Southern Power Distribution Company Of Andhra Pradesh Limited vs. Central Electricity Regulatory Commission

Held

The Court allowed the writ petition and set aside the impugned order dated 05.02.2020 passed by the CERC in petition No.176/MP/2019. The matter was remitted back to the CERC with a direction to afford sufficient opportunity to the petitioners to file their counters, hear all parties, consider their submissions, and pass an appropriate order afresh in accordance with the governing law and rules, without being influenced by its earlier findings. The Court noted that the impugned order was ex-parte concerning the writ petitioners, who were respondents in the CERC proceedings. The Court found that the petitioners did not have sufficient time to appear or submit their reply due to a communication gap and paucity of time, and the CERC ought to have afforded further reasonable time. The Court applied the principle from Executive Engineer v. Seetaram Rice Mill’s case, suggesting that matters involving crucial factual and technical aspects should be remitted for consideration on merits. The Court explicitly stated that it was not expressing any opinion on the merits of the respective contentions of the parties.

Facts

The petitioners, Southern Power Distribution Company of Andhra Pradesh Limited (DISCOMs), challenged an order by the Central Electricity Regulatory Commission (CERC). The CERC order directed the National Thermal Power Corporation Limited (NTPC) to pay safeguard duty and GST on it to a solar power developer (SPD), and allowed NTPC to recover this amount from the DISCOMs on a back-to-back basis. The DISCOMs argued that the CERC lacked jurisdiction, as the dispute should have been handled by the Andhra Pradesh Electricity Regulatory Commission (APERC) due to the Power Sale Agreement (PSA) being for power supplied within Andhra Pradesh. They also contended there was no privity of contract between them and the SPD, making them not liable for the safeguard duty and GST. The CERC had passed the impugned order ex-parte, as the DISCOMs claimed they did not receive sufficient notice to file their response.

Key Issues

1. Whether the Central Electricity Regulatory Commission (CERC) has the jurisdiction to adjudicate the dispute between the parties, considering Section 79(f) of the Electricity Act, 2003, and the nature of the Power Sale Agreement (PSA) and Power Purchase Agreement (PPA)? - Petitioners' argument: The APERC alone has jurisdiction as the entire power is to be supplied to AP DISCOMs, and the PSA specifies that disputes shall be referred to the Appropriate Commission, which they contend is APERC under Section 86 of the Electricity Act, 2003. - Respondents' argument: CERC has jurisdiction because the generation and distribution of power take place in more than one State, and both the PSA and PPA are back-to-back agreements forming a composite scheme. 2. Whether the petitioners (DISCOMs) are liable to pay the safeguard duty and GST to the 3rd respondent (SPD), given the absence of privity of contract between them and the fact that they are not signatories to the PPA dated 07.02.2018? - Petitioners' argument: There is no privity of contract between the petitioners and the 3rd respondent, and the petitioners are not parties to the PPA, thus they cannot be held liable for the safeguard duty and GST. - Respondents' argument: The PSA and PPA are back-to-back agreements, implying a composite scheme and thus a transformation of tax liability from NTPC to the petitioners. 3. Whether the impugned order passed by the CERC is sustainable on facts and in law, particularly concerning the procedural fairness afforded to the petitioners?