Vol. XL No. 51 December 18, 2016

Victory for AIPEF: SC Disallows Reliance Power from Recovering Rs 1,050 Cr from Discoms

IN a victory for the All India Power Engineers Federation (AIPEF), the Supreme Court has disallowed Reliance Power-owned Sasan Power Limited from recovering Rs 1,050 crore from several state-owned and

private distribution companies.

A bench of Justice Kurian Joseph and Justice Rohinton F Nariman on December 8 set aside the order of the Appellate Tribunal of Electricity (APTEL) asking the discoms to pay the dues to Sasan Power Limited for supply of electricity from its plant in Madhya Pradesh. 

Sasan Power had argued that discoms that procured electricity must pay from 31 March, 2013, when the commercial rollout of electricity began from its Ultra Mega Power Project (UMPP). The discoms had claimed that the payment should be made from 16 August, 2013, when the plant was commissioned.

Sasan Power had initially moved the Central Electricity Regulatory Commission (CERC), seeking to recover the dues. In August 2014, the CERC dismissed Sasan’s plea citing discrepancies in the power purchase agreement (PPA) between Sasan and the procurers. CERC also held that the power injected during the four-and-a-half disputed months was infirm power and the discoms cannot be charged for it as per the PPA. Infirm power is electricity supplied to the grid before commissioning of a project.

Sasan Power then moved APTEL. On 31 March, APTEL ruled that the discoms must pay Sasan Power the dues, quashing the CERC ruling. Sasan Power had declared the date of commissioning of its first unit to be March 31, 2013, on the basis of a certificate obtained from an independent engineer.

AIPEF was the first to move the Supreme Court against the ruling and the discoms later joined in.

The Supreme Court bench said the constitutional court must step in and “thwart any waiver” of contractual obligations if it was contrary to public interest. “On the facts of this case, it is clear that the moment electricity tariff gets affected, the consumer interest comes in and public interest gets affected,” it said.

“The independent engineer’s test certificate can pass muster and that there is a waiver on facts is not a possible conclusion, and such finding is, therefore, perverse and hence set aside,” said the bench as it reinstated the CERC’s judgment.

 “We thus find that the Appellate Tribunal is wholly incorrect in accepting the case of waiver put forward by learned counsel for Sasan, and is equally incorrect in absolving the independent engineer for the test certificate given by him on March 30, 2013. “We, therefore, set aside the Appellate Tribunal's judgement, and reinstate the judgement dated August 8, 2014 of the Central Electricity Regulatory Commission,” the SC bench said. 

UMPP, located in Singrauli district of Madhya Pradesh, is an integrated power plant-cum-coal mining project at a single location, involving an investment of over Rs 27,000 crore.