Andhra Pradesh High Court - Amravati
M/S Tata Power Renewable Energy ... vs Union Of India on 17 June, 2021
THE HON'BLE SRI JUSTICE M.GANGA RAO
WRIT PETITION No. 674 OF 2021
ORDER:
1. The petitioner, M/s.Tata Power Renewable Energy
Limited, filed this writ petition, under Article 226 of the
Constitution of India, to quash the Requests for Selection
(RfS) dated 30.11.2020 for a capacity of 6400 MW as well as
the draft Power Purchase Agreements (PPA) issued by
respondent No.4 and direct respondent No.4 to issue fresh
Requests for Selection, strictly in accordance with the
Guidelines for Tariff Based Competitive Bidding process for
procurement of power from Grid connected Solar voltaic
power projects dated 03.08.2017 issued under Section 63 of
the Electricity Act, 2003 (for short 'the Act').
2. The 3rd respondent Government had taken a decision to
provide 9 hours day time free power supply to 18.37 lakhs
agricultural consumers in the State and issued G.O.Ms.No.5
for establishing APGECL (4th respondent), which is 100%
subsidiary of AP GENCO to act as Nodal Agency for
procurement/establishing 10,000 MW solar power projects to
provide free power to the agricultural consumes. Accordingly,
the 3rd respondent has issued G.O.Ms.No.18 dated
15.06.2020 formulating the scheme to provide 9 hours day
time power supply to the agriculture sector on sustainable
basis, has decided to implement the solar power projects in
the State and issued operational guidelines for
implementation of the scheme. The 4th respondent shall be
the executing Agency for the project and shall take action to
set up 10,000 MWs solar power capacity in a phased manner
in order to provide 9 hours day time free power supply to
agriculture consumers and connect the scheme to the Grid.
The 4th respondent shall procure the power through
competitive bidding and shall monitor progress of the 10,000
MWs solar initiatives in all aspects by putting an appropriate
mechanism in place. The 4th respondent shall be the nodal
agency for developing solar parks under Ultra Mega Solar
power projects scheme and UMREPP scheme of the
Government of India and APSPCL shall provide required
assistance to the 4th respondent. The 4th respondent shall
prepare the DPR's and submit the same to the MNRE for
obtaining Central Financial Assistance and it shall be
responsible for development of solar parks either through
solar power developer or any agency with the grants received
from MNRE. The solar power developer shall be responsible
for development of solar project and internal evaluation
infrastructure within the solar park as well as their annual
Operation & Maintenance (O&M). For transparent bidding
process, a purchase committee is constituted. The purchase
committee shall conduct the bid process, including issue of
bid documents, conducting pre-bid meetings, initiating bids
from developers and evaluation of bids received from the
bidders. After evaluation of the tenders, the purchase
committee shall submit their recommendations to the Tender
approval Committee. The bids shall be invited under BOT
mode with flat tariff of 15 years and prefixed reduced Tariff
thereafter to meet O&M and other expenses for the balance
period of 15 years. The Solar project will be transferred to the
4th respondent at the end of useful life of the project. The 3rd
respondent-Government through 4th respondent shall pay
monthly energy charges to the Solar Power Developers, energy
charges will be paid to the projects from the date of COD for a
period of 30 years (fixed Tariff for 15 years and prefixed
reduced charges from 16th year). The 4th respondent is
permitted to lease the lands to solar power developers by
collecting annual lease charges (INR 31,000 per acre per
annum). The 4th respondent shall enter into separate
agreements with the licensees to supply and distribute the
power to the end-consumers on payment of cost/charges as
approved by the APERC as per the appropriate guidelines
issued by the State Government under Section 108 of the
Electricity Act, 2003 from time to time. On 30.11.2020, the
4th respondent issued impugned RFS and the impugned draft
PPA pertaining to the project and invited bids from the solar
power developers, duly fixing last date for submission of bids
was 28.12.2020.
3. The case of the petitioner is that the petitioner -
M/s.Tata Power Renewable Energy Limited is a company
incorporated under the Companies Act, 1956 and a
generating company within the meaning of Section 2 sub-
section 28 of the Act. The petitioner claims to be the genuine
prospective bidder and states that it is a wholly owned
subsidiary of the Tata Power Company Limited (TPC) and it is
technically and financially eligible to participate in the
bidding process. But the impugned RfS and draft PPA are
issued contrary to the provisions of the Electricity Act and
competitive bidding guidelines dated 03.08.2017 issued by
the Central Government under Section 63 of the Act and
thereby the competitive bidding process lacks its
transparency. Hence, it could not participate in the bidding
process as it is prejudicial to the petitioner's right to
participate.
4. The further case of the petitioner is that the 4th
respondent issued impugned RfS inviting bids from Solar
Power Developers (SPD) for development of 6,400 MW Grid
connected Solar Photo Voltaic Ultra Mega Power Project
spread over 10 Solar parks in the State of Andhra Pradesh in
violation of provisions of the Act and guidelines for Tariff
based competitive bidding process for procurement of power
from Grid connected Solar photo voltaic power projects dated
03.08.2017 (for short hereinafter called as 'Competitive
Bidding Guidelines) framed by the 1st respondent in exercise
of power under the provisions of Section 63 of the Act. As per
the scheme, the 4th respondent issued impugned RfS and
impugned draft PPA seeking to create a parallel Generation,
Transmission and Distribution system in the State of Andhra
Pradesh in gross violation of the provisions of the Electricity
Act, 2003 promulgated by the Parliament.
5. This Court, on 07.01.2021, upon hearing the parties
while ordering notice before admission, granted interim
direction directing the respondents not to enter into any
agreements in relation to the impugned RfS and draft PPA
with the successful bidders, however, the respondents are at
liberty to proceed with the finalization of bids. Thereafter, the
4th respondent filed I.A.No.2 of 2021 seeking to vacate the
interim order.
6. The 4th respondent filed its counter mainly stating that
the Government of Andhra Pradesh has proposed to establish
10000 MW of solar power projects with a view to provide 9
hours day time free power supply to the agricultural
consumers on a sustainable basis while reducing the
subsidiary expenditure to the State Government.
Accordingly, the Government of Andhra Pradesh issued
orders vide G.O.Ms.No.5 dated 15.02.2020 for establishment
of 4th respondent as a 100% subsidiary of AP GENCO as
nodal agency for procuring and establishment of 10000 MW
of solar power projects in the State to provide the same free of
cost to all 18.37 lakh agricultural consumers in the State.
The Government of Andhra Pradesh has issued G.O.Ms.No.18
dated 15.06.2020 designating the 4th respondent to
implement the scheme. The 4th respondent has prepared bid
documents and issued tender for procurement of solar power
after judicial preview as required under the Andhra Pradesh
Infrastructure (Transparency through Judicial Preview) Act,
2019.
The present scheme of free power to the farmers
envisages that the State through the 4th respondent shall pay
monthly energy charges to the solar power developers. The
4th respondent would provide this power to the agriculturists
at free of cost by using the network of TRANSCO and
DISCOM duly conforming with the statutory requirement of
payment of applicable network charges for such use of
network. Through this scheme, the Government of Andhra
Pradesh proposes to replace the current system of providing
subsidy to the distributing licensee by a system of providing
power as required by the agricultural consumers at free of
cost. As per this scheme, the State has issued "10.Request
for Selection (RfS) dated 30.11.2020". The 4th respondent
placed the tender documents in public domain by the judicial
preview authority which has sought for comments from the
public/stakeholders. In response, the petitioner's company,
M/s.Tata Power Company Limited, has submitted bids'
comments on the conditions of tender document which
includes draft PPA, etc. However, the petitioner company has
not submitted its objections as alleged non-compliance of
provisions of Section 63 of the Act together with competitive
bidding guidelines dated 03.08.2017 issued by the
Government of India. The petitioner being a subsidiary of the
said company has knowledge of the suggestions and
comments made by the principal company. The petitioner
having knowledge of issuance of bidding process all through
did not choose to raise the present objection till the expiry of
bids submission date. Only with an intention to cause hurdle
to the project bidding process, the petitioner has filed the
present writ petition.
The provisions of Section 63 of the Act are not
applicable to the subject biding process. In fact, Section 63 is
another limb of principal section 62 of the Act. As per Section
62 of the Act, the appropriate commission shall determine the
tariff in accordance with the provisions of the Act for supply
of electricity by a generating company to the distribution
licensee. The generating company is not intended to supply
power to the licensee. The 6th respondent commission has no
power to determine tariff. Once Section 62 is not applicable
by natural corollary, the implication of Section 63 is also
ruled out. As such, the bidding process undertaken by the
4th respondent as nodal agency of 3rd respondent, the
Government of Andhra Pradesh, is a general bidding
procedure only to have fair competition and transparency
dehors to the said guidelines issued by the Government of
India. The 4th respondent is a nodal agency of Government of
Andhra Pradesh and is not supplying power to DISCOM, but
providing power free of cost to 18.37 agricultural consumers
in the State. Therefore, the provisions of Section 63 of the Act
are not applicable to the subject bidding process.
The main issue in the instant case is only whether the
subject bidding process would come within the ambit of
Sections 62 and 63 of the Act. As the subject bidding process
does not fall within the definition of 'supply or distribution
licensee' or 'supply to consumers for consideration' as defined
under the Act. The implications of Regulatory commission to
exercise its powers either under Section 62 or under Section
63 does not arise. As the 4th respondent is proposed to
provide power secured from the generators to agriculturists at
free of cost by using the network of AP TRANSCO and AP
DISCOMs by paying network applicable charges as prescribed
by the 6th respondent Commission as per Section 42 of the
Act. The provisions of Section 86 of the Act deals with the
functions of State Commission. The Commission shall
discharge the functions namely, determine the tariff for
generation, supply, transmission and wheeling of electricity
as the case may be within the State and regulate the
electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be
procured from the generating companies or licensees or other
than through agreement for distribution and supply within
the State. Therefore, the provisions of Sections 62, 63 and 86
read together lead to a conclusion that implication of
regulatory commission and to follow the competitive bidding
guidelines issued by the Government of India comes into
operation only when the power is to be procured by the
distribution licensees to supply by sale to consumers.
Therefore, the grounds urged in the writ petition are
unsustainable.
The petitioner claims to be a prospective bidder having
not participated in the judicial preview proceedings at a stage
prior to finally issuing the tender document without raising
the present objection and without submitting its bid, is
precluded from raising the instant plea at this stage. It has
no locus standi to raise the present plea. The writ petition, as
seen from its averments, is in the nature of Public Interest
Litigation saying that there is alleged violation of certain
provisions of law in inviting the bids under the subject tender.
The petitioner or any other person has every liberty to
approach the 6th respondent Commission for appropriate
directions under Section 129 of the Act and the writ petition
is not maintainable and deserves to be dismissed at the
threshold.
7. Heard Sri D. Prakash Reddy, learned senior counsel
appearing for Sri Kilaru Nithin Krishna, learned counsel for
the petitioner on record; Sri N. Harinath, learned Assistant
Solicitor General appearing for the respondents 1 & 2;
Sri P. Sri Raghuram, learned senior counsel appearing for 8th
respondent; Sri S.Sriram, learned Advocate General
appearing for 4th respondent; Sri V.R.N. Prasanth, learned
counsel, appearing for 6th respondent; and Sri Y. Nagi Reddy,
learned standing counsel, appearing for the respondents 5, 7
& 8. None appeared for 3rd respondent and no counter is
filed.
8. To avoid repetition of the case of the parties and
submissions made on their behalf, this Court, felt it
appropriate to deal with their respective cases and
submissions, while answering the issues.
9. Having regard to the pleadings of all the parties and
submissions of learned counsel, the following issues arise for
consideration:
1) Whether the petitioner has locus standi to question
the impugned RfS and draft PPA before this Court?
2) Whether the impugned RfS and draft PPA are
amenable for judicial review by this Court exercising
power under Article 226 of the Constitution of India?
3) Whether the provisions of the Act and the guidelines
for tariff based competitive bidding process for
procurement of power from grid connected solar
photo voltic power project dated 03.08.2017 issued
under Section 63 of the Act are applicable to the
impugned RfS and draft PPA or not?
10. Issue No.1:
The preliminary objection taken by the respondents is
that the petitioner has no locus standi to file the present writ
petition.
10.1 Learned Advocate General submits that the
petitioner has not participated in the tender process and as
such the said entity is not affected by the manner in which
the bidding process was conducted. Petitioner being a
prospective bidder has no locus standi to file the present
petition seeking the relief sought for in the writ petition. He
submits that the prospective bidder has limited right to
challenge the bidding process initiated by the procurer/any
department of Government. For invoking the extraordinary
jurisdiction of this Court, an infringement of fundamental
right or any legal right must be demonstrated. He submits
that it is well settled that the State has power to fix the terms
of the tender which are sustainable and the prospective
bidders have no say over the terms of the tender. In support
of his contention, he placed reliance on the judgment of the
Hon'ble Supreme Court reported in Air India Ltd. v. Cochin
International Airport Ltd., [2000(2) SCC 617] and B.S.N.
Joshi & Sons v. Nair Coal Services Ltd. [2006(11) SCC
548]. Hence, the contention of the petitioner that 4th
respondent who has initiated this bidding process as nodal
agency on behalf of the Government of A.P.-3rd respondent,
has not followed the competitive bidding guidelines dated
03.08.2017 issued by the Government of India, the 1st
respondent, under Section 63 of the Act, is unsustainable. At
the instance of the 4th respondent, the tender documents
were placed in public domain by the Judicial Preview
authority which has sought for comments from
public/stakeholders. The parent company of the writ
petitioner - M/s.Tata Power has submitted its comments.
However, the company has not submitted its objections as
alleged in the present writ petition, i.e., non-compliance of
Section 63 of the Act together with effective bidding guidelines
dated 03.08.2017 issued by the Government of India. The
petitioner being a subsidiary of the said company has
knowledge of the suggestions/acts made by its principal
company. The petitioner having knowledge of the initiation of
the impugned bidding process, did not choose to raise the
present objections till the expiry of bid submission date and
only with an intention to cause hurdle to the subject bidding
process, filed the present writ petition. He further submits
that even though the petitioner has participated in the
judicial preview proceedings at a stage prior to issuing tender
document without raising the present objection and without
submitting its bid, is precluded from raising instant plea at
this stage. It has no locus standi to raise the present plea.
10.2 Learned senior counsel appearing for the
petitioner submits that the petitioner could have submitted its
bid in the bidding process, if the impugned documents were in
consonance with the provisions of the Act and the
Competitive Bidding Guidelines. As per the technical
eligibility criteria of the impugned RfS, the bidder is required
to have similar experience in the field of solar and electrical
sectors. The bidder should have also executed solar projects
having capacity of minimum of 25 MW within the last 10
years either as EPS contractor or a solar power developer.
The petitioner under the aegis of parental company i.e., Tata
Power Company Limited has executed various solar projects
of more than 25 MW capacity in the last 10 years, particularly
in the State of Andhra Pradesh. The petitioner is having
technical eligibility to participate in the impugned bidding
process. As per the financial eligibility criteria of the
impugned RfS, the bidder should have a net worth equal to or
greater than Rs.10 lakh MW of quoted capacity and minimum
annual turnover of Rs.41.45 lakhs MW of quoted capacity as
on the last date of previous financial year i.e., financial year
2018-19 or financial year 2019-20 whichever is latest
available or as on the day at least 7 days prior to the bid
submission of deadline. The petitioner has net worth of
Rs.1123.25 crores and annual turnover of Rs.917.46 crores.
The petitioner and its parent company has a net worth of
Rs.12861.18 crores and an annual turnover of Rs.7074.99
crores. The petitioner also has financial eligibility to
participate in the impugned bidding process. He would
further submit that the petitioner and its parent company
have the capability to bid for more than tendered capacity of
6400 MW. The petitioner, under the aegis of its parent
company (TPC), has executed various solar power projects of
more than 25 MW capacity in the last 10 years in the State of
Andhra Pradesh. However, the petitioner consciously decided
to not submit its Bid after observing that the impugned RfS
and draft PPA are issued in violation of the provisions of the
Act and the Competitive Bidding Guidelines. Such deviations
are fatal and make the entire bidding process unreliable.
Further, it could not participate in the tender process as it is
prejudicial to its interest, as the tender is floated in violation
of provisions of the Act and competitive bidding guidelines.
10.3. This Court found that the petitioner is technically
and financially qualified to participate in the bidding process
initiated by the 4th respondent by way of impugned RfS and
draft PPA. The petitioner being a prospective bidder and
qualified to participate in the bidding process, restrained from
participating in the bidding process in response to the
impugned RfS and draft PPA which is prejudicial to its rights
complaining non-compliance of the provisions of the Act and
competitive bidding guidelines and was constrained to file the
present writ petition assailing the validity of the impugned
RfS and impugned PPA being ultra vires the Act as well as
competitive bidding guidelines.
10.4 The traditional rule of locus standi is that judicial
redress is available only to a person who has suffered a legal
injury by reason of violation of his legal right or legally
protected interest by the impugned action of the State or a
public authority or any other person or who is likely to suffer
a legal injury by reason of threatened violation of his legal
right or legally protected interest by any such action. The
basis of entitlement to judicial redress is personal injury to
property, body, mind or reputation arising from violation,
actual or threatened, of the legal right or legally protected
interest of the person seeking such redress. This is a rule of
ancient vintage and it arose during an era when private law
dominated the legal scene and public law had not yet been
born (emphasis supplied from the Hon'ble Apex Court
judgment in S.P.Gupta Vs. President of India and others
[AIR 1982 SC 149]). The strict rule of locus standi applicable
to private litigation is relaxed and a broad based rule is
evolved which gives the right of locus standi to any member of
the public acting bona fide and having sufficient interest in
instituting an action for redressal of public wrong or public
injury, but who is not a mere busy body or a meddlesome
interloper (emphasis supplied from the Hon'ble Apex Court
judgment in Janata Dal Vs. H.S.Chowdhary and others
[(1992) 4 SCC 305]). A member of the public, having no
personal gain or oblique motive, is empowered to approach
the Court for enforcement of his constitutional legal rights
(Sheela Barse Vs. Union of India and Others [(1988) 4 SCC
226]).
10.5 Thus, there has been a spectacular expansion of
concept of 'locus standi'. The concept is much wider and it
takes in its sweep anyone who is not a mere busy body. In
the light of the expanded concept of locus standi, the action of
executive in disregard to the provision of law, raise
substantial issues of accountability of those entrusted with
the responsibility of Administration. It furnishes enough
cause for an individual to approach by way of a writ petition.
The authorities can neither be permitted to seek shelter
under the technicalities of locus standi nor can they plead
restraint in the exercise of discretion as grave issues of public
concern outweigh such consideration (emphasis supplied
from the from the Hon'ble Apex Court judgment in Bangalore
Medical Trust Vs. B.S.Muddappa [(1991) 4 SCC 54].
When the impugned RfS and draft PPA are issued in utter
violation of the provisions of the Act and the competitive
bidding guidelines, certainly petitioner's rights to participate
in the bidding process are being affected. To challenge the
impugned RfS and draft PPA, one need not be a participant
bidder. Once the State or an instrumentality of the State has
been enjoined to follow the rule of law and if there is an
infraction, it lies within the domain of any ordinary citizen to
lay challenge against the said infraction.
10.6 A writ of mandamus could be issued at the
instance of the aggrieved party whose legal right is affected for
non-compliance of the provisions of the Act. Likewise, at the
instance of any citizen, writ of certiorari could be issued
quashing the State action or proceedings found to be in
contravention of any statutory provision of law.
10.7 The petitioner, being a genuine prospective bidder,
in response to the impugned RfS and draft PPA, by a narrow
construction of doctrine of locus standi, the writ petition
cannot be thrown out on the ground that the petitioner has
no locus standi, when the issue is whether the impugned RfS
and draft PPA are issued in consonance with the provisions of
the Act. The issue is answered accordingly.
11. Issue No.2:
The learned counsel for the respondents would contend
that the petitioner is not a bidder. The complaint in the writ
petition is that the terms and conditions of Tender (RfS) and
draft PPA are violative of the provisions of the Act and the
competitive bidding guidelines issued by the Central
Government, exercising the power under Section 63 of the
Act. Except violative of law, no mala fides, discrimination and
arbitrariness which violates the rights of a bidder to compete
with other bidders or that the tender conditions are tailor-
made for a particular class or individual bidder are
attributed. Hence, no part of the legal rights of the petitioner,
who is not even bidder, is violated. It is further contended no
legal right is vested in the petitioner to question the terms of
tender conditions. Even if the petitioner is prospective bidder
or bidder, the challenge could be only to tender process but
not to the tender conditions or the decisions of the process.
In support of his contention, he relied on the decision of the
Hon'ble Apex Court rendered in the case of Merut
Development Authority Case [2009 (6) SCC 171]. He would
further contend that the bidders participating in the tender
process have no other right except the right to equality and
fair treatment in the matter of evaluation of competitive bids
offered by the interested persons in response to the notice
inviting tenders in a transparent manner free from hidden
agenda. He would further contend that the tender is an
invitation to treat, which is a step before an offer. Hence, it is
in the realm of contract. Therefore, the tender conditions
cannot be challenged. The challenge, if any, to the tender
conditions could be limited to the illegality, such as mala
fides and that they are tailor-made by benefiting the other
party and that the illegality affects the competitiveness of the
petitioner. The court cannot substitute its judgment in the
tender process. Therefore, the Court would not issue any writ
directing the State or its instrumentalities to re-bid as it
would be contravening the freedom of the State to contract.
11.1 He further submits that the parent company of the
petitioner submitted a letter on 28.12.2020 with a request for
extension of time for submission of bids. When the same has
not been responded, the writ petition is filed on 06.01.2021,
and interim order was obtained on 07.01.2021, which clearly
shows the lack of bona fides in the writ petition. Hence, the
Writ Petition is liable to be dismissed.
11.2 There is no doubt, it is well settled legal
proposition that the terms of the invitations to tender cannot
be open to judicial scrutiny because the invitation to tender is
not in the realm of contract. However, as the specific
impugned activity of the 4th respondent is governed by the
statutory provisions, but the impugned RfS and draft PPA are
issued in violation of the provisions of the Act, the action of
the 4th respondent is amenable to judicial review by this
Court. Mere issuance of impugned RfS and draft PPA after
judicial preview as required under the A.P. Infrastructure
(Transparency through Judicial Preview) Act, 2019 does not
preclude this Court to entertain a writ petition filed
challenging the impugned RfS and draft PPA on the ground of
infraction of law. There is no dispute, the freedom of contract
for the Government in exercise of its executive power. It has
the same freedom as any individual is vested with under the
Constitution in the case of commercial contracts, but not in
the case of statutory contracts. However, in order to prevent
arbitrariness or unfairness in the bidding process initiated
contrary to the statutory provisions, such arbitrariness needs
to be set at naught by this Court by exercising its power of
judicial review. The remedy available under the provisions of
Section 129 of the Act is not an efficacious remedy under
present circumstance of the case. Hence, the petitioner could
not be driven to the APERC, the 6th respondent.
12. Issue No.3:
The case of the petitioner is that the 3rd respondent
Government vide G.O.Ms.No.18 has sought to establish
10000 MW of solar power capacity in the State of Andhra
Pradesh and provide free 9-hour day time power to the
agriculture sector on a sustainable basis. Thereafter,
G.O.Ms.Nos.19 and 25 were issued modifying the directions
issued in G.O.Ms.No.18 and included change in tenure of the
impugned draft PPA, provisions for sale of asset, provision of
State Government Guarantee to successful bidders, revision
of lease rental for private and assigned lands, generation,
compensation for back down, pass through of safe guard duty
and basic custom duty through tariff adjustment etc.
Accordingly, 4th respondent issued the impugned RfS and the
impugned draft PPA pertaining to the project and invited bids
from the SPDs. The impugned RfS and draft PPA are against
the provisions of the CBG as well as the provisions of the Act.
12.1 Sri D.Prakash Reddy, learned senior counsel has
drawn the attention of this Court to the relevant provisions of
the Act, Tariff Policy and clauses of the CBG. He would
contend that as per the provision of Section 63 of the Act, the
6th respondent - APERC is required to adopt the tariff for a
project, if such tariff has been determined through a
transparent bidding process, in accordance with the
guidelines issued by the Central Government. Section 6.4(2)
of the Tariff Policy formulated by the 1st respondent provides
that States shall endeavour to procure power from renewable
energy sources through competitive bidding to keep the tariff
low. In furtherance of the object of Section 63 of the Act,
CBG have been issued by the Central Government for long
term procurement of electricity from grid connected solar
photo voltaic power projects having size of 5 MW and above,
through competitive bidding. Clause 1.2 of CBG provides the
specific objectives of the Competitive Building Guidelines.
CBG provide a standardized and uniform method for
procurement of power through competitive bidding, which is
necessarily required to be followed by all stakeholders even
for Intra-State Projects.
12.2 The deviations pointed by learned senior counsel
in the impugned RfS and the draft PPA vis-à-vis the
provisions of the Act and CBG can be stated as follows:
i) The impugned draft PPA provides a stipulation for
claiming the relief of 'change in law' in the event of such
change in tax, duties, etc., subsequent to signing of the
impugned draft PPA. Since such 'change in law' event
could result in increase in tariff and can have financial
implications for the consumers, the Act provides for
adequate safeguards of allowing any change in tariff only
after adjudication and approval by the appropriate
commission. Whereas, the Clause 12 of impugned draft PPA
says that a party claiming the relief of 'Change in law' is
required to approach the other party for appropriate relief
and any compensation on account of 'change in law' shall
be determined and shall be effective from such date as may
be mutually agreed by both parties.
The same is in violation of clause 5.7 of CBG. Clause
5.7 of CBG states that a party claiming the relief of 'change
in law' shall be entitled to compensation by the other party,
subject to the condition that the quantum and mechanism
for payment of compensation shall be determined and shall
be effective from such date as may be decided by the 6th
respondent commission. Even as per the provision of
Section 62 of the Act, the power and functions for
'determination of tariff' has been statutorily vested with the
6th respondent. Thus, it is evident that clause 12 of the
impugned draft PPA is in stark contrast to clause 5.7 of the
CBG and the same would amount to a deviation from the
provisions of the CBG. In fact, clause 12 of the impugned
draft PPA seeks to oust the statutory power and authority
of 6th respondent. Therefore, clause 12 of the impugned
draft PPA, which violates the specific intent of having a
regulatory commission and making the said regulatory
commission the custodian of the entire power sector within
the State, not only violates the CBG but also the very object
of the Act. Therefore, impugned RfS and the draft PPA
especially clause 12 of the draft PPA are ultra vires the
provisions of CBG and the Act and are liable to be quashed.
ii) Clause 16 of the impugned draft PPA provides the
mechanism for amicable settlement and dispute resolution
to be adopted by the parties. It provides that all disputes
shall be referred to a senior officer designated by the
representatives of 4th respondent and the Solar Power
Developers [SPDs] who shall attempt to resolve the dispute
within a period of 15 days. If any dispute remains
unresolved shall be referred to an Arbitration committee
consisting of - (1) Principal Secretary of Energy
Department, Andhra Pradesh, (2) Chief Engineer,
Transmission Corporation of Andhra Pradesh (TRANSCO),
(3) Superintendent Engineer of 4th respondent, and (4) One
representative of SPD.
The above mechanism for dispute resolution provided in
the impugned draft PPA is contrary to the provisions of
CBG as well as the provisions of the Act inasmuch as the
said clause has taken away the powers of the 6th
respondent to facilitate resolution of dispute and refer the
parties to arbitration. Clause 16 of the impugned draft PPA
also curtails the powers of 6th respondent to adjudicate the
issues of "Change in law" and award necessary
compensation.
The above dispute resolution mechanism is also
violative of Section 86(1)(f) of the Act. As per the provisions
of Section 86(1)(f) of the Act, the State Commission i.e., 6th
respondent is vested with the statutory powers to
adjudicate any dispute arising out of the impugned draft
PPA. However, Clause 16 of the impugned draft PPA has
sought to oust the powers of 6th respondent stating that
disputes if any shall be adjudicated by the arbitration
committee. Even as per Clause 19 of the competitive
bidding guidelines, all disputes shall be adjudicated or
referred to arbitration by the State Electricity Regulatory
Commission. As per the scheme of the Act, the State
Commission i.e., 6th respondent has been statutorily
empowered and obligated to adjudicate the disputes
between the generator and licensee. However, by virtue of
impugned RfS and the impugned draft PPA, the jurisdiction
of 6th respondent is sought to be contractually ousted by
the 4th respondent, which is impermissible in law.
iii) The provisions of the Act permit procurement of
power supply or consumption by licensees viz., a Trading
licensee or a Distribution licensee. The 4th respondent, who
is neither a trading licensee nor a distribution licensee,
initiated bidding process inviting bids from the prospective
bidders by issuing impugned RfS and impugned draft PPA,
contrary to the provisions of competitive bidding guidelines
and the provisions of the Act and are liable to be quashed.
Clause 1.2 of CBG specifically provide for a
framework for an intermediary procurer as an
aggregator/trader for the inter-state/intra-state sale
purchase of long term power. Thus, any entity which
issues a request for procurement of power under the CBG
must necessarily be an intermediary procurer. However,
neither the impugned RfS nor the impugned draft PPA
discloses the status of 4th respondent as intermediary
procurer. Thus, issuance of impugned RfS and draft PPA
by 4th respondent, without being the intermediary procurer
for the project is a deviation from the provisions of the
CBG.
As per Sections 7 & 8 of the Act, generation is a
delicensed activity. 4th respondent has not disclosed its
status as to whether it is a licensed company or not for
which necessary licence is to be obtained under Section 14
of the Act. 4th respondent has not provided any clarity on
the nature of its entity, who is seeking to enter into a
commercial contract i.e., impugned PPA with the SPDs.
Therefore, the same is in gross violation of Section 14 of the
Act. The non disclosure of the status of the 4th respondent
puts a bar on 6th respondent to exercise its regulatory
powers under Section 86(1)(f) of the Act vis-à-vis the
project, as the 4th respondent is designated as nodal agency
for procuring power to the 3rd respondent.
Since 4th respondent is neither a trader nor a
licensee and in the present case the project is to be
implemented as per the impugned RfS, by virtue of the
statutory limitation prescribed under Section 86(1)(f) of the
Act, the SPDs would also be barred from approaching the
6th respondent commission for redressal of grievances.
Therefore, once again, 4th respondent has indirectly sought
to completely oust the statutory jurisdiction of 6th
respondent which is not permissible in terms of the CBG
and the Act.
iv) The specific objective of the CBG is to facilitate
transparency and fairness in procurement processes/ and
to provide for a framework for an intermediary procurer as
an aggregator/trader for the inter state/intra state sale
purchase of long term power. The action of 4th respondent
in deviating from the express provisions of the CBG without
the approval of 6th respondent is ultra vires the scheme of
the Act itself.
12.3 In support of the above contentions, learned
senior counsel relied on the following decisions:
a) Gujarat Urja Vikas Nigam Ltd., v. Essar Power
Limited [(2008) 4 SCC 755.
b) Energy Watchdog v. CERC [(2017) 14 SCC 80]
c) Renew Power Limited v. The State of Andhra
Pradesh [W.P.No.9844 of 2019].
d) PTC India Ltd., v. Central Electricity Regulatory
Commission & Ors [(2010) 4 SCC 603.
12.4 Per contra, Sri P.Sri Raghuram, learned senior
counsel, would contend that the 4th respondent being nodal
agency of 3rd respondent Government along with the
Government had undertaken a scheme to provide 9-hours
day time power to 18.37 lakh agricultural consumers. The
Government proposed to select the bidders who have
wherewithal to establish, operate and provide power to
respondents 3 & 4. At the instance of 4th respondent, the
tender documents were placed in public domain by the
Judicial Preview Authority. The provisions of Section 63 of
the Act are not applicable to the present case. In fact, Section
63 is another limb of Principal Section 62 of the Act, which
clearly says that the appropriate commission shall determine
the tariff in accordance with the provisions of the Act for
supply of electricity by a generating company to distribution
licensee. Therefore, it is clear that when a generating
company is not supplying power to distribution licensees, the
6th respondent Commission has no jurisdiction to determine
tariff. Once Section 62 is not applicable, by natural
concomitant, the application of provisions of Section 63 is
also ruled out. Therefore, the bidding process undertaken by
4th respondent as Nodal agency of 3rd respondent is a general
bidding procedure only to have fair competition and
transparency dehors to the said guidelines issued by
respondents 1 & 2. The 4th respondent, which is nodal
agency of the 3rd respondent is not supplying power to
DISCOMs but proposed to provide power free of cost to 18.37
lakh agricultural consumers of the State. Therefore, Section
63 is not applicable to the subject bidding process. The core
issue in the instant case is as to whether or not the subject
bidding process would come within the ambit of Sections 62
and 63 of the Act. Since the subject bidding process does not
fall within the meaning of 'supply to distribution licensee' or
'supply to consumers' for consideration, as is defined under
the Act, the jurisdiction of regulatory commission to exercise
its power either under Section 62 or under Section 63 does
not arise. The 4th respondent proposed to provide the power
secured from generators to agriculturists free of cost by using
the network of AP TRANSCO and AP DISCOMs by paying the
applicable network charges as prescribed by 6th respondent
as per Section 42 of the Act. Section 86 of the Act deals with
the functions of State Commission. The Commission shall
discharge the functions namely, determine the tariff for
generation, supply, transmission and wheeling of electricity
as the case may be within the State and regulate the
electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be
procured from the generating companies or licensees or other
than through agreement for distribution and supply within
the State. Therefore, the provisions of Sections 62, 63 and 86
read together lead to a conclusion that jurisdiction of
regulatory commission and to follow the competitive bidding
guidelines issued by the Government of India comes into
operation only when the power is to be procured by the
distribution licensees to supply by way of sale to consumers.
Therefore, the grounds urged in the writ petition are
unsustainable.
12.4.1 The Act has not contemplated that the
Government need to get license and since the Government
wants to provide power free of cost to agriculturists or
peasants no license is required. The 4th respondent as a
nodal agency has every right to procure power for the 3rd
respondent-Government to achieve the aforesaid object. The
subject tender process is not in violation of any of the
provisions of the Act or the regulations made thereunder.
Therefore, the writ petition deserves to be dismissed at
threshold as not maintainable.
12.4.2 Under the provisions of the Act, the powers of the
6th respondent are primarily in relation to the functions of the
licensee under the Act, fixation of tariff for the purposes
adumbrated and limited under Section 62 and 63 of the Act
and for adjudication of disputes under Section 86(1)(f) of the
Act apart from the regulatory function of determination of
tariff under open access under Section 42 of the Act besides
formulation of regulations, supervisory functions and
advisory functions. As per the definitions of "consumer",
"distribution licensee", "supply" and "transmission licensee"
defined under Sections 2(15), 2(17), 2(70) and 2(73), the 4th
respondent is neither a distribution licensee nor a
transmission licensee.
12.4.3 The contention of the petitioner that the subject
activity ought to receive prior concurrence and continue to
abide by the regulatory and adjudicatory jurisdiction of the
6th respondent is untenable. The status of the 4th respondent
vis-à-vis the subject matter is clearly elaborated in para 5 of
G.O.Ms.No.18 and also reiterated in Section 6 of RfS.
12.4.4 In the proposed scheme, the tariff is determined
by 4th respondent through general competitive bidding and
does not fall under Sections 62 or 63 of the Act since 4th
respondent is not supplying power to a licensee but providing
power free of cost to the agricultural consumers. As per
MNRE guidelines, for tariff based competitive bidding process
for procurement of power from grid connected solar PV power
projects, the terms 'procurer' applies only to distribution
licensees or the authorized representatives or an intermediary
procurer or end procurer. Neither 4th respondent nor the
generator/SPD has involved in sale of power to distribution
licensees or consumers. Government of AP proposed to
provide power being secured through the subject tender to
agriculturists free of cost. Since 4th respondent is securing
power on behalf of 3rd respondent Government to meet its
subsidy obligations and is not a licensee, the bid documents
were not referred to 6th respondent Commission for approval.
As per G.O.Ms.No.18, AP DISCOMs shall enter into an
agreement with the 4th respondent-APGECL for transmission
of power from these solar projects to agriculture consumers.
Such agreement is similar to open access agreement. The
spirit of the guidelines mandating competitive bidding as force
of power has strictly been followed. Only in cases where
DISCOM procures power through power sale agreement at a
tariff from SECI/NTPC and SECI/NTPC in turn get such
power from SPD then in such case DISCOMs are required to
obtain approval from appropriate commission for tariff
adoption and approval of PPA, which is not the case in the
subject scheme. As per the bid documents, any financial
implication due to change in law on account of duties will be
passed on through tariff adjustment on actual to SPD by 4th
respondent. As per this scheme, the power generated by the
solar projects shall be provided to agriculture consumers at
free of cost. The tariff will be paid by 4th respondent with
budgetary support from the 3rd respondent-Government and
would not be passed onto the DISCOMs or agriculture
consumers or any other consumers in the State. In view of
the aforesaid facts, this scheme doesn't fall within the ambit
of Sections 62 and 63 of the Act. However, the spirit of said
guidelines was followed to the extent relevant. The State
Government intends to secure Solar Power through 4th
respondent as the enabling agency (not a licensee) for
providing power to the agricultural consumers at free of cost,
by using the network of AP TRANSCO and AP DISCOMs. The
network charges, as determined by APERC, shall be paid by
the State Government. In addition, any incidental expenses
towards backing down (additional surcharge) and balancing
cost (if any) incurred by the AP DISCOMs after netting off
revenue from sale of Renewable Energy Certificates as
approved by 6th respondent will be paid by the 3rd
respondent-Government to the AP DISCOMs. Since both
Government of AP and the 4th respondent are not selling the
power to any licensees, the bid process including tariff
adoption is not required to be referred to 6th respondent. As
per the provisions of Electricity Act, generation is not a
licensed activity and any non-licensee can secure power from
a generator without approaching the appropriate commission
during the power procurement process or for dispute
resolution.
12.4.5 It is not correct to state that the status of 4th
respondent is not clear. In fact, 4th respondent is procuring
power for the 3rd respondent-Government to provide 9 hours
day time free power supply to agriculture consumers and is
not trading the power. In the proposed scheme, 4th
respondent which is a State owned Corporation and 100%
subsidiary of APGENCO is procuring power on behalf of the
3rd respondent-Government for free power supply to
agriculture consumers by the State Government. Further,
under the electricity law, generation is not a licensed activity.
Government is free to secure power from a generator to
provide the same on free of cost to agriculture consumers.
Since APGECL is the nodal agency of 3rd respondent, it is not
a licensee and it does not fall within the jurisdiction of
APERC. It is incorrect to state that 4th respondent has ousted
the jurisdiction of 6th respondent Commission.
12.4.6 The guidelines issued by respondents 1 & 2 are
not applicable to the subject scheme. The said guidelines are
issued with an object that the cost of procurement of power to
DISCOMs should not be unjustified, since DISCOMs are to
discharge its functions on commercial principles as
contemplated in Section 61 of the Act invariably it has to pass
on the same to end consumers. Whereas in the subject
scheme, Government would provide power free of cost to
agricultural consumers. The scheme modalities do not
infer/put at risk the consumer interest as provided under
Electricity Act. Under the proposed scheme, the State
Government will continue to provide subsidy to the DISCOMs.
Further, the State Government shall continue to pay the
network charges, as determined by 6th respondent to the
DISCOMs. The key provisions of the RfS ensure competitive
price discovery and transparency, in strict compliance with
the MNRE CBG. Since the procurement is done by 4th
respondent for Government of AP, this procurement would
not fall under the jurisdiction of 6th respondent.
12.4.7 Section 86 of the Act applies only when DISCOMs
procure power for sale to consumers but not otherwise. The
scope of Section 86 does not encompass the Government
supplying free power to agriculturists. Regulatory power
under Section 86 on procurement of power is limited to
procurement by DISCOMs but not procurement by any
person or Government. The appropriate commission shall
determine the tariff only for supply of electricity by a
generating company to a distribution licensee.
12.4.8 It is incorrect to state that dispute resolution
mechanism provided in the impugned tender document is
against provisions of Arbitration Act. It is incorrect to state
that 4th respondent has to procure power only through
competitive bidding guidelines issued by respondents 1 & 2
and the said claim is clear misconception of facts and law. In
the fact situation of the case, the guidelines applicable to the
present tender process, viz., competitive bidding has been
strictly complied with along with norms of transparency.
12.5 Sri S.Sriram, learned Advocate General, while
adopting/reiterating the arguments of Sri P.Sri Raghuram,
would contend that the guidelines issued by the Central
Government are for the purpose of protecting consumer
interest. The Government evolved a scheme by which
consumer i.e, the agriculturist is securing power free of cost.
There is no commercial element in the transactions. The
transaction does not have any effect on the market. It has no
effect, particularly, on the consumer. Therefore, the
guidelines per se may not apply to the subject tender. In the
first instance, the Government and the 4th respondent have
followed the guidelines in essence and in all respects. The
guidelines clearly show that the essence of guidelines is to
maintain the consumer interest and transparent fair
procedure in procuring power through bidding process. Since
the impugned proceedings themselves are in the nature of
transparent bidding process, which is not in any way
commented upon by the petitioner, the guidelines in its
essence are followed and consequently section 63 of the Act is
also followed.
12.5.1 The key difference as regards the guidelines and
the scheme is that while the scheme is for composite
procurement of electricity and the asset (BoT) basis the
guidelines only consider procurement electricity. Hence, the
guidelines are applicable to the distribution licensees issuing
tenders primarily for the procurement of electricity which
shall thereafter be offered on sale to consumers. Similarly,
Sections 62 & 63 of the Act are applicable only to tariff
fixation of licensees and not for a scheme. Therefore, the
contention that the tender process is in violation of the
guidelines is not tenable. The guidelines clarify that they
apply only to procurers i.e. licensees or intermediary
procurer. Therefore, the guidelines are not directly applicable
to the scheme which is not a procurer or intermediary or
licensee. Similarly Sections 62 & 63 of the Act speaks of tariff
determination by bidding process and tariff is determined
according to section 62.
12.5.2 Section 86(1)(f) of the Act is a statutory remedy of
dispute resolution with regard to disputes between licencees
and generating company. In the scheme of things, generating
company is having a privity of contract with the 4th
respondent only. There is no scope for dispute between
generating company and licencee. Finally, he would contend
that if the petitioner has any grievance about the issuance of
impugned RfS and draft PPA, the petitioner has to approach
the 6th respondent-Commission under Section 129 of the Act
and the writ petition is not maintainable and deserves to be
dismissed at the threshold.
12.6 In reply, Sri D.Prakash Reddy, learned senior
counsel appearing for Mr.Kilaru Nithin Krishna, advocate on
record for the petitioner, would contend that the 4th
respondent issued impugned RfS inviting bids from Solar
Power Developers (SPD) for development of 6,400 MW Grid
connected Solar Photo Voltaic Ultra Mega Power Project
spread over 10 Solar parks in the State of Andhra Pradesh in
violation of provisions of the Act and guidelines for Tariff
based competitive bidding process for procurement of power
from Grid connected Solar photo voltaic power projects dated
03.08.2017 framed by the 1st respondent in exercise of power
under the provisions of Section 63 of the Act. Through the
scheme, the 4th respondent issued impugned RfS and draft
PPA seeking to create a parallel Generation, Transmission
and Distribution system in the State of Andhra Pradesh in
gross violation of the provisions of the Electricity Act, 2003
promulgated by the Parliament. The 4th respondent issued
impugned RfS mentioning that the Tender/Bidding process is
called in terms of the Competitive Bidding Guidelines as
envisaged under the provisions of Section 63 of the Electricity
Act. Under the scheme, the power is supplied to the
agriculturists free of cost through AP DISCOMs in the State of
Andhra Pradesh, for which necessary approvals shall be
taken from the 6th respondent-Commission. In support of his
contention, he has drawn the attention of this Court to the
various provisions of the Electricity Act and Competitive
Bidding Guidelines. In fact, respondent No.4 has admitted
that the impugned documents do not conform to the CBG and
the provisions of the Electricity Act, 2003. From the language
used in Section 63 of the Act, it is evident that for any bidding
to be carried out the same has to be done "in accordance"
with the guidelines issued by Central Government. Further,
the Competitive Bidding Guidelines issued by respondent
No.1 also envisages that the same are mandatorily required to
be followed for any procurement of Renewable Power.
12.6.1 The National Tariff policy as issued under Section
3 of the Electricity Act, 2003 mandates that State (including
Respondent No.3) shall procure power from renewable energy
sources through competitive bidding as specified under
Section 63. Therefore, the Electricity Act, 2003 unequivocally
mandates that all competitive bidding for procurement of
Solar Power is to be carried out in terms of the Guidelines as
specified by the Central Government/Respondent No.1.
Hence, under no circumstances can any Solar Power bidding
be done in variation with the guidelines. Hence, ex facie, in
issuing the impugned documents, respondents 3 and 4 have
violated the express mandate of Section 63 of the Electricity
Act, 2003 and for this reason alone the impugned RfS and
draft PPA are liable to be quashed. Further, it is a settled
principle of law that where a statute provides for a thing to be
done in a particular manner, then it has to be done in that
manner and in no other manner. In fact the Act as well as
the guidelines specifically prescribed the method of
procurement to be carried out. Hence, in so far as electricity
is concerned, the Tender Authority/4th respondent has no
discretion to alter or vary the terms of the Tender as per the
Act as well as per the Guidelines. Further, as contended in
the Writ Petition for any deviation the respondent Nos.3 and 4
were obligated to approach respondent No.6 Commission for
its prior approval.
12.6.2 The 4th respondent in its counter has contended
that the impugned documents have been issued in
accordance with the Act of 2019. The said contention is
wholly untenable as Electricity Act, 2003 is promulgated by
the Parliament and hence occupies the field insofar as
generation and supply of electricity is concerned. Whereas,
Act of 2019 is a State enactment and would be subservient to
the field, which is occupied by Electricity Act, 2003. Further,
the Section 13 of the Act of 2019 itself mandates that Central
Act shall prevail. Therefore, the Judicial Preview Committee
as created under the State Act cannot discharge functions as
entrusted upon by Respondent No.6 by the Central Act (i.e.,
Electricity Act, 2003). Hence, compliance of the AP Act, 2019
is of no consequence insofar as Competitive Bidding for
Electricity Generation is concerned as the same must
conform with the mandate of Section 63 read with the
Guidelines issued by the Respondent No.1. Hence, the
contention of Respondent No.4 is wholly without merit and is
liable to be rejected.
12.6.3 Learned senior counsel would further submit,
without prejudice to the above, that assuming that the
impugned RfS was issued after clearance from the Judicial
Preview Committee, the same is itself against the provisions of
the Act of 2019 which mandated that any scheme has to be in
conformity with the procedure, rules and guidelines
prescribed by State and Central Government. Thus, the
Judicial Preview Committee ought to have suggested that the
Scheme has to be in conformity with the Electricity Act and
Competitive Bidding Guidelines, and the failure to do so has
made the entire scheme ultra vires the provisions of the
Electricity Act.
12.6.4 The contention of the 4th respondent that TPC i.e.,
the parent company of the petitioner did not raise any
objections regarding the non-conformities in the impugned
RfS and the Draft PPA during the judicial preview/pre-bid
stage, is wholly without merit and is liable to be rejected. In
this regard, it is submitted that TPC issued several
communications to Respondent No.4 regarding non-
conformity of the impugned RfS and the Draft PPA with the
mandate of the Competitive Bidding Guidelines. It was also
specifically conveyed by TPC that in terms of the Judgment of
the Hon'ble Supreme Court in the case of Gujarat Urja Vikas
Nigam Limited V. Essar Power Limited, (2008) 4 SCC 755, it
has been held that, under the Electricity Act, adjudication of
disputes between Licensees and Generating Companies can
only be done by the Appropriate State Commission or the
arbitrators(s) appointed by it.
12.6.5 The 4th respondent has admitted that it is not a
licensee; the 4th respondent being a Government company
does not need license; the present bidding is not in
accordance with Sections 63 and 86 of the Electricity Act,
2003 as the said provisions are not applicable; the deviations
need not be approved by the 6th respondent Commission. The
substance of 4th respondent's case is that since the power is
being supplied directly from generators to agricultural
consumers without consideration, the scope of Section 63
gets ousted and hence the proposed transaction falls outside
the purview of the 6th respondent.
12.6.6 As could be seen from the contents of the counter,
Respondent No.4 is seeking to procure power from the Solar
Power Generators and provide it to Agricultural consumers,
such a transaction falls foul to the very ethos of Electricity
Act, 2003. The ability to purchase and supply power to
consumers as an activity is solely vested with a Distribution
Licensee as per Section 2(17) read with Section 12 of the Electricity
Act, 2003. In fact as per Section 2(17) the Distribution Licensee
operates the Distribution System for supplying electricity to
consumers in his area of supply. Hence, if the contention of the 4th
respondent that Respondent No.4 will use the Network of
Transco/Discom to supply power to Agricultural consumers is to
be accepted then respondent No.4 would operate the Distribution
System to provide power to Agricultural consumers without
obtaining license under Section 14 of the Electricity Act, 2003.
This is when such Agricultural Consumers fall within the area of
operation of either of the existing Licensees. In fact, the said
method of supply would find foul with the specific mandate of
Section 12 of the Electricity Act, 2003 which unequivocally
mandates that no person can distribute electricity without
obtaining a License. Further, as per the provisions of the
Electricity Act, 2003 the power can be supplied to a consumer only
by a Distribution Licensee who is authorized by issuance of a
License. This is because distribution of power is one key end of the
entire power generation and supply chain. The distribution of
power as an activity requires direct interface with end consumers.
Hence, the technical and financial requirement to become a
Distribution License has been kept at a much higher pedestal.
This is why the Central Government for the purpose of granting
Distribution License has notified The Distribution of Electricity
License (Additional Requirements of Capital Adequacy, Credit
Worthiness and Code of Conduct) Rules, 2005. Moreover, the
APERC/Respondent No.6 has also notified the APERC (Distribution
License) Regulation, 2013 inter alia specifying the minimum
threshold to be met for grant of Distribution License. Hence,
without the grant of License no person can distribute electricity
from a Generator to end consumers even if such consumers are
Agricultural consumers. Therefore, the assertion that respondent
No.4 would use the Distribution Network by paying requisite
Charges to provide power from generators to agricultural
consumers is a misnomer as the said transaction would render the
definition of "Distribution Licensee" under Section 2(17) as only the
said Licensee is authorized to operate the Distribution System.
Hence, the meaning ascribed to whole activity of Distribution
Licensee would be made redundant.
12.6.7 The proposed transaction would then render the entire
object of having higher threshold for granting any person a
Distribution License also redundant as by the said logic any
person can effectively become a distribution Licensee as long as it
is ready to pay network charges of the Existing Discoms. This
interpretation of the Electricity Act, 2003 would make the existing
Licensees redundant. In fact Section 42(1) read with Section 43 of
the Electricity Act, 2003 mandates that power is supplied by the
Distribution Licensee to end consumers on its own Distribution
System. Hence, the natural sequitur to Section 42(1), Section 43
read with Section 2(17) is that the Licensee needs to own and
operate the Distribution System to effect Supply. Whereas, in the
present case respondent No.4 is neither the owner of the
Distribution System nor is a Licensee but is intending to supply
power to lakhs of end consumers who otherwise fall within the
area of supply of existing Licensee.
12.6.8 Respondent No.4 has repeatedly used the phrase
"provide" power to Agricultural consumers. This is nothing but a
device to couch the intent of carrying out "supply" of power to such
consumers. No amount of clever pleading can overcome the intent
of the legislation enacted by the parliament. Further, as seen from
the Impugned RfS the term "Supply" has been used by the
respondent No.4 repeatedly and relevant extracts of the RfS are as
follows:-
"1. Andhra Pradesh Green Energy Corporation Limited
(hereinafter called "APGECL") incorporated under the
Companies Act, 2013, is a 100% subsidiary of Andhra
Pradesh Power Generation Corporation Limited
("APGENCO"). One of the main objectives of the Company is
establishment of 10,000 MWp Solar Power Projects in the
State of Andhra Pradesh to ensure nine hours daytime free
power supply to the Agriculture sector on a sustainable
basis. It is envisaged to set up large grid connected solar
power plants which would help in significantly reducing the
subsidy outgo from Government of Andhra Pradesh. In this
regard, the Government of Andhra Pradesh has issued
G.O.Ms.No.18 dated 15th June, 2020, G.O.Ms.No.19 dated
17th July, 2020 and G.O.Ms.No.25 dated 7th November,
2020 for establishment of 10,000 MWp of solar power
capacity in the State to provide 9-hours of free day time
power supply to the Agriculture Sector.
3. The Government of Andhra Pradesh has envisaged
development of 10,000 MWp of solar projects as an
alternative mechanism to provide nine-hours free day time
power supply to farmers with reduced subsidy out-
go."
Therefore, from the above, it is evident that the intent of
respondent No.4 is to effect supply of power to end consumer albeit
Agricultural Consumers. Hence, for such distribution/
supply/procurement and onward supply License is required as per
Section 12 read with Section 2(17) which admittedly has not been
procured by respondent No.4. Hence, the entire transaction
envisaged runs foul to the specific intent of the Electricity Act,
2003. The 4th respondent has repeatedly emphasized that the
power is being "provided" free of cost and hence no "Supply" as
envisaged under the Electricity Act, 2003 is being made. This
contention is also patently fallacious as Section 65 of the Act
provides a specific manner in which Subsidy can be granted to any
class of consumers by respondent No.3. It is further submitted
that such subsidy can only be granted in the Distribution tariff
determined under Section 62 of the Electricity Act for respondent
Nos. 7 and 8. Hence, if at all respondent No.3 is desirous of
providing subsidy to agricultural consumers, then it ought to make
such monies available to respondent Nos.7 and 8 i.e., Distribution
companies of the State of Andhra Pradesh as such consumers fall
within the area of supply of respondent Nos.7 and 8. Therefore, as
per the scheme of the Electricity Act all supply to consumers
irrespective of their category is to be done by the Distribution
Licensee and if the State Government so wishes it can provide
advance subsidy to the Licensees in case of Distribution tariff
determined under Section 62 to ensure free power is supplied to a
particular class of consumers. The Electricity Act only envisages
payment of subsidy to the Licensee who is supplying power to end
consumers and such subsidy is to be paid in advance to the
Licensee as the Licensee is the only interface with the end
consumers. Hence, the respondent Nos.3 and 4 in the garb of
providing subsidy to Agricultural Consumers cannot create a
parallel regulatory framework in gross violation of the specific
provisions of the Electricity Act, including Section 65 of the
Electricity Act. In support of the said contention, reliance is
placed on Tata Power Company Limited Vs. REL & Ors [(2009)
16 SCC 659] wherein the Hon'ble Supreme Court held as follows:-
"119. The 2003 Act even permits the generating company to
supply electricity to a consumer directly. For the said
purpose what is necessary is to comply with the provisions
of the Act, the Rules and the Regulations. Section 14 of the
Act categorically provides for grant of licence to any person
who is transmitting electricity or distributing supply or
undertaking trading therein, indisputably, however, the
generator of an electrical energy, although is not subject to
the grant of license but while supplying electrical energy to
a distributing agency, in turn would be subject to approval
and directions of the Commission."
Lastly, the contention of the 4th respondent that since it is a
Government Company it does not need a License is in teeth of
express mandate of Sections 12 and 14 of the Electricity Act, 2003
as no exception for Government Companies is made in such
provisions.
12.6.9 Further, the object of Electricity Act, 2003 is to create
independent Regulatory Commissions and to distance Government
from the functioning of the State Commission. This is enshrined
under the preamble of the Act itself. Therefore, the present
Impugned Transaction seeks to actively bring Government into the
power generation and distribution, which is contrary to the very
object of the Act.
12.6.10 When respondent No.3 had previously tried to meddle
with the Regulatory framework and to bypass respondent No.6,
this Hon'ble High Court set aside such actions of the respondent
No.3 in W.P.No.9844 of 2019 & Batch vide its Judgment dated
22.09.2019. The relevant extracts of the Judgment are reproduced
as follows:-
"Apart from all the above, Article 162 of the Constitution of
India and the case law on Article 162, in the opinion of this
Court, are squarely applicable to the facts and
circumstances of the case. Once there is a law governing
the field, particularly, a central law, the State Government
in exercise of its executive power cannot pass any orders
which would trench upon or occupy and intrude in to the
area occupied by the State Commission. The decision of the
Full Bench of the A.P. High Court reported in T. Muralidhar
Rao (14 supra), in the opinion of this Court very squarely
applies to the facts and circumstances of the case. As long
as the 2003 Act is on the statute book, the executive cannot,
in the opinion of this Court in exercise of its executory
power supplant, supplement, ignore or act contrary to it.
(borrowing a phrase from the Hon'ble Full Bench).
The decision of the Supreme Court in P.H. Paul Manoj
Pandian's case (15 supra) also applies to this case.
Last, but not the least, Section 12 of the A.P.
Electricity Reforms Act, also mandates that the
power of the State can extend only to give policy
directions including over all planning and
coordination, but they shall not adversely affect or
interfere with the functions and powers of the
Commissions including the parties and tariffs.
[Emphasis added]
12.6.11. The 4th respondent has stated that it will procure
power from generators and supply it to farmers and
agriculturalists using the Transmission/Distribution System
and will pay applicable Network charges as prescribed by
respondent No.6 under Section 42 of the Act. The argument
advanced by respondent No.4 that it is entitled to provide
power to consumers by payment of Cross-Subsidy Surcharge
under Section 42 of the Act is erroneous, and hence liable to
be rejected. The transaction proposed to be undertaken by
the respondent No.4 essentially amounts to distribution and
supply of power without obtaining license which is
impermissible in terms of the Electricity Act, 2003 which is
an exhaustive code on all aspects of electricity. Section 42 of
the Act, which falls under Part VI of the Act, deals with
"Distribution of Electricity" and "Provisions with respect to
Distribution Licensee". Thus, Prima facie the provisions
under part VI are applicable to Licensees only and cannot be
resorted to by the respondent No.4 who is not a licensee.
12.6.12. It is also noteworthy that the Andhra Pradesh
Electricity Regulatory Commission (Terms and Conditions of
Open Access to Intra-State Transmission and Distribution
Networks) Regulations, 2005 ("Open Access Regulations") has
no provision which allows respondent No.4 to offtake
electricity from Generators and supply it in the area of the
Distribution Licensee on behalf of Agricultural consumers. A
perusal of the provision under Section 42 of the Act and the
Open Access Regulations clearly show that only a Generator, a
Licensee or a Consumer is allowed to make an application for grant
of Open Access under the Open Access Regulations. As per Section
42(4), it is the Consumer who has to make an appropriate
application before the State Commission, i.e., respondent No.6, to
avail supply of electricity from any person/entity other than the
Distribution Licensee in its area of supply. It is evident that in the
facts of the present case no such application has been preferred by
any consumer/class of consumers for availing the aforesaid
facility. Respondent No.4 cannot possibly use the provisions of
Open Access to circumvent the mandate of Section 12 read with
Section 14 of the Electricity Act, 2003. As per the admission of the
4th respondent, the power from Solar Power Developers would be
supplied to 18 lakh agricultural consumers. Hence, unless such
consumers after meeting the qualification set out in the Open
Access Regulations, 2005 make an application the said power
cannot be supplied through Open Access as being contended by
the respondent No.4. In fact Section 42 cannot be used to bypass
the licensing envisaged under Section 12 read with Section 14 of
the Electricity Act, 2003. Respondent No.4 cannot circumvent
the provisions of law which govern the Distribution and
Supply of Electricity and state that it is empowered to supply
electricity to the consumers as per its own whims and fancies.
Respondent No.4, has expressly stated that it does not fall
within the purview of the Electricity Act and the Competitive
Bidding Guidelines. Respondent No.4 has also stated that
the impugned RfS is not required to be in conformity with the
Competitive Bidding Guidelines issued under Section 63 of
the Electricity Act. However, in stark contrast, the impugned
RfS itself states that it has been prepared in accordance with
the Competitive Bidding Guidelines. Clause 8 under Section
II of the Impugned RfS, which deals with "Guidelines for
implementation of the RfS", clearly states that the
Competitive Bidding Guidelines form the basis for selection of
new Projects under the Impugned RfS. Respondent No.4 also
states that the Appropriate Commission i.e., respondent No.6
does not have jurisdiction vis-a-vis the Impugned Bidding
Process as the same is not governed by the provisions of the
Electricity Act. However, a perusal of the Impugned RfS would
show that respondent No.4 has sought to draw in the
jurisdiction of respondent No.6 in a selective manner. Clause
8.4 (iv) under Section III of the Impugned RfS, which deals
with "Offtake Constraints due to Backdown", inter alia states
that the Solar Power Developers shall follow the forecasting
and scheduling process as per Regulations notified by the Ld.
CERC/Ld. APERC. The 4th respondent has been approbating
and reprobating vis-a-vis jurisdiction of respondent No.6 as
well as the role of DISCOMs in the entire Project. In fact the
RfS clearly indicates that it has been issued in specific
violation of the directions issued by respondent No.3 vide its
G.O.Ms.No.18 dated 15.06.2020. It is trite in law that a party
cannot be permitted to approbate and reprobate on the same
facts and take inconsistent stands. In Joint Action
Committee of Air Line Pilots' Association of India V.
DGCA [(2011) 5 SCC 435], it was held as under:-
"12. The doctrine of election is based on the rule of
estoppel--the principle that one cannot approbate and
reprobate inheres in it. The doctrine of estoppel by
election is one of the species of estoppels in pais (or
equitable estoppel), which is a rule in equity. By that
law, a person may be precluded by his actions or
conduct or silence when it is his duty to speak, from
asserting a right which he otherwise would have had.
Taking inconsistent pleas by a party makes its
conduct far from satisfactory. Further, the parties
should not blow hot and cold by taking inconsistent
stands and prolong proceedings unnecessarily, [Vide
Babu Ram V. Indra Pal Singh [(1998) 6 SCC 358], P.R.
Deshpande V. Maruti Balaram Haibatti [(1998) 6 SCC
507] and Mumbai International Airport (P) Ltd. V.
Golden Chariot Airport [(2010) 10 SCC 422 : (2010) 4
SCC (Civ) 195]"
The Hon'ble Supreme Court of India in the case of
Suzuki Parasrampuria Suitings (P) Ltd. V. Official
Liquidator [(2018) 10 SCC 707], held as under:-
"12. A litigant can take different stands at different
times but cannot take contradictory stands in the
same case. A party cannot be permitted to approbate
and reprobate on the same facts and take
inconsistent shifting stands. The untenability of an
inconsistent stand in the same case was considered
in Amar Singh v. Union of India [Amar Singh V. Union
of India, (2011) 7 SCC 69 ; (2011) 3 SCC (Civ) 560],
observing as follows: (SCC p.86, para 50)
'50. This Court wants to make it clear that an action
at law is not a game of chess. A litigant who comes to
court and invokes its writ jurisdiction must come
with clean hands. He cannot prevaricate and take
inconsistent positions.'
13. A similar view was taken in Joint Action
Committee of Air Line Pilots' Assn. of India V. DGCA
[Joint Action Committee of Air Line Pilots' Assn. of India V.
DGCA, (2011) 5 SCC 435], observing: (SCC p. 443, para 12)
12. The doctrine of election is based on the rule of estoppel-
the principle that one cannot approbate and reprobate
inheres in it. The doctrine of estoppel by election is one of
the species of estoppels in pais (or equitable estoppel),
which is a rule in equity... Taking inconsistent pleas by a
party makes its conduct far from satisfactory. Further, the
parties should not blow hot and cold by taking inconsistent
stands and prolong proceedings unnecessarily."
[Emphasis Supplied]
Thus, in view of the above, the contentions of
respondent No.4 as urged in the Counter Affidavit are
inconsistent with what the respondent No.4 projects in the
Impugned RfS. Further, the Impugned RfS as well as the
proposed transaction even violates the mandate expressed by
respondent No.3 through its GO No.18, dated 15.06.2020.
Hence, such contentions are liable to be rejected and the
Impugned RfS and Impugned Documents are liable to be
quashed as being ultra vires to the provisions of the
Electricity Act, 2003.
13. This Court has given earnest consideration to the
facts and submissions of the learned counsel.
14. This Court felt it appropriate to extract the
relevant provisions of the Act relied upon by the learned
counsel for better understanding of the issue:
"Section 2(15) "Consumer" means any person who is
supplied with electricity for his own use by a licensee or
the Government or by any other person engaged in the
business of supplying electricity to the public under this
Act or any other law for the time being in force and
includes any person whose premises are for the time
being connected for the purpose of receiving electricity
with the works of a licensee, the Government or such
other person, as the case may be.
Section 2(17) "Distribution licensee" means a
licensee authorised to operate and maintain a
distribution system for supplying electricity to the
consumers in his area of supply;
Section 2(47) "open access" means the non-
discriminatory provision for the use of transmission
lines or distribution system or associated facilities with
such lines or system by any licensee or consumer or a
person engaged in generation in accordance with the
regulations specified by the Appropriate Commission;
Section 2(70) "supply", in relation to electricity, means
the sale of electricity to a licensee or consumer;
Section 2(73) ) "transmission licensee" means a
licensee authorised to establish or operate transmission
lines;
Section 2(74) "transmit" means conveyance of
electricity by means of transmission lines and the
expression "transmission" shall be construed
accordingly;
Section 7. Generating company and requirement
for setting up of generating station:- Any generating
company may establish, operate and maintain a
generating station without obtaining a licence under
this Act if it complies with the technical standards
relating to connectivity with the grid referred to in
clause (b) of Section 73.
Section 10. Duties of Generating Companies:- (1)
Subject to the provisions of this Act, the duties of a
generating company shall be to establish, operate and
maintain generating stations, tie-lines, sub-stations
and dedicated transmission lines connected therewith
in accordance with the provisions of this Act or the
rules or regulations made thereunder.
(2) A generating company may supply electricity to any
licensee in accordance with this Act and the rules and
regulations made thereunder and may, subject to the
regulations made under sub-section (2) of Section 42,
simply electricity to any consumer.
(3) Every generating company shall -
(a) submit technical details regarding its generating
stations to the Appropriate Commission and the
Authority;
(b) co-ordinate with the Central Transmission Utility or
the State Transmission Utility, as the case may be, for
transmission of the electricity generated by it.
Section 12 . (Authorised persons to transmit,
supply, etc., electricity): No person shall (a) transmit
electricity; or (b) distribute electricity; or (c) undertake
trading in electricity, unless he is authorised to do so by
a licence issued under section 14, or is exempt under
section 13.
Section 14 (Grant of licence): The Appropriate
Commission may, on an application made to it under
section 15, grant a licence to any person -
(a) to transmit electricity as a transmission licensee; or
(b) to distribute electricity as a distribution licensee; or
(c) to undertake trading in electricity as an electricity
trader, in any area as may be specified in the licence:
Provided that any person engaged in the
business of transmission or supply of electricity under
the provisions of the repealed laws or any Act specified
in the Schedule on or before the appointed date shall be
deemed to be a licensee under this Act for such period
as may be stipulated in the licence, clearance or
approval granted to him under the repealed laws or
such Act specified in the Schedule, and the provisions of
the repealed laws or such Act specified in the Schedule
in respect of such licence shall apply for a period of one
year from the date of commencement of this Act or such
earlier period as may be specified, at the request of the
licensee, by the Appropriate Commission and thereafter
the provisions of this Act shall apply to such business:
Provided further that the Central Transmission
Utility or the State Transmission Utility shall be deemed
to be a transmission licensee under this Act:
Provided also that in case an Appropriate
Government transmits electricity or distributes
electricity or undertakes trading in electricity, whether
before or after the commencement of this Act, such
Government shall be deemed to be a licensee under this
Act, but shall not be required to obtain a licence under
this Act:
Provided also that the Damodar Valley
Corporation, established under sub-section (1) of section
3 of the Damodar Valley Corporation Act, 1948, shall be
deemed to be a licensee under this Act but shall not be
required to obtain a licence under this Act and the
provisions of the Damodar Valley Corporation Act, 1948,
in so far as they are not inconsistent with the provisions
of this Act, shall continue to apply to that Corporation:
Provided also that the Government company or
the company referred to in sub-section (2) of section 131
of this Act and the company or companies created in
pursuance of the Acts specified in the Schedule, shall be
deemed to be a licensee under this Act:
Provided also that the Appropriate Commission
may grant a licence to two or more persons for
distribution of electricity through their own distribution
system within the same area, subject to the conditions
that the applicant for grant of licence within the same
area shall, without prejudice to the other conditions or
requirements under this Act, comply with the additional
requirements relating to the capital adequacy, credit-
worthiness, or code of conduct as may be prescribed by
the Central Government, and no such applicant, who
complies with all the requirements for grant of licence,
shall be refused grant of licence on the ground that
there already exists a licensee in the same area for the
same purpose:
Provided also that in a case where a distribution
licensee proposes to undertake distribution of electricity
for a specified area within his area of supply through
another person, that person shall not be required to
obtain any separate licence from the concerned State
Commission and such distribution licensee shall be
responsible for distribution of electricity in his area of
supply:
Provided also that where a person intends to
generate and distribute electricity in a rural area to be
notified by the State Government, such person shall not
require any licence for such generation and distribution
of electricity, but he shall comply with the measures
which may be specified by the Authority under section
53:
Provided also that a distribution licensee shall
not require a licence to undertake trading in electricity".
PART VI :: DISTRIBUTION OF ELELCTRICITY
Provisions with respect to distribution licensee
Section 42. (Duties of distribution licensee and open
access): (1) It shall be the duty of a distribution licensee to
develop and maintain an efficient, co-ordinated and
economical distribution system in his area of supply and
to supply electricity in accordance with the provisions
contained in this Act.
(2) The State Commission shall introduce open access in
such phases and subject to such conditions, (including
the cross subsidies, and other operational constraints) as
may be specified within one year of the appointed date by
it and in specifying the extent of open access in successive
phases and in determining the charges for wheeling, it
shall have due regard to all relevant factors including such
cross subsidies, and other operational constraints:
Provided also that such surcharge and cross subsidies
shall be progressively reduced in the manner as may
be specified by the State Commission:
4) Where the State Commission permits a consumer or
class of consumers to receive supply of electricity from a
person other than the distribution licensee of his area of
supply, such consumer shall be liable to pay an additional
surcharge on the charges of wheeling, as may be specified
by the State Commission, to meet the fixed cost of such
distribution licensee arising out of his obligation to
supply".
[Emphasis Supplied]
Section 43. (Duty to supply on request): --- (1) 1[Save as
otherwise provided in this Act, every distribution] licensee,
shall, on an application by the owner or occupier of any
premises, give supply of electricity to such premises, within
one month after receipt of the application requiring such
supply:
Provided that where such supply requires extension of
distribution mains, or commissioning of new sub-stations,
the distribution licensee shall supply the electricity to such
premises immediately after such extension or
commissioning or within such period as may be specified by
the Appropriate Commission:
Provided further that in case of a village or hamlet or area
wherein no provision for supply of electricity exists, the
Appropriate Commission may extend the said period as it
may consider necessary for electrification of such village or
hamlet or area.
[Explanation.- For the purposes of this sub-section,
"application" means the application complete in all respects
in the appropriate form, as required by the distribution
licensee, along with documents showing payment of
necessary charges and other compliances.]
(2) It shall be the duty of every distribution licensee to
provide, if required, electric plant or electric line for giving
electric supply to the premises specified in sub-section (1) :
Provided that no person shall be entitled to demand, or to
continue to receive, from a licensee a supply of electricity for
any premises having a separate supply unless he has
agreed with the licensee to pay to him such price as
determined by the Appropriate Commission.
(3) If a distribution licensee fails to supply the electricity
within the period specified in sub-section (1), he shall be
liable to a penalty which may extend to one thousand
rupees for each day of default".
Section 62. Determination of Tariff: -
(1) The Appropriate Commission shall determine the
tariff in accordance with the provisions of this Act for--
(a) supply of electricity by a generating company to a
distribution licensee:
Provided that the Appropriate Commission may, in case
of shortage of supply of electricity, fix the minimum and
maximum ceiling of tariff for sale or purchase of
electricity in pursuance of an agreement, entered into
between a generating company and a licensee or
between licensees, for a period not exceeding one year
to ensure reasonable prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the
same area by two or more distribution licensees, the
Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling
of tariff for retail sale of electricity.
(2) The Appropriate Commission may require a licensee
or a generating company to furnish separate details, as
may be specified in respect of generation, transmission
and distribution for determination of tariff.
(3) The Appropriate Commission shall not, while
determining the tariff under this Act, show undue
preference to any consumer of electricity but may
differentiate according to the consumer's load factor,
power factor, voltage, total consumption of electricity
during any specified period or the time at which the
supply is required or the geographical position of any
area, the nature of supply and the purpose for which
the supply is required.
(4) No tariff or part of any tariff may ordinarily be
amended, more frequently than once in any financial
year, except in respect of any changes expressly
permitted under the terms of any fuel surcharge formula
as may be specified.
(5) The Commission may require a licensee or a
generating company to comply with such procedures as
may be specified for calculating the expected revenues
from the tariff and charges which he or it is permitted to
recover.
(6) If any licensee or a generating company recovers a
price or charge exceeding the tariff determined under
this section, the excess amount shall be recoverable by
the person who has paid such price or charge along
with interest equivalent to the bank rate without
prejudice to any other liability incurred by the licensee.
Section 63. Determination of tariff by bidding
process:
Notwithstanding anything contained in section 62, the
Appropriate Commission shall adopt the tariff if such
tariff has been determined through transparent process
of bidding in accordance with the guidelines issued by
the Central Government.
Section 65. Provision of subsidy by State
Government - If the State Government requires the
grant of any subsidy to any consumer or class of
consumers in the tariff determined by the State
Commission under section 62, the State Government
shall, notwithstanding any direction which may be
given under section 108, pay, in advance and in such
manner as may be specified, the amount to compensate
the person affected by the grant of subsidy in the
manner the State Commission may direct, as a
condition for the licence or any other person concerned
to implement the subsidy provided for by the State
Government:
Provided that no such direction of the State
Government shall be operative if the payment is not
made in accordance with the provisions contained in
this section and the tariff fixed by State Commission
shall be applicable from the date of issue of orders by
the Commission in this regard".
Section 86: Functions of State Commission:
(1) The State Commission shall discharge the following
functions, namely:--
(a) determine the tariff for generation, supply,
transmission and wheeling of electricity, wholesale,
bulk or retail, as the case may be, within the State:
Provided that where open access has been permitted to
a category of consumers under section 42, the State
Commission shall determine only the wheeling charges
and surcharge thereon, if any, for the said category of
consumers;
(b) regulate electricity purchase and procurement
process of distribution licensees including the price at
which electricity shall be procured from the generating
companies or licensees or from other sources through
agreements for purchase of power for distribution and
supply within the State;
(c) facilitate intra-State transmission and wheeling of
electricity;
(d) issue licences to persons seeking to act as
transmission licensees, distribution licensees and
electricity traders with respect to their operations within
the State;
(e) promote cogeneration and generation of electricity
from renewable sources of energy by providing suitable
measures for connectivity with the grid and sale of
electricity to any person, and also specify, for purchase
of electricity from such sources, a percentage of the total
consumption of electricity in the area of a distribution
licensee;
(f) adjudicate upon the disputes between the licensees
and generating companies and to refer any dispute for
arbitration;
(g) levy fee for the purposes of this Act;
(h) specify State Grid Code consistent with the Grid
Code specified under clause (h) of sub-section (1) of
section 79;
(i) specify or enforce standards with respect to quality,
continuity and reliability of service by licensees;
(j) fix the trading margin in the intra-State trading of
electricity, if considered, necessary;
(k) discharge such other functions as may be assigned
to it under this Act.
(2) The State Commission shall advise the State
Government on all or any of the following matters,
namely:--
(i) promotion of competition, efficiency and economy in
activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganisation and restructuring of electricity
industry in the State;
(iv) matters concerning generation, transmission ,
distribution and trading of electricity or any other matter
referred to the State Commission by that Government.
(3) The State Commission shall ensure transparency
while exercising its powers and discharging its
functions.
(4) In discharge of its functions, the State Commission
shall be guided by the National Electricity Policy,
National Electricity Plan and tariff policy published
under section 3.
Relevant provisions of Open Access Regulations read as under:
2. Definitions:
(i) In this Regulation, unless the context otherwise requires:-
(b) "applicant", means a person who makes an application
to the Nodal Agency for open access and includes any
person engaged in generation, a licensee or any consumer
eligible for open access under this Regulation;
(j) "user" or "open access user" means a person using or
intending to use the transmission system and/or the
distribution system of the licensees in the state for receiving
supply of electricity from a person other than the
distribution licensee of his area of supply, and the
expression includes a generating company and licensee.
17. Open Access charges
(iv) The open Access user shall also be liable to pay
additional surcharge on charges of wheeling as may be
specified by the Commission from time to time under section
42(4) of the Act, in case open access is sought for receiving
supply from a person other than the distribution licensee of
such consumer's area of supply, to meet the fixed cost of
the distribution licensee arising out of his obligation to
supply".
Relevant Clauses of the Competitive Bidding Guidelines
issued by the respondent No.1 reads as follows:
"2.1.2 Unless explicitly specified in these Guidelines, the
provisions of these Guidelines shall be binding on the
Procurer/Intermediary Procurer/End Procurer and the
Authorised Representative of the Procurer. The process to
be adopted in event of any deviation proposed from these
Guidelines is specified in Clause 18 of these Guidelines."
"18. DEVIATION FROM PROCESS DEFINED IN THE
GUIDELINES: In case there is any deviation from these
Guidelines and/or the SBDs, the same shall be subject to
approval by the Appropriate Commission. The Appropriate
Commission shall approve or require modification to the bid
documents within a reasonable time no exceeding 90
(ninety) days."
The relevant extracts of the policy are reiterated as
follows:-
"States shall endeavour to procure power from renewable energy sources
through competitive bidding to keep the tariff low, except from the waste to
energy plants. Procurement of power by Distribution Licensee from
renewable energy sources, from Solar PV Power Projects above the notified
capacity, shall be done through competitive bidding process from the date
to be notified by the Central Government. However, till such notification,
any such procurement of power from renewable energy sources projects,
may be done under Section 62 of the Electricity Act, 2003."
Section 129. Orders for securing compliance:-
(1) Where the Appropriate Commission, on the basis of
material in its possession, is satisfied that a licensee is
contravening, or is likely to contravene, any of the
conditions mentioned in his licence or conditions for
grant of exemption or the licensee or the generating
company has contravened or is likely to contravene any
of the provisions of this Act, it shall, by an order, give
such directions as may be necessary for the purpose of
securing compliance with that condition or provision.
(2) While giving direction under sub-section (1), the
Appropriate Commission shall have due regard to the
extent to which any person is likely to sustain loss or
damage due to such contravention.
15. In the facts and circumstances of the case and
considering the submissions of the counsel and on perusal of
the record, this Court found that it is the case of the
respondents that the 4th respondent is procuring the power
from the SPD for tariff fixed in the competitive bidding
process and supplying power free of cost to the agriculturists
in the State through AP TRANSCO and AP DISCOMs on
payment of cost of transmission and distribution as fixed by
the 6th respondent-Commission under Section 42 of the Act
and the cost of the power is reimbursed to the 4th respondent
by the 3rd respondent. The activity of purchase of power by
the 4th respondent from the Solar Power Developers though
Tariff fixed in the competitive bidding process by adopting
essence of the competitive bidding guidelines is contrary to
the provisions of the Act and in total derogation of the
competitive bidding guidelines framed by the Central
Government exercising power under the provisions of Section
63 of the Electricity Act,. The whole transaction of the project
involves generation of power by the solar power developers
and supply power to the 4th respondent, non-licensee, for the
tariff fixed in the competitive bidding. To put it in other way,
the 4th respondent will purchase power from solar developers
and supply the same to the agriculturists/consumers free of
cost. But, the 4th respondent is being paid the cost (cost of
power purchased and costs of transmission and distribution)
of the power supplied to the end-consumer by 3rd respondent.
Hence, the 4th respondent is not supplying power free of cost
to the consumers. The cost of the power is being borne by the
3rd respondent from its exchequer. Hence, the activity of
procurement of power by the 4th respondent and supply the
same to the consumer involves trading. Therefore, the
contention of respondents that no trading activity is involved
in the transaction/activity of the 4th respondent, could not be
accepted. The 4th respondent cannot act as a nodal agency
for the 3rd respondent for implementation of the scheme, as it
is not a department of the 3rd respondent-Government. The
4th respondent is independent company, juristic person
incorporated under the Companies Act. The Government
Order issued by the 3rd respondent is not binding on the 4th
respondent. It shall be made binding only by way of separate
agreements. However, the scheme is floated by the 3rd
respondent and seeks to implement the same through the 4th
respondent. The 3rd respondent is purchasing power through
the 4th respondent from the Solar Power Developer, for the
fixed tariff, and supplying the same to the end-consumer,
agriculturist. Sri V.R.N.Prasanth, learned counsel appearing
for the 6th respondent, would contend that the 3rd respondent,
being a deemed licensee as per the provisions of Section 13, is
purchasing the power, through the 4th respondent-nodal
agency and therefore the 4th respondent does not require a
separate licence is untenable, as the 4th respondent is a
separate entity and the 3rd respondent being a deemed
licensee shall follow the provisions of the Act in procuring
power from the SPD through the 4th respondent. Further, the
4th respondent is procuring the power for the 3rd respondent
and payment is being made by the 3rd respondent. Hence the
activity of the 4th respondent could be termed as procurement
of power from the SPD on behalf of the 3rd respondent and
supplying the same to the end-consumer. Hence, the 4th
respondent could be called as procurer, intermediary
procurer, agent or the representative of the 3rd respondent.
Hence, the activity of the 4th respondent comes within the
ambit of clause 1.2 of competitive bidding guidelines and
within the meaning of 'Trading' as defined under Section 2(71)
of the Act. Hence, the contra contentions of the learned
counsel for the respondents are untenable. In view of the
above discussion, the 4th respondent cannot
purchase/procure power from the SPD by inviting bids
without obtaining any licence. The Generator may establish,
operate and maintain a generating station without obtaining a
licence under the Act, but it could not supply the same to the
4th respondent - non-licensee to supply the same to the end-
consumer contrary to the provisions of the Act. The
Electricity Act, 2003 is a special Act and a comprehensive
enactment/code promulgated by the Parliament to regulate
and govern Electricity Section in India. Hence, any action
(including issuance of the Impugned Documents) must
conform to the requirements set out in the Electricity Act,
2003 and the rules, regulations and guidelines framed
thereunder. The action of 4th respondent could not be said to
be outside the provisions of Electricity Act. The 3rd
respondent formulated the scheme to provide supply of 9
hours day time free power supply to the agriculturists. The
project is schematically prepared to take the activity of
generation, supply, purchase and payments made to the 4th
respondent and SPD outside the purview of provisions of
Electricity Act and thereby ousted the jurisdiction of 6th
respondent under Section 86 of the Electricity Act for
extraneous considerations. The 3rd respondent should not
forget that it is going to supply power to the agriculturists free
of cost by making huge payment to the SPD from the State
exchequer i.e., public money through 4th respondent. The
power could be purchased through transparent bidding
process in strict adherence to the provisions of the Electricity
Act, by adopting competitive bidding guidelines, by entering
legally binding contracts as the power Tariff has to be
approved by the 6th respondent-Commission under Section 63
of the Act. Hence, the 3rd respondent cannot act arbitrarily in
procuring/purchasing power with the avowed objective of
supplying power free of cost to the agriculturists in the State,
resolve any dispute through the dispute resolution
mechanism envisaged under the scheme which gives scope
for nepotism, favouritism by acting arbitrarily. Hence, the
contra contentions of Sri P.Raghuram, learned senior counsel
and Sri S.Sriram, learned Advocate General that the 3rd
respondent is purchasing power through the 4th respondent -
nodal agency and making payments to the SPD, and
supplying the power through the licensees, AP TRANSCO, AP
DISCOMs to the end-consumer; therefore, the transaction of
supply of power does not amount to Trading and no
commercial activity is involved; hence, the provisions of the
Electricity Act and competitive bidding guidelines are not
applicable, could not be accepted, as the said contention is
contrary to the provisions of the Act. As per the provisions of
Section 12 of the Act, no person shall (a) transmit or (b)
distribute electricity or (c) undertake trading in electricity,
unless he is authorized to do so by a licence issued under
Section 14, or is exempt under Section 13. The provisions of
Section 14 of the Act, authorizes the appropriate commission
may grant licence to any person, but one of the proviso says
that in case an appropriate Government transmits electricity
or distributes electricity or undertakes trading in electricity,
whether before or after the commencement of this Act, such
Government shall be deemed to be a licensee under this Act,
but shall not be required to obtain a licence under this Act.
As per Section 7 of the Act, a generating company may
establish, operate and maintain a generating station without
obtaining a licence under this Act, if it complies with the
technical standards relating to connectivity with the grid
referred to in Clause (b) of Section 73. The provisions of the
Electricity Act and competitive bidding guidelines apply to the
whole activity of generation, supply, distribution of electricity
power. As per the provisions of the Act, permission is not
required to generate power, but the generating company has
to establish the generation station as per the provisions of the
Act, with approvals and supply to the licensees only and it
cannot sell to non-licensee, but supply to the consumer who
obtained permission under Section 42 of the Act under open
access system of power supply. The Generator (SPD) is
supplying power for price/tariff to the 4th respondent, non-
licensee. In turn, the 4th respondent is supplying power to
end-consumer by receiving cost of the power from the
3rd respondent. However, the end-consumer received the
power free of cost, but the cost of the power is being paid by
the 3rd respondent to the 4th respondent. Hence, the activity
of the 4th respondent comes within the meaning of 'Trading'
as defined under Section 2(71) of the Act. In that process,
the 3rd respondent is spending huge public money, even
though for the benefit of agriculturist, its action should be fair
and transparent. It is under obligation to follow the statutory
provisions applicable to the scheme of activity. It could not
curve out part of the transaction of the scheme to be outside
the provision of the Act, to act according to its whims and
fancies to favour blue-eyed boys.
16. It is profitable to refer to the following decisions:
In Energy Watchdog Vs. CERC & Ors (2017) 14 SCC
80 the Hon'ble Supreme Court held as follows:
"19. The construction of Section 63, when read with the
other provisions of this Act, is what comes up for decision in
the present appeals. It may be noticed that Section 63
begins with a non obstante clause, but it is a non obstante
clause covering only Section 62. Secondly, unlike Section 62
read with Sections 61 and 64, the appropriate
Commission does not "determine" tariff but only
"adopts" tariff already determined under Section 63.
Thirdly, such "adoption" is only if such tariff has
been determined through a transparent process of
bidding, and, fourthly, this transparent process of
bidding must be in accordance with the guidelines
issued by the Central Government".
In view of the above decisions of the Hon'ble Apex
Court, the contentions of the counsel for respondents that the
provisions of Section 63 of the Act is not applied to subject
bidding process as the provisions of Section 63 is another
limb of provisions of Section 62 of the Act. The provisions of
Section 62 of the Act shall apply in the case where the
generating company supply electricity to the distribution
licensee, when once the provisions of Section 62 of the Act is
not applicable, by natural concomitant, the provisions of
Section 62 are also not applicable, holds no water.
In Dipak Babaria & Ors. V. State of Gujarat & Ors.
(2014) 3 SCC 502 it was held as under:-
"53. It is well settled that where the statute provides for a
thing to be done in a particular manner, then it has to be
done in that manner and in no other manner. This
proposition of law laid down in Taylor V. Taylor (1875) 1
Ch D 426, 431 was first adopted by the Judicial
Committee in Nazir Ahmed V. King Emperor reported in
MANU/PR/0020/1936: AIR 1936 PC 253 and then
followed by a bench of three Judges of this Court in Rao
Shiv Bahadur Singh V. State of Vindhya Pradesh reported
in MANU/SC/0053/1954: AIR 1954 SC 322. This
proposition was further explained in paragraph 8 of State
of U.P. Vs. Singhara Singh by a bench of three Judges
reported in MANU/SC/0082/1963: AIR 1964 SC 358 in
the following words:
8. The rule adopted in Taylor V. Taylor is
well recognized and is founded on sound principle.
Its result is that if a statute has conferred a power
to do an act and has laid down the method in
which that power has to be exercised, it necessarily
prohibits the doing of the act in any other manner
than that which has been prescribed. The principle
behind the rule is that if this were not so, the
statutory provision might as well not have been
enacted ..."
[emphasis supplied]
In State of Kerala & Others V. Mar Appraem Kuri
Company Limited & Another (2012) 7 SCC 106 it was held
as follows:
"56. The background of the enactment of the Central Chit Funds
Act, which refers to the Report of the Banking Commission has
been exhaustively dealt with in the case of Shriram Chits and
Investment (P) Limited V. Union of India [(1993) Supp 4 SCC 226]
as also in the Statement of Objects and Reasons of the 1982 Act.
The clear intention of enacting the Central 1982 Act,
therefore, was to make the Central Act a complete code with
regard to the business of conducting chit funds and to
occupy the legislative field relating to such chit funds.
57. Moreover, the intention to override the State laws is clearly
manifested in the Central Act, especially Section 3 which makes it
clear that the provisions of the Central Act shall have effect
notwithstanding anything to the contrary contained in any other
law for the time being in force. Similarly, Section 90 of the Central
Act providing for the repeal of State legislations also manifests the
intention on the part of the Parliament to occupy the field hitherto
occupied by State Legislation.
In PTC India Limited V. Central Electricity Regulatory
Commission & Others, [(2010) 4 SCC 603], the Hon'ble Supreme
Court has upheld and recognized the existence of the Electricity
Act as a comprehensive legislation and held as follows:
"17. The 2003 Act is enacted as an exhaustive code on
all matters concerning electricity. It provides for
"unbundling" of SEBs into separate utilities for generation,
transmission and distribution. It repeals the Electricity Act,
1910; the Electricity (Supply) Act, 1948 and the Electricity
Regulatory Commissions Act, 1998. The 2003 Act, in
furtherance of the policy envisaged under the
Electricity Regulatory Commissions Act, 1998 (the
1998 Act), mandated the establishment of an
independent and transparent regulatory mechanism,
and has entrusted wide-ranging responsibilities with
the Regulatory Commissions. While the 1998 Act
provided for independent regulation in the area of tariff
determination; the 2003 Act has distanced the Government
from all forms of regulation, namely, licensing, tariff
regulation, specifying Grid Code, facilitating competition
through open access, etc.
18. Section 3 of the 2003 Act requires the Central
Government in consultation with the State Governments
and the Authority, to prepare the National Electricity Policy
as well as tariff policy for development of the power system
based on optimum utilization of resources. The Central and
the State Governments are also vested with rule-making
powers under Sections 176 and 180 respectively, while the
"Authority" has been defined under Section 2(6) as the
regulation-making power under Section 177. On the other
hand, the Regulatory Commissions are vested with
the power to frame policy, in the form of regulations,
under various provisions of the 2003 Act. However,
the Regulatory Commissions are empowered to frame
policy, in the form of regulations, as guided by the
general policy framed by the Central Government.
They are to be guided by the National Electricity
Policy, the tariff policy as well as the National
Electricity Plan in terms of Sections 79(4) and 86(4) of
the 2003 Act (see also Section 66)."
[Emphasis Supplied]
17. If the impugned RfS and draft PPA are read
keeping in mind the above provisions and decisions, it is clear
that the RfS and draft PPA are issued in gross violation of the
provisions of the Electricity Act as well as the CBG framed by
respondents 1 & 2. Clause 3 of the CBG deals with
preparation for inviting bid and project preparedness. Clause
18 of the CBG, which deals with 'deviation from process
defined in the guidelines' states that any deviation from the
CBG is subject to approval by the 6th respondent - APERC.
Further it is the submission of the respondents that 4th shall
not be supplying power to AP DISCOMs but has proposed to
provide power to agricultural consumers of the State of
Andhra Pradesh by merely using the network of AP
TRANSCOs and AP DISCOMs. However, the said contention of
the 4th respondent is in violation of the G.O.No.18, dated
15.06.2020 issued by the 3rd respondent which imposes
obligations on DISCOMs of the State to obtain necessary
permissions and approvals from APERC/6th respondent
regarding implementation of the scheme as well as execution
of agreements for supply of power to the agricultural
consumers. The relevant content of G.O.No.18, dated
15.06.2020 reads as under:
"TASKS of APDISCOMs"
...
35. APDISCOMs shall obtain permissions/necessary
approvals from APERC to implement this scheme.
State Government will issue appropriate directions to
APERC under Section 108 of the Electricity Act, 2003
from time to time for implementation of this scheme.
...
37. APDISCOMs shall enter into agreement with
APGECL for the supply of power to agricultural
consumers and APDISCOMs shall obtain necessary
approvals from APERC for this."
Therefore, the 4th respondent, in law, is required to issue the
impugned RfS and draft PPA strictly in accordance with the
provisions of the CBG to conform to the mandate of Section
63 of the Act and in case of any deviations the same must be
approved by the 6th respondent - APERC. The impugned RfS
and draft PPA were substantially deviated from the provisions
of the Act and the CBG and the said deviations were not
approved by the 6th respondent Commission. As the
impugned RfS and draft PPA are not in conformity with CBG
and the provisions of the Act, obviously its continuance by
the successive Governments without any legal impediments is
doubtful and it will reduce the higher participation of the
bidders in the bidding process as it lacks fair bidding process.
Hence, impugned RfS and draft PPA are liable to be set aside.
18. Accordingly, the Writ Petition is allowed, setting
aside the impugned RfS and draft PPA. However, it is left
open to the 4th respondent, if so advised, may issue fresh
requests for Selection in accordance with the guidelines for
Tariff Based Competitive Bidding process for procurement of
Power from Grid Connected Solar Photo Voltaic Power
Projects dated 03.08.2017 issued under Section 63 of the Act.
No order as to costs.
19. Miscellaneous Petitions, if any, pending in this
writ petition shall stand closed.
___________________________
JUSTICE M.GANGA RAO
17-06-2021
Anr/Vjl
THE HON'BLE SRI JUSTICE M.GANGA RAO
Writ Petition No. 674 of 2021
17-06-2021
Anr/Vjl
