Case Note & Summary
The litigation arose from a denial by the Karnataka Electricity Regulatory Commission (KERC) of approval to a Power Purchase Agreement (PPA) executed between the first petitioner company (an 8 MW wind energy project owner) and the second respondent Bangalore Electricity Supply Company Limited (BESCOM). The PPA was signed on 01.03.2017 and submitted for regulatory approval, but KERC returned the file twice on grounds that such PPAs were detrimental to the interests of the licensees owing to backing down of thermal power plants and falling wind tariffs. The petitioners challenged this denial by way of writ petitions under Article 226 of the Constitution, seeking certiorari to quash the KERC order dated 29.05.2018 and mandamus to approve the PPA. According to the petitioners, the project was duly commissioned on 28.03.2017, as certified by KPTCL, and 511 units of energy were injected into the grid that day, thus fulfilling all conditions for tariff eligibility under the prevailing KERC Order dated 24.04.2015. The respondents argued that there was no evidence of power generation during 29.03.2017 to 31.03.2017, that the approval of PPA by KERC is a sine qua non for enforceability, and that a co-ordinate bench decision in Surya Energy had already denied similar relief. The court, after examining the material, found that the KERC's basis for disbelieving the generation evidence was flawed because the delivery point meter had a high multiplying constant of 1,50,000 and would not record a small flow, and the uncontroverted version of flow at specific times on 28.03.2017 stood. The court held that KERC’s repeated return of the file on an inarticulate premise that PPAs were detrimental revealed presumptive bias, vitiating the quasi-judicial function it was required to perform under the Electricity Act, 2003. It also noted that the KERC had discriminated against the petitioners by approving all other PPAs listed in the government order while denying theirs, even though those projects had not even been commissioned by March 2018, whereas the petitioners’ project was commissioned on 28.03.2017. This differential treatment violated Article 14 of the Constitution and the principle in Vitarelli v. Seaton that an executive authority must be held to its professed standards. The court further determined that the applicable tariff order was the 2015 Order, not the subsequent 2017 Order, and that neither commissioning nor commercial operation was a prerequisite for the tariff rate thereunder. The co-ordinate bench judgment was distinguished on facts, and the classic principle in Quinn v. Leathem was applied that a case is only an authority for what it actually decides. In view of the above, the writ petitions were allowed, the impugned order dated 29.05.2018 was quashed, and a mandamus was issued to KERC to consider and approve the PPA dated 01.03.2017 in accordance with the KERC Order dated 24.02.2015 and to grant consequential benefits within eight weeks. Costs were made easy.
Headnote
A) Electricity Law - Regulatory Approval - Quasi-Judicial Function - Electricity Act, 2003 - KERC while considering approval of Power Purchase Agreement exercises quasi-judicial function; failure to act impartially vitiates order. Held: Impugned order vitiated by presumptive bias due to inarticulate premise of detriment to licensees. (Paras 3(e), 6) B) Constitutional Law - Right to Equality - Article 14, Constitution of India - Differential treatment of similarly situated entities - KERC approved PPAs of others not yet commissioned while denying petitioners', though recommended; held violative of equality clause and Vitarelli principle. (Paras 3(g), 7-8) C) Electricity Law - Tariff Determination - KERC Orders dated 24.04.2015 and 04.09.2017 - Commissioning or commercial operation not necessary for tariff under control period of 2015 Order; change of standards post facto impermissible. Held: Tariff of Rs.4.50 applicable under 2015 Order. (Paras 3(f), 6) D) Judicial Precedent - Ratio Decidendi - Judgment must be read as applicable to particular facts; case is only authority for what it actually decides - Quinn v. Leathem (1901) AC 495 - Co-ordinate bench judgment in Surya Energy not applicable as facts differed; denial of approval can be challenged. Held: Writ petitions structured on the ratio that approval is sine qua non, but challenge to denial permissible. (Paras 3(h), 8-9) E) Electricity Law - Grid Injection - Metering - Technical evidence regarding energy flow - Uncontroverted version that 511 units flowed into grid at specific times on 28.03.2017; high multiplying constant meter may not record small amounts; non-production of log book irrelevant. Held: Prima facie establishment of flow. (Paras 3(d), 5)
Issue of Consideration
Whether the denial of approval to the Power Purchase Agreement by the KERC was valid, particularly regarding the requirement of power generation before 31.03.2017 for tariff eligibility and whether the petitioners were discriminated against.
Final Decision
Writ petitions allowed; impugned order quashed; mandamus issued to KERC to approve PPA in accordance with KERC Order dated 24.02.2015 within eight weeks; costs made easy.
Law Points
- quasi-judicial exercise required for approval of Power Purchase Agreement
- Article 14 equality clause prohibits differential treatment without rationale
- State instrumentalities must adhere to fairness and reasonableness standards
- every judgment must be read as applicable to particular facts
- a case is only authority for what it actually decides
- approval of Power Purchase Agreement by KERC is sine qua non for enforceability
