M/S. Bangalore Electricity Supply Company Limited vs. Godavari Biorefineries Limited

Facts

This intra-Court appeal was filed by M/s Bangalore Electricity Supply Company Limited (BESCOM) against an order of the learned Single Judge. The learned Single Judge had partly allowed a writ petition filed by Godavari Biorefineries Limited (GBL), quashing two letters dated 12.02.2018 and 30.05.2018. These letters were clarifications issued by the Karnataka Electricity Regulatory Commission (KERC) regarding a Tariff order dated 11.04.2017. GBL had entered into a Power Purchase Agreement with BESCOM for setting up co-generation units. The KERC had fixed the tariff for power supplied from co-generation plants. BESCOM sought clarification from KERC on the applicability of this tariff, which led to the impugned clarification letters. GBL contended that these clarifications were issued without providing them an opportunity to be heard, violating principles of natural justice.

Held

The Court held that the learned Single Judge rightly answered point No.(a) against the appellant, primarily because the impugned clarifications were issued in violation of the principles of natural justice. No arguments were advanced by the appellant on this point in the writ appeal. Regarding point No.(b), the Court agreed with the learned Single Judge's reliance on the Apex Court judgment in PTC India Ltd. v. Central Electricity Regulatory Commission, concluding that KERC functions as a quasi-judicial authority. Considering the powers vested in KERC under Section 94 of the Act and its functions under Section 86(3), the Court answered point No.(b) against the appellant. Consequently, point No.(c) was also answered in favor of the respondent, holding that the failure to provide an opportunity of hearing while issuing clarification on the billing mechanism, which directly impacted the application of the tariff, caused prejudice to the respondent. The Court found that the clarification, which dictated a specific billing mechanism, was not a mere clerical mistake and prejudiced the respondent's case. Any order passed by KERC without hearing the parties who were heard during the original tariff determination was deemed unsustainable. The Court found no reason to interfere with the learned Single Judge's order, which rightly quashed the communications and reserved liberty to consider the request for clarification.

Key Issues

1. Whether the petition was liable to be rejected on the ground that there exists an alternate remedy of appeal, as per Section 62 of the Electricity Act, 2003? The appellant argued that the learned Single Judge erred in not rejecting the petition on this ground. The respondent argued that the learned Single Judge rightly did not reject the petition as the impugned clarifications were issued in violation of the principles of natural justice. 2. Whether the function of determination of tariff by the KERC is legislative, as contended by the respondents? The appellant argued that the learned Single Judge misdirected himself in holding that KERC, being a quasi-judicial authority, could not be considered a regulatory authority, and that tariff determination is solely the prerogative of KERC under Sections 62 and 86(1)(a) of the Electricity Act, 2003. The respondent argued that KERC functions as a quasi-judicial authority, relying on the Apex Court judgment in PTC India Ltd. v. Central Electricity Regulatory Commission. 3. Whether KERC was required to comply with the principles of natural justice before issuing clarification to the order dated 11.04.2017 under Annexure-A dated 12.02.2018? The appellant did not advance arguments on this point in the writ appeal. The respondent argued that the clarification was issued in breach of natural justice as no opportunity was provided to them, justifying the quashing of the letters.