HINDUSTAN ZINC LIMITED (H.Z.L.) versus AJMER VIDYUT VITRAN NIGAM LIMITED

Citation: [2019] 15 S.C.R. 113 · Decided: 04-12-2019 · Supreme Court of India · Bench: R.F. NARIMAN, ANIRUDDHA BOSE, V. RAMASUBRAMANIAN · Disposal: Disposed off

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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HINDUSTAN ZINC LIMITED (H.Z.L.)
v.
AJMER VIDYUT VITRAN NIGAM LIMITED
(Civil Appeal No. 9212 of 2019)
DECEMBER 04, 2019
[R. F. NARIMAN, ANIRUDDHA BOSE AND
V. RAMASUBRAMANIAN, JJ.]
Electricity Act, 2003 – ss.86(1)(f) and ss.37, 42, 158 –
Appellant has four high tension electricity connections for its units
at Chanderiya, Debari, Aghucha and Dariba, for which four
contracts with the respondent were entered into for purchase of
electricity – Appellant also set up a captive power plant at
Chanderiya – It entered into three open access agreements dtd.
10.03.05 with the respondent – Dispute arose as to the unscheduled
interchange charges payable under Clauses 8 & 9 of the agreements
– By orders passed by the Rajasthan Electricity Regulatory
Commission, it stated that it will itself decide the dispute between
the parties – However, later the Commission appointed Arbitrator
u/s.86(1)(f) r/w s.158 – Inter alia, the Arbitrator struck down Clause
8(c) & 9 of the agreements, consequently, the unscheduled
interchange charges would be billed as per the agreements earlier
entered between the parties –Commercial Court dismissed the
challenge to the Award – High Court while setting aside the award,
held that the hat worn by the appellant, which contained all four
units, was that of an open access consumer and not that of generating
company and thus, s.86(1)(f) was not attracted – Held: If there is
an inherent lack of jurisdiction, the plea can be taken up at any
stage and also in collateral proceedings – Thus, difficult to
countenance to the appellant ‘s argument that having consented,
the respondent cannot now turn around and challenge the very
appointment of the Arbitrator as being invalid and without
jurisdiction– Further, in view of judgment of Supreme court in Gujarat
Urja Vikas Nigam Ltd. case, the expression ‘and’ occurring in
s.86(1)(f) must be read as ‘or’ – As pointed out in the judgment, the
State Commission cannot both decide the dispute itself and also
refer it to an Arbitrator – Otherwise also, reference of any dispute
 [2019] 15 S.C.R. 113
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SUPREME COURT REPORTS
[2019] 15 S.C.R.
for arbitration can only be between the licensees and generating
companies and not otherwise – High Court right in stating that the
Arbitrator could not, in law, have been appointed by the State
Commission u/s.86 – Award based on such appointment would be
non est in law – However, the High Court did not stop with finding
on this issue, but went on to discuss the merits of the Award – In
case the appellant wishes to avail any other remedy in law, none of
the observations made by the High Court will stand in its way –
Interpretation of Statutes.
Disposing of the appeal, the Court
HELD: 1.1  It is settled law that if there is an inherent lack
of jurisdiction, the plea can be taken up at any stage and also in
collateral proceedings. Therefore, it is a little difficult to
countenance the argument that having consented, the respondent
cannot now turn around and challenge the very appointment of
the Arbitrator as being invalid and without jurisdiction. Coming
now to Section 86 of the Electricity Act, 2003, it is clear that the
adjudication upon disputes can only be between licensees and
generating companies and not between licensees and consumers,
which is provided for in an open access situation by Section 42.
[Paras 18, 20, 21][122-C, F-G]
1.2 Under the Open Access Regulations of 2004, clause
29, in particular, gives a three-tier hierarchy of challenge when it
comes to disputes raised between distribution licensees and
consumers in relation to matters qua open access. This is quite
apart from the separate mechanism provided in Section 42(6) of
the Electricity Act, where a representation for redressal of
grievances may be made to the Ombudsman appointed or
designated by the State Commission, which, as has been pointed
out,  has already been set up. What becomes clear on a reading
of the judgment of the Supreme Court in Gujarat Urja Vikas Nigam
Ltd. v. Essar Power Ltd. is that the expression ‘and’ occurring in
Section 86(1)(f) must be read as ‘or’. But this is only because, as
has been pointed out in the judgment, the State Commission
cannot both decide the dispute itself and also refer it to an
Arbitrator. Otherwise also, reference of any dispute for arbitration
can only be between the licensees and generating companies and
not otherwise. This being the case, the High Court is right in
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