KARNATAKA ELECTRICITY REGULATORY COMMISSION vs GREENKO KA01 IREP PRIVATE LIMITED
- Court
- Karnataka High Court
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WA No. 1898 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 17 DAY OF OCTOBER, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE T.P.VIVEKANANDA
WRIT APPEAL NO. 1898 OF 2024 (GM-TEN)
BETWEEN:
KARNATAKA ELECTRICITY
REGULATORY COMMISSION
#16, C1, MILLER TANK BED AREA
VASANTHNAGAR
BENGALURU-560 052
RERESENTED BY ITS SECRETARY
…APPELLANT
(BY SRI: PRAKASH B N, ADVOCATE)
AND:
1. GREENKO KA01 IREP
PRIVATE LIMITED
GROUND FLOOR
PRESTIGE KHODAY TOWER
#5, RAJ BHAVAN ROAD
BENGALURU-560 001
(REPRESENTED BY ITS NOW
AUTHORISED SIGNATORY
SRI. MANOJ KUMAR TANWAR
2. POWER COMPANY OF KARNATAKA
TH
LIMITED, 5 FLOOR
KPTCL BUILDING
CAUVERY BHAVAN
Digitally signed by
PAVITHRA B
Location: HIGH
COURT OF
KARNATAKA
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WA No. 1898 of 2024
BENGALURU-560 009
AND REPRESENTED BY ITS
MANAGING DIRECTOR
…RESPONDENTS
(BY SRI: K N PHANEENDRA, SENIOR COUNSEL A/W
SRI: ABHIMANYU ARJUN DEVAIAH T, ADV/CR FOR R1;
SRI: SHASHIKIRAN SHETTY, SENIOR COUNSEL A/W
SRI: SHAHBAAZ HUSSAIN, ADVOCATE FOR R2)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO CALL FOR THE
RECORDS IN WP No.21261/2024 AND SET ASIDE THE
IMPUGNED ORDER DATED 08.11.2024 PASSED IN WP
No.21261/2024 BY THE LEARNED SINGLE JUDGE AND DISMISS
THE SAID WP AND ETC.
THIS WRIT APPEAL, HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 24.09.2026 AND COMING ON
FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
T.P.VIVEKANANDA J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE T.P.VIVEKANANDA
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE T.P.VIVEKANANDA)
Abbreviations for various common terminologies in the
judgment:
KERC Karnataka Electricity Regulatory
Commission
PCKL Power Company of Karnataka Limited
ESCOM Electricity Supply Company
LOA Letter of Award
AFC Annual Fixed Cost
RfS Request for Selection
PHSP Pumped Hydro Storage Plant
LOI Letter of Intent
MoP Ministry of Power
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WA No. 1898 of 2024
This intra-Court appeal is preferred by the Karnataka
Electricity Regulatory Commission (KERC) - the
appellant/respondent No.2 in the writ petition challenging the
order dated 08.11.2024 passed in Writ Petition No.21261 of
2024.
2. The brief background of the subject matter of the
writ petition before the learned Single Judge is that, the State
Government issued an order dated 02.01.2023 directing
respondent No.2 to call for bids on behalf of ESCOM for setting
up 1000 MW pumped hydro storage plant in accordance with
Section 63 of the Electricity Act, 2003 (for short 'the Act') by
following the provisions of Karnataka Transparency in Public
Procurement Act, 1999. Pursuant to the aforesaid Government
Order, respondent No.2 floated tender Notification dated
10.02.2023. On 24.02.2023, the appellant has communicated
in-principle approval for calling of the bids. Respondent No.2
has received 4 bids in response to the Notification. M/s JSW
Neo Energy Limited and respondent No.1 herein were the
lowest bidders in respect of 300 MW and 700 MW respectively.
Respondent No.2 sought for adoption of tariff under Section 63
of the Act discovered through Competitive Bidding Route
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WA No. 1898 of 2024
through its communication dated 28.03.2023. In continuation
of the letter dated 28.03.2023, respondent No.2 informed the
appellant regarding the deletion of certain clauses stipulated in
the letter dated 24.02.2023. On 26.05.2023, the appellant
declined to adopt the tariff on the ground that the bids were
not in compliance with the observations made by the appellant
in the communication dated 24.02.2023. After much
correspondence between the appellant and respondent No.2,
respondent No.1 wrote to respondent No.2 on 29.04.2024 with
a request to issue LOA in terms of the RFS. Respondent No.2
expressed its inability to issue the LOA in light of the appellant
having not adopted the tariff determination in terms of Section
63 of the Act. In the letters dated 26.05.2023 and 26.03.2024,
in response to the request of respondent No.1, respondent No.2
issued a communication dated 31.07.2024 detailing the
correspondence made by it to the appellant and also
explanation offered by it to the appellant as to why the fresh
tender Notification cannot be called at this juncture and the
circumstances under which respondent No.2 is unable to issue
LOA as requested by respondent No.1. It is the said
communication which gave rise to respondent No.1
approaching the learned Single Judge by filing the writ petition.
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WA No. 1898 of 2024
3. Learned Single Judge by the impugned order
allowed the writ petition and quashed the communication
issued by respondent No.2, so also, the communications dated
26.05.2023 and 26.03.2024 issued by the appellant and further
directed respondent No.2 herein to facilitate the execution of
pumped hydro storage plant procurement agreement between
respondent No.1 and ESCOM along with undertaking all
necessary consequential steps in terms of the request for
selection (RFS).
4. Learned Single Judge further clarified that the
appellant and respondent No.2 are obliged to adopt the tariff
determination through the competitive bidding process as
mandated under Section 63 of the Act. It is the said order
passed by the learned Single Judge is under challenge in the
present writ appeal.
5. Learned counsel for the appellant submitted that
respondent No.2 - PCKL vide its letter dated 17.12.2022 had
requested the KERC to accord approval to purchase power
generated from 1000 MW PHSP project on grid support model
in the State of Karnataka by private parties and to invite tender
and to approve the bid documents including the power
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WA No. 1898 of 2024
purchase agreement. The Commission vide its Communication
dated 05.01.2023 informed respondent No.2 - PCKL to make a
detailed presentation on the proposed project. After much
correspondence between the KERC and PCKL, finally the PCKL
has submitted revised bid document and PPA without DPR on
03.02.2023 and requested the Commission to approve the
same. Upon examination of the proposal of PCKL, the
Commission found that the computation of cost is based on the
average of the projects which are under progress in Andhra
Pradesh and West Bengal, but these figures cannot be adopted
for the subject proposal since the DPR and other parameters
are not made available to the Commission by PCKL. However,
the Commission by its Communication dated 24.02.2023,
accorded in-principle approval with the observations made
therein.
6. It is the further submission of the learned counsel
that without complying with the observations made in the
aforesaid Communication and without incorporating the
conditions as instructed by the Commission, respondent No.2
has proceeded to invite tender. It is his further submission that
PCKL by Communication dated 17.04.2023 informed the
appellant that the observations made in Annexure-R2 by letter
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WA No. 1898 of 2024
dated 24.02.2023 for deleting certain clauses and reasons for
the same. However, the appellant has declined to adopt the
tariff on the ground that the bids were not in compliance with
the observations made by it, in its letter dated 24.02.2023.
Subsequently, on 08.02.2024 PCKL has explained its stand in
response to the Communication dated 26.05.2023 and
requested for reconsideration of the decision of the appellant.
By subsequent Communication dated 26.03.2024, the appellant
has declined to reconsider the decision and instead directed
respondent No.2 - PCKL to call for fresh bids.
7. It is submitted that the respondent No.1
approached respondent No.2 through Communication dated
29.07.2024 requesting for issue of LOA. In response to which,
respondent No.2 had informed respondent No.1 on 31.07.2024
that the appellant herein vide its Communication dated
26.03.2024 has directed to call for fresh bids after proper study
of the requirements and therefore, respondent No.2 is unable
to issue LOA as requested. It is the said Communication which
gave rise to respondent No.1 herein to approach this Court
challenging the Communication dated 31.07.2024 issued by
respondent No.1 therein and also for issue of writ of mandamus
directing the respondents to issue LOA in terms of the request
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WA No. 1898 of 2024
for selection dated 10.02.2023 and for other consequential
reliefs.
8. It is the submission of learned counsel for the
appellant that the issue of contract for procurement of power is
always subject to the approval of appellant in terms of Section
63 of the Act. When the proposal was submitted to KERC, the
appellant has clearly informed respondent No.2 to incorporate
certain conditions as regards the benchmark capital cost and
other conditions through Communication dated 24.02.2023.
However, in direct contradiction to the said instructions,
respondent No.2 has proceeded to finalize the bid and
submitted the same to the appellant for approval. Since
respondent No.2 has not complied with the instructions of the
appellant and there being no guideline regarding the adoption
of tariff as on the said date, the appellant has rightly refused
the approval. Therefore, no exception can be taken to the
action of the appellant - Commission.
9. Taking us to the order passed by the learned Single
Judge, learned counsel for the appellant submits that it is the
appropriate Commission which is empowered to adopt a
particular tariff determined through transparent process of
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WA No. 1898 of 2024
bidding in accordance with the guidelines issued by the Central
Government. However, as on the date of bidding process, there
was no guideline issued by the Central Government and
therefore, it is the appellant - Commission which was
empowered under Section 63 of the Act to determine the tariff.
The said aspect has not been considered by the learned Single
Judge in proper perspective.
10. Learned counsel further submitted that the issue
brought before the learned Single Judge was outside the
domain of judicial review of administrative action. Inasmuch as,
the writ Court cannot act as an appellate authority over the
decision of the Commission. It is his further submission that the
learned Single Judge has erroneously taken note of the tariff in
respect of the projects of Maharashtra and Andhra Pradesh.
Fixation of tariffs in the said States is based on different
circumstances and different cost of project in the respective
States and the same yardstick cannot be applied in respect of
the Karnataka is concerned.
11. In support of the said contention, learned counsel
for the appellant has placed reliance on the judgment of the
Hon'ble Supreme Court in Jaipur Vidyut Vitran Nigam
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WA No. 1898 of 2024
Limited and Others Vs MB Power (Madhya Pradesh)
1
Limited and Others , more particularly, paragraphs 136 and
137 and contends that the writ Court should exercise the
extraordinary jurisdiction under Article 226 of Constitution of
India with caution and to exercise only in furtherance of public
interest and not merely to make out a legal point. The Court
should always keep the larger public interest in mind in order to
decide whether its intervention is called for or not. It is only
when it comes to a conclusion that overwhelming public
interest requires interference, the Court should intervene.
12. Learned counsel further places reliance on
paragraph 137, the relevant paragraph is as follows:
"It could thus be seen that this Court has held
that the award of a contract, whether it is by a private
party or by a public body or the State, is essentially a
commercial transaction. In arriving at a commercial
decision, considerations which are paramount are
commercial considerations. It has been held that the
State can choose its own method to arrive at a decision.
It can fix its own terms of invitation to tender and that
is not open to judicial scrutiny. It has further been held
that the State can enter into negotiations before finally
deciding to accept one of the offers made to it. It has
1
(2024) 8 SCC 513
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WA No. 1898 of 2024
further been held that, price need not always be the
sole criterion for awarding a contract. It has been held
that the State may not accept the offer even though it
happens to be the highest or the lowest. However, the
State, its corporations, instrumentalities and agencies
are bound to adhere to the norms, standards and
procedures laid down by them and cannot depart from
them arbitrarily. Though that decision is not amenable
to judicial review, the court can examine the decision-
making process and interfere if it is found vitiated by
mala fides, unreasonableness and arbitrariness. It has
further been held that even when some defect has been
found in the decision- making process, the court must
exercise its discretionary power under Article 226 with
great caution and should exercise it only in furtherance
of public interest and not merely on the making out of a
legal point. The court should always keep the larger
public interest in mind in order to decide whether its
intervention is called for or not. Only when it comes to a
conclusion that overwhelming public interest requires
interference, the court should intervene."
and thus, learned counsel for the appellant contends that
the impugned order passed by the learned Single Judge is
erroneous and contrary to the provision of Section 63 of the Act
and therefore, liable to the set at naught.
13. Per contra, Sri Shashi Kiran Shetty, l earned senior
counsel representing respondent No.2 has made the following
submissions:
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WA No. 1898 of 2024
(i) The appellant has over-stepped its power under
Section 63 of the Act, which only permits the appellant to
examine the transparency i.e., the appellant could have only
scrutinized the bid document to confirm as to whether there is
a transparency in the process adopted by respondent No.2 in
the tender process.
(ii) The provisions of Section 62 of the Act are not
applicable in respect of the cases relating to procurement of
power as contemplated under Section 63 of the Act. Therefore,
the insistence of the appellant to include the benchmark cost in
respect of the present case is outside the scope of Section 63 of
the Act.
(iii) The benchmark cost considered by the appellant is
in respect of the project from 2016 to 2020 at the prices
prevailing during the said period. However, the benchmark cost
which should have been considered is of the year 2023 in view
of significant change in the market condition.
(iv) Non-inclusion of the bench mark average fixation
cost and non-production of the DPR of other projects does not
amount to violation of transparency and which cannot be a
ground for rejection of bid so long as the appellant has not
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WA No. 1898 of 2024
disputed the transparency in the process of bidding while
setting the benchmark AFC. The appellant has placed reliance
on the projects Kurukutti and Turga which were the projects
developed at different locations. The price range of the said
project of the corresponding years in which the project cost
was determined will be different. However, when the cost of
power purchased was sought to be compared with the projects
of Kurukutti and Turga, the appellant has objected to the same.
14. Learned senior counsel has also placed reliance on
the judgment of the Hon'ble Supreme Court in Jaipur Vidyut
Vitran Nigam Limited and Others Vs MB Power (Madhya
2
Pradesh) Limited and Others which is relied upon by the
appellant and points out that the appellant is bound by law to
restrict its role under Section 63 of the Act to adopt tariff
discovered through transparent bidding process and not the
approval. The manner of intervention of the appellant -
Corporation under Section 62 of the Act, cannot be equated
with the projects considered under Section 63 of the Act.
15. Learned senior counsel further points out that even
if the MOP guidelines are looked into, there is no condition to
2
(2024) 8 SCC 513
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WA No. 1898 of 2024
include benchmark AFC and therefore, even if the fresh
notifications are issued, it is only the MOP guidelines which
would govern the bidding process and therefore, no purpose
would be served in re-issuing the tender notification calling for
fresh tenders.
16. Learned senior counsel appearing for respondent
No.2 by placing reliance on MOP Guidelines, 2025 submitted
that if the RFS dated 10.02.2023 compared with MOP
Guidelines, 2025 are more or less similar and RFS is in
substantial compliance with the latest MOP Guidelines,
therefore, there is no illegality in the action of respondent No.1
in finalising the tender process and submission of the same to
the appellant for approval.
17. For ready reference, learned senior counsel has
furnished the tabular statement showing the various provisions
of the MOP Guidelines, 2025 and the provisions found in the
RFS dated 10.02.2023. The said tabular statement reads as
follows:
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WA No. 1898 of 2024
Sl.
No.
Provisions of the MOP Corresponding provisions in
Guidelines the RFS dated 10.02.2023
issued by PCKL
PART B: BID
A. GENERAL CONDITIONS OF BID
1. 1.1. Bid Document shall be
prepared in accordance with
the guidelines.
The bid was floated prior to
the notification of these
guidelines, and their validity
is addressed in the following
point.
2. 1.2. For tenders already floated
before notification of these
guidelines, the relevant bid
document shall prevail.
The MOP Guidelines validate
the RfS dated 10.02.2023;
MOP Guidelines do not
require the State
Commission to prescribe any
condition before notification
of these Guidelines.
3. 1.3. Suitable technical and
financial eligibility criteria to be
specified in the tender
documents.
Clause 6.2.1 establishes the
technical criteria
Clause 6.2.2 establishes the
financial criteria
4. 1.4. Location of project may be Clause 2.1.2.(a) - talks about
specified. the project location
Clause 2.1.8
Location to be anywhere in
Karnataka
5. 1.5. Responsibilities of parties
to acquire necessary
clearances.
Clause 2.4. Approvals and
Clearances required by the
parties
6. 2.1. two-part bidding through
Technical Bid & Financial Bid,
conducted preferably through
(e-bidding).
Clause 3.1.1-Lays down the
procedure of techno-
commercial bid
Clause 3.1.2 - stipulates the
process of financial bid
7. 2.2. Technical Bid to be
followed by Financial Bid,
followed by e-reverse auction
Clause 3.1.1 is the first step
of technical bid, followed by
the price bid at Clause 3.1.2,
and further followed by e-
reverse auction at Clause
3.1.3
8. 2.3. Publication of bid in at Times of India publication is
least 2 national Newspapers produced as Annexure D
@Pg. 163
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WA No. 1898 of 2024
9. 2.4. Pre-bid Conference (and
amendments thereafter)
Clause 3.3.2. Pre-Bid meeting
Clause 3.4 also goes into
amendments and
corrigendum
10. 3. Mode of Procurement Bid Information Sheet
(Document Description) and
2.1.2 (About the Project) -
provide capacity, mode of
procurement (PHSPPA),
duration of procurement,
nature of project (B-O-O),
etc.
2.1.12. - requires the bidder
to furnish Detailed Project
Report 3.2.1 - provides for
incorporation of SPV
11. 4.2. Timelines under RFS Indicative timeline for the
following is provided in Bid
Information Sheet
- Online Submission of Techo-
commercial bid and Price
Bid
- Hard copy Submission of
Techo-
commercial bid and Price Bid
- Pre Bid queries
- Pre-bid meeting
- Techno-commercial bid
Opening
- (for Price Bid and e-reverse
auction, date was to be
indicated to those who
coalified the previous
level)
Clause 5.5 - Validity of Bids
(180 days)
Clause 6.7-Issuance of LOA-
at the end of bidding process
Clause 6.8. - Performance
Bank Guarantee - to be
submitted 30 days from
issuance of LOA
Clause 6.9.- Signing of
Project Agreements - 30 days
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WA No. 1898 of 2024
from issuance of LOA
Clause 2.1.15. Connectivity -
30 days from signing PHSPPA
12. 5.1. Bidding Parameter: Clause 2.1.2 (d)- provides
that the tender is for a
transparent competitive
bidding process
13. 5.2. The Tariff quoted to be at Clause 2.1.12. (d) provides
delivery point that bid has to be quoted for
supply upto delivery point
and Clause 2.1.12 (h)
provides for tariff to be
determined based ON
contracted capacity at
delivery point.
14. 5.3. The minimum bid capacity Clause 2.1.3. (d) Minimum
Bid Capacity is fixed as 100
MW
15. 5.4. Maximum Capacity per bid Clause 2.1.3. (f) Maximum
Bid Capacity is fixed as 1000
MW
16. 5.5. Bid Responsiveness- No Clause 3.2.1 (d): No wilful
wilful default to any lender default to any lender
17. 5.6.-Eligibility and Qualification Clause 3.2: Eligibility of
Criteria Bidder
18. 5.6.a. Consortium related Clause 3.2.1 (d) and (e) -
eligibility Consortium related eligibility
19. 5.6.b. General Eligibility
Criteria-
Bidder ought to be a company
under the Companies Act, 2013
/a foreign company under the
respective nation's laws/an AIF
registered under SEBI/a
consortium of the above
Clause 3.2.1 (a) General
Eligibility Criteria-Provides
that the bidder company may
be a company under the
Companies Act, 1956 or 2013
/any foreign company
registered under the
respective nation's law/a
consortium of the above
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WA No. 1898 of 2024
20. 5.6.c. Technical Eligibility Though not directly provided,
Criteria it is indirectly provided under
Clause 6.2. Evaluation
Qualification Proposals
21. 5.6.d. Financial Eligibility Clause 6.2.2 - Financial
Criteria Capacity
22. 5.7. Quoted tariff to exclude Clause 2.1.12- provides that
GST tariff to exclude GST
23. 6. Technical Requirements Clause 6.2.1. Technical
Capacity
24. 7. Contractual Guarantees
7.2. Earnest Money Deposit
(EMD)
Bid information sheet- Bid
Security applicable for the
Bidder and Clause
5.7.2.(e)(iii) provide that
each bidder shall furnish Bid
Security of INR 5,00,000/-
per MW, in the form of Bank
Guarantee/ Payment on Order
Instrument (POI) ог through
Demand Draft;
25. 7.3. Performance Guarantee Clause 6.8. Performance Bank
(PG) Guarantee (PBG)
26. 8. Submission and Evaluation Clause 6 Evaluation of Bid
of Bids
27. 8.1-non-refundable processing Bid information sheet-INR
fee and/or success fee 10,000/- cost of RfS and INR
10,000/- cost of application
fee to be paid by Bidder (non-
refundable)
28. 8.2- separate technical bid and
price bid to be submitted and
bid guarantee to be furnished
Clauses 3.1.1 and 3.1.2
provide for submission of
technical bid followed by a
price bid; the bid information
sheet and Clause 5.7.2.(e)(iii)
provide that bidder shall
furnish bid security
29. 8.3- Evaluation Committee-for Clause 3.1 PCKL evaluated
evaluating the price bid the techno-commercial bids
and Price bids in accordance
with the requirements set out
in the RFS
30. 8.4- Technical bid evaluation 3.1.1 (a) and 3.1.2- upon
meeting the requirements,
bidders are termed techno-
commercially qualified, and
only then can the participate
in price bid
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WA No. 1898 of 2024
31. 8.5- Minimum 2 qualified bids
must be there to ensure
competitiveness
32. 8.6- Price bid to be rejected if it 6.5.(b) if Price bid is found
deviated from bid conditions non-responsive, it will be
rejected
33. 8.7- bid evaluation to be
carried out in terms of
parameters mentioned in RfS
through ranking of bids in
ascending Order, e-reverse
auction may be carried out
6.6.1.(f) The bidders shall be
selected in the ascending
order on Total Storage Cost
discovered at the end of e-
reverse auction till the total
Bid Capacity is exhausted
34. 8.8- detailed procedure for
evaluation of bid to be provided
in the RfS
Clause 6 lays down each step
of the bidding process in
detail
35. 8.9- Evaluation committee shall
evaluate in conformity with
these guidelines
The MOP Guidelines validate
the RfS dated 10.02.2023;
MOP Guidelines do not
require the State Commission
to prescribe any condition
before the notification of
these Guidelines.
PART B: BID
B. SPECIAL CONDITIONS OF BID
The clauses in the Special Conditions correspond to and must be read
in conjunction with the clauses in the General Conditions within the
respective part of the document.
36. 3. Mode of Procurement Bid Information Sheet
(Document Description) and
2.1.2 (About the Project) -
provide capacity, mode of
procurement (PHSPPA),
duration of procurement,
nature of project (B-0-0), etc.
2.1.12. requires the bidder to
furnish Detailed Project
Report
3.2.1 provides for
incorporation of SPV
37. 4.1. Indicative Timelines Indicative timeline for the
following is provided in Bid
Information Sheet-
- Online Submission of Techo-
commercial bid and Price
Bid
- Hard copy Submission of
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WA No. 1898 of 2024
Techo- commercial bid and
Price Bid
- Pre Bid queries
- Pre-bid meeting
-Techno-commercial bid
opening
- (for Price Bid and e-reverse
auction, date was to be
indicated to those who
coalified the previous level)
Clause 5.5 - Validity of Bids
(180 days)
Clause 6.7- Issuance of LOA-
at the end of bidding process
Clause 6.8. Performance Bank
Guarantee - to be submitted
30 days from issuance of LOA
Clause 6.9 Signing of Project
Agreements- 30 days from
issuance of LOA
Clause 2.1.15. Connectivity-
30 days from signing PHSPPA
38. 5.1 Bidding Parameters: Clause 2.1.2 (d) - provides
that the tender is for a
transparent competitive
bidding process
39. 5.3 Minimum Bid Capacity Clause 2.1.3. (d) Minimum
Bid Capacity is fixed as 100
MW
40. 5.6 Qualification requirements Clause 3.2: Eligibility of
to be met by the bidders Bidder
41. 6.1 Technical Requirements in Though not directly provided,
Bid Documents it is indirectly provided under
Clause 6.2. Evaluation of
Qualification Proposals
42. 7.2 Earnest Money Deposit Bid information sheet- Bid
(EMD) Security applicable for the
Bidder and Clause
5.7.2.(e)(iii) provide that
each bidder shall furnish Bid
Security of INR 5,00,000/-
per MW, in the form of Bank
Guarantee/ Payment on Order
Instrument (POI) or through
Demand Draft;
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WA No. 1898 of 2024
43. 7.3 Performance Guarantee Clause 6.8. Performance Bank
(PG) Guarantee (PBG)
18. Learned senior counsel further hasten to add that
the tariff at which respondent No.2 is purchasing the power
from respondent No.1 is much lower than the purchase of
power by Andhra Pradesh and West Bengal from the project of
Kurukutti and Turga respectively. It is his further contention
that the acceptance of bid of respondent No.1 is in no way
against the interest of the consumers at large and there is no
additional financial burden on respondent No.2. Therefore,
refusal to approve the issuance of LOA in favour of respondent
No.1 by the appellant - KERC, is totally unjustified.
19. Learned senior counsel further points out from
Annexure-R4 dated 17.04.2023 i.e., the Cost Implication
Analysis and Table and submits that the tariff at which
respondent No.1 has agreed to supply the power to respondent
No.2 is much lower than the competitive price.
20. Learned senior counsel further submits that in view
of the fact that the learned Single Judge had stipulated the
timeline of 2 months for the compliance of the directions,
though the appellant has filed the present appeal, since there
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WA No. 1898 of 2024
being no order of interdiction, and in view of the repeated
persuasion by respondent No.1, respondent No.2 has issued
Letter of Award dated 04.02.2025 in terms of the order passed
by the learned Single Judge, however, making it subject to the
outcome of the present appeal. Therefore, prayed that the
appeal be dismissed.
21. Sri K N Phanindra, learned senior counsel appearing
for respondent No.1 while supporting the order passed by the
learned Single Judge and re-iterating the contentions urged
before the learned Single Judge supplements his submission by
taking us through the order passed by the Maharashtra
Electricity Regulatory Commission and points out that the price
at which respondent No.2 has agreed to supply the power to
respondent No.1 is much lower than the tariff approved by the
Maharashtra State Electricity Regulatory Commission.
22. Learned senior counsel further submitted that all
the arguments canvassed by the appellant herein has been
considered by the learned Single Judge in extenso from
paragraphs 23 to 28 of the impugned order and therefore, no
fault can be found from the findings recorded by the learned
Single Judge.
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23. Learned senior counsel further submits that the
appellant has failed to justify its intervention in determination
of tariff under Section 63 of the Act, more particularly, its
action of setting a benchmark average fixed cost which does
not align to the market condition in any manner. It is also his
contention that the re-issuance of tender as per the directions
of the appellant and receiving the bid afresh would not render a
different result, inasmuch as, the price quoted by respondent
No.1 is more than competitive when compared to the bids
which have been accepted by Maharashtra and Andhra Pradesh
States in respect of identical projects. Learned senior counsel
referring to the order passed by Maharashtra Electricity
Regulatory Commission at Annexure-R7 points out that the
price discovered in respect of the present project is much lower
than the offers received by the MSEDCL in respect of three of
the projects at Maharastra are as follows:
a) Theory Pumped Storage plant (1000 MW)
at the rate of 9.70/kWh
b) Naitwar Mori Hydro Electric Power Project
of SJVN Limited at Ras.9.51/KWh
c) Kurukutti PSH and NP30 Gandhi Sagar
PSH at Rs.7.85 per unit.
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24. It is the further submission of learned senior
counsel that the benchmark AFC taken into consideration by
the appellant is an average AFC of 2 projects namely Kurukutti
and Turga. Once the appellant has considered the costs of a
different project as a basis for determination in respect of the
project in question, it is reasonable to compare the cost and
tariff of the said projects to be applied to the project in hand.
The standard adopted by the appellant to consider the
benchmark AFC of Kurukutti and Turga projects and not relying
upon the tariff fixed in respect of the said projects to be applied
for the project of respondent No.1.
25. Learned senior counsel has also brought to the
notice of this Court that LOA was issued on 04.02.2025,
pursuant to which, respondent No.2 has informed respondent
No.1 to furnish the bank guarantee in favour of the 5 electricity
supply companies, following which, respondent No.1 has
submitted performance bank guarantee of the value of
Rs.84,00,000/- to 5 electricity supply companies. Respondent
No.1 has produced the performance security guarantees
furnished to all the 5 electricity supply companies.
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WA No. 1898 of 2024
26. Upon hearing the learned counsels as stated supra,
the only points that arises for our consideration is as to –
"a. Whether the learned Single Judge was
justified in holding that the appellant-Commission could
not refuse to adopt the tariff discovered through the
competitive bidding process on the ground that the
tender documents did not stipulate a benchmark Annual
Fixed Cost(AFC), particularly when the appellant had not
questioned the transparency of the bidding process?
b. Whether the learned Single Judge was right
in holding that the Commission's (appellant) role is
limited to assessing as to whether the tariff discovered
through the bidding process complies with or it aligns
with the over-reaching objective of safeguarding
consumer welfare?”
27. In order to answer the afore-stated questions, it is
relevant for us to examine the provisions of Section 63 of the
Electricity Act, 2003, which reads as under:
"63. Determination of tariff by bidding
process.– Notwithstanding anything contained in
section 62, the Appropriate Commission shall adopt the
tariff if such tariff has been determined through
transparent process of bidding in accordance with the
guidelines issued by the Central Government."
28. Indisputably, as on the date of issuance of the
tender Notification by respondent No.2, there was no
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WA No. 1898 of 2024
guidelines issued by the Central Government. Therefore,
respondent No.2 had adopted the RFS dated 10.02.2023. In
response to the proposal sent by respondent No.2 for approval
of draft RFS and draft PPA, the appellant has made certain
observations. The relevant portion of the Communication dated
24.02.2023 is necessary for the present consideration, which
reads as follows:
"The Commission has examined the proposal,
since the PCKL has not submitted any echno-
commercial analysis and DPR, the Commission has
considered the operational and financial parameters as
per the sample DPR of Kurukutti PHS (Andhra Pradesh)
and Turga Project (West Bengal) for determining the
capital cost and annual fixed cost of generation as
detailed in the Annexure-1.
The computation of the cost is based on the
average of the projects which are under progress in
Andhra Pradesh and West Bengal but these figures
cannot be adopted for the subject proposal since the
DPR and other parameters are not made available to the
Commission by PCKL. However, I am directed by the
Commission to communicate in principle approval of the
Commission to the PCKL.
a) The bids need to be called keeping the
benchmark project capital cost of Rs.438.58 lakhs per
MW and AFC and cost of Rs.78.163 lakhs per MW with
reference to the average project cost in respect of
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WA No. 1898 of 2024
Kurukutti PHS (Andhra Pradesh) and Turga Project
(West Bengal)"
29. The other concern raised in the said Communication
are in relation to non-furnishing of information regarding long
term projections, anticipated power supply, equipments, timing
of utilization of energy etc.
30. The main concern raised by the appellant in the
aforesaid Communication was with regard to the benchmark
average fixed cost (AFC) and with regard to the benchmark
project capital cost. As could be seen from the afore-extracted
comments of the appellant in the aforesaid Communication,
computation of cost cannot be made keeping the benchmark
project capital cost with reference to the average project cost in
respect of Kurukutti PHS (Andhra Pradesh) and Turga project
(West Bengal), since the DPR and other parameters are not
provided.
31. It is the submission of learned senior counsel
appearing for the respondent No.1, so also, learned counsel for
respondent No.2 that the price quoted by respondent No.1 is
much lesser than the price quoted and accepted in respect of
projects at West Bengal and Andhra Pradesh. Learned counsel
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WA No. 1898 of 2024
for respondent No.1 has also invited our attention to the orders
passed by Maharashtra Electricity Regulatory Commission and
also the Andhra Pradesh. Both the Commissions of
Maharashtra and Andhra Pradesh have approved the proposals
Rs.
of the aforementioned two projects and the price of 7.75 per
unit/KWH. However, in respect of the project of respondent
No.1, the tariff is determined between 6.22 and 6.72 per
unit/kwh, which is considerably less than tariff in respect of
Kurukutti project of Andhra Pradesh. Added to the above
circumstances, in the present case the bid has been accepted
through transparent process of bidding.
32. As noticed above, the concern of the appellant -
Commission is only to oversee the cost/tariff of purchase of
power as to whether there is any burden on the consumer on
account of power purchased at a higher price. If only the
decision of respondent No.2 in accepting the proposal of
respondent No.1 is causing additional financial burden on
respondent No.2, which would ultimately detrimental to the
interest of the consumer, the appellant - Commission would be
justified in refusing to accord approval for the project of
respondent No1.
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WA No. 1898 of 2024
33. Learned Single Judge at paragraphs 26 and 27 of
the impugned order has considered the aforesaid aspect and
came to the conclusion that there would be no undue financial
burden on the consumers on account of the project of
respondent No.1 being given effect to.
34. In view of non-obstante clause contained in Section
63 of the Act, the manner of intervention of the appellant –
Corporation and the power conferred under Section 62 of the
Act, cannot be equated with the projects considered under
Section 63 of the Act. Because, under Section 62 of the Act,
the Commission would determine the tariff, however, under
Section 63 of the Act, the Commission would adopt the tariff.
Only requirement for adoption of tariff under Section 63 of the
Act is the determination of tariff though a transparent process
of bidding. Though there was no guidelines as on the date of
consideration of bidding in the present case, however, as
demonstrated by the respondents, the determination of tariff
and the process adopted by the respondent No.2 aligns with the
guideline issued by the Central Government.
35. This Court cannot be oblivious to the subsequent
developments that have taken place after the order passed by
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WA No. 1898 of 2024
the learned Single Judge. As noticed supra, the Letter of Award
has been issued by respondent No.2 on 04.02.2025 and in
compliance of the conditions of LOA, respondent No.1 has
already submitted the Performance Bank Guarantee to the tune
of Rs.84,00,000/-. As submitted by learned senior counsel for
respondent Nos.1 and 2 and upon notice, MOP guidelines
issued by the Central Government, so also the comparison of
the RFS and the MOP, we find no significant difference as such
between the RFS and the MOP. The MOP issued by the Central
Government does not provide the fixation of benchmark AFC.
Accepting the plea of the appellant if the entire process
commencing from 2022 till date is set at naught at this distance
of time, the natural corollary is to issue fresh tender
Notification in terms of the MOP Guidelines, 2025.
36. We have noticed that the MOP Guidelines do not
stipulate the fixation of benchmark AFC. The main intention of
the appellant in not accepting tariff in the present case is that
while issuing the tender Notification, the benchmark AFC is not
stipulated. Even if the entire process is commenced afresh by
giving goby to the tender process already undertaken, the
appellant would not succeed in its view of fixation of benchmark
AFC. Therefore, even if the writ appeal is allowed and the
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WA No. 1898 of 2024
order of the learned Single Judge is set aside, the entire
process will ought to be commenced afresh in terms of the
MOP, which do not stipulate benchmark AFC. In that view of
the matter, no purpose would be served in interfering with the
order passed by the learned Single Judge on any of the grounds
raised by the appellant.
37. Reliance is placed by the learned counsel for the
appellant on the judgment of the Hon'ble Supreme Court in
Energy Watchdog Vs Central Electricity Regulatory
3
Commission and Others , more particularly, paragraph 19
thereof. It is to be noticed that the observation made in
paragraph 19 is in no way supports the contention of the
appellant, inasmuch as, the Hon'ble Supreme Court in
paragraph 19 of the aforesaid judgment has clarified the
difference between the determination of tariff under Section 62
of the Act and adoption of tariff under Section 63 of the Act.
The Hon'ble Supreme Court has further observed in the said
paragraph that in case of transparent bidding nothing can be
looked into except the bid must be in accordance with the
guidelines issued by the Central Government.
3
(2017) 14 SCC 80
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WA No. 1898 of 2024
38. Learned counsel for the appellant has stressed on
the following phrase in paragraph 19, viz., “One thing is
immediately clear, that the appropriate Commission does not
act as a mere post office under Section 63”. The said
observation of the Hon'ble Supreme Court only means that the
Commission is required to adopt the tariff, which has been
determined through a transparent process of bidding, but it can
only be done in accordance with the guidelines issued by the
Central Government.
39. In the present case, admittedly, as on the date of
issuance of tender Notification, the guidelines had not been
issued by the Central Government. As noticed above, in the
present case, the appellant has not raised any concern as
regards the transparency in the bidding process. The objection
by the Commission is only with regard to the non-inclusion of
the benchmark AFC and the details of other projects relied
upon by respondent No.2, viz., Kurukutti and Turga were not
furnished to respondent No.2.
40. The following observations of the Hon’ble supreme
court of India in the case of Jaipur Vidyut Vitran Nigam
Limited (supra) has been relied upon by the learned counsel
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WA No. 1898 of 2024
for the appellant to contend that the judicial review under
Article 226 of the Constitution of India should be exercised with
caution and only in furtherance of larger public interest.
It has further been held that even when some defect
has been found in the decision- making process, the
court must exercise its discretionary power under Article
226 with great caution and should exercise it only in
furtherance of public interest and not merely on the
making out of a legal point. The court should always
keep the larger public interest in mind in order to decide
whether its intervention is called for or not. Only when it
comes to a conclusion that overwhelming public interest
requires interference, the court should intervene."
41. If the above observation is considered in the
perspective of exercise of power of judicial review under Article
226 of the Constitution of India by the learned Single Judge
while passing the impugned order, the order passed by the
learned Single Judge cannot be held to be contrary to the
aforesaid enunciation. In the present case also, despite there
being slight deviation from the instruction of the respondent
No.2 contained in the order of in-principle approval, the learned
Single Judge found it not an serious infraction of the provisions
of Section 63 of the Act, more particularly, when the
process/formulae and action of the respondent No.2 did not
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WA No. 1898 of 2024
contravene the guideline issued by the Central Government
subsequent to the bidding process. The learned Single Judge
has also taken note of interest of consumers and public interest
while passing the impugned order. We are of the opinion that
the above referred judgment which is cited by the appellant in
effect supports the case of the respondents rather than the
appellant.
42. On overall analysis of the entire issue, we are of the
considered opinion that the contentions of the appellant raised
before the learned Single Judge, so also, before this Court are
totally untenable and no grounds are made out for interfering
with the order passed by the learned Single Judge. In light of
the said subsequent development and taking note of the fact
that the tariff/cost of purchase of power from respondent No.1
project is far lesser than the tariff offered/accepted in respect
of identical projects at Andhra Pradesh and Maharashtra, we
find no illegality or infirmity in the order passed by the learned
Single Judge in allowing the writ petition filed by respondent
No.1.
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WA No. 1898 of 2024
43. In the result,
(i) The appeal is dismissed as devoid of merits.
No order as to costs.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(T.P.VIVEKANANDA)
JUDGE
BGN