Dismissed

K.S.Dominic v. the State of Kerala

Kerala HC13 Dec 2013WP(C)/28746/2012

Case brief

AI extract

What is this about?

The petitioner filed a PIL alleging corruption and seeking a CBI preliminary enquiry into alleged irregularities in hydro-electric projects undertaken by a private company. The Court held that allegations based on personal perception without substantiation could not sustain a public interest litigation. It dismissed the petition as an exercise to damage reputation and ordered costs against the pet

What the court decided

AI extract

K.S.Dominic Vs the State of Kerala — Company and Corporate | Kerala HC (2013)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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FRIDAY, THE 13TH DAY OF DECEMBER 2013/22ND AGRAHAYANA, 1935

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WP(C).NO. 28746 OF 2012 (S)

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PETITIONER:

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K.S.DOMINIC, AGED 42 YEARS, S/O.K.V.SEBASTAIN, KUZHIPPALLY HOUSE, ALUVA SETTLEMENT QUARTERS, U.C COLLEGE P.O., ALUVA, ERNAKULAM DISTRICT, PIN-683 102.

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BY ADV. SRI.V.SETHUNATH.

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RESPONDENTS:

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1. THE STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM, PIN-950 001.

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2. THE PRINCIPAL SECRETARY, POWER(B)DEPARTMENT, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM, PIN-695 001.

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3. THE PRINCIPAL SECRETARY,INDUSTRIES(J) DEPARTMENT, GOVT. OF KERALA SECRETARIAT, THIRUVANANTHAPURAM, PIN-695 001.

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4. THE KERALA STATE ELECTRICITY BOARD, REPRESENTED BY ITS SECRETARY, VYDHYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM, PIN-695 004.

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5. THE EXECUTIVE ENGINEER, THE KERALA STATE ELECTRICITY BOARD, 220 K.V SUB STATION, POOVATHURUTHU, KOTTAYAM, PIN-686 012.

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6. THE ACCOUNTS OFFICER & P.I.O, SPECIAL OFFICER, REVENUE, THE KERALA STATE ELECTRICITY BOARD, VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM, PIN-695 004.

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Prv.

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W.P.(C).NO.28746/2012-S:

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7. THE TECIL CHEMICALS & HYRDO POWER LTD., REGISTERED OFFICE AT CHINGAVANAM.P.O, KOTTAYAM DISTRICT, KERALA, PIN – 686 531, REPRESENTED BY THE CHAIRMAN & MANAGING DIRECTOR, SHREENIWAS B. SOMANI, CHINGAVANAM.P.O., KOTTAYAM DISTRICT, KERALA, PIN – 686 531.

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8. THE CENTRAL BUREAU OF INVESTIGATION (C.B.I), REPRESENTED BY ITS DIRECTOR, NEW DELHI, PIN – 110 001.

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9. THE CENTRAL BUREAU OF INVESTIGATION (C.B.I), THIRUVANANTHAPURAM UNIT, REPRESENTED BY THE SUPERINTENDENT OF C.B.I, THIRUVANANTHAPURAM.

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R1 TO R3 BY SPL. GOVT. PLEADER SMT. GIRIJA GOPAL, R4 TO R6 BY SRI.P.SANTHALINGAM (SR.).S.C,

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SRI. S. SHARAN, S.C,

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SRI.JAICE JACOB,S.C,

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R7 BY SRI.JOSEPH KODIANTHARA, SENIOR ADVOCATE, ADVS. SRI.V.ABRAHAM MARKOS,

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SRI.MATHEWS K.UTHUPPACHAN,

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SRI.BINU MATHEW

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SRI.TERRY V.JAMES

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SRI.TOM THOMAS (KAKKUZHIYIL), R8 & R9 BY SRI.P.CHANDRASEKHARA PILLAI, S.C, C.B.I.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-12-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Prv.

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W.P.(C).NO.28746/2012:

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXT.P.1: TRUE COPY OF THE GUIDELINES BY THE GOVT. OF KERALA FOR THE DEVELOPMENT OF HYDEL SCHEMES BY PRIVATE SECTOR.

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EXT.P.2: TRUE COPY OF THE G.O.(MS).NO.122/05/IND DTD. 19/09/2005. EXT.P.3: TRUE PHOTO COPY OF THE M.O.U ENTERED IN TO BETWEEN 7TH RESPONDENT AND E.D.C.L. COMPANY.

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EXT.P.4: TRUE COPY OF THE G.O.(MS).NO.14/2006/PD DTD. 22/05/2006. EXT.P.5: TRUE COPY OF THE RENEWABLE ENERGY POLICY OF THE GOVT. OF KERALA G.O.(M.S). NO.16/2002/STED DATED 03/04/2002.

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EXT.P.6: TRUE COPY OF THE ORDER DATED 17/03/09 NO.HTB10/1040/TECIL/3942 OF THE 4TH RESPONDENT.

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EXT.P.7: TRUE COPY OF THE ORDER OF THIS COURT IN W.P.(C).NO.10396/2009 DATED 06/03/2009.

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EXT.P.8: TRUE COPY OF THE REPLY GIVEN BY THE 6TH RESPONDENT TO THE PETITIONER DATED 12/11/2012 (ALONG WITH ENGLISH TRANSLATION).

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EXT.P.9: TRUE COPY OF THE ORDER NO.B.O.(FB).NO.387/2012 (DPCI) OTS SPECIAL SCHEME – DATED 17/02/2012.

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EXT.P.10: TRUE COPY OF THE G.O.(MS).NO.25/2012/PD DATED 03/10/2012. EXT.P.11: TRUE PHOTO COPY OF THE RESOLUTION OF THE BOARD DIRECTORS OF THE 7TH RESPONDENT.

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EXT.P.12: TRUE COPY OF THE G.O.(M.S).NO.302/2009/RD DATED 30/07/2009. EXT.P.13: TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE K.S.E.B WITH RESPECT TO THE DUES OF THE 7TH RESPONDENT FILED IN W.P.(C).NO.10396 OF 2009 ON THE FILE OF THIS COURT.

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EXT.P.14: TRUE PHOTO COPY OF THE LETTER WRITTEN BY THE PUBLIC INFORMATION OFFICER OF THE IRRIGATION DEPARTMENT.

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EXT.P.15: TRUE COPY OF THE DISCHARGE ORDER DATED 03/08/2006 IN CASE NO.358/2002 ON THE FILE OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION.

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EXT.P.16: TRUE COPY OF THE MINUTES OF THE MEETING CONVENED BY THE THEN PRINCIPAL SECRETARY INDUSTRIES.

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Prv.

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W.P.(C).NO.28746/2012-S:

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EXT.P.17:	TRUE COPY OF THE LETTER WRITTEN BY THE PURCHASING COMPANY TO THE 7TH RESPONDENT.
EXT.P.18:	TRUE COPY OF THE ORDER OF THE KERALA STATE ELECTRICITY REGULATORY COMMISSION IN ORDER NO.734/CT/2013 DATED 30/07/2013.
EXT.P.19:	TRUE COPY OF THE C.D.M (CLEAN DEVELOPMENT MECHANISM) APPLICATION SUBMITTED BY THE E.D.C.L. BEFORE THE U.N.F.C.C.C.
EXT.P.20:	TRUE COPY OF THE MONITORING REPORT BY THE C.D.M (CLEAN DEVELOPMENT MECHANISM) BASED ON THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (U.N.F.C.C.C).
EXT.P.21:	TRUE COPY OF THE VALIDATION REPORT ISSUED BY THE S.G.S. CLIMATE CHANGE PROGRAMME UNDER THE AUSPICES OF THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (U.N.F.C.C.C).
EXT.P.22:	TRUE COPY OF THE LETTERS ISSUED BY THE MINISTRY OF ENVIRONMENT AND FOREST, GOVT. OF INDIA.
EXT.P.23:	TRUE COPY OF THE NOTIFICATION DATED 14/09/2006 ISSUED BY THE MINISTRY OF ENVIRONMENT AND FOREST, GOVT. OF INDIA.

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RESPONDENTS' EXHIBITS:

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EXT.R2.(A): TRUE COPY OF G.O.14/2006/PD DATED 22/05/2006. EXT.R7.(A): TRUE COPY OF JUDGMENT DATED 10/06/2013 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.23414/2009.

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EXT.R7.(B): TRUE COPY OF INTERIM ORDER DATED 17/08/2009 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.23414/2009.

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EXT.R7.(C): TRUE COPY OF INTERIM ORDER DATED 14/08/2012 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.23414/2009.

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EXT.R7.(D): TRUE COPY OF INTERIM ORDER DATED 21/08/2012 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.23414/2009.

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EXT.R7.(E): TRUE COPY OF INTERIM ORDER DATED 20/09/2012 PASSED BY THIS HON'BLE COURT IN W.P.(C).NO.23414/2009.

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EXT.R7.(F): TRUE COPY OF LETTER NO.HTB-10/1040 DATED 22/09/2012 ISSUED BY THE KERALA STATE ELECTRICITY BOARD.

//TRUE COPY//

P.A. TO JUDGE.

Prv.

MANJULA CHELLUR, C.J. & A.M.SHAFFIQUE, J.

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W.P.(C) No. 28746 OF 2012

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Dated this the 13^th day of December, 2013

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J U D G M E N T

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~~~~~~~~~~~

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Manjula Chellur, C.J.

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Present Writ Petition is filed in the nature of a Public Interest Litigation seeking following reliefs:

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“1. Issue a writ of mandamus or any appropriate writ, order or direction to the 8^th and 9^th respondents to conduct a Preliminary Enquiry as stated in paragraph 9.7 – chapter VI of the CBI Manual with regard to the averments in this writ petition.

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2. Issue a writ of mandamus or any appropriate writ, order or direction to the respondents 1 to 6 not to allow the 7^th respondent to dispose the assets in the factory premises at the TECIL, Chingavanam, till a preliminary enquiry report is filed.”

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According to writ petitioner, the official

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respondents have totally ignored the guidelines and resorted to illegal relaxations/concessions/gift/bestowal to the 7^th respondent known as the Hydel Captive Power Projects (CPP) at Ullunkal and Karikayam in Pathanamthitta District. Initially the 7^th respondent was allotted with, by Government of Kerala in the year 1994, two small CPP as stated above by G.O.(M.S) No.9/94/PD dated 19.5.1994. This was on account of high intake of consumption of electricity in the State of Kerala at the relevant point of time so far as the factories of the 7^th respondent. The benefits from the award of these two projects to the 7^th respondent was many folded. One of the main consideration was, it would provide employment to 800 employees apart from getting the two hydel projects at the end of period of project of 30 years. According to the petitioner, the guidelines for the development of projects as per Ext.P1 were to be made operational within 36 months from the date of financial closure and the failure to do so, penalty will be imposed.

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Apart from the project not becoming operational within 36 months from the date of financial closure, with the knowledge of the State Government, the projects were handed over to third parties changing Captive Power Project (CPP) to Independent Power Project (IPP). According to petitioner, major corruption took place for Ext.P2 Government Order, that is, converting CPP into IPP loosing Crores of rupees to the State Government. The petitioner tries to define what Captive means and how Captive Power Project has gone to the hands of Independent Project proponents. He narrates several aspects as illegal and unlawful gains made by the 7^th respondent as per the award of project and encouraging them to proceed with handing over the project as IPP by virtue of Ext.P2 which reads as under:

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“12. As per Ext.P2 Government Order the following illegal and unlawful gains to the 7^th respondent was awarded by the Government.

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i) Six Crore was granted to a lapsed project in the year 2005, which would have been surrendered after 36 months from 1994. ii) Concession and relaxation was given to the 7^th respondent for the Sales Tax.

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iii) Interest and penal interest on Sales Tax was omitted.

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iv) The recovery on Tax arrears was stopped for two years from 19.9.2005. v) Recovery of the Power-KSEB charges arrears is stopped indefinitely. vi) Interest on KSEB charges was reduced to 6%. vii) Installment facility was given for remitting the KSEB charge. viii) Reconnection was granted on remitting the first installment. ix) Captive Power Project (CPP) was converted to Independent Power Project (IPP) - even though there is no provision for converting CPP into IPP. x) Lease Rent was extended at the previous lease rent rate (Not at the

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prevailing rate) for the 11.25 acres of land.

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xi) A lapsed project for 11 years was revived/extended and converted into IPP without going recourse to the Ext.P1 guideline – clause 3.5 of Ext.P1 “failure to reach the milestone in 3.3. above would result in a liability to pay penalty by the C.P.P. to the Government of Kerala.”

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As per the averments in the writ petition, the 7^th respondent entered into memorandum of understanding with EDCL company (who is not a party before us) for 23.5 Crores. Further, the 7^th respondent, who was responsible for delaying the project, has made profit by entering into agreement with third parties with the connivance of many political leaders, civil servants and other officials. All the black money payments were made in Dubai and other foreign countries. According to the petitioner, three successive Governments have allowed the above concession and relaxation with the active support of leaders including

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the Ministers and other officials concerned. The entire process right from awarding projects to 7^th respondent, converting CPP to IPP and, later, permitting the 7^th respondent to hand over the same to the private company would lead to a conclusion that the petitioner was justified in opining that lot of money dealings have gone under the table and people at the helm of affairs knowing fully well have given the concessions and relaxations in total violation of guidelines. Incidentally, he also refers to concession given to 7^th respondent in bringing down the electricity charges from Rs.50,40,79,135/- to Rs.14,75,58,345/-. With these averments he has sought for the above reliefs.

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On the above pleadings and the relief sought, the petitioner seeks indulgence of this Court to issue a direction to 8^th and 9^th respondents, that is, the Director,Central Bureau of Investigation and a CBI unit at Thiruvananthapuram to make a preliminary enquiry into the averments/allegations made in various paragraphs of the Writ Petition and also Chapter VI of CBI Manual and then

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seeks direction to other respondents 1 to 6 not to allow the 7^th respondent to part with the assets in the factory premises at the TECIL, Chingavanam till a preliminary enquiry report is filed.

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As against this, the Government filed counter affidavit on behalf of respondents 1 to 3 along with Ext.R2(a). Apart from submitting that the Writ Petition is not at all maintainable as public interest litigation, they have narrated the background and the purpose of the agreement, so far as awarding two CPPs to the 7^th respondent. According to them, the averment that Government wanted to promote the CPP only to create job opportunities for 800 permanent employees was not all the consideration in approving the projects.

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As there was large gap between the demand and availability of power in the State of Kerala, the necessity arose to bridge the gap between the demand and supply of power. Thermal Power Stations were economically non-viable and ecologically harmful. Therefore, alternative

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Hydro Electrical Projects was the solution. The Government and public sector did not have enough resources for large scale investment for setting up Hydro Electric Projects apart from non-receipt of permission and other clearances from the competent authorities hence, permitting private participation to meet the increasing demand for energy was decided. Thus, guidelines were issued for allotment of Small Hydro Electric Projects under CPP/IPP for private participation. In this context, two projects came to be allotted to 7^th respondent - TECIL as their application at that point of time was found fit for such allocation based on the guidelines applicable. Said allotment of the projects proceeded further with relevant documents like agreements and other contracts between the parties.

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Later, when a proposal was made for conversion of CPP into IPP, after deliberations when it was found that no loss would be incurred either to the Government or K.S.E.B., such conversion was permitted subject to conditions stipulated as per Government Order dated

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11.1.2006 in G.O.(Rt) 9/06/PD. It was also made clear that all the dues payable by CPP either to the Government or KSEB had to be cleared before the transfer of ownership and change of nature of project. With this conversion, sale of electricity from IPP in the State was allowed only to KSEB, that is also at a tariff decided by the statutory independent regulatory body. So far as the control and authority of the Government over the project remain the same irrespective of conversion from CPP to IPP. Further condition was imposed that without the approval of the Government, energy from IPP cannot sell to an outsider.

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Irrespective of the nature whether it is a CPP or

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IPP the land required for the project has to be provided by the State Government without transferring the ownership of the land to the developer. Depending upon the project cost and other relevant factors, the tariff for the power generated from the project will also be determined by the Regulatory Commission. When compared to this procedure, the power generated from CPP project shall be consumed by

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the developer and in the case of excess power based on the terms and conditions in the agreement between KSEB and Developer, power will be purchased by KSEB as per the tariff determined by the Regulatory Commission. Therefore, according to them, irrespective of the nature of project whether IPP/CPP, the tariff rate shall be determined only by the Regulatory Commission and no one else.

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Government agreed for the said conversion as no additional land submersion was involved unless the capacity of production envisaged was substantially changed. In accordance with the modified guidelines, agreements entered into with the new Developer which envisages implementation of projects on BOOT basis (Build, Own, Operate and Transfer). This means at the end of 30 years from the allotment of project, all rights of the developer with respect to the projects get extinguished and the land found necessary by the Government for the operation and maintenance of the projects which was leased/purchased or obtained otherwise by the company shall also vest with the

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Government. In this process no loss of land is sustained by the Government and the entire project will be re-vested with

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the Government at the end of the term, that is 30 years.

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Ext.P3 is the agreement for transfer of the project

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to the new Developer. Article 3 of the agreement between

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the Government and EDCL on 26.12.2012 refers to several facts, relevant ones are narrated as under:

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3.1 Purchase of Private Land:

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The company shall purchase private

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land as may be necessary for implementing the project without any recourse to the Government or the Board.

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3.2 Purchase/Lease of Government/ Forest/Board land:

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The company shall obtain on lease/by purchase Government/Forest/ Board land as may be necessary for implementation of the project on mutually accepted terms and conditions.”

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Then coming to the dues of Rs.50,40,79,135/-, it

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is said, after the withdrawal of concessions granted under

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Ext.P2, the revenue recovery action for realising the arrears by KESB were intensified. Per day, the interest accrued was Rs.68,155/-. When the scheme of settlement for arrears under One Time Settlement mooted, the same was intimated to the consumers including the 7^th respondent to avail the benefit at the reduced rate of interest at 9% per annum. Accordingly, the outstanding arrears along with the reduced interest came down to Rs.25,38,12,354/-. The Company was not able to pay the said amount as it was defunct. However, another scheme was introduced in 2011 which came to the benefit of consumers to settle the pending arrears. Consequently, Rs.14,75,58,345/- arrived at after adjusting the cash deposit and bank guarantee available with reduced rate of interest at 3% per annum. As K.S.E.B. had adopted One Time Settlement from time to time so far as clearance of arrears pending from 2005, whichever consumer was legally entitled as per the scheme in force were given the said benefit. In that process, the 7^th respondent also secured some benefit. Consumer has

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remitted Rs.10 Crores on 10.12.2011 taking into account the principal amount that was due, the entire principal amount came to be covered when the bank guarantee and cash deposit came to be adjusted. So far as the balance amount, the consumer represented before the Minister for Electricity for Minimum Deposit Waiver during the closed period. Meanwhile, the Company also got entangled in litigation by filing Writ Petition No.8573/2012 to lift the attachment effected on the property of the Company. Several directions to remit the amount by the Company came to be ordered by this Court while considering revenue recovery action initiated. According to respondents 1 to 3, none of the exceptional circumstances pointed out by the petitioner are in existence which necessitate an investigation by the CBI, much less the State Police. They have sought for dismissal of the Writ Petition specifically contending that no particular offence said to have been committed by 7^th respondent or any particular named Government official.

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The 7^th respondent Company has also filed counter affidavit through General Manager of the Company along with several documents with reference to W.P.(C) No. 23414/2009 and also true copy of the letter issued by KSEB dated 22.9.2012. It is contended on behalf of the 7^th respondent that no legal basis was made out in any of the allegations made by the petitioner to maintain the present Writ Petition. No case of any particular nature against any particular person of the Company is made out which calls for a direction to the CBI to make a preliminary enquiry as sought by the petitioner.

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So far as locus standi of the writ petitioner, they contend that he is only a named lender, who is a benami of a scrap dealer who failed to make a deal with the 7^th respondent Company for purchase of scrap materials. According to them, the disappointment of the scrap dealer is exhibited in the form of public interest litigation through the writ petitioner.

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So far as the 7^th respondent's reputation, they claim to be one of the largest Companies in the private sector for more than 50 years. But, unfortunately, due to many factors, mainly on account of labour unrest and other consequential events, the company was under lockout. When this occurred there were 700 personnel directly and several hundreds indirectly working for the company. The entire workforce had to be relieved over a period of 14 years and all the amounts statutorily payable along with the benefits and compensation came to be paid through an agreement dated 24.6.2011 entered into between the management and the Trade Unions in the presence of Labour Commissioner, Government of Kerala.

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The respondent challenges resumption proceedings pertaining to the leased land of 11.25 Acres and the Court ultimately directed the Government to consider a revival scheme of the 7^th respondent and also to consider the request of the respondent for renewal of lease and release the bought-in-land. Several interim directions

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came to be made between 17.8.2009 to 20.9.2012. Ultimately, the judgment came to be pronounced on 10.6.2013 wherein the directions to consider the request of the 7^th respondent by the Government are indicated.

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Then coming to the actual power project, after referring to the initial proposal and acceptance so also the financial resources secured from the financial institutions, to the conversion of the status of Hydel Projects from CPP to IPP took place. It is further said, they have clearly indicated how the said conversion would help the public exchequer rather the independent project proponent. According to them, after conversion, the Company was permitted to sell the project to Energy Development Company (EDCL), which is a public limited Company got the transfer of the project with the permission of the State Government. The projects are resumed by EDCL and started generating and supplying its power to the K.S.E.B grid, thereby contributing to Kerala's power generation at a crucial juncture when power has become a precious commodity in the State of Kerala. If

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the projects in question are abandoned and kept idle, the loss would have been substantial without benefit to the investor or to the Government. Therefore, with the present conversion and situation, Government has not incurred any loss. On the other hand, it has acquired substantial benefit by way of selling the power generated by these projects.

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Then questioning the locus standi of the petitioner, the respondent contend that for extraneous reasons with mala fide intentions without absolutely having any genuine reason, the petitioner has come up with the present Writ Petition. So far 7^th respondent, no amount, whatsoever, came to be sanctioned for the projects by the Government. No amount was received from the Government for the completion of the projects. Similarly, no relief was sought for payment of sales tax arrears. Rs.70 lakhs was paid towards arrears of sales tax through an Amnesty Scheme introduced by the Department of Commercial Taxes for realisation of arrears. This scheme was availed by the 7^th respondent like any other dealer. So far as the rent

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pertaining to the lease, the renewal of the land lease is not considered by the Government. The annual lease rent was enhanced from Rs.11,825/- per annum to Rs.1.5 lakhs per annum, a considerable hike, according to the 7^th respondent. All the projects were floated by the Company without any contribution from the State Government. They specifically contended that the forest land required for the project had to be compensated by offering equal extent of forest land by the Company to the Government as per the requisition of the Forest Department.

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It is placed on records, there are no employees who are on the rolls of the Company as on today to whom any amounts are payable as all statutory dues and compensation came to be paid through agreement dated 24.6.2011. The averments are denied as false and baseless so far as black money payments made outside the country and this is nothing but an assertion to mislead the Court and also with the intention to damage the reputation of the 7^th respondent. No Government land came to be sold to EDCL

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by 7^th respondent. What was transferred as per Ext.P3 are the assets, which were owned and acquired by 7^th respondent for the two projects.

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Then coming to the payment of electricity bills, it is revealed, all the outstanding bills upto 31.10.2000 was amounting to Rs.6,45,57,258/-. However, there was disconnection of power supply. After the said amount, more than 50% had been paid by way of adjusting cash security deposit. In so far as Rs.50,40,79,135/- charges by the petitioners, respondent sent several representations to K.S.E.B and Government to forgo penal interest were made, but there was no response. However, only after the introduction of Amnesty Scheme, they could secure some benefit through the same. Apart from this, Electricity Board Revenue Adalath, also gave them some breathing time. Ultimately, the benefit under One Time Settlement Scheme was taken which was sanctioned to the 7^th respondent and the same is not illegal as there is no deviation of any of the procedure. They specifically contend that conversion of CPP

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to IPP does not indicate any favour to the 7^th respondent as it was part of Cabinet decision followed by Government Order.

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So far as the employees and their demand, from respondents no amount whatsoever is due as everything was settled through proper procedure in the presence of Labour Commissioner. 7^th respondent had got around 25 acres of Patta land apart from 11.25 acres of lease land. It can alienate if it desires so and, so far as dues, they have no dues to the Government or to any other agency. No material forthcoming showing any favouritism or granting favours to any Minister nor any of the Government official in order to show undue favour to the 7^th respondent. No concession, whatsoever, was given to them which is illegal. All the allegations made by the petitioner are described as concocted stories.

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With the above circumstances, we have to consider whether there is any justification in the stand of the writ petitioner seeking the above reliefs. Ext.P1

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admittedly was the existing guidelines at the relevant point of time when initially the Government awarded two CPP projects to 7^th respondent. Learned counsel appearing for petitioner strongly places reliance on Ext.P1 and guidelines issued in 2006 to contend that reading of these two documents clearly indicate that there was no competency or power or authority to the State Government to convert CPP into IPP. When, he was asked to explain the said proposition specifically, he places reliance on Ext.P2 to contend that the Principal Secretary while permitting the conversion from CPP to IPP at sub Clause (v) of Clause 3 opined that inspite of no rule permitting conversion from CPP to IPP, the Government has accorded sanction as Kerala Small Scale Industries Development Corporation (KSIDC) has put such a condition for sanctioning the loan. Whether this opinion expressed while issuing Ext.P2 order could be considered as a statutory impediment or embargo so far as the competency of the Government to permit the 7^th respondent to convert CPP to IPP. It is necessary to understand what exactly is

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Captive Power Producer and Independent Power Producer. Clause 6 at Ext.P1, refers to 'Captive consumption' under four sub-clauses and it again refers to 'Consumption restrictions' at clause 17 of guidelines which read as under:

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“ 6.Captive consumption :

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6.1 CPP shall have right to open access for the purpose of carrying power from their captive generation plant to their destination of own use subject to availability of adequate transmission facility as determined by KSEB/State transmission utility (STU). Any case of dispute regarding availability of transmission facility shall be adjudicated up on by the KSERC.

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6.2 In case the captive consumer after allotment of HEP undertakes capacity addition to his existing industry resulting in increased consumption, necessary additional energy allotment to the extent of the added requirement can be granted on

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the specific request of the developer.

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6.3 Wheeling charge and Transmission losses will be decided by KSERC.

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6.4 Consumption of Energy by the captive developer at his point of consumption from the grid over and above his captive consumption shall be charged at the ruling rates in KSEB chargeable for his category of consumer.

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17. Consumption restrictions : Captive user/third party consumer/ Licensee (authorised consumer) shall abide by grid discipline & will not be entitled for any compensation in the event of grid failure, shut down, interruption in power supply etc. resulting in non-consumption of generated energy.”

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22. Reading of these two clauses at Ext.P1 does not

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make any proposition that there was any restriction on the competency of the Government which has to take policy

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decisions to modify the guidelines or to convert the project itself from CPP to IPP. Captive Power Producer means the quantum of power consumed by the consumer produced at one place has to be generated by him and, in case, he generates more than the said power he is at liberty to sell the same to an outsider with the permission of the Government or the Government is entitled to purchase the same at a tariff to be fixed by the Regulatory Commission meant for the said purpose. So far as the Independent Power Producer is concerned, the power generated from the department system will not be consumed by the consumer who generates the power and if he has any power generated in excess of what is required for its own consumption, again he will not be permitted to sell except with the permission of the Government to anyone outside the State of Kerala and so far as supply to the State of Kerala, the tariff will be again regulated by the Regulatory Commission meant for the said purpose. Except this difference, so far as the other terms of contract between the Government and the project

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proponent or the agreement between the K.S.E.B and the project proponent do not impose any restriction from converting Captive Power Production to Independent Power Production. Mere mentioning of the order at Ext.P2 that inspite of no rule permissible to convert CPP to IPP in the absence of any statutory provision or rule or regulation or guidelines in that context, we fail to understand how the petitioner could sustain this argument that the State has no competency to convert CPP to IPP based on this clause (v) at Ext.P2.

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Though the petitioner's specific challenge was not made with regard to transfer of projects by 7^th respondent to third party, learned counsel for petitioner placing reliance on paragraph 16 of the Writ Petition contends that he has specifically alleged conspiracy between the parties to make unjustifiable entrenchment they entered into such transfer with the permission of the higher officials of the Government as indicated in the pleadings. By referring to guidelines of 2003, the petitioner contends that in clause 17)(i) of main

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clause 34 indicates that

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“In case the developer leaves any project incomplete or closes the industry or abandons the project or violates any condition of allotment, the Government reserves the right to take over the project without any compensation and free from encumbrances. ”

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According to the learned counsel for petitioner, this clearly lays down a condition that the developer cannot transfer the rights acquired by him to any third parties. Therefore, the right of presumption reserved by the Government would substantiate the said position.

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From reading the above clause 17(i), we fail to understand how it would amount to a restriction on the right of the parties to transfer rights accrued to them so far as the two projects to third parties. So far as the facts of the present case, there is no clandestine action of the 7^th respondent in divesting its interest in the projects in favour of a third party, that is, EDCL, who are not before us . As a

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matter of fact, they approached the Government explaining the difficulties faced by the 7^th respondent Company. In other words, non-viability of the project is on account of the lockout of Company for a good number of years. Therefore, they sought permission to transfer the rights acquired by them in favour of third parties, that is, EDCL.

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As per Ext.R2(a) way back in 2006, the two Hydel Power Projects which were converted from CPP to IPP were permitted to be transferred to EDCL by the order of the Government. Therefore, in the absence of any statutory prohibition to transfer such rights in favour of third parties and even if such conditions were to be impliedly discernible from any of the clauses of 2003 agreement or the guidelines at Ext.P1, with the permission of the Government to transfer such rights in favour of third party, same is satisfied by the project proponent, that is, 7^th respondent.

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Then coming to other argument of learned counsel for petitioner that for 12 years the 7^th respondent did not move an inch to proceed with the project, therefore, the

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Government ought to have resumed the entire project and allotted the same to the other parties instead of permitting the 7^th respondent to enter into a deal with the third party which has resulted in illegal enrichment to the 7^th respondent. It is needless to say that the 7^th respondent was also one of the prospective proposer to start two CPP units by then, when Government came out with the proposal of encouraging such CPP. Like 7^th respondent, others in the State of Kerala must have also secured projects from the Government of Kerala. At the relevant point of time, guidelines under Ext.P1 were depending upon the policy decision of the Government and one cannot restrict the policy maker not to change the policy or guidelines depending upon the circumstances and the need at a future date.

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The entire counter affidavit of the Government and the 7^th respondent read together clearly indicate that the 7^th respondent borrowed money from several banks to start the projects and entered into different agreements

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with the K.S.E.B and also undertaking to the Government in the prescribed forms. However, they were not able to go ahead with the projects due to various reasons and the main reason seems to be lockout in the factory premises of the 7^th respondent. The ample material supporting this stand of the 7^th respondent is before us by way of judgments of this Court at Ext.R7 series which clearly indicates the problems faced by the Company on account of lockout which went to the extent of some attempt of resuming the land, which was leased to the 7^th respondent. By intervention of this Court, when there was some hope for revival of 7^th respondent's industrial unit, certain directions were given to the Government to consider the said request.

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Then coming to the Hydel projects, as already stated, there is no statutory ban or prohibition to part with the projects by handing over the same to third parties. If Government did not think proper to resume the projects when the 7^th respondent failed to make projects operational, it is left to the Government depending upon the reasons

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given by the 7^th respondent whether it wanted to resume the project and penalise the 7^th respondent further with financial burden as indicated in the terms of agreement. It is not open to a third party to compel the policy maker i.e., the Government that they should have acted in a particular manner. The policy makers, when they make decision, taking into consideration the vision of the project proposed would have entered into agreement based on the policy and the guidelines. It may end up beneficial to the policy maker and some times it may create problems to the policy maker.

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In the present proposal, the main purpose for which the project was given to 7^th respondent was keeping in mind the shortage of power generated in the State of Kerala through the regular process of power generation. Therefore Hydel projects were encouraged. This would endure lot of employment to the youth and development of economy in the area though there was no agreement to give employment to any particular group or employee. Apart from that, funds were not available for the Government or

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other public bodies to invest in other modes of power generation. Therefore, in order to encourage participation of private parties to add to the power generated by the grid, these Hydel Projects were encouraged. Over and above this, at the end of the term of the project of 30 years, the projects automatically vest with the Government unless they revive on further terms and conditions. In this process, the Government will not incur any financial burden. They are not even burdened with the control and regulatory mechanism of the entire process. They entrust the entire process of generation of power to the project proponents to undertake such projects. At the end, the State will be having the benefit of excess power at its hand, which could be either used or permitted to be sold by the concerned project. At the end of the term of 30 years, they would be acquiring an asset without any investment, that is, financial burden. These are the attractive components of the project when Government proposes BOOT. This is the order of the day so far as amenities to be provided to the people of the

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State without financial burden with participation of third parties.

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In the above circumstances, the two projects entered into were awarded to the 7^th respondent and we fail to understand how 7^th respondent was conspiring either with any particular Minister or Ministers or other high officials of the Government to give away the projects to third party, that is, EDCL. On the other hand, there is a feeble submission on the part of learned counsel for the petitioner why the petitioner thought of approaching this Court in the above Public Interest Litigation. During the course of arguments, counsel for the petitioner admits that this petitioner accompanied one of the scrap dealers who was interested to purchase some scrap from the 7^th respondent industrial unit. According to learned counsel, petitioner who accompanied scrap dealer to the unit accidentally met some employees who seem to have passed on certain information which has led to this Public Interest Litigation. The so called information said to have been given by the employees of the

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7^th respondent would have persuaded the petitioner to come up with this Public Interest Litigation. We are not aware what was the information passed to the petitioner. Even if any information is given, should petitioner blindly approach this Court without minding the valuable time of all the parties concerned including the Court. If the information passed on to the petitioner was true, we fail to understand how the allegations could be made not only against the 7^th respondent but reckless allegations made against other Government functionaries, which are not even established further, do not cast any doubt on any of the propositions or proposals made by the 7^th respondent and the Government in the entire process.

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Petitioner seems to be a Trade Union leader who attempted, according to him, to expose the cause of public. We fail to understand how, on surmises and imagination, he could have approached this Court without substantiating any of the allegations made by him. The personal perception, doubt, however strong the suspicion or doubt

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cannot be equated with proof of any allegations made by him. The entire issue touches on the reputation of high functionaries in the Government and also the bona fides of the 7^th respondent in discharging its duties as project proponent which is trying to come out of the financial hassles and hurdles. In the entire process, if at all the 7^th respondent was benefited financially unless the said benefit could be termed as illegal enrichment, we fail to understand how the public exchequer is affected with the said transaction. We are of the opinion, each and every policy of the Government, if allowed to be attacked on these lines, it would only create unholy and uncharitable suspicion in the minds of the public not only regarding the administration but also cast serious doubts on the reputation of its functionaries. It is nothing but character assassination of the parties. It could be an exercise to get some benefit or publicity. It is said again and again by the Apex Court that such unholy and uncharitable litigation has to be dealt with stern hand.

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In the light of above circumstances and the reasoning, we are of the opinion that the Writ Petition deserves to be dismissed with costs of Rs.1,00,000/(Rupees one lakh only) which shall be recovered and paid to the Advocates Welfare Fund.

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Accordingly, this Writ Petition is dismissed with costs.

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Sd/-

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MANJULA CHELLUR, CHIEF JUSTICE.

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Sd/-

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A.M.SHAFFIQUE, JUDGE.

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ps/17/13

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//True copy//

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PA to Judge

K.S.Dominic v. the State of Kerala

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K.S.Dominic v. the State of Kerala

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