TATA POWER COMPANY LTD. versus ADANI ELECTRICITY MUMBAI LTD. & ORS.

Citation: [2019] 6 S.C.R. 845 · Decided: 02-05-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Dismissed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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TATA POWER COMPANY LTD.
v.
ADANI ELECTRICITY MUMBAI LTD. & ORS.
(Civil Appeal No. 415 of 2007)
MAY 02, 2019
[ARUN MISHRA AND S. ABDUL NAZEER, JJ.]
Electricity Regulatory Commission Act, 1998: s. 22(2)(n) and
29(3) – Standby charges – Quantum of – Appellant-TPC, distribution
licensee supplying electricity to entire Mumbai and BSES/REL,
distribution licensee supplying electricity only in suburbs of Mumbai
– From 1998 to 2006, BSES/REL used to purchase electricity from
TPC between 29% to 37% – Tariff payable by BSES to TPC included
a component of standby charge – Standby charges paid by TPC to
Maharashtra State Electricity Board-MSEB were being recovered
by TPC from its customers through its tariff – Order of Government
of Maharashtra stipulating a sum of Rs.3.5 crores per month to be
paid by BSES/REL to TPC by way of standby charges – Issue as
regards quantum of standby charges required to be paid by BSES/
REL to TPC – Order by MERC directing BSES/REL to bear
approximately 23% of the total standby charges incurred by TPC
qua MSEB – Appeal before APTEL – Case of the TPC that standby
charges should be borne in ratio of 50:50 – Chairman held that
liability to be in proportion of 2:1 tariff, whereas Judicial Member
and Technical Member differed – Decisions of MERC, as well as
the Technical and Judicial Members, working out the percentage
of standby charges as 23:77 with respect to BSES/REL and TPC
respectively for the period – On appeal, held: Electricity used to be
purchased by BSES/REL from TPC and the standby charges used to
be realised which were factored in the tariff, which liability was
ultimately passed on to the retail consumers – Ratio had been
appropriately worked out in the most equitable manner by applying
the level playing field – Considering the standby charges of Rs.24.75
crores recovered by MSEB from TPC with effect from 1.10.1996
and as per the Government order and Principles of Agreement Rs.3.5
crores was additionally being available and a difference of standby
which was made to increase the liability Rs.24.75 crore per month
   [2019] 6 S.C.R. 845
845
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
to Rs.30.25 crores per month – Thus, the decision of the Technical
and Judicial Members is appropriate and reasonable while working
out the percentage of the standby charges to be paid by BSES/REL
to TPC for the said period – Majority opinion that standby facility
provided by TPC was out of its own generating capacity and 90%
of the times energy has been drawn by BSES/REL from TPC, is
accepted – Thus, there is no justification for TPC to claim 50:50%
sharing of the standby charges –Implementation of the order of the
APTEL would mean that the determination made by it has been acted
upon and corresponding liability factored into tariff has been passed
on the customers and actual consumers and realised from them since
there was no such interim stay on implementation of the order –
Submission that order of APTEL has already been worked out even
otherwise it is found to be just and equitable is accepted  – Order
passed by Technical and Judicial Members of APTEL upheld.
Dismissing the appeals, the Court
HELD: 1.1 The standby facility was made available to TPC
in the event there was a failure of power in TPC’s generation of
1777 MW. BSES/REL used to purchase electricity from TPC
between 29 % to 37 % from 1998 to 2006. The standby charges
were factored into the tariff charged from its retail customers.
The standby charges to the extent of supply were borne by BSES/
REL for optimum supply from TPC when interconnectivity was
provided at Borivali point as per the Government order. The
dispute arose between TPC and BSES/REL as to whether BSES/
REL entitlement to draw 275 MVA from TPC in the case of outage
and failure of electricity supply, the charges which were required
to be paid were over and above the charges that would be paid
for energy actually drawn. TPC was paying an amount of Rs.24.75
crores per month-Rs.297 crores per annum to MSEB by way of
standby charges which was built into the tariff. The said amount
was recovered by TPC from its customers who in turn recovered
it from their retail consumers. [Para 25][866-E-G]
1.2 The Government of Maharashtra formed a Committee
to resolve the issue of quantum of standby charges required to
be paid by BSES/REL to TPC. The Government of Maharashtra
passed an order dated 19.1.1998 whereby stipulating a sum of
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Rs.3.5 crores 

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