authority to determinethe tariff. It may be noted here that the Act came into force on A

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25-4-1998 and the Maharashtra Electricity Regulatory Commissionwas formed on 5-8-1999. Therefore, it is not possible to acceptthe contention of Shri Nariman that the State Government hadthe authority or jurisdiction on 22-3-2000 to determine or quantifythe charges which BSES had to pay to TPC under the terms ofthe licence granted to the former as this was subsequent to the”formation of the Maharashtra Electricity Regulatory Commission.

19. Shri Nariman has submitted that TPC gave a notice on30-9-1998 of their intention to enhance the charges of standbyfacility provided to BSES from Rs 3.5 crores to Rs 15.125 croresper month and this notice having been given under the SixthSchedule (para I, third proviso) of the Electricity (Supply) Act,1948, the enhanced charges became effective and operative afterthe expiry of 60 days of notice i.e. with effect from 1-2-1998.The submission is that by operation of law the charges for standbyfacility stood revised and enhanced with effect from 1-12-1998.In our opinion, the contention raised has no substance. The legalposition has undergone a complete change with the enforcementof the Electricity Regulatory Commissions Act, 1998. In view ofSection 29 of the Act, the tariff for intra-State transmission ofelectricity and tariff for supply of electricity in wholesale, bulk orretail has to be determined by the Electricity RegulatoryCommission of the State and a licensee cannot by its unilateralaction enhance the charges. The provisions of the Act have anoverriding effect by virtue of Section 52 of the Act and, therefore,any provisions of the Electricity (Supply) Act, 1948, which areinconsistent with the Act would cease to apply and consequently,the provisions of the Sixth Schedule of the said Act can have noapplication now. The Sixth Schedule has been made by virtue ofSections 57 and 57-A of the Electricity (Supply) Act, 1948 andSection 57-A contemplates constitution of a Rating Committee bythe State Government to examine the licensee’s charges for thesupply of electricity. Section 29(6) of the Act specifically laysdown that notwithstanding anything contained in Sections 57-Aand 57-B of the Electricity (Supply) Act, 1948, no RatingCommittee shall be constituted after the date of the commencementof the Act. The effect of Section 29 and the Regulations framedthereunder is that it is no longer open to a licensee or utility tounilaterally increase the tariff. The tariff can be enhanced only after approval of the Commission and charging of an enhancedtariff which has not been approved by the Commission will amountto commission of an offence. Therefore, the notice to enhancethe charges given by TPC, which was subsequent to theenforcement of the Act, can have no legal effect.

20. Shri Nariman has also submitted that even assuming that thestandby charges are a matter relating to tariff as the same ispassed on to the consumers, but the sharing of standby chargesbetween TPC and BSES is not a matter relating to determinationof tariff and, therefore, the Commission can have no jurisdictionto enter into such an exercise under Section 22 of the Act. Thesubmission proceeds on an assumption that the dispute relates tothe sharing of standby charges. In fact, the whole case of BSESis that they are under no obligation to share the charges which arebeing paid by TPC to MSEB for providing them with standbyfacility. It may be noted that the standby facility of 300 MVA wasprovided to TPC in the year 1985 which gradually rose to 550MVA in the year 1990. The licence of BSES was amended in1992, whereunder for the first time, it was provided that theyshould interlink with the system of TPC and ultimately, theirsystems were interlinked on 14-2-1998 in pursuance of the orderpassed by the Government of Maharashtra on 19-1-1998. Thequestion of payment of standby charges by BSES to TPC has,therefore, arisen for the first time in 1998 which is almost 13years after TPC started paying standby charges to MSEB. Insubstance, the dispute is what should be paid by BSES to TPC forthe standby facility provided by it. The strict and narrowinterpretation sought to be placed by the learned counsel so as tooust the jurisdiction of the Commission cannot be accepted as itwill defeat the very object of enacting the Electricity RegulatoryCommissions Act.

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26. An interim arrangement is normally made on a prima facieconsideration of the matter and on broad principles withoutexamining the matter in depth. The matter has been remitted tothe Commission by the High Court by the judgment and orderdated 3-6-2003 and a period of nearly three-and-a-half monthshas already elapsed. Regulation 101 of the Central Electricity A

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864SUPREME COURT REPORTS

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ARegulatory Commission provides that the Commission maynormally dispose of the petitions finally within six months ofadmission. The State Commissions are also expected to followthis time-limit for disposal of petitions. Since the order made bythe High Court is only by way of interim arrangement and theCommission is expected to decide the disputes finally within aBshort period, we do not consider it proper to interfere with theorder made by the High Court in this regard. After the decision ofthe Commission, the equities can be adjusted and the excessamount paid by any party can be refunded to it along with”appropriate interest or can be adjusted in future bills.

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(emphasis supplied)

21. Learned senior counsel has also urged that actual supply ofelectricity and charges paid for actual supply are completely differentfrom the guarantee and charges payable for providing such a guarantee/arrangement. It is further urged that generating capacity comes at aDcost. The Technical Member therefore wrongly assigns Zero cost forthis generating capacity. This is an error apparent in the impugned orderwhere the spinning reserve has been treated as zero cost.

22. Learned senior counsel has relied on the decision in BinaniZinc Ltd. v. Kerala State Electricity Board, (2009) 11 SCC 244, toEcontend that notice dated 30.9.1998 was legal and valid. The relevantportion of the aforesaid decision is extracted hereunder:

“28. Thus, it would be one thing to say that upon coming intoforce of the 1998 Act the provisions contained in the 1948 Actwhich are found to be inconsistent with the former shall give wayFthereto but it is another thing to say that although no Commissionis constituted, the Board would have no jurisdiction at all to framea tariff.

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33. It is of some significance to note that the Commission in termsGof clauses (a) and (b) of sub-section (2) of Section 29 of the 1998Act are required to follow the principles provided for under Sections46, 56 and 57-A of the 1948 Act as also the Sixth Scheduleappended thereto. The 1998 Act, therefore, recognises theprinciples contained in the 1948 Act also.

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41. We have, however, no hesitation in finding that the StateElectricity Board had the requisite jurisdiction to revise a tariff tillsuch time as the Commission was constituted and the purposes ofthe 1998 Act could be achieved through it. Till the time theRegulatory Commission was not constituted by the State of Kerala,the power to determine tariff remained with the Board under theElectricity (Supply) Act, 1948 as it was not repealed by theElectricity Regulatory Commissions Act, 1998. Parliament couldnot have intended to bring about a situation where no authoritywould be empowered to determine the tariff between the date ofcoming into force of the ERC Act, 1998 and the constitution ofthe Commission. It is only after the Regulatory Commission isconstituted that it will be the sole authority to determine the tariff.”

No case for interference in Civil Appeal No. 3229 of 20017 ismade out which is barred by limitation.

23. Shri J.J. Bhatt learned senior counsel appearing on behalf ofBSES/REL has contended that TPC and MSEB entered into anarrangement on 12.3.1985. There was an independent agreementbetween TPC and BSES/REL entered into on 31.1.1998 and it has noconnection with the agreement between the TPC and MSEB.Notwithstanding the fact that MSEB supplied TPC with standby poweror not, TPC was bound to supply BSES/REL from its own generationstandby power. On approximately 90 percent of the occasions, BSES/REL has utilised standby power of TPC. It has exceeded on someoccasions more than 275 MVA and has gone up to above 400 MVA,whereas TPC has drawn standby from MSEB. The Government passedan order on 19.1.1998, considering several factors and determined Rs.3.5crores per month as standby charges. The payment of standby chargesby BSES/REL to TPC was independent of the charges to be paid byTPC to MESB. The determination has been made on the basis of variousfactors. Basis of 50:50 sharing has been rightly rejected by the MERCas well as by the APTEL. The decision of spinning reserve by theTechnical and Judicial Members at zero levels is justified in the facts ofthe case. The submission made on the basis of Binani Zinc Ltd. v.Kerala State Electricity Board (supra) is not tenable. The totalgenerating capacity of TPC was 1777 MW, whereas that of BSES/RELis 500 MW. It is incorrect that TPC has recovered only 50 percent ofstandby charges payable to MSEB. The standby charges of Rs.24.75

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Acrores per month i.e., Rs.297 crores per annum were factored into TPCtariff in addition to the amount of Rs.3.5 crores per month was paid byBSES/REL. It wanted to realise 75 percent of the charges from BSES/REL by claiming a 50:50 ratio sharing. The TPC has spinning reservesurplus of 317 MVA with regard to its total capacity of 1777 MW. Itwas not MSEB but TPC which has provided standby support to BSES/BREL on 90 percent occasions. It is further contended that the appealfiled by BSES/REL should be allowed and the excess amount has beenworked out by the APTEL. The same may be suitably reduced.

24. The period in dispute is 1.4.1999 to 30.9.2004. It is apparentthat TPC has an agreement with MSEB for standby supply of 550 MVA.CInitially, in 1985, TPC has increased its generating capacity wherebyreducing the off-take of electricity from MSEB to zero. In order tocompensate MSEB for loss of revenue caused as a result of the stoppageof purchase of electricity, the MSEB entered into an arrangement withTPC whereby TPC was required to pay to MSEB initially for 300 MVADstandby to be increased by 50 MVA every year. The standby wasfreeze in the year 1990 when the parties agreed not to increase thestandby beyond 550 MVA.

25. The standby facility was made available to TPC in the eventthere was a failure of power in TPC’s generation of 1777 MW. BSES/EREL used to purchase electricity from TPC between 29 percent to 37percent from 1998 to 2006. The standby charges for aforesaid purchasewere factored into the tariff charged from its retail customers. Thestandby charges to the extent of supply were borne by BSES/REL foroptimum supply from TPC when interconnectivity was provided atBorivali point as per the Government order. The dispute arose betweenFTPC and BSES/REL as to whether BSES/REL entitlement to draw 275MVA from TPC in the case of outage and failure of electricity supply,the charges which were required to be paid were over and above thecharges that would be paid for energy actually drawn. At the relevanttime, TPC was paying an amount of Rs.24.75 crores per month i.e.,GRs.297 crores per annum to MSEB by way of standby charges whichwas built into the tariff. The said amount was recovered by TPC fromits customers who in turn recovered it from their retail consumers.

26. The Government of Maharashtra formed a Committee toresolve the issue of quantum of standby charges required to be paid byHBSES/REL to TPC. The Government of Maharashtra passed an order dated 19.1.1998 whereby stipulating a sum of Rs.3.5 crores per monthshould be paid by BSES/REL to TPC by way of standby charges. Thedecision was taken by the Committee inter alia considering the generationby TPC and MSEB. The order was based upon six factors - generationof TPC and MSEB; electricity supplied by TPC to BSES/REL as aconsumer; TPC’s standby supply from MSEB; charges paid for saidsub-standby supply by TPC to MSEB; the financial position of TPC andBSES/REL; and stability of better Mumbai grid.

27. The main principles on the basis of which Agreement was tobe reached between TPC and BSES/REL were settled. As per clause2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220KV interconnection at Borivali at Rs.3.5 crores per month. The partieshad agreed to cooperate in order to ensure that Government order dated19.1.1998 is implemented in the spirit of it. A detailed power supplyagreement was to be entered into by 21.4.1998. The agreement couldnot be executed as consensus with respect to several aspects could notbe reached. The order dated 22.3.2000 has been set aside by the HighCourt, which order was not interfered with by this Court and the casewas remitted for the decision to MERC, which is an expert body. Thepower was conferred upon the MERC vide notification dated 27.10.2000under the provision of Section 22(2)(n) of Electricity RegulatoryCommission Act, 1998, to adjudicate upon the disputes and differencesbetween licensees and utilities. On 4.12.2000, BSES/REL had filed anapplication to MERC in respect of sharing of standby charges betweenBSES/REL and TPC. The prayers were made to regulate action andstandby charges levied by them and to fix and determine the standbycharges payable by them.

28. Ultimately, the APTEL by the impugned orders has decidedthe matter. The Chairman has held that liability to be in proportion of 2:1tariff, whereas Judicial Member has concurred with the TechnicalMember when Technical Member differed with the opinion of Chairman,but the fact remains that MERC, as well as the APTEL, concurrentlyhave not accepted the case of the TPC that standby charges should beborne in ratio of 50:50. The decisions of MERC, as well as the Technicaland Judicial Members, are found to be correct while terming ratio as23:77 with respect to BSES/REL and TPC respectively.

29. In view of the aforesaid facts and circumstances of the caseand, in particular, several factors were required to be taken into AB

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Aconsideration, on that basis aforesaid figure has been worked out. It hasalso been considered that electricity used to be purchased by BSES/REL from TPC to the aforesaid extent and the standby charges used tobe realised which were factored in the tariff, which liability was ultimatelypassed on to the retail consumers. Even when the Principles ofAgreement have been reached as to standby charges though it wasBsubject to revision basis was fixed which could not have been departedfrom, it was on consideration of several aspects. The ratio had beenappropriately worked out in the most equitable manner by applying thelevel playing field. Considering the standby charges of Rs.24.75 croresrecovered by MSEB from TPC with effect from 1.10.1996 and as perCthe Government order and Principles of Agreement Rs.3.5 crores wasadditionally being available and a difference of standby which was madeto increase the liability Rs.24.75 crore per month to Rs.30.25 crores permonth. Thus, the decision of the Technical and Judicial Members isfound to be appropriate and reasonable while working out the percentageof the standby charges to be paid by BSES/REL to TPC for the period inDquestion.

30. This Court in BSES Ltd. v. Tata Power Co. Ltd. (supra) heldthat the tariff notice dated 30.9.1998 to be illegal and had no legal effect.It was held that the charges paid for this kind of arrangement, wherebya fixed quantity of electrical energy was guaranteed to TPC and BSES/EREL at their desire, is bound to constitute a component of the pricewhich they (BSES and TPC) would be charging from their consumerstowards the cost of the electrical energy actually consumed by them.This Court also held that the State Government had no authority orjurisdiction on 22.3.2000 to determine or quantify the charges whichFBSES had to pay to TPC under the terms of the license granted to theformer. It was further observed that Commission to decide the disputeearly. A clarificatory order was passed by this Court on 9.1.2004considering the decision in Binani Zinc Limited (supra). The petitionwas filed by TPC for review. On the basis of the decision in BinaniZinc Limited (supra), the same was dismissed. The MERC has passedGthe order on 31.5.2004, the following observations were made by MERC:

“94. In this context, the Commission is also of the view that,since the standby facility ensures the reliability of the Mumbaisystem and thus benefits all the consumers in the Mumbai area,they have to contribute towards the cost of standby through theHmechanism designed by the Commission. TPC has been recovering the cost of standby that was applicable in January1998 i.e., Rs.24.75 crore per month, from its consumers throughits tariff, viz. fixed charges and energy charges. This aspect hasbeen dealt with in detail subsequently in this Order. Now, dependingon the ratio of sharing of the standby cost determined by theCommission, the consumers of TPC and BSES will have to paythe cost applicable to their respective licensees, in the mannerdecided by the Commission.

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225. The Commission is, however, of the view that the issue ofwhether the ratio should be applicable on the entire standbycomponent or only on the incremental portion above Rs.24.75crore, and the recovery of the same from the consumers, is amatter of tariff, which is within the Commission’s jurisdiction asheld by several Courts, including the High Court judgment on theappeal filed by TPC and BSES on the Commission’s Order in thematter of sharing of standby charges.

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237. While determining the Annual Revenue Requirement (ARR)of TPC in the separate case before it, the Commission isconsidering all the payments to be made to or by the respectiveParties and the interest and delayed payment charges, and isrestating the Clear Profit of BSES and TPC to reflect the truepicture, in line with the Commission’s decision on the issue ofsharing of standby charges. This is being done from FY 1998-99,as the dispute arose during that year. The Commission has drawnfrom the available reserves and surpluses, wherever required, toensure that TPC and BSES get their due Reasonable Return on ayear-on-year basis, in line with the provisions of Schedule VI.Having ensured that the Clear Profit matches the ReasonableReturn on a year-on-year basis, there is no requirement for anyadditional recovery of any amount from the Parties. The Utilitieshave to draw from their reserves, as would be elaborated by theCommission, to make the payments as directed by it.

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239. Para 26 of the Supreme Court ruling states, inter alia, that“After the decision of the Commission, the equities can be adjusted A

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and the excess amount paid by any party can be refunded to italong with appropriate interest or can be adjusted in future bills.

240. The Commission is of the view that interest should berecovered from all parties to the dispute for the amounts paidshort vis-à-vis the actual payments due from each party, inBaccordance with the Commission’s computations. TheCommission believes that this approach is equitable to all the Partiesconcerned, and is appropriate in the light of the issues andcircumstances of this matter which has been under dispute forsuch a long time. Hence, the Commission has computed theinterest payable by BSES to TPC for delayed payments in FYC1998-99 and FY 1999-00, and the interest payable by TPC toBSES on the excess amounts deposited by BSES with TPC foronward payment to MSEB. The Commission has considered thefact that the interest rate on delayed payments to MSEB is 18%for overdue over 6 months. However, in this instance, the paymentDliabilities as between TPC and BSES have been crystallized onlynow through this Order of the Commission. Moreover, the depositsmade by BSES earlier were consequent to Court Orders and werenot regular payments. Hence, taking into account the prevailingmarket interest rates (SBI PLR) in each of these years, the net(simple) interest payable by BSES works out to Rs.8.37 crore, asEshown in the table below, which can be adjusted against the refunddue to BSES from TPC.”

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31. The MERC directed sharing of standby charges payable toMSEB between TPC and BSES/REL on the basis of their respectivepeak load requirements and directed TPC to pay to BSES/REL a sum ofFRs.315.30 crores within 15 days. It was also observed that the quantumof standby capacity is related to the larger unit size of the generation ineither system. We have no hesitation to accept the majority opinion thatstandby facility provided by TPC was out of its own generating capacityand 90 percent of the times energy has been drawn by BSES/REL fromGTPC. Thus, there is no justification for TPC to claim 50:50 percent sharingof the standby charges in the facts of this case on consideration of variousfactors the decision has been reached.

32. It appears that there was no stay on the order passed by theAPTEL by this Court. The plea of non-implementation of the orderHtaken by TPC is not understandable. It was only the bank guarantee which was submitted by TPC, in addition, to deposit of a sum of Rs.227crores with the Registrar General of this Court. The implementation ofthe order of the APTEL would mean that the determination made by ithas been acted upon and corresponding liability factored into tariff hasbeen passed on the customers and actual consumers and realised fromthem since there was no such interim stay on implementation of theorder. We find force in the submission raised on behalf of BSES/RELthat order of APTEL has already been worked out even otherwise it isfound to be just and equitable. No case for interference with the sameis made out.

33. There is no question of applicability of Article 14 of theConstitution. As a matter of fact, what was agreed in the Principles ofAgreement more amount than that has been ordered to be paid on thebasis of principles of business equilibrium and other factors as notedabove.

34. It may be relevant to mention here that I.A. No.59365 of2019 and I.A. No. 59356 of 2019 have been filed for substitution ofname of Reliance Energy Limited with the agreement of learned counselfor the parties, the name of Adani Electricity Mumbai Limited is substitutedas respondent and as appellant in C.A. No. 415/2007 and C.A. No.3229/2007 respectively.

35. Resultantly, we find there is no case made out for interferencein either of the appeals filed by TPC and BSES/REL. The order passedby Technical and Judicial Members of APTEL is hereby upheld. Theamount which is payable to Reliance Energy Limited, deposited orsecured by way of bank guarantee by TPC as per order dated 07.02.2007along with interest lying with the Registrar of this Court as per agreementof the Counsel for Reliance Energy Limited and Adani Electricity MumbaiLimited be paid to Adani Electricity Mumbai Limited. The appeals beingdevoid of merits are hereby dismissed. Consequently, IA Nos.59365/2019 & 59374/2019 in CA No.415/2007 and IA Nos.59356/2019 &59380/2019 in CA No.3229/2007 are disposed of. Any other IA, if any,also stands disposed of. No costs.

Appeals dismissed.

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