M/S Tata Power Renewable Energy … vs Union Of India on 17 June, 2021

1. The petitioner, M/s.Tata Power Renewable Energy Limited, filed this writ petition, under Article 226 of the Constitution of India, to quash the Requests for Selection (RfS) dated 30.11.2020 for a capacity of 6400 MW as well as the draft Power Purchase Agreements (PPA) issued by respondent No.4 and direct respondent No.4 to issue fresh Requests for Selection,

Strictly in accordance with the Guidelines for Tariff Based Competitive Bidding process for procurement of power from Grid connected Solar voltaic power projects dated 03.08.2017 issued under Section 63 of the Electricity Act, 2003 (for short ‘the Act’).

The 3rd respondent Government had taken a decision to provide 9 hours day time free power supply to 18.37 lakhs agricultural consumers in the State and issued G.O.Ms.No.5 for establishing APGECL (4th respondent), which is 100% subsidiary of AP GENCO to act as Nodal Agency for procurement/establishing 10,000 MW solar power projects to provide free power to the agricultural consumes.

 2. Accordingly, the 3rd respondent has issued G.O.Ms.No.18 dated 15.06.2020 formulating the scheme to provide 9 hours day time power supply to the agriculture sector on sustainable basis, has decided to implement the solar power projects in the State and issued operational guidelines for implementation of the scheme.

The 4th respondent shall be the executing Agency for the project and shall take action to set up 10,000 MWs solar power capacity in a phased manner in order to provide 9 hours day time free power supply to agriculture consumers and connect the scheme to the Grid.

The 4th respondent shall procure the power through competitive bidding and shall monitor progress of the 10,000 MWs solar initiatives in all aspects by putting an appropriate mechanism in place.

The 4th respondent shall be the nodal agency for developing solar parks under Ultra Mega Solar power projects scheme and UMREPP scheme of the Government of India and APSPCL shall provide required assistance to the 4th respondent.

The 4th respondent shall prepare the DPR’s and submit the same to the MNRE for obtaining Central Financial Assistance and it shall be responsible for development of solar parks either through solar power developer or any agency with the grants received from MNRE.

The solar power developer shall be responsible for development of solar project and internal evaluation infrastructure within the solar park as well as their annual Operation & Maintenance (O&M).

For transparent bidding process, a purchase committee is constituted. The purchase committee shall conduct the bid process, including issue of bid documents, conducting pre-bid meetings, initiating bids from developers and evaluation of bids received from the bidders. After evaluation of the tenders, the purchase committee shall submit their recommendations to the Tender approval Committee.

The bids shall be invited under BOT mode with flat tariff of 15 years and prefixed reduced Tariff thereafter to meet O&M and other expenses for the balance period of 15 years.

The Solar project will be transferred to the 4th respondent at the end of useful life of the project. The 3rd respondent-Government through 4th respondent shall pay monthly energy charges to the Solar Power Developers, energy charges will be paid to the projects from the date of COD for a period of 30 years (fixed Tariff for 15 years and prefixed reduced charges from 16th year).

The 4th respondent is permitted to lease the lands to solar power developers by collecting annual lease charges (INR 31,000 per acre per annum).

The 4th respondent shall enter into separate agreements with the licensees to supply and distribute the power to the end-consumers on payment of cost/charges as approved by the APERC as per the appropriate guidelines issued by the State Government under Section 108 of the Electricity Act, 2003 from time to time.

On 30.11.2020, the 4th respondent issued impugned RFS and the impugned draft PPA pertaining to the project and invited bids from the solar power developers, duly fixing last date for submission of bids was 28.12.2020.

3.The case of the petitioner is that the petitioner – M/s.Tata Power Renewable Energy Limited is a company incorporated under the Companies Act, 1956 and a generating company within the meaning of Section 2 sub- section 28 of the Act.

The petitioner claims to be the genuine prospective bidder and states that it is a wholly owned subsidiary of the Tata Power Company Limited (TPC) and it is technically and financially eligible to participate in the bidding process.

But the impugned RfS and draft PPA are issued contrary to the provisions of the Electricity Act and competitive bidding guidelines dated 03.08.2017 issued by the Central Government under Section 63 of the Act and thereby the competitive bidding process lacks its transparency. Hence, it could not participate in the bidding process as it is prejudicial to the petitioner’s right to participate.

4. The further case of the petitioner is that the 4th respondent issued impugned RfS inviting bids from Solar Power Developers (SPD) for development of 6,400 MW Grid connected Solar Photo Voltaic Ultra Mega Power Project spread over 10 Solar parks in the State of Andhra Pradesh in violation of provisions of the Act and guidelines for Tariff based competitive bidding process for procurement of power from Grid connected Solar photo voltaic power projects dated 03.08.2017 (for short hereinafter called as ‘Competitive Bidding Guidelines) framed by the 1st respondent in exercise of power under the provisions of Section 63 of the Act.

As per the scheme, the 4th respondent issued impugned RfS and impugned draft PPA seeking to create a parallel Generation, Transmission and Distribution system in the State of Andhra Pradesh in gross violation of the provisions of the Electricity Act, 2003 promulgated by the Parliament.

5. This Court, on 07.01.2021, upon hearing the parties while ordering notice before admission, granted interim direction directing the respondents not to enter into any agreements in relation to the impugned RfS and draft PPA with the successful bidders, however, the respondents are at liberty to proceed with the finalization of bids. Thereafter, the 4th respondent filed I.A.No.2 of 2021 seeking to vacate the interim order.

6. The 4th respondent filed its counter mainly stating that the Government of Andhra Pradesh has proposed to establish 10000 MW of solar power projects with a view to provide 9 hours day time free power supply to the agricultural consumers on a sustainable basis while reducing the subsidiary expenditure to the State Government.

Accordingly, the Government of Andhra Pradesh issued orders vide G.O.Ms.No.5 dated 15.02.2020 for establishment of 4th respondent as a 100% subsidiary of AP GENCO as nodal agency for procuring and establishment of 10000 MW of solar power projects in the State to provide the same free of cost to all 18.37 lakh agricultural consumers in the State.

The Government of Andhra Pradesh has issued G.O.Ms.No.18 dated 15.06.2020 designating the 4th respondent to implement the scheme. The 4th respondent has prepared bid documents and issued tender for procurement of solar power after judicial preview as required under the Andhra Pradesh Infrastructure (Transparency through Judicial Preview) Act, 2019.

The present scheme of free power to the farmers envisages that the State through the 4th respondent shall pay monthly energy charges to the solar power developers.

The 4th respondent would provide this power to the agriculturists at free of cost by using the network of TRANSCO and DISCOM duly conforming with the statutory requirement of payment of applicable network charges for such use of network.

Through this scheme, the Government of Andhra Pradesh proposes to replace the current system of providing subsidy to the distributing licensee by a system of providing power as required by the agricultural consumers at free of cost. As per this scheme, the State has issued “10.Request for Selection (RfS) dated 30.11.2020”.

The 4th respondent placed the tender documents in public domain by the judicial preview authority which has sought for comments from the public/stakeholders.

In response, the petitioner’s company, M/s.Tata Power Company Limited, has submitted bids’ comments on the conditions of tender document which includes draft PPA, etc.

However, the petitioner company has not submitted its objections as alleged non-compliance of provisions of Section 63 of the Act together with competitive bidding guidelines dated 03.08.2017 issued by the Government of India. The petitioner being a subsidiary of the said company has knowledge of the suggestions and comments made by the principal company.

The petitioner having knowledge of issuance of bidding process all through did not choose to raise the present objection till the expiry of bids submission date. Only with an intention to cause hurdle to the project bidding process, the petitioner has filed the present writ petition.

The provisions of Section 63 of the Act are not applicable to the subject biding process. In fact, Section 63 is another limb of principal section 62 of the Act. As per Section 62 of the Act, the appropriate commission shall determine the tariff in accordance with the provisions of the Act for supply of electricity by a generating company to the distribution licensee.

The generating company is not intended to supply power to the licensee. The 6th respondent commission has no power to determine tariff. Once Section 62 is not applicable by natural corollary, the implication of Section 63 is also ruled out. As such, the bidding process undertaken by the 4th respondent as nodal agency of 3rd respondent, the Government of Andhra Pradesh, is a general bidding procedure only to have fair competition and transparency dehors to the said guidelines issued by the Government of India.

The 4th respondent is a nodal agency of Government of Andhra Pradesh and is not supplying power to DISCOM, but providing power free of cost to 18.37 agricultural consumers in the State. Therefore, the provisions of Section 63 of the Act are not applicable to the subject bidding process.

The main issue in the instant case is only whether the subject bidding process would come within the ambit of Sections 62 and 63 of the Act. As the subject bidding process does not fall within the definition of ‘supply or distribution licensee’ or ‘supply to consumers for consideration’ as defined under the Act.

The implications of Regulatory commission to exercise its powers either under Section 62 or under Section 63 does not arise. As the 4th respondent is proposed to provide power secured from the generators to agriculturists at free of cost by using the network of AP TRANSCO and AP DISCOMs by paying network applicable charges as prescribed by the 6th respondent Commission as per Section 42 of the Act. The provisions of Section 86 of the Act deals with the functions of State Commission.

The Commission shall discharge the functions namely, determine the tariff for generation, supply, transmission and wheeling of electricity as the case may be within the State and regulate the electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or other than through agreement for distribution and supply within the State.

Therefore, the provisions of Sections 62, 63 and 86 read together lead to a conclusion that implication of regulatory commission and to follow the competitive bidding guidelines issued by the Government of India comes into operation only when the power is to be procured by the distribution licensees to supply by sale to consumers. Therefore, the grounds urged in the writ petition are unsustainable.

The petitioner claims to be a prospective bidder having not participated in the judicial preview proceedings at a stage prior to finally issuing the tender document without raising the present objection and without submitting its bid, is precluded from raising the instant plea at this stage. It has no locus standi to raise the present plea.

The writ petition, as seen from its averments, is in the nature of Public Interest Litigation saying that there is alleged violation of certain provisions of law in inviting the bids under the subject tender. The petitioner or any other person has every liberty to approach the 6th respondent Commission for appropriate directions under Section 129 of the Act and the writ petition is not maintainable and deserves to be dismissed at the threshold.

7. Heard Sri D. Prakash Reddy, learned senior counsel appearing for Sri Kilaru Nithin Krishna, learned counsel for the petitioner on record; Sri N. Harinath, learned Assistant Solicitor General appearing for the respondents 1 & 2; Sri P. Sri Raghuram, learned senior counsel appearing for 8th respondent; Sri S.Sriram, learned Advocate General appearing for 4th respondent; Sri V.R.N. Prasanth, learned counsel, appearing for 6th respondent; and Sri Y. Nagi Reddy, learned standing counsel, appearing for the respondents 5, 7 & 8. None appeared for 3rd respondent and no counter is filed.

8. To avoid repetition of the case of the parties and submissions made on their behalf, this Court, felt it appropriate to deal with their respective cases and submissions, while answering the issues.

9. Having regard to the pleadings of all the parties and submissions of learned counsel, the following issues arise for consideration:

1) Whether the petitioner has locus standi to question the impugned RfS and draft PPA before this Court?
2) Whether the impugned RfS and draft PPA are amenable for judicial review by this Court exercising power under Article 226 of the Constitution of India?
3) Whether the provisions of the Act and the guidelines for tariff based competitive bidding process for procurement of power from grid connected solar photo voltic power project dated 03.08.2017 issued under Section 63 of the Act are applicable to the impugned RfS and draft PPA or not?

10. Issue No.1:

The preliminary objection taken by the respondents is that the petitioner has no locus standi to file the present writ petition.

10.1 Learned Advocate General submits that the petitioner has not participated in the tender process and as such the said entity is not affected by the manner in which the bidding process was conducted. Petitioner being a prospective bidder has no locus standi to file the present petition seeking the relief sought for in the writ petition.

He submits that the prospective bidder has limited right to challenge the bidding process initiated by the procurer/any department of Government. For invoking the extraordinary jurisdiction of this Court, an infringement of fundamental right or any legal right must be demonstrated. He submits that it is well settled that the State has power to fix the terms of the tender which are sustainable and the prospective bidders have no say over the terms of the tender.

In support of his contention, he placed reliance on the judgment of the Hon’ble Supreme Court reported in Air India Ltd. v. Cochin International Airport Ltd., [2000(2) SCC 617] and B.S.N. Joshi & Sons v. Nair Coal Services Ltd. [2006(11) SCC 548].

Hence, the contention of the petitioner that 4th respondent who has initiated this bidding process as nodal agency on behalf of the Government of A.P.-3rd respondent, has not followed the competitive bidding guidelines dated 03.08.2017 issued by the Government of India, the 1st respondent, under Section 63 of the Act, is unsustainable. At the instance of the 4th respondent, the tender documents were placed in public domain by the Judicial Preview authority which has sought for comments from public/stakeholders. The parent company of the writ petitioner – M/s.Tata Power has submitted its comments.

However, the company has not submitted its objections as alleged in the present writ petition, i.e., non-compliance of Section 63 of the Act together with effective bidding guidelines dated 03.08.2017 issued by the Government of India.

The petitioner being a subsidiary of the said company has knowledge of the suggestions/acts made by its principal company. The petitioner having knowledge of the initiation of the impugned bidding process, did not choose to raise the present objections till the expiry of bid submission date and only with an intention to cause hurdle to the subject bidding process, filed the present writ petition.

He further submits that even though the petitioner has participated in the judicial preview proceedings at a stage prior to issuing tender document without raising the present objection and without submitting its bid, is precluded from raising instant plea at this stage. It has no locus standi to raise the present plea.

10.2 Learned senior counsel appearing for the petitioner submits that the petitioner could have submitted its bid in the bidding process, if the impugned documents were in consonance with the provisions of the Act and the Competitive Bidding Guidelines. As per the technical eligibility criteria of the impugned RfS, the bidder is required to have similar experience in the field of solar and electrical sectors.

The bidder should have also executed solar projects having capacity of minimum of 25 MW within the last 10 years either as EPS contractor or a solar power developer. The petitioner under the aegis of parental company i.e., Tata Power Company Limited has executed various solar projects of more than 25 MW capacity in the last 10 years, particularly in the State of Andhra Pradesh.

The petitioner is having technical eligibility to participate in the impugned bidding process. As per the financial eligibility criteria of the impugned RfS, the bidder should have a net worth equal to or greater than Rs.10 lakh MW of quoted capacity and minimum annual turnover of Rs.41.45 lakhs MW of quoted capacity as on the last date of previous financial year i.e., financial year 2018-19 or financial year 2019-20 whichever is latest available or as on the day at least 7 days prior to the bid submission of deadline. The petitioner has net worth of Rs.1123.25 crores and annual turnover of Rs.917.46 crores.

The petitioner and its parent company has a net worth of Rs.12861.18 crores and an annual turnover of Rs.7074.99 crores. The petitioner also has financial eligibility to participate in the impugned bidding process. He would further submit that the petitioner and its parent company have the capability to bid for more than tendered capacity of 6400 MW.

The petitioner, under the aegis of its parent company (TPC), has executed various solar power projects of more than 25 MW capacity in the last 10 years in the State of Andhra Pradesh. However, the petitioner consciously decided to not submit its Bid after observing that the impugned RfS and draft PPA are issued in violation of the provisions of the Act and the Competitive Bidding Guidelines. Such deviations are fatal and make the entire bidding process unreliable.

Further, it could not participate in the tender process as it is prejudicial to its interest, as the tender is floated in violation of provisions of the Act and competitive bidding guidelines. 10.3.

This Court found that the petitioner is technically and financially qualified to participate in the bidding process initiated by the 4th respondent by way of impugned RfS and draft PPA.

The petitioner being a prospective bidder and qualified to participate in the bidding process, restrained from participating in the bidding process in response to the impugned RfS and draft PPA which is prejudicial to its rights complaining non-compliance of the provisions of the Act and competitive bidding guidelines and was constrained to file the present writ petition assailing the validity of the impugned RfS and impugned PPA being ultra vires the Act as well as competitive bidding guidelines.

10.4 The traditional rule of locus standi is that judicial redress is available only to a person who has suffered a legal injury by reason of violation of his legal right or legally protected interest by the impugned action of the State or a public authority or any other person or who is likely to suffer a legal injury by reason of threatened violation of his legal right or legally protected interest by any such action.

The basis of entitlement to judicial redress is personal injury to property, body, mind or reputation arising from violation, actual or threatened, of the legal right or legally protected interest of the person seeking such redress.

This is a rule of ancient vintage and it arose during an era when private law dominated the legal scene and public law had not yet been born (emphasis supplied from the Hon’ble Apex Court judgment in S.P.Gupta Vs. President of India and others [AIR 1982 SC 149]).

The strict rule of locus standi applicable to private litigation is relaxed and a broad based rule is evolved which gives the right of locus standi to any member of the public acting bona fide and having sufficient interest in instituting an action for redressal of public wrong or public injury, but who is not a mere busy body or a meddlesome interloper (emphasis supplied from the Hon’ble Apex Court judgment in Janata Dal Vs. H.S.Chowdhary and others [(1992) 4 SCC 305]).

A member of the public, having no personal gain or oblique motive, is empowered to approach the Court for enforcement of his constitutional legal rights (Sheela Barse Vs. Union of India and Others [(1988) 4 SCC 226]).

10.5 Thus, there has been a spectacular expansion of concept of ‘locus standi’. The concept is much wider and it takes in its sweep anyone who is not a mere busy body. In the light of the expanded concept of locus standi, the action of executive in disregard to the provision of law, raise substantial issues of accountability of those entrusted with the responsibility of Administration.

It furnishes enough cause for an individual to approach by way of a writ petition. The authorities can neither be permitted to seek shelter under the technicalities of locus standi nor can they plead restraint in the exercise of discretion as grave issues of public concern outweigh such consideration (emphasis supplied from the from the Hon’ble Apex Court judgment in Bangalore Medical Trust Vs. B.S.Muddappa [(1991) 4 SCC 54]. When the impugned RfS and draft PPA are issued in utter violation of the provisions of the Act and the competitive bidding guidelines, certainly petitioner’s rights to participate in the bidding process are being affected.

To challenge the impugned RfS and draft PPA, one need not be a participant bidder. Once the State or an instrumentality of the State has been enjoined to follow the rule of law and if there is an infraction, it lies within the domain of any ordinary citizen to lay challenge against the said infraction.

10.6 A writ of mandamus could be issued at the instance of the aggrieved party whose legal right is affected for non-compliance of the provisions of the Act. Likewise, at the instance of any citizen, writ of certiorari could be issued quashing the State action or proceedings found to be in contravention of any statutory provision of law.

10.7 The petitioner, being a genuine prospective bidder, in response to the impugned RfS and draft PPA, by a narrow construction of doctrine of locus standi, the writ petition cannot be thrown out on the ground that the petitioner has no locus standi, when the issue is whether the impugned RfS and draft PPA are issued in consonance with the provisions of the Act. The issue is answered accordingly.

11. Issue No.2:

The learned counsel for the respondents would contend that the petitioner is not a bidder. The complaint in the writ petition is that the terms and conditions of Tender (RfS) and draft PPA are violative of the provisions of the Act and the competitive bidding guidelines issued by the Central Government, exercising the power under Section 63 of the Act.

Except violative of law, no mala fides, discrimination and arbitrariness which violates the rights of a bidder to compete with other bidders or that the tender conditions are tailor- made for a particular class or individual bidder are attributed.

Hence, no part of the legal rights of the petitioner, who is not even bidder, is violated. It is further contended no legal right is vested in the petitioner to question the terms of tender conditions.

Even if the petitioner is prospective bidder or bidder, the challenge could be only to tender process but not to the tender conditions or the decisions of the process. In support of his contention, he relied on the decision of the Hon’ble Apex Court rendered in the case of Merut Development Authority Case [2009 (6) SCC 171].

He would further contend that the bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by the interested persons in response to the notice inviting tenders in a transparent manner free from hidden agenda.

He would further contend that the tender is an invitation to treat, which is a step before an offer. Hence, it is in the realm of contract. Therefore, the tender conditions cannot be challenged.

The challenge, if any, to the tender conditions could be limited to the illegality, such as mala fides and that they are tailor-made by benefiting the other party and that the illegality affects the competitiveness of the petitioner. The court cannot substitute its judgment in the tender process.

Therefore, the Court would not issue any writ directing the State or its instrumentalities to re-bid as it would be contravening the freedom of the State to contract. 11.1 He further submits that the parent company of the petitioner submitted a letter on 28.12.2020 with a request for extension of time for submission of bids. When the same has not been responded, the writ petition is filed on 06.01.2021, and interim order was obtained on 07.01.2021, which clearly shows the lack of bona fides in the writ petition. Hence, the Writ Petition is liable to be dismissed.

11.2 There is no doubt, it is well settled legal proposition that the terms of the invitations to tender cannot be open to judicial scrutiny because the invitation to tender is not in the realm of contract.

However, as the specific impugned activity of the 4th respondent is governed by the statutory provisions, but the impugned RfS and draft PPA are issued in violation of the provisions of the Act, the action of the 4th respondent is amenable to judicial review by this Court.

Mere issuance of impugned RfS and draft PPA after judicial preview as required under the A.P. Infrastructure (Transparency through Judicial Preview) Act, 2019 does not preclude this Court to entertain a writ petition filed challenging the impugned RfS and draft PPA on the ground of infraction of law.

There is no dispute, the freedom of contract for the Government in exercise of its executive power. It has the same freedom as any individual is vested with under the Constitution in the case of commercial contracts, but not in the case of statutory contracts.

However, in order to prevent arbitrariness or unfairness in the bidding process initiated contrary to the statutory provisions, such arbitrariness needs to be set at naught by this Court by exercising its power of judicial review.

The remedy available under the provisions of Section 129 of the Act is not an efficacious remedy under present circumstance of the case. Hence, the petitioner could not be driven to the APERC, the 6th respondent.

12. Issue No.3:

The case of the petitioner is that the 3rd respondent Government vide G.O.Ms.No.18 has sought to establish 10000 MW of solar power capacity in the State of Andhra Pradesh and provide free 9-hour day time power to the agriculture sector on a sustainable basis.

Thereafter, G.O.Ms.Nos.19 and 25 were issued modifying the directions issued in G.O.Ms.No.18 and included change in tenure of the impugned draft PPA, provisions for sale of asset, provision of State Government Guarantee to successful bidders, revision of lease rental for private and assigned lands, generation, compensation for back down, pass through of safe guard duty and basic custom duty through tariff adjustment etc.

Accordingly, 4th respondent issued the impugned RfS and the impugned draft PPA pertaining to the project and invited bids from the SPDs. The impugned RfS and draft PPA are against the provisions of the CBG as well as the provisions of the Act. 12.1 Sri D.Prakash Reddy, learned senior counsel has drawn the attention of this Court to the relevant provisions of the Act, Tariff Policy and clauses of the CBG. He would contend that as per the provision of Section 63 of the Act, the 6th respondent – APERC is required to adopt the tariff for a project, if such tariff has been determined through a transparent bidding process, in accordance with the guidelines issued by the Central Government. Section 6.4(2) of the Tariff Policy formulated by the 1st respondent provides that States shall endeavour to procure power from renewable energy sources through competitive bidding to keep the tariff low.

In furtherance of the object of Section 63 of the Act, CBG have been issued by the Central Government for long term procurement of electricity from grid connected solar photo voltaic power projects having size of 5 MW and above, through competitive bidding.

Clause 1.2 of CBG provides the specific objectives of the Competitive Building Guidelines. CBG provide a standardized and uniform method for procurement of power through competitive bidding, which is necessarily required to be followed by all stakeholders even for Intra-State Projects.

12.2 The deviations pointed by learned senior counsel in the impugned RfS and the draft PPA vis-à-vis the provisions of the Act and CBG can be stated as follows:

i) The impugned draft PPA provides a stipulation for claiming the relief of ‘change in law’ in the event of such change in tax, duties, etc., subsequent to signing of the impugned draft PPA.

Since such ‘change in law’ event could result in increase in tariff and can have financial implications for the consumers, the Act provides for adequate safeguards of allowing any change in tariff only after adjudication and approval by the appropriate commission.

Whereas, the Clause 12 of impugned draft PPA says that a party claiming the relief of ‘Change in law’ is required to approach the other party for appropriate relief and any compensation on account of ‘change in law’ shall be determined and shall be effective from such date as may be mutually agreed by both parties.

The same is in violation of clause 5.7 of CBG. Clause 5.7 of CBG states that a party claiming the relief of ‘change in law’ shall be entitled to compensation by the other party, subject to the condition that the quantum and mechanism for payment of compensation shall be determined and shall be effective from such date as may be decided by the 6th respondent commission.

Even as per the provision of Section 62 of the Act, the power and functions for ‘determination of tariff’ has been statutorily vested with the 6th respondent.

Thus, it is evident that clause 12 of the impugned draft PPA is in stark contrast to clause 5.7 of the CBG and the same would amount to a deviation from the provisions of the CBG.

In fact, clause 12 of the impugned draft PPA seeks to oust the statutory power and authority of 6th respondent. Therefore, clause 12 of the impugned draft PPA, which violates the specific intent of having a regulatory commission and making the said regulatory commission the custodian of the entire power sector within the State, not only violates the CBG but also the very object of the Act.

Therefore, impugned RfS and the draft PPA especially clause 12 of the draft PPA are ultra vires the provisions of CBG and the Act and are liable to be quashed.

ii) Clause 16 of the impugned draft PPA provides the mechanism for amicable settlement and dispute resolution to be adopted by the parties. It provides that all disputes shall be referred to a senior officer designated by the representatives of 4th respondent and the Solar Power Developers [SPDs] who shall attempt to resolve the dispute within a period of 15 days. If any dispute remains unresolved shall be referred to an Arbitration committee consisting of – (1) Principal Secretary of Energy Department, Andhra Pradesh, (2) Chief Engineer, Transmission Corporation of Andhra Pradesh (TRANSCO), (3) Superintendent Engineer of 4th respondent, and (4) One representative of SPD.

The above mechanism for dispute resolution provided in the impugned draft PPA is contrary to the provisions of CBG as well as the provisions of the Act inasmuch as the said clause has taken away the powers of the 6th respondent to facilitate resolution of dispute and refer the parties to arbitration.

Clause 16 of the impugned draft PPA also curtails the powers of 6th respondent to adjudicate the issues of “Change in law” and award necessary compensation.

The above dispute resolution mechanism is also violative of Section 86(1)(f) of the Act. As per the provisions of Section 86(1)(f) of the Act, the State Commission i.e., 6th respondent is vested with the statutory powers to adjudicate any dispute arising out of the impugned draft PPA.

However, Clause 16 of the impugned draft PPA has sought to oust the powers of 6th respondent stating that disputes if any shall be adjudicated by the arbitration committee.

Even as per Clause 19 of the competitive bidding guidelines, all disputes shall be adjudicated or referred to arbitration by the State Electricity Regulatory Commission. As per the scheme of the Act, the State Commission i.e., 6th respondent has been statutorily empowered and obligated to adjudicate the disputes between the generator and licensee.

However, by virtue of impugned RfS and the impugned draft PPA, the jurisdiction of 6th respondent is sought to be contractually ousted by the 4th respondent, which is impermissible in law.

iii) The provisions of the Act permit procurement of power supply or consumption by licensees viz., a Trading licensee or a Distribution licensee. The 4th respondent, who is neither a trading licensee nor a distribution licensee, initiated bidding process inviting bids from the prospective bidders by issuing impugned RfS and impugned draft PPA, contrary to the provisions of competitive bidding guidelines and the provisions of the Act and are liable to be quashed.

Clause 1.2 of CBG specifically provide for a framework for an intermediary procurer as an aggregator/trader for the inter-state/intra-state sale purchase of long term power. Thus, any entity which issues a request for procurement of power under the CBG must necessarily be an intermediary procurer.

However, neither the impugned RfS nor the impugned draft PPA discloses the status of 4th respondent as intermediary procurer. Thus, issuance of impugned RfS and draft PPA by 4th respondent, without being the intermediary procurer for the project is a deviation from the provisions of the CBG.

As per Sections 7 & 8 of the Act, generation is a delicensed activity. 4th respondent has not disclosed its status as to whether it is a licensed company or not for which necessary licence is to be obtained under Section 14 of the Act. 4th respondent has not provided any clarity on the nature of its entity, who is seeking to enter into a commercial contract i.e., impugned PPA with the SPDs.

Therefore, the same is in gross violation of Section 14 of the Act. The non disclosure of the status of the 4th respondent puts a bar on 6th respondent to exercise its regulatory powers under Section 86(1)(f) of the Act vis-à-vis the project, as the 4th respondent is designated as nodal agency for procuring power to the 3rd respondent.

Since 4th respondent is neither a trader nor a licensee and in the present case the project is to be implemented as per the impugned RfS, by virtue of the statutory limitation prescribed under Section 86(1)(f) of the Act, the SPDs would also be barred from approaching the 6th respondent commission for redressal of grievances.

Therefore, once again, 4th respondent has indirectly sought to completely oust the statutory jurisdiction of 6th respondent which is not permissible in terms of the CBG and the Act.

iv) The specific objective of the CBG is to facilitate transparency and fairness in procurement processes/ and to provide for a framework for an intermediary procurer as an aggregator/trader for the inter state/intra state sale purchase of long term power.

The action of 4th respondent in deviating from the express provisions of the CBG without the approval of 6th respondent is ultra vires the scheme of the Act itself.

12.3 In support of the above contentions, learned senior counsel relied on the following decisions:

a) Gujarat Urja Vikas Nigam Ltd., v. Essar Power Limited [(2008) 4 SCC 755.

b) Energy Watchdog v. CERC [(2017) 14 SCC 80]
c) Renew Power Limited v. The State of Andhra Pradesh [W.P.No.9844 of 2019].

d) PTC India Ltd., v. Central Electricity Regulatory Commission & Ors [(2010) 4 SCC 603.

12.4 Per contra, Sri P.Sri Raghuram, learned senior counsel, would contend that the 4th respondent being nodal agency of 3rd respondent Government along with the Government had undertaken a scheme to provide 9-hours day time power to 18.37 lakh agricultural consumers.

The Government proposed to select the bidders who have wherewithal to establish, operate and provide power to respondents 3 & 4. At the instance of 4th respondent, the tender documents were placed in public domain by the Judicial Preview Authority.

The provisions of Section 63 of the Act are not applicable to the present case. In fact, Section 63 is another limb of Principal Section 62 of the Act, which clearly says that the appropriate commission shall determine the tariff in accordance with the provisions of the Act for supply of electricity by a generating company to distribution licensee.

Therefore, it is clear that when a generating company is not supplying power to distribution licensees, the 6th respondent Commission has no jurisdiction to determine tariff. Once Section 62 is not applicable, by natural concomitant, the application of provisions of Section 63 is also ruled out.

Therefore, the bidding process undertaken by 4th respondent as Nodal agency of 3rd respondent is a general bidding procedure only to have fair competition and transparency dehors to the said guidelines issued by respondents 1 & 2.

The 4th respondent, which is nodal agency of the 3rd respondent is not supplying power to DISCOMs but proposed to provide power free of cost to 18.37 lakh agricultural consumers of the State.

Therefore, Section 63 is not applicable to the subject bidding process. The core issue in the instant case is as to whether or not the subject bidding process would come within the ambit of Sections 62 and 63 of the Act.

Since the subject bidding process does not fall within the meaning of ‘supply to distribution licensee’ or ‘supply to consumers’ for consideration, as is defined under the Act, the jurisdiction of regulatory commission to exercise its power either under Section 62 or under Section 63 does not arise.

The 4th respondent proposed to provide the power secured from generators to agriculturists free of cost by using the network of AP TRANSCO and AP DISCOMs by paying the applicable network charges as prescribed by 6th respondent as per Section 42 of the Act. Section 86 of the Act deals with the functions of State Commission.

The Commission shall discharge the functions namely, determine the tariff for generation, supply, transmission and wheeling of electricity as the case may be within the State and regulate the electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or other than through agreement for distribution and supply within the State.

Therefore, the provisions of Sections 62, 63 and 86 read together lead to a conclusion that jurisdiction of regulatory commission and to follow the competitive bidding guidelines issued by the Government of India comes into operation only when the power is to be procured by the distribution licensees to supply by way of sale to consumers. Therefore, the grounds urged in the writ petition are unsustainable.

12.4.1 The Act has not contemplated that the Government need to get license and since the Government wants to provide power free of cost to agriculturists or peasants no license is required.

The 4th respondent as a nodal agency has every right to procure power for the 3rd respondent-Government to achieve the aforesaid object. The subject tender process is not in violation of any of the provisions of the Act or the regulations made thereunder.

Therefore, the writ petition deserves to be dismissed at threshold as not maintainable.

12.4.2 Under the provisions of the Act, the powers of the 6th respondent are primarily in relation to the functions of the licensee under the Act, fixation of tariff for the purposes adumbrated and limited under Section 62 and 63 of the Act and for adjudication of disputes under Section 86(1)(f) of the Act apart from the regulatory function of determination of tariff under open access under Section 42 of the Act besides formulation of regulations, supervisory functions and advisory functions.

As per the definitions of “consumer”, “distribution licensee”, “supply” and “transmission licensee” defined under Sections 2(15), 2(17), 2(70) and 2(73), the 4th respondent is neither a distribution licensee nor a transmission licensee.

12.4.3 The contention of the petitioner that the subject activity ought to receive prior concurrence and continue to abide by the regulatory and adjudicatory jurisdiction of the 6th respondent is untenable.

The status of the 4th respondent vis-à-vis the subject matter is clearly elaborated in para 5 of G.O.Ms.No.18 and also reiterated in Section 6 of RfS. 12.4.4 In the proposed scheme, the tariff is determined by 4th respondent through general competitive bidding and does not fall under Sections 62 or 63 of the Act since 4th respondent is not supplying power to a licensee but providing power free of cost to the agricultural consumers.

As per MNRE guidelines, for tariff based competitive bidding process for procurement of power from grid connected solar PV power projects, the terms ‘procurer’ applies only to distribution licensees or the authorized representatives or an intermediary procurer or end procurer.

Neither 4th respondent nor the generator/SPD has involved in sale of power to distribution licensees or consumers. Government of AP proposed to provide power being secured through the subject tender to agriculturists free of cost.

Since 4th respondent is securing power on behalf of 3rd respondent Government to meet its subsidy obligations and is not a licensee, the bid documents were not referred to 6th respondent Commission for approval. As per G.O.Ms.No.18, AP DISCOMs shall enter into an agreement with the 4th respondent-APGECL for transmission of power from these solar projects to agriculture consumers.

Such agreement is similar to open access agreement. The spirit of the guidelines mandating competitive bidding as force of power has strictly been followed. Only in cases where DISCOM procures power through power sale agreement at a tariff from SECI/NTPC and SECI/NTPC in turn get such power from SPD then in such case DISCOMs are required to obtain approval from appropriate commission for tariff adoption and approval of PPA, which is not the case in the subject scheme.

As per the bid documents, any financial implication due to change in law on account of duties will be passed on through tariff adjustment on actual to SPD by 4th respondent. As per this scheme, the power generated by the solar projects shall be provided to agriculture consumers at free of cost.

The tariff will be paid by 4th respondent with budgetary support from the 3rd respondent-Government and would not be passed onto the DISCOMs or agriculture consumers or any other consumers in the State.

In view of the aforesaid facts, this scheme doesn’t fall within the ambit of Sections 62 and 63 of the Act. However, the spirit of said guidelines was followed to the extent relevant.

The State Government intends to secure Solar Power through 4th respondent as the enabling agency (not a licensee) for providing power to the agricultural consumers at free of cost, by using the network of AP TRANSCO and AP DISCOMs. The network charges, as determined by APERC, shall be paid by the State Government.

In addition, any incidental expenses towards backing down (additional surcharge) and balancing cost (if any) incurred by the AP DISCOMs after netting off revenue from sale of Renewable Energy Certificates as approved by 6th respondent will be paid by the 3rd respondent-Government to the AP DISCOMs.

Since both Government of AP and the 4th respondent are not selling the power to any licensees, the bid process including tariff adoption is not required to be referred to 6th respondent. As per the provisions of Electricity Act, generation is not a licensed activity and any non-licensee can secure power from a generator without approaching the appropriate commission during the power procurement process or for dispute resolution.

12.4.5 It is not correct to state that the status of 4th respondent is not clear. In fact, 4th respondent is procuring power for the 3rd respondent-Government to provide 9 hours day time free power supply to agriculture consumers and is not trading the power. In the proposed scheme, 4th respondent which is a State owned Corporation and 100% subsidiary of APGENCO is procuring power on behalf of the 3rd respondent-Government for free power supply to agriculture consumers by the State Government.

Further, under the electricity law, generation is not a licensed activity. Government is free to secure power from a generator to provide the same on free of cost to agriculture consumers. Since APGECL is the nodal agency of 3rd respondent, it is not a licensee and it does not fall within the jurisdiction of APERC.

It is incorrect to state that 4th respondent has ousted the jurisdiction of 6th respondent Commission. 12.4.6 The guidelines issued by respondents 1 & 2 are not applicable to the subject scheme.

The said guidelines are issued with an object that the cost of procurement of power to DISCOMs should not be unjustified, since DISCOMs are to discharge its functions on commercial principles as contemplated in Section 61 of the Act invariably it has to pass on the same to end consumers. Whereas in the subject scheme, Government would provide power free of cost to agricultural consumers. The scheme modalities do not infer/put at risk the consumer interest as provided under Electricity Act.

Under the proposed scheme, the State Government will continue to provide subsidy to the DISCOMs. Further, the State Government shall continue to pay the network charges, as determined by 6th respondent to the DISCOMs.

The key provisions of the RfS ensure competitive price discovery and transparency, in strict compliance with the MNRE CBG. Since the procurement is done by 4th respondent for Government of AP, this procurement would not fall under the jurisdiction of 6th respondent. 12.4.7 Section 86 of the Act applies only when DISCOMs procure power for sale to consumers but not otherwise.

The scope of Section 86 does not encompass the Government supplying free power to agriculturists. Regulatory power under Section 86 on procurement of power is limited to procurement by DISCOMs but not procurement by any person or Government.

The appropriate commission shall determine the tariff only for supply of electricity by a generating company to a distribution licensee. 12.4.8 It is incorrect to state that dispute resolution mechanism provided in the impugned tender document is against provisions of Arbitration Act.

It is incorrect to state that 4th respondent has to procure power only through competitive bidding guidelines issued by respondents 1 & 2 and the said claim is clear misconception of facts and law.

In the fact situation of the case, the guidelines applicable to the present tender process, viz., competitive bidding has been strictly complied with along with norms of transparency. 12.5 Sri S.Sriram, learned Advocate General, while adopting/reiterating the arguments of Sri P.Sri Raghuram, would contend that the guidelines issued by the Central Government are for the purpose of protecting consumer interest.

The Government evolved a scheme by which consumer i.e, the agriculturist is securing power free of cost. There is no commercial element in the transactions. The transaction does not have any effect on the market. It has no effect, particularly, on the consumer.

Therefore, the guidelines per se may not apply to the subject tender. In the first instance, the Government and the 4th respondent have followed the guidelines in essence and in all respects.

The guidelines clearly show that the essence of guidelines is to maintain the consumer interest and transparent fair procedure in procuring power through bidding process. Since the impugned proceedings themselves are in the nature of transparent bidding process, which is not in any way commented upon by the petitioner, the guidelines in its essence are followed and consequently section 63 of the Act is also followed.

12.5.1 The key difference as regards the guidelines and the scheme is that while the scheme is for composite procurement of electricity and the asset (BoT) basis the guidelines only consider procurement electricity.

Hence, the guidelines are applicable to the distribution licensees issuing tenders primarily for the procurement of electricity which shall thereafter be offered on sale to consumers. Similarly, Sections 62 & 63 of the Act are applicable only to tariff fixation of licensees and not for a scheme.

Therefore, the contention that the tender process is in violation of the guidelines is not tenable. The guidelines clarify that they apply only to procurers i.e. licensees or intermediary procurer. Therefore, the guidelines are not directly applicable to the scheme which is not a procurer or intermediary or licensee. Similarly Sections 62 & 63 of the Act speaks of tariff determination by bidding process and tariff is determined according to section 62.

12.5.2 Section 86(1)(f) of the Act is a statutory remedy of dispute resolution with regard to disputes between licencees and generating company. In the scheme of things, generating company is having a privity of contract with the 4th respondent only. There is no scope for dispute between generating company and licencee.

Finally, he would contend that if the petitioner has any grievance about the issuance of impugned RfS and draft PPA, the petitioner has to approach the 6th respondent-Commission under Section 129 of the Act and the writ petition is not maintainable and deserves to be dismissed at the threshold.

12.6 In reply, Sri D.Prakash Reddy, learned senior counsel appearing for Mr.Kilaru Nithin Krishna, advocate on record for the petitioner, would contend that the 4th respondent issued impugned RfS inviting bids from Solar Power Developers (SPD) for development of 6,400 MW Grid connected Solar Photo Voltaic Ultra Mega Power Project spread over 10 Solar parks in the State of Andhra Pradesh in violation of provisions of the Act and guidelines for Tariff based competitive bidding process for procurement of power from Grid connected Solar photo voltaic power projects dated 03.08.2017 framed by the 1st respondent in exercise of power under the provisions of Section 63 of the Act.

Through the scheme, the 4th respondent issued impugned RfS and draft PPA seeking to create a parallel Generation, Transmission and Distribution system in the State of Andhra Pradesh in gross violation of the provisions of the Electricity Act, 2003 promulgated by the Parliament.

The 4th respondent issued impugned RfS mentioning that the Tender/Bidding process is called in terms of the Competitive Bidding Guidelines as envisaged under the provisions of Section 63 of the Electricity Act. Under the scheme, the power is supplied to the agriculturists free of cost through AP DISCOMs in the State of Andhra Pradesh, for which necessary approvals shall be taken from the 6th respondent-Commission.

In support of his contention, he has drawn the attention of this Court to the various provisions of the Electricity Act and Competitive Bidding Guidelines. In fact, respondent No.4 has admitted that the impugned documents do not conform to the CBG and the provisions of the Electricity Act, 2003.

From the language used in Section 63 of the Act, it is evident that for any bidding to be carried out the same has to be done “in accordance” with the guidelines issued by Central Government.

Further, the Competitive Bidding Guidelines issued by respondent No.1 also envisages that the same are mandatorily required to be followed for any procurement of Renewable Power. 12.6.1 The National Tariff policy as issued under Section 3 of the Electricity Act, 2003 mandates that State (including Respondent No.3) shall procure power from renewable energy sources through competitive bidding as specified under Section 63.

Therefore, the Electricity Act, 2003 unequivocally mandates that all competitive bidding for procurement of Solar Power is to be carried out in terms of the Guidelines as specified by the Central Government/Respondent No.1. Hence, under no circumstances can any Solar Power bidding be done in variation with the guidelines.

Hence, ex facie, in issuing the impugned documents, respondents 3 and 4 have violated the express mandate of Section 63 of the Electricity Act, 2003 and for this reason alone the impugned RfS and draft PPA are liable to be quashed. Further, it is a settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. In fact the Act as well as the guidelines specifically prescribed the method of procurement to be carried out.

Hence, in so far as electricity is concerned, the Tender Authority/4th respondent has no discretion to alter or vary the terms of the Tender as per the Act as well as per the Guidelines. Further, as contended in the Writ Petition for any deviation the respondent Nos.3 and 4 were obligated to approach respondent No.6 Commission for its prior approval.

12.6.2 The 4th respondent in its counter has contended that the impugned documents have been issued in accordance with the Act of 2019. The said contention is wholly untenable as Electricity Act, 2003 is promulgated by the Parliament and hence occupies the field insofar as generation and supply of electricity is concerned. Whereas, Act of 2019 is a State enactment and would be subservient to the field, which is occupied by Electricity Act, 2003.

Further, the Section 13 of the Act of 2019 itself mandates that Central Act shall prevail. Therefore, the Judicial Preview Committee as created under the State Act cannot discharge functions as entrusted upon by Respondent No.6 by the Central Act (i.e., Electricity Act, 2003).

Hence, compliance of the AP Act, 2019 is of no consequence insofar as Competitive Bidding for Electricity Generation is concerned as the same must conform with the mandate of Section 63 read with the Guidelines issued by the Respondent No.1. Hence, the contention of Respondent No.4 is wholly without merit and is liable to be rejected.

12.6.3 Learned senior counsel would further submit, without prejudice to the above, that assuming that the impugned RfS was issued after clearance from the Judicial Preview Committee, the same is itself against the provisions of the Act of 2019 which mandated that any scheme has to be in conformity with the procedure, rules and guidelines prescribed by State and Central Government.

Thus, the Judicial Preview Committee ought to have suggested that the Scheme has to be in conformity with the Electricity Act and Competitive Bidding Guidelines, and the failure to do so has made the entire scheme ultra vires the provisions of the Electricity Act.

12.6.4 The contention of the 4th respondent that TPC i.e., the parent company of the petitioner did not raise any objections regarding the non-conformities in the impugned RfS and the Draft PPA during the judicial preview/pre-bid stage, is wholly without merit and is liable to be rejected. In this regard, it is submitted that TPC issued several communications to Respondent No.4 regarding non- conformity of the impugned RfS and the Draft PPA with the mandate of the Competitive Bidding Guidelines.

It was also specifically conveyed by TPC that in terms of the Judgment of the Hon’ble Supreme Court in the case of Gujarat Urja Vikas Nigam Limited V. Essar Power Limited, (2008) 4 SCC 755, it has been held that, under the Electricity Act, adjudication of disputes between Licensees and Generating Companies can only be done by the Appropriate State Commission or the arbitrators(s) appointed by it.

12.6.5 The 4th respondent has admitted that it is not a licensee; the 4th respondent being a Government company does not need license; the present bidding is not in accordance with Sections 63 and 86 of the Electricity Act, 2003 as the said provisions are not applicable; the deviations need not be approved by the 6th respondent Commission.

The substance of 4th respondent’s case is that since the power is being supplied directly from generators to agricultural consumers without consideration, the scope of Section 63 gets ousted and hence the proposed transaction falls outside the purview of the 6th respondent.

12.6.6 As could be seen from the contents of the counter, Respondent No.4 is seeking to procure power from the Solar Power Generators and provide it to Agricultural consumers, such a transaction falls foul to the very ethos of Electricity Act, 2003.

The ability to purchase and supply power to consumers as an activity is solely vested with a Distribution Licensee as per Section 2(17) read with Section 12 of the Electricity Act, 2003. In fact as per Section 2(17) the Distribution Licensee operates the Distribution System for supplying electricity to consumers in his area of supply.

Hence, if the contention of the 4th respondent that Respondent No.4 will use the Network of Transco/Discom to supply power to Agricultural consumers is to be accepted then respondent No.4 would operate the Distribution System to provide power to Agricultural consumers without obtaining license under Section 14 of the Electricity Act, 2003.

This is when such Agricultural Consumers fall within the area of operation of either of the existing Licensees. In fact, the said method of supply would find foul with the specific mandate of Section 12 of the Electricity Act, 2003 which unequivocally mandates that no person can distribute electricity without obtaining a License. Further, as per the provisions of the Electricity Act, 2003 the power can be supplied to a consumer only by a Distribution Licensee who is authorized by issuance of a License.

This is because distribution of power is one key end of the entire power generation and supply chain. The distribution of power as an activity requires direct interface with end consumers. Hence, the technical and financial requirement to become a Distribution License has been kept at a much higher pedestal. This is why the Central Government for the purpose of granting Distribution License has notified The Distribution of Electricity License (Additional Requirements of Capital Adequacy, Credit Worthiness and Code of Conduct) Rules, 2005.

Moreover, the APERC/Respondent No.6 has also notified the APERC (Distribution License) Regulation, 2013 inter alia specifying the minimum threshold to be met for grant of Distribution License. Hence, without the grant of License no person can distribute electricity from a Generator to end consumers even if such consumers are Agricultural consumers.

Therefore, the assertion that respondent No.4 would use the Distribution Network by paying requisite Charges to provide power from generators to agricultural consumers is a misnomer as the said transaction would render the definition of “Distribution Licensee” under Section 2(17) as only the said Licensee is authorized to operate the Distribution System. Hence, the meaning ascribed to whole activity of Distribution Licensee would be made redundant.

12.6.7 The proposed transaction would then render the entire object of having higher threshold for granting any person a Distribution License also redundant as by the said logic any person can effectively become a distribution Licensee as long as it is ready to pay network charges of the Existing Discoms.

This interpretation of the Electricity Act, 2003 would make the existing Licensees redundant. In fact Section 42(1) read with Section 43 of the Electricity Act, 2003 mandates that power is supplied by the Distribution Licensee to end consumers on its own Distribution System. Hence, the natural sequitur to Section 42(1), Section 43 read with Section 2(17) is that the Licensee needs to own and operate the Distribution System to effect Supply.

Whereas, in the present case respondent No.4 is neither the owner of the Distribution System nor is a Licensee but is intending to supply power to lakhs of end consumers who otherwise fall within the area of supply of existing Licensee.

12.6.8 Respondent No.4 has repeatedly used the phrase “provide” power to Agricultural consumers. This is nothing but a device to couch the intent of carrying out “supply” of power to such consumers.

No amount of clever pleading can overcome the intent of the legislation enacted by the parliament. Further, as seen from the Impugned RfS the term “Supply” has been used by the respondent No.4 repeatedly and relevant extracts of the RfS are as follows:-

“1. Andhra Pradesh Green Energy Corporation Limited (hereinafter called “APGECL”) incorporated under the Companies Act, 2013, is a 100% subsidiary of Andhra Pradesh Power Generation Corporation Limited (“APGENCO”).

One of the main objectives of the Company is establishment of 10,000 MWp Solar Power Projects in the State of Andhra Pradesh to ensure nine hours daytime free power supply to the Agriculture sector on a sustainable basis.

It is envisaged to set up large grid connected solar power plants which would help in significantly reducing the subsidy outgo from Government of Andhra Pradesh.

In this regard, the Government of Andhra Pradesh has issued G.O.Ms.No.18 dated 15th June, 2020, G.O.Ms.No.19 dated 17th July, 2020 and G.O.Ms.No.25 dated 7th November, 2020 for establishment of 10,000 MWp of solar power capacity in the State to provide 9-hours of free day time power supply to the Agriculture Sector.

3. The Government of Andhra Pradesh has envisaged development of 10,000 MWp of solar projects as an alternative mechanism to provide nine-hours free day time power supply to farmers with reduced subsidy out- go.”

Therefore, from the above, it is evident that the intent of respondent No.4 is to effect supply of power to end consumer albeit Agricultural Consumers. Hence, for such distribution/ supply/procurement and onward supply License is required as per Section 12 read with Section 2(17) which admittedly has not been procured by respondent No.4.

Hence, the entire transaction envisaged runs foul to the specific intent of the Electricity Act, 2003. The 4th respondent has repeatedly emphasized that the power is being “provided” free of cost and hence no “Supply” as envisaged under the Electricity Act, 2003 is being made.

This contention is also patently fallacious as Section 65 of the Act provides a specific manner in which Subsidy can be granted to any class of consumers by respondent No.3. It is further submitted that such subsidy can only be granted in the Distribution tariff determined under Section 62 of the Electricity Act for respondent Nos. 7 and 8.

Hence, if at all respondent No.3 is desirous of providing subsidy to agricultural consumers, then it ought to make such monies available to respondent Nos.7 and 8 i.e., Distribution companies of the State of Andhra Pradesh as such consumers fall within the area of supply of respondent Nos.7 and 8.

Therefore, as per the scheme of the Electricity Act all supply to consumers irrespective of their category is to be done by the Distribution Licensee and if the State Government so wishes it can provide advance subsidy to the Licensees in case of Distribution tariff determined under Section 62 to ensure free power is supplied to a particular class of consumers.

The Electricity Act only envisages payment of subsidy to the Licensee who is supplying power to end consumers and such subsidy is to be paid in advance to the Licensee as the Licensee is the only interface with the end consumers.

Hence, the respondent Nos.3 and 4 in the garb of providing subsidy to Agricultural Consumers cannot create a parallel regulatory framework in gross violation of the specific provisions of the Electricity Act, including Section 65 of the Electricity Act. In support of the said contention, reliance is placed on Tata Power Company Limited Vs. REL & Ors [(2009) 16 SCC 659] wherein the Hon’ble Supreme Court held as follows:-

“119. The 2003 Act even permits the generating company to supply electricity to a consumer directly. For the said purpose what is necessary is to comply with the provisions of the Act, the Rules and the Regulations. Section 14 of the Act categorically provides for grant of licence to any person who is transmitting electricity or distributing supply or undertaking trading therein, indisputably, however, the generator of an electrical energy, although is not subject to the grant of license but while supplying electrical energy to a distributing agency, in turn would be subject to approval and directions of the Commission.”

Lastly, the contention of the 4th respondent that since it is a Government Company it does not need a License is in teeth of express mandate of Sections 12 and 14 of the Electricity Act, 2003 as no exception for Government Companies is made in such provisions.

12.6.9 Further, the object of Electricity Act, 2003 is to create independent Regulatory Commissions and to distance Government from the functioning of the State Commission. This is enshrined under the preamble of the Act itself. Therefore, the present Impugned Transaction seeks to actively bring Government into the power generation and distribution, which is contrary to the very object of the Act.

12.6.10 When respondent No.3 had previously tried to meddle with the Regulatory framework and to bypass respondent No.6, this Hon’ble High Court set aside such actions of the respondent No.3 in W.P.No.9844 of 2019 & Batch vide its Judgment dated 22.09.2019. The relevant extracts of the Judgment are reproduced as follows:-

“Apart from all the above, Article 162 of the Constitution of India and the case law on Article 162, in the opinion of this Court, are squarely applicable to the facts and circumstances of the case. Once there is a law governing the field, particularly, a central law, the State Government in exercise of its executive power cannot pass any orders which would trench upon or occupy and intrude in to the area occupied by the State Commission.

The decision of the Full Bench of the A.P. High Court reported in T. Muralidhar Rao (14 supra), in the opinion of this Court very squarely applies to the facts and circumstances of the case. As long as the 2003 Act is on the statute book, the executive cannot, in the opinion of this Court in exercise of its executory power supplant, supplement, ignore or act contrary to it. (borrowing a phrase from the Hon’ble Full Bench).
The decision of the Supreme Court in P.H. Paul Manoj Pandian’s case (15 supra) also applies to this case.

Last, but not the least, Section 12 of the A.P. Electricity Reforms Act, also mandates that the power of the State can extend only to give policy directions including over all planning and coordination, but they shall not adversely affect or interfere with the functions and powers of the Commissions including the parties and tariffs.

[Emphasis added] 12.6.11. The 4th respondent has stated that it will procure power from generators and supply it to farmers and agriculturalists using the Transmission/Distribution System and will pay applicable Network charges as prescribed by respondent No.6 under Section 42 of the Act.

The argument advanced by respondent No.4 that it is entitled to provide power to consumers by payment of Cross-Subsidy Surcharge under Section 42 of the Act is erroneous, and hence liable to be rejected. The transaction proposed to be undertaken by the respondent No.4 essentially amounts to distribution and supply of power without obtaining license which is impermissible in terms of the Electricity Act, 2003 which is an exhaustive code on all aspects of electricity.

Section 42 of the Act, which falls under Part VI of the Act, deals with “Distribution of Electricity” and “Provisions with respect to Distribution Licensee”.

Thus, Prima facie the provisions under part VI are applicable to Licensees only and cannot be resorted to by the respondent No.4 who is not a licensee. 12.6.12. It is also noteworthy that the Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions of Open Access to Intra-State Transmission and Distribution Networks) Regulations, 2005 (“Open Access Regulations”) has no provision which allows respondent No.4 to offtake electricity from Generators and supply it in the area of the Distribution Licensee on behalf of Agricultural consumers.

A perusal of the provision under Section 42 of the Act and the Open Access Regulations clearly show that only a Generator, a Licensee or a Consumer is allowed to make an application for grant of Open Access under the Open Access Regulations. As per Section 42(4), it is the Consumer who has to make an appropriate application before the State Commission, i.e., respondent No.6, to avail supply of electricity from any person/entity other than the Distribution Licensee in its area of supply. It is evident that in the facts of the present case no such application has been preferred by any consumer/class of consumers for availing the aforesaid facility.

Respondent No.4 cannot possibly use the provisions of Open Access to circumvent the mandate of Section 12 read with Section 14 of the Electricity Act, 2003. As per the admission of the 4th respondent, the power from Solar Power Developers would be supplied to 18 lakh agricultural consumers.

Hence, unless such consumers after meeting the qualification set out in the Open Access Regulations, 2005 make an application the said power cannot be supplied through Open Access as being contended by the respondent No.4. In fact Section 42 cannot be used to bypass the licensing envisaged under Section 12 read with Section 14 of the Electricity Act, 2003.

Respondent No.4 cannot circumvent the provisions of law which govern the Distribution and Supply of Electricity and state that it is empowered to supply electricity to the consumers as per its own whims and fancies.

Respondent No.4, has expressly stated that it does not fall within the purview of the Electricity Act and the Competitive Bidding Guidelines. Respondent No.4 has also stated that the impugned RfS is not required to be in conformity with the Competitive Bidding Guidelines issued under Section 63 of the Electricity Act. However, in stark contrast, the impugned RfS itself states that it has been prepared in accordance with the Competitive Bidding Guidelines.

Clause 8 under Section II of the Impugned RfS, which deals with “Guidelines for implementation of the RfS”, clearly states that the Competitive Bidding Guidelines form the basis for selection of new Projects under the Impugned RfS. Respondent No.4 also states that the Appropriate Commission i.e., respondent No.6 does not have jurisdiction vis-a-vis the Impugned Bidding Process as the same is not governed by the provisions of the Electricity Act.

However, a perusal of the Impugned RfS would show that respondent No.4 has sought to draw in the jurisdiction of respondent No.6 in a selective manner.

Clause 8.4 (iv) under Section III of the Impugned RfS, which deals with “Offtake Constraints due to Backdown”, inter alia states that the Solar Power Developers shall follow the forecasting and scheduling process as per Regulations notified by the Ld. CERC/Ld. APERC.

The 4th respondent has been approbating and reprobating vis-a-vis jurisdiction of respondent No.6 as well as the role of DISCOMs in the entire Project. In fact the RfS clearly indicates that it has been issued in specific violation of the directions issued by respondent No.3 vide its G.O.Ms.No.18 dated 15.06.2020.

It is trite in law that a party cannot be permitted to approbate and reprobate on the same facts and take inconsistent stands. In Joint Action Committee of Air Line Pilots’ Association of India V. DGCA [(2011) 5 SCC 435], it was held as under:-

“12. The doctrine of election is based on the rule of estoppel–the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity.

By that law, a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. Taking inconsistent pleas by a party makes its conduct far from satisfactory.

Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily, [Vide Babu Ram V. Indra Pal Singh [(1998) 6 SCC 358], P.R. Deshpande V. Maruti Balaram Haibatti [(1998) 6 SCC 507] and Mumbai International Airport (P) Ltd. V. Golden Chariot Airport [(2010) 10 SCC 422 : (2010) 4 SCC (Civ) 195]”

The Hon’ble Supreme Court of India in the case of Suzuki Parasrampuria Suitings (P) Ltd. V. Official Liquidator [(2018) 10 SCC 707], held as under:-
“12. A litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands.

The untenability of an inconsistent stand in the same case was considered in Amar Singh v. Union of India [Amar Singh V. Union of India, (2011) 7 SCC 69 ; (2011) 3 SCC (Civ) 560], observing as follows: (SCC p.86, para 50) ’50. This Court wants to make it clear that an action at law is not a game of chess. A litigant who comes to court and invokes its writ jurisdiction must come with clean hands. He cannot prevaricate and take inconsistent positions.’

13. A similar view was taken in Joint Action Committee of Air Line Pilots’ Assn. of India V. DGCA [Joint Action Committee of Air Line Pilots’ Assn. of India V. DGCA, (2011) 5 SCC 435], observing: (SCC p. 443, para 12)

12. The doctrine of election is based on the rule of estoppel- the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity… Taking inconsistent pleas by a party makes its conduct far from satisfactory. Further, the parties should not blow hot and cold by taking inconsistent stands and prolong proceedings unnecessarily.”

[Emphasis Supplied] Thus, in view of the above, the contentions of respondent No.4 as urged in the Counter Affidavit are inconsistent with what the respondent No.4 projects in the Impugned RfS. Further, the Impugned RfS as well as the proposed transaction even violates the mandate expressed by respondent No.3 through its GO No.18, dated 15.06.2020.

Hence, such contentions are liable to be rejected and the Impugned RfS and Impugned Documents are liable to be quashed as being ultra vires to the provisions of the Electricity Act, 2003.

13. This Court has given earnest consideration to the facts and submissions of the learned counsel.

14. This Court felt it appropriate to extract the relevant provisions of the Act relied upon by the learned counsel for better understanding of the issue:

“Section 2(15) “Consumer” means any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be.

Section 2(17) “Distribution licensee” means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply;
Section 2(47) “open access” means the non- discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission;
Section 2(70) “supply”, in relation to electricity, means the sale of electricity to a licensee or consumer;
Section 2(73) ) “transmission licensee” means a licensee authorised to establish or operate transmission lines;
Section 2(74) “transmit” means conveyance of electricity by means of transmission lines and the expression “transmission” shall be construed accordingly;

Section 7. Generating company and requirement for setting up of generating station:- Any generating company may establish, operate and maintain a generating station without obtaining a licence under this Act if it complies with the technical standards relating to connectivity with the grid referred to in clause (b) of Section 73.

Section 10. Duties of Generating Companies:- (1) Subject to the provisions of this Act, the duties of a generating company shall be to establish, operate and maintain generating stations, tie-lines, sub-stations and dedicated transmission lines connected therewith in accordance with the provisions of this Act or the rules or regulations made thereunder.

(2) A generating company may supply electricity to any licensee in accordance with this Act and the rules and regulations made thereunder and may, subject to the regulations made under sub-section (2) of Section 42, simply electricity to any consumer.

(3) Every generating company shall –

(a) submit technical details regarding its generating stations to the Appropriate Commission and the Authority;

(b) co-ordinate with the Central Transmission Utility or the State Transmission Utility, as the case may be, for transmission of the electricity generated by it. Section 12 . (Authorised persons to transmit, supply, etc., electricity): No person shall (a) transmit electricity; or (b) distribute electricity; or (c) undertake trading in electricity, unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13.

Section 14 (Grant of licence): The Appropriate Commission may, on an application made to it under section 15, grant a licence to any person –

(a) to transmit electricity as a transmission licensee; or

(b) to distribute electricity as a distribution licensee; or

(c) to undertake trading in electricity as an electricity trader, in any area as may be specified in the licence:

Provided that any person engaged in the business of transmission or supply of electricity under the provisions of the repealed laws or any Act specified in the Schedule on or before the appointed date shall be deemed to be a licensee under this Act for such period as may be stipulated in the licence, clearance or approval granted to him under the repealed laws or such Act specified in the Schedule, and the provisions of the repealed laws or such Act specified in the Schedule in respect of such licence shall apply for a period of one year from the date of commencement of this Act or such earlier period as may be specified, at the request of the licensee, by the Appropriate Commission and thereafter the provisions of this Act shall apply to such business:

Provided further that the Central Transmission Utility or the State Transmission Utility shall be deemed to be a transmission licensee under this Act:

Provided also that in case an Appropriate Government transmits electricity or distributes electricity or undertakes trading in electricity, whether before or after the commencement of this Act, such Government shall be deemed to be a licensee under this Act, but shall not be required to obtain a licence under this Act:

Provided also that the Damodar Valley Corporation, established under sub-section (1) of section 3 of the Damodar Valley Corporation Act, 1948, shall be deemed to be a licensee under this Act but shall not be required to obtain a licence under this Act and the provisions of the Damodar Valley Corporation Act, 1948, in so far as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation:

Provided also that the Government company or the company referred to in sub-section (2) of section 131 of this Act and the company or companies created in pursuance of the Acts specified in the Schedule, shall be deemed to be a licensee under this Act:

Provided also that the Appropriate Commission may grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area, subject to the conditions that the applicant for grant of licence within the same area shall, without prejudice to the other conditions or requirements under this Act, comply with the additional requirements relating to the capital adequacy, credit- worthiness, or code of conduct as may be prescribed by the Central Government, and no such applicant, who complies with all the requirements for grant of licence, shall be refused grant of licence on the ground that there already exists a licensee in the same area for the same purpose:

Provided also that in a case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply:

Provided also that where a person intends to generate and distribute electricity in a rural area to be notified by the State Government, such person shall not require any licence for such generation and distribution of electricity, but he shall comply with the measures which may be specified by the Authority under section 53:

Provided also that a distribution licensee shall not require a licence to undertake trading in electricity”.

PART VI :: DISTRIBUTION OF ELELCTRICITY Provisions with respect to distribution licensee Section 42. (Duties of distribution licensee and open access): (1) It shall be the duty of a distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act.

(2) The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other operational constraints: Provided also that such surcharge and cross subsidies shall be progressively reduced in the manner as may be specified by the State Commission:

4) Where the State Commission permits a consumer or class of consumers to receive supply of electricity from a person other than the distribution licensee of his area of supply, such consumer shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by the State Commission, to meet the fixed cost of such distribution licensee arising out of his obligation to supply”.

[Emphasis Supplied] Section 43. (Duty to supply on request): — (1) 1[Save as otherwise provided in this Act, every distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply:

Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission:

Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider necessary for electrification of such village or hamlet or area.

[Explanation.- For the purposes of this sub-section, “application” means the application complete in all respects in the appropriate form, as required by the distribution licensee, along with documents showing payment of necessary charges and other compliances.] (2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1) : Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission.

(3) If a distribution licensee fails to supply the electricity within the period specified in sub-section (1), he shall be liable to a penalty which may extend to one thousand rupees for each day of default”.

Section 62. Determination of Tariff: –

(1) The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for–

(a) supply of electricity by a generating company to a distribution licensee:

Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity;

(b) transmission of electricity;

(c) wheeling of electricity;

(d) retail sale of electricity:

Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.

(2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmission and distribution for determination of tariff.

(3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer’s load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required.

(4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.

(5) The Commission may require a licensee or a generating company to comply with such procedures as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover.

(6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. Section 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.

Section 65. Provision of subsidy by State Government – If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under section 62, the State Government shall, notwithstanding any direction which may be given under section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government:

Provided that no such direction of the State Government shall be operative if the payment is not made in accordance with the provisions contained in this section and the tariff fixed by State Commission shall be applicable from the date of issue of orders by the Commission in this regard”.

Section 86: Functions of State Commission:

(1) The State Commission shall discharge the following functions, namely:–

(a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Provided that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers;

(b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;

(c) facilitate intra-State transmission and wheeling of electricity;

(d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State;

(e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;

(f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration;

(g) levy fee for the purposes of this Act;

(h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79;
(i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees;
(j) fix the trading margin in the intra-State trading of electricity, if considered, necessary;
(k) discharge such other functions as may be assigned to it under this Act.
(2) The State Commission shall advise the State Government on all or any of the following matters, namely:–
(i) promotion of competition, efficiency and economy in activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganisation and restructuring of electricity industry in the State;
(iv) matters concerning generation, transmission , distribution and trading of electricity or any other matter referred to the State Commission by that Government.
(3) The State Commission shall ensure transparency while exercising its powers and discharging its functions.
(4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.
Relevant provisions of Open Access Regulations read as under:

2. Definitions:
(i) In this Regulation, unless the context otherwise requires:-
(b) “applicant”, means a person who makes an application to the Nodal Agency for open access and includes any person engaged in generation, a licensee or any consumer eligible for open access under this Regulation;

(j) “user” or “open access user” means a person using or intending to use the transmission system and/or the distribution system of the licensees in the state for receiving supply of electricity from a person other than the distribution licensee of his area of supply, and the expression includes a generating company and licensee.

17. Open Access charges
(iv) The open Access user shall also be liable to pay additional surcharge on charges of wheeling as may be specified by the Commission from time to time under section 42(4) of the Act, in case open access is sought for receiving supply from a person other than the distribution licensee of such consumer’s area of supply, to meet the fixed cost of the distribution licensee arising out of his obligation to supply”.

Relevant Clauses of the Competitive Bidding Guidelines issued by the respondent No.1 reads as follows:

“2.1.2 Unless explicitly specified in these Guidelines, the provisions of these Guidelines shall be binding on the Procurer/Intermediary Procurer/End Procurer and the Authorised Representative of the Procurer. The process to be adopted in event of any deviation proposed from these Guidelines is specified in Clause 18 of these Guidelines.”

“18. DEVIATION FROM PROCESS DEFINED IN THE GUIDELINES: In case there is any deviation from these Guidelines and/or the SBDs, the same shall be subject to approval by the Appropriate Commission. The Appropriate Commission shall approve or require modification to the bid documents within a reasonable time no exceeding 90 (ninety) days.”
The relevant extracts of the policy are reiterated as follows:-

“States shall endeavour to procure power from renewable energy sources through competitive bidding to keep the tariff low, except from the waste to energy plants. Procurement of power by Distribution Licensee from renewable energy sources, from Solar PV Power Projects above the notified capacity, shall be done through competitive bidding process from the date to be notified by the Central Government. However, till such notification, any such procurement of power from renewable energy sources projects, may be done under Section 62 of the Electricity Act, 2003.”
Section 129. Orders for securing compliance:-
(1) Where the Appropriate Commission, on the basis of material in its possession, is satisfied that a licensee is contravening, or is likely to contravene, any of the conditions mentioned in his licence or conditions for grant of exemption or the licensee or the generating company has contravened or is likely to contravene any of the provisions of this Act, it shall, by an order, give such directions as may be necessary for the purpose of securing compliance with that condition or provision.
(2) While giving direction under sub-section (1), the Appropriate Commission shall have due regard to the extent to which any person is likely to sustain loss or damage due to such contravention.

15. In the facts and circumstances of the case and considering the submissions of the counsel and on perusal of the record, this Court found that it is the case of the respondents that the 4th respondent is procuring the power from the SPD for tariff fixed in the competitive bidding process and supplying power free of cost to the agriculturists in the State through AP TRANSCO and AP DISCOMs on payment of cost of transmission and distribution as fixed by the 6th respondent-Commission under Section 42 of the Act and the cost of the power is reimbursed to the 4th respondent by the 3rd respondent.

The activity of purchase of power by the 4th respondent from the Solar Power Developers though Tariff fixed in the competitive bidding process by adopting essence of the competitive bidding guidelines is contrary to the provisions of the Act and in total derogation of the competitive bidding guidelines framed by the Central Government exercising power under the provisions of Section 63 of the Electricity Act,.

The whole transaction of the project involves generation of power by the solar power developers and supply power to the 4th respondent, non-licensee, for the tariff fixed in the competitive bidding. To put it in other way, the 4th respondent will purchase power from solar developers and supply the same to the agriculturists/consumers free of cost. But, the 4th respondent is being paid the cost (cost of power purchased and costs of transmission and distribution) of the power supplied to the end-consumer by 3rd respondent.

Hence, the 4th respondent is not supplying power free of cost to the consumers. The cost of the power is being borne by the 3rd respondent from its exchequer.

Hence, the activity of procurement of power by the 4th respondent and supply the same to the consumer involves trading. Therefore, the contention of respondents that no trading activity is involved in the transaction/activity of the 4th respondent, could not be accepted. The 4th respondent cannot act as a nodal agency for the 3rd respondent for implementation of the scheme, as it is not a department of the 3rd respondent-Government.

The 4th respondent is independent company, juristic person incorporated under the Companies Act. The Government Order issued by the 3rd respondent is not binding on the 4th respondent. It shall be made binding only by way of separate agreements. However, the scheme is floated by the 3rd respondent and seeks to implement the same through the 4th respondent.

The 3rd respondent is purchasing power through the 4th respondent from the Solar Power Developer, for the fixed tariff, and supplying the same to the end-consumer, agriculturist. Sri V.R.N.Prasanth, learned counsel appearing for the 6th respondent, would contend that the 3rd respondent, being a deemed licensee as per the provisions of Section 13, is purchasing the power, through the 4th respondent-nodal agency and therefore the 4th respondent does not require a separate licence is untenable, as the 4th respondent is a separate entity and the 3rd respondent being a deemed licensee shall follow the provisions of the Act in procuring power from the SPD through the 4th respondent.

Further, the 4th respondent is procuring the power for the 3rd respondent and payment is being made by the 3rd respondent. Hence the activity of the 4th respondent could be termed as procurement of power from the SPD on behalf of the 3rd respondent and supplying the same to the end-consumer.

Hence, the 4th respondent could be called as procurer, intermediary procurer, agent or the representative of the 3rd respondent. Hence, the activity of the 4th respondent comes within the ambit of clause 1.2 of competitive bidding guidelines and within the meaning of ‘Trading’ as defined under Section 2(71) of the Act.

Hence, the contra contentions of the learned counsel for the respondents are untenable. In view of the above discussion, the 4th respondent cannot purchase/procure power from the SPD by inviting bids without obtaining any licence.

The Generator may establish, operate and maintain a generating station without obtaining a licence under the Act, but it could not supply the same to the 4th respondent – non-licensee to supply the same to the end- consumer contrary to the provisions of the Act.

The Electricity Act, 2003 is a special Act and a comprehensive enactment/code promulgated by the Parliament to regulate and govern Electricity Section in India. Hence, any action (including issuance of the Impugned Documents) must conform to the requirements set out in the Electricity Act, 2003 and the rules, regulations and guidelines framed thereunder.

The action of 4th respondent could not be said to be outside the provisions of Electricity Act. The 3rd respondent formulated the scheme to provide supply of 9 hours day time free power supply to the agriculturists.

The project is schematically prepared to take the activity of generation, supply, purchase and payments made to the 4th respondent and SPD outside the purview of provisions of Electricity Act and thereby ousted the jurisdiction of 6th respondent under Section 86 of the Electricity Act for extraneous considerations.

The 3rd respondent should not forget that it is going to supply power to the agriculturists free of cost by making huge payment to the SPD from the State exchequer i.e., public money through 4th respondent.

The power could be purchased through transparent bidding process in strict adherence to the provisions of the Electricity Act, by adopting competitive bidding guidelines, by entering legally binding contracts as the power Tariff has to be approved by the 6th respondent-Commission under Section 63 of the Act.

Hence, the 3rd respondent cannot act arbitrarily in procuring/purchasing power with the avowed objective of supplying power free of cost to the agriculturists in the State, resolve any dispute through the dispute resolution mechanism envisaged under the scheme which gives scope for nepotism, favouritism by acting arbitrarily.

Hence, the contra contentions of Sri P.Raghuram, learned senior counsel and Sri S.Sriram, learned Advocate General that the 3rd respondent is purchasing power through the 4th respondent – nodal agency and making payments to the SPD, and supplying the power through the licensees, AP TRANSCO, AP DISCOMs to the end-consumer; therefore, the transaction of supply of power does not amount to Trading and no commercial activity is involved; hence, the provisions of the Electricity Act and competitive bidding guidelines are not applicable, could not be accepted, as the said contention is contrary to the provisions of the Act.

As per the provisions of Section 12 of the Act, no person shall (a) transmit or (b) distribute electricity or (c) undertake trading in electricity, unless he is authorized to do so by a licence issued under Section 14, or is exempt under Section 13.

The provisions of Section 14 of the Act, authorizes the appropriate commission may grant licence to any person, but one of the proviso says that in case an appropriate Government transmits electricity or distributes electricity or undertakes trading in electricity, whether before or after the commencement of this Act, such Government shall be deemed to be a licensee under this Act, but shall not be required to obtain a licence under this Act.

As per Section 7 of the Act, a generating company may establish, operate and maintain a generating station without obtaining a licence under this Act, if it complies with the technical standards relating to connectivity with the grid referred to in Clause (b) of Section 73. The provisions of the Electricity Act and competitive bidding guidelines apply to the whole activity of generation, supply, distribution of electricity power.

As per the provisions of the Act, permission is not required to generate power, but the generating company has to establish the generation station as per the provisions of the Act, with approvals and supply to the licensees only and it cannot sell to non-licensee, but supply to the consumer who obtained permission under Section 42 of the Act under open access system of power supply. The Generator (SPD) is supplying power for price/tariff to the 4th respondent, non- licensee.

In turn, the 4th respondent is supplying power to end-consumer by receiving cost of the power from the 3rd respondent. However, the end-consumer received the power free of cost, but the cost of the power is being paid by the 3rd respondent to the 4th respondent.

Hence, the activity of the 4th respondent comes within the meaning of ‘Trading’ as defined under Section 2(71) of the Act. In that process, the 3rd respondent is spending huge public money, even though for the benefit of agriculturist, its action should be fair and transparent. It is under obligation to follow the statutory provisions applicable to the scheme of activity.

It could not curve out part of the transaction of the scheme to be outside the provision of the Act, to act according to its whims and fancies to favour blue-eyed boys.

16. It is profitable to refer to the following decisions:

In Energy Watchdog Vs. CERC & Ors (2017) 14 SCC 80 the Hon’ble Supreme Court held as follows:

“19. The construction of Section 63, when read with the other provisions of this Act, is what comes up for decision in the present appeals. It may be noticed that Section 63 begins with a non obstante clause, but it is a non obstante clause covering only Section 62. Secondly, unlike Section 62 read with Sections 61 and 64, the appropriate Commission does not “determine” tariff but only “adopts” tariff already determined under Section 63.

Thirdly, such “adoption” is only if such tariff has been determined through a transparent process of bidding, and, fourthly, this transparent process of bidding must be in accordance with the guidelines issued by the Central Government”.

In view of the above decisions of the Hon’ble Apex Court, the contentions of the counsel for respondents that the provisions of Section 63 of the Act is not applied to subject bidding process as the provisions of Section 63 is another limb of provisions of Section 62 of the Act.

The provisions of Section 62 of the Act shall apply in the case where the generating company supply electricity to the distribution licensee, when once the provisions of Section 62 of the Act is not applicable, by natural concomitant, the provisions of Section 62 are also not applicable, holds no water.

In Dipak Babaria & Ors. V. State of Gujarat & Ors. (2014) 3 SCC 502 it was held as under:-

“53. It is well settled that where the statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. This proposition of law laid down in Taylor V. Taylor (1875) 1 Ch D 426, 431 was first adopted by the Judicial Committee in Nazir Ahmed V. King Emperor reported in MANU/PR/0020/1936: AIR 1936 PC 253 and then followed by a bench of three Judges of this Court in Rao Shiv Bahadur Singh V. State of Vindhya Pradesh reported in MANU/SC/0053/1954: AIR 1954 SC 322.

This proposition was further explained in paragraph 8 of State of U.P. Vs. Singhara Singh by a bench of three Judges reported in MANU/SC/0082/1963: AIR 1964 SC 358 in the following words:

8. The rule adopted in Taylor V. Taylor is well recognized and is founded on sound principle.
Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted …”
[emphasis supplied] In State of Kerala & Others V. Mar Appraem Kuri Company Limited & Another (2012) 7 SCC 106 it was held as follows:

“56. The background of the enactment of the Central Chit Funds Act, which refers to the Report of the Banking Commission has been exhaustively dealt with in the case of Shriram Chits and Investment (P) Limited V. Union of India [(1993) Supp 4 SCC 226] as also in the Statement of Objects and Reasons of the 1982 Act.

The clear intention of enacting the Central 1982 Act, therefore, was to make the Central Act a complete code with regard to the business of conducting chit funds and to occupy the legislative field relating to such chit funds.

57. Moreover, the intention to override the State laws is clearly manifested in the Central Act, especially Section 3 which makes it clear that the provisions of the Central Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force. Similarly, Section 90 of the Central Act providing for the repeal of State legislations also manifests the intention on the part of the Parliament to occupy the field hitherto occupied by State Legislation.

In PTC India Limited V. Central Electricity Regulatory Commission & Others, [(2010) 4 SCC 603], the Hon’ble Supreme Court has upheld and recognized the existence of the Electricity Act as a comprehensive legislation and held as follows:

“17. The 2003 Act is enacted as an exhaustive code on all matters concerning electricity. It provides for “unbundling” of SEBs into separate utilities for generation, transmission and distribution.

It repeals the Electricity Act, 1910; the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998. The 2003 Act, in furtherance of the policy envisaged under the Electricity Regulatory Commissions Act, 1998 (the 1998 Act), mandated the establishment of an independent and transparent regulatory mechanism, and has entrusted wide-ranging responsibilities with the Regulatory Commissions.

While the 1998 Act provided for independent regulation in the area of tariff determination; the 2003 Act has distanced the Government from all forms of regulation, namely, licensing, tariff regulation, specifying Grid Code, facilitating competition through open access, etc.

18. Section 3 of the 2003 Act requires the Central Government in consultation with the State Governments and the Authority, to prepare the National Electricity Policy as well as tariff policy for development of the power system based on optimum utilization of resources. The Central and the State Governments are also vested with rule-making powers under Sections 176 and 180 respectively, while the “Authority” has been defined under Section 2(6) as the regulation-making power under Section 177.

On the other hand, the Regulatory Commissions are vested with the power to frame policy, in the form of regulations, under various provisions of the 2003 Act. However, the Regulatory Commissions are empowered to frame policy, in the form of regulations, as guided by the general policy framed by the Central Government. They are to be guided by the National Electricity Policy, the tariff policy as well as the National Electricity Plan in terms of Sections 79(4) and 86(4) of the 2003 Act (see also Section 66).”

17. If the impugned RfS and draft PPA are read keeping in mind the above provisions and decisions, it is clear that the RfS and draft PPA are issued in gross violation of the provisions of the Electricity Act as well as the CBG framed by respondents 1 & 2. Clause 3 of the CBG deals with preparation for inviting bid and project preparedness. Clause 18 of the CBG, which deals with ‘deviation from process defined in the guidelines’ states that any deviation from the CBG is subject to approval by the 6th respondent – APERC.

Further it is the submission of the respondents that 4th shall not be supplying power to AP DISCOMs but has proposed to provide power to agricultural consumers of the State of Andhra Pradesh by merely using the network of AP TRANSCOs and AP DISCOMs.

However, the said contention of the 4th respondent is in violation of the G.O.No.18, dated 15.06.2020 issued by the 3rd respondent which imposes obligations on DISCOMs of the State to obtain necessary permissions and approvals from APERC/6th respondent regarding implementation of the scheme as well as execution of agreements for supply of power to the agricultural consumers. The relevant content of G.O.No.18, dated 15.06.2020 reads as under:

“TASKS of APDISCOMs”
35. APDISCOMs shall obtain permissions/necessary approvals from APERC to implement this scheme. State Government will issue appropriate directions to APERC under Section 108 of the Electricity Act, 2003 from time to time for implementation of this scheme.

37. APDISCOMs shall enter into agreement with APGECL for the supply of power to agricultural consumers and APDISCOMs shall obtain necessary approvals from APERC for this.”

Therefore, the 4th respondent, in law, is required to issue the impugned RfS and draft PPA strictly in accordance with the provisions of the CBG to conform to the mandate of Section 63 of the Act and in case of any deviations the same must be approved by the 6th respondent – APERC. The impugned RfS and draft PPA were substantially deviated from the provisions of the Act and the CBG and the said deviations were not approved by the 6th respondent Commission.

As the impugned RfS and draft PPA are not in conformity with CBG and the provisions of the Act, obviously its continuance by the successive Governments without any legal impediments is doubtful and it will reduce the higher participation of the bidders in the bidding process as it lacks fair bidding process. Hence, impugned RfS and draft PPA are liable to be set aside.

18. Accordingly, the Writ Petition is allowed, setting aside the impugned RfS and draft PPA. However, it is left open to the 4th respondent, if so advised, may issue fresh requests for Selection in accordance with the guidelines for Tariff Based Competitive Bidding process for procurement of Power from Grid Connected Solar Photo Voltaic Power Projects dated 03.08.2017 issued under Section 63 of the Act. No order as to costs.

19. Miscellaneous Petitions, if any, pending in this writ petition shall stand closed.

Source: indiankanoon