This common order dismissed multiple writ petitions filed by sugar mills challenging the Tariff Board Proceedings for surplus electricity purchase prices. While the single judge held a 1993 Government Order was binding, the petitions were ultimately dismissed on the grounds of laches and waiver of statutory rights by the petitioners.
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.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06.06.2011
CORAM
THE HONOURABLE MR.JUSTICE S.NAGAMUTHU
Writ Petition Nos.20820, 20821 of 2000, 20624 to 20629 of 2000, 20730 to 20733 of 2000 and 29752 to 29757 of 2010 E.I.D.Parry (I) Ltd, Dare House, 234, N S C Bose Road, Chennai. rep by its Director ... Petitioner in W.P.Nos.20820,20821, 20730 to 20733 of 2000 Thiru Arooran Sugars Ltd, "Eldorado' rep. By its Chairman ... Petitioner in W.P.Nos.20624 to 20629 of 2000 Rajasshree Sugars & Chemicals Limited rep. By its GeneralManagfer (Finance) and C ompany Secretary, The Uffizi, No.338, Avinashi Road, Peelamedu, Coimbatore 641 004. ... Petitioner in W.P.Nos.29752 to 29757 of 2000 -Versus-
... Respondents in W.P.Nos.20820, 20821, 20624 to 20629 and 20730 to 20733 of 2000
... Respondents in W.P.Nos.29752 to 29757 of 2010
Writ Petition No.20820 of 2000 has been filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Declaration declaring that Permanent B.P.(FB) No.96 dated 31.03.1995, B.P.(FB) No.1 dated 11.01.2000 and Permanent B.P.(FB)No.93 dated 16.05.2000 of the second respondent are illegal, without authority of law in so far as the said Board Proceedings are not in accordance with G.O.230 dated 16.06.1993.
W.P.NO.20821 OF 2000:
This Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of Declaration or any other Writ Order or direction declaring that G.O.230 dated 16.6.1993 issued by first respondent is binding on the Tamil Nadu Electricity Board and consequently direct Tamil Nadu Electricity Board to fix/refix which have set up co-generating plants in accordance with G.O.Ms.23 dated 16.6.93.
W.P.No.20624/2000
This Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of Writ of Declaration or any other writ, order or direction declaring that B.P(F.B) No.93 dated 16.5.2000 of the Second respondent is arbitrary and violative of Article 14 of the Constitution of India in so far as the Tamil Nadu Electricity Board has fixed the price of co-generated power produced by the petitioner using lignite/coal as fuel during off Season at a rate lower than that fixed for the power generated during the season and pass such further or other orders.
W.P.No.20625/2000:-
This Writ Petition filed under Article 226 of the constitution of India pleased to issue a Writ of Declaration or any other Writ, Order or Direction declaring that permanent B.P.(FB) No.96 dated 31.3.1995 of the Second Respondent in without authority of law and arbitrary, violative of Article 14 of the Constitution of India in so far as the said BP adopts 1995-96 instead of 1994-95 as the base year https://hcservices.ecourts.gov.in/hcservices/ for fixing the purchase price of Rs.2.25 per unit for the surplus
energy exported by the Co-generating Sugar Mills and consequently direct the Tamilnadu Electricity Board to refix the purchase price for the power purchased for the period from 1.4.1995 to 31.3.2000 under permanent B.P.(FB) No.96, dated 31.03.1995 adopting 1994-95 (1.4.1994 to 31.3.1995) as the base year and pay the differential price between the purchase price directed to be re-fixed and the price already fixed in permanent BP (FB) No.96 dated 31.3.1995 of the second respondent, together with interest at the rate of 18% per annum, with effect from the respective due dates.
WP.No.20626/2000/- This writ petition filed under Article 226 of the constitution pleased to issue a writ of Declaration or any other writ, order or direction, declaration that permanent B.P. (FB) No.1, dated 11.01.2000, of the 2nd respondent fixing the purchase of Surplus energy exported by the co-generation sugar mills at Rs.2.73 per unit with effect from 1.4.2000 in without authority of law and arbitrary, Violative of Article 14 of the constitution of India and consequently direct the Tamilnadu Electricity Board to refix the purchase price for the power purchased/to be purchased for the period from 1.4.2000 to 31.3.2010 under permanent B.P.(FB) No.1, dated 11.01.2000 adopting Rs.3.01 per unit as the price for the base year viz., 2000-2001 and pay the differential price between the purchase price directed to be refixed and the price already fixed in BP No.1 dated 11.01.2000 of the Second respondent together with interest at the rate of 18% per annum with effect from the respective due date.
WP 20627/2000: To issue writ of Declaration or any after writ order or direction declaring that permanent B.P.(FB) No.96 dated 31.3.95 permanent B.P.(FB) No.1 dated 11.1.2000 and permanent B.P. (FB) No.93 dated 16.5.2000 of the second respondent are illegal and without authority of law in so far as the said Board proceedings are not in accordance with G.O.230 dated 16.6.1993.
WP No.20628/2000: To issue a declaration or any other writ order direction declaring that G.O.Ms.No.230 dated 16.6.1993 issued by the first respondent binding on the Tamil Nadu Electricity Boar an consequently direct Tamil Nadu Electricity Board to fix/refix the tarriff payable to the sugar mills which have set co-generation plants in accordance with G.O.Ms.230 dated 16.6.1993.
WP.No.20629/2000: to issue a writ of Mandamus or any other writ, order or direction directing the Tamil Nadu Electricity Board to forthwith pay the arrears of purchase price, as per the annexure I to the Affidavit to the petition for the power exported by the petitioner under the power purchase Agreements executed between the petitioner and the TNEB together with interest @ 18% per annum from the respective due dates and continue to pay the purchase price for the power to be exported by the petitioner within 30 days of presentation of the invoices.
W.P.No.20730/2000:- To issue a writ of Declaration or any other writ, order or direction, declaring that permanent B.P.(FB) No.93, dated 16.05.2000 of the second respondent is not applicable for the petitioner and that the Tamil Nadu Electricity Board in under legal obligation to pay a uniform purchase price for power supported by the petitioner without any distinction between crushing and non crushing season.
W.P.No.20731/2000: To issue a writ of Declaration or any other writ, order or direction declaring that permanent B.P (FB) No.93 dated 16.5.2000 of the second respondent is arbitrary and violative of Article 14 of the Constitution of India in so far as Tamil Nadu Electricity Board has fixed the price of co-generated power produced by the petitioner using bagasse purchased from other sources during off season at the rate of Rs.2.48 per unit as against Rs.2.73 per unit as per the agreement executed and fixed under permanent B.P (FB) M.1 dated 11.01.2000 of the second respondent and pass such further or other orders.
WP NO.20732/2000
To issue a writ of Mandamus or any other writ, order or direction directing the Tamilnadu Electricity Board to forthwith pay the arrears of puchase price as per the Annexure I to the affidavit to the petition for the power exported by the petitioner under the power purchase agreements executed between the petitioner and the TNEB together with Interest @ 18% per annum from the the respective due dates and continue to pay the purchase price for the power to be exported by the petitioner within 30 days of presentation of the invoices.
WP NO.20733/2000
To issue a writ of Declaration or any other writ, order or direction directing that permanent B.P. (FB) No.96, dated 31.03.1995, in without authority of law and arbitrary, violative of article 14 of the constitution of India, in so far as the said BP adopts 1995-96 instead of 1994-1995 as the base year for fixing the purchase price of Rs.2.25 per unit for the surplus energy exported by the cogenerating sugar mills and consequently direct the Tamilnadu Electricity Board to refix the purchase price for the power purchased for the period from 1.4.1995 to 31.3.2000 under permanent B.P.(FB) No.96, dated 31.3.95 adopting 1994-95 (01.04.94 to 31.3.95) as the base year and pay the differential price between the purchase price directed to be re-fixed and the price already fixed in permanent B.P. (F.B) No.96 dated 31.3.95, of the second respondent together with interest at the rate of 18% per annum, with effect from the respective due dates.
W.P.29752/2010:
To issue a declaration or any other writ order or direction Declaring that G.O.Ms.No.230 dt.16.6.1993 issued by the First Respondent is binging on the Tamil Nadu Electricity Board and consequently direct Tamil Nadu Electricity Board to fix/refix the tariff payable to the Sugar Mills which have set up co-generation plants in accordance with G.O.Ms.No.230 dt.16.6.1993 and pass such further or other orders.
W.P. No.29753/2010:
To issue a writ of Declaration or any other writ, order of direction declaring that B.P.(FB)No.96 dt.31.3.1995 B.P.(FB) No.1 dt.11.1.2000 and B.P.(FB) No.93 dt.16.5.2000 of the 2nd respondent are illegal and without authority of law in so far as the said Board Proceedings are not in accordance with G.O.Ms.No.230 dt.16.6.1993 and pass such further or other orders.
W.P.29754/2010:
To issue a writ of Declaration or any other writ, order or direction, declaring that B.P.(F.B) No.96, dated 31.3.95 of the 2rd respondent is without authority of law and arbitrary, violative of Article 14 of the Constitution of India in so far as the said BP adopts 1995-96 instead of 1994-95 as the base year for fixing the purchase price of Rs.2.25 per unit for the surplus energy exported by the petitioner and consequently direct the Tamilnadu Electricity Board to refix the purchase price for the power purchased for the period from 26.3.1996 to 25.3.2001 under permanent B.P. (FB) No.96 dt 31.3.1995 adopting 1994-95 (01.04.1994 to 31.3.1995) as the base year and pay the differential price between the purchase price directed to be refixed and the price already fixed in B.P. (PB) No.96, dated 31.03.1995 by the 2nd Respondent together with interest at the rate of 18% per annum, with effect from the respective due dates and pass such further or other orders.
W.P.No.29755 of 2010: Pleased to issue a Writ of declaration or any other Writ order or direction Declaring that B.P. (FB) No.1 dt 11.1.2000 of the 2nd respondent fixing the purchase price of surplus energy exported by the co-generating Sugar Mills at Rs.2.73 per unit with effect from 1.4.2000 is without authority of law and arbitrary violative of Article 14 of the Constitution of India and consequently direct the Tamilnadu Electricity Board to refix the purchase price for the power purchased/to be purchased for the period from 1.4.2000 to 31.3.2010 under B.P. (FB) No.1 dt 11.1.2000 adopting Rs.3.01/per unit as the price for the based year viz. 2000-2001 and pay to the differential price between the purchase price directed to be re fixed and the price already fixed in B.P.No.1 dt 11.1.2000 by the 2nd respondent together with interest at the rate of 18% per annum https://hcservices.ecourts.gov.in/hcservices/ with effect from the respective due dates.
W.P.No.29756/2010:- to issue a writ of Declaration Declaring that B.P.(FB) No.93 dated 16.05.2000 of the 2nd Respondent is arbitrary and violative of Article of the Constitution of India in so far as the Tamil Nadu Electricity Board has fixed the price of Co-generated power produced by the sugar mills during off season at a rate lower than that fixed for the power generation during the season.
W.P.No.29757/2010: To issue a writ of mandamus or any other writ or direction Directing the Tamil Nadu Electricity Board to forthwith pay the arrears of purchase price to the Petitioner for the power exported by the Petitioner under the Power Purchase Agreements executed between the Petitioner and the Tamil Nadu Electriciy Board together with interest at 18% per annum from the respective due dates and continue to pay the purchase price for the power to be exported by the Petitioner within 30 days of presentation of the invoices.
For petitioner in W.P.Nos. : Mr.Gopal Choudary, 20820, 20821, 20730 to Senior Counsel for M/S.ABdul 20733 of 2000 Hameed For Petitioner in W.P.Nos. : Mrs.Nalini Chidambaram, 20624 to 20629 of 2000 Senior Counsel and Mr.Rahul Balaji for M/S.S.Silambanan For Petitioner in W.P.Nos. : Mrs.Nalini Chidambaram, 29752 to 29757/2010 Senior Counsel for M/S.S.Silambanan For respondents in all : Mr.V.Srikanth, Writ Petitions Addl. Government Pleader (R1) : Mr.P.S.Raman, Advocate General for Mr.A.Selvlendran (R2) : Mr.V.M.G.Rama Kannan (R3)
COMMON ORDER
The petitioners in these writ petitions are all Sugar Mills in the State of Tamil Nadu who have set up Co-generation plants to generate electricity and to supply the surplus electricity to the Tamil Nadu Electricity Board as per the agreements entered into with the Tamil Nadu Electricity Board in accordance with the provisions of the Electricity (Supply) Act of 1948. The main dispute in all these writ petitions is in respect of the fixation of price for the electricity supplied by these sugar mills to the Tamil Nadu Electricity Board.
Prior to 1991, private sector entrepreneurs cannot set up thermal projects, coal/lignite or gas based hydel projects and wind/solar energy projects of any size. However, the Electricity (Supply) Act, 1948 was so amended in 1991 by which private sector entrepreneurs were allowed to set up enterprises, either as Licensees, or as generating companies. Now, licenses under Section 3 of the Indian Electricity Act can be issued by the State Governments to private units willing to enter the electricity sector as licensee companies to supply and distribute energy in a specified area, who may or may not have a generating station. Prior to 1991, generating companies could be set up only by the Central or State Governments or both. After 1991, generating companies can now be set up and such companies can set up one or more generating stations and offer to sell electricity to the grid, unlike licensees, who supply and distribute energy within a specified area and who may or may not have generating stations. It is thus possible for an enterprise to combine the functions of a generating company in one area and that of a lincensee in another area. The generating company, will sell power to State Electricity Boards (SEBs), on the basis of an agreement, and, at tariff based on parameters applicable to generating companies. Power plants in the private sector are captive power plants, set up to serve an industrial or other unit, where the requirement of that unit is for a large/continuous supply of electricity and a reliable source of electricity is necessary. Surplus electricity from captive power plants can be offered for sale to the State Electricity Boards. In this regard, the Government of India, Ministry of Power, issued a policy known as "Policy on Private Participation in the Power Sector" dated 22.10.1991.
consent under Section 44 (1) of the Electricity (Supply) Act. After erecting power generation units, they entered into Power Purchase Agreements with Tamil Nadu Electricity Board. As per the said Power Purchase Agreements (hereinafter referred to as PPA), the surplus power exported by Sugar Mills to Tamil Nadu Electricity Board grid as recorded by the export meter will be purchased by the Tamil Nadu Electricity Board on outright basis at the rate of Rs.2 per unit and the rate will be reviewed and refixed if different norms are fixed by the Central Government/Government of Tamil Nadu.
i. To evolve a methodology for pricing of electricity purchased by Tamil Nadu Electricity Board from Sugar Mills Co-generating electricity;
ii. To establish a formula for regular revision of the price at Fixed intervals to reflect changes in costs and other prices;
iii. To establish the mode and terms of payment by Tamil Nadu Electricity Board to the Cogeneration Units.
iv. To review the scheme of wheeling and banking to make it more effective by allowing wheeling to any party at market driven price to be mutually negotiated between the co-generator and the end user.
"Based on the recommendations of this Committee, the Government shall take decisions on pricing, payment terms, wheeling etc., and finalise suitable programmes to set up cogeneration plants in the sugar mills in Tamil Nadu".
limit for payment, banking and wheeling of power, and exemption from Electricity Generation Tax. The report of the Committee was accepted by the Government and thereafter, the Government issued G.O.Ms.No.230, Industries (MISC.I) Department dated 16.06.1993. In the said G.O., the Government has directed as follows:-
"The Committee has now given its report. The Government have considered the recommendations contained therein. Accordingly, the following orders are issued by the Government. "i. Price of Co-generated Power:
For the power supplied to the State grid by the co-generating sugar mills, Tamil Nadu Electricity Board shall pay a price equal to HT-1 tariff charged for industrial consumers less 2% for transmission cost.
ii. Time Limit for payment:
The Tamil Nadu Electricity Board shall be required to make the payments for the power purchased from the co-generating mills within 30 days of the date of receipt of invoices from the mills with a suitable rebate/surcharge for earlier/later payments. The rebate/surcharge shall be decided taking into account the prevailing bank interest rates.
iii. Banking and Wheeling:
The Co-generating sugar mills shall be permitted to tank the power generated and wheel it through the Tamil Nadu Electricity Board, grid for sale to other consumers at mutually agreed rates subject to approval by the Government and the Tamil Nadu Electricity Board, shall charge 10% of the power for wheeling through the grid and 2% of the power for banking.
iv. Exemption from Electricity Generation Tax: Co-generating sugar mills shall be exempted from the Electricity Generation Tax both for power consumed captively as well as power supplied to the Tamil Nadu Electricity Board, and other third parties."
the petitioners, forwarded a draft agreement, wherein, to their surprise, they noticed that the price for power supply shall not be paid as per G.O.Ms.No.230 and instead, it will be paid as per B.P. (FB) 96 dated 31.03.1995.
"In the Board's Proceedings Permanent (FB) No.241 (Tech.Br) dt.20.08.1994, the cost at which the surplus energy sold to TNEB by the Sugar Mills was fixed at Rs2/- per unit.
In order to encourage further private sector participation in power generation through Cogeneration, the purchase price of surplus energy to the grid by Co-generating sugar mills is revised to Rs.2.25 ps (Rupees two and paise twenty five only) per unit with effect from 01.04.1995 and with a price increase of 5% over the previous year for a period of five years. This will be reviewed after five years. Till the review is made and new rates are finalised, the rate at which the payment is made at the fifth year will continue.
The wheeling charges of 2% for wheeling power to their sister concerns of sugar mills is also approved. The Sugar Mills are permitted to wheel the power to their sister concerns which are situated within 2 kilometers radius from the Sugar Mills. The Government may be requested to revise the G.O.Ms.No.230 dt.16.06.1993 of Industries Department."
not commissioned soon, it would have been impossible for the Mills even to go for crushing sugar cane. Therefore, subject to protest, according to the petitioners, they entered into the Power Purchase Agreements reserving their right to claim the purchase price as per G.O.Ms.No.230 dated 16.06.1993.
"The purchase price of power generated
by the sugar Mills during off-season, using lignite as fuel, is fixed on par with the rate applicable for the bagasse based cogenerated power contemplated vide B.P (FB). No.96 dt.31.03.1995 i.e.Rs.2.25 per unit with effect from 1.04.1995 with 5% annual increase for a period of five years.
The above tariff is applicable only to those Co-generating Sugar Mills exporting power to TNEB grid and have utilised the entire bagasse produced during the crushing season for power generation."
Thus, as per B.P(FB) No.91, uniform price was fixed for off-season supply also, though, the Sugar Mills may not use Bagasse as fuel and instead, they may use other conventional fuels like coal, lignite etc. In that Board Proceedings also it was specifically stated that the Government of Tamil Nadu may be requested to revise the G.O.Ms.No.230 dated 16.06.1993, Industries Department.
"i. The purchase Price of Co-generated Power from the Sugar Mills for the year 2000-2001 effective from 01.04.2000 is fixed at Rs.2.73 (Rupees two and paise seventy three) per unit and this price will be increased by 5% every year over the previous year rate for a period of Nine Years upto 2010. The price so fixed shall not exceed 90% of the prevailing H.T.Tariff I rate applicable for the industrial consumers, which may get revised from time to time.
ii. The above purchase price is applicable for the energy generated and exported by the cogenerating sugar mills during the non-crushing season also, using alternative fuels like lignite,
subject to the conditions stipulated vide (B.P. (FB) No.91 dt.10.06.1998.
iii. The above purchase price is applicable for the individual sugar mills participating either in the proposed Joint Venture Company approved by the Government of Tamil Nadu or any other individual sugar mills proposing such Joint Venture.
iv. The above Purchase Price will be reviewed after ten years during 2010. Till such review is made and a new rate is finalised, the tenth year rate will be continued to be paid if the company/sugar Mills supplies its surplus power to TNEB.
v. The Power Purchase Agreement (PPA) shall be kept in force, from the date of agreement, for a period of fifteen years or for the useful life period of the plant whichever is less."
Thus, the Board Proceedings came to be issued contrary to the price as contemplated in G.O.Ms.No.230. In this Board Proceedings, as noticed above, the Purchase Price for the year 2000-2001 with effect from 01.04.2000 was fixed at Rs.2.73 per unit. The uniform Purchase Price for the off-season as introduced by B.P.(FB) 91 dated 10.06.1998 shall continue.
" i. To permit those sugar mills, having tie-up arrangement with TNPL for supply of bagasse to generate power using pith and fossil fuels during crushing and non-crushing season and export surplus power to TNEB grid. However, the plant capacity is to be restricted to the quantum of bagasse produced and supplied to TNPL.
ii. The purchase price of power generated by the existing and future co-generation plants of the sugar mills, using alternate conventional fuel, including those co-generation plants under Joint Venture model proposed in the Co-operative Sector sugar Mills, may be fixed at the captive power rate with 2000-2001 as the base year.
iii. The purchase price of power generated by the sugar mills having tie up with TNPL for the supply of bagasse and generating power using pith and fossil fuels during crushing and non-crushing season also may be fixed at the captive power rate with 2000-2001 as the base year.
iv. The price of captive power is Rs.2.48 per unit effective from 01.04.2000 with 5% annual increase over the previous year rate, for a period
of nine years.
v. The above rate will be reviewed after ten years during 2010. Till such review is made and new rates applicable from 01.04.2010 is finalised, the tenth year rate will be continued to be paid if the sugar mills continued to supply its surplus power to TNEB.
vi. To adopt the above differential pricing policy uniformly for all the existing and future co-generation plants of the sugar mills."
"The State Electricity Board will announce a base purchase price every year for the electrical energy purchased by it from non-conventional energy based power projects. These rates shall be valid from 1st April to 31st March of the following year.
The base electrical energy purchase price valid for 1994-95 shall be a minimum of Rs.2.25 kwh.
The base price shall be escalated at a minimum rate of 5% every year. Announcement of revised base prices shall be made by the SEB on1st April every year.
The base prices shall be applicable to all non-conventional energy based power projects based on solar, wind, small hydro, biomass, etc. for which Power Purchase Agreements are signed during a year.
10 years, from the date of signing of the Power Purchase Agreement. From the end of the 10th year, and for the remaining duration of the Power Purchase Agreement, the new purchase price shall be equal to the purchase price at the end of the 10th year, or the High Tension (HT) tariff prevalent in the State at that time, whichever is higher."
the Electricity (Supply) Act.
"It is submitted that Section 78-A of the Indian Electricity (Supply) Act, 1948 gives the power to the State Government to guide the Electricity Board in the discharge of their functions on questions of policy. I state that G.O. (Ms) No.230 Industries Department, dated 16.06.1993 was not issued under Section 78-A of the Act."
etc., This would go to show that the Government by constituting the committee decided to issue a policy decision on the question of pricing.
"i. For the power supplied to the State grid by the co-generating sugar mills, TNEB may pay a price equal to HT-1 tariff charged for industrial consumers less 2% for transmission cost.
ii. The TNEB may be required to make the payments for the power purchased from the cogenerating mills within 30 days of the date of receipt of invoices from the mills with a suitable rebate/surcharge for earlier/later payments.
iii. The co-generating sugar mills may be permitted to bank the power generated and wheel it through the TNEB grid for sale to other consumers at mutually agreed rates subject to approval by the Government and the TNEB may charge 10% of the power for wheeling through the grid and 2% of the power for banking.
iv. Co-generating sugar mills may be exempted from the Electricity Generation Tax both for power consumed captively as well as power supplied to the TNEB and other third parties."
by Arooran Sugar Mills Ltd., the Chairman,Tamil Nadu Electricity Board has stated in paragraphs 1 and 2 as follows:
"1. The surplus power generated by the cogeneration plant after local consumption by your mill shall be sold to T.N.E.B only.
In my considered view, had it been the case of the Tamil Nadu Electricity Board that the G.O.Ms.No.230 is not a policy direction issued by the Government, the above reference to G.O.Ms.No.230 would not have come to be made in the said consent letter.
"6. Further the H.T Tariff I indicated in G.O.Ms.No.230 dated 26.06.1993, is the Tariff prevailing on that date, viz. Rs.1.70. The G.O has not been revised subsequent to revision of tariff. Board has modified this by rounding off as Rs.2/per unit without Transmission charges. Hence, it is not correct to say that Board is not following the G.O. The Board's orders are more beneficial than the G.O.
This letter was in response to a letter from the Government wherein the Government had called for remarks from the Tamil Nadu Electricity Board, as to whether G.O.Ms.No.230 was being scrupulously followed in the matter of payment of price for electricity purchased from cogeneration units of sugar mills. Had it been the case of the Tamil Nadu Electricity Board that G.O.Ms.No.230 is not binding and that the same was not issued under Section 78-A of the Act, by all means, the Chairman of Tamil Nadu Electricity Board would have told the Government that the G.O.Ms.No.230 is not binding on the Tamil Nadu Electricity Board. Instead, the Chairman has categorically stated that it is not correct to say that the Board is not following the G.O.Ms.No.230. This would again indicate that G.O.Ms.No.230 was treated only as policy direction of the Government.
https://hcservices.ecourts.gov.in/hcservices/ 29. In this regard, I may also refer to Permanent B.P.(FB).
No.153, (Technical Branch) dated 22.05.1995, issued by the Tamil Nadu Electricity Board, wherein also, there is a reference to G.O.Ms.No.230. In paragraph 1 of the said Board Proceeding, the Tamil Nadu Electricity Board has stated as follows:
"The Government of Tamil Nadu has issued order in the G.O cited that the power supplied from the Co-generation Plant of the Sugar Mills may be purchased at the H.T.I Tariff charged for industrial consumers after deducting 2% towards transmission cost. Accordingly, payments were made to MRK Sugar Mills/Sethiathope and Cheyyar Sugar Mills/Cheyyar. Subsequently in the Board B.P.(2) cited, it has been decided to pay only Rs.2/(Rupees Two only) per unit as followed in the case of Wind Energy. However, in respect of MRK Sugar Mills and Cheyyar Sugar Mills, Board had paid at HT Tariff I less 2% transmission cost up to the issue of the B.P. dated 20.08.1994."
This letter also would go to show that G.O.Ms.No.230 was scrupulously followed as a policy direction of the Government.
The Board has approved the revised rate of Rs.2.25 per unit with effect from 01.04.1995 for purchase of power from co-generated Sugar Mills with a price increase of 5% over the previous year instead of 10% for a period of 5 years towards the net surplus energy exported to the grid by the Sugar Mills. This rate will be reviewed after 5 years. Till the review is made and the new rates are finalised, the rate at which the payment is made at the 5th year will continue. The 2% wheeling charges recommended for wheeling the power to sister concerns of the Sugar Mills who are generating power and exporting to grid may be limited to the industries located within 25 kms radius from the Sugar Mills."
"Based on this, B.P.(FB) 96 dated 31.03.1995 is issued and a copy enclosed, in which the revised rate of Rs.2.25 per unit is fixed with effect from 01.04.1995 and with a price increase of 5% over the previous year for a period of five years and 2% wheeling charges for wheeling of power to sister
concerns of Sugar Mills located within 25 kms radius from the sugar mills. It is requested that G.O.Ms.No.230 Industries Department, Madras dated 16.06.1993 may kindly be amended as above and communicated early."
"I am directed to state that it is proposed to issue amendments to the existing paragraphs (2(i) and para 2(iv) of G.O.Ms.No.230 Industries Department, dated 16.06.1993, by substituting the following paragraphs:-
2(i) Price of Co-generated Power:-
For the Power supplied to the State grid by the Co-generating sugar mills, Tamil Nadu Electricity Board shall pay a price equal to HT-I tariff charged for industrial consumption less 10% for transmission cost/overheads:-
2(iv) Exemption from Electricity Generation Tax Co-generating sugar mills shall be exempted initially for a period of 5 years from the Electricity Generation Tax both for power consumed captively as well as power supplied to the Tamil Nadu Electricity Board and other third parties."
"Consequent to the issue of the G.O. under reference first cited, several policy initiatives had been taken by the Board in order to encourage co-generation of power in sugar mills based on the guidelines issued by the Ministry of NonConventional Energy Sources. A comprehensive report on the decision taken by the Board were communicated vide references (2) and (4) cited.
Based on your request made vide reference (6) cited, copies of references sought for were also sent vide reference (7) cited requesting amendment to the G.O.(Ms) No.230, dated 16-6-93. Board's decision regarding the Government's proposal to amend the said G.O. on the purchase price and exemption from Generation tax has also been communicated vide reference (9) cited. It has been
further intimated, vide reference (10) cited, that Board has now decided to bear the cost of power evacuation facilities to the co-generating sugar mills as a special case, based on the suggestions made by the MNES.
However, orders of the Government of Tamil Nadu are yet to be issued on these issues. Hence, I request that G.O.Ms.No.230, dated 16-6-93 may be arranged to be amended, in consultation with Energy Department, at the earliest, as the matter is pending at Government level for a long time."
Thus, though the Tamil Nadu Electricity Board was repeatedly requesting the Government to amend G.O.Ms.No.230, the Government by letter dated 04.08.1999 in Letter No.22576/MIC 1/99-1, has informed its policy not to amend G.O.Ms.No.230. The letter reads as follows:
"I am directed to invite attention to the letter cited wherein you have requested orders of the Government for issuing amendment to G.O.Ms.No.230,Industries, dt.16.06.1993. In this connection, I am to state that it is proposed to set up cogeneration projects, in 10 sugar mills in joint venture. IL & FS and Adviser, Government of India, MNES have sought for certain relaxation from Tamil Nadu Electricity Board for these cogeneration projects. It has therefore, been decided that it is adequate to follow up on the proposal document prepared by IL & FS for the cogeneration projects (illegible) in which certain relaxation have been sought for (illegible) from the Tamil Nadu Electricity Board and that no action need be taken for issue of amendment to the above mentioned G.O at present."
From this letter, it is very clear that the Government was very firm in its stand that G.O.Ms.No.230 should be scrupulously implemented by the Tamil Nadu Electricity Board.
https://hcservices.ecourts.gov.in/hcservices/ 34. The learned Advocate General raised a preliminary
objection regarding the maintainability of the writ petitions. According to him, all the writ petitions do not relate to statutory contract. The relief sought for, according to him, falls within the realm of private contracts and therefore, the remedy for the petitioners is to workout before the appropriate Civil Court.
" ... Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements
and, therefore, merely because PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory."
"Therefore, the PPAs can be regarded as statutory only to the extent it contains provisions regarding the determination of operation and other statutory requirements of 43-A (2) opening and maintaining of an escrow account or an escrow agreement are not the statutory requirement and therefore, merely because PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory."
" A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil Court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it, is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies."
Authority of India VS Ganga Enterprises and another reported in (2003) 7 Supreme Court Cases 410 wherein, in paragraph 6, the Honb'le Supreme Court has held as follows:
"It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala SEB VS Kurien E.Kalathil, State of U.P. VS Bridge & Roof Co. (India) Ltd. And Bareilly Development Authority VS Ajai Pal Singh. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ Court was not the proper forum. Mr.Dave, however, relied upon the cases of Verigamto Naveen VS Govt. of A.P and Harminder Singh Arora VS Union of India. These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus, on the ground of maintainability the petition should have been dismissed".
"It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts of that case, this Court has held that on a given set of facts if a State acts
in an arbitrary manner even in a matter of contract, an aggrieved party can approach the court by way of writ under Article 226 of the Constitution and the Court depending on facts of the said case is empowered to grant the relief."
"It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party to the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the above said requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent."
"So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore, the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies:(i) where the writ petition seeks enforcement of any of the fundamental rights;(ii)where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. VS Registrar of Trade Marks) The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel
that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."
"It is clear that (a) in the contract if there is a clause for arbitration, normally, a writ court should not invoke its jurisdiction;(b) the existence of effective alternative remedy provided in the contract itself is a good ground to decline to exercise its extraordinary jurisdiction under Article 226; and (c)if the instrumentality of the State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably, discriminatory and violative of Article 14 of the Constitution of India in its contractual or statutory obligation, writ petition would be maintainable. However, a legal right must exist and corresponding legal duty on the part of the State and if any action on the part of the State is wholly unfair or arbitrary, writ courts can exercise their power and the writ petition is maintainable."
in Section 78-A of the Act and since the grievance of the petitioners is that the Tamil Nadu Electricity Board has declined to discharge its statutory obligations, I am of the firm view that all these writ petitions are maintainable.
referred to above are not binding on the petitioners since they run contrary to the said Government Order. The learned counsel would submit that the TNEB, having given an assurance in the consent letters issued in exercise of the powers vested with the Board by the Electricity (Supply) Act, 1948 that the purchase of power will be governed by G.O.Ms.No.230 dated 16.06.1993, the Board is estopped from contending that the Board will not fix or refix the tariff payable to the sugar mills as per G.O.Ms.No.230. In this regard, the learned counsel has taken me through the consent letter wherein, the TNEB has stated as follows:-
"1. Surplus power generated by the Cogeneration Plant after local consumption by the mill shall be sold to TNEB only.
However, contrary to the said assurance given in the consent letter, when the draft Power Purchase Agreement was sent to the petitioners, they were shocked to note that in Clause 7, the TNEB had sought to include as follows:-
"Surplus energy left unavailed by the sugar mills at the end of non crushing season will be purchased by the TNEB on out right basis at the rate of Rs.2.25 per unit as per proceedings in permanent BP 96 [Technical Branch] dated 31.03.1995 ."
"Further to our letters cited above, and subsequent discussions thereon with the Member [Generation] on 01.09.1995 and yourself on 04.09.1995, regarding modifications to be incorporated in the draft Power Purchase Agreement [PPA], we wish to inform you that pending final decision on the issues raised therein and incorporation of our suggestions, we are proceeding to sign the PPA with the Superintending Engineer, Tanjore Distribution Circle, Thanjavur, as per draft furnished to us, on, provisional basis, as advised by you, in view of the imminent readiness of our Co-generation plant for commissioning.
We shall be extremely grateful to you if you could kindly extend favourable consideration to our request for modifications in respect of the terms and conditions at the earliest so as to enable incorporation of the same in the revised final Power Purchase Agreement."
https://hcservices.ecourts.gov.in/hcservices/ 53. The learned counsel would, therefore, contend that because
of the said assurance given in the consent letter and subject to protest, the petitioners entered into the PPAs wherein the clause running contrary to G.O.Ms.No.230 was also incorporated. Placing reliance on these facts, the learned counsel would submit that the doctrine of promissory estoppel would be very much applicable inasmuch as the petitioners had set up the power plant only on the above promise made by the TNEB to purchase the surplus electricity and fix the tariff as per G.O.Ms.No.230. In this regard, the learned counsel would rely on the judgment in Southern Petrochemical Industries Co. Limited v. Electricity Inspectors & ETIO and others, (2007) 5 SCC 447 wherein the Hon'ble Supreme Court in paragraphs 121 and 122 has held as follows:-
"121. The doctrine of promissory estoppel would undoubtedly be applicable where an entrepreneur alters his position pursuant to or in furtherance of the promise made by a State to grant inter alia exemption from payment of taxes or charges on the basis of the current tariff. Such a policy decision on the part of the State shall not only be expressed by reason of notifications issued under the statutory provisions but also under the executive instructions. Appellants had undoubtedly been enjoying the benefit of payment of tax in respect of sale/consumption of electrical energy in relation to the co-generating power plants.
constitutional provision, its action cannot be supported or the State intends to withdraw or modify a policy decision, no exception thereto can be taken. It is, however, one thing to say that such an action is required to be judged having regard to the fundamental rights of a citizen but it is another thing to say that by applying the rule of estoppel, the State would not be permitted to raise the said question at all. So far as the impugned circular dated 18-2-1989 is concerned, the State has, in our opinion, a right to support the validity thereof in terms of the constitutional framework."
"132. We may also notice the emerging doctrine in this behalf, viz., Legitimate Expectation of Substantive Benefit. Ordinarily, the said principle would not have any application where the legislature has enacted a statute. As, according to us, the legislature in this case allowed the parties to take benefit of their existing rights having regard to the repeal and saving clause contained in Section 20 (1) of the 2003 Act, the same would apply. If, thus, principle of promissory estoppel would apply, there may not be any reason as to why the doctrine of legitimate expectation would not.
"The courts have expressed at least three different reasons supporting the existence of statutes of limitation, namely, (1) that long dormant claims have more of cruelty than justice in them, (2) that a defendant might have lost the evidence to disprove a stale claim and (3) that persons with good causes of action should pursue them with reasonable diligence."
66.In my view, a claim based on the infraction of fundamental rights ought not to be entertained if made beyond the period fixed by the Limitation Act for the enforcement of the right by way of suit. While not holding that the Limitation Act applies in terms. I am of the view that ordinarily the period fixed by the Limitation Act should be taken to be a true measure of the time within which a person can be allowed to raise a plea successfully under Art. 32 of the Constitution."
However, in the above judgment, the Hon'ble Supreme Court has held that ordinarily the period fixed by the Limitation Act should be taken to be a true measure of the time within which a person can be allowed to raise a plea successfully either by way of writ petition under Article 226 or by way of petition under Article 32 of the Constitution. Here, in the instant cases, the petitioners have filed the writ petitions only for mandamus to implement the G.O.Ms.No.230, but, in effect the relief sought for in these writ petitions are only for recovery of the price for the electricity supplied in terms of G.O.Ms.No.230. As per Article 14 of the Limitation Act, 1963 a period of 3 years has been prescribed for filing a suit for recovery of the price of goods sold from the date of delivery of goods. It is the contention of the learned Advocate General that since these writ petitions are in effect for recovery of the amount due from the TNEB and since they have been filed beyond the period of 3 years, the petitioners are guilty of laches. I find every force in the said argument. The contention of the petitioners is that there were number of correspondences between the petitioners and the TNEB and in this regard even at one stage , there was also a proposal on the part of the Government to amend G.O.Ms.No.230. Therefore, according to the petitioners, they are not guilty of laches. In my considered opinion, mere correspondences between the parties, discussions and the meetings will not save the limitation. All these writ petitions have been filed much beyond the period of limitation prescribed in Article 14 of the Limitation Act. Thus, I have no hesitation to hold that the petitioners are guilty of laches and on that ground the writ petitions are liable to be dismissed.
"5. The prevailing HT-I tariff for industrial consumers is Rs.2.40/2.50 per unit excluding maximum demand charges. The same less 2%, as provided for in G.O.Ms.No.230 would still be inadequate in the light of the computations furnished in Annexure-I. As such, it is respectfully submitted that the price for power supplied to TNEB by our unit be fixed at least in accordance with G.O.Ms.No.230 which governs
the original consent accorded to our project. The supporting calculations are enclosed in Annexures II to IV and we will be happy to furnish any further information or clarifications that may be required.
As stated earlier our project is at an advanced stage of implementation and is expected to be commissioned by end March-mind of April 1995. Under these circumstances , we request you to kindly extend favourable consideration to our representation and recommend fixation of a price which is at least the same as guaranteed by G.O.Ms.No.230, for power supplies to the grid , both during the season as well as the off-season irrespective of fuel used."
"13. Abandonment of right is much more than mere waiver, acquiescence or laches. The decision of the High Court in the present case is that the appellant has waived the right to evict the respondent. Waiver is an intentional relinquishment of a known right or advantage, benefit, claim or privilege which except for such waiver the party would have enjoyed. Waiver can also be a voluntary surrender of a right. The Doctrine of waiver has been applied in cases where landlords claimed forfeiture of lease or tenancy because of breach of
some condition in the contract of tenancy. The doctrine which the courts of law will recognize is a rule of judicial policy that a person will not be allowed to take inconsistent position to gain advantage through the aid of courts. Waiver sometimes partakes of the nature of an election. Waiver is consensual in nature. It implies a meeting of the minds. It is a matter of mutual intention. The doctrine does not depend on misrepresentation. Waiver actually requires two parties, one party waiving and another receiving the benefit of waiver. There can be waiver so intended by one party and so understood by the other. The essential element of waiver is that there must be a voluntary and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question. It cannot be held that there has been a waiver of valuable rights where the circumstances show that what was done was involuntary. There can be no waiver of a non-existent right. Similarly, one cannot waive that which is not one's as a right at the time of waiver. Some mistake or misapprehension as to some facts which constitute the underlying assumption without which parties would not have made the contract may be sufficient to justify the court in saying that there was no consent."
party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being. Statutory right, however, may also be waived by his conduct."
the same as the law of the land as laid down in Vellore Citizens Welfare Forum v. Union of India, (1996) 5 SCC 647.
"27. Guidelines per se do not partake the character of statute. Such guidelines in absence of the statutory backdrop are advisory in nature. Mr.Ram Prakash himself has relied upon a decision of this court in Narendra Kumar Maheswari v. Union of India, 1990 Supp SCC 440 : Air 1989 SC 2138, wherein it has been laid down:
"107. .... This is because guidelines, by their very nature, do not fall into the category of legislation, direct, subordinate or ancillary. They have only an advisory role to play and non-adherence to or deviation from them is necessarily and implicitly permissible if the circumstances of any particular fact or law situation warrants the same. Judicial control takes over only where the
deviation either involves arbitrariness or discrimination or is so fundamental as to undermine a basic public purpose which the guidelines and the statute under which they are issued are intended to achieve."
Sd/-
Asst.Registrar.
/true copy/
Sub Asst.Registrar.
pal/kmk
To
1. The Principal Secretary to
Government, State of Tamil Nadu
Department of Industries,
Fort St.George, Chennai.9
2. The Chairman,
Tamil Nadu Electricity Board
800, Anna Salai,Chennai.2
3. TSecretary,
Union of India
Ministry of Non-Conventional
Energy Sources,
Block No.14, C.G.O Complex,
Lodi Road, New Delhi 10 003.
1 cc to M/s. C. Uma, Advocate, SR. 31956
2 ccs to Mr.S.Silambanan, Advocate, Sr. 31954, 31955
1 cc to Mr.A. Selvendran, Advocate, Sr. 32088
1 cc to Mr.A. Abdul Hameed Advocate, SR. 31953
Writ Petition
Nos.20820, 20821 of 2000,
20624 to 20629 of 2000,
20730 to 20733 of 2000
and
29752 to 29757 of 2010
SJ (CO)
kk ,km,sra,rh,eu,pmk, sr tp 14/7
3 issues framed by the court
Whether the State Government's G.O.Ms.No.230 regarding tariff fixation for co-gen plants was issued under Section 78-A of the Electricity (Supply) Act and thus binding on the TN Electricity Board.
Whether the petitioners' writ petitions are maintainable in the presence of an alternative remedy under a private Power Purchase Agreement or arbitrary action by a State instrumentality.
Whether the petitioners are guilty of laches for filing the writ petitions after a delay of several years despite entering Power Purchase Agreements.
Colour shows how this judgement treated each authority
India Thermal Power Ltd Vs State of M.P.Referred¶161
(2000) 3 Supreme Court Cases 379
Kerala State Electricity Board and another VS Kurien E.Kalathil and othersReferred¶166
(2000) 6 Supreme Court Cases 293
National Highways Authority of India VS Ganga Enterprises and anotherReferred¶168
(2003) 7 Supreme Court Cases 410
Pimpri Chinchwad Municipal Corporation and others VS Gayatri Construction Company and anotherReferred¶171
(2008)8 Supreme Court Cases 172
ABL International Ltd. and another VS Export Credit Guarantee Corporation of India Ltd. and othersReferred¶173
(2004) 3 Supreme Court Cases, 553
Harbanslal Sahnia and another VS Indian Oil Corporation Ltd. And othersReferred¶180
(2003) 2 Supreme Court Cases 107
Zonal Manager, Central Bank of India VS Devi Ispat Limited and othersReferred¶183
(2010) 11 Supreme Court Cases, 186
Tilokchand Motichand v. H.B.MunshiApplied¶214
1969 (1) SCC 110 · Who else cites this
Pramod Kumar Jain v. Sudha Choubey and othersReferred¶235
(2004) 8 SCC 228 · Who else cites this
P.Das Muni Reddy v. P.Appa RaoReferred¶230
AIR 1974 SC 2089 · Who else cites this
Poonam Verma and others v. Delhi Development AuthorityReferred¶244
2007 (13) SCC 134 · Who else cites this
Vellore Citizens Welfare Forum VS Union of India and othersReferred¶241
(1996) 5 Supreme Court Cases 647
E.I.D.Parry (I) Ltd
Thiru Arooran Sugars Ltd
Rajasshree Sugars & Chemicals Limited
The State of Tamil Nadu
Tamil Nadu Electricity Board
Union of India
S.Nagamuthu
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
