M/S Bangalore Electricity Supply Company LTD vs. Shri Hiranyakesh Sahakari Sakkare Karkhane Niyamit

Facts

The review petitioners, five electricity supply companies, sought to review a judgment dated July 26, 2021, passed in W.P. No. 101282/2021. The original writ petition was filed by three sugar companies (respondents 1-3) seeking to quash a letter dated March 6, 2021, and to direct the electricity companies to honor Power Purchase Agreements (PPAs) for five years from their respective execution dates in 2018. The writ petition was disposed of by following a co-ordinate bench's order in a similar case. However, the review petitioners argued that the PPAs in this case had different terms regarding their duration, expiring in 2021, unlike the PPAs in the cited case which ran from 2016-2017 to 2020-2021. The original judgment directed the electricity companies to honor the PPAs for five years from 2018, which the petitioners contended was contrary to the PPA terms.

Held

The Court held that the impugned order dated July 26, 2021, contained an error apparent on the face of the record. The Court found that the PPAs in the instant case, executed in 2018, had a term that expired by 2020-2021, which was different from the PPAs in the case of Sri. Renuka Sugars Limited, which had a term from 2016-2017 to 2020-2021. The original order's direction to honor the PPAs for five years from 2018 was contrary to the specific terms of the PPAs in this case, which stipulated expiry by March 31, 2021. Therefore, the direction to honor the PPAs beyond this period was unsustainable. The Court acknowledged that the writ petitioners continued to supply electricity after April 1, 2021, and that payments were due. In light of the absence of subsequent Tariff orders by the KERC, the Court directed the KERC to determine the tariff payable to respondents 1-3 for the period from April 1, 2021, until the date they supplied electricity. The original order was modified accordingly, and the KERC was directed to comply within three months.

Key Issues

1. Whether the impugned order dated 26.07.2021, which directed the review petitioners to honor the subject Power Purchase Agreements (PPAs) for a period of 5 years from 2018, is an error apparent on the face of the record, considering the specific terms of the PPAs executed in 2018 which stipulated expiry by 2020-2021? Petitioner's contention: The PPAs in the instant case were executed in 2018 and were to expire by 2020-2021. The original order, by directing adherence for 5 years from 2018, contravened the explicit terms of these PPAs. This was a factual and legal error, as the basis for the original order (a similar case with different PPA terms) was distinguishable. The petitioners relied on the terms of the PPAs themselves. Respondents' contention: The respondents (writ petitioners) argued that they continued to supply electricity after the PPA expiry on April 1, 2021, and payments were due. They sought directions for payment. They also contended that the KERC should determine the tariff for the period after the PPA expiry in the absence of a tariff order, as per Section 64(5) of the Electricity Act.