Summary
A generating company supplying power to distribution utilities in Haryana, Odisha and Bihar from one plant was granted Change in Law compensation for shortfall in linkage coal, with the CERC directing that linkage coal and the cost of alternate coal be apportioned pro rata among all three beneficiaries; APTEL affirmed. The Supreme Court dismissed the appeals of the Haryana utilities and GRIDCO under Section 125 of the Electricity Act, 2003: no substantial question of law arose, the concurrent findings of two expert bodies interpreting the fuel supply documents could not be disturbed, coal linkage and fuel supply agreements were for the plant as a whole and not procurer-specific, and no beneficiary could claim priority over linkage coal on the basis of an earlier agreement or its recital of fuel source.
Issues
- Whether an appeal under Section 125 of the Electricity Act, 2003 against concurrent findings of the CERC and APTEL on the apportionment of linkage coal among beneficiaries raises a substantial question of law warranting interference.
- Whether firm and tapering coal linkage and the fuel supply agreement with Mahanadi Coalfields Limited were allocated to the Haryana PPA specifically, so that the cost of imported, open market or tapering coal used to meet a shortfall should fall only on the Odisha and Bihar beneficiaries, or whether the coal was allocated to the power plant as a whole and is to be apportioned pro rata among all beneficiaries.
- Whether the Haryana utilities, having accepted and paid bills under the CERC's earlier order devising a pro rata formula, could later challenge the pro rata apportionment.
- Whether GRIDCO, whose PPA was a cost-plus tariff arrangement under Section 62, was a necessary or proper party to Change in Law petitions concerning PPAs concluded under Section 63, and whether it had a first right over firm linkage coal by reason of its earlier PPA.
Provisions considered
- Section 125, Electricity Act, 2003An appeal to the Supreme Court under Section 125 lies only on the grounds available under Section 100 of the Code of Civil Procedure, 1908, that is, on a substantial question of law. The Court held that the appeals, which challenged concurrent findings of the CERC (on two occasions) and APTEL based on interpretation of documents, raised no substantial question of law, though it dealt with the merits because the appeal had been pending since 2020. (¶¶ 18, 22, 23, 24, 25, 26)
- Section 100, Code of Civil Procedure, 1908Section 100 permits an appeal only where the case involves a substantial question of law. Through Section 125 of the Electricity Act, this standard governs appeals from APTEL to the Supreme Court; the Court found that the asserted question of interpretation of documents did not amount to a substantial question of law. (¶¶ 18, 23, 25)
- Sections 62 and 63, Electricity Act, 2003Section 63 provides for determination of tariff through a bidding process while Section 62 provides for cost-plus tariff determination; the two proceedings are entirely different. Since GRIDCO's PPA was under Section 62 whereas the Change in Law petitions concerned PPAs concluded under Section 63 with the Haryana and Bihar utilities, there was no occasion to implead GRIDCO in those petitions. (¶¶ 10, 41, 42, 43)
- Section 79, Electricity Act, 2003The generating company's petitions for Change in Law compensation and for recovery of supplementary bills were filed before the CERC under Section 79, including Section 79(1)(b) and (f), read with the PPA provisions; the CERC's orders in those petitions were the subject of the appeals. (¶¶ 4.15, 4.24, 4.25)
Held
- Where expert bodies such as the CERC, APTEL and the Central Electricity Authority have taken a particular view after considering the relevant material, the Court should be slow to interfere; unless the expert bodies failed to consider mandatory statutory provisions, or their decisions rest on extraneous considerations or are ex facie arbitrary and illegal, it is not appropriate for the Court to substitute its view for theirs. With concurrent findings of fact by the CERC on two occasions and by APTEL, interference is permissible only if the findings are perverse, arbitrary or in violation of statutory provisions. (¶¶ 19, 20, 24)
- An appeal under Section 125 of the Electricity Act, 2003 is permissible only on the grounds specified in Section 100 CPC, that is, on a substantial question of law. Unnecessary challenges by distribution companies and generators to well-reasoned concurrent orders of the regulatory commissions and APTEL prolong litigation, impose heavy carrying costs that are passed on to end-consumers, and need to be curbed; despite earlier observations to this effect the Court continues to be flooded with such litigation. A contention that interpretation of documents is involved does not by itself raise a substantial question of law. (¶¶ 21, 22, 23, 25)
- The firm and tapering coal linkage, the letters of assurance and the fuel supply agreement with Mahanadi Coalfields Limited were for the power plant as a whole and not for any particular PPA or procurer: the fuel supply agreement states that the coal is meant for use at the 3 x 350 MW plant and that the annual contracted quantity is in proportion to the generation covered under all long-term PPAs, the Standing Linkage Committee minutes record that the tapering linkage was for all three beneficiaries, and the coal company confirmed that in the case of multiple PPAs coal is released against the total PPA capacity and not bifurcated PPA-wise. The concurrent findings that linkage coal, and the cost of procuring alternate coal to meet a shortfall, must be apportioned pro rata among all beneficiaries in proportion to the power supplied to them were upheld; allocating the linkage coal to the Haryana utilities alone would make the Odisha and Bihar beneficiaries cross-subsidise Haryana. (¶¶ 31, 32, 33, 34, 35, 40, 45)
- The Haryana utilities did not challenge the CERC's earlier order in Petition No. 79, which devised a formula for the energy charge rate requiring pro rata allocation of coal among all three beneficiaries, and paid the bills raised under it until June 2016 before disputing pro rata allocation. Following the Court's earlier finding in Uttar Haryana Bijli Vitran Nigam v. Adani Power (Mundra) that the Haryana utilities, as instrumentalities of the State, cannot approbate and reprobate or change their stand after final orders of the CERC, no merit was found in their appeal. (¶¶ 31, 36, 38, 39, 40)
- GRIDCO was neither a necessary nor a proper party to the Change in Law petitions: its PPA was a cost-plus arrangement under Section 62 of the Electricity Act whereas the petitions concerned PPAs concluded under Section 63, which are entirely different proceedings, and the tariff payable by GRIDCO had been separately determined by the CERC under the CERC (Terms and Conditions of Tariff) Regulations, 2009 in proceedings that went up to APTEL. (¶¶ 41, 42, 43)
- Coal supply from all sources must be apportioned among all the beneficiary distribution companies in proportion to the energy supplied to them. No beneficiary can claim priority over linkage coal or supply of power on the basis of the earlier date of its agreement or the recital in its PPA as to the source of coal; GRIDCO's claim to a first right over the firm linkage because its PPA was executed and operationalised first was therefore rejected. (¶¶ 44, 45)
Result
Both appeals dismissed as without merit; APTEL's judgment and order dated 20.12.2019 in Appeal No. 135 of 2018 and Appeal No. 54 of 2019, upholding the CERC's order directing payment of the supplementary bills with late payment surcharge on a pro rata apportionment of linkage coal, upheld; pending applications disposed of.