The High Court quashed Karnataka Electricity Regulatory Commission orders reducing solar tariff, invoking promissory estoppel as petitioners acted on approved agreements and suffered detriment.
A Writ of Certiorari quashing impugned orders; a Writ of Mandamus directing respondents 2 & 3 to act upon agreed tariff of Rs. 9.56 per KWh.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 28TH DAY OF SEPTEMBER, 2021
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
WRIT PETITION NO.43260 OF 2017(GM-RES) C/W WRIT PETITION NO.43261 OF 2017(GM-RES)
IN W.P.NO.43260/2017:
BETWEEN:
SRI.H.M RAMACHANDRA, S/O MAHABALESHWAR BHAT, AGED ABOUT 48 YEARS, RESIDING AT 496, 6TH MAIN, DOLLARS COLONY, BANGALORE – 560 094.
...PETITIONER
(BY SRI. CHANDRA MOULI H.S., ADVOCATE A/W SRI. UDAYA HOLLA, SENIOR COUNSEL)
AND:
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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 20.10.2016 AT ANNEX-K AND ORDER IN RP 18/2016 DATED 24.8.2017 AT ANNEX-G PASSED BY THE R-2.
IN W.P.NO.43261/2017:
BETWEEN:
SMT. JAIMALA, W/O H.M.RAMACHANDRA, AGED ABOUT 56 YEARS, RESIDING AT 496, 6TH MAIN, DOLLARS COLONY, BANGALORE – 560 094.
...PETITIONER (BY SRI. H.S.CHANDRA MOULI, ADVOCATE A/W SRI. UDAYA HOLLA, SENIOR COUNSEL)
AND:
… RESPONDENTS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 20.10.2016 AT ANNEX-K AND ORDER IN RP 19/2016 DATED 24.8.2017 AT ANNEX-T PASSED BY THE R-2.
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THESE PETITIONS COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Petitioners who operate a 1000 KWh capacity Solar
Roof Top Photo Voltaic Systems under a Power Purchase Agreement are grieving before the Writ Court for assailing the KERC orders dated 20.10.2016 & 24.08.2017 whose net effect is the reduction of tariff below the agreed rates.
entered appearance through the learned HCGP and the 2nd & 3rd respondents are represented by their respective Panel Advocates who have filed their individual Statements of Objections; learned HCGP and the Panel Advocates resist the writ petition making submission in justification of the impugned orders and the reasons on which they have been constructed.
Voltaic Systems (hereafter SRTPV Systems) of 1000 KWh capacity on the roof tops of warehouses; they have entered
into Power Purchase Agreements (hereafter PPA) of December 2015 whereunder they have agreed to sell the net energy drawn from the SRTPV System to the 3rd
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respondent BESCOM; the tariff fixed under the PPAs is Rs.9.56 per KWh.
(ii) The subject PPAs bear the seal & signatures of KERC is not much in dispute; later the KERC granted approval vide order dated 28.04.2016; however that was subject to incorporating an additional clause as to the SRTPV System being designed, engineered, constructed, commissioned & operated by the petitioners within 31.12.2016; pursuant to this, the 3rd respondent sent a letter dated 19.08.2016 conveying the approval stating that the installation should be completed within 31.12.2016.
(iii) It appears that there was some delay and therefore the KERC has issued notices dated 29.08.2016 stating that though timeline of 12 months was allowed, why the extended timeline should not be cutailed relegating them to the 6 months given earlier; petitioners sent their reply on 01.09.2016 opposing the proposal; but the respondent – BESCOM did not offer its explanation; however, the KERC vide order dated 20.10.2016 rejected petitioners reply and thereby, held that the period for project accomplishment is six months; consequently the commissioning of the project was found to be beyond the
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timeline which eventually resulted into downward revision of tariff to Rs.5.20 from the agreed Rs.9.56 per KWh; petitioner’s Review Petitions against the same also came to be rejected on 24.08.2017; that is how they are knocking at the doors of this court.
(a) Petitioners happen to be the Power Purchase Agreement holders is not in dispute; the said agreements of December 2015 are at Annexure-B in both the petitions; paragraph 9 of the PPAs reads:
‘The BESCOM shall pay for the net metered energy at Rs.9.56 per KWh’; they bear the seal of 2nd respondent-KERC, which vide letter dated 28.04.2016 has granted approval; with this approval the transaction being choate takes effect.’
(b) The vehement contention of learned Panel Advocates appearing for the respondents that the approval was contingent on the petitioners agreeing to incorporate clause 1(1.6) under technical & interconnection requirement is bit difficult to countenance when even
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without such incorporation, the subject PPA were operated and the power was drawn from the petitioners’ SRTPV Systems; where the contractual terms have been acted upon and one of the parties has derived benefit therefrom, to the detriment of the other, the contention of the kind does not much avail; had the answering respondents declined to draw the power, the case would have been different.
(c) In fact the 3rd respondent has also accorded its
approval for installing the SRTPV vide letter dated 19.08.2016 specifically granting 12 months for completion of the installation and commissioning of the System before 31.12.2016; the subsequent notices dated 29.08.2016 proposing to cut short the period would not have been stuck to, even after the petitioners had offered their due explanation therefor; the version of the KERC in its order dated 20.10.2016 that the period of one year granted required curtailment to 6 months as a measure of rectification of the error, is bit difficult to countenance, when the arguable error cannot be laid at the threshold of the petitioners, as rightly contended by Mr. Uday Holla.
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(d) Pursuant to the approval granted by the KERC, petitioners acted upon the terms of the contract and have made huge investments in that connection; if incorporation of additional clause 1(1.6) was mandatory, there was no reason for the 3rd respondent to tap the power from the petitioners SRTPV Systems; it is not the case of the answering respondents that this clause which was sought to be super added, was an essential bargain between the parties; the conduct of the respondents gives an impression that somehow they want to fish out one or the other fault with the petitioners so that, they can encash the same to their profit and at the cost of the power sellers.
(e) There is a lot of force in the vehement submission of Sr.Advocate Mr. Holla appearing for the petitioners that the impugned orders are liable to be voided on the doctrine of estoppel and the principle of promissory estoppel , as well; he is justified in this submission; in fact, on the request of the petitioners the 3rd respondentBESCOM vide letters dated 29.12.2016 has stated as under:
“The Synchronization test of Solar Rooftop PV system of 1000 kWp, installed on the roof of your installation baring RR No.:RNHT368 has been conducted and your SRTPV system successfully synchronized with the BESCOM
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grid at 11 KV voltage level on 29.12.2016 at rate of Rs.5.20 paise per unit solar generated by your SRTPV”.
(f) In Halsbury's Laws of England (Third Edition)
Volume 15, at page 175, the doctrine of Promissory Estoppel is elucidated as under:--
"When one party has by his words or conduct made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him. but he must accept their legal relations subject to the qualification which he himself has so introduced. This doctrine, which is derived from a principle of equity enunciated in 1877, has been the subject of considerable recent development. It differs from estoppel properly socalled in that the presentation relied upon need not be one of present fact.
(g) The vehement contention of learned Panel
Counsel for the respondents that the period of one year
was wrongly allowed to the petitioners Systems and therefore that was rectified by issuing the proposal notice, is bit difficult to agree with; going by the petition papers, one gathers a legitimate impression that the period of one year was accorded consciously and not by any inadvertence or the like; in any circumstance it is not the
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case of respondents that the petitioner had done any culpable act in elongating the period from six months to one year; they had organized all their preparatory arrangements, financial & other, on the basis of period being one year; therefore, all of a sudden that could not have been downwardly revised to six months on the arguable ground of error.
(h) The vehement contention of learned Panel Counsel for the BESCOM that there has been a downward incurring of expenditure because of technological advancements in the field of non-conventional energy tapping may be true; however, that cannot be a ground for denying the extended period by banking upon the plea that the consumers of power need to be charged at lesser rates and that cannot be done unless the commissioning period is refixed as six months consistent with the additional clause 1(1.6) that was suggested by the KERC as a condition of approval.
(i) All the above aspects have not been duly treated by the respondent-KERC and thus, the impugned orders are infected with the legal infirmities apparent on their face
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warranting indulgence of writ court to set the injustice
meted out to the petitioners, at naught
In the above circumstances, these writ petitions succeed; a Writ of Certiorari issues quashing the impugned order; a Writ of Mandamus issues to the respondents 2 & 3 to act upon the tariff fixed in the Power Purchase Agreements and grant all consequential benefits on that basis.
Time for compliance is three months.
Costs made easy.
Sd/JUDGE
Bsv
1 issue framed by the court
Whether the impugned orders passed by KERC reducing tariff below agreed rates in PPAs are liable to be quashed on grounds of estoppel and legal infirmities?
1 provisions across 1 enactments
Sri H.M Ramachandra
Smt Jaimala
State of Karnataka
Karnataka Electricity Regulatory Commission
Bangalore Electricity Supply Company Limited
Krishna S.Dixit
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
