Arcelormittal Nippon Steel India Ltd. vs Dakshin Gujarat Vij Company Ltd. & Ors
- Court
- Appellate Tribunal For Electricity
Court-2
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.13 OF 2021
Dated: 08.07.2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member
In the matter of:
Arcelormittal Nippon Steel India Ltd.
(Formerly known as Essar Steel India Ltd.)
Through its duly Authorised Representative
Mr. Suranjan Dasgupta, Joint General Manager
Having its registered office at,
27, KM, Surat-Hazira Road,
District Surat – 394270 … Appellant
Versus
1. Dakshin Gujarat Vij Company Ltd.
Through its Chairman and Managing Director
Kaporda Char Rasta,
Nana Varchha Road, Surat - 395006
2. Western Regional Load Despatch Centre
Through its Chairman and Managing Director
(Power System Operation Corporation Ltd.)
F-3, MIDC Area, Marol,
Andheri (East), Mumbai - 400093
3. Power Grid Corporation of India Ltd.
Through its Chairman and Managing Director
Plot No.2, Saudamini, Near IFFCO Chowk,
Leisure Valley Road, Sector-29,
Gurgaon, Haryana – 122002
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4. Gujarat Energy Transmission Corporation Ltd.
Through its Chairman and Managing Director
Sardar Patel, Vidyut Bhawan,
Race Course, Vadodara – 390007
5. Central Electricity Regulatory Commission
Through its Secretary
rd th
3 & 4 Floor, Chanderlok Building,
36, Janpath, New Delhi – 110001
6. Central Transmission Utility of India Limited
Through its Chairman and Managing Director
Floor Nos. 5 to 10, Tower 1,
Plot No.16, IRCON International Tower,
Institutional Area, Sector-32,
Gurugram, Haryana - 122001 … Respondent (s)
Counsel for the Appellant(s) : Gopal Jain, Sr. Adv.
Ruby Singh Ahuja
Vishal Gehrana
Anupam Prakash
Utkarsh Maria
for App. 1
Counsel for the Respondent(s) : M G Ramachandran, Sr. Adv.
Ranjitha Ramachandran
Anand K. Ganesan
Swapna Seshadri
Ashwin Ramanathan
Harsha Manav
Srishti Khindaria
for Res. 1
Suparna Srivastava
For Res. 3
J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The appellant Arcelor Mittal Nippon Steel India Limited [formerly
known as ESSAR Steel India Limited), in short “ESIL] has, in this
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appeal, assailed the order dated 06.11.2018 passed by the 5
respondent Central Electricity Regulatory Commission (hereinafter
referred to as “the Commission”) on the limited aspect that while holding
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that the Commission cannot deal with the prayers of the 1 respondent,
Dakshin Gujarat Vij Company Ltd. (petitioner before the Commission),
made in the petition in view of pendency of the insolvency proceedings
with regards to the ESIL before the National Company Law Tribunal
(NCLT) and the Resolution Professional, has proceeded to pass certain
adverse observations against the appellant in Paragraph nos.19, 22 and
30 of the impugned order. It is pointed out that these observations are
causing severe prejudice to the appellant as the same are being used
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against it by the 1 respondent in collateral proceedings including the
proceedings pending disposal before the Gujarat Electricity Regulatory
Commission.
2. Brief facts, in which the instant appeal has come to be filed by the
appellant, are narrated hereinbelow.
3. In the year 2012, ESSAR Steel Private Ltd. (the predecessor of the
appellant) approached the Central Commission by way of petition
no.245/MP/2012 seeking complete disconnection from the grid of the
State of Gujarat and seeking the status of a regional entity by being
connected with the Central Grid. The petition was allowed by the
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Commission vide order dated 08.06.2013 albeit with certain conditions.
One such contention being the payment of Cross Subsidy Surcharge as
applicable under the provisions of the Electricity Act, 2003. The relevant
portion of the said order is extracted hereinbelow: -
“M/s. ESSAR steel Ltd shall remain liable to pay all
applicable cross subsidy charges including surcharge
and other charges, if any, applicable under the
provisions of the 2003 Act and as per the provisions of
the regulations of State Regulatory Commission. …”
4. Subsequently, ESSAR Steel India Limited approached the
Gujarat Electricity Regulatory Commission by way of petition
no.1420/2014 on the issue as whether or not the provisions of the
Electricity Act, 2003 as well as the regulations framed by the Gujarat
Commission require it to pay Cross Subsidy Surcharge.
5. It appears that another petition was also filed by ESSAR Steel
India Limited in this regard before the Gujarat Commission, being
petition no.160/2016.
6. Vide order dated 13.06.2014 passed by Gujarat Commission in
petition no.1420/2014, it held that the dispute regarding payment of
Cross Subsidy Surcharge by the appellant falls within its jurisdiction.
The relevant portion of the said order is reproduced hereinbelow: -
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“3.1 According to above decision of the CERC, levy of
cross subsidy surcharge is subject to the
provisions/regulations of the State Commission. As such,
any dispute regarding levy of the cross subsidy
surcharge is within the Commission’s jurisdiction. Hence,
it is binding to the parties. Hence, the present petition
falls in the Commission jurisdiction and we admit the
same.”
7. Meanwhile, the 1st respondent had approached the Central
Commission by way of petition no.112/2014 alleging default by the
appellant in payment of Cross Subsidy Surcharge since June, 2013 and
praying for the direction to the appellant to immediately pay outstanding
amount. The appellant objected the maintainability of the petition on the
ground that the dispute relating to payment of Cross Subsidy Surcharge
was pending before the Gujarat Commission in petition no.1420/2014
and Gujarat Commission was the competent authority to decide the
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issue of payment of Cross Subsidy Surcharge. However, the 1
respondent later on sought withdrawal of the petition and accordingly,
the petition was disposed of as withdrawn vide order dated 22.07.2015.
8. Thereafter, the appellant also filed petition bearing no.216/2016
before the Central Commission seeking, inter alia , a declaration to the
effect that no Cross Subsidy Surcharge was payable by it. The petition
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was dismissed by the Central Commission vide order dated 06.07.2016
holding that it did not have jurisdiction to decide the issue relating to
Cross Subsidy Surcharge which was within the domain of the Gujarat
Commission, the relevant portion of the said order is extracted
hereinbelow: -
“36. In our view, the dispute raised falls within the
jurisdiction of the Gujarat Commission before whom a
petition already filed by the petitioner is pending.”
9. ESSAR Steel India Limited was thereafter on 02.08.2017 admitted
into corporate insolvency under the Insolvency and Bankruptcy Code,
2016 (in short IBC) and a moratorium was declared under Section 14 of
the IBC by the NCLT on the said date.
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10. Meanwhile, the 1 respondent approached Western Regional Load
Despatch Centre (in short WRLDC) for denial of open access to the
ESSAR Steel India Limited but the same was declined by WRLDC in the
absence of any express directions in this regard from the Gujarat
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Commission. In view of such denial on the part of WRLDC, the 1
respondent approached Central Commission again by way of petition
no.151/2016 under section 79(1)(c) read with sections 142 and 143 of
the Electricity Act, 2003 with the following prayers: -
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“(a) Recall the permission granted in the order dated
8.6.2013 passed by the Commission in Petition No. 245/
MP/2012 granting connectivity to the inter-State
transmission network of Powergrid Corporation of India
for the premises of the Essar Steel and also the regional
entity status to Essar Steel on account of violation on the
part of Essar Steel on the conditions of due payment of
cross subsidy to DGVCL;
(b) Direct Powergrid and WRLDC not to entertain any
application for grant of open access or otherwise allow
any scheduling or despatch to Essar Steel till the
outstanding amount towards cross subsidy surcharge
are duly paid to DGVCL;
(c) Direct WRLDC to get consent of DGVCL before
issuing NOC for open access to Essar Steel and in the
event of non-payment, the Petitioner would have the
right to withdraw the open access permission granted to
Essar Steel;
(d) Initiate proceedings against Essar Steel and its
directors and officials under Section 142 of the Electricity
Act, 2003 for the failure on the part of Essar Steel to
comply with the order dated 8.6.2013 passed by the
Commission;
(e) Direct the filing of the complaint in the appropriate
court as per Section 146 of the Electricity Act, 2003 for
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deliberate and willful default and with the intent not to
obey the order dated 8.6.2013; and
(f) Award cost of the present proceedings.”
11. This petition has been disposed of by the Commission vide
impugned order dated 06.11.2018. Taking note of the entire conspectus
of facts and circumstances of the case, the Central Commission has
held in the impugned order as under: -
“31. The Petitioner has filed the present petition for
termination of the Regional Entity status of ESIL Steel
and initiation of the proceedings against ESIL for non-
compliance of the Commission`s direction dated
8.6.2013, and directions to PGCIL and WRLDC not to
grant open access unless the cross subsidy surcharges
are paid. In other words, the Petitioner is seeking
execution of the cross subsidy surcharges against ESIL
through initiation of appropriate proceedings including
withdrawal of regional entity status which would prevent
the Essar Steel to take power to its steel facility through
ISTS and consequently, affect its source of revenue.
Further, the Petitioner has sought initiation of
proceedings under Section 142 of the Act which not only
provides for penalty for noncompliance of the order of
the Commission but also imposition of recurring penalty
till the order is complied with and also proceedings under
section 146 of the Act. The prayers are in the nature of
enforcement of the orders of the Commission and
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therefore, are analogous to Section 36 of the Arbitration
and Conciliation Act. The prayers are affected by the
moratorium under Section 14(1)(a) of the Insolvency and
Bankruptcy Code. Therefore, the Commission cannot
deal with the prayers of the Petitioner in the present
petition during the pendency of the insolvency
proceedings before NCLT and Resolution Professional.”
12. As already noted hereinabove, the appellant is aggrieved only by
certain observations of the Commission contained in Paragraphs 19, 22
and 30 of the said impugned order, in which certain adverse
observations are stated to have been made by the Commission with
regards to liability of the appellant to pay Cross Subsidy Surcharge, we
find it apposite to extract these three paragraphs of the impugned order
hereunder: -
“19. From the above discussion, it is crystal clear that as
per the order dated 8.6.2013 in Petition
No.245/MP/2012, Respondent No.1 is liable to pay the
applicable cross subsidy surcharge and other charges to
DGVCL as per the provisions of the Act and Regulations
of the GERC.”
………………………………………………………………….
………………………………………………………………….
“22. Thus the factual and legal position is abundantly
clear that the Respondent No.1/ESIL is obliged to pay
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cross subsidy surcharge to DGVCL consequent to its
direct connectivity to ISTS and grant of regional status.
As discussed above, Respondent No.1/ESIL was paying
the cross subsidy surcharge for its non-captive
consumption and the cross subsidy surcharge was
disputed before GERC in Petition No.1420 of 2014.
Respondent No.1/ESIL filed Petition No. 1601 of 2016
before GERC contending that the cross subsidy
surcharge is not payable even for non-captive open
access. In our view, this is a fresh cause of action and
unless GERC grants a stay or decided in favour of
Respondent No.1/ESIL, liability for cross subsidy
surcharge continues to be on the Respondent No.1. As
per the documents on record, no stay has been granted
by GERC in Petition No.1601/2016. However, GERC in
order dated 30.8.2016 in IA Nos. 7 of 2014 and 3 of 2016
in Petition No. 1420 of 2014 had decided as under: ―
6.11. Further, the issue of CSS payable by ESIL
on the units purchased from sources other than
EPMPL is also disputed by ESIL stating that it is
not liable to pay CSS under the provisions of
Section 38 (2) (d) (ii) of the Electricity Act, 2003
and it has filed a petition in this regarding which is
pending for registration and hearing before the
Commission. Therefore, it is premature to pass
any order in this regard. We clarify that there is no
stay granted by the Commission on the recovery
of the amount of CSS claimed by DGVCL and
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GUVNL from ESIL. They are at liberty to take
necessary action for recovery of the said amount
as per the provisions of the Electricity Act, 2003.
6.12. We clarify that DGVCL and GUVNL are not
barred from taking necessary action against ESIL
for non-payment of the outstanding CSS amount
by approaching the appropriate forum including
WRLDC who have given permission for open
access as a regional entity.”
………………………………………………………………….
………………………………………………………………….
“30. The Commission has already decided in orders
dated 8.6.2013 and 6.7.2016 in Petition Nos.
245/MP/2012 and 216/MP/2016 respectively that ESIL is
liable to pay the cross subsidy surcharge to DGVCL
consequent to its disconnection from the area of
operation of DGVCL and connection to ISTS and grant of
status of Regional Entity. Petition Nos.1402 of 2014 and
1601 of 2016 are pending before the GERC. While in
Petition No.1402 of 2014, the liability for cross subsidy
surcharge in respect of supply from captive source has
been challenged, in Petition No.1601/2016, the liability
for cross subsidy surcharge from non-captive source has
been challenged. Both petitions are pending before
GERC, there are no stay. The Respondent No.1 has the
liability to pay the cross subsidy surcharge in terms of
the Commission’s orders dated 8.6.2013 and 6.7.2016 in
Petition Nos. 245/MP/2012 and 216/MP/2016
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respectively. Thus, there is no fresh determination of
liability of Respondent No.1 towards cross subsidy
surcharge in the present petition.”
(Emphasis supplied)
13. It was argued by Shri Gopal Jain, learned senior counsel
appearing on behalf of the appellant that since the Commission had
itself in its order dated 06.07.2016 in petition no.216/2016 held that
disputes pertaining to the Cross Subsidy Surcharge were within the
domain of Gujarat Commission before whom a petition in that regard
was pending disposal at that time, the Commission ought not to have
held in the impugned order that Cross Subsidy Surcharge was payable
by the appellant. It is submitted that the said observation of the
Commission in the impugned order is also contrary to the previous order
dated 08.06.2013 passed in petition no.245/2012 wherein the
Commission has held that the Cross Subsidy Surcharge would be
payable by the appellant if it was payable in terms of the regulations
framed by the State Commission i.e. Gujarat Electricity Regulatory
Commission.
14. The learned senior counsel further argued that these observations
of the Commission in the impugned order having been made while
admittedly lacking jurisdiction to decide the issue of payment of Cross
Subsidy Surcharge, are causing severe prejudice to the appellant in the
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collateral proceedings including those pending disposal before the
Gujarat Commission. The learned senior counsel would further submit
that in any event, the continuation of the petition before the Commission
subsequent to passing of order dated 02.08.2017 by the NCLT whereby
the ESIL was admitted to corporate insolvency under Section 14 of the
IBC, was in contravention of Section 14(1)(a) of the IBC which provides
that upon declaration of moratorium with regards to a corporate entity,
there is prohibition on the continuation of pending suits or proceedings
against the corporate debtor including execution of any judgment,
decree or order in any court of law, tribunal, arbitration panel or other
authority. It is submitted that this prohibition is absolute and applies to
every court and tribunal including the Central Commission. It is pointed
out that the Commission has acknowledged in Paragraph nos.31-32 of
the impugned order that it cannot pass direction or grant any relief in
view of Section 14 of IBC, and therefore, ought not to have proceeded
further. Instead, it recorded substantive findings against the appellant in
Paragraph nos.19, 22 and 30 of the impugned order which are patently
erroneous and cannot be sustained.
15. Shri M G Ramachandran, learned senior counsel appearing on
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behalf of the 1 respondent has refuted these submissions advanced on
behalf of the appellant. He would submit that in the impugned order the
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Commission has only recapitulated the decision earlier made in the
orders passed by it prior to the admission of CIRP proceedings under
the IBC and has not decided afresh any substantial issue on the liability
of the appellant to pay Cross Subsidy Surcharge as per its earlier order
dated 08.06.2013.
Our analysis:
16. At the very outset, we are constrained to observe that we do not
find any merit in the contentions/submission advanced on behalf of the
appellant. We have already extracted the Paragraph nos.19, 22 and 30
of the impugned order regarding which the grievance has been raised by
the appellant in this appeal. A bare perusal of these three Paragraphs of
the impugned order clearly reveals that the Commission has merely
reiterated what it had observed and held in the previous orders dated
08.06.2013 and 06.07.2016 passed in petition nos.245/2012 and
216/2016 respectively. In the order dated 08.06.2013, the Commission
had specifically held that ESSAR Steel India Limited shall remain liable
to pay all applicable cross subsidy charges including surcharge and
other charges, if any, applicable under the provisions of 2003 Act and as
per the provisions of regulations of State Regulatory Commission. In the
order dated 06.07.2016, the Commission has held that the dispute
raised with regards to liability of appellant to pay Cross Subsidy
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Surcharge falls within the jurisdiction of the Gujarat Commission before
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whom a petition in this regard has already been filed by the 1
respondent.
17. It is limpid that no fresh liability has been created by the
Commission upon the appellant in the impugned order particularly by
way of the observations contained in Paragraph nos.19, 22 and 30. The
fact remains that in terms of the order dated 08.06.2013, the appellant is
liable to pay Cross Subsidy Surcharge as well as other charges which
have to be computed by the Gujarat Commission in terms of the
provisions of the Electricity Act, 2003 as well as the extant regulations
framed in this regard by the Gujarat Commission. Needless to add here
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that a petition in this regard has already been filed by the 1 respondent
before the Gujarat Commission which appears to be still pending
disposal.
18. For the same reasons, we are of the view that the impugned order
of the Commission does not run contrary to the order dated 02.08.2017
passed under Section 14 of the IBC vide which ESSAR Steel India
Limited was admitted into corporate insolvency. We may further note in
this regard that the Commission, in the impugned order has recorded
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that the 1 respondent has already filed its claims before the Resolution
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Professional and accordingly observed that the 1 respondent is at
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liberty to approach the NCLT for appropriate directions with regards to
its claim including the Cross Subsidy Surcharge against the appellant.
The Commission has further observed that if any grievance with regards
to Cross Subsidy Surcharge survives after the conclusion of CIRP, the
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1 respondent may approach the appropriate Commission in
accordance with law. Therefore, the Central Commission has not taken
on to itself the job of computation of the Cross Subsidy Surcharge
payable by the appellant and has left the same to be decided by the
Gujarat Commission as and when the issue is raised before the said
Commission.
Conclusion: -
19. In view of the above discussions, we find the appeal devoid of any
merit. The same is hereby dismissed as such.
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Pronounced in the open court on this the 08 day of July, 2026.
Virender Bhat
Judicial Member
(Seema Gupta)
Officiating Chairperson
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REPORTABLE / NON-REPORATBLE
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