M/S. TRANSMISSION CORPORATION OF A.P. LTD. versus M/S. LANCO KONDAPALLI POWER PVT. LTD.

Citation: [2005] SUPP. 5 S.C.R. 790 · Decided: 15-12-2005 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

A 
M/S. TRANSMISSION CORPORATION OF A.P. LTD. 
_,, 
. 
' 
... 
v. 
MIS. LAN CO KONDAPALLI POWER PVT. LTD. 
DECEMBER IS, 2005 
B 
I 
[S.B. SINHA AND P.P. NAOLEKAR, JJ.] 
Arbitration and Conciliation Act; 1996; Sec!fon 9/Andhra Pradesh 
Electricity Reforms Act, 1998; Ss.28, 37 and 50/Electrlcil)' Act, 2003; Ss. 83, 
84, 86, 94, 145, 154 and 174: 
r 
c 
Power purchase agreem~nt between generator/supplier and 
Transm_lssion Corporation-Rate fixed on the basis of certain capacity charges 
on the output-Corporation issuing show cause notice to the supplier for 
re.fixing capacity charges-Filing of an application before Civil Court by the 
D supplier for issuance of permanent injunction against the Corporation-
Dismissed by Civil Court-High Court granted an injunction restraining the 
Corporation from reftxing the capacity charges-Filing of an application by 
the Corporation for re.fixing the capacity charges before State Electricity 
Regulatory Commission-Challenge to--Proceedings before the Commission 
stayed by High Court-On appeal. Held: Since the po·wer of the Chief Justice 
E or his nominee to appoint an arbitrator is judicial, jurisdiction of the High 
Court/Civil Court In terms of the 1996 Act would be a subject matter for 
< 
determination by the High Court in the writ proceedings pending before It-
The Court under Section 9 of the 1996 Act could formulate interim measures 
to protect the right of the parties before the Arbitral Tribunal from being 
frustrated by directing the parties to maintain status quo-A Writ Court 
r 
F could grant an l'lfunctlon In exercise of its power under Article 226, however, 
final relief could be granted by the Arbilral Trlbunal~Though, Supreme 
Court's power to Interfere with the order of the High Court Is discretionary, 
but it is not a.fit case to interfere with the order of the High Courts In exercise 
of the power under Article I 36 of the Constitution of India. 
G 
Appellant-Transmission Corporation and respondent-supplier/generator 
of electricity entered Into a Power Purchase Agreement. In terms of the 
agreement, the price to be paid therefor by the Corporation included "Capacity 
charges" and "variable charges". Though the Corporation had been paying 
H 
790 
/ 
~ 
/4_
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/ 
TRANSMISSION CORPN. OF A.P. LTD. 1•. LANCO KONDAPALLI POWER PVT. LTD. 
791 
the price on the basis of capacity charges on the output of the plant fixed at A 
368.144 MW but it issued a show cause notice to the supplier for refixing 
the capacity charges on the out put of the plant at 351.49 MW with 
retrospective effect. Respondent-supplier filed an application in terms of the 
arbitration clause in the agreement under Section 9 of the Arbitration and 
Conciliation Act praying for issuance of a permanent injunction against the B 
Corporation restraining It from taking any unilateral decision pursuant to 
the show cause notice. The Corporation filed an application before the Andhra 
Pradesh Electricity Regulatory Commission praying for refixation of the 
Installed capacity of the plant in terms of Section 37(1) of the A.P. Electricity 
Reforms Act, 1998/Sectlon 86(l)(f) r/w Section 74 of the Electricity Act, 
2003. The supplier filed an application in terms of Article 14 of the C 
Arbitration clause of the Power Purchase Agreement before the Chief Justice 
of the Andhra Pradesh High Court, for Issuing a writ of prohibition against 
the Commission. The High Court stayed the proceedings. In the meantime, 
application for grant of Injunction was dlsmlsi;ed by the Civil Court holding 
that the Commission alone had the jurisdiction to decide the dispute. On 
appeal, the High Court set aside the order of the Civil Court and granted an D 
injunction restraining the Commission from refixing the capacity charges 
till disposal of the original petition by the Civil Court. Hence the present 
appeaL 
It was contended by the appellant-Transmission Co1·poration that the 
Respondent-supplier, although not being a licensee within the meaning of the E 
2003 Act, was required to have a licence as It supplied electrical energy to 
the appellant; that by virtue of the provisions contained In the 1998 Act and 
the 2003 Act, not only the jurisdiction of the Civil Court Is barred, but also 
the dispute and differences, If any, arose between the two ltcenHes and/or 
two generating companies could be referred to the Commission only In terms F 
of Section 86(1)(f) of the 2003 Act and thus the High Court committed a 
serious error I

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