Summary
DISCOMs sought to withdraw their power-purchase approval application after final hearing, thereby also ending the generator’s tariff proceeding. The Court upheld APTEL’s direction to decide both applications on merits. The DISCOMs’ reversal after inducing the generator’s reliance was arbitrary and constituted legal malice. Final capital cost, tariff and approval remained with the regulator. The appeal was dismissed with Rs.5 lakh costs, six months to decide, and immediate interim purchases at Rs.3.82 per unit.
Issues
- Whether DISCOMs could withdraw the approval proceeding in these circumstances and thereby defeat the generator’s tariff application.
- Whether regulatory-approval requirements or disputed capital cost justified ending the proceedings.
- Whether the State instrumentalities’ change of position and failure to follow interim orders were permissible.
Provisions considered
- Sections 61 and 86(1)(b), (f), Electricity Act, 2003The Commission retained responsibility for procurement approval, fair terms, public interest, tariff scrutiny and resolution of disputes; the remand did not pre-approve the claimed costs or tariff. (¶¶ 88-94, 104, 109)
- Sections 62 and 64(1), Electricity Act, 2003The generating company could itself seek tariff determination; dismissal of its application merely as a consequence of the DISCOMs’ withdrawal was unjustified. (¶ 99)
- Section 21(5), Andhra Pradesh Electricity Reform Act, 1998The provision covered agreements made with consent or subject to consent; the pending application sought the requisite regulatory approval. (¶ 95-96)
- Article 14, Constitution of IndiaState instrumentalities remained bound by non-arbitrariness and public interest in contractual dealings; the unexplained reversal lacked a rational basis. (¶ 100-108)
Held
- The State and DISCOMs repeatedly committed to taking the project’s entire output and had excluded the generator from competitive bidding on that basis. The generator altered its position in reliance. On this conduct and the advanced stage of the linked proceedings, withdrawal of the approval application was impermissible. (¶ 73-87)
- The authorities concerning withdrawal of a licence application or an ordinary suit were distinguishable. The present quasi-judicial proceedings involved the other party’s rights and linked claims, and had already been heard finally and reserved for orders. (¶ 80-87)
- Disputed capital cost did not justify withdrawal. The Commission was not bound by the generator’s estimates and had to consider each party’s submissions, public interest, statutory factors and regulations. APTEL required merits decisions, leaving regulatory control intact. (¶¶ 88-99, 104, 109)
- The reversal relied on grounds already available when the agreements were made and threatened to waste substantial private and public resources. It was arbitrary, irrational and unreasonable, amounting to legal malice. The Court did not find it necessary to determine the separate allegations of personal mala fides. (¶ 100-108)
- Merely applying to vacate an interim order did not excuse non-compliance. The Court deprecated the DISCOMs’ conduct but refrained from initiating contempt action. The appeal was dismissed with Rs.5 lakh costs; both applications had to be decided within six months, and purchases at Rs.3.82 per unit had to resume forthwith pending decision. (¶ 110-114)
Result
Appeal dismissed with Rs.5 lakh costs. Commission to decide both applications on merits within six months; DISCOMs to resume power purchases forthwith at interim Rs.3.82 per unit until then. Final regulatory approval, cost and tariff remain for determination.