PRESENT THE HON'BLE MR N v. ANJARIA, CHIEF JUSTICE AND THE HON'BLE MR JUSTICE M.I.ARUN WRIT APPEAL NO
Case Details
- 1 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF MARCH, 2025 PRESENT THE HON'BLE MR N. V. ANJARIA, CHIEF JUSTICE AND THE HON'BLE MR JUSTICE M.I.ARUN WRIT APPEAL NO.1753 OF 2024 (GM-KEB) BETWEEN: 1. STATE LOAD DISPATCH CENTRE OPERATED BY KARNATAKA POWER TRANSMISSION CORPORATION LIMITED A BODY ESTABLISHED UNDER SECTION 31 OF THE ELECTRICITY ACT 2003 SLDC, RACE COURSE CROSS ROAD ANAND RAO CIRCLE BENGALURU - 560 009 [REPRESENTED BY ITS CHIEF ENGINEER]. (BY SRI S.S. NAGANAND, SENIOR ADVOCATE ALONG WITH SMT. SUMANA NAGANAND, ADVOCATE) …APPELLANT AND: 1. M/S. SHREE RENUKA SUGARS LIMITED A COMPANY REGISTERED UNDER COMPANIES ACT 2013, HAVING ITS ADMINISTRATIVE OFFICE AT NO.7, (OLD NO.24) 1ST AND 2ND FLOORS 'SUNANJAYA' 1ST CROSS Digitally signed by H K HEMA Location: High Court of Karnataka - 2 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024
Legal Reasoning
KUMARA KOT ROAD BEHIND HOTEL JANARDHAN RACE COURSE ROAD BENGALURU - 560 001 REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE/ ASSISTANT MANAGER SRI VINAYAK PURANIK. 2. SRI. REVANSIDAPPA KADAKOL AGED ABOUT 49 YEARS SHAREHOLDER OF SHREE RENUKA SUGARS R/O HAVALAGA VILLAGE AFZALPUR KALABURAGI - 585 301. 3. STATE OF KARNATAKA DEPARTMENT OF ENERGY ROOM NO.236, 2ND FLOOR VIKASA SOUDHA DR B.R AMBEDKAR STREET BANGALORE - 560 001 [REPRESENTED BY ITS ADDITIONAL CHIEF SECRETARY]. 4. UNION OF INDIA MINISTRY OF POWER AND NEW AND RENEWABLE ENERGY SHRAM SHAKTI BHAWAN RAFI MARG NEW DELHI - 110 001 [REPRESENTED BY ITS SECRETARY (POWER)]. 5. CENTRAL ELECTRICITY REGULATORY COMMISSION, A STATUTORY BODY FUNCTIONING UNDER SECTION 76 OF THE ELECTRICITY ACT 2003 - 3 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 CORE-3, SCOPE COMPLEX 6TH FLOOR, LODHI ROAD NEW DELHI - 110 003. [REPRESENTED BY ITS REGISTRAR]. …RESPONDENTS (BY SRI P.N. MANMOHAN, ADVOCATE FOR R.1; R.2 IS SERVED AND UNREPRESENTED; SRI K.S. HARISH, GOVERNMENT ADVOCATE FOR R.3; SMT. M.R. SINCHANA, CGC FOR R.4; SRI PRADEEP NAYAK, ADVOCATE FOR R.5.) THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER DATED 23.07.2024 PASSED BY THE LEARNED SINGLE JUDGE IN W.P.NO.1509/2024 (GM-KEB) AND CONSEQUENTLY DISMISS THE WRIT PETITION, IN THE INTEREST OF JUSTICE. THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA and HON'BLE MR JUSTICE M.I.ARUN - 4 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE M.I.ARUN) Aggrieved by the order dated 23.07.2024 passed by the learned Single Judge in Writ Petition No.1509 of 2024, respondent no.2 therein has preferred this appeal. 2. For the sake of convenience, the parties are referred to herein
Decision
as per their status in the writ petition. 3. Petitioner No.1 is involved in the business of generating power. Private generators of electricity are at liberty either to sell the electricity generated in favour of the State where it is generated or to third parties as per the policy of the Government. The Electricity Act, 2003 (hereinafter referred to as 'the Act') has been passed with the following object and reasons: for of taking measures conducive electricity "An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity to and generally development promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment industry, - 5 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 of Appellate Tribunal and therewith or incidental thereto." for matters connected 4. As per Section 11 of the Act, certain directions can be issued to the electricity generating companies in public interest. Section 11 of the Act reads as under: Directions generating to "11. that a (1) Appropriate Government may specify generating extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government. company shall, in companies.- Explanation. - For the purposes of this section, the expression “extraordinary circumstances” means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest. (2) The Appropriate Commission may offset the adverse financial impact of the directions referred to in sub-section (1) on any generating company in such manner as it considers appropriate." 5. The State of Karnataka, in public interest, issued the Government Order dated 16.10.2023 under Section 11 of the Act, which reads as under: "GOVERNMENT ORDER No.ENERGY 82 PPT 2023, BENGALURU, DATED: 16.10.2023 In the circumstances explained in the Preamble and in exercise of the power conferred under Section, - 6 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 11 of Electricity Act, 2003, the State Government in the public interest hereby issues the following Directions, with immediate effect and until further orders. 1. All the Generators in the State of Karnataka shall to operate and maintain the maximum exportable capacity and supply all electricity generated to State Grid subject to following conditions: their generating stations a. b. c. d. ESCOMs provisionally subject thereon., shall pay at Rs.4.86/unit to KERC orders The balance capacity of UPCL plant, over and above the Contracted capacity with the ESCOMs under the PPA shall be supplied to State at PPA rates. Joint meter readings shall be the basis for raising the monthly invoices. Rebate of 2% shall be allowed on the bill amount if payment is made within 5 days from the date of presentation of bill or other wise 1% shall be allowed if the payments are made within 30 days. e. Due date for making payment shall be 30 days from the date of presentation of the bill. f. Late Payment Surcharge shall be payable at one-year marginal cost of lending rate (MCLR) of the State Bank of India issued as on 1ST April plus 350 basis points; per month, if the payments are made beyond due date. g. The Jurisdictional Distribution Licensee shall deduct the energy at 115% for the - 7 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 energy, covered by this Section 11 order. imported by if the Generators h. injected by Generators under Energy Section 11 shall be allocated amongst ESCOMs as per the quantum approved by KERC in the Tariff order dated 12.05.2023 for the FY 24, is as follows: BESCOM MESCOM CESC HESCOM GESCOM Total 46.51% 8.57% 11.14% 20.60% 13.18% 100.00% j). The Generators shall raise the bills in the above proportion to respective ESCOMs. 2. 3. The above directions shall not be applicable for the Intra-State Generators who are having valid PPA's with the Distribution Licensees in the State of Karnataka. All State Electricity Supply Companies (ESCOMS) shall file a petition within 15 days from date of this order before the Karnataka Electricity Regulatory Commission (KERC) for approval of tariff specified in this order." 6. The petitioners have challenged the said Government Order in Writ Petition No.1509 of 2024 and prayed the following: "Wherefore it is prayed that this Hon'ble Court may be pleased to: Issue a Writ of Certiorari and quash the order (i) dated 16.10.2023 bearing No.Government order - 8 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 No. Energy 82 PPT 2023, passed by the 1st respondent (produced as ANNEXURE-"J") and consequently direct the 2nd respondent to issue NOC/permit to the petitioner to supply power through open access; and (ii) Pass such other Writ or order as deemed fit in the circumstances of the case, in the interest of justice and equity." 7. The learned Single Judge upheld the said Government Order, except the condition in Clause 1(d), which reads as under: "d. Rebate of 2% shall be allowed on the bill amount if payment is made within 5 days from the date of presentation of bill or other wise 1% shall be allowed if the payments are made within 30 days." 8. The operative portion of the order in Writ Petition No.1509 of 2024 reads as under: "41. The present writ petition is accordingly allowed and the impugned order, insofar as it relates to the in condition quashed." in Clause 1(d) of said order alone, 9. Aggrieved by the same, respondent No.2 has preferred this writ appeal. 10. Respondent No.1-State supports the contention of respondent No.2-appellant herein. - 9 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 11. The case of respondent No.2 is that in public interest, as per Section 11 of the Act, the appropriate Government is entitled to issue a direction, directing that all the power generating companies to supply the electricity generated only to the State Grid and is also entitled to fix the rate at which it has to be supplied, provisionally. It includes, the rebate at which the electricity has to be supplied on the rate provisionally fixed, if the payment is made by the State promptly, as in the instant case. It is further submitted that the power generating companies have the right to approach the appropriate Commission to offset the adverse financial impact of any of the directions issued by the State Government and the petitioners-respondent Nos.1 and 2 in the writ appeal, have the power to approach the Karnataka Electricity Regulatory Commission for fixing the necessary rate for the unit of electricity sold including the rebate ordered by the State. 12. Per contra, original petitioner No.1 submits that the State under Section 11 of the Act can issue a direction that the electricity generated by the power generating companies has to be supplied only to the State Grid at a particular rate. It is contended that the rebate as mentioned in the condition in clause 1(d) of the Government Order impugned in the writ petition cannot be - 10 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 prescribed by the State and that cannot be a subject matter before the Karnataka Electricity Regulatory Commission or the Appellate Authority, as the case may be. For the said reason, original petitioner No.1 justifies the order passed by the learned Single Judge and prays for dismissal of the appeal. 13. Original petitioner No.1 has not challenged the order of the learned Single Judge wherein the impugned Government Order in the writ petition except the condition in clause 1(d), has been otherwise upheld. 14. Thus, the only question that arises for consideration in the instant writ appeal is whether the learned Single Judge erred in quashing the condition in clause 1(d) of the Government Order? 15. As already stated above, Section 11 of the Act confers power to the appropriate Government to issue directions to the electricity generating companies to sell the electricity generated solely to the State in public interest. The order so passed under Section 11 of the Act may contain the provisional procurement price or not. Section 11 of the Act also extends a right to the electricity generating companies to approach the appropriate commission which is the Karnataka Electricity Regulatory Commission in this - 11 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 case, to offset the adverse financial impact of the directions issued by the appropriate Government to the electricity generating companies and the Karnataka Electricity Regulatory Commission, after examining all the materials placed before it, is entitled to fix such rate that the State is liable to pay the electricity generating companies for compulsorily availing the power from them. 16. When the appropriate Government is empowered to fix the provisional rate at which it intends to procure the electricity, it includes the manner and method of payment and also the rebate for prompt payment or surcharge for late payment. If the power generating companies are not happy about the same, they are also entitled to challenge the same before the Karnataka Electricity Regulatory Commission while making an application for fixing a price for compulsory procurement of the electricity to offset the adverse financial impact on them. The Karnataka Electricity Regulatory Commission or the Appellate Authority, is competent to rule on the rebate or surcharge. 17. When the learned Single Judge concluded that the Government Order dated 16.10.2023 to be otherwise valid, could not have quashed the condition in clause 1(d) alone, as the - 12 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 Karnataka Electricity Regulatory Commission or the Appellate Authority can rule on the rebate mentioned in the said condition as stated above. 18. For the aforementioned reasons, we are of the opinion that the order of learned Single Judge insofar as it relates to quashing the condition in clause 1(d) of the Government Order is liable to be set aside. Hence, the following: ORDER (i) The order of the learned Single Judge dated 23.07.2024 passed in Writ Petition No.1509 of 2024 insofar as it relates to quashing the condition in clause 1(d) of the Government Order dated 16.10.2023 impugned in the said writ petition is hereby set aside; (ii) Consequently, writ petition No.1509 of 2024 is hereby dismissed; (iii) The writ appeal stands disposed of accordingly. Pending applications, if any, stand disposed of. No order as to costs; (iv) It is hereby clarified that liberty is reserved for original petitioner No.1 to challenge the rebate granted as per the condition in clause 1(d) of the Government Order dated - 13 - NC: 2025:KHC:10103-DB WA No. 1753 of 2024 16.10.2023 before the Karnataka Electricity Regulatory Commission or the Appellate Authority, as the case may be. Sd/- (N. V. ANJARIA) CHIEF JUSTICE Sd/- (M.I.ARUN) JUDGE hkh. List No.: 1 Sl No.: 21