TATA POWER COMPANY LTD.versusADANI ELECTRICITY MUMBAI LTD. & ORS.

                         [2019] 6 S.C.R. 845                            845


                 TATA POWER COMPANY LTD.                                A
                                 v.
         ADANI ELECTRICITY MUMBAI LTD. & ORS.
                   (Civil Appeal No. 415 of 2007)
                           MAY 02, 2019                                 B
       [ARUN MISHRA AND S. ABDUL NAZEER, JJ.]
       Electricity Regulatory Commission Act, 1998: s. 22(2)(n) and
29(3) – Standby charges – Quantum of – Appellant-TPC, distribution
licensee supplying electricity to entire Mumbai and BSES/REL,
                                                                        C
distribution licensee supplying electricity only in suburbs of Mumbai
– From 1998 to 2006, BSES/REL used to purchase electricity from
TPC between 29% to 37% – Tariff payable by BSES to TPC included
a component of standby charge – Standby charges paid by TPC to
Maharashtra State Electricity Board-MSEB were being recovered
by TPC from its customers through its tariff – Order of Government      D
of Maharashtra stipulating a sum of Rs.3.5 crores per month to be
paid by BSES/REL to TPC by way of standby charges – Issue as
regards quantum of standby charges required to be paid by BSES/
REL to TPC – Order by MERC directing BSES/REL to bear
approximately 23% of the total standby charges incurred by TPC
                                                                        E
qua MSEB – Appeal before APTEL – Case of the TPC that standby
charges should be borne in ratio of 50:50 – Chairman held that
liability to be in proportion of 2:1 tariff, whereas Judicial Member
and Technical Member differed – Decisions of MERC, as well as
the Technical and Judicial Members, working out the percentage
of standby charges as 23:77 with respect to BSES/REL and TPC            F
respectively for the period – On appeal, held: Electricity used to be
purchased by BSES/REL from TPC and the standby charges used to
be realised which were factored in the tariff, which liability was
ultimately passed on to the retail consumers – Ratio had been
appropriately worked out in the most equitable manner by applying
                                                                        G
the level playing field – Considering the standby charges of Rs.24.75
crores recovered by MSEB from TPC with effect from 1.10.1996
and as per the Government order and Principles of Agreement Rs.3.5
crores was additionally being available and a difference of standby
which was made to increase the liability Rs.24.75 crore per month
                                                                        H
                                845
846            SUPREME COURT REPORTS                      [2019] 6 S.C.R.


A     to Rs.30.25 crores per month – Thus, the decision of the Technical
      and Judicial Members is appropriate and reasonable while working
      out the percentage of the standby charges to be paid by BSES/REL
      to TPC for the said period – Majority opinion that standby facility
      provided by TPC was out of its own generating capacity and 90%
      of the times energy has been drawn by BSES/REL from TPC, is
B
      accepted – Thus, there is no justification for TPC to claim 50:50%
      sharing of the standby charges –Implementation of the order of the
      APTEL would mean that the determination made by it has been acted
      upon and corresponding liability factored into tariff has been passed
      on the customers and actual consumers and realised from them since
C     there was no such interim stay on implementation of the order –
      Submission that order of APTEL has already been worked out even
      otherwise it is found to be just and equitable is accepted – Order
      passed by Technical and Judicial Members of APTEL upheld.
            Dismissing the appeals, the Court
D           HELD: 1.1 The standby facility was made available to TPC
      in the event there was a failure of power in TPC’s generation of
      1777 MW. BSES/REL used to purchase electricity from TPC
      between 29 % to 37 % from 1998 to 2006. The standby charges
      were factored into the tariff charged from its retail customers.
E     The standby charges to the extent of supply were borne by BSES/
      REL for optimum supply from TPC when interconnectivity was
      provided at Borivali point as per the Government order. The
      dispute arose between TPC and BSES/REL as to whether BSES/
      REL entitlement to draw 275 MVA from TPC in the case of outage
      and failure of electricity supply, the charges which were required
F     to be paid were over and above the charges that would be paid
      for energy actually drawn. TPC was paying an amount of Rs.24.75
      crores per month-Rs.297 crores per annum to MSEB by way of
      standby charges which was built into the tariff. The said amount
      was recovered by TPC from its customers who in turn recovered
G     it from their retail consumers. [Para 25][866-E-G]
            1.2 The Government of Maharashtra formed a Committee
      to resolve the issue of quantum of standby charges required to
      be paid by BSES/REL to TPC. The Government of Maharashtra
      passed an order dated 19.1.1998 whereby stipulating a sum of
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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                      847
               MUMBAI LTD. & ORS.

Rs.3.5 crores per month should be paid by BSES/REL to TPC by         A
way of standby charges. The decision was taken by the Committee
inter alia considering the generation by TPC and MSEB. The
order was based upon six factors-generation of TPC and MSEB;
electricity supplied by TPC to BSES/REL as a consumer; TPC’s
standby supply from MSEB; charges paid for said sub–standby
                                                                     B
supply by TPC to MSEB; the financial position of TPC and BSES/
REL; and stability of better Mumbai grid. [Para 26][866-H;
867-A-B]
       1.3 The main principles on the basis of which Agreement
was to be reached between TPC and BSES/REL were settled. As
per clause 2 of the Principles of Agreement, BSES/REL had to         C
pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores
per month. The parties had agreed to cooperate in order to ensure
that Government order dated 19.1.1998 is implemented in the
spirit of it. A detailed power supply agreement was to be entered
into by 21.4.1998. The agreement could not be executed as            D
consensus with respect to several aspects could not be reached.
The order dated 22.3.2000 has been set aside by the High Court,
which order was not interfered with by this Court and the case
was remitted for the decision to MERC, which is an expert body.
The power was conferred upon the MERC vide notification dated
27.10.2000 under the provision of Section 22(2)(n) of Electricity    E
Regulatory Commission Act, 1998, to adjudicate upon the
disputes and differences between licensees and utilities. On
4.12.2000, BSES/REL had filed an application to MERC in respect
of sharing of standby charges between BSES/REL and TPC. The
prayers were made to regulate action and standby charges levied      F
by them and to fix and determine the standby charges payable by
them. [Para 27][867-C-F]
      1.4 Ultimately, the APTEL by the impugned orders has
decided the matter. The Chairman held that liability to be in
proportion of 2:1 tariff, whereas Judicial Member has concurred      G
with the Technical Member when Technical Member differed with
the opinion of Chairman, but the fact remains that MERC, as
well as the APTEL, concurrently have not accepted the case of
the TPC that standby charges should be borne in ratio of 50:50.

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848            SUPREME COURT REPORTS                      [2019] 6 S.C.R.


A     The decisions of MERC, as well as the Technical and Judicial
      Members, are found to be correct while terming ratio as 23:77
      with respect to BSES/REL and TPC respectively.[Para 28]
      [867-F-G]
             1.5 In view of the facts and circumstances of the case and,
B     in particular, several factors were required to be taken into
      consideration, on that basis said figure has been worked out. It
      has also been considered that electricity used to be purchased
      by BSES/REL from TPC to the aforesaid extent and the standby
      charges used to be realised which were factored in the tariff, which
      liability was ultimately passed on to the retail consumers. Even
C     when the Principles of Agreement have been reached as to
      standby charges though it was subject to revision basis was fixed
      which could not have been departed from, it was on consideration
      of several aspects. The ratio had been appropriately worked out
      in the most equitable manner by applying the level playing field.
D     Considering the standby charges of Rs.24.75 crores recovered
      by MSEB from TPC with effect from 1.10.1996 and as per the
      Government order and Principles of Agreement Rs.3.5 crores
      was additionally being available and a difference of standby which
      was made to increase the liability Rs.24.75 crore pm to Rs.30.25
      crores pm. Thus, the decision of the Technical and Judicial
E     Members is found to be appropriate and reasonable while working
      out the percentage of the standby charges to be paid by BSES/
      REL to TPC for the period in question. [Para 29][867-H;
      868-A-D]
             1.6 The MERC directed sharing of standby charges payable
F     to MSEB between TPC and BSES/REL on the basis of their
      respective peak load requirements and directed TPC to pay to
      BSES/REL a sum of Rs.315.30 crores within 15 days. The
      quantum of standby capacity is related to the larger unit size of
      the generation in either system. The majority opinion that standby
G     facility provided by TPC was out of its own generating capacity
      and 90 percent of the times energy has been drawn by BSES/
      REL from TPC, is accepted. Thus, there is no justification for
      TPC to claim 50:50 percent sharing of the standby charges in the
      facts of this case on consideration of various factors the decision
      has been reached. [Para 31][870-G]
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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                         849
               MUMBAI LTD. & ORS.

       1.7 There was no stay on the order passed by the APTEL           A
by this Court. The plea of non–implementation of the order taken
by TPC is not understandable. It was only the bank guarantee
which was submitted by TPC, in addition, to deposit of a sum of
Rs.227 crores with the Registrar General of this Court. The
implementation of the order of the APTEL would mean that the
                                                                        B
determination made by it has been acted upon and corresponding
liability factored into tariff has been passed on the customers and
actual consumers and realised from them since there was no such
interim stay on implementation of the order. The submission that
order of APTEL has already been worked out even otherwise it
is found to be just and equitable is accepted. [Para 32][870-H;         C
871-A-B]
       1.8 There is no question of applicability of Article 14 of the
Constitution. As a matter of fact, what was agreed in the Principles
of Agreement more amount than that has been ordered to be
paid on the basis of principles of business equilibrium and other       D
factors. [Para 33][871-C]
       1.9 The order passed by Technical and Judicial Members
of APTEL is upheld. The amount which is payable to REL
deposited or secured by way of bank guarantee by TPC along
with interest lying with the Registrar of this Court, be paid to the
respondent company. [Para 35][871-E-F]                                  E
       BSES Ltd. v. Tata Power Co. Ltd. (2004) 1 SCC
       195 : [2003] 4 Suppl. SCR 932 ; Binani Zinc Ltd. v.
       Kerala State Electricity Board, (2009) 11 SCC 244 :
       [2009] 4 SCR 636 – referred to.
                         Case Law Reference                             F
[2003] 4 Suppl. SCR 932          referred to             Para 14
[2009] 4 SCR 636                 referred to             Para 22
       CIVIL APPELLATE JURISDICTION : Civil Appeal No. 415 of
2007.
                                                                        G
       From the Judgment and Order dated 20.12.2006 of the Appellate
Tribunal for Electricity at Mumbai in Appeal No. 202 of 2005.
       With
      Civil Appeal No. 3229 of 2007.
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850             SUPREME COURT REPORTS                            [2019] 6 S.C.R.


A           Gopal Jain, J. J. Bhatt, Sr. Advs., R. N. Karanjawala, Ms. Ruby
      Singh Ahuja, Parag Kabadi, Ms. Deepti Sarin, Sanjeet Ranjan, Saurabh
      Kumar, Mrs. Manik Karanjawala, Ms. Anjali Chandurkar, Hasan
      Murtaza, Ms. Divya Anand, Kartik Anand, Kumar Anurag Singh, Ms.
      Ramni Taneja, Anil Shrivastav, Advs. for the appearing parties
B           The Judgment of the Court was delivered by
            ARUN MISHRA, J.
             1. The appellant – Tata Power Company (in short ‘the TPC’) is a
      distribution licensee supplying electricity to the entire city of Mumbai,
      whereas BSES/Reliance Energy Limited (in short ‘REL’) is a distribution
C     licensee supplying electricity only in the suburbs of Mumbai. Prior to
      1998, the TPC was the only generator of the electricity supplying
      electricity to BSES for further supply to BSES customers. The TPC
      had 108 customers in the entire city of Mumbai. The tariff payable by
      BSES to TPC included a component of standby charge. The entire
D     standby charges paid by TPC to Maharashtra State Electricity Board
      (for short ‘the MSEB’) were being recovered by TPC from its customers
      through its tariff. Due to change in shareholding pattern, the BSES was
      changed to Reliance Energy Limited on 24.2.2004.
             2. The brief facts indicate that TPC and MSEB met on 12.3.1985
E     to finalise the interconnection between representatives of TPC and
      MSEB with respect to demand charges. Following decision was arrived
      at:
             “A) Demand Charges:
            Effective 1-2-84 a monthly firmed demand of 300 MVA would be
F           billed by MSEB. This would increase by 50 MVA each year
            effective 1-4-1985 to take care of TEC’s own load growth annually.
            This is irrespective of TEC’s actual net off-take recorded at the 4
            interconnecting points of supply and also irrespective of MSEB’s
            total off-take from TEC system”
G             3. Prior to 1985, the TPC was supplying entire electricity generated
      by it to the distributors of electricity in Mumbai. Since the quantity
      generated by TPC was not sufficient to meet the entire demand, TPC
      used to buy electricity from MSEB. BSES/REL was purchasing its
      entire requirement of electricity from TPC in bulk to supply to its customers
      in suburban Mumbai.
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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                             851
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

       4. With effect from 1985, TPC wanted to increase its generating      A
capacity thereby reducing its offtake of electricity from MSEB to zero
thereby causing loss of revenue to MSEB. In order to compensate
MSEB for loss of revenue caused as a result of stoppage of purchase of
electricity by TPC from MSEB, the TPC and MSEB entered into
aforesaid arrangement whereby TPC was required to pay to MSEB
                                                                            B
standby facility initially for 300 MVA to be increased by 50 MVA every
year, charges to be paid at the rate fixed by MSEB. The quantum of
standby increased from 300 MVA to 550 MVA by the year 1990,
whereafter the MSEB and the TPC agreed not to increase the said
standby beyond 550 MVA. The standby facility was meant to enable
TPC to draw upon the energy generated by MSEB in the event there            C
was outage/failure of power in TPC’s generation capacity of 1777 MW
consisting of multiple units of different sizes i.e., 500 MW, 180 MW, 150
MW, 72 MW, 75 MW and 300 MW, which is supplied to BSES/REL
along with its own consumers and BEST, another distribution licensee in
Mumbai. The standby facilities charges paid by TPC to MSEB were
                                                                            D
factored into tariff charged by TPC from its customers including BSES/
REL. The BSES/REL was a purchaser of electricity from TPC to the
extent of TPC’s generation between 29% to 37% from 1998 to 2006,
thus the standby charges to the extent of aforesaid varying percentages
for the respective years were borne by BSES/REL which in turn were
factored into tariff and charged by BSES/REL to its retail customers.       E
       5. Initially, BSES was permitted to set up its generating plant at
Dahanu to generate 500 MW (550 MVA approximately). There was a
condition that it would achieve interconnection with the supply of TPC
at a point known as Borivali Interconnection Point in case there was any
outage of BSES generation. It could draw upon the power supplied by         F
the TPC. The charges for such interconnections were to be determined.
On 30.5.1992, a notification was issued amending the BSES license. A
new clause 7B was introduced for providing aforesaid interconnectivity.
Provisions of clause 13A were also amended to authorise the State
Government in the event of a dispute to decide the same. On 29.6.1992,
a meeting was held between TPC and BSES and it was agreed that              G
interconnection would be provided at Borivali GIS switching station to
take care of emergencies in BSES 220 KV system. The TPC already
have arrangements with MSEB wherein standby capacity is provided
by MSEB to TPC in case of emergencies in TPC system. Standby
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852             SUPREME COURT REPORTS                           [2019] 6 S.C.R.


A     capacity to BSES may be provided from the standby capacity reserved
      by TPC with MSEB and appropriate sharing of charges by BSES could
      be worked out as provided in clause 12.0. The BSES prior to September
      1995 was purchasing its entire requirement of power from TPC and
      distributing it within its licensed area as TPC distributing licensee. After
      its two Dahanu generating units were commissioned in January/March
B
      1995, BSES started bringing the power generated by Dahanu to supply
      to its consumers after September 1995 in the suburbs of Mumbai city.
      As supply was started from the Dahanu, TPC surplus capacity began to
      increase. The TPC after 1995 required only 275 MVA standby facility
      against the standby capacity of 550 MVA.
C            6. The MSEB issued notice on 28.6.1996 revising its tariff to TPC
      effective from 1.10.1996. The MSEB raised its maximum demand
      charges per month with respect of standby facility/supply from
      Rs.190/- per KVA to Rs.450/- per KVA. Consequently, MSEB gave
      notice to TPC, inter alia, revising its standby charges with effect from
D     1.10.1996 recoverable from TPC to Rs.24.75 crores per month i.e.,
      Rs.297 crores per year.
             7. TPC had issued a notice on 30.7.1996 to the Government of
      Maharashtra and MSEB under Schedule VI to the Electricity (Supply)
      Act, 1948, showing its intention to enhance tariff charges with effect
E     from 1.10.1996 which included maximum demand charges and energy
      charges to various consumers. It also provided for payment of maximum
      demand charges and energy charges by BSES for standby facility. With
      effect from 1.1.1997, TPC revised its tariff inter alia to BSES, thereby
      factoring in the monthly demand charges of Rs.24.75 crores payable by
      TPC to MSEB for standby supply. In order to resolve the issue of
F     quantum of standby charges to be paid by BSES to TPC, the Government
      of Maharashtra appointed a Committee and an order dated 19.1.1998
      was passed whereby the Government of Maharashtra, based on the
      recommendation of the Committee, stipulated that a sum of Rs.3.5 crores
      per month should be paid by BSES/REL to TPC by way of standby
G     facility for the period 1998-1999. This sum of Rs.3.5 crores per month
      i.e., Rs.42 crores per annum was over and above the sum Rs.24.75
      crores per month i.e., Rs.297 crores per annum which TPC used to
      recover in the form of its tariff from its customer. In fixing the aforesaid
      amount, the following factors were taken into consideration by the said
      Committee:
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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                               853
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

      “(i) the generation of TPC and MSEB;                                    A
      (ii) the electricity supplied by TPC on BSES/ REL as a consumer.
      (iii) TPC’s standby supply from MSEB;
      (iv) Charges paid thereof by TPC;
      (v) TPC’s and BSES/REL’s financial position;                            B
      (vi) That standby was being supplied for the stability of the Greater
           Mumbai Grid.”
       8. On 17.12.1997, TPC contended that it was fully capable and
willing to supply standby to BSES for its Dahanu plant and TPC should,
                                                                              C
therefore, be billed only for 275 MVA standby facility for their consumers
other than BSES. The Government of Maharashtra issued an order on
19.1.1998, following is the relevant portion of the said order:
      “it has come to the notice of the Government that due to dispute
      on commercial terms between BSES and TEC, interconnection is
                                                                              D
      not established at Borivali even though technical arrangements
      are ready. Similarly, additional electricity generated at Dahanu is
      being sold to the Western Regional Grid through MSEB’s Biosar
      Interconnection. As a result, the government’s main objective
      that electricity generated at Dahanu should be used within the
      BSES area of supply has not been met and BSES license conditions        E
      are violated. For this Government had appointed a Committee
      under the Chairmanship of the Principal Secretary, Energy. In
      this committee, representatives of MSEB, TEC, and BSES were
      members. This Committee has examined the total situation and
      has submitted its report to the Government.
                                                                              F
      GOM thereafter ordered as follows:
      “Taking into account the recommendations of the Committee,
      following are orders of the Government.
      1. BSES should complete interconnection at Borivli by January
         26, 1998.                                                            G

      2. BSES should take 275 MVA standby power supply from TEC
         for Dahanu generating station.
      3. For taking above standby supply, BSES should pay standby
         charges to TEC.
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854            SUPREME COURT REPORTS                            [2019] 6 S.C.R.


A           4. After the interconnection is commissioned, BSES should stop
               selling electricity through MSEB’s Boisar sub-station to
               Western Regional Grid.
            5. TEC may charge stand-by charges for 275 MVA supply to
               BSES.
B           6. Whenever required during an emergency, additional electricity
               may be taken for areas outside Mumbai region through
               MSEB’s Boisar sub-station. For this purpose, MSEB should
               take proper arrangements.
            7. As per Committee’s recommendations and taking into account,
C              TEC’s electricity supply to BSES, TEC’s standby supply from
               MSEB, charges thereof and TEC’s and BSES’s financial
               conditions, BSES should make a payment of Rs.3.5 crores every
               month for standby supply. On this basis, the rate per KVA
               should be fixed and commercial arrangement finalized.
D           8. The above standby charges are passed on TEC’s & BSES’s
               existing electricity supply tariff. The standby charges may be
               reviewed during tariff revision in the future.”
            9. Since the agreement was to be finalised as per the
      Government’s order, the Government had no power to give directions to
E     generators and distributors, TPC and BSES had entered into Principles
      of Agreement on 30.1.1998, the clauses 2 to 9 are extracted hereunder:
            “(2) BSES shall pay to TEC for the 220 KV interconnection at
            Borivali Rs.3.5 crores per month as standby charges for 275 MVA
            as per Government orders.
F
            (3) BSES offtake of energy at 220 KV Borivli interconnection
            will be billed at Rs.2.09 per kWh plus F.A.C. (which is presently
            at Rs.0.45) as applicable from time to time at other points of supply.
            This average energy charge is based on an estimated annual flow
            of 250 million units of energy through Borivli interconnection.
G           (5) As soon as the interconnection between TEC and BSES at
            220 KV Borivli is established.
            (6) The interconnection between MSEB and BSES at Boisar will
            be opened out.

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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                           855
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

      (7) BSES shall use this interconnection at Borivali fully for the   A
      standby type of service.
      (8) Both the parties have agreed to cooperate in order to ensure
      that the orders of the Government dated 19-01-1998 are
      implemented in the spirit of it.
      (9) A detailed Power Supply Agreement on a mutually agreed          B
      basis incorporating the above will be executed by 21st of April,
      1998.”
                                                   (emphasis supplied)
       Though the aforesaid principles of the agreement were entered      C
into between the parties, for one reason or the other, no agreement has
been executed between them.
      10. The TPC under the Principles of Agreement dated 31.1.1998
was bound to supply standby power as and when required by BSES/
REL. Whether the TPC was drawing from MSEB or not is immaterial.          D
The agreement of BSES was with TPC, not with MSEB. The agreement
between TPC and BSES was independent than the agreement between
TPC and MSEB.
      11. Even after providing the standby facility of 275 MVA to BSES/
REL, TPC still enjoyed the standby facility of 550 MVA from MSEB.
                                                                          E
The TPC entitlement to avail 550 MVA standby facility from MSEB did
not change.
      12. The standby facility that has been availed of by BSES/REL
through TPC since then it actually drew on about 119 occasions till May
2004, of which 57 occasions in excess of 275 MVA. It has been observed
                                                                          F
by the Appellate Tribunal for Electricity (in short ‘the APTEL’) that
TPC in 90 percent of the above occurrences has supplied standby powers
from its own generation and never drawn back the power from MSEB.
The TPC has actually drawn standby from MSEB on a large number of
occasions and on several occasions far in excess of 275 MVA. The
standby drawn by TPC from MSEB is as under:                               G
      “439 MVA highest in 1998-1999
      271 MVA highest in 1999-2000
      358 MVA highest in 2000-2001
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856            SUPREME COURT REPORTS                           [2019] 6 S.C.R.


A           325 MVA highest in 2002-2003
            415 MVA highest in 2002-2003
            763 MW highest in 2004"
             13. It is also pertinent to mention that even after BSES/REL started
B     drawing power from its Dahanu generation station, BSES/REL continued
      to purchase approximately 35 percent of TPC’s generation from TPC to
      supply energy to BSES/REL consumers. With effect from 1.2.1998, the
      BSES/REL paid a sum of Rs.3.5 crores per month to TPC as charges
      for standby. The TPC objected and sought the revision of standby
      charges, which was fixed at Rs.3.5 crores per month, by writing a letter
C     to the Government of Maharashtra on 8.7.1998. With effect from
      1.12.1998, the MSEB revised its tariff by issuing a notice under the
      agreement between the MSEB and TPC. The charges for standby
      facility were also increased from Rs.450 KVA per month to Rs.550
      KVA per month i.e., Rs.363 crores per annum equal to Rs.30.250 crores
D     per month. These standby charges enhanced from Rs.24.75 crore per
      month to Rs.30.25 crores per month with effect from 1.12.1998 i.e.,
      from Rs.297 crores to Rs.363 crores annually. The TPC instead of
      requiring a pro-rata share of the incremental standby charges from BSES/
      REL purported to divide the amount of Rs.30.25 crores in the ratio of
      50:50 and demanded a sum of Rs.15.125 crores per month i.e., Rs.181.5
E     crores per annum by way of standby charges from BSES/REL. The
      TPC was already recovering Rs.24.75 crores per month through its tariff
      as said amount was factored in tariff from its customers and additional
      recovery of Rs.3.5 crores was also being made from BSES/REL under
      the Principles of Agreement. Thus, the total recovery of Rs.28.25 crores
F     per month by way of standby charge was already made by TPC from its
      customers as on September 1998. By demanding a sum of Rs.15.125
      crores per month from BSES/REL, TPC was attempting to demand an
      additional sum of approximately Rs.11.625 crores per month from BSES/
      REL under the guise of standby charges instead of demanding a pro-
      rata amount of the incremental standby charges of Rs.2 crores.
G
            14. TPC issued notice dated 30.9.1998 under Schedule VI to the
      Electricity (Supply) Act, 1948 to the Government of Maharashtra
      proposing revision of its tariff and other matters. It was indicated in the
      notice that it would pay only Rs.181.5 crores per annum and remaining
      should be the liability of BSES/REL. It has also been contended on
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   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                               857
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

behalf of TPC that other revision in tariff had not been proposed by          A
TPC which would otherwise have needed an increase of 6 percent on
all consumers in Mumbai. It served a notice on BSES/REL demanding
the aforesaid charges of 35 percent of the component which was
purchased by BSES/REL as a consumer. The standby charges used to
be paid and otherwise included in the tariff. BSES/REL has received 35
                                                                              B
percent of the energy supplied from TPC as a consumer and for the
same, TPC was recovering an amount of Rs.24.75 crores per month
and an additional sum of Rs.3.5 crores per month. This Court in BSES
Ltd. v. Tata Power Co. Ltd., (2004) 1 SCC 195 has observed that tariff
notice as being illegal. Since the dispute between the TPC and BSES/
REL could not be sorted out, an order dated 22.3.2000 was passed by           C
the Government of Maharashtra endorsing the Committee’s Report. Vide
aforesaid order, BSES/REL was directed to pay Rs.9 crores as observed
in BSES Ltd. v. Tata Power Co. Ltd. (supra) by this Court.
       15. The Electricity Regulatory Commission Act, 1998 (in short
‘the Act of 1998’) came to be promulgated which conferred jurisdiction        D
on Maharashtra Electricity Regulatory Commission (in short ‘the MERC’)
to determine the tariff of supply of electricity and later on to adjudicate
the dispute between the parties. The dispute came to be referred to
MERC by the parties. The order dated 22.3.2000 passed by the State
Government has been set aside by the High Court, which decision has
been affirmed by this Court in BSES Ltd. v. Tata Power Co. Ltd. (supra).      E

       16. The MERC passed an order on 7.12.2001 directing BSES/
REL to bear 25 percent of the standby charges. This order was
challenged by both the parties before the High Court. The High Court
remitted the matter back to MERC and directed BSES/REL to deposit
50 percent of the standby amount as an interim arrangement. The matter        F
had further travelled to this Court in the aforesaid decision namely BSES
Ltd. v. Tata Power Co. Ltd. (supra).
      17. After the matter was remitted, MERC after hearing the parties
passed an order dated 31.5.2004 and directed the BSES/REL to bear
approximately 23 percent of the total standby charges incurred by TPC         G
qua MSEB. While noticing that TPC has already recovered a sum of
Rs.24.75 crores per month through its tariff and an additional sum of
Rs.3.5 crores per month as per the Principles of Agreement, it was
found that large part of standby charges has already been recovered by
TPC through tariffs and otherwise. Against the demand made on                 H
858            SUPREME COURT REPORTS                          [2019] 6 S.C.R.


A     31.5.2004, both the parties filed an appeal before the APTEL. It was
      heard by a Bench consisting of Chairman and Technical Member. They
      delivered separate judgments, both of them rejected the contentions of
      TPC claiming standby charges in the ratio of 50:50. The Chairman
      opined that standby charges should be shared in the proportion of 2:1
      i.e., TPC paying 2/3rd and BSES/REL paying 1/3rd, while Technical
B
      Member held BSES/REL should bear 23 percent while TPC should bear
      approximately 77 percent.
             18. In view of the divergence of opinion, the matter was referred
      to the third Member being Judicial Member, who agreed with the
      conclusion of the Technical Member that BSES/REL should bear 23
C     percent of the standby charges. In view of the majority judgment, the
      APTEL passed an order dated 20.12.2006, acknowledging the majority
      view of the Judicial Member and the Technical Member and directed
      that 23 percent of the standby charges for the period in question should
      be borne by BSES/REL and balance should be borne by TPC and further
D     directed refund of the excess amount that was deposited by BSES/REL
      pursuant to the interim orders passed. The MERC in the appeal has
      acknowledged that TPC has withdrawn a sum of Rs.24.75 crores from
      its customers through electricity tariff and an additional sum of Rs.3.5
      crores per month by way of standby charges from BSES/REL did not
      give credit for the said sum in the computation of standby charges to the
E     extent of 23 percent held to be payable by BSES/REL. The appeal of
      BSES/REL in respect of the aforesaid was rejected by the APTEL vide
      judgment and order dated 20.4.2007. TPC filed Civil Appeal No.415 of
      2007 before this Court. BSES/REL has also filed Civil Appeal No.3229
      of 2007 aggrieved by the judgment and order dated 20.4.2007 of APTEL.
F            19. Shri Gopal Jain learned senior counsel appearing on behalf of
      TPC has contended that TPC has not recovered standby charges from
      its customers for the facility in excess of 275 MVA out of 550 MVA
      standby facility for the period April 1999 to March 2004 provided by
      MSEB. Thereafter as provided by tariff order dated 11.6.2004, TPC
G     has recovered from its customers to the extent of 78 percent of the
      standby charges. This Court has granted interim stay on 7.2.2007 and
      required the appellant to furnish bank guarantee in the sum of Rs.227
      crores and in addition, deposit a sum of Rs.227 crores with the Registrar
      General of this Court, which may be withdrawn by respondent no.1
      subject to their furnishing an undertaking to this Court that in the event
H     of this appeal being decided against them, the amount as may be found
   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                                 859
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

refundable by them shall be refunded without demur with interest as             A
may be determined by this Court. The TPC has complied with these
conditions and it is not correct to say that all concerned have complied
with the impugned order dated 20.12.2006. The amount of Rs.3.5 crores
per month was only for the year 1997-1998, though the actual liability
came to be Rs.8.25 crores per month, Rs.3.5 crores were fixed so as to
                                                                                B
avoid disturbance in the tariff in the current year. The MSEB is not
providing standby facility of 1777 MW (TPC’s total installed capacity)
nor is REL provided standby facility of 550 MVA by TPC. Therefore,
the standby charges cannot be apportioned in the ratio of the total installed
capacity of TPC and REL. The obligation to pay to MSEB for the
standby facility is independent. If the generator for some reason is not        C
able to recover from its customers, it will not be absolved of its obligation
to pay the standby charges to MSEB. The liability of the BSES/REL to
pay for standby charges in 50:50 ratio is absolute and cannot be linked
with the means of recovery. It would result in disturbing and distorting
level playing field conditions which are a facet of Article 14 of the
                                                                                D
Constitution and also distort competition. It is also urged by learned
senior counsel that it would run contrary to the objects of the Act of
1998, in particular, the mandate of Section 29(3) which is extracted
hereunder:
      “29. Determination of Tariff by State Commission.
                                                                                E
      (3) The State Commission, while determining the tariff under this
      Act, shall not show undue preference to any consumer of
      electricity, but may differentiate according to the consumer’s load
      factor, power factor, total consumption of energy during any
      specified period or the time at which the supply is required or the
      geographical position of any area, the nature of supply and the           F
      purpose for which the supply is required.”
      20. It was further urged that the prayer was made by BSES/REL
before the MERC to fix the standby charges payable by BSES/REL
(complainant) to the TPC (respondents). Its liability would be more
than Rs.3.5 crores per month. TPC is paying Rs.363 crores as standby            G
charges to MSEB. On principles of parity and proportionality, the BSES/
REL should pay for 275 MVA as the quantum of 275 MVA standby is
out of the same block of 550 MVA standby facility given by MSEB.
The TPC and BSES/REL should share in the ratio of 50:50. The APTEL
has not followed the decision of this Court in BSES Ltd. v. Tata Power          H
860            SUPREME COURT REPORTS                             [2019] 6 S.C.R.


A     Co. Ltd. (supra). This Court in the aforesaid decision has observed as
      under:
            “16. The word “tariff” has not been defined in the Act. “Tariff” is
            a cartel of commerce and normally it is a book of rates. It will
            mean a schedule of standard prices or charges provided to the
B           category or categories of customers specified in the tariff. Sub-
            section (1) of Section 22 clearly lays down that the State
            Commission shall determine the tariff for electricity (wholesale,
            bulk, grid or retail) and also for use of transmission facilities. It
            has also the power to regulate power purchase of the distribution
            utilities including the price at which the power shall be procured
C           from the generating companies for transmission, sale, distribution,
            and supply in the State. “Utility” has been defined in Section 2(l)
            of the Act and it means any person or entity engaged in the
            generation, transmission, sale, distribution or supply, as the case
            may be, of energy. Section 29 lays down that the tariff for the
D           intra-State transmission of electricity and tariff for supply of
            electricity — wholesale, bulk or retail — in a State shall be subject
            to the provisions of the Act and the tariff shall be determined by
            the State Commission. Sub-section (2) of Section 29 shows that
            the terms and conditions for fixation of the tariff shall be determined
            by Regulations and while doing so, the Commission shall be guided
E           by the factors enumerated in clauses (a) to (g) thereof. The
            Regulations referred to earlier show that generating companies
            and utilities have to first approach the Commission for approval
            of their tariff whether for generation, transmission, distribution or
            supply and also for terms and conditions of supply. They can charge
F           from their customers only such tariff which has been approved
            by the Commission. Charging of a tariff which has not been
            approved by the Commission is an offence which is punishable
            under Section 45 of the Act. The provisions of the Act and
            Regulations show that the Commission has the exclusive power
            to determine the tariff. The tariff approved by the Commission is
G           final and binding and it is not permissible for the licensee, utility or
            anyone else to charge a different tariff.
            ***                          ***                         ***
            “18. Electricity is not a commodity which may be stored or kept in
H           reserve. It has to be continuously generated and it is so continuously
TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                                861
     MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

  generated electricity which is made available to consumers. Any           A
  generator of electricity has to have some alternate arrangement
  to fall back upon in the event of its generating machinery coming
  to a halt. The standby arrangement for 550 MVA made by TPC
  was for the purpose that in the event its generation fell short for
  any reason, it will be able to immediately draw the aforesaid
                                                                            B
  quantity of power from MSEB. Similarly, the arrangement entered
  into by BSES with TPC ensured the former of immediate
  availability of 275 MVA power in the event of any breakdown or
  stoppage of generation in its Dahanu generation facility. Heavy
  investment is required for generation of power. For this kind of a
  guarantee and availability of power, TPC had to pay charges for           C
  the same to MSEB. This payment was in addition to the charges
  or price which TPC had to pay to MSEB for the actual draw of
  electrical energy. The same is the case with BSES qua TPC.
  The charges paid for this kind of an arrangement whereby a fixed
  quantity of electrical energy was guaranteed to TPC and BSES
                                                                            D
  at their desire, is bound to constitute a component of the price
  which they (BSES and TPC) would be charging from their
  consumers towards the cost of the electrical energy actually
  consumed by them. The determination or quantification of the
  amount which is payable for this kind of standby arrangement
  made in favour of TPC and BSES would, in reality, mean                    E
  determination of the price or charges for wholesale or bulk supply
  of electricity. It will, therefore, clearly fall within the expression
  “determine the tariff for electricity, wholesale, bulk, grid or retail”
  as used in clause (a) of sub-section (1) of Section 22 and also in
  the expression “regulate power purchase … including the price at
                                                                            F
  which the power shall be procured from the generating companies
  …” as used in clause (c) of sub-section (1) of Section 22.
  Therefore, the determination or quantification of the amount which
  BSES has to pay to TPC falls within the jurisdiction of the State
  Commission under Section 22 of the Act. This legal position is
  also reflected by Section 29 of the Act which confers an overriding       G
  power and clearly lays down that notwithstanding anything
  contained in any other law the tariff for supply of electricity —
  wholesale, bulk or retail — shall be subject to the provisions of
  the Act and shall be determined by the State Commission. This
  clearly ousts the jurisdiction of any other authority to determine
  the tariff. It may be noted here that the Act came into force on          H
862      SUPREME COURT REPORTS                            [2019] 6 S.C.R.


A     25-4-1998 and the Maharashtra Electricity Regulatory Commission
      was formed on 5-8-1999. Therefore, it is not possible to accept
      the contention of Shri Nariman that the State Government had
      the authority or jurisdiction on 22-3-2000 to determine or quantify
      the charges which BSES had to pay to TPC under the terms of
      the licence granted to the former as this was subsequent to the
B
      formation of the Maharashtra Electricity Regulatory Commission.”
      19. Shri Nariman has submitted that TPC gave a notice on
      30-9-1998 of their intention to enhance the charges of standby
      facility provided to BSES from Rs 3.5 crores to Rs 15.125 crores
      per month and this notice having been given under the Sixth
C     Schedule (para I, third proviso) of the Electricity (Supply) Act,
      1948, the enhanced charges became effective and operative after
      the expiry of 60 days of notice i.e. with effect from 1-2-1998.
      The submission is that by operation of law the charges for standby
      facility stood revised and enhanced with effect from 1-12-1998.
D     In our opinion, the contention raised has no substance. The legal
      position has undergone a complete change with the enforcement
      of the Electricity Regulatory Commissions Act, 1998. In view of
      Section 29 of the Act, the tariff for intra-State transmission of
      electricity and tariff for supply of electricity in wholesale, bulk or
      retail has to be determined by the Electricity Regulatory
E     Commission of the State and a licensee cannot by its unilateral
      action enhance the charges. The provisions of the Act have an
      overriding effect by virtue of Section 52 of the Act and, therefore,
      any provisions of the Electricity (Supply) Act, 1948, which are
      inconsistent with the Act would cease to apply and consequently,
F     the provisions of the Sixth Schedule of the said Act can have no
      application now. The Sixth Schedule has been made by virtue of
      Sections 57 and 57-A of the Electricity (Supply) Act, 1948 and
      Section 57-A contemplates constitution of a Rating Committee by
      the State Government to examine the licensee’s charges for the
      supply of electricity. Section 29(6) of the Act specifically lays
G     down that notwithstanding anything contained in Sections 57-A
      and 57-B of the Electricity (Supply) Act, 1948, no Rating
      Committee shall be constituted after the date of the commencement
      of the Act. The effect of Section 29 and the Regulations framed
      thereunder is that it is no longer open to a licensee or utility to
H     unilaterally increase the tariff. The tariff can be enhanced only
TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                            863
     MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

  after approval of the Commission and charging of an enhanced          A
  tariff which has not been approved by the Commission will amount
  to commission of an offence. Therefore, the notice to enhance
  the charges given by TPC, which was subsequent to the
  enforcement of the Act, can have no legal effect.
  20. Shri Nariman has also submitted that even assuming that the       B
  standby charges are a matter relating to tariff as the same is
  passed on to the consumers, but the sharing of standby charges
  between TPC and BSES is not a matter relating to determination
  of tariff and, therefore, the Commission can have no jurisdiction
  to enter into such an exercise under Section 22 of the Act. The
  submission proceeds on an assumption that the dispute relates to      C
  the sharing of standby charges. In fact, the whole case of BSES
  is that they are under no obligation to share the charges which are
  being paid by TPC to MSEB for providing them with standby
  facility. It may be noted that the standby facility of 300 MVA was
  provided to TPC in the year 1985 which gradually rose to 550          D
  MVA in the year 1990. The licence of BSES was amended in
  1992, whereunder for the first time, it was provided that they
  should interlink with the system of TPC and ultimately, their
  systems were interlinked on 14-2-1998 in pursuance of the order
  passed by the Government of Maharashtra on 19-1-1998. The
  question of payment of standby charges by BSES to TPC has,            E
  therefore, arisen for the first time in 1998 which is almost 13
  years after TPC started paying standby charges to MSEB. In
  substance, the dispute is what should be paid by BSES to TPC for
  the standby facility provided by it. The strict and narrow
  interpretation sought to be placed by the learned counsel so as to    F
  oust the jurisdiction of the Commission cannot be accepted as it
  will defeat the very object of enacting the Electricity Regulatory
  Commissions Act.
     ***                     ***                 ***
  26. An interim arrangement is normally made on a prima facie          G
  consideration of the matter and on broad principles without
  examining the matter in depth. The matter has been remitted to
  the Commission by the High Court by the judgment and order
  dated 3-6-2003 and a period of nearly three-and-a-half months
  has already elapsed. Regulation 101 of the Central Electricity        H
864            SUPREME COURT REPORTS                           [2019] 6 S.C.R.


A           Regulatory Commission provides that the Commission may
            normally dispose of the petitions finally within six months of
            admission. The State Commissions are also expected to follow
            this time-limit for disposal of petitions. Since the order made by
            the High Court is only by way of interim arrangement and the
            Commission is expected to decide the disputes finally within a
B
            short period, we do not consider it proper to interfere with the
            order made by the High Court in this regard. After the decision of
            the Commission, the equities can be adjusted and the excess
            amount paid by any party can be refunded to it along with
            appropriate interest or can be adjusted in future bills.”
C                                                          (emphasis supplied)
             21. Learned senior counsel has also urged that actual supply of
      electricity and charges paid for actual supply are completely different
      from the guarantee and charges payable for providing such a guarantee/
      arrangement. It is further urged that generating capacity comes at a
D     cost. The Technical Member therefore wrongly assigns Zero cost for
      this generating capacity. This is an error apparent in the impugned order
      where the spinning reserve has been treated as zero cost.
            22. Learned senior counsel has relied on the decision in Binani
      Zinc Ltd. v. Kerala State Electricity Board, (2009) 11 SCC 244, to
E     contend that notice dated 30.9.1998 was legal and valid. The relevant
      portion of the aforesaid decision is extracted hereunder:
            “28. Thus, it would be one thing to say that upon coming into
            force of the 1998 Act the provisions contained in the 1948 Act
            which are found to be inconsistent with the former shall give way
F           thereto but it is another thing to say that although no Commission
            is constituted, the Board would have no jurisdiction at all to frame
            a tariff.
            ***                         ***                        ***
            33. It is of some significance to note that the Commission in terms
G
            of clauses (a) and (b) of sub-section (2) of Section 29 of the 1998
            Act are required to follow the principles provided for under Sections
            46, 56 and 57-A of the 1948 Act as also the Sixth Schedule
            appended thereto. The 1998 Act, therefore, recognises the
            principles contained in the 1948 Act also.
H           ***                         ***                        ***
   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                                  865
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

      41. We have, however, no hesitation in finding that the State              A
      Electricity Board had the requisite jurisdiction to revise a tariff till
      such time as the Commission was constituted and the purposes of
      the 1998 Act could be achieved through it. Till the time the
      Regulatory Commission was not constituted by the State of Kerala,
      the power to determine tariff remained with the Board under the
                                                                                 B
      Electricity (Supply) Act, 1948 as it was not repealed by the
      Electricity Regulatory Commissions Act, 1998. Parliament could
      not have intended to bring about a situation where no authority
      would be empowered to determine the tariff between the date of
      coming into force of the ERC Act, 1998 and the constitution of
      the Commission. It is only after the Regulatory Commission is              C
      constituted that it will be the sole authority to determine the tariff.”
     No case for interference in Civil Appeal No. 3229 of 20017 is
made out which is barred by limitation.
       23. Shri J.J. Bhatt learned senior counsel appearing on behalf of
BSES/REL has contended that TPC and MSEB entered into an                         D
arrangement on 12.3.1985. There was an independent agreement
between TPC and BSES/REL entered into on 31.1.1998 and it has no
connection with the agreement between the TPC and MSEB.
Notwithstanding the fact that MSEB supplied TPC with standby power
or not, TPC was bound to supply BSES/REL from its own generation                 E
standby power. On approximately 90 percent of the occasions, BSES/
REL has utilised standby power of TPC. It has exceeded on some
occasions more than 275 MVA and has gone up to above 400 MVA,
whereas TPC has drawn standby from MSEB. The Government passed
an order on 19.1.1998, considering several factors and determined Rs.3.5
crores per month as standby charges. The payment of standby charges              F
by BSES/REL to TPC was independent of the charges to be paid by
TPC to MESB. The determination has been made on the basis of various
factors. Basis of 50:50 sharing has been rightly rejected by the MERC
as well as by the APTEL. The decision of spinning reserve by the
Technical and Judicial Members at zero levels is justified in the facts of       G
the case. The submission made on the basis of Binani Zinc Ltd. v.
Kerala State Electricity Board (supra) is not tenable. The total
generating capacity of TPC was 1777 MW, whereas that of BSES/REL
is 500 MW. It is incorrect that TPC has recovered only 50 percent of
standby charges payable to MSEB. The standby charges of Rs.24.75
                                                                                 H
866            SUPREME COURT REPORTS                          [2019] 6 S.C.R.


A     crores per month i.e., Rs.297 crores per annum were factored into TPC
      tariff in addition to the amount of Rs.3.5 crores per month was paid by
      BSES/REL. It wanted to realise 75 percent of the charges from BSES/
      REL by claiming a 50:50 ratio sharing. The TPC has spinning reserve
      surplus of 317 MVA with regard to its total capacity of 1777 MW. It
      was not MSEB but TPC which has provided standby support to BSES/
B
      REL on 90 percent occasions. It is further contended that the appeal
      filed by BSES/REL should be allowed and the excess amount has been
      worked out by the APTEL. The same may be suitably reduced.
              24. The period in dispute is 1.4.1999 to 30.9.2004. It is apparent
      that TPC has an agreement with MSEB for standby supply of 550 MVA.
C     Initially, in 1985, TPC has increased its generating capacity whereby
      reducing the off-take of electricity from MSEB to zero. In order to
      compensate MSEB for loss of revenue caused as a result of the stoppage
      of purchase of electricity, the MSEB entered into an arrangement with
      TPC whereby TPC was required to pay to MSEB initially for 300 MVA
D     standby to be increased by 50 MVA every year. The standby was
      freeze in the year 1990 when the parties agreed not to increase the
      standby beyond 550 MVA.
             25. The standby facility was made available to TPC in the event
      there was a failure of power in TPC’s generation of 1777 MW. BSES/
E     REL used to purchase electricity from TPC between 29 percent to 37
      percent from 1998 to 2006. The standby charges for aforesaid purchase
      were factored into the tariff charged from its retail customers. The
      standby charges to the extent of supply were borne by BSES/REL for
      optimum supply from TPC when interconnectivity was provided at
      Borivali point as per the Government order. The dispute arose between
F     TPC and BSES/REL as to whether BSES/REL entitlement to draw 275
      MVA from TPC in the case of outage and failure of electricity supply,
      the charges which were required to be paid were over and above the
      charges that would be paid for energy actually drawn. At the relevant
      time, TPC was paying an amount of Rs.24.75 crores per month i.e.,
G     Rs.297 crores per annum to MSEB by way of standby charges which
      was built into the tariff. The said amount was recovered by TPC from
      its customers who in turn recovered it from their retail consumers.
            26. The Government of Maharashtra formed a Committee to
      resolve the issue of quantum of standby charges required to be paid by
H     BSES/REL to TPC. The Government of Maharashtra passed an order
   TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                               867
        MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

dated 19.1.1998 whereby stipulating a sum of Rs.3.5 crores per month          A
should be paid by BSES/REL to TPC by way of standby charges. The
decision was taken by the Committee inter alia considering the generation
by TPC and MSEB. The order was based upon six factors - generation
of TPC and MSEB; electricity supplied by TPC to BSES/REL as a
consumer; TPC’s standby supply from MSEB; charges paid for said
                                                                              B
sub-standby supply by TPC to MSEB; the financial position of TPC and
BSES/REL; and stability of better Mumbai grid.
       27. The main principles on the basis of which Agreement was to
be reached between TPC and BSES/REL were settled. As per clause
2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220
KV interconnection at Borivali at Rs.3.5 crores per month. The parties        C
had agreed to cooperate in order to ensure that Government order dated
19.1.1998 is implemented in the spirit of it. A detailed power supply
agreement was to be entered into by 21.4.1998. The agreement could
not be executed as consensus with respect to several aspects could not
be reached. The order dated 22.3.2000 has been set aside by the High          D
Court, which order was not interfered with by this Court and the case
was remitted for the decision to MERC, which is an expert body. The
power was conferred upon the MERC vide notification dated 27.10.2000
under the provision of Section 22(2)(n) of Electricity Regulatory
Commission Act, 1998, to adjudicate upon the disputes and differences
between licensees and utilities. On 4.12.2000, BSES/REL had filed an          E
application to MERC in respect of sharing of standby charges between
BSES/REL and TPC. The prayers were made to regulate action and
standby charges levied by them and to fix and determine the standby
charges payable by them.
        28. Ultimately, the APTEL by the impugned orders has decided          F
the matter. The Chairman has held that liability to be in proportion of 2:1
tariff, whereas Judicial Member has concurred with the Technical
Member when Technical Member differed with the opinion of Chairman,
but the fact remains that MERC, as well as the APTEL, concurrently
have not accepted the case of the TPC that standby charges should be          G
borne in ratio of 50:50. The decisions of MERC, as well as the Technical
and Judicial Members, are found to be correct while terming ratio as
23:77 with respect to BSES/REL and TPC respectively.
      29. In view of the aforesaid facts and circumstances of the case
and, in particular, several factors were required to be taken into            H
868             SUPREME COURT REPORTS                            [2019] 6 S.C.R.


A     consideration, on that basis aforesaid figure has been worked out. It has
      also been considered that electricity used to be purchased by BSES/
      REL from TPC to the aforesaid extent and the standby charges used to
      be realised which were factored in the tariff, which liability was ultimately
      passed on to the retail consumers. Even when the Principles of
      Agreement have been reached as to standby charges though it was
B
      subject to revision basis was fixed which could not have been departed
      from, it was on consideration of several aspects. The ratio had been
      appropriately worked out in the most equitable manner by applying the
      level playing field. Considering the standby charges of Rs.24.75 crores
      recovered by MSEB from TPC with effect from 1.10.1996 and as per
C     the Government order and Principles of Agreement Rs.3.5 crores was
      additionally being available and a difference of standby which was made
      to increase the liability Rs.24.75 crore per month to Rs.30.25 crores per
      month. Thus, the decision of the Technical and Judicial Members is
      found to be appropriate and reasonable while working out the percentage
      of the standby charges to be paid by BSES/REL to TPC for the period in
D
      question.
             30. This Court in BSES Ltd. v. Tata Power Co. Ltd. (supra) held
      that the tariff notice dated 30.9.1998 to be illegal and had no legal effect.
      It was held that the charges paid for this kind of arrangement, whereby
      a fixed quantity of electrical energy was guaranteed to TPC and BSES/
E     REL at their desire, is bound to constitute a component of the price
      which they (BSES and TPC) would be charging from their consumers
      towards the cost of the electrical energy actually consumed by them.
      This Court also held that the State Government had no authority or
      jurisdiction on 22.3.2000 to determine or quantify the charges which
F     BSES had to pay to TPC under the terms of the license granted to the
      former. It was further observed that Commission to decide the dispute
      early. A clarificatory order was passed by this Court on 9.1.2004
      considering the decision in Binani Zinc Limited (supra). The petition
      was filed by TPC for review. On the basis of the decision in Binani
      Zinc Limited (supra), the same was dismissed. The MERC has passed
G     the order on 31.5.2004, the following observations were made by MERC:
             “94. In this context, the Commission is also of the view that,
            since the standby facility ensures the reliability of the Mumbai
            system and thus benefits all the consumers in the Mumbai area,
            they have to contribute towards the cost of standby through the
H           mechanism designed by the Commission. TPC has been
TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                             869
     MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

  recovering the cost of standby that was applicable in January          A
  1998 i.e., Rs.24.75 crore per month, from its consumers through
  its tariff, viz. fixed charges and energy charges. This aspect has
  been dealt with in detail subsequently in this Order. Now, depending
  on the ratio of sharing of the standby cost determined by the
  Commission, the consumers of TPC and BSES will have to pay
                                                                         B
  the cost applicable to their respective licensees, in the manner
  decided by the Commission.
  ***                        ***                            ***
  225. The Commission is, however, of the view that the issue of
  whether the ratio should be applicable on the entire standby           C
  component or only on the incremental portion above Rs.24.75
  crore, and the recovery of the same from the consumers, is a
  matter of tariff, which is within the Commission’s jurisdiction as
  held by several Courts, including the High Court judgment on the
  appeal filed by TPC and BSES on the Commission’s Order in the
  matter of sharing of standby charges.                                  D

  ***                        ***                            ***
  237. While determining the Annual Revenue Requirement (ARR)
  of TPC in the separate case before it, the Commission is
  considering all the payments to be made to or by the respective        E
  Parties and the interest and delayed payment charges, and is
  restating the Clear Profit of BSES and TPC to reflect the true
  picture, in line with the Commission’s decision on the issue of
  sharing of standby charges. This is being done from FY 1998-99,
  as the dispute arose during that year. The Commission has drawn
  from the available reserves and surpluses, wherever required, to       F
  ensure that TPC and BSES get their due Reasonable Return on a
  year-on-year basis, in line with the provisions of Schedule VI.
  Having ensured that the Clear Profit matches the Reasonable
  Return on a year-on-year basis, there is no requirement for any
  additional recovery of any amount from the Parties. The Utilities      G
  have to draw from their reserves, as would be elaborated by the
  Commission, to make the payments as directed by it.
  ***                        ***                            ***
  239. Para 26 of the Supreme Court ruling states, inter alia, that
  “After the decision of the Commission, the equities can be adjusted    H
870             SUPREME COURT REPORTS                           [2019] 6 S.C.R.


A           and the excess amount paid by any party can be refunded to it
            along with appropriate interest or can be adjusted in future bills.
            240. The Commission is of the view that interest should be
            recovered from all parties to the dispute for the amounts paid
            short vis-à-vis the actual payments due from each party, in
B           accordance with the Commission’s computations. The
            Commission believes that this approach is equitable to all the Parties
            concerned, and is appropriate in the light of the issues and
            circumstances of this matter which has been under dispute for
            such a long time. Hence, the Commission has computed the
            interest payable by BSES to TPC for delayed payments in FY
C           1998-99 and FY 1999-00, and the interest payable by TPC to
            BSES on the excess amounts deposited by BSES with TPC for
            onward payment to MSEB. The Commission has considered the
            fact that the interest rate on delayed payments to MSEB is 18%
            for overdue over 6 months. However, in this instance, the payment
D           liabilities as between TPC and BSES have been crystallized only
            now through this Order of the Commission. Moreover, the deposits
            made by BSES earlier were consequent to Court Orders and were
            not regular payments. Hence, taking into account the prevailing
            market interest rates (SBI PLR) in each of these years, the net
            (simple) interest payable by BSES works out to Rs.8.37 crore, as
E           shown in the table below, which can be adjusted against the refund
            due to BSES from TPC.”
             31. The MERC directed sharing of standby charges payable to
      MSEB between TPC and BSES/REL on the basis of their respective
      peak load requirements and directed TPC to pay to BSES/REL a sum of
F     Rs.315.30 crores within 15 days. It was also observed that the quantum
      of standby capacity is related to the larger unit size of the generation in
      either system. We have no hesitation to accept the majority opinion that
      standby facility provided by TPC was out of its own generating capacity
      and 90 percent of the times energy has been drawn by BSES/REL from
G     TPC. Thus, there is no justification for TPC to claim 50:50 percent sharing
      of the standby charges in the facts of this case on consideration of various
      factors the decision has been reached.
            32. It appears that there was no stay on the order passed by the
      APTEL by this Court. The plea of non-implementation of the order
H     taken by TPC is not understandable. It was only the bank guarantee
    TATA POWER COMPANY LTD. v. ADANI ELECTRICITY                                 871
         MUMBAI LTD. & ORS. [ARUN MISHRA, J.]

which was submitted by TPC, in addition, to deposit of a sum of Rs.227           A
crores with the Registrar General of this Court. The implementation of
the order of the APTEL would mean that the determination made by it
has been acted upon and corresponding liability factored into tariff has
been passed on the customers and actual consumers and realised from
them since there was no such interim stay on implementation of the
                                                                                 B
order. We find force in the submission raised on behalf of BSES/REL
that order of APTEL has already been worked out even otherwise it is
found to be just and equitable. No case for interference with the same
is made out.
      33. There is no question of applicability of Article 14 of the
Constitution. As a matter of fact, what was agreed in the Principles of          C
Agreement more amount than that has been ordered to be paid on the
basis of principles of business equilibrium and other factors as noted
above.
        34. It may be relevant to mention here that I.A. No.59365 of
2019 and I.A. No. 59356 of 2019 have been filed for substitution of              D
name of Reliance Energy Limited with the agreement of learned counsel
for the parties, the name of Adani Electricity Mumbai Limited is substituted
as respondent and as appellant in C.A. No. 415/2007 and C.A. No.3229/
2007 respectively.
       35. Resultantly, we find there is no case made out for interference       E
in either of the appeals filed by TPC and BSES/REL. The order passed
by Technical and Judicial Members of APTEL is hereby upheld. The
amount which is payable to Reliance Energy Limited, deposited or
secured by way of bank guarantee by TPC as per order dated 07.02.2007
along with interest lying with the Registrar of this Court as per agreement      F
of the Counsel for Reliance Energy Limited and Adani Electricity Mumbai
Limited be paid to Adani Electricity Mumbai Limited. The appeals being
devoid of merits are hereby dismissed. Consequently, IA Nos.59365/
2019 & 59374/2019 in CA No.415/2007 and IA Nos.59356/2019 &
59380/2019 in CA No.3229/2007 are disposed of. Any other IA, if any,
also stands disposed of. No costs.                                               G


Nidhi Jain                                                  Appeals dismissed.



                                                                                 H