Madras High Court
Jayalakshmi Spinning Mills Ltd vs The Chairman on 23 March, 2022
W.P. No.24413 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.03.2022
CORAM :
THE HONOURABLE MR.JUSTICE K.KALYANASUNDARAM
W.P. No.24413 of 2014 & M.P.Nos.2 & 3 of 2014
Jayalakshmi Spinning Mills Ltd.,
HTSC No.299, Chikkanampatty,
Omalur Taluk, Salem District.
Repd. By its Director
R.Ravichandran ... Petitioner
Vs.
1. The Chairman
Tamil Nadu General and Distribution Corporation Limited,
[TANGEDCO],
144, Anna Salai, Chennai – 600 002.
2. The Chief Financial Controller/Revenue,
TANGEDCO,
144, Anna Salai, Chennai – 600 002.
3. Tamil Nadu Electricity Regulatory Commission,
Through its Secretary,
No.19A, Rukmini Lakshmipathy Salai,
Egmore, Chennai – 600 008.
1/25
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W.P. No.24413 of 2014
4. The Superintending Engineer,
TANGEDCO,
Tiruppur Electricity Distribution Circle,
Tiruppur. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India
praying for issuance of a Writ of Certtiorari to call for the records of the
second respondent contained in impugned letter
CFC/FC/DFC/AAO,HT/AS.3/REV/D.N.115/13 dated 29.07.2013 and quash
the same as arbitrary, illegal and violative of the provisions of the Electricity
Act, 2003 and the orders of the TNERC.
For Petitioner : Mr.R.S.Pandiaraj
For Respondents : Mr.M.Abulkalam
Standing Counsel for the respondents
1, 2 & 4
ORDER
The order of cancellation of the benefit of Deemed Demand
Charges issued by the second respondent in proceedings dated 29.07.2013
is sought to be quashed in this writ petition.
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W.P. No.24413 of 2014
2. The writ petitioner is the High Tension Electricity Consumers
and they are purchasing the electricity power from the third parties for
generating power and adjusting the same for the benefit of petitioner's
establishments.
3. In this regard certain terms and agreements were agreed
upon between the parties by way of adjudicative process before the Tamil
Nadu Electricity Regulatory Commission.
4. The learned counsel appearing on behalf of the writ
petitioner contented that the unilateral withdrawal of concession granted to
the writ petitioner are arbitrary and unsustainable in view of the order dated
15.05.2006 in petition No.TP 1/05 by the Tamil Nadu Electricity Regulatory
Commission. It is contended that the adjudicative process had been
conducted statements, objections and suggestions were received from all
stakeholders and thereafter a decision was taken by the Tamil Nadu
Electricity Regulatory Commission, Chennai in petition No.T.P.1/2005 and
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W.P. No.24413 of 2014
an order was passed in order No.2 dated 15.05.2006. The preamble of the
order stipulates as follows:-
Sub-section (2) of Section 42 of the Electricity Act,
2003, stipulates that the State Commission shall introduce
open access in such phases and subject to such conditions
as may be specified, within one year of the appointed
date. Accordingly, the Commission has notified the
Tamil Nadu Electricity Regulatory Commission – Intra
State Open Access Regulations 2005 in the Tamil Nadu
Government Gazette dated the 3rd August, 2005 so as to
introduce open access in Tamil Nadu. As per Regulation
9 of the aforesaid Regulations, various charges payable
to State Transmission Utility / Transmission Licensee and
Distribution Licensee by an open access customer have to
be determined by the Commission. As directed by the
Commission, the TNEB filed a petition for determination
of the above charges on 26.09.2005 and the Petition was
registered and numbered as T.P. 1 of 2005.
In exercise of the powers conferred by
section 42 of the Electricity Act, 2003 (Act 36 of 2003)
and all other powers enabling it in this behalf, the Tamil
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W.P. No.24413 of 2014
Nadu Electricity Regulatory Commission (TNERC) after
having considered the written objections, consulted the
members of the State Advisory Committee, heard the
issues raised by the stakeholders in a public hearing, the
reply of the Tamil Nadu Electricity Board, the applicant
herein, and having considered the relevant documents
available on record, passes this order, fixing the
transmission charges, wheeling charges and other
charges specified under the aforesaid Open Access
Regulations and payable by an open access customer.
Sd....... Sd..... Sd.....
B.Jeyaraman S.Thangarathnam A.Balraj
Member Member Chairman
5. The learned senior counsel relied on the preamble of the said
order, which states that the Regulatory Commission considered the written
objections, consulted the members of the State Advisory Committee, heard
the issues raised by the stakeholders by way of public hearing and the reply
from the Tamil Nadu Electricity Board and considered all the issues.
Pursuant to the said order dated 15.05.2006 the applicability of Deemed
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W.P. No.24413 of 2014
Demand Charges has been stipulated and in respect of Deemed Demand
Charges it is stated that the transmission losses in each voltage play a vital
role in deciding the deemed demand. The loss levels at each voltage are
given above. The loss factor depends on the voltage at which the power is
injected and the voltage at which the open access user draws. Since various
combinations are possible, a simple methodology is adopted to approximate
the loss factor under various scenarios. Even though the power, in an
interconnected grid, flows by displacement and does not actually traverse the
whole distance from point of injection to the point of travel, the accepted
principle, in general is, that the loss estimation shall be based on the
theoretical route of flow. For example, even though the generated power is
injected by a generator at 11 K V and is also drawn at the same voltage of
11 KV at a distant place, the power is supposed to have been transformed
through the higher voltages of 33, 110,230 KV etc., again transformed into
the lower levels and reach the point of drawal. To emulate such scenarios it
is assumed that the said power, flows in an upward and downward direction
as indicated below, through various transformation levels and undergoes
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W.P. No.24413 of 2014
50% of the loss, in each direction, in that level. The percentage of deemed
demand supplied by the licensee for typical cases of injection and drawal
and based on the loss factors and also considered by the Regulatory
Commission. Considering the technical aspects the Regulatory Commission
passed an order in respect of billing of monthly consumption which is
segregated into two parts as under.
(i) Quantum of energy supplied by the generator at open
access user end and;
(ii) Quantum of energy supplied by Distribution licensee to open
access user.
The demand charges in a billing month are to be arrived at as
detailed below;
(a) The maximum demand recorded in a month shall be
segregated into demand supplied by the generator and the
demand supplied by the licensee taking into account the actual
energy consumed ini units, the actual energy in units supplied
by the generator and average power factor maintained at the
consumption poin tin the billing month.
(b) The demand charges payable by the open access customer will be
calculated as below:
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W.P. No.24413 of 2014
Case 1:
Injection Voltage 110 kV
Drawal Voltage 33 kV
Percentage of deemed demand as per the table = 41.28
Sanction Demand 1000 Kva
Recorded Demand 855 Kva
Units consumed 650000 units
Power factor 0.95
Units supplied by generator (at consumption point) : 500000 units
Demand supplied by generator =500000/720*0.95=659.72
Kva
Demand supplied by the licensee =855-659.72=195.28 Kva
Billable demand-supplied by licensee =900-659.72=240.28
(at 90% of the sanctioned demand)
Demand charges payable
=(659.72*0.4128*300)+(240.28*300)
=81699.72+72084=153783.72
Case 2:
Injection Voltage 230kV
Drawal Voltage 22/11 kV
Percentage of deemed demand as per the table above = 40.04
Sanction Demand 1000 Kva
Recorded Demand 950 Kva
Units consumed 700000 units
Power factor 0.92
Units supplied by generator (at consumption point) : 700000 units
Demand supplied by generator =700000/720*0.92=894.44
Kva
Demand supplied by the licensee =950-894.44=55.56 Kva
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W.P. No.24413 of 2014
Billable demand-supplied by licensee = 950-894.44=55.56 Kva
Demand charges payable =
(894.44*0.4004*300)+(55.56*300)
= 107440.13+16668=124108.13
6. Importantly in paragraph No.5.24.2 the order passed by the
Regulatory Commission itself categorically states that all the orders will take
effect from the date of this order and till such time the charges are revised.
Further revision shall normally be along with the regular tariff petition by
the licensee. The licensee may also approach the Commission for revision of
these charges by filing a distinct revision petition without linkage to the
regular tariff revision. Further the commission reserves the right to initiate
suo-motu procedure for revision of the charges. Thus it is made clear that the
licensee has got right to approach the Commission for revision of these
charges by filing a distinct revision petition. The commission also shall
initiate suo-motu procedure for revision of the charges. Thus both the
licensee as well as the Commission are empowered to re-open the concession
granted in respect of Deemed Demand charges. It is further made clear that
re-opening of the concession of Deemed Demand Charges is payable either
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W.P. No.24413 of 2014
by way of revision petition by the licensee or by way of suo-motu revision by
the Regulatory Commission. Thus the authorities of the board has no
authority to cancel the concession granted unilaterally without reference to
the order passed by the Regulatory Commission by invoking clause 5.24.2
of the order dated 15.05.2006 in petition No.T.P.1 of 2005.
7. The learned senior counsel is of the opinion that the
Regulatory Commission has not passed any such order withdrawing the
concession granted in respect of Deemed Demand Charges to the open
access consumers/fosil fuel based generators. In the absence of any such
order by the Regulatory Commission, it is not open to the authorities of the
electricity board to cancel the concession unilaterally by passing the
impugned order.
8. The learned Additional Advocate General appearing on
behalf of the respondents 1, 2 & 4 opposed the contentions of the learned
counsels appearing for the writ petitioner by stating that grant of Deemed
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Demand Charges is a concession extended by the Commission at the
instance of the board. Such a concession was agreed to be granted by the
board on certain terms and conditions. The concession was extended
undoubtedly for many years, however on account of certain financial
implications the board has decided to withdraw the concession of the
Deemed Demand Charges and the competent authorities are empowered to
do so. In view of the fact that in the subsequent order passed by the
Regulatory Commission, the concession of Deemed Demand Charges were
omitted. The omission of extending the concession of Deemed Demand
Charges will provide an implied power to the authorities competent of the
Electricity board to cancel the concession of the Deemed Demand Charges
granted to open access consumer/fosil fuel based generators. Thus there is
no irregularity or infirmity in respect of the impugned circular passed in this
regard. It is further contended that the benefit extended is being a concession
can never be claimed as a right by the writ petitioner. The concession is
granted considering various other factors by the commission in the year
2012. On account of the changed circumstances the board by way of an
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W.P. No.24413 of 2014
order dated 30.03.2012 in order No.2/2012 the concept of grant of Deemed
Demand Charges were dispensed with. However the learned Additional
Advocate General admitted the fact that there is no specific clause
withdrawing the concession or to dispense with the concession granted
earlier. However such an order for withdrawal of concession was passed
with reference to the wind mill energy case. However in respect of the open
access customers/fosil fuel based generators no such order was passed by
the Tamil Nadu Electricity Regulatory Commission. This being the factum of
the case there is no irregularity or illegality in respect of the cancellation of
concession of Deemed Demand Charges granted earlier to this writ
petitioner. The learned Additional Advocate General further contended that
in respect of Wind Mill Generators and bio-gas power generators the said
concession has been withdrawn and the Regulatory Commission had passed
orders to that effect. When such being the factum of the case the mere
omission shall not be construed as an extension of the concession granted in
all other cases. The concession has been withdrawn and the same cannot be
continued in respect of the writ petitioner alone, who is coming under the
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W.P. No.24413 of 2014
category of open access customers/fosil fuel based generators. Thus the writ
petition is liable to be rejected.
9. Considering the arguments advanced on both sides, this
Court is of the opinion that admittedly the concession of Deemed Demand
Charges were granted to all the writ petitioners by way of an order by the
Tamil Nadu Electricity Regulatory Commission in T.P.1 of 2005 dated
15.05.2006. The preamble of the order categorically enumerates that an
adjudicative process had been conducted and written objections,
suggestions, consulted the members of the State Advisory Committee, heard
the issues raised by the stakeholders by way of public hearing and were
obtained before passing an order. This Court is of the opinion that such a
process ought to have been conducted before withdrawing the concession
granted to these writ petitioners. Concept of implied withdrawal can never
be accepted. In view of the fact that through an agreement the concession
was granted and it is contractual in nature. The petitioner is generating
electricity power and keeping the same for their own usage. The service of
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the electricity board is also utilised by the petitioner for transmitting the
electricity power. Thus the services ought to be compensated by the writ
petitioner undoubtedly all these conditions were considered by providing
opportunity to all the parties and a decision was taken by the Tamil Nadu
Electricity Regulatory Commission. Such being the factum, while
withdrawing the concession it is necessary on the part of the electricity
board to approach the Electricity Regulatory Commission by filing a proper
application or with a request to initiate suo-motu revision under clause
5.24.2 of the said order dated 15.05.2006 in respect of the open access
customers/fosil fuel based generators. In respect of all other categories the
Regulatory Commission had already passed orders withdrawing the
concession of Deemed Demand Charges. Thus it is made clear that the
electricity board has to approach the Tamil Nadu Electricity Regulatory
Commission for the purpose of revision of all such concessions granted to
this category.
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10. This Court is of the considered opinion that when certain
concession are granted for a clause/group of people by way of adjudicative
process, the said concession can be withdrawn only by following the
procedure. In the event of unilateral cancellation of such concession,
certainly rights of the persons, who enjoyed the concession will be
prejudiced. Even such a consultation process has been stipulated in the order
passed by the Electricity Regulatory Commission dated 15.05.2006 in clause
5.24.2 which contemplates that the licensee may also approach the
Commission for revision of these charges by filing a distinct revision petition
without linkage to the regular tariff revision. Further the commission
reserves the right to initiate suo-motu procedure for revision of the charges.
When such a power has been provided under the very order, there is no
impediment to the Regulatory Commission to initiate suo-motu revision to
re-open the case of open access consumers/fosil fuel based generators.
Electricity board is also competent to submit an application for revision of
the charges before the Regulatory Commission.
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W.P. No.24413 of 2014
11. On a perusal of the entire records it is made clear that no
adjudicative process had been conducted before issuing the impugned order
by the Tamil Nadu Regulatory Commission in respect of the category of
open access consumers/fosil fuel based generators. When the concession is
extended to this category withdrawal of the same must be done by providing
an opportunity to the persons who are benefited from and out of the
concession. Admittedly no such opportunity was provided to the writ
petitioner before issuing impugned circular by the respondents. An
opportunity to be provided is for the purpose of submitting the objections in
respect of cancellation of such concession. Thus it is made clear that as per
clause 5.24.2 the Electricity Board is at liberty to approach the Regulatory
Commission if so advised.
12. The learned Additional Advocate General on behalf of the
third respondent Tamil Nadu Electricity Regulatory Commission further
contended that the concept of Deemed Demand benefit was introduced in
Order No.3 of 2006 by the Commission. Though there was no regulation
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W.P. No.24413 of 2014
governing the said subject, it was introduced solely with a view to extend a
concession to generators as the introduction of open access was in the initial
stage. The deemed demand is a fiction, which was evolved to promote open
access in the formative stages and rightly Commission has reviewed its own
decision in the subsequent statutory order to dispense with the same. The
concept of demand charges has found statutory sanction in the Electricity
Act, 2003 which provides for recovery of fixed charges but the same is not
the case in respect of deemed Demand charges which does not have
statutory sanction. At best, the facility so far enjoyed can be termed to be a
concessional one to promote open access in the initial stages and any move
to make such concessions to the generators a permanent affair would
amount to unfair enrichment at the cost of the licensee/other consumers.
Further, the demand charges being a component of tariff, the Commission
has the power to revisit the same and revise subsequently as circumstances
warrant.
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W.P. No.24413 of 2014
13. With reference to the submissions made by the respective
learned counsels appearing on behalf of the parties to the lis on hand, this
Court is of the opinion that the power to revisit the entire concession of
Deemed Demand Charges is granted to the Tamil Nadu Electricity
Regulatory Commission. The Commission is empowered to revise the order
even by initiating suo-motu revision. The power of suo-motu revision has
been contemplated in the order dated 15.05.2006 itself. Thus there is no
impediment for the commission to initiate suo-motu revision for the purpose
of revisiting the entire concession and to revise the same if necessary. The
grievance of the writ petitioner is that such a suo-motu power had not been
exercised by the Regulatory Commission nor the Commission had
undertaken the process of adjudication by providing an opportunity to the
stakeholders. Without undertaking any such process the unilateral decision
has been taken by the respondent Electricity Board for the withdrawal of the
concession granted earlier. In the absence of a specific order by the
Regulatory Commission in this regard, the power of the Commission to
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W.P. No.24413 of 2014
revise the concession of Deemed Charges cannot be usurped by the
authorities of the Electricity Board. Thus the impugned order is one where
the respondents are not following the procedures contemplated nor the
Commission exercised the suo-motu power of revision.
14. It is contended by the learned Additional Advocate General
that the petitioner is attempting to take undue advantage of the omission
made by the authorities in the impugned order. However, this Court cannot
consider the same in view of the fact that the powers conferred on the
Regulatory Commission had not been exercised admittedly by the
respondents. Procedures to be followed also had not been adhered. Thus the
very submission made that the omission on the part of the respondent is
taken as an advantage by the writ petitioner deserves no merit. This apart
this Court cannot draw an inference from and out of such omission made by
the Electricity Board or by the Regulatory Commission. There cannot be any
implied withdrawal of concession, which is permissible. The concession
already granted and in force for long years can be withdrawn or taken away
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only by following the procedures contemplated and therefore the unilateral
decision of the respondent Board can never be appreciated by this Court.
15. It is further contended by the learned counsel appearing for
respondents that the Regulatory Commission had withdrawn the Deemed
Demand Charges concept in respect of the Wind Energy Generators,
Biomass generators, Bagasse Based Co-generators in Orders No.6, 7 & 8
dated 31.07.2012. However, the open category of the writ petitioner namely
open access consumer/fosil fuel based generators has not been stated in the
counter affidavit. Thus the reason for non-inclusion is not known to this
Court. This Court cannot draw any factual inference in respect of the
withdrawal of the concession granted to all other categories but it should be
applied to the writ petitioner also who belongs to a different category. Such
an inference is not only improbable, which cannot be made, in view of the
fact that specific clause is available in the order of the Regulatory
Commission dated 15.05.2006 for initiation of revision procedures even suo-
motu. Thus it is made clear that the respondents in the event of passing an
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W.P. No.24413 of 2014
appropriate orders by following the procedures contemplated cannot
withdraw or cancel the benefit of Deemed Demand Charges already
extended to the writ petitioner. The said concession can be cancelled by
invoking the power by Electricity Regulatory Commission. Accordingly this
writ petition is to be considered.
16. The learned counsel appearing for the writ petitioner has
stated that such an adjudicative process in compliance with the principles of
natural justice has been contemplated in the Tamil Nadu Electricity
Regulatory Commission conduct of business regulations 2004 clause 16 1
& 2 reads as under :-
16 (1) The Commission may initiate any
proceedings suo motu or on a petition filed by any
affected or interested person.
(2) When the Commission initiates the
proceedings, it shall be by a due notice issued by the
Commission. The Commission may give such orders and
directions as may be deemed necessary, for serving of
notices to the affected parties; for the filing of replies and
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W.P. No.24413 of 2014
rejoinders against or in support of the petition in such form
as the Commission may direct. The Commission may, if it
considers appropriate, issue orders for publication of the
petition inviting comments from the public or any class of
persons on the issue involved in the proceedings in such
form as the Commission may direct.
17. In view of the discussions made in the afore mentioned
paragraphs, this Court is of the opinion that the Regulatory Commission has
to under take the process of revision either suo-motu or through an
application if any filed before the commission and conduct the adjudicative
process by issuing notice to all the stakeholders and after hearing the parties
aggrieved, decision shall be taken on merits and in accordance with law. The
compliance of principles of natural justice has been contemplated in the
business regulations, as stated supra. Thus Electricity Regulatory
Commission is bound by that and they have to follow the procedures and
thereafter take a decision and pass orders on merits and in accordance with
law in respect of the withdrawal of the concession of the Deemed Demand
Charges in respect of the writ petitioner. However, it is made clear that the
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W.P. No.24413 of 2014
observations made in this judgment will not affect the independent
adjudication if any undertaken by the Electricity Regulatory Commission in
accordance with the procedures contemplated. The Electricity Regulatory
Commission is at liberty to decide the merits and de-merits independently
and pass orders without causing undue delay in view of the fact that the
concession has been already cancelled in respect of other categories.
Accordingly the impugned order passed by the second respondent in letter
No.CFC/FC/DFC/AAO.HT/AS.3/REV/D.N.115/13 dated 29.07.2013 is
quashed and the writ petition is allowed. No costs. Consequently connected
miscellaneous petitions are also closed.
23.03.2022
vrc
Speaking/Non speaking Order
Index : Yes/No
To
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1. Tamil Nadu General and Distribution Corporation Limited,
[TANGEDCO],
144, Anna Salai, Chennai – 600 002.
2. Chief Financial Controller/Revenue,
TANGEDCO,
144, Anna Salai, Chennai – 600 002.
3. The Superintending Engineer,
TANGEDCO,
Tiruppur Electricity Distribution Circle,
Tiruppur.
4. Tamil Nadu Electricity Regulatory Commission,
Through its Secretary,
No.19A, Rukmini Lakshmipathy Salai,
Egmore, Chennai – 600 008.
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W.P. No.24413 of 2014
K.KALYANASUNDARAM, J.
vrc
W.P. No.24413 of 2014
23.03.2022
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