Supreme Court of India
A.P. POWER COORDINATION COMMITTEE & ORS.versusMIS. LANCO KONDAPALLI POWER LTD. & ORS.
- Citation
- 2015 INSC 1033
- Decided
- 16 October 2015
- Disposal
- Dismissed
- Bench
- VIKRAMAJIT SEN
Holding
A claim before the Commission cannot be entertained if barred by the ordinary limitation period, but the period may be excluded under s.14 of the Limitation Act, and the MAT claim is covered by Article 3.8 of the PPA.
Summary
The dispute involved the A.P. Power Coordination Committee and related entities (appellants) and M/s. LanCo Kondapalli Power Ltd. (respondent) over capacity‑charge bills and a claim for reimbursement of Minimum Alternate Tax (MAT) under their Power Purchase Agreement (PPA). The key questions were whether the Limitation Act, 1963 applies to proceedings before the Andhra Pradesh Electricity Regulatory Commission (the Commission) under s.86(1)(f) of the Electricity Act, 2003, whether the Appellate Tribunal for Electricity (APTEL) was correct in allowing the exclusion of the arbitration period under s.14 of the Limitation Act, and whether the MAT claim falls within Article 3.8 of the PPA. The Supreme Court held that a claim before the Commission is barred by the ordinary limitation period unless a period is excluded under s.14, and that APTEL correctly applied s.14. It also held that MAT is covered by Article 3.8 and is recoverable. Consequently, the appeals were dismissed and the Commission was directed to pass a consequential order on the MAT claim.
Issues considered
- Whether the Limitation Act, 1963 (s.3, s.14 and Schedule) applies to actions instituted before the Commission under s.86(1)(f) of the Electricity Act, 2003.
- Whether the order of APTEL permitting the application of principles under s.14 of the Limitation Act is contrary to law.
- Whether the claim for reimbursement of Minimum Alternate Tax is covered by Article 3.8 of the Power Purchase Agreement and therefore enforceable.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 11, s. 21, s. 2(4), s. 43
- Electricity Act, 2003s. 174, s. 175, s. 86(1)(f)
- Income Tax Act, 1961s. 115J, s. 115JA, s. 115JB
- Limitation Act, 1963s. 14, s. 3, s. Schedule
Subjects
Electricity ActLimitation ActAPTELCommissionArbitrationCapacity chargesMinimum Alternate TaxPower Purchase AgreementSection 86Section 14Statutory tribunal
Judgment
[2015] 12 S.C.R. 447
A.P. POWER COORDINATION COMMITTEE & ORS. A
v.
MIS. LANCO KONDAPALLI POWER LTD. & ORS.
(Civil Appeal No. 6036 of 2012)
B
OCTOBER 16, 2015
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
Electricity Act, 2003 - s. 86(1 )(f), 174 - Limitation Act,
1963 - ss. 3, 14, Schedule - Disputes between /icencees c
and power generating company- Bill for capacity charges-
Claim for reimbursement of minimum alternate Tax (MAT) -
Whether the Limitation Act, s. 3 and the Schedule would
apply to any action instituted before the Commission uls.
86(1)(f) - Whether the impugned order passed by APTEL D
permitting application of principles emerging from s. 14, is
against law - Whether the claim for reimbursement of MAT
is in contravention of relevant terms and conditions of the
Power Purchase Agreement (PPA) - Held: A claim coming
before the Commission cannot be entertained or allowed if it E
is barred by limitation prescribed for an ordinary suit before
the civil court - However, in appropriate case, a specified
period may be excluded on account of principle underlying
salutary provisions like s. 5 or 14 - Further, such limitation
upon the Commission would be only in respect of its judicial F
power uls. 86(1 )(f) and not in respect of its other powers or
functions which may be administrative or regulatory - As
regards order passed by APTEL, in law, the APTEL could
grant exclusion of certain period on the basis of principles ul G
s. 14 - On facts, APTEL adopted a just and lawful approach
in examining the relevant facts and in excluding the entire.
period claimed by respondent which starts from the notice
for arbitration dated 8.9.2003 given by the respondent, till
the application of the respondent u/s. 11 of the Arbitration H
448 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Act before the High Court was finally disposed of on
18. 3. 2009 - Challenge to impugned order in respect of views
taken on the issue of limitation in the light of principles of s.
14 fails - As regards the claim for reimbursement, entire
phraseology used in Article 3.8 of the PPA clarifies that
B parties were aware that tax regime keeps changing and
therefore any advance income tax payable for the income
from the project only had to be reimbursed by the Board -
As a successor of the Board the appeliant cannot avoid the
liability to reimburse advance income tax paid by_ the
C respondent, on the ground that MAT was a new variety of tax
concept introduced subsequently in which minimum tax
became payable on the basis of mere book profits of even
power generating companies - It cannot be said that such,
tax is not on income from the project and thus, not covered
0
by Article 3.8- Taxable income became amenable to MAT
on account of s. 115JB - Claim for MAT covered by Article
3. 8 and payable as such when requisite conditions stand
~~~d .
E Dismissing the appeals, the Court
HELD: 1.1 There is no possibility of any difference
of opinion in accepting that on account of judgment of
this Court in Gujarat Urja the Commission has been
F elevated to the status of a substitute for the Civil Court
in respect of all disputes between the licencees and
generating companies. Such dispute need not arise from
the exercise of powers under the Electricity Act. Even
claims or disputes arising purely out of contract like in
G the instant case have to be either adjudicated by the
Commission or the Commission itself has the discretion
to refer the dispute for arbitration after exercising its
power to nominate the arbitrator. A statutory authority
H like the Commission is also required to determine or
A.P. POWER COORDINATION COMMITTEE v. LANCO 449
KONDAPALLI POWER LTD.
decide a claim or dispute either by itself or by referring it A
to arbitration only in accordance with law and thus
Section 174 and 175 of the Electricity Act assume
relevance. Since no separate limitation has been
prescribed for exercise of power under Section 86(1)f)
nor this adjudicatory power of the Commission has been B
enlarged to entertain even the time barred claims, there
is no conflict between the provisions of the Electricity
Act and Limitation Act to attract the provisions of Section
174 of the Electricity Act. In such a situation on account
of provisions in Section 175 of the Act or even otherwise C
the power of adjudication and determination or even the
power of deciding whether a case requires reference to
arbitration must be exercised in a fair manner and in
accordance with law. In the absence of any provision in o·
the Electricity Act creating a new right upon a claimant.
to claim even monies barred by law of limitation, or taking
away a right of the other side to take a lawful defence of
limitation, in the light of nature of judicial power
conferred on the Commission, claims coming for E
adjudication before it cannot be entertained or allowed
if it is found legally not recoverable in a regular suit or
any other regular proceeding such as arbitration, on
account of law of limitation. This view is taken not only
because it appears to be more just but also because F
unlike Labour laws and Industrial Disputes Act, the
Electricity Act has no peculiar philosophy or inherent
underlying reasons requiring adherence to a contrary
view. [Para 29] [489-B-D, H; 490-A-F]
G
1.2Aclaim coming beforethe Commission cannot
be entertained or allowed if it is barred by limitation
prescribed for an ordinary suit before the civil court. But
in appropriate case, a specified period may be excluded
on account of principle underlying salutary provisions H
450 SUPREME COURT REPORTS [2015] 12 S.C.R.
A like Section 5 or 14 of the Limitation Act. Further, such
limitation upon the Commission on account of the
decision in V.R.Kal/iyanikutty would be only in respect
of its judicial power under clause (f) of sub-section (1) of
s. 86 of the Electricity Act, 2003 and not in respect of ifs
B other powers or functions which may be administrative
or regulatory. [Para 30] [491-C-E]
1.3 The respondent rightly appreciated the hurdle
of limitation in its way when such an objection was taken
C by the appellant and it rightly chose to seek exclusion
of the period it was pursuing arbitration proceeding
before the High Court, on the basis of principles
underlying Section 14 of the Limitation Act. [Para 31] [491-
F-G]
D
1.4 In law, the APTEL could grant exclusion of
certain period on the basis of principles under Section
14 in view of law laid down or clarified in M.P. Steel
Corporation. On facts, there is no difficulty in holding that
E APTEL has adopted a just and lawful approach in
examining the relevant facts and in excluding the entire
period claimed by the respondent which starts from the
notice for arbitration dated 8.9.2003 given by the
respondent, till the application of the respondent under
F Section 11 of the Arbitration Act before the High Court
was finally disposed of on 18.3.2009. The issue whether
the first notice dated 8.9.2003 or the next notice dated
26.3.2004 should be treated as notice for arbitration for
the purpose of Section 21 of the Arbitration Act was
G rightly not pursued further by the counsel. But since this
issue was touched, the entire Article 14 of the PPA as
well as the notice dated 8.9.2003 is looked at and there
is no difficulty in holding it as the notice for arbitration
which amounted to initiation of arbitral proceedings as
H contemplated by Section 21 of the Arbitration Act. The
A.P. POWER COORDINATION COMMITTEE v. LANCO 451
KONDAPALLI POWER LTD.
submission on behalf of appellant that after the judgment A
of this Co.urt in Gujarat Urja on 13.3.2008, the
continuance of the arbitral proceedings before the High
Court at the instance of the respondent should not be
accepted as bona fide and that the commission was
justified in not excluding this period of about one year B
on the ground that it was not bona fide and in such facts
APTEL should not have taken a contrary view, cannot
be accepted. [Para 32] [492-A-E]
1.5 The appellant had notice of the arbitral C
proceeding and after judgment in. Gujarat Urja, the
appellant also took no steps to get the application under
Section 11 listed and disposed of earlier to 18.3.2009.
The averments and the materials are not sufficient to
establish the claim of the appellant that the proceeding D
ceased to be bona fide after 13.3.2008. As a
consequence thereof, the challenge to impugned order
in respect of views taken on the issue of limitation in the
light of principles of Section 14 of the Limitation Act fails.
[Para 32][493-C-D] E
1.6 The issue whether MAT is covered by Article 3.8
of the PPA was clearly covered by Arbitration notice. The
filing of upto date claims through amendment or
otherwise before the Arbitral Tribunal could not happen F
for the obvious reason that application under Section
11 of the Arbitration Act itself remained pending till
18.03.2009 before the High Court and thereafter before
the Commission. [Para 33] [494-A-B]
G
1.7 The claim for reimbursement of MAT for the
period 2001-2005 was rejected by the Commission on
the ground of limitation and after impugned order by
APTEL reversing such order, that claim stands remitted.
to the Commission for passing a consequential order. H
452 SUPREME COURT REPORTS [2015] 12 S.C.R.
A The claims for other periods have been allowed by the
Commission. On account of the view indicated earlier
upholding the order of APTEL on the issue of limitation,
the claim of MAT for 2001-2005 cannot be treated as
barred by limitation. Thus the claim of MAT for entire
B concerned period that is from 2001-2012 will be covered
by the decision on Merits of Claim relating to MAT. The
submission that MAT cannot be covered by the
provisions in Article 3.8 of the PPA providing for claims
for taxes on income because the appellant had not
C foreseen such eventuality in view of the then prevailing
tax regime under which income from such power
projects stood exempted, is noticed only to be rejected.
The entire. phraseology used in Article 3.8 of the PPA
leaves no manner of doubt that parties were aware that
0
tax regime keeps changing and therefore any advance
income tax payable for the income from the project only
had to be reimbursed by the Board. As a successor of
the Board the appellant cannot avoid the liability to
E reimburse advance income tax paid by the respondent,
on the ground that MAT was a new variety of tax concept
introduced subsequently in which minimum tax became
payable on the basis of mere book profits of even power
generating companies. The argument that such tax is
F not on income from the project and thus, not covered
by Article 3.8 of the PPA is without any substance.
[Para 34] [494C-H; 495-A]
1.8 The objective of levying MAT, as declared by the
G Income Tax Department is to bring into the tax net "Zero
Tax Companies" which inspite of having earned
substantial book profits and having paid handsome
dividends, do not pay any tax due to various tax
concessions and incentives provided under the Income
H Tax Law. It is no body's case that in fact the respondent
AP. POWER COORDINATION COMMITTEE v. LANCO 453
KONDAPALLI POWER LTD.
had not generated income from the project during the A
relevant years. The taxable income, of course, became
amenable to MAT on account of Section 115JB. The
legislative changes in respect of MAT show that it came
into force initially with e·ffect from 1.4.1988 by
introduction of Section 115J in the Income Tax Act, 1961 B
but this provision was amended to exempt power
generating companies with.effect from 1.4.1989 and from
1.4.1991 MAT became inapplicable because of deletion
of Section 115J which was reintroduced with effect from
1.4.1997 by insertion of Section 115JA. But it was not C
made applicable ~o power generating companies till
31.3.2001. However, Section 115JAwas withdrawn and
Section ·115JB was inserted with effect from 1.4.2001 to
make MAT applicable to all targeted corporate entities
0
including power generating companies. The submission
on behalf of the appellant that Section 115JB is a tax not
on profit but of different character is based on
misconception. No doubt this Section has a special
provision for payment of tax by certain companies on E
the basis of its book profit which is deemed to be the
total income of the assessee and is subjected to income
tax at a specified rate. The provisions of Sections 115JA
and 11 SJB have been also construed as a self-contained
code But that does not change the basic nature of the F
provision. It remains a provision under the Income Tax
Act and what is levied is income tax on the assessment
of income as per such a special provision. [Para 35]
[495-B-H; 496-A]
G
1.9 Article 1.4 of the PPA provides inter alia that
reference to any 'Law' shall be construed as a reference
to such Law as from time to time amended or re-enacted.
This general provision in our view is sufficient to take
care of all the taxes on income under Article 3.8 of the H
454 SUPREME COURT REPORTS [2015] 12 S.C.R.
A PPA notwithstanding different rates of income tax or
other changes which may be brought about in the
Income Tax Act. This view commends itself because
such change in Law relating to Income Tax does not
require any additional claim to be raised by the power
B generating companies. There is no specific amount-or
rate which is to be reimbursed by the Board. Rather, the
entire advance income ·tax payable requires
reimbursement on account of Article 3.8 of the PPA
provided of course that the accounts are maintained in
C the manner required by the Agreement so that tax is only
on the basis of income from the project. No such dispute
has been raised in the instant case. (Para 36] (496-B-D]
1.10 The claim of the appellant that liability of MAT
D is on account of change in Law and therefore required
the respondent to adopt the procedure for making claims
under Article 11.4 of the PPA does not appeal for the
aforesaid reasons. The entire stipulation in Article 11.4
of the PPA is in respect of additional or reduced
E expenditures or costs which have not been catered for
and arise later due to change in Law. The burden on
account of income tax as per Article 3.9 of the PPA cannot
be treated as additional or reduced burden because the
entire actual advance income tax payable for the project
F is required to be reimbursed by the Board. It is immaterial
whether the income tax payable is high or low in any
particular year. When there is already a special provision
in respect of entire payable taxes on income under Article
3.8 of the PPA, that should have precedence over the
G general provisions in Article 11.4 of the PPA. [Para 37]
(496-E-H]
1.11 Section 2(43) defines 'Tax' to mean income tax
chargeable under the provisions of Income Tax Act and
H 'Total Income' has been defined with reference to Section
A.P. POWER COORDINATION COMMITTEE v. LANGO 455
KONDAPALLI POWER LTD.
5 which enlarges the scope of total income not only to A
income received. or accrued but also deemed to be
received or deemed to be accrued in India (for a resident).
Simply because the exemption earlier granted to power
generating companies has been withdrawn so as to
subject them to income tax liability under a special B
provision, cannot lead to any inference as suggested
on behalf of the appellant that it is not an income tax but
some other tax which is levied under s.115JB of the
Income Tax Act. Hence the claim for MAT covered by
Article 3.8 of the PPA and payable as such when C
requisite conditions stand satisfied. [Para 38] [497-B-D]
M.P Steel Corporation v. Commissioner of Central
Excise (2015) 7 SCC 58; State of Kera/av. V.R.
Kalliyanikutty 1999 (2) SCR 372: (1999) 3 SCC D
657 - relied on.
Gujarat Urja Vik as Nigam Ltd. v. Essar Power Ltd. ·
2008 (4) SCR 822: (2008) 4 sec 755; Tamil
Nadu Generation & D[stribution Corpn. Ltd. v. E
PPN Power Generating Co. (P) Ltd. 2014 (4)
SCR 667: (2014) 11 SCC 53; Hans Raj Gupta v.
Dehra Dun-Mussoorie Electric Tramway Co. Ltd.
AIR 1933 PC 63; New Delhi Municipal Committee
v. Ka/u Ram 1976 (0) Suppl. SCR 87:(1976) 3 F
SCC 407; Kihoto Hallahan v. Zachillhu 1992 (1)
SCR 686: 1992 Supp. (2) SCC 651; Thakur Jugal
Kishore Sinha v. Sitamarhi Central Co-operative
Bank Ltd. 1967 (3) SCR 163; Brajnandan Sinha
v. Jyoti Narain AIR 1956 SC 66: 1955 SCR 955; G
P Sarathy v. State Bank of India 2000 (1) Suppl.
SCR 402: (2000) 5 SCC 355; Commissioner of
Sa/es Tax v. Parson Tools and Plants (1975)4
SCC 22; Ujjam Bai v. State of U.P AIR 1962 SC
H
456 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 1621 :1963 SCR 778; Jagannath Prasad v. State
of UP AIR 1963 SC 416: 1963 SCR 850; Mukri
Gopalan v. Cheppilat Puthanpurayil Aboobacker
1995 (2) Suppl. SCR 1: (1995) 5 sec 5;
Consolidated Engg. Enterprises v. Irrigation Deptt.
B 2008 (5) SCR 1108: (2008) 7 SCC 169; Trans
Mediterranean Airways v. Universal Exports 2011
(14) SCR 47: (2011) 10 SCC 316; Henry
Hauenstein v. John.A. Lynham 100 U.S. 483; Re.
Jarvis (Deceased) Edge v. Jarvis (1958) 2 All.ER
c 336; Bombay Gas Co. Ltd. v. Gopal Bhiva 1964(3)
SCR 709; Hindustan Times Ltd. v. Union of India
1998 (1) SCR 4:(1998) 2 SCC 242; State of
Gujarat · v. Patil Raghav Natha 1970
(1) SCR 335:(1969) 2 SCC 187; Ram Chand v.
D
Union of India 1993 (2) Suppl. SCR 558: (1994)
1 SCC 44; Bombay Dyeing & Manufacturing Co.
Ltd. v. The State of Bombay AIR 1958 SC
328:1958 SCR 1122; Mis. Tilokchand and
E Motichand v. H.B. Munshf (1969) 1 SCC 110;
Ajanta Pharma Limited vs. CIT 2010 (11)
SCR 404:2010 (9) SCC 455- referred to.
Case Law Reference
F 2008 (4) SCR 822 Referred to. Para 5
2014 (4) SCR 667 Referred to. Para 14
1999 (2) SCR 372 Referred to. Para 17
AIR 1933 PC 63 Referred to. Para 17
G
1976 (0) Suppl. SCR 87 Referred to. Para 18
1992 (1) SCR 686 Referred to. Para 19
1967 (3) SCR 163 Referred to. Para 19
H
A.P. POWER COORDINATION COMMITTEE v. LANCO 457
KONDAPALLI POWER LTD.
1955 SCR 955 Referred to. Para 19 A
2000 (1) Suppl. SCR 402 Referred to. Para 20
(2015) 1 sec 58 Relied on. Para 20
(1975) 4 sec 22 Referred to. Para 20 B
1963 SCR 778 R~ferred to. Para 20
1963 SCR 850 Referred to. Para 20
1995 (2) Suppl. SCR 1 Referred to. Para 20 c
2008 (5) SCR 1108 Referred to. Para 20
2011 (~4) SCR 47 Referred to. Para 21
100 U.S. 483 Referred to. Para 26
D
(1958) 2 All.ER 336 Referred to. Para 26
1964(3) SCR 709 Referred to. Para 26
1998 (1) SCR 4 Referred to. Para 26
E
1970 (1) SCR 335 Referred to. Para 26
1993 (2) Suppl. SCR 558 Referred to. Para 26
1958 SCR 1122 Referred to. Para 27
F
(1969) 1sec110 Referred to. Para 27
2010 (11) SCR 404 Referred to. Para 35
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
6036 of 2012 G
From the Judgment and Order dated 02.07.2012 of the
Appellate Tribunal for Electricity, New Delhi in Appeal No. 129
of 2011
WITH H
458 SUPREME COURT REPORTS [2015] 12 S.C.R.
A C. A. Nos. 6061and6138 of 2012
C. A. No. 9304 of 2013 and C. A. No. 6835 of 2015
V. Giri,A. Subba Rao, ManavVohra, Svadha Shankar,
K. L. D. S. Vinober, P. Siva Rao, Rakesh K. Sharma, Anand
8 K. Ganesan, Swapna Sheshadri, K. V. Balakrishnan, K. V.
Mohan for the Appellants.
C. A. Sundaram, Jayant Bhushan, Vikas Singh, S. B.
Upadhyay, Sakya Singha Chaudhuri, Avijeet Lala, Kanika
C Chugh, Saloni Tangri, Rohini Musa, Zafar lnayat, D. Bharathi
Reddy, Shivani Khandekar, Sakya Singha Chaudhuri, Vishrov
Mukehrjee, Apoorva Misra, ·Rohit Venkat, Deipika Kalia, Sum it
Kumar Vats, Pukhrambam Ramesh Kumar, Pawan Upadhyay,
Kaustav P. Pathak, Sarvjit Pratap Singh, Sharmila Upadhyay
D for the Respondents.
The Judgment of the Court was delivered by
SHIVAKIRTI SINGH, J.1. The leading matter -
E C.A.No.6036 of 2012 as well as C.A.No.6061 of 2012 are
statutory appeals arising out of a common order dated
2. 7.2012 passed by Appellate Tribunal for Electricity (for short,
'APTEL') whereby pleas under Section 14 of the Limitation
Act, 1963 to explain the alleged delay in preferring claims by
F the common respondent- M/s. Lance Kondapalli Power Ltd.
(for brevity referred to as 'M/s. LAN CO') a power generating
company before the Andhra Pradesh Electricity Regulatory
Commission (hereinafter referred to as 'the Commission') has
been accepted and as a result the main claim in the leading
G matter relating to Bill for Capacity Charges and in the other
appeal for Minimum Alternate Tax (MAT) for 2001-2005 have
been remanded for a follow up order by the Commission on
the actual claims and interest. In respect of MAT, a concession
on merits was recorded in respect of period 2006-2009 and
H
A.P. POWER COORDINATION COMMITTEE v. LANCO 459
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
for the earlier period (2001-2005) the contest was confined A
only to issue of limitation, as evidenced by Original Order of
Commission dated 13.6.2011. Hence, through a SLP leading
to C.A.No.6835 of 2015, the Appellant has chosen to make a
direct challenge to aforesaid order to explain and overcome
.the alleged concession in respect of claim for reimbursement B
of MAT for the entire period of 2001-2009. C.A. No.6138 of
2012 is a statutory appeal to again challenge MAT for 2006-
2009 but directed against appellate order dated 20.7.2012
by APTEL. The last matter, C.A.No.9304 of 2013 arises out
of a SLP against the original order of Commission dated C
8.8.2013 relating to MAT claim for the period 2009-2012.
Since issues are same or similar between the same appellant
and respondent in all these appeals, they have been heard
together and shall be governed by this common judgment.
0
Unless otherwise indicated the facts·have been noted from
the records of the main matter, i.e., C.A.No.6036 of2012.
2. Instead of merits of bills raised by M/s. LANCO for
capacity charges the issue of limitation has assumed greater
significance and has thrown up two important points. First, E
whether the Limitation Act is applicable to a claim before the
Commission and if the answer is in positive, then second,
whether APTEL's order reversing the views of Commission.
and accepting claim under Section 14 of the Limitation Act is F
in accordance with law or not. ft is not in dispute that if the
order of APTEL is upheld, the issue of correctness or validity
of capacity charges will stand remanded for decision by the
Commission in accordance with law. So far as claim of M/s.
LANGO for reimbursement of MAT for the period 2001-2005 G
is concerned, it shall stand rejected if APTEL's order on the
issue of limitation is reversed, otherwise such claim for the
aforesaid period as well as for later period upto 2012 will be
governed by the present judgment on the issue of legality and
admissibility of claim for MAT. H
460 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 3. Before adverting to the issues noticed above and the
rival contentions, it will be useful to notice the essential facts
relevant for deciding the issues. M/s. LANGO is engaged in
the generation and sale of electricity. Its Registered Office is
at Hyderabad and it has set up its power project at Kondapalli
B Industrial Development Area in Krishna District of Andhra
Pradesh. A.P. Power Co-ordination Committee, the appellant
no.1, as the name suggests, was constituted on 07.06.2005
to ensure coordination between the four distribution
companies of Andhra Pradesh who are appellant nos.3 to 6.
C M/s. Transmission Corporation of Andhra Pradesh
(APTRANSCO) is the second appellant. At the relevant time
the appellant no.2 was engaged in procurement of power for
the Distribution Companies. In the first phase of power sector
D reforms, Andhra Pradesh State Electricity Board was
unbundled into Generation and Transmission Corporation and
subsequently the four Distribution Companies were notified
by the Government on 31.3.2000 on account of unbundling of
the Transmission Corporation in the subsequent phase of
E reforms.
4. There is no dispute between the parties that the
erstwhile A. P. State Electricity Board had invited bids for short
,gestation power projects. M/s. LANCO also submitted its bid
F which was accepted by the Board and approved by the
Government of Andhra Pradesh leading to a Power Purchase
Agreement (for brevity, 'PPA') dated 31.3.1997. M/s. LANCO
then set up a 355 MW (ISO) Combined Cycle Gas Power Plant.
The completion of the plant took more than the scheduled
G period of 16 months. It is not necessary to go into reasons for
the delay in the present proceeding. It will suffice to note that
Mis. LA NCO declared 25.10.2000 as the date of
commissioning of their project but this was not accepted as
the Commercial Operation Date (COD) by APTRANSCO.
H However, M/s. LANCO continued to generate power and
A.P. POWER COORDINATION COMMITTEE v. LANGO 461
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
delivered it to grid. It raised bills from 19.9.2000. While the A
charges for the energy delivered were accepted, the bill for
capacity charges was disallowed on the ground that it was not
in accordance with the PPA. On 8.9.2003 M/s. LANCO issued
a notice of arbitration under Article 14 of the PPA. There is
some dispute as to whether this notice was only for invoking B
the mechanism for informal dispute resolution or also a notice
for resolution of dispute by Arbitration. The appellants through
a reply dated 24.9.2003 requested for an ordinary meeting to.
discuss pending problems before considering the request for
arbitration. On 14.10.2003 Mis. LANCO wrote a letter C
intimating the nomination of its Company's Secretary as its
representative to participate in the proceeding for informal
dispute resolution required by Article 14.1. It requested the
other side to designate their representative and to intimate
0
the date and venue of the meeting. The appellants through a
letter dated 25.11.2003 designated their Chief General
Manager to act as their representative but the meeting
scheduled could not take place. On 26.3.2004, M/s. LANCO
issued another notice for arbitration and intimated the name E
of Justice B.P. Jeevan Reddy as its arbitrator. Through a letter
dated 8.4.2004, APTRANSCO raised various grounds in
support of its stance that the arbitration clause was not
enforceable, particularly in the light of Section 86(1 )(f) of the
Electricity Act, 2003. F
5. M/s. LANCO did not accept the stand of appellants
arid filed an Arbitration Application bearing No.31 of 2004 on
27.4.2004 before the High Court of Andhra Pradesh at
Hyderabad under Section 11(4) of the Arbitration and G
Conciliation Act, 1996 seeking appointment of arbitrator for
APTRANSCO so that the disputes raised by it could be
resolved through arbitration. APTRANSCO contested the
maintainability of arbitration proceedings on various grounds
including Section 86(1 )(f) of the Electricity Act, 2003. While H
462 SUPREME COURT REPORTS [2015] 12 S.C.R.
A the matter before the High Court was still pending, the scope
and effect of Section 86( 1)(f) of the Electricity Act was decided
by a judgment of this Court dated March 13, 2008 in the case
of Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.
(2008) 4 SCC 755. This Court held that all disputes between
B the licencee such as the appellants and generating companies
such as Mis. LANGO require adjudication only by the State
Commission which is alone competent to either adjudicate
the disputes or refer them for arbitration and to appoint
arbitrator. It was clearly held that it is the State Commis~ion or
C its nominee under Section 86(1 )(f) of the Electricity Act, 2003
and not the Chief Justice cir his nominee under Section 11 of
the Arbitration and Conciliation Act, 1996 who will have the
authority to appoint an arbitrator if it decides to refer the
disputes to arbitration. This Court further clarified that except
0
the power of appointing arbitrator getting shifted to the State
Commission, conduct of arbitration even under Section 86(1 )(f)
of the Electricity Act would be governed by provisions of the
Arbitration and Conciliation Act, 1996. Only in cases of conflict
E the Electricity Act would prevail.
6. In view of law settled by the judgment in the case of
Gujarat Urja (supra), the Arbitration Application No.31 of 2004
was closed by the High Court on 18.3.2009 with liberty to M/s.
F LANCO to approach the Commission under Section 86(1 )(f)
of the Elec~ricity Act. M/s. LANCO filed O.P.No.33 of 2009
before the Commission on 5.6.2009 to claim capacity charges
on the basis of bills raised from 15.9.2000 onwards to
11.1.2001. The appellants resisted the claim inter a/ia on the
G ground of limitation. The appellants preferred a specific
application for rejecting the O.P.No.33 of 2009 on the ground
of limitation. M/s. LANCO preferred a reply in which Section
14 of the Limitation Act was invoked for seeking exclusion of
time when the arbitration proceeding had remained pending
H with the High Court in the form of Arbitration Application No.31
A.P. POWER CCORDINATION COMMITTEE v. LANGO 463
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.]
of 2004. The Commission rejected the claim by order dated A
13.6.2011 on the ground of limitation by holding that the time.
spent in the arbitration proceedings did not merit exclusion
under Section 14 of the Limitation Act because it had not been
pursued in good faith. M/s. LAN CO preferred Appeal No.129
of 2011 before APTEL. That appeal was allowed by the B
impugned judgment presently under appeal, dated 2.7.2012.
APTEL reversed the findings of the Commission on the issue
of limitation and directed the Commission to pass appropriate
follow up order on the actual claims and interest.
c
7. So far as claim of M/s. LAN CO for reimbursement of
MAT for various periods is concerned, the claim for the period
2001-2005 was rejected by the Commission on the ground of
limitation but it got revived on account of common appellate
order by APTEL dated 2.7.2012 and after the remand only a D
consequential order is required to be passed by the
Commission. For other periods, the claim for reimbursement
of MAT has been allowed in favour of M/s. LANCO. The
Commission allowed the claim for the periods 2006-2009 and
2009-2012 on account of its earlier order in respect of similar E
claim in another case which elicited a concession by the
counsel for the appellants, although in the written statement
before the Commission the appellants had seriously contested
such claim on merits. It is contended by Mr. V. Giri, learned F
senior counsel for the appellant that the concession was
misconceived and unauthorized. Learned senior counsel for
M/s. LANCO, Mr. Sundaram, fairly conceded that the issue
relating to claim for reimbursement of MAT may be heard and
decided by us on merits and accordingly the parties have been G
heard in detail on the merits of such claim for the entire period,.
i.e., from 2001to2012. But in case the claim of MATfor2001-
2005 is held by us to be barred by limitation, it will not be
considered on merits.
H
464 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 8. Appearing for the appellants, learned senior advocate
Mr. V. Giri pointed out that in the impugned on;ler under appeal
APTEL has not considered the claim of capacity charges on
merits and therefore this Court is not required to go into facts
for deciding the merits of bills for capacity charges. On the
B issue of limitation he contended that there was no issue raised
before the Commission that bar of limitation as per Limitation
Act is not applicable to the proceedings before the
Commission. He referred to the arguments advanced on
behalf of Mis. LAN CO before APT EL to highlight that even in .
C appeal it claimed exclusion of time spent in arbitration
proceedings under Section 14(2) of the Limitation Act and
hence this Court should not allow Mis. LANCO to now urge
that the Limitation Act cannot apply and hence there will be no
bar of any limitation in preferring a claim before the State
0
Commission. We have noticed that in para 28 of the judgment
under appeal APTEL has noted that the appellant no.1 (M/s.
LANCO) does not seriously dispute the fact that the Limitation
Act would be applicable to the present case. But learned
E counsels have conceded that the issue whether Limitation Act
is applicable or not is one of law and accordingly the parties
have advanced detailed submissions on this issue. Hence
we propose to consider these submissions also.
F 9. From the above stand of the parties, the following
issues emerge for our consideration and adjudication :-
(i) Whether the Limitation Act, 1963, particularly Section
3 and the Schedule will apply to any action instituted
before the Commission under Section 86(1)(f) of the
G Electricity Act, 2003?
(ii) Whether the impugned order passed by APTEL
permitting application of principles emerging from
Section 14 of the Limitation Act, is against Law so as to
H warrant interference?
AP. POWER COORDINATION COMMITTEE v. LANCO 465
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
(iii) And whether on merits the claim for reimbursement A
of MAT is in contravention of relevant terms and
conditions of the Power Purchase Agreement (PPA)?
10. At this juncture, relevant provisions or articles of PPA
need to be noticed. They are as follows: B
"Article 3.8 - Claims for Taxes on Income
Any advance Income tax payable for the Project in any
month supported by a certificate of a chartered
accountant approved by the Board (such approval not to C
be unreasonably withheld or delayed) shall be
reimbursed by the Board. After the tax assessment is
completed for any year: and the liability thereon is
determined by the taxation authorities in India, the excess
0
or shortfall in the tax liability so determined will be
adjusted in the supplementary bill (as defined in Article
5.5) for the succeeding month or on the due date of
paymentthereof, whichever is later, subject to Article 3.9.
Tax to be reimbursed will be calculated on the income E
from the project only, and calculated on the assumption
that the Company is engaged solely in the ownership,
design, financing, construction, operation and
maintenance of the Project and will not include tax
reimbursements of the previous year. F
5.5. - Supplementary Bills
For payments due to the Company for reimbursement of
taxes on income, incentives or taxes and duties levied
on generation and/or sale of electricity, payments for G
periods of political Force Majeure affecting either Party
or Non-Political Force Majeure affecting tile Board or
any other adjustments or payments due to the Company
hereunder, the Company shall present a supplementary H
466 SUPREME COURT REPORTS [2015] 12 S.C.R.
A bill, in such form as may be mutually agreed upon by the
Board and the Company, (duly supported by supporting
data). Each supplementary bill shall be payable by the
Board on the Due Date of Payment, except in case of
supplementary bill for taxes on income. At least thirty
B (30) days prior to the date when income tax is required
to be paid by the Company, the Company shall submit to
the Board a supplementary bill for the same. This bill
shall be payable by the Board within twenty-five (25) days
of its presentation to the Board by the Company or at
c least five (5) days before the date on which the tax is
required to be paid by the Company, whichever is later.
5.7 - Billing Disputes
D Notwithstanding any dispute as to all or any portion of
any bill submitted by the company to the Board, the Board
shall pay the full amount of the bill provided that the amount
of the bill is based on (a) a meter reading that has either
been signed by both Parties or certified by the Company
E with respect to the Board's refusal to sign within three
(3) days of the meter reading date and (b) the provisions
of this Agreement. The Board shall notify the Company
of any disputed alllount, and the Company shall rectify
the defect or otherwise notify its rejection of the disputed
F amount, with reasons, within five (5) days of the reference
by the Board, falling agreement on which the provisions
of Article 14 shall apply with respect thereto. If the
resolution of any dispute requires the Company to
reimburse the Board, the amount to be reimbursed shall
G bear interest at the Working Capital Rate applicable to
the Board from the date of payment by the Board to the
date of reimbursement. The Board may not dispute any
amount after sixty (60) days following the Due Date of
Payment therefor.
H
A.P. POWER COORDINATION COMMITTEE v. LANGO 467
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
11.1 - Definition of Law A
For the purposes of this Agreement, "Law" means the
constitution of India and any act, rul~, regulation, directive,
notification, order or instruction having the force of Law
enacted or issued by any competent legislature, or 8
Government Agency.
11.2 - Definition of Change in Law
For the purposes of this agreement, "Change in Law"
means c
(i) any enactment or issue of any new Law,
(ii) any amendment, alteration, modification or repeal of
any existing Law or any new or modified directive or
order thereunder, D
(iii) any change in the application or interpretation of any
Law by a competent legislature or GovernmentAgency
in India which is contrary to the existing accepted
application or interpretation thereof, in each case coming E
into effect after the date of this Agreement, provision for
which has not been made elsewhere in the Agreement.
11.4 - Additional/Reduced Expenditures or Other
Increased/Reduced Costs due to a Change in Law F
or Change in Permits
(a) Within sixty (60) days after the COD of the first
Generating Unit or the end of any Tariff Year, the Company
shall determine after accounting for the net economic G
effects on the Company during the period prior to the
COD of the first Generating Unit or, as the case may be,
such Tariff Year of any Changes in Law or Cha.nges in
Permits, based on an accounting conducted by an
independent chartered accountant reasonably H
468 SUPREME COURT REPORTS [2015] 12 S.C.R.
A acceptable to the Board. If as a result of such accounting,
the company suffers an increase in costs or a reduction
in after-tax cash flow or any other net economic burden
which it would not nave experienced but for such changes
in Law or Changes in Permits (taking into account the
B reasonable costs offinancing of any capital improvement
in the period prior to the COD of the first Generating Unit
or, as the case may be, such Tariff Year), the aggregate
economic affect of which exceeds the equivalent of
Rupees three (3) crores per 100 MW or pro-rata for any
c part thereof during the period prior to the COD of the
first generating unit and Rupees one (1) crore per 100
MW or pro-rata for any part thereof during the period after
the COD of the first Generating Unit, during any Tariff
Year (excluding cost adjustments in respect of Changes
D
in Law or Changes in Permits from any prior period), the
Company may notify the Board of any proposed
amendments to this Agreement required to put the
Company in the same economic position it would have
E occupied in the absence of such cost increase reduction
in the net after-tax cash flow or any other economic
burden. Such notice shall be accompanied by a
certification of the Company's independent chartered
accountant and a reasonably detailed explanation of
F certification of any officer of the Company respecting the
basis for such net economic burden increase. The
amount of an net economic burden claimed by the
Company shall be net of any insurance proceeds
received in respect thereof.
G
(b) Within sixty (60) days after the COD of the first
Generating Unit or the end of any Tariff Year, if after
accqunting as provided in subsection (a) for the net
economic effects on the Company during the period prior
H to the COD of the first Generating Unit or as the case
A.P. POWER COORDINATION COMMITTEE v. LANCO 469
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
may be, such tariff year of any changes in law or A
Changes in Permits, the Company experiences a
reduction in costs or an increase in after-tax cash flow or
any other net economic benefit which it would not have
experienced but for such Changes in Law or Changes in
Permits, the aggregate economic effect of which B
exceeds the equivalent of Rs.3 crore per 100 MW or pro-
rata for any part thereof during the period prior to the
COD of the first Generating Unit or Rupees one (1) crore
per 100 MW or pro-rata for any part thereof, following
the COD of the first Generating Unit, during any tariff Year, C
the Company shall provide to the Board results of such
accounting together with a certificate of the Independent
chartered accountant and the Board, in response thereto
may notify the company of any proposed amendments D
to this Agreement required in its good faith judgment to
put the Company in the same economic position it would
have occupied in the absence of such cost reduction,
increase in the net after-tax cash flow or any other
economic benefit. Such notice shall be accompanied E
by a reasonably detailed explanation of a certification of
·. an officer of the Company respecting the basis for such
decrease.
(c) Only increased costs which are necessarily and F
unavoidably incurred in complying with or as a direct result
of the Changes in Law or Changes in Permits taking into
account, all reasonable steps which may be taken by the
Company to minimize such increased costs, shall be
considered as increased costs for the purposes of this G
Article.
(d) As soon as practicable during the period prior to the
COD of the first Generating Unit or any Tariff Year after
the Company becomes aware of any Change in Law or H
470 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Change in Permits which could reasonably be expected
to give rise to an increase/reduction in costs or reduction/
increase in after-tax cash flow pursuant to paragraph (a)
and (b), the Company shall provide an interim notice
thereof to the Board describing, to the extent possible,
B the expected effect on the costs and the cash flow of the
Company. The Company shall consult with the Board
regarding such increased expenditures and the
Company shall use all reasonable efforts to implement
the Board's recommendations, if any, to minimize such
c increased expenditures consistent with Prudent Utility
Practices and the Company's obligations under this
Agreement. If prior to the end of any Tariff year the
Company demonstrates on the basis of a certification of
its chartered accountant that any Change in Law or
D
Change in Permits would result in the Company's being
unable to meet its payment obligations to its lenders under
the Financing Documents on a current basis, then in
addition to the Company's right under sub-section (a)
E but notwithstanding the time period for exercising such
rights specified therein, the Company shall be entitled to
propose amendments to this Agreement as provided in
sub-section(a) and the Parties shall consider such
proposal as provided in subsection (e) below, provided
F that any benefits which the Company is eligible to receive
under subsection (a) shall be reduced by any benefits
received by the Company prior to the end of the relevant
period under this subsection.
G (e) Within thirty (30) days after receiving any proposal
pursuant to paragraph (a), (b) or (d), the Parties shall
meet and agree on either amendments to this Agreement
or alternative arrangements to implement the foregoing.
If no such agreement has been reached within ninety (90)
H days after any meeting pursuant to Article 11.3(a), (b) or
A.P. POWER COORDINATION COMMiTTEE v. LANGO 471
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
(d), as the case may be, the proposals of the Parties A
. shall be submitted to the Independent chartered
accountant referred to in paragraphs (a), (b) and (d), as
the case may be.
14.1 - Informal Dispute Resolution B
(a) Each Party shall designate in writing to the other Party
a representative who shall be authorized to resolve any
dispute arising under this Agreement in an equitable
manner. c
(b) If the designated representatives are unable to resolve
a dispute under this Agreement within fifteen (15) days,
such dispute shall be referred by such representatives
to a senior officer designated by the Company and a
0
senior officer designated by the Board, respectively, who
shall attempt to resolve the dispute within a further period
of fifteen (15) days.
(c) The Parties hereto agree to use their best efforts to
attempt to resolve all disputes arising hereunder E
promptly, equitably and in good faith, and further agree
to provide each other with reasonable access during
normal business hours to any and all non-privileged
records, information and data pertaining to any such F
dispute.
14.2 -Arbitration
(a) In the event that any dispute is not resolved between
the Parties pursuant to Article 14.1, then such disputes G
shall be settled exclusively and finally by arbitration. It is
specifically understood and agreed that any dispute that
cannot be resolved oetween the Parties, including any
matter relating to the interpretation of this Agreement,
shall be ·submitted to arbitration irrespective of the H
472 SUPREME COURT REPORTS [2015] 12 S.C.R.
A magnitude thereof, and the amount in dispute or whether
such dispute would otherwise be considered justiciable
or ripe for resolution by any court or arbitral tribunal. This
Agreement and the rights and obligations of the Parties
hereunder shall remain in full force and effect pending
B the award in such arbitration proceedings, which award
shall determine whether and when termination of this
Agreement if relevant shall become effective."
11. Although, we were taken through various other
C Articles of PPA but it is not imperative to reproduce all such
provisions. Article 3.1 provides for capacity charge which is
required to be computed as per Article 3.2 and is meant to be
paid by the Board. This is in respect of the Cumulative
Available Energy provided by the Project in respect of any tariff
D year, upto (but not exceeding) an amount calculated on the
basis of Prescribed Plant Load factor. Since the issue of
capacity charge is not required to be addressed by us on
merits, further details need not detain us. Clause 3.8 has
been read over again and again because it is of immense
E significance in deciding the issue relating to MAT. Article 5
contains various sub-articles relating to billing and payment.
They provide for monthly tariff bills which are payable by the
Board or the licensee on the Due Date of Payment. The
F supplementary bills are covered by Article 5.5. They cover
different items and are required to be supported by supporting
data. Such bills are also payable on the Due Date of Payment,
except the supplementary bill for taxes on income which is to
be submitted at least 30 days prior to the time when the income
G tax is required to be paid by the generating company. Such
bill is payable by the Board within 25 days of presentation or
at least 5 days before the date on which the tax is required to
be paid by the company, whicheveJ is later.
12. Article 5.7 relates to billing disputes and it refers to
H the provisions of Article 14 which governs Arbitration including
A.P. POWER COORDINATION COMMITTEE v. LANCO 473
KONDAPALLI POWER LTD. [SHIVA KIRT! SINGH, J.)
Informal Dispute Resolution. Article 11 caters to the effects of A
Change in L~w 1Jpon the rights and liabilities of the parties.
This has assumed relevance in the present context on account
of stand taken by the appellant that MAT does not fall under
Article 3.8 governing claims for Taxes on Income but under
Article 11.4 which provides an altogether different procedure B
for making claim for additional costs by the company on
account of any Change in Law etc. In this contex· it may usefully
be noted that Article 1 of PPA contains definitions fo.r the
purposes of the agreement. Article 1.2 adopts definition of
several terms as defined in the Indian Electricity (Supply Act) C
1948 and set out in Schedule B to the Agreement. Article 1.4
contains various general provisions such as - unless the context
otherwise requires, the singular shall include plural etc. and
vice versa and that " ....... a reference to any Law shall be
0
construed as a reference to such Law as from time to time
amended or re-enacted."
13. Mr. Giri drew our attention to various provisions of
the Electricity Act, 2003 particularly to Section 86 providing
for various functions of a State Commissi·on which include the E
function under clause (f) in Sub-Section (1) empowering the
Commission fo "adjudicate upon the disputes between the
licensees and generating companies and to refer any dispute
for arbitration." He also referred to Section 94 which vests the F
Commission, for purposes of any inquiry or proceedings under
this Act, with same powers as are vested in Civil Court under
the Code of Civil Procedure, 1908 in respect of various matters
such as summoning and enforcing the attendance of any
person and examining him on oath; discovery and production G
of any document etc; receiving evidence on affidavit;
requisitioning of any public record; issuing commission forthe
examination of witnesses; reviewing its decisions, directions
and orders; and any other matter which may be prescribed by
the Commission. The Commission shall also have powers to H
474 SUPREME COURT REPORTS (2015] 12 S.C.R.
A pass suitable interim order and authorize any suitable person
to represent the interest of the consumers in the proceedings
,before it. Section 95 declares that all proceedings before the
Commission shall be deemed to be judicial proceedings within
the meaning of Sections 193 and 228 of the Indian Penal Code
B and it shall be deemed to be a Civil Court for the purposes of
Sections 345 and 346 of the Code of Criminal Procedure,
1973. Section 158 is a solitary provision in Part XVI which
provides for arbitration under the heading "Dispute Resolution".
According to Section 158, any matter directed to be
C determined by Arbitration, unless there is expressed provision
to the contrary in the license of a licensee, shall be determined
by such person or persons as the Commission may nominate
in that behalf on the application of either party; but in all other
D respects the Arbitration shall be subject to the provisions of
the Arbitration and Conciliation Act, 1996.
14.0n the basis of powers and functions of the
Commission highlighted above and on account of law declared
in Gujarat Urja (supra) as well as in Tamil Nadu Generation
E & Distribution Coipn. Ltd. v. PPN Power Generating Co.
(P) Ltd., (2014) 11SCC53, the contention of Mr. Giri is that in
discharge of its functions to adjudicate all disputes between
the licensees and generating companies and/or in referring a
F dispute to arbitration under Section 86(1 )(f) of the Electricity
Act, the Commission deserves to be treated as a substitute
and therefore equivalent of civil court for the purpose of
attracting the bar of limitation provided under the Limitation
Act, 1963. According to him the law laid down by this Court
G that Limitation Act applies only to civil courts in the strict sense
of the term requires reconsideration in an appropriate case
but in the present matter, since in the case of PPN Power
Generating Co. (P) Ltd.(supra) it has been categorically held
that the State Commission discharges judicial functions and
H judicial power of far reaching effect and has essential trapping
A.P. POWER COORDINATION COMMITTEE v. LANGO 475
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
of the Courts, the same should be sufficient to make the A
Limitation Act applicable to petitions or applications that come
before the Commission requiring adjudication even of matters
arising purely out of contract like in the present case and not
from the statutory provisions of the Electricity Act. He also
advanced a supplementary or alternative submission that there B
is nothing in the Electricity Act, 2003 to restore to any party the
right to sue for a cause which has already become barred by
law of Limitation, rather under the mandate of Section 175 of
the Electricity Act, the Limitation Act has to be given full respect
as a law for the time being in force unless any provision of the C
Limitation Act is found to be inconsistent with the Electricity
Act. Only in a situation of conflict, the electricity Act will have a
superior or overriding force by virtue of Section 174 of the
Electricity Act.
D
15. Yet another submission of Mr. Giri is that the matter
does not attract Section 2(4) oftheArbitration and Conciliation
Act, 1996 (for brevity 'Arbitration Act') rather Section 43 of the
Arbitration Act shall govern the rights of the parties and it
mandates that the Limitation Act, 1963 shall apply to arbitrations· E
as it applies to proceedings in courts. It may however be noted·
here that in the case of PPN Power Generating Co. (P) Ltd.
(supra) in para 65, the Court held that the Limitation Act would
not be applicable in such matters for various reasons including F
Section 2(4) of the Arbitration Act which was extracted to
highlight that sub-section (1) of Section 40, Sections 41 and
43 all in Part I of the Arbitration Act, would not apply to arbitration
under any other enactment. Only rest of the Limitation Act
would be applicable to the extent not inconsistent with the other G
enactment or any Rule made thereunder. On that basis in
Paragraph 66 it was held that the provisions with regard to
Limitation Act under Section 43 of the Arbitration Act would
not be applicable to statutory arbitrations conducted under the
Electricity Act, 2003. H
476 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 16. In fairness to the submission of Mr. Giri, it is noted
that in the PPN Power Generating Co. (P) Ltd.(supra), in
Paragraphs 64 and 68, this Court was satisfied on facts itself
that the principle of delay and !aches was not attracted. Further,
the provisions in the PPA in that case provided that the seat of
B Arbitration shall be in London and that alone made part I of the
Arbitration Act inapplicable to the arbitration proceeding and
ruled out applicability of Section 43 also.
17. Mr. Giri has placed considerable reliance upon a
C jt,Jdgment by three Judges of this Court in State of Kera la v.
V.R. Kalliyanikutty (1999) 3 SCC 657. The question of law
in that case was whether a debt which is barred by the law of
limitation can be recovered by resorting to recovery
proceedings under the Kera la Revenue Recovery Act of 1968.
D The High Court held that in the absence of any provision in the
aforesaid Kerala Act creating a substantive right to recover
time barred debts, such debts could not be recovered through
the summary proceedings under that Act. As per Section 71
of the Kerala Act the Government could issue a notification
E making the provisions of the Act applicable to the recovery of
"amounts due" from any person or class of persons to any
specified institution or any class of institutions. The say of
State Government and the State Financial Corporation was
that the words "amounts due" will encompass time barred claims
F
also. This Court placed reliance upon judgment of the Privy
Council in the case of Hans Raj Gupta v. Dehra Dun-
Mussoorie Electric Tramway Co. Ltd. AIR 1933 PC 63. It
found that the Kerala Act did not create any new right rather it
G only provided a process for speedy recovery of moneys due.
Therefore the person claiming recovery cannot claim amounts
which are not legally recoverable nor can a defence of limitation
available to a debtor in a suit or other legal proceeding be
taken away under the provisions of the Kera la Act. The State
H supported its stand by highlighting the settled legal principle
A.P. POWER COORDINATION COMMITTEE v. LANCO 477
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
that the statute of limitation merely bars the remedy without A
touching the right. But such submission did not cut any ice.
·Relevant provisions of the KeralaAct led to a conclusion that ·
. although the necessity offiling a suit stood avoided, the claim
which could be legally recovered was not enlarged. In para 16
this Court concluded thus: B
" ......... An Act must expressly provide for such
·enlargement of claims which are legally recoverable,
before it can be interpreted as extending to the recovery
of those amounts which have ceased to be legally C
recoverable on the date when recovery proceedings are
undertaken ...... "
In fact this Court looked to the scheme of the Kerala
Act to come to a conclusion that "amounts due" are those o
amounts which the creditor could have recovered had he filed
a suit.
18. It is noteworthy that besides drawing relevant
inference from the provisions of the Kera la Act, in paragraph E
11 the Court acted cautiously in interpreting the words
"amounts due" in view of Article 14 of the Constitution. It
expressed its views thus :
" ..... Moreover, such a wide interpretation of "amounts F
due" which destroys an important defence available to a
debtor in a suit against him by the creditor, may attract.
Article 14 against the Act. It would be ironic if an Act for
speedy recovery is held as enabling a creditor who has
delayed recovery beyond the period of limitation to G
recover such delayed claims."
In para 12 the Court referred to and relied upon judgment
in the case of New Delhi Municipal Committee v. Kalu
Ram (1976) 3 SCC 407 wherein this Court had similarly H
478 SUPREME COURT REPORTS [2015] 12 S.C.R.
A interpreted Section 7 of the Public Premises (Eviction of
Unauthorised Occupants) Act, 1958. The words "arrears of
. rent payable" were given a limited meaning by holding thus:
" ..... In the context of recoverY of arrears of rent under
B Section 7, this Court said that if the recovery is barred
by the law of limitation, it is difficult to hold that the Estate
Officer could still insist thatthe said amount was payable.
When a duty is cast on an authority to determine the
arrears of rent the determination must be in accordance
C with law. .... "
(emphasis added)
19. Mr. Giri referred to paragraphs 98 and 99 of the
judgment in the case of Kihoto Hollohan v. Zachillhu 1992
0
Supp. (2) SCC 651 to highlight the attributes of a "Court" and
those of a Tribunal and also the relevant tests which led the
court to hold that the Speaker while deciding certain disputes
is a Tribunal. Similarly in the case of Thakur Jugal Kishore
E Sinha v. Sitamarhi Central Co-operative Bank Ltd. 1967
(3) SCR 163, this Court held that the Assistant Registrar of
Co-operative Societies was a court within the meaning of the
Contempt of Courts Act, 1952. This inference was based on
the pronounced view that the subordination for the purpose of
F Section 3 of the Contempt of Courts Act means judicial
subordination under the constitutional provisions and not
subordination under the usual hierarchy of courts as per Civil
Procedure Code or the Criminal Procedure Code. The next
case in this series is that of Brajnandan Sinha v. Jyoti
G Narain AIR 1956 SC 66. In this case it was found that the
Commissioner appointed under the Public Servants (Inquiries)
Act 1850 (Act 37 of 1850) is not a court within the meaning of
the term under Section 3 of the Contempt of Courts Act. This
view found favour largely because the Commissioner did not
H have the legal capacity under that Act to deliver "definitive
A.P. POWER COORDINATION COMMITTEE v. LANGO 479
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.)
judgment". Mr. Giri has however sought to highlight paragraphs A
14 to 18 of the judgment which deal with the essential attributes
of a Tribunal so as to clothe it with the status of a court. Those
paragraphs are as follows :
"(14) The pronouncement of a definitive judgment is thus B
considered the essential 'sine qua non' of a Court and
unless and until a binding and authoritative judgment can
be pronounced by a person or body of persons it cannot
be predicated that he or they constitute a Court.
c
(15) The Privy Council in the case of 'Shell Co. of Australia
v. Federal Commissioner of Taxation', 1931AC275 (A)
thus defined 'Judicial Power' at p.295:
'Is this right? What is 'Judicial power'? Their
0
Lordships are of opinion that one of the best definitions
is that given by Griffith C.J. in - 'Huddart, Parker &
Co. v. Moorehead', (1909) 8 CLR 330 at p.357 (B)
where he says: 'I am of opinion that the words 'judicial
power' as used in S.71 of the Constitution mean the E
power which every sovereign authority must of
necessity have to decide controversies between its·
subjects, or between itself and its subjects, whether
the rights relate to life, liberty or property. The exercise
of this power does not begin until some tribunal which F
has power to give a binding and authoritative decision
(whether subject to appeal or not) is called upon to
take action'.
Their Lordships further enumerated at p.297 certain G
negative propositions in relation to this subject:
'1. A tribunal is not necessarily a Court in this strict
sense because it gives a final decision;
2. Nor because it hears witnesses on oath; H
480 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 3. Nor because two or more contending parties
appear before it between whom it has to decide;
4. Nor because it gives decisions which affect the
rights of subjects;
B
5. Nor because there is an appeal to a Court;
6. Nor because it is a body to which a matter is
referred by another body.
C See 'Rex v. Electricity Commissioners' 1924-1 KB
171(C)'
and observed at page 298:
'An administrative tribunal may act judicially, but still
D
remain an administrative tribunal as distinguished from
a Court, strictly so-called. Mere externals do not make
a direction to an administrative officer by an ad hoc
tribunal an exercise by a Court of judicial power.'
E ( 16) The same principle was reiterated by this Court in -
'Bharat Bank Ltd. v. Employees of Bharat Bank Ltd.',AIR
1950 SC 188 (D); and - 'Meqbool Hussain v. State of
Bombay', AIR 1953 SC 325 (E), where the test of a
judicial tribunal as laid down in a passage from - 'Cooper
F
v. Willson', 1937-2 KB 309 (F) at p.340, was adopted by
this Court:
'A true judicial decision presupposes an existing
dispute betyveen two or more parties, and then
G involves four requisites: - (1) The presentation (not
necessarily orally) of their case by the parties to the
dispute, (2) ifthe dispute between them is a question
of fact, the ascertainment of the fact by means of
evidence adduced by the parties to the dispute and
H
A.P. POWER COORDINATION COMMITTEE v. LANCO 481
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
often with the assistance of argument by or on behalf A
of the parties on the evidence; (3) if the dispute
between them is a question of law, the submission of
legal arguments by the parties; and (4) a decision
which disposes of the whole matter by a finding upon
the facts in dispute and an application of the law of B
' .
the land to the facts so found, including where required
a ruling upon any disputed question of law'.
(17) 'Maqbool Hussain's case (E)', above referred to,
was followed by this Court in - 'S.A. Venkataraman v. C
Union of India', AIR 1954 SC 375 (G), where a
Constitution Bench of this Court also laid down that both
finality and authoritativeness were the essential tests of
a judicial pronouncement.
D
(18) It is clear, therefore, that in· order to constitute a
Court in the strict sense of the term, an essential condition
is that the Court should have, apart from having some of
the trappings of a judicial tribunal, power to give a
decision or a definitive judgment which has finality and E
authoritativeness which are the essential tests of a
judicial pronouncement."
20. On behalf of appellants reliance was next placed upon
case of P. Sarathy v. State Bank of India (2000) 5 SCC F
355. A Bench of two Judges considered the scope of the word
"Court" occurring in Section 14 of the Limitation Act and held
that any authority or tribunal having trappings of a court is
covered because "Court" does not necessarily have to be a
civil court. On such reasonings the appellate authority under G
Section 41 of Tamil Nadu Shops and Establishments Act was
held to be a court. One must notice here only that the judgment
in the case of P. Sarathy (supra) has been considered in a
recent judgment of this Court rendered by a Bench of two
Judges in the case of M.P. Steel Corporation v. H
482 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Commissioner of Central Excise (2015) 7 SCC 58. In this
case it was held that although the Limitation Act including
Section 14 thereof would not apply to appeals filed before a
quasi-judicial tribunal such as the Collector (Appeals)
mentioned in Section 128 of the Customs Act, 1962 but the
B principles underlying Section 14 of the Limitation Act would
nevertheless apply as they advance the cause of justice. The
Court repelled the submission that Section 128 of the Customs
Act excludes the application of the principles underlying
Section 14 of the Limitation Act. In order to reach the
C conclusion that only principles underlying Section 14 and not
the very Section itself can apply to tribunals having attributes
of Court, in M.P. Steel Corporation (supra) the Court
analysed the precedents and the Limitation Act 1963. It
concluded that a quasi-judicial Tribunal will suffer Limitation
0
Act only as per the statutory scheme under which it is created
and functions. On the other hand, on its own the Limitation Act
is applicable in respect of proceedings before courts proper,
i.e., courts as understood in the strict sense of being part of
E the Judicial Branch of the State. In support of this principle
several judgments of this Court were noted such as a three-
Judge Bench judgment in Commissioner of Sales T~x v.
Parson Tools and Plants (1975)4 SCC 22 in which reliance
was placed upon Ujjam Bai v. State of U.P. AIR 1962 SC
F 1621. For the same purpose reliance was also placed upon
judgment in the case of Jagannath Prasad v. State of U.P.
AIR 1963 SC 416. A contrary view taken by a two-Judge Bench
in the case of Mukri Gopalan v. Cheppilat Puthanpurayil
Aboobacker (1995) 5 SCC 5 was therefore held to be at
G variance with at least five earlier binding judgments and also
at odd with a lclter judgment in the case of Consolidated Engg.
Enterprises v. Irrigation Deptt. (2008) 7 SCC 169. The latter
judgment was considered in detail because the three-Judge
Bench examined the provisions of the Arbitration and
H Conciliation Act 1996 and held that provisions of Section 14
A.P. POWER COORDINATION COMMITTEE v. LANCO 483
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
of the Limitation Act 1963 would be applicable to an A
application under Section 34 of the 1996 Act filed before a
Civil Court for setting aside an Arbitral Award. This view in
Consolidated Engg.(supra) has been further clarified by
Ravindran, J. (as he then was) in his separate but concurring
judgment, particularly in paragraph 44. B
21. In an attempt to shJwthatthe word "Court" has been
interpreted differently in context of different statutes, Mr. Giri
referred to the case of Trans Mediterranean Airways v.
Universal Exports (2011) 10 SCC 316. In paragraphs 44 C
and onwards a number of precedents were noticed as to the
meaning and interpretation of the word "Court" and in paragraph
57 it was held that the word "Court" in Rule 29 of the Second
Schedule of the Carriage by Air Act 1972 has been borrowed
from the Warsaw Convention and had not been used in the D
strict sense as used in the procedural laws of this country. The
word "Court" was, therefore, held to include the consumer
forums. In para 58 it was. reiterated that in legislations like the
Consumer Protection Act the word "Court" cannot be given a
strict meaning. E
22. In reply on this issue, learned senior advocate Mr.
Sundaram took a frontal stand that Limitation Act does not
apply to a proceeding before the Commission because it is
not a court stricto-sensu. For this proposition he relied upon F
judgments in the case of PPN Power Generating Co. (P)
Ltd. (supra) and M.P. Steel Corporation (supra). He however
floated a suggestion that even when no period of limitation is
app!icable for initiating action before the Commission, if this
Court finds it nec~ssary and in the interest of justice, then a G
reasonable period may be indicated by this Court for the
aforesaid purpose. He hastened to add that such reasonable
period can only be as an illustration and not as a fixed period.
According to him, a reasonable illustrative period indicated H
484 SUPREME COURT REPORTS [2015] 12 S.C.R.
A by the court, in practical application, can vary from case to
case as per facts of each case. He also contended that even
if a definite limitation period is found to be attracted, in view of
law laid down clearly in M.P. Steel Corporation (supra), the
principles underling Section 14 will be applicable and the same
B has been rightly applied by APTEL while rendering the
impugned order under appeal.
23. Mr. Sundaram referred to PPN Power Generating
Co. (P) Ltd. (supra) and placed reliance upon a solitary
C sentence at the end of paragraph 64 which reads thus :
"In any event, the Limitation Act is inapplicable to
proceeding before the State Commission."
He also placed reliance upon paragraph 65 which is as
0
follows:
"65. The submission of the appellant that the Limitation
Act would be available in case the reference was to be
made to arbitration, in our opinion, is also without merit.
E Firstly, the State Commission exercised its jurisdiction
to decide the dispute itself. The matter was not referred
to arbitration, therefore, the Limitation Act would not be
applicable. Secondly, Section 43 of the Arbitration and
Conciliation Act would not be applicable even if the
F
matter was referred to arbitration by virtue of Section 2(4)
of the Arbitration Act, 1996. Section 2(4) of the Arbitration
Act reads as under:
'2(4) This Part except sub-section (1) of Section 40,
G Sections 41 and 43 shall apply to every arbitration
under any other enactment for the time being in force,
as if the arbitration were pursuant to an arbitration
agreement and as if that other enactment were an
arbitration agreement, except insofar as the
H
A.P. POWER COORDINATION COMMITTEE v.. LANCO 485
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.]
provisions of this Part are inconsistent with that other A
enactment or with any rules made thereunder."
24. Mr. Sundaram placed reliance upon judgment in the
case of M.P. Steel Corporation (supra) to support his
submission that Limitation Act applies only to courts stricto- s
sensu and not to quasi-judicial tribunals. It may be noted here
that the matter in M.P. Steel Corporation (supra) had arisen
from proceedings under the Customs Act and hence in that
case there was no occasion to consider the issue whether the
Limitation Act is applicable to an action initiated before the C
Commission by virtue of provisions of the Electricity Act, 2003.
However, this judgment does help the respondents to an extent
by holding that principles underlying Section 14 of the
Limitation Act will be applicable even in matters filed before a
quasi-judicial tribunal such as the Commission. But the moot D
question remains to be answered -whether the bar of limitation
is required to be respected by the Commission on the ground
that there is no provision in the Electricity Act conferring
additional rights upon a party moving the Commission for relief
so as to claim even such reliefs which stand barr~d by limitation E
before the Civil Court or even for-arbitral proceedings. The
other ancillary issue required to _be answered is -whether by
virtue of provisions of the Electrici~y Act 2003 the Limitation
Act has been made applicable to an action before the F
Commission by express provision or even by necessary
intendment.
. 25. Before answering the aforesaid two issues and then
adverting to the question whether principles of Section 14 were
rightly applied by APTEL (in case any period of limitation is G
held to be attracted), it will be proper to note some relevant
contentions advanced by learned senior advocate Mr. Jayant
Bhushan who has appeared for some of the respondents.
H
486 SUPREME COURT REPORTS [2015] 12 S.C.R.
A 26. Mr. Bhushan pointed out that Commission is a
creature of Statute and hence it cannot reject a claim on the
ground of limitation unless limitation is found to be applicable
by virtue of the provisions of the Electricity Act 2003. According
to him if Limitation Act does not apply, courts cannot import
B limitation and the exceptional cases where this Court has
introduced principles of delay and !aches relate to proceedings
before quasi-judicial tribunals which are vested with
discretionary or suo motu jurisdiction like revisional power; the
other exception being courts having extraordinary or equity
C jurisdiction such as writ jurisdiction vested in the High Courts
or the Supreme Court. In support of the limited and exceptional
applicability of principles of delay and !aches as distinguished
from limitation, Mr. Bhushan placed reliance upon an old
judgment of Supreme Court of United States in the case of
0
Henry Hauenstein v. John A. Lynham 100 U.S. 483 and
also upon extracts from Halsbury's Laws of England and a
judgment of Chancery Division in the case of Re. Jarvis
(Deceased) Edge v. Jarvis (1958) 2 All.ER 336. Since the
E principle noted above is well settled, the above authorities need
not be discussed particularly when this Court has taken similar
view in the case of Bombay Gas Co. Ltd. v. Gopal Shiva
1964(3) SCR 709 and Hindustan Times Ltd. v. Union of
India (1998) 2 SCC 242. In the latter case the issue under
F consideration was of delay in passing order levying damages
under Employees Provident Funds and Miscellaneous
Provisions Act, 1952. The Court distinguished long line of
cases such as State of Gujarat v. Patil Raghav Natha (1969)
2 SCC 187 and Ram Chand v. Union of India (1994) 1 SCC
G 44 by pointing out that same principles will not apply to moneys
withheld by a defaulter when he actually holds the money in
Trust for the beneficiaries. Paragraph 19 of that judgment
highlights that the concerned Statute does not contain any
provision prescribing a period of limitation either for
H assessment or recovery and although the moneys payable into
A.P. POWER COORDINATION COMMITTEE v. LANCO 487
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.)
the Fund are for the ultimate benefit of the employees but there A
is no provision by which the employees can directly recover
the due amounts. The power of recovery is vested in the
statutory authorities to be exercised in the manner provided
by the Statute and not by way of suit.
B
27. Mr. Bhushan also referred to some judgments in
support of the principle that Statute of limitation only bars a
remedy through ordinary suit and not a remedy provided under
a special Statute such as the Industrial Disputes Act which must
be given effect to on the basis of various provisions contained C
therein. For this purpose he relied upon a Constitut'on Bench
judgment in the case of Bombay Dyeing & Manufacturing
Co. Ltd. v. The State of Bombay AIR 1958 SC 328. He
sought to explain the Constitution Bench judgment in the case
of M/s. Tilokchand and Motichand v. H.B. Munshi (1969) D
1sec 110 by pointing out that delay and laches were held to
be applicable to a petition under.Article 32 of the Constitution
of India for the reason that such jurisdiction was always
recognized and held to be a discretionary one.
E
28. Coming back to the issues relating to limitation, in
view of law noticed above and for the reasons noted in M.P.
Steel Corporation (supra), we respectfully concur and hold
that by itself the Limitation Act will not be applicable to the
Commission under the Indian Electricity Act 2003 as the F
Commission is not a Court stricto sensu. Further stand of the
respondents that the Commission being a statutory tribunal,
cannot act beyond the four walls of the Electricity Act also does
not brook any exception. In the case of PPN Power
Generating Co. (P) Ltd. (supra) this Court examined the issue G
of limitation in a very summary manner and without referring to
the relevant provisions of the Electricity Act 2003, at the end of
para 64 it was observed in a single sentence that the Limitation
Act is inapplicable to proceeding before the State H
488 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Commission. But in view of detailed discussion in the case of
M.P. Steel Corporation (supra), we have held above that by
itself the Limitation Act is inapplicable to proceeding or action
brought before the State Commission. However, the Electricity
Act 2003 requires a further scrutiny to find out whether by virtue
B of Section 175 of the Electricity Act or otherwise it can be
inferred that the provisions of Limitation Act will govern or curtail
the powers of the Commission in entertaining a claim under
Section 86(1 )(f) of the Electricity Act. Section 175 reads thus:
C "175. Provisions. of this Act to be in addition to and
not in derogation of other laws. - The provisions of
this Act are in addition to and not in derogation of any
other law for the time being in force."
o A plain reading of this Section leads to a conclusion
that unless the provisions of the Electricity Act are in conflict
with any other law when this Act will have overriding effect as
per Section 174, the provisions of Electricity Act will not
adversely affect any other law for the time being in force. In
E other words, as stated in the Section the provisions of the
Electricity Act will be additional provisions without adversely
affecting or substracting anything from any other law which may
be in force. Such provision cannot be stretched to infer
adoption of the Limitation Act for the purpose of regulating the
F varied and numerous powers and functions of authorities under
Electricity Act 2003. In this context it is relevant to keep in view
that the State Commission or the Central Commission have
been entrusted with large number of diverse functions, many
being administrative or regulatory and such powers do not invite
G the rigours of the Limitation Act. Only for controlling the quasi
judicial functions of the Commission under Section 86(1 )(f), it
will not be possible to accept the contention of the appellant
that by Section 175 the Electricity Act, 2003 adopts the
H Limitation Act either explicitly or by necessary implication.
A.P. POWER COORDINATION COMMITTEE v. LANCO 489
KONDAPALLI POWER LTD. [SHIVA KIRT! SINGH, J.]
29. The only other weighty contention of Mr. Giri that there A
is nothing in the Electricity Act 2003 to create a right in a suitor
before the Commission to seek claims which are barred by
law of limitation merits a serious consideration. There is no
possibility of any difference of opinion in accepting that on
account of judgment of this Court in Gujarat Urja (supra) the B
Commission has been elevated to the status of a substitute
for the Civil Court in respect of all disputes b.etween the
licencees and generating companies. Such dispute need hot
arise from the exercise of powers under the Electricity Act.
Even claims or disputes arising purely out of contract like in C
the present case have to be either adjudicated by the
Commission or the Commission itself has the discretion to
refer the dispute for arbitration after exercising its power to
nominate the arbitrator. It is in view of such far reaching judicial
0
powers vested in the Commission that in the case of PPN
Power Generating Co. (P) Ltd. (supra) this Court advised
the State to exercise enabling power under Section 84(2) to
appoint a person who is/has been a Judge of a High Court as
Chairperson of the State Commission. In such a situation it E
falls for consideration whether the principle of law enunciated
in State of Kerala v. V.R. Kalliyanikutty (supra) and in the
case of New Delhi Municipal Committee v. Kalu Ram
(supra) is attracted so as to bar entertainment of claims which
are legally not recoverable in a ~uit or other legal proceeding F
on account of bar created by the Limitation Act. On behalf of ·
respondents those judgments were explained by pointing out
that in the first case the peculiar words in the statute- "amount
due" and in the second case "arrears of rent payable" fell for
interpretation in the context of powers of concerned tribunal G
and on account of aforesaid particular words of the statute
this Court held that the duty cast upon the authority to determine
what is recoverable or payable implies a duty to determine
such claims in accordance with law. In our considered view a
statutory authority like the Commission is also required to H
490 SUPREME COURT REPORTS [2015) 12 S.C.R.
A determine or decide a claim or dispute either by itself or by
referring it to arbitration only in accordance with law and thus
Section 174 and 175 of the Electricity Act assume relevance.
Since no separate limitation has been prescribed for exercise
of power under Section 86(1 )f) nor this adjudicatory power of
B the Commission has been enlarged to entertain even the time
barred claims, there is no conflict between the provisions of
the Electricity Act and Limitation Act to attract the provisions
of Section 174 of the Electricity Act. In such a situation on
account of provisions in Section 175 of the Electricity Act or
C even otherwise the power of adjudication and determination
or even the power of deciding whether a case requires
reference to arbitration must be exercised in a fair manner
and in accordance with law. In the absence of any provision in
D the Electricity Act creating a new right upon a claimant to claim
even monies barred by law of limitation, or taking away a right
of the other side to take a lawful defence of limitation, we are
persuaded to hold that in the light of nature of judicial power
conferred on the Commission, claims coming for adjudication
E before it cannot be entertained or allowed if it is found legally
not reco'1erable in a regular suit or any other regular proceeding
such as arbitration, on account of law of limitation. We have
taken this view not only because it appears to be more just but
also because unlike Labour laws and Industrial Disputes Act,
F the Electricity Act has no peculiar philosophy or inherent
underlying reasons requiring adherence to a contrary view.
30. We have taken the aforesaid view to avoid injustice
as well as possibility of discrimination. We have already.
G extracted a part of paragraph 11 of the judgment in the case of
State of Kerala v. V.R. Kalliyanikutty (supra) wherein Court
considered the matter also in the light of Article 14 of the
Constitution. In that case the possibility of Article 14 being
attracted against the statute was highlighted to justify a
H particular interpretation as already noted. It was also observed
A.P. POWER COORDINATION COMMITTEE l LANCO 491
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.)
that it would be ironic if in the name of speedy recovery A
contemplated by the statute, a creditor is enabled to recover
. claims beyond the period of limitation. In this context, it would
be fair to infer that the special adjudicatory role envisaged
under Section 86(1 )(f) also appears to be for speedy resolution
so that a vital developmental factor - electricity and its supply B
is not adversely affected by delay in adjudication of even
ordinary civil disputes by the Civil Court. Evidently, in absence
of any reason or justification the legislature did not contemplate
to enable a creditor who has allowed the period of limitation to
set in, to recover such delayed claims through the Commission. C
Hence we hold that a claim coming before the Commission·
cannot be entertained or allowed if it is barred by limitation
prescribed for an ordinary suit before the civil court. But in
appropriate case, a specified period may be excluded on
0
account of principle underlying salutary provisions like Section
5 or 14 of the Limitation Act. We must hasten to add here that
such limitation upon the Commission on account of this
decision would be only in respect of its judicial power under
clause (f) of sub-section,(1) of Section 86 of the Electricity Act, E
2003 and not in respect of its other powers or functions which
may be administrative or regulatory.
31. In the light of above there can be no difficulty in
appreciating that M/s. LANGO rightly appreciated the hurdle F
of limitation in its way when such an objection was taken by
the appellant and it rightly chose to seek exclusion of the period
it was pursuing arbitration proceeding before the High Court,
on the basis of principles underlying Section 14 of the
Limitation Act. G
32. The issue as to whether the impugned order by
APTEL permitting application of principles on Section 14 of
the Limitation Act is in accordance with law or warrants
interference now requires to be answered on the basis of law H
492 SUPREME COURT REPORTS [2015] 12 S.C.R.
A as well as facts. In law, the APTEL could grant exclusion of
certain period on the basis of principles under Section 14 in
view of law laid down or clarified in M.P. Steel Corporation
(supra). On facts, although the parties have argued at length,
we find no difficulty in holding thatAPTEL has adopted a just
B and lawful approach in examining the relevant facts and in
excluding the entire period claimed by Mis. LAN CO which starts
from the notice for arbitration dated 8.9.2003 given by Mis.
LANGO, till the application of Mis. LANGO under Section 11
of the Arbitration Act before the High Court was finally disposed
C of on 18.3.2009. The issue whether the first notice dated
8. 9.2003 or the next notice dated 26.3.2004 should be treated ·
as notice for arbitration for the purpose of Section 21 of the
Arbitration Act was rightly not pursued further by Mr. Giri after
some initial arguments. But since this issue was touched, we
0
have looked at the entire Article 14 of the PPA as well as the
notice dated 8.9.2003 and we find no difficulty in holding it as
the notice for arbitration which amounted to initiation of arbitral
proceedings as contemplated by Section 21 of the Arbitration
E Act. A spirited argument was advanced on behalf of appellant
that after the judgment of this Court in Gujarat Urja (supra) on
13.3.2008, the continuance of the arbitral proceedings before
the High Court at the instance of Mis. LANGO should not be
accepted as bona fide and that the commission was justified
F in not excluding this period of about one year on the ground
that it was not bona fide and in such facts APTEL should not
have taken a contrary view. Having considered submissions
of the parties we find no merit in the aforesaid contention
advanced on behalf of appellant. The view which we are going
G to take has been indicated by this Court in several judgments
including M.P. Steel Corporation (supra). But the point
requires no debate in view of clear stipulation in explanation
(a) to sub-section (3) of Section 14 of the Limitation Act. This
explanation reads as follows:
H
A.P. POWER COORDINATION COMMITTEE v. LANGO 493
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.)
"Explanation- For the purposes of this section, - A
(a) in excluding the time during which a former civil
proceeding was pending, the day on which that
proceeding was instituted and the day on which it ended
shall both be counted ........... " B
The same conclusion is inevitable even on other relevant
facts. The· appellant had notice of the arbitral proceeding and
after judgment in Gujarat Urja (supra), the appellant also took
no steps to get the application under Section 11 listed and C
disposed of earlier to 18.3.2009. The averments and the
materials are not sufficient to establish the claim of the appellant
that the proceeding ceased to be bona fide after 13.3.2008.
As a consequence of aforesaid discussion, the challenge to
impugned order in respect of views taken on the issue of o
limitation in the light of principles of Section 14 of the Limitation
Act fails.
Issues relating to MAT
33.The notice of Arbitration dated 8.9.2003, .inter alia, · E
made a demand for reimbursement of ir1~ome tax payment
made by M/s. LANCO, as per Article 3.8 of the PPA. -No doubt
the claim on this head for the subsequent years was not and
could not be in this notice but the difference between the parties F
on the issue had already arisen. In the notice claims for
advance income tax for the period 1.4.2001 to 15.6.2003
amounting to Rs.13.14 crores were included under the heading
"General Nature of Claims" and under the heading "Relief
Sought", Mis. LANGO claimed - "a declaration that the claimant G
is entitled to reimbursement of advance income tax paid by
the claimant". Under the same heading M/s. LAN CO mentioned
that it reserves its rights to seek such other reliefs or amend/
supplement the reliefs in the Statement of Claim as it may deem
appropriate whenever the same is filed before the Arbitral H
494 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Tribunal. Thus the issue whether MAT is covered by article
3.8 of the PPA was clearly covered by Arbitration notice. The
filing of upto date claims through amendment or otherwise
before theArbitral Tribunal could not happen for the obvious
reason that application under Section 11 of the Arbitration Act
B itself remained pending till 181h March, 2009 before the High
Court and thereafter before the Commission.
34. It has already been noted that the claim for
reimbursement of MAT for the period 2001-2005 was rejected
C · by the Commission on the ground of limitation and after
impugned order by APTEL reversing such order, that claim
stands remitted to the Commission for passing a
consequential order. The claims for other periods have been
allowed by the Commission. On account of our view indicated
D earlier upholding the order of APTEL on the issue of limitation,
the claim of MAT for 2001-2005 cannot be treated as barred
by limitation. Thus the claim of MAT for entire concerned period
that is from 2001-2012 will be covered by our decision on
Merits of Claim relating to MAT. The argument of Mr. Giri that
E MAT cannot be covered by the provisions in Article 3.8 of the
PPA providing for claims for taxes on income because the
appellant had not foreseen such eventuality in view of the then
prevailing tax regime under which income from such power
F projects stood exempted, is noticed only to be rejected. The
entire phraseology used in Article 3.8 of the PPA leaves no
manner of doubt that parties were aware that tax regime keeps
changing and therefore any advance income tax payable for
the income from the project only had to be reimbursed by the
G Board. As a successor of the Board the appellant cannot avoid
the liability to reimburse advance income tax paid by the M/s.
LANCO, on the ground that MAT was a new variety of tax
concept introduced subsequently in which minimum tax
became payable on the basis of mere book profits of even
H power generating companies. The argument that such tax is
A.P. POWER COORDINATION COMMITTEE v. LANCO 495
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
not on income from the project and therefore, not covered by A
Article 3.8 of the PPA is also found to be without any substance.
35. The objective of levying MAT, as declared by the
Income Tax Department is to bring into the tax net "Zero Tax
Companies" which inspite of having earned substantial book B
profits and having paid handsome dividends, do not pay any
tax due to various tax concessions and incentives provided
under the Income Tax Law. It is no body's case that in fact M/
s. LAN CO had not generated income from the project during
the relevant years. The taxable income, of course, became C
amenable to MAT on account of Section 115JB. The.
Legislative changes in respect of MAT show that it came into
force initially with effect from 1.4.1988 by introduction of
Section 115J in the Income Tax Act, 1961 but this provision
was amended to exempt power generating companies with D
effect from 1.4.1989 and from 1.4.1991 MAT became
inapplicable because of deletion of Section 11 SJ which was
reintroduced with effect from 1.4.1997 by insertion of Section
115JA. But it was not made applicable to power generating
companies till 31.3.2001. However, Section 115JA was E
withdrawn and Section 115JB was inserted with effect from
1.4.2001 to make MAT applicable to all targeted corporate
entities including power generating companies. The
submission on behalf of the appellant that Section 115JB is a F
tax not on profit but of different character is based on
misconception. No doubt this Section has a special provision
for payment of tax by certain companies on the basis of its
book profit which is deemed to be the total income of the.
assessee and is subjected to income tax at a specified rate. G
The provisions of Sections 115JA and 115JB have been also
construed as a self-contained code in Ajanta Pharma Limited
vs. CIT, 201 O(9) sec 455 and in several other judgments as
stand alone sections. But that does not change the basic
nature of the provision. It remains a provision under the Income H
496 SUPREME COURT REPORTS [2015] 12 S.C.R.
A Tax Act and what is levied is income tax on the assessment of
income as per such a special provision.
36. Article 1.4 of the PPA provides inter alia that reference
to any 'Law' shall be construed as a reference to such Law as
8 . from time to time amended or re-enacted. This general
provision in our view is sufficient to take care of all the taxes
on income under Article 3.8 of the PPA notwithstanding different
rates of income tax or other changes which may be brought
about in the Income Tax Act. This view commends itself to us
c because such change in Law relating to Income Tax does not
require any additional claim to be raised by the power
generating companies. There is no specific amount - or rate
which is to be reimbursed by the Board. Rather, the entire
advance income tax payable requires reimbursement on
D account of Article 3.8 of the PPA provided of course that the .
accounts are maintained in the manner required by the
Agreement so that tax is only on the basis of income from the
project. No such dispute has been raised in the present case.
E 37. The claim of the appellant that liability of MAT is on
account of change in Law and therefore required M/s. LANCO
to adopt the procedure for making claims under Article 11.4 of
the PPA does not appeal to us for the aforesaid reasons. The
entire stipulation in Article 11.4 of the PPA is in respect of
F additional or reduced expenditures or costs which have not
been catered for and arise later due to change in Law. The
burden on account of income tax as per Article 3.9 of the PPA
cannot be treated as additional or reduced burden because
the entire actual advance income tax payable for the project is
G required to be reimbursed by the Board. It is immaterial
whether the income tax payable is high or low in any particular
year. When there is already a special provision in respect of
entire payable taxes on income under Article 3.8 of the PPA,
that should have precedence over the general provisions in
H Article 11.4 of the PPA.
A.P. POWER C00RDINATION COMMITTEE v. LANCO 497
KONDAPALLI POWER LTD. [SHIVA KIRT! SINGH, J.]
38. We have also considered other relevant provisions A
of the Income Tax su~h as definition of income, total income,
tax and find that they do not help the case of the appellant in
any manner. Section 2(43) defines 'Tax' to mean income tax
chargeable under the provisions of Income Tax Act and 'Total
Income' has been defined with reference to Section 5 which ·B
enlarges the scope of total income not only to income received
or accrued but also deemed to be received or deemed to be.
accrued in India (for a resident). Simply because the exemption
earlier granted. to power generating companies has been
withdrawn so as to subject them to income tax liability under a C
special provision, cannot lead to any inference as suggested
on behalf of the appellant that it is not an income tax but some
other tax which is levied under Section 115JB of the Income
Tax Act. Hence we hold the claim for MAT covered by Article
0
3.8 of the PPAand payable as such when requisite conditions
stand satisfied.
39. In the final conclusion, we find no scope to interfere
with the impugned order in these appeals. The appeals are
dismissed but without any order as to costs. E
Nidhi Jain Appeals dismissed.
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