Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5139 OF 2019
(Arising out of SLP (C) No.8432 of 2017)
M/S Star Wire (India) Vidyut Pvt. Ltd. & Anr. ..…Appellant(s)
Versus
Haryana Electricity Regulatory Commission ….Respondent(s)
J U D G M E N T
A.M. Khanwilkar, J.
1. Leave granted.
2. This appeal takes exception to the judgment and order of the
High Court of Punjab and Haryana at Chandigarh passed in C.W.P.
rd
No.25337 of 2015 (O & M) dated 23 November, 2016. The
appellants had challenged the fourth amendment to Haryana
Electricity Regulatory Commission (Terms and Conditions for
Signature Not Verified
determination of Tariff from Renewable Energy Sources, Renewable
Digitally signed by
CHARANJEET KAUR
Date: 2019.10.05
10:00:33 IST
Reason:
Purchase Obligation and Renewable Energy Certificate) Regulations,
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2010 (for short, “ principal Regulations ”) published vide
th
notification dated 12 August, 2015 (for short, “ impugned
”) which sought to amend the principal
Amended Regulations
Regulations. The appellants had also challenged the order passed
th
by the respondentCommission dated 4 August, 2015, in
furtherance whereof, the impugned Amended Regulations were
framed by the appropriate authority for revision of norms for
determination of generic tariff for the second control period
st
beginning from 1 April, 2013.
3. The appellants had set up a 9.90 MW independent Biomass
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Power Plant, which was declared commercially operational on 3
rd
May, 2013. The principal Regulations were notified on 3 February,
2011, providing for the norms and parameters for determination of
tariff for various renewal energy project developers. As per
Regulation 4 of the principal Regulations, the first control period of
st
three years was to end on 31 March, 2013. The third proviso of
Regulation 4 posits that in case, the regulations for the next control
period were not notified after the expiry of the first control period,
the tariff norms as per these regulations (principal Regulations)
would continue to apply until notification of the revised regulations,
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subject to adjustments as per the revised regulations. As the first
control period had already ended, the appropriate authority
initiated suo motu proceedings for revision of tariff and issued draft
fourth amendment to the principal Regulations, seeking to amend
Regulation 4 and including Regulation 5 of the principal
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Regulations. This draft amendment was issued on 29 December,
2014. Pursuant thereto, the concerned parties submitted their
response. After giving opportunity to all concerned, the Commission
th
proceeded to pass an order dated 4 August, 2015, which attempts
to analyse and adjudicate all the issues raised by the concerned
parties. On the basis of the said order, the impugned Amended
Regulations came to be notified. The effect whereof was to deny the
applicability of tariff norms adjustments to the appellant No.1,
rd
which had commenced its commercial operations on 3 May, 2013.
The said amendment has been given prospective effect qua the
appellants. It has made classification between the projects
commissioned/to be commissioned in financial years 201314 on
the one hand and 201415, 201516 and 201617 on the other,
without any intelligible differentia or any rational basis therefor.
Neither the principal Regulations nor the impugned Amended
Regulations envisage classification on the basis of commissioning of
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renewable energy projects in a particular financial year during the
same control period. Similarly, the regulations do not envisage
determination of separate tariff on such differentiation. Indeed, the
authority has been invested with power to determine project specific
tariff under Regulation 6. In the present case, however, the power
exercised by the Commission is indisputably with reference to
Regulation 4 namely, to determine a generic tariff for the control
st
period commencing from 1 April, 2013 and ending with financial
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year 201617 i.e. 31 March, 2017, for a period of 4 years.
4. In this back drop, the appellants filed writ petition and prayed
for the following reliefs:
“PRAYER
It is therefore most respectfully prayed that this
Hon’ble Court may graciously be pleased to:
a. Issue an appropriate writ under Article 226/227 of the
Constitution of India for issuance of, order or direction
in the nature of Certiorari for setting aside the
Impugned Notification dated 12.08.2015 (Annexure P
1) and the Impugned Order dated 04.08.2015
(Annexure P2) passed by the Respondent to the extent
the same seeks to apply the revised regulations with
effect from the date of the Impugned Notification; and
Issue an appropriate writ under Article 226/227 of the
b.
Constitution of India for issuance of, order or direction
in the nature of Mandamus directing the Respondent
to apply the revised regulations on and from the date
of commencement of the Second Control Period i.e.
with effect from 01.04.2013; and
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c. Issue an appropriate writ under Article 226/227 of the
Constitution of India for issuance of, order or direction
in the nature of directing the Respondent
Mandamus
to publish the revised tariff after adjusting the same as
per the revised regulations from the first day of the
Second Control Period i.e. 01.04.2013, and to further
allow carrying cost on the overdue amounts; and
Issue an appropriate interim direction granting ad
d.
interim exparte stay of operation of the Impugned
Notification dated 12.08.2015 (Annexure P1) and the
Impugned Order dated 04.08.2015 (Annexure P2)
passed by the Respondent; and
Dispense with serving advance notice upon the
e.
Respondent; and
f. Costs of the Writ Petition be awarded to the
Petitioners; and
g. Dispense with filing of certified copies/true typed
copies of Annexures P1 to P10, and the photo/typed
copies of the Annexures may kindly taken on record
and the requirement of filing typed/certified copies
thereof be dispensed with; and
Pass such other order(s) as this Hon’ble Court may
h.
deem fit and proper in the facts of the case.”
5. The appellants raised almost thirty grounds as articulated in
the writ petition, in support of the reliefs claimed by them. They
have attempted to demonstrate as to how the amended regulations
were arbitrary, unreasonable, capricious and discriminatory. The
respondent refuted the stand taken by the appellants by filing
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elaborate counter affidavit and mainly relied on the order passed by
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the Commission dated 4 August, 2015, which was the foundation
for the amendment of the relevant provisions of the principal
Regulations. The reply affidavit filed by the respondents before the
High Court runs into about 60 typed pages (forming part of volume
II of the paper book). Accordingly, the writ petition proceeded before
the Division Bench of the High Court. The High Court in the
impugned judgment has noted that the appellants had raised only
two contentions, as can be discerned from paragraph 6 of the
impugned judgment. The same reads thus:
“6. The grievance of the petitioners is two fold.
Firstly with the issuance of notification of the
Amended Regulations on 12.8.2015, there would be
different treatment for the persons operating in the
same control period; namely, who had commissioned
their projects in the year 201314 and the persons,
who had commissioned thereafter, the control period
being same i.e. for the years from 201314 to 201617.
Further, it was submitted that out of the control
period prior to the date of notification of the Amended
Regulations only financial year 201314 has been
isolated for different treatment, which is
discriminatory. How any of alleged Regulation is
affecting the petitioner was not specifically pointed
out.”
We would proceed on the basis that this was the limited argument
canvassed before the High Court during the hearing of the writ
petition. However, what is intriguing to note is that even these two
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points have been disposed of by the Division Bench of the High
Court in a most cursory manner without analysing the issues in
proper perspective, as can be discerned from the discussion in
paragraph Nos.13 to 15 of the impugned judgment. The same reads
thus:
“13. It is not in dispute that exercise for revision of
the 2010 Regulations was not started six months
before the expiry of the existing control period on
31.3.2013. The exercise was started only in the year
2015. Public hearing was held in which even the
petitionercompany was represented. Vide order dated
4.8.2015, the Commission approved the proposed
amendments in the 2010 Regulations. The Amended
Regulations in terms of the order passed by the
Commission were notified on 12.8.2015. Regulation
1(2) of the Amended Regulations provides that the
Regulations shall be applicable to all the Renewable
Energy Projects Commissioned/to be commissioned
from Financial Years 201314 to 201617, as the
control period of four years was provided. Regulation
1(3) of the Amended Regulations provides that for the
existing projects commissioned from Financial year
201314 onwards, the revised norms shall be
applicable prospectively from the date of notification of
the Amended Regulations unless otherwise provided in
the Amended Regulations. For the period prior to the
date of notification, existing norms as per the 2010
Regulations shall continue to be applicable. The
Amended Regulations were to come into force from the
date of publication in the official gazette. The Amended
Regulation (4) provides that the second control period
shall be of four years commencing from Financial year
rd
201314. 3 proviso thereto provides that in case
revised regulations for the next control period are not
notified on or before the commencement of that period,
the tariff norms as per the Amended Regulations shall
continue to remain applicable, until notification of the
revised regulations and the second control period shall
be deemed to have been extended upto the date of
notification of the regulations for the next control
period.
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14. The contention raised by learned counsel for the
petitioners that there is discriminatory application of
regulations qua the petitioners’ company only because
it started operation in the Financial year 201314, as
compared to the other projects, which started
functioning after Financial year 201314 is merely to
be noticed and rejected. Though the control period is
from the Financial Years 201314 to 201617,
however, the Amended Regulations clearly provide that
for the existing projects from Financial year 201314
onwards, the revised norms shall be applicable
prospectively, from the date of notification of the
Amended Regulations.
15. As far as the second contention raised by
learned counsel for the petitioners regarding
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application of the Amended Regulations in terms of 3
proviso to Regulation 4 of the 2010 Regulations is
concerned, it clearly provides that the existing norms,
even for the period subsequent to the expiry of control
period, shall be applicable till such time revised
Regulations are notified. However, the same shall be
subject to adjustments as per revised regulations. That
would mean, adjustments, if any, are to be specifically
provided for in the Amended Regulations for the period
prior to the notification of Amended Regulations.
Wherever special conditions have been provided for in
the Amended Regulations for different years, learned
counsel for the petitioners did not point out how that
prejudiced the petitioners. It is all matter of
calculations for which facts were examined by the
Commission while passing the order on 4.8.2015, on
the basis of which, the Regulations were amended.”
As a matter of fact, paragraph 13 of the impugned judgment merely
notices some factual aspects. The reason which weighed with the
High Court to negative the issues agitated by the appellants can be
noticed only from paragraph Nos.14 and 15, which ex facie to say
the least is cryptic.
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6. Resultantly, the appellants have approached this Court by way
of present appeal. The main argument of the appellants is that the
principal Regulations which indeed, applied to the control period
rd st
from 3 February, 2011 until 31 March, 2013, but envisaged that
the same would continue to remain applicable until notification of
the revised regulations is issued, subject to adjustments as per
revised regulations. These regulations make no distinction on the
basis of commissioning of project on financial year basis during the
same block period or thereafter until its application during the
extended period. Rather, the control period referred to in Regulation
4 encompasses all the projects commissioned during that block
period and including extended period and must be treated alike. In
other words, the same generic tariff must apply to all the projects
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commissioned during the relevant block period i.e. from 3
st
February, 2011 to 31 March, 2013 and until the issue of revised
regulations, subject to adjustments as per revised regulations.
Therefore, the amended regulations must be read in light of the
principal Regulations. However, the amended regulations entail in
denying the applicability of the revised regulations to R.E. projects
commissioned in FY 201314, such as the appellant, which was
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rd
commissioned on 3 May, 2013. The amended regulations are for
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the second control period commencing from 1 April, 2013 and
st
ending on 31 March, 2017 for a period of four years, of which the
first year has been defined as FY 201314. Despite this position, the
amended regulation 1(3) makes exception to the applicability of the
revised regulations to the projects commissioned during FY 2013
14, by making it applicable prospectively from the date of
th
notification of the impugned Regulations on 12 August, 2015.
Whereas, the projects commissioned during 2001415 and onwards
during the selfsame second control period referred to therein would
get the benefit of the revised regulations for the entire period from
the date of commissioning commercial production, without there
being any intelligible differentia. In other words, the appellants have
been denied benefit of the revised regulations for the period between
rd th
3 May, 2013 to 12 August, 2015. The effect of such a provision is
to take away the benefit which had enured to the appellants in
terms of Regulation 4 of the principal Regulations, which predicates
that the tariff norms as per the principal Regulations shall continue
to remain applicable until notification of the revised regulations,
subject to adjustments as per the revised regulations. Resultantly,
the impugned Amended Regulations suffer from the vice of hostile
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discrimination between persons similarly placed namely, projects
commissioned during the block of second control period governed
by the Amended Regulations, without any intelligible differentia. We
need not elaborate on other arguments which are either to buttress
the abovementioned points or if we may say so, in the nature of
another shade of the same argument with reference to factual
aspects relevant for examining the same. The sum and substance of
the argument is that the appellants have been denuded of their
right to get adjustments in the same manner as extended to
projects commissioned in the same control period and despite the
stipulation in the third proviso of the Regulation 4 of the principal
Regulations. Inasmuch as, the impugned Amended Regulations
th
were notified on 12 August, 2015, therefore, the rights accrued to
the appellants in terms of Regulation 4 would take effect from
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commissioning of their project on 3 May, 2013 because the
principal Regulations were still applicable and in force. Taking away
that fructified right, is impermissible in law. Further, the impugned
Amended Regulations, ex facie, discriminates between the projects
commissioned during the same control period i.e. second control
st st
period from 1 April, 2013 till 31 March, 2017, by singling out the
projects commissioned in FY 201314. It is not open to make such
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classification in respect of projects commissioned during the same
control period. Further, there can be no two tariffs operating during
the same control period. In that, no express provision to prescribe
two sets of tariffs concerning the same control period is found in the
principal Regulations or the impugned Amended Regulations.
Therefore, classification sought to be done in the impugned
Amended Regulations, cannot be countenanced.
7.
Indeed, the respondents have vehemently supported the
impugned decision of the High Court and would contend that the
provisions engrafted in the impugned notification are manifestation
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of the order passed by the Commission dated 4 August, 2015. The
Commission had elaborately analysed all aspects of the matter
before passing the said order. In other words, the respondents have
drawn support from the analysis done by the Commission in the
suo moto proceedings initiated by it for revision of norms (for tariff
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operation for the second control period commencing from 1 April,
2013). That order runs into over 100 typed pages and has analysed
the necessity of revision visàvis each head to be reckoned for
determination of tariff. The appellants had participated in the said
proceedings. However, the stand taken by the appellants did not
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commend to the Commission, as can be discerned from the
th
discussion in the order passed by it on 4 August, 2015. Further, it
was open to the appellants to approach the Commission by way of a
review if they had any reservation with regard to the view taken by
Commission in the said order. It was also open to the appellants to
file appeal against the said order. However, without resorting to
such remedies, the appellants chose to file writ petition and have
raised grounds which are untenable in light of the discussion
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recorded by the Commission in its order dated 4 August, 2015. It
is certainly not a case of hostile discrimination considering the fact
that Commission has recorded tangible reasons as to why the
applicability of the revised regulations was required to be made
prospective in respect of projects commissioned during FY 201314.
It is urged that the exercise of power in framing regulations be it
principal Regulations or impugned Amended Regulations in terms
of Section 61 read with Section 181 of the Electricity Act, 2003
permits classification on the basis of the date of commissioning of
the project during the relevant period and which may inevitably
result in providing for two sets of tariffs during the same control
period. It is submitted that even though the impugned judgment of
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the High Court is brief, the conclusions reached therein are
unexceptionable and therefore, this appeal ought to be dismissed.
8.
After perusing the impugned judgment, we have no hesitation
in taking the view that the High Court has committed manifest
error or so to speak, failed to exercise jurisdiction vested in it for
adjudicating the relevant issues raised by the appellants. For, there
is hardly any intelligible discussion in the impugned judgment in
that regard. If we may say so, it is cryptic and cannot stand the test
of judicial scrutiny. We say so because, up to paragraph 9 of the
judgment the High Court has only reproduced the rival stand.
Paragraph 11 refers to the relevant provisions. Paragraph 12 is
mere narration of some facts concerning this case. Paragraph 13,
broadly refers to the purport of the provisions in the principal
Regulations and the impugned Amended Regulations. The
discussion with regard to the merits of the challenge, can be
discerned only from paragraph Nos.14 and 15 reproduced hitherto.
Paragraph 14 even if fairly analysed, merely adverts to the
argument of discriminatory application of regulations qua the
appellant company and proceeds to reject the same. No logic can be
deduced as to why the Court was persuaded to reject the argument
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despite the multifaceted issues raised by the appellants. The second
sentence in the said paragraph then proceeds to record that the
control period may be from FY 201314 onwards, however, the
impugned Amended Regulations envisage application of revised
norms to projects commissioned in FY 201314 prospectively from
the date of notification of the impugned Amended Regulations. In
other words, the High Court has not analysed the grounds of
challenge regarding the validity of the impugned Amended
Regulations and including the competency to frame such a
regulation, appropriately. Strikingly, the High Court then
straightaway proceeds to examine the second contention raised by
the appellants in reference to the third proviso in the principal
Regulations providing for adjustments as per revised regulations.
The Court merely noted that the appellants failed to point out any
prejudice caused to them because of exclusion from the benefit
flowing from the principal Regulations. The appellants, on the other
hand, have invited our attention to the specific grounds taken by
the appellants in the writ petition and also noted in the order of the
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Commission dated 4 August, 2015 and additionally articulated in
the ground No. B of the special leave petition, giving comparative
chart indicating substantial disparity regarding the norms
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applicable as per principal Regulations and the impugned Amended
Regulations. In other words, the argument of prejudice was raised
by the appellants to the detail but the High Court has failed to deal
with the same, to say the least satisfactorily. Similarly, the detail
arguments regarding the validity of the impugned Amended
Regulations and the competency to frame such a regulation has not
been analysed by the High Court.
9.
Suffice it to observe that the discussion in two paragraphs
(para 14 and 15), to say the least, is one of disposing of the writ
petition in a most casual and cavalier manner. That cannot be
countenanced. Having said this, we are of the considered opinion
that it would be appropriate to relegate the parties before the High
Court for fresh consideration of the writ petition on its own merits
in accordance with law. We refrain from expressing any opinion
either way on the merits of the controversy or the grounds of
challenge regarding the impugned Amended Regulations. In other
words, the High Court must consider all relevant aspects of the
matter agitated by the appellants and deal with the same
appropriately in accordance with law.
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10. For completion of the record, we must note the decision of the
Constitution Bench of this Court in PTC India Ltd. Vs. Central
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, which
Electricity Regulatory Commission, Through Secretary
has held that the challenge to the validity of the regulations can be
decided only in judicial review proceedings before the courts and
not by way of appeal or review. The appellants having invoked such
a remedy before the High Court, all contentions available to the
appellants in that regard ought to have been adjudicated in proper
perspective. We agree with the appellants that the nature of
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elaborate order passed by the Commission on 4 August, 2015,
which culminated with the framing of Amendment Regulations the
only remedy available to challenge the same is by way of a writ
petition under Article 226/227 of the Constitution of India.
11. Accordingly, this appeal is allowed. The impugned judgment
and order is set aside. The CWP No.285337 of 2015 (O&M) is
restored to the file of the High Court to its original number, for
being considered afresh by the High Court on its own merits in
accordance with law. All pending applications are disposed of. No
order as to costs.
1 (2010) 4 SCC 603
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……………………………..J
(A.M. Khanwilkar)
……………………………..J
(Ajay Rastogi)
New Delhi;
July 2, 2019.