TATA POWER COMPANY LTD. v. RELIANCE ENERGY LIMITED AND OTHERS

p. 684

A 86 provides to ·regulate electricity purchase and procurement process of distribution licensees including the price at which r-

the electricity shall be procured from the generating companies . )--

~

or licenses or from other sources through agreements. As a part '

of the regulation it can also adjudicate upon disputes between B the licensees and generating companies in regard to the implementation, application or interpretation of the provisions of the said agreement. )

144Copy pinpoint144. There are some provisions which provide for regulation etc. qf generation and/or generating companies, c namely- (i) Section 10(3) (ii) Section 11 (2) "'' ' (iii) Section 23 D (iv) Section 33(2) (v) Section 55(2) and (3) . ,, (vi) Section 60 (vii) Section 62(1), (2) and (95) E (viii) Section 81(1)(a), (b), (e), (f) and sub-section (2) ' (ix) Section 128(1 ), (6), (7) and (8) (x) Section 129 } ,.. t (xi) Section 181 'I

145Copy pinpoint145. The Parliament thought it necessary to provide for specific provisions for the purpose of regulating the functions . of the generating companies, those provisions are special provisions vis-a-vis the other general provisions which take \- within its abridge the function of the distributor, transmitter and r G trader.

146Copy pinpoint146. In U.P. Power Corporation Ltd. v. NTPC and others, [2009 (3) SCALE 620] this Court opined : " "There cannot be any doubt whatsoever that the word H

TATA POWER COMPANY LTD. v. RELIANCE 685 ENERGY LIMITED AND ORS. [S.B. SINHA, J.]

'regulation' in some quarters is considered to the unruly A horse."

[See also Bank of New South Wales v. Commonwealth {(1948) 76 CLR 1} and Prasar Bharti and others v. Amarjeet Singh and others, { 2007 (2) SCALE 486 } ]. B

147Copy pinpoint147. We may notice a comparative chart of the provisions of Section 22(1)(c) of 1998 Act and Section 86(1)(b) of the f 2003 Act.

Section 22(1)(c) of the 1998 Section 86( 1)(b) of the 2003 c Act Act to regulate power purchase regulate electricity purchase and procurement process of and procurement process of the· transmission utilities and distribution licensees including distribution utilities including the price at which electricity the price at which the power shall be procured from the shall be procured from the generating companies or generating companies, licensees or from other generating stations or from sources through agreements other sources for trans- for purchase of power for mission, sale, distri-bution distribution and supply within and supply in the State; the State;

148Copy pinpoint148. A critical comparison of the said provisions would show that the agreements for purchase of power referred to therein is directly linked with the procurement process of distribution license either from the generating companies or licensees or from other sources. Regulation of transmission has been taken out of the regulatory provision. The words 'through agreements for purchase of power' inserted in Section 86(1)(b) of the 2003 Act bring about a significance distinction. It is neither irrelevant nor immaterial as contended by Dr. Singhvi.

149Copy pinpoint149. A PPA may be a long term one or a short term one. Regulations have been made by the Commission by making MERC (Terms and Conditions of Tariff) Regulations, 2005. H

686 SUPREME COURT REPORTS [2009] 9 S.C.R. J

150Copy pinpoint150. Short term power procurement refers to an agreement for procurement of power for a period of less than one year. Regulation 23.1 requires the distribution licensee to prepare a five year plan inter alia upon taking into consideration the sources for procurement thereof. Regulation 24.1 mandates B obtaining of prior approval of the Commission therefor. Approval by Commission is granted upon examining the process of procurement having regard to the factors specified in Regulation 24.2. It is in the aforementioned context grant of )

approval of the PPA by and between TPC (G) on the one hand c and BEST and TPC (D), on the other hand, necessitated. The proposal of TPC (G) that Rlnfra should enter with it a long term agreement assumes significance.

RE: HARDSHIP OF Rlinfra

151Copy pinpoint151. For the purpose of interpretation and/or application of a statute, this Court cannot base its decision on any hypothesis. Construction of a statute, save and except some exceptional cases, cannot be premised on the hardship of a party which may be suffered by one of the licensees. Enabling E provisions are made for entering into a free contract. I c,.

152Copy pinpoint152. A company incorporated under the Companies Act being not a citizen of India does not have any fundamental right to carry on business in terms of Article 19(1 )(g) of the t Constitution of India; its shareholders and directors have. Even F otherwise in a free market economy right to enter into contract by and between two private parties are not to be discouraged ,. in absence of any statute or statutory regulation. The intendment of Parliament in making statute is clear and unambiguous. Requirements of a licensee and/or sheer number of its G consumers, in our opinion, would be wholly irrelevant for the ~

purpose of the construction of a statute.

RELEVANCE OF SECTION 60 I

153Copy pinpoint153. It is, in the facts and circumstances of this case, not ''" H

TATA POWER COMPANY LTD. v. RELIANCE 687. ENERGY LIMITED AND ORS. [S.B. SINHA, J.]

necessary for us to consider an extraordinary situation where the Commission may exercise its jurisdiction both under . Section 86(1)(b) and Section 60 simultaneously. We are also not concerned with any extra ordinary situation. Assuming that such a contingency may take place and having regard to Sections 23 & 60 of the Act while issuing direction to the licensee company the right of a generating company may also be affected., but we are not concerned with such a situation. ( The Commission which is an expert body has not found that any such case has been made out for exercise of its jurisdiction in that behalf. c

154Copy pinpoint154. The 2003 Act even permits the generating company to supply electricity to a consumer directly. For the said purpose what is necessary is to comply with the provisions of the Act , Rules and the Regulations. D

155Copy pinpoint155. Section 14 of the Act categorically provides for grant of licnece to any person who is transmitting electricity or distributing supply or undertaking trading therein, indisputably, however, the generator of an electrical energy, although is not subject to the grant of licence but while supplying electrical energy to a distributing agency, in turn would be subject to approval and directions of the Commission.

CONCLUSION·

(1) Activities of a generating company are beyond the purview of the licensing provisions.

(2) The Parliament therefor did not think it necessary to provide for any regulation or issuance of directions except that which have expressly been stated in the Act.

(3) Section 21 occurs in the chapter of "licensing" under which the generating companies would not be governed. H

p. 688

A (4) As almost all the sections preceding Section 23 as i also Section 24 talk about licensee and licensee alone, the word "supply" if given its statutorily defined meaning as contained in Section 2(70) of the Act would lead to an anomalous situation as by B reason thereof supply of electrical energy by the generating company to the consumers directly in terms of Section 12(2) of the Act as also by the ' ., transmission companies to the consumers would _) also come within its purview. c (5) In a case of this nature the principle of exclusion of the definition of Section by resorting to "unless the context otherwise requires" should be resorted to.

(6) Section 86(1 )(a) of the 2003 Act clearly shows the D para meters of supply for the purpose of Regulation, viz. supply of electricity by the distribution company to the consumer.

(7) If regulatory clause is sought to be applied in relation to allocation of power, the same would· E defeat the de-licensing provisions. Generating companies have the freedom to enter into contract and in particular long term contracts with a distribution company subject to the regulatory provisions contained in the 2003 Act. . F (8) PPA for a long term is essential for increasing and decreasing the capacity of generation of electricity by the generating company, which purpose by the 2003 Act must be allowed to be achieved. G (9) Duration of the contract in regard to supply of electricity by and between TPC (G) and Rlnfra prior to coming into force of the contract is of no consequence, particularly when no written long term or short term contract had been entered into by and H

__,. TATA POWER COMPANY LTD. v. RELIANCE 689 ENERGY LIMITED AND ORS. [S.B. SINHA, J.]

between them. A

(10) Fairness or otherwise of the supply of electricity to different distribution companies being outside the jurisdiction of the Commission, the same by itself cannot be a ground for bringing back the licence B raj, which is not contemplated by the Act. ( (11) For true and correct construction of the Act, the principle of harmonious construction is required to be resorted to. c (12) Recourse to the principle of purposive construction does not militate against the conclusion reached by us and as indicated hereinbefore in fact in terms of the said doctrine the purpose and object of the Parliament must prevail over a narrow and/or literal interpretation, which would defeat the purpose and object of the Act.

(13) Section 86(1)(b) of the 2003 Act clearly shows that the generating company indirectly comes within the purview of regulatory jurisdiction as and when directions are issued to the distributing companies by the appropriate Commission but the same would 1 not mean that while exercising the said jurisdiction, the Commission will bring within its umbrage the generating company also for the purpose of issuance separate direction.

. 156. For the aforementioned reasons, the impugned Judgment of the Tribunal cannot be sustained. It is set aside ) accordingly. The appeals are allowed with costs. Counsel's fee G Rs. 1,00,000/- (Rupees one lakh) in each appeal. · R.P. Appeals allowed.