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MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD Vs. CENTRAL ELECTRICITY REGULATORY COMMISSION AND ANR.
August, 02nd 2013
*     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                  Pronounced on: 30.07.2013

+            CM No.16060/2011 in W.P.(C) 7017/2011

      MAHARASHTRA STATE ELECTRICITY
      DISTRIBUTION CO. LTD.                                  ..... Petitioner

      Through :     Mr. Ravi Prakash and Mr. Varun Pathak, Advocates.

                                         versus

      CENTRAL ELECTRICITY REGULATORY
      COMMISSION AND ANR.                                    ..... Respondents

      Through :     Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay,
                    Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila
                    Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula,
                    Advocates.

                    Mr. M.Y.Deshmukh and Mr. Yatin M.Jagat, Adv. for R-3.

           CM Nos.11667/2012, 572/2013 in WP(C) No.4867/2012

      GRIDCO LTD                                             ..... Petitioner

      Through :     Mr. Soli J. Sorabjee, Senior Advocate with Mr.R.K.Mehta,
                    Mr. Antaryami Upadhyaya and Mr. Premjit Elangbam,
                    Advocates.

                                         versus

      STATE OF ORISSA AND ORS                                ..... Respondents

      Through :     Mr. G.E.Vahanvati, Attorney General Mr. S.B.Upadhyay,
                    Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila
                    Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs.

                           CM No.12129/2012 WP(C) No.5396/2012

      WEST BENGAL STATE ELECTRICITY
      DISTRIBUTION COM. LTD AND ANR.                         ..... Petitioners
CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 1
      Through :     Mr. Upamanyu Hazarika, Sr. Adv. with Mr. Sakya Sinha
                    Chaudhari and Ms. Prerna Priyadarshini, Advs.

                                         versus

      CENTRAL ELECTRICITY REGULATORY
      COMMISSION AND ORS.                                      ..... Respondents

      Through :     Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay,
                    Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila
                    Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs.

                    CM No.11666/2012 in WP(C) No.5397/2012
      THE BIHAR STATE ELECTRICITY BOARD                             ..... Petitioner

             Through :     Mr. M.K.Singh, Advocate

                                         versus

      THE UNION OF INDIA AND ORS                                    ..... Respondent

      Through :     Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay,
                    Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila
                    Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs.

      CORAM:

      HON'BLE MR. JUSTICE S. RAVINDRA BHAT
      HON'BLE MR. JUSTICE NAJMI WAZIRI
%     MR. JUSTICE S. RAVINDRA BHAT

1.    The common grievance of all the writ petitioners in these batch of
proceedings under Article 226 of the Constitution of India relates to the
framing, enforcement and interpretation of the Central Electricity Regulatory
Commission (Sharing of Interstate Transmission and Losses) Regulations, 2010
(hereafter called "the impugned regulations"). This order proposes to dispose of
one set of applications seeking interim orders (CM Nos. 16060/2011 in WP(C)
No.7017/2011, 572/2013 in WP(C) No. 4867/2012, 12129/2012 in WP(C)
No.5396/2012 and 2999/2012 in WP(C) No.5397/2012. These have been
CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 2
preferred by the Petitioners. The order also disposes off two other applications
(CM Nos.11666/2012 and 11667/2012 preferred by the Power Grid Corporation
of India seeking appropriate directions. These applications were heard with
consent of counsel for the parties, on 23rd July, 2013 and listed for orders for
today, i.e. 30th July, 2013.
2.    The petitioners are transmission utilities or corporations, in terms of
Section 38 of the Electricity Act, 2003. The petitioners submit that in the
"Postage Stamp Method", in vogue prior to enforcement of the impugned order
GRIDCO and others were paying amounts towards transmission charges to the
Power Grid Corporation. This method incorporated all the assets of the
concerned region whose transmission charges were finalized by the Central
Electricity Regulatory Commission, till 30.06.11. Under the said old method
(Postage Stamp Method) only Rs.11 crore, approximately was payable, for
instance by the GRIDCO. However, now GRIDCO is being billed for an
amount of Rs.15.69 crore towards the transmission charges which has increased
by 43 % which entails a heavy financial burden upon it (GRIDCO). If the
Transmission charges are billed 100% on the basis of Point of Connection
(PoC) Methodology such charges will go up to the extent of Rs.20.26 Crores
per month which would translate to an increase by 88%.
3.    Mr. Sorabjee, learned senior counsel appearing on behalf of the GRIDCO
relies upon the orders of the Orissa High Court, dated 04-11-2011 and 08-11-
2011, to submit that there is a subsisting interim order which in effect directs
the respondents not to recover amounts based on the impugned regulations. He
also submits that the impugned regulations are ex-facie arbitrary and
discriminatory. Counsel relied on the following averments in the reply to the
Power Grid Corporation's application for directions:
      "10. That the methodology whose objective was to make Transmission
      Tariff sensitive to Distance, Direction & Quantum of flow has been
      ultimately defeated and could not be concluded an appropriate




CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 3
      methodology. In the present PoC regime (as per recent CERC Order DPi
      30.11.12) purchase of power from Taicher-IT by Odisha which is at
      periphery of TSTPS is 24.38Pf Unit whereas purchase of Taicher 11
      power by Andhra Pradesh (at a distance of 1000 Kms) and Karnataka
      (1500 Kms) is 20.70 P/unit and 18.70 P/unit respectively. Hence Odisha
      is paying more as the far off region for the generator situated in Odisha.
      A Map sharing the Pictorial presentation of the location of injection point
      and drawal point of Odisha, Andhra Pradesh and Karnataka is filed
      herewith as Annexure l3."

4.    It was contended that while framing the impugned Regulations, it was
assumed that States like Odisha Housing Generating Stations located near the
Load Centers, will have to pay lesser Transmission Charge as the Network
utilized by the load for drawing its power from the Generators shall be less. The
above presumption was further substantiated by Para 3.1.6 of CERC Statement
of Reasons dated 11.06.10. That document stipulates as follows:



             " . . These days ER imports power from WR under most grid
             conditions, therefore any generation in Orissa will most likely get
             absorbed in Orissa itself, thereby using very less transmission
             network (and hence lower transmission charges). This will further
             lead to reduction in the utilization of the transmission network
             (reduced flow on the ER4VR links) and invite lower transmission
             charges for the generator.........."


5.    Relying on the averments in the application for stay, and the materials on
record, including the copy of a map produced for the purpose of this petition, it
was argued that the PoC regime through which the impugned regulations have
been brought into force in fact undermines its objective. There is utter
arbitrariness in regard to the levy of charges. In several places or regions, which
are located within short geographical proximity of the electricity generating
assets, under the pre-existing regime, the rates payable were reasonable, and had
a nexus with the distance. However, under the new regime through the

CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 4
impugned regulations, in the Eastern Region like Odisha and West Bengal, etc
the companies had to pay more, even though the transmission or generating
assets were located geographically close to the units; on the other hand, units
located far away in Karnataka and Andhra Pradesh had to pay less than the
petitioner. This was iniquitous and arbitrary.

6.    The petitioners also rely on Para 7 (q) of the impugned regulations, which
is as follows:

      "...For the first two years, the zonal charges obtained using the Point of
      connection method shall be adjusted such that 50% of the Yearly
      Transmission Charge of the ISTS Licensees is recovered through Hybrid
      methodology and the balance 50% of the Yearly Transmission Charge of
      the ISTS Licensees is recovered based on Uniform Charge Sharing
      Mechanism. After a period of two years from the implementation of these
      arrangements, the Commission may review the weightages accorded to
      the Hybrid methodology and the Uniform Charge Sharing Mechanism."

7.    It is submitted that any system or regime which does not predominantly
take into account actual usage charges, and is based primarily on some formula,
is bound to be arbitrary, which is the vice of the impugned regulations. The PoC
method is based on right of use, or contract and not on actual usage. Other
counsel also adopted the submissions of Shri Sorabjee.
8.    Mr. Upamanyu Hazrika learned senior counsel for the West Bengal
Electricity Board, one of the writ petitioners adopted the submissions of Mr.
Sorabjee. He argued that the impugned regime introduced by the impugned
regulations cannot be sustained because in spite of the non-participatory nature
of some or predominant constituents in a grid system, they would have to bear
uniform charges. Thus, for instance, transmission charges from the Northern to
the North Eastern Regions would have to be borne by all grid transmission
participants, regardless of their involvement or usage through such transactions.
9.    The Attorney General, who appeared on behalf of the Power Grid
Corporation- i.e. the respondent in all writ petitions, and applicants in the two
CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 5
interim applications seeking directions, submitted that the impugned regulations
have statutory force; consequently a presumption of Constitutionality attaches
to them. That apart, argued counsel, the Petitioners are stressing unduly on the
distance factor, in support of the case. In this context, it was contended that the
impugned regulations, as indeed the National Transmission Policy framed under
the Act, envisions a scientific and rational method of apportioning expenses
borne by transmission companies and entities. It was argued that while the
previous policy did take into account regional requirements, that did not mean
that such policy had to be continued. The power of the respondents to revise and
put in place a system or tariff policy which was rational to all users, was
unquestioned. It was contended that 66 of the 71 users in the country adopted
the new regime and have been making payments. The petitioners have, however
chosen to challenge the policy, and unjustifiably resisted making payments
towards the bills raised upon them by the Power Grid Corporation.

10.   The Attorney General referred to a study conducted by the Central
Commission which preceded the introduction of the impugned Regulations. It
was urged that the National Electricity Policy and the National Tariff policy
envisage a transmission pricing sensitive distance, direction and quantum of
power flow. This enjoins upon the Central Commission to develop and
implement a National Transmission Tariff frame-work to meet the stated
objectives envisaged in the National Electricity Policy. The Petitioners'
argument that the new methodology is ultra vires the provisions of the
Electricity Act, 2003 or the National Electricity Policy or the National Tariff
Policy was denied.
11.   It was submitted that the intransigence of the petitioners cannot be
countenanced and if the directions sought for are not granted, the Power Grid
Corporation itself would face serious financial crisis. The Attorney General
emphasized that it was only the Orissa High Court which had granted an interim

CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 6
order, limited in point of time. When the Supreme Court directed the transfer of
all proceedings pending before various High Courts, there was in fact no interim
order suspending the petitioners' obligations to make monthly payments.
12.   This court notices that the present proceedings were taken up by this
Court, further to directions of the Supreme Court dated 7th May, 2012. The
Supreme Court had transferred writ petitions from various High Court,
involving challenges to the impugned Regulations. They were, thereafter,
referred to the Division Bench, on account of the fact that a challenge to the
validity of statutory Regulations was involved.

13.   The Petitioners' contention that the Orissa High Court's interim order of
4th November 2011 has continued and is subsisting, in the opinion of this Court,
is insubstantial and meritless. Facially, that order directed the parties to
maintain status quo till the next date of hearing; so did the next order of 8 th
November, 2011. Thereafter, transfer proceedings were initiated before the
Supreme Court. The record does not disclose that the Supreme Court made any
interim order, or that it expressed any view on the feasibility of such interim
orders. The record shows that the interim order made by the Orissa High Court
had exhausted itself, by 8th November 2011.




14.   As far as the merits of the arguments concerning grant of interim order in
favour of the writ petitioners are concerned, this Court is of opinion that the writ
petitioners' contentions do no warrant the grant of any interim order. Firstly,
what is in issue is the validity of statutory regulations. The power to frame and
issue those regulations is not questioned; what is sought to be highlighted is that
it has an arbitrary effect. Now, the petitioners may undoubtedly be affected by
the operation of the impugned regulations; they might be casting a greater
financial burden upon them than was being cast on them hitherto. That by itself
in the opinion of the court, does not amount to arbitrariness. As far as the
complaint that the petitioners, though located nearer the transmission assets,
CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 7
have to pay more amounts than those who are located farther away are
concerned, the argument overlooks that distance is one of the factors which
weighed with the policy makers while framing the regulations. Three factors,
i.e. distance, direction and quantum of power flow appear to have been the
guiding factors while fixing the transmission tariff costs in the facts of this case.
It would be well-nigh impossible for this court, at this stage of the hearing, to
characterize all, or any one of these considerations as arbitrary, or even say that
the administration of the impugned regulations has led to demonstrable and
manifest arbitrariness or discrimination. The court is conscious of its limitation
in exercising ad-interim jurisdiction in a matter which has received the attention
of experts and was concededly preceded by a process of consultation. To delve
deep into the issues, at this stage of the proceeding, without a full understanding
or grasp of the complexities of the issues, sans a palpable and manifest
arbitrariness on the face of the record (the existence of which alone can justify
an ad-interim interdiction by a writ court) would be to assume that the
petitioners' submissions are correct- a course clearly impermissible in law.
Consequently, this court is of opinion that the applications for ad-interim stay of
the impugned regulations have no force; they are consequently dismissed.

15.   Dealing next with the applications of the Power Grid Corporation, the
claim made is for appropriate directions to the petitioners to pay the charges
which they have to bear in terms of the impugned directions. This court is of
opinion that with the dismissal of the petitioner's application, there really
should be no need for such directions. Nevertheless, to put the matter beyond
the pale of controversy, the writ petitioners are hereby directed to abide by the
conditions in the impugned regulations, with regard to payments to the Power
Grid Corporation. In case any of the petitioners makes a request for payment of
arrears of charges, the respondents should consider the same reasonably, and in
the light of the applicable rules and regulations, including those pertaining to

CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 8
paying such amounts through instalments, subject to prescribed conditions in
that regard.

16.   In the light of the above discussion, CM Nos.16060/2012, 572/2013,
12129/2012 and 2999/2013 are rejected; CM Nos. 11666/2012 and 11667/2012
are allowed, in the above terms. There shall be no order as to costs. Order Dasti.

WP(C) Nos. 7017/2011, 4867/2012, 5396/2012, 5397/2012

      List for hearing on 17th September, 2013.

      The concerned parties shall file synopsis of arguments not exceeding
seven pages with appropriate cross references. The parties shall restrict their
respective arguments to half an hour each.




                                                     S. RAVINDRA BHAT

                                                                    (JUDGE)



                                                           NAJMI WAZIRI

                                                                    (JUDGE)

JULY 30, 2013




CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in
WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12                               Page 9
 
 
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