As per case facts, the appellant-company supplied electricity under Power Purchase Agreements (PPAs) and received payments without dispute for several years. Later, the State Commission, during tariff determination and true-up ...
1
2026:CGHC:23516-DB
AFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WA No. 379 of 2026
1 - Jindal Steel Limited Previously Jindal Steel And Power Limited A Company
Registered Under The Provision Of Companies Act, 1956, Having Its Corporate
Office At Jindal Centre, 12 Bhikaji Cama Place, New Delhi 110066.
2 - Mr. Pinaki Bhattacharjee Shareholder Of Appellant No. 1, Company,
Working As Vice President, Jindal Steel And Power Ltd. Having Its Office At
Kharsia Road, Raigarh, C.G. 496001.
... Appellant(s)
Versus
1 - Chhattisgarh State Electricity Regulatory Commission Irrigation Colony,
Shanti Nagar Raipur C.G. 492001.
2 - Chhattisgarh State Power Distribution, Company. Limited Vidyut Seva
Bhavan, Daganiya Raipur- Chhattisgarh . 492013.
3 - Chhattisgarh State Power Transmission Company. Limited, Vidyut Seva
Bhavan, Daganiya Raipur C.G. 492013.
... Respondent(s)
For Appellant(s) :Mr. Gopal Jain and Mr. Abhimanyu Bhandari, and
Mr. Ashish Shrivastava, learned Senior Advocates,
assisted by Ms. Divya Chaturvedi, Mr. Bhaskar
Payashi, Mr. Saransh Shaw, Mr. Jai Dhanani, Mr.
Pranav Sood and Ms. Pankhuri Gupta, Ms. Kriti
Sharma and Mr. Rahul Ambast, Advocates.
For Respondent No. 1 :Mr. Adhiraj Surana, Advocate.
For Respondents No. 2 & 3Mr. Raj Kumar Mehta, Ms. Himanshi Andley, Mr.
Varun Sharma, Advocates.
Date of Hearing : 08/05/2026
Date of Judgment : 02/06/2026
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Hon'ble Shri Ramesh Sinha, Chief Justice
Hon'ble Shri Bibhu Datta Guru, Judge
C.A.V Judgment
Per Ramesh Sinha, Chief Justice
1 Heard Mr. Gopal Jain and Mr. Abhimanyu Bhandari, and Mr. Ashish
Shrivastava, learned Senior Advocates, assisted by Ms. Divya
Chaturvedi, Mr. Bhaskar Payashi, Mr. Saransh Shaw, Mr. Jai Dhanani,
Mr. Pranav Sood and Ms. Pankhuri Gupta, Ms. Kriti Sharma and Mr.
Rahul Ambast, learned counsel for the appellants. Also heard Mr. Adhiraj
Surana, learned counsel for the respondent No. 1/Chhattisgarh State
Electricity Regulatory Commission (for short, the Commission), as well as
Mr. Raj Kumar Mehta, Ms. Himanshi Andley and Mr. Varun Sharma,
learned counsel for the respondents No. 2 and 3/Power Companies.
2 Challenge in this appeal is to the order dated 30.03.2026 passed by the
learned Single Judge in WP(C) No. 1927/2016 by which the petition filed
by the writ petitioners/appellants was dismissed. The appellants have
prayed for the following relief(s):
“10.1 Admit the present Appeal and set aside the Impugned
Judgment dated 30.03.2026 issued by the Ld. Single Judge of this
Hon'ble Court in Writ Petition (Civil) No. 1927/2016;
10.2 Declare that Appellant No.1 is not liable to refund INR 153.55
Crores to the Chhattisgarh State Power Distribution Company Ltd. in
relation to the power supplied to it for FY 2011-12 or for any
subsequent tariff period;
10.3 Quash the demand notice dated 07.07.2016 issued by
Respondent No. 2/CSPDCL, upon the Appellant No.1 demanding
refund of INR 153.55 Cores;
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10.4 Quash the letter dated 21.07.2016 issued by the Chhattisgarh
State Power Distribution Company Limited;
10.5 Quash the letter dated 25.07.2016 issued by Chhattisgarh
State Power Transmission Company Limited;
10.6 Declare that Respondents cannot take any other coercive
measures/actions in the pursuance of aforesaid demand or
letter(s)or take any fresh steps denying No Objection Certificate for
grant of Short Term Open Access permission in pursuance of the
Impugned Judgment, Tribunal Judgment or the Tariff Order passed
in relation to the power supplied by the Appellant No.1 to the
Respondent No.2 for FYs 2011-12 and 2012-13; and
10.7 Pass any such other Order or Orders as this Hon'ble Court
may deem fit and proper in facts of the present case.”
3 The appellant No. 1 is a Company incorporated under the Companies
Act, 1956 and is engaged in the business of manufacture of sponge iron/
steel, generation of power etc. It is primarily engaged in manufacturing
steel and for this purpose, it has established its Captive Power Plant (for
short, the CPP) and is a Generating Company within the meaning of
Section 2(8) of the Electricity Act and has a Captive Generating Plant at
Patrapali village in Raigarh District, initially with a capacity of 265.7 MW
which was enhanced to the capacity of 325.7 MW. The respondent No. 1
is the Chhattisgarh State Electricity Regulatory Commission which was
constituted by the Government of Chhattisgarh vide Notification No.
3190/S/E/2002, dated 23.08.2002 read with Notification No.
432/R/352/03, dated 11.05.2004 and discharges functions enjoined
upon it under Section 86 of the Electricity Act, 2003 (for short, the Act of
2003). The respondent No. 2/CSPDCL is the successor Company of
Chhattisgarh State Electricity Board (for short, the CSEB) and a
Government of Chhattisgarh undertaking. Respondent No. 3/CSPTCL is
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also a successor Company of CSEB and the transmission utility in the
State of Chhattisgarh and became functional w.e.f 01.01.2009. It also
acts as the State Load Despatch Centre for the State of Chhattisgarh.
4 The writ petition was filed challenging the judgment dated 26.05.2016
passed by the Appellate Tribunal for Electricity (for short, the Appellate
Tribunal) in Appeal Nos. 41 and 67 of 2015 {CSPDCL v. CSERC},
demand notice dated 07.07.2016 issued by the respondent No.
2/CSPDCL seeking refund of Rs. 153.55 Crores, letter dated 31.07.2016
issued by the respondent No. 2/CSPDCL refusing the appellant No. 1, a
No Objection Certificate (for short, the NoC) for grant of Open Access
for supplying power to the Indian Energy Exchange Ltd. (for short, the
IEX), the letter dated 27.05.2016 of respondent No. 3/CSPTCL rejecting
the application of the appellant No. 1 for grant of open access for supply
of power to IEX in the month of August 2016 on the ground that the
respondent No. 2/CSPDCL has not issued the NoC to the appellant No. 1
because of the alleged dues of Rs. 153.55 Crores. The challenge made
by the appellants to the above orders/demand notices were turned down
by the learned Single Judge vide order dated 30.03.2026 passed in
WPC No. 1927/2016 holding that the denial of the NoC and rejection of
Short Term Open Access (for short, the STOA) applications by
respondent No. 3 was in consonance with the statutory mandate under
Sections 32 and 33 of the Electricity Act, 2003 and was justified on
grounds of maintaining grid discipline, system security and public
interest.
5 The case of the appellants, in brief, is that a Power Purchase Agreement
(for short, the PPA) was entered into on 02.11.2011 between appellant
No.1 and respondent No.2/CSPDCL for supply of electricity. Under the
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original PPA, 150 MW of power was agreed to be supplied for the period
from 01.11.2011 to 30.06.2012. The agreement contained detailed
provisions relating to calculation of load factor, scheduling of power, and
tariff determination in accordance with the formula adopted in the suo
motu order of the State Commission. It further permitted injection of
power up to 110% during off-peak hours and up to 120% during peak
hours, while any supply beyond the prescribed limits was payable at the
rate of Re.1 per unit. The tariff structure was linked with the load factor,
subject to a minimum effective rate of Rs.1.50 per unit. Thereafter,
supplementary PPAs dated 12.07.2012, 13.08.2012, and 24.01.2013
were executed for subsequent periods extending up to 30.06.2013, with
the contracted capacity varying between 150 MW and 75 MW. In
pursuance of these agreements, the appellants supplied electricity during
Financial Years 2011–12 and 2012–13 and raised invoices in
accordance with the agreed terms, including billing based on load factor
and concessional charges for excess injection. Respondent No.2/
CSPDCL accepted the power supplied and released payments without
any protest, at average rates of Rs.2.42 per kWh and Rs.2.66 per kWh
respectively. In the year 2014, respondent No.2/CSPDCL instituted
Tariff Petition No.07/2014 before the State Commission seeking true-up
and tariff determination. By order dated 12.06.2014, the State
Commission approved a minimum base tariff of Rs.1.50 per kWh for
electricity procured from the appellants and treated such procurement as
“non-firm power.” According to the appellants, such classification was
never envisaged under the PPAs executed between the parties.
Subsequently, respondent No.2/CSPDCL preferred a Review Petition
before the State Commission, which came to be dismissed by order
dated 08.12.2014, thereby affirming the earlier order. Thereafter,
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respondent No.2/CSPDCL challenged the tariff order as well as the
review order before the Appellate Tribunal for Electricity by filing Appeals
Nos.41 and 67 of 2015. The Appellate Tribunal, vide judgment dated
26.05.2016, upheld the orders passed by the State Commission.
Following the said judgment, Respondent No.2/CSPDCL issued a
demand notice dated 07.07.2016 seeking recovery of Rs.153.55 crore
together with interest, alleging that excess amounts had been charged by
the appellants for supply of power during FYs 2011–12 and 2012–13.
The appellants contended that the demand was wholly arbitrary and
contrary to the binding contractual provisions of the PPAs, asserting that
all invoices had been raised strictly in accordance with the agreements
and had been duly accepted and paid without objection at the relevant
time. It was further the case of the appellants that in July 2016 they
applied for STOA to enable supply of power through power exchanges.
However, respondent No.2/CSPDCL refused to issue the requisite NoC
on the ground of the alleged outstanding dues arising from the impugned
demand notice. Consequently, respondent No.3/CSPTCL also rejected
the application for open access on 25.07.2016 on the same basis,
thereby preventing the appellants from undertaking transactions through
the power exchange. The appellants submitted that power had been
supplied to respondent No.2/CSPDCL during FYs 2011–12 and 2012–13
strictly in terms of the PPAs, and invoices were raised by calculating tariff
on the basis of load factor during peak and off-peak periods, while
charging only Re.1 per kWh for injection exceeding 110% during off-peak
hours and 120% during peak hours, with weekly computation of load
factor. According to the appellants, respondent No.2/CSPDCL accepted
the supplies and made payments at average rates of Rs.2.42 per kWh in
FY 2011–12 and Rs.2.66 per kWh in FY 2012–13 without ever disputing
7
the billing methodology or alleging that the power supplied was non-firm
in nature. The appellants maintain that the PPAs constitute binding
contracts and could not, after several years, be ignored unilaterally for
seeking refund of amounts already paid. It is also contended that the
PPAs were neither placed before the State Commission under Section
62 of the Electricity Act, 2003 nor properly explained during the tariff
proceedings, thereby denying the Commission an opportunity to examine
their terms. The appellants further point out that respondent
No.2/CSPDCL itself admitted in the review proceedings that the PPAs
were consistent with the orders of the State Commission and that
payments had been made in accordance therewith, while also
acknowledging that concluded transactions could not be reopened
retrospectively. The appellants additionally challenged the demand
notice and denial of NoC through representations dated 22.07.2016 and
23.07.2016, contending that neither the State Commission nor the
Appellate Tribunal had issued any direction for refund and that liability
could not be fastened upon them without affording an opportunity of
hearing. It was also asserted that the contractual terms of the PPAs
could not be retrospectively altered after complete performance and
settlement of accounts between the parties. Aggrieved by the demand
raised for Rs.153.55 crore, the denial of open access, and the reliance
placed on orders passed in proceedings in which the appellants were not
impleaded parties, the appellants instituted the writ petition seeking
quashing of the judgment dated 26.05.2016 passed by the Appellate
Tribunal, the consequential demand notice, and related communications.
The appellants also prayed for issuance of directions restraining
respondent No.2 from recovering the aforesaid amount and for grant of
NoC and open access facilities which has been rejected by the learned
8
Single Judge.
6 Mr. Gopal Jain and Mr. Abhimanyu Bhandari, and Mr. Ashish
Shrivastava, learned Senior Advocates, assisted by Ms. Divya
Chaturvedi, Mr. Bhaskar Payashi, Mr. Saransh Shaw, Mr. Jai Dhanani,
Mr. Pranav Sood and Ms. Pankhuri Gupta, Ms. Kriti Sharma and Mr.
Rahul Ambast, learned counsel for the appellants would submit that the
learned Single Judge has erred in law and on facts in passing the
impugned judgment, which is manifestly self-contradictory and internally
inconsistent. The contradictions are apparent on the face of the
impugned judgment i.e., in paragraph 57, the learned Single Judge has
expressly held that the writ petition is maintainable for adjudication of
merits on the ground that the case fell within the recognized exceptions
of violation of principles of natural justice, owing to appellant No.1 not
having been impleaded as a party to the proceedings before the learned
State Commission and the Hon'ble Appellate Tribunal. However, in direct
contradiction to the foregoing findings / observations, in paragraph 69 of
the impugned judgment, the learned Single Judge has held that in
context of the proceedings in question, namely, the tariff determination
and true-up proceedings, appellant No.1 was made aware of the said
proceedings and that the principles of natural justice had not been
vitiated. Thereafter, the learned Single Judge once again in contradiction
to the foregoing findings regarding maintainability, in paragraph 73 of the
impugned judgment has held that insofar as the appellant No.1 has
placed reliance on the principles of natural justice, no prejudice, in the
legal sense, has been demonstrated by appellant No. 1. Even after
expressly and unequivocally holding that "the present case falls squarely
within the recognized exceptions to the rule of alternative remedy,
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namely, violation of principles of natural justice" having rendered the
foundational findings, the learned Single Judge ought to have granted the
relief sought by the appellants, instead of dismissing the writ petition and
validating the very proceedings that had been characterised as violative
of natural justice. It is a well-established proposition of constitutional law
that where a Court finds that principles of natural justice have been
violated in a proceeding, the proper remedy is to set aside the impugned
action. A Court cannot, on one hand, hold that natural justice has been
violated and, on the other, proceed to validate the consequences flowing
from the very proceeding it has found to be vitiated. The writ Court failed
to appreciate that the Tariff Order by learned State Commission and the
judgment by Hon'ble Appellate Tribunal were passed without affording
the appellant No. 1 an opportunity of being heard. Therefore, the
aforesaid order and judgment are liable to be declared void ab initio qua
the appellant No. 1, being in flagrant violation of the basic principles of
natural justice enshrined under Article 14 of the Constitution. It is a
settled proposition that no person shall be condemned unheard and any
order passed in breach of the audi alteram partem rule is nullity in law
The Hon'ble Supreme Court has categorically held that an order which is
void ab initio cannot be validated by subsequent conduct and remains
unenforceable. Further, the Hon'ble Supreme Court has also held that the
distinction between a decree which is void and a decree which is wrong,
incorrect, irregular or not in accordance with law cannot be overlooked or
ignored i e, a void decree can be challenged even in execution or a
collateral proceeding holding. Therefore, the Tariff Order and Tribunal’s
judgment having been passed without hearing the appellant, is non est in
law, void ab initio qua the appellant No. 1, and cannot bind or prejudice
appellant No. 1 in any manner. The reasoning in the impugned judgment
10
is self-defeating and cannot be sustained in law. The finding of natural
justice violation, once made, necessarily entails the consequence of
quashing the demand notice dated 07.07.2016 and the consequential
actions. The inconsistency in the impugned judgment is not a mere
procedural anomaly but reflects a fundamental error in the approach to
constitutional adjudication. Where the foundational condition for the
exercise of discretionary writ jurisdiction is found to exist, then in such a
case the Hon'ble Court is obligated in law to exercise that jurisdiction in
favour of the aggrieved party, unless there are compelling reasons of fact
or law justifying a departure, which the learned Single Judge did not
identify. The Tariff Order dated 12.06.2014 and the Tribunal’s judgment
dated 26.05.2016 were passed in proceedings to which the appellant
was not a party. The findings recorded in the said proceedings to the
extent they purport to characterise the nature of the appellant's power
supply and to form the basis for a financial demand against the appellant
are not binding upon the appellant. The order of the learned Single Judge
erred in holding that the tariff determination and true-up exercise
undertaken by the learned State Commission is legislative or quasi-
legislative in character, carried out in accordance with the Chhattisgarh
State Electricity Regulatory Commission (Conduct of Business)
Regulations (for short, the Regulations) which contemplate issuance of
public notices and stakeholder participation rather than individual
impleadment of every entity that may be indirectly affected. Notably, the
Hon'ble Supreme Court has held in several judgments that tariff
determination exercise is an exercise of quasi-judicial powers of
commission. Thus, the learned Single Judge has erred in proceeding on
the basis that the tariff determination exercise was quasi-legislative in
nature when the judicial precedents of Hon'ble Supreme Court establish
11
the contrary, i e, that such proceedings are quasi-judicial in nature.
7 Learned Senior Advocate appearing for the appellants would submit that
the respondent No. 2/ CSPDCL, before the learned Single Judge had
erroneously and misleadingly contended that a representative from
appellant No. 1's office /organization was present during the hearing in
the Review Petition before the learned State Commission and therefore,
appellant No. 1 was aware about the proceedings before learned State
Commission and cannot plead non-joinder. Even if an officer of appellant
No. 1 Company was present in the review proceedings before learned
State Commission, the alleged presence of some official from appellant
No 1's office does not in any manner prove that the appellant No. 1 herein
was aware about the proceedings against it. Further, the foregoing
presence also does not waive of the procedural requirement to serve
individual notice upon a necessary party. Notably. the officer of appellant
No. 1 being a consumer of respondent No. 2 /CSPDCL was attending the
review proceedings (a continuation of tariff proceedings) in his personal
capacity. Therefore, such presence, and that too at the Review Petition
stage cannot be considered to be sufficient notice to appellant No. 1. The
respondent No. 2/ CSPDCL had erroneously and misleadingly referred to
the public notices issued with respect to the tariff proceedings before
learned State Commission and the proceedings before Hon'ble Appellate
Tribunal to contend that claim of denial of opportunity of hearing by
appellant No. 1 is wholly misconceived. In this regard, he would submit
that the purpose of the public notice is to safeguard the interests of the
consumers and it would not serve as sufficient notice to a party to the
PPA, the terms of which allegedly have been adjudicated upon.
Consumers are notified vide a public notice as it may be impracticable to
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serve notice upon each and every consumer by hand delivery or
registered post whereas notice could easily have been served upon
appellant No.1. Thus, the 'public notice' issued by respondent
No.2/CSPDCL on the directions of learned State Commission and
Hon'ble Appellate Tribunal were inadequate qua appellant No.1. Further,
the public notices issued by respondent No.2/CSPDCL only disclosed
the fact that tariff of respondent No.2/CSPDCL is being determined.
Neither the public notices provided a summary of the concerned
petition/appeal nor the same mentioned anything specifically in relation to
disallowance/treatment of cost of power purchased from appellant No. 1
by respondent No.2/CSPDCL Therefore, the so-called 'public notice'
issued by respondent No.2/CSPDCL itself was insufficient and appellant
No.1 has been denied a reasonable opportunity to be heard, as was also
rightly observed by the learned Single Judge in the impugned judgment
in paragraph 57. As per Regulation 13 of the Regulations, 'public notice'
is sufficient only in cases where it is impracticable to serve notice through
hand delivery or by registered post. However, the learned Single Judge
while passing the impugned judgment failed to consider that if
respondent No.2/CSPDCL intended to place liability for refund of power
purchase cost on appellants, which is a Generating Company and not a
consumer in the present dispute, respondent No.2/CSPDCL in terms of
Regulation 13 of the Regulations, was required to serve notice to
appellant separately. This submission was also raised by appellant No.1
before the learned Single Judge which has altogether been ignored,
while passing the impugned judgment. The appellant in any event could
not have been considered merely as "public" in terms of Section 64 of the
Electricity Act when it had executed PPAs with respondent
No.2/CSPDCL. Section 64 of the Electricity Act provides that a tariff
13
order is to be passed after considering all the suggestions and objections
received from 'the public'. However, the Hon'ble Appellate Tribunal, vide
its judgment has held that the term "public" can only be understood to
mean a consumer and appellant No.1 in the present set of facts and
context was not a consumer of respondent No.2/CSPDCL. The issuance
of public notice does not exhaust the requirement to put appellant No.1
on notice of the proceedings and give it a reasonable opportunity to be
heard, if according to respondent No.2/CSPDCL any liability were to
directly be placed upon appellant No.1. The purpose of public notice is to
invite suggestions and objections from the 'public', i.e., the consumers of
respondent No.2/CSPDCL at the time of determination of tariff by the
learned State Commission. The appellant No. 1 is a well-established
Company with its offices in the State of Chhattisgarh and as such, notice
could easily have been served upon appellant No.1 by hand delivery or
registered post In light of this, the contention of respondent
No.2/CSPDCL that 'public notice' issued by it was the only means to
serve notice or that such service was sufficient to put appellant No.1 on
notice of adjudication of issue of rate of power supplied by appellant No 1
to respondent No.2/CSPDCL in FYs 2011-12 and 2012-13 is clearly
misconceived arbitrary and untenable Therefore. appellant No 1 is
clearly an affected party and ought to have been issued notice
specifically for the purpose of deciding the issue of rate of supply of
power. It is settled principle of law that a "necessary party is a person
who ought to have been joined as a party and in whose absence no
effective decree could be passed at all by the Court In the present case,
if respondent No. 2/CSPDCL intended to recover any amounts from
appellant No.1, then the appellant herein was a "necessary party to the
proceedings in Tariff Petition before learned State Commission and in
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Appeal Nos 41 and 67 of 2015 before the Hon'ble Appellate Tribunal
Hence, the appellant herein being a necessary party could have been
impleaded at any stage as per Order 1 Rule 10(2) of the Civil Procedure
Code, 1908. As per Regulation 15(1) of the Regulations, the learned
State Commission may at any stage of the proceeding, either upon or
without the application of either party, may add/ implead a party either as
respondent or appellant whose presence may be necessary in order to
enable learned State Commission to effectually and completely
adjudicate upon and settle all questions involved in the petition
Therefore, the appellants herein being a necessary party could have
been impleaded at any stage, if any recovery was intended to be made
from appellant No 1. Even the Hon'ble Appellate Tribunal in various
order(s) has reiterated the mandatory requirement to implead necessary
parties. The finding that public notices were issued and that a
representative of the appellant No.1 was present at one hearing in the
review proceedings does not cure the violation of natural justice. The
appellant No. 1 was not a party to the proceedings. A person who is
present at a hearing without party status and that too in its personal
capacity as a consumer of the distribution licensee, without the right to
file pleadings, lead evidence, cross-examine witnesses, or make formal
submissions, cannot be said to have been "heard" in any legally
meaningful sense. Notably, the Hon'ble Supreme Court vide one of its
judgment has held that mere presence at a hearing does not constitute
an opportunity of hearing if the person is not afforded the full procedural
protections of a party.
8 Learned Senior Advocate for the appellants would next submit that the
Tariff Order by the learned State Commission and the judgment by
15
Hon'ble Appellate Tribunal were passed without affording an opportunity
of being heard to the appellant No. 1. These orders are thus, void ab
initio qua the appellant No. 1, being in flagrant violation of the basic
principles of natural justice enshrined under Article 14 of the Constitution.
The invalidity of such orders could be set up and pleaded by the
appellant No. 1 herein in execution and even in collateral proceedings.
The distinction between legislative and quasi-judicial proceedings for the
purposes of natural justice is not a rigid categorical rule but depends
upon the nature and degree of the effect of the proceeding upon
individual rights and interests. This principle was definitively settled by
the Constitution Bench of the Hon'ble Supreme Court, wherein it was
held that the question of whether a proceeding is legislative or quasi-
judicial does not determine whether principles of natural justice apply,
rather, the test is whether the proceeding. affects rights in a manner that
demands the protection of fair procedure. The principle of audi alteram
partem is a fundamental aspect of the rule of law and of the guarantee
under Article 21 of the Constitution. Any action that visits a person with
adverse civil or pecuniary consequences without affording an opportunity
of hearing violates the constitutional guarantee of fair procedure. Right to
be heard before an adverse order is passed is embedded in the
guarantee of Articles 14, 19, and 21 of the Constitution. The learned
State Commission during the tariff determination stage in FYs 2011-12
and 2012-13, vide its orders for respective years had clearly and
unambiguously approved the short term power purchase cost of
respondent No. 2/CSPDCL @ Rs. 3.10/unit with 2% escalation in each
year. It is a settled principle of law that the State Electricity Regulatory
Commission cannot at true-up stage adopt completely new methodology
contrary to the one followed at the tariff determination stage, unless there
16
is an amendment in the prevailing regulatory framework, which was not
the case in present scenario. The learned Single Judge has returned
findings on the alleged exposure of respondent No. 2/CSPDCL to
"congestion charges up at the rate of Rs.5.45 per kWh and the supposed
adverse impact on consumers on the basis of facts, assumptions and
issues that were neither pleaded by respondent No.2/CSPDCL, nor
urged during the course of hearing. The entire reasoning proceeds on
conjectural considerations drawn from certain observations/findings of
learned Central Electricity Regulatory Commission in its order passed in
suo-motu petition No. 01/2010, without any foundational pleading, issue,
evidence or submission from respondent No.2/CSPDCL that such
congestion charges were attracted to the facts of the present case. The
findings based on conjectures and surmises, rather than legal evidence,
cannot be sustained. The findings are based on surmises and
speculative consequences, rather than pleaded facts and tested
material, hence legally untenable. The observation that non-regulation of
injection into the State grid would render respondent No.2/CSPDCL
liable to congestion charges and that such situation could be avoided by
adoption of merit order purchase and control of injection, is not a finding
emerging from the pleadings or documents on record, but a conjectural
assumption introduced suo motu by the learned Single Judge, without
putting it to the appellant No.1 to contest the same. Such a course has
caused serious prejudice to the appellant and has materially affected the
outcome. In an adversarial system, no party can be taken by surprise by
a case never set up in pleadings, and no finding can be sustained on a
ground which the affected party had no notice of and consequently, no
opportunity to meet. The appellants were was never put to notice that the
issue of congestion charges, much less the applicability of the rate of
17
Rs.5.45 per kWh, would form part of the adjudicatory basis of the
impugned judgment. The appellants were, therefore, denied a fair
opportunity to controvert the factual premise, legal applicability and
regulatory interpretation of the said material. The finding is thus in breach
of the audi alteram partem rule and the broader principles of natural
justice. The learned Single Judge could not have travelled beyond the
pleadings and record to make out a new case for respondent
No.2/CSPDCL. It is settled law that relief cannot be founded on matters
not pleaded and equally, a judgment cannot rest on an issue outside the
pleadings or on material on record not led on such issue, unless parties
were fully aware and had consciously participated in the proceedings
thereon in the present case, the question of congestion charges was
never part of the lis, never crystalised as an issue and never opened to
contest by the appellant No. 1. The learned Single Judge has gone
beyond the findings of learned State Commission and Hon’ble Appellate
Tribunal to supplement the reasoning contained therein, which is against
the established principle of law that validity of an order must be judged
by the reasons mentioned therein and cannot be supplemented by fresh
findings as well as reasons subsequently given by the concerned
authority making the order of what it meant, or of what was in its mind, or
what it intended to do. Public orders made by public authorities must be
construed objectively with reference to the language used therein as are
meant to have public effect and affect the conduct of those to whom they
are addressed.
9 Mr. Jain would next submit that the appellant No.1 was not liable to make
any payments in terms of Tariff Order and Tribunal’s judgment and
demand was raised beyond limitation period. The learned Single Judge
18
has erroneously held vide the impugned judgment that since Hon'ble
Appellate Tribunal and learned State Commission had already dealt with
the aspect of nature of supply of power and these bodies being expert
bodies in the subject matter, hence the Hon'ble Court cannot substitute
the said findings. In this regard, it is pertinent to mention herein that both
the Tariff Order dated 12.06.2014 and the Tribunal’s judgment dated
26.05.2016 attribute all the negligence and fault to respondent No.
2/CSPDCL. The said regulatory fora did not find any wrong-doing,
misrepresentation, fraud, or overcharging on the part of appellant No. 1.
The learned Single Judge, while passing the impugned judgment failed
to appreciate that there was never a direction against the appellant No. 1
to refund any monies, enabling respondent No.2/CSPDCL to raise such a
demand. Rather, respondent No.2/CSPDCL itself had consistently
defended the validity and performance of the PPAs before the learned
State Commission and the Hon'ble Appellate Tribunal, and having
accepted supply of power thereunder, honoured invoices and made
payments without protest, cannot now be permitted to resile from
submissions made in its own affidavits and from the concluded
contractual arrangement and seek refund of monies already lawfully paid
under a fully performed contract. Further, respondent No.2/CSPDCL
having failed to defend its position, instead of challenging the Tribunal’s
judgment before the Hon'ble Supreme Court, erroneously and arbitrarily
proceed to raise the alleged demand of Rs.153.55 Crores. Even
otherwise the proceedings before the learned State Commission (true-up
proceedings) and the proceedings before the Hon'ble Appellate Tribunal
only dealt with the aspect of what amount of cost respondent No. 2/
CSPDCL was entitled to recover from its consumers. Hence, no finding
therein can have any connection or nexus with what amount respondent
19
No. 2/CSPDCL is liable to pay to its generators from whom it has
purchased power under a dispensation approved by the learned State
Commission. The learned Single Judge did not appreciate the fact that
despite there being no direction against appellant No.1 in the regulatory
proceedings, respondent No. 2/CSPDCL had raised the illegal and
baseless Demand Notice beyond the permissible limitation period. The
Demand Notice dated 07.07.2016 raised by respondent No.2/CSPDCL
for the electricity supplied in FY 2011-12 and FY 2012-13, was well
beyond the limitation period for raising such demand under the Limitation
Act, 1963. The provisions of the Limitation Act, 1963 also applies to the
proceedings under the Electricity scenarios. Neither the Tribunal’s
judgment nor the Review Order/true-up order anywhere directed
appellant No. 1 herein to refund the monies received by it for supply of
power as per the PPA to respondent No.2/CSPDCL, to make good the
loss allegedly incurred by respondent No.2/CSPDCL In the absence of a
specific statutory provision, the Limitation Act, 1963 applies by virtue of
Section 29(2) of the Limitation Act, 1963. Article 55 of the Schedule to
the Limitation Act, 1963, prescribe a limitation period of 3 (three) years
from the date on which the right to sue accrues. In the context of a claim
for breach of contract, the right to sue accrues on the date when the
breach in respect of which the suit is instituted occurs.
10Mr. Jain would also submit that Section 62(6) of the Electricity Act does
not create an automatic or self-executing refund claim. The learned
Single Judge, vide the impugned judgment has erroneously held that
once it is found, in accordance with law, that the tariff applicable to the
supply in question is lower than what has been paid, the consequence of
adjustment or recovery necessarily follows under Section 62(6) of the
20
Electricity Act. But a careful reading of the Section 62(6) of the Electricity
Act reveals that the obligation to refund arises only when a "generating
company" receives "tariff which is in excess of the tariff fixed by the
Appropriate Commission". The proviso does not create an independent
cause of action or an automatic liability that can be enforced. Therefore,
learned Single Judge's construction of Section 62(6) as creating a self-
executing and automatic refund obligation, without any proceeding
against the Generating company, is contrary to the plain text and
legislative intent of the provision. The true-up mechanism under the
Electricity Act is designed to ensure that the actual costs of the
distribution licensee are accurately reflected in the tariff charged to
consumers. It is a regulatory tool for calibrating the distribution licensee's
revenue requirement. It is not a mechanism for allowing the distribution
licensee to seek recovery from the Generating Company of amounts
voluntarily paid under a bilateral contract with the Generating company.
In terms of Regulation 5.4(iv) of the CSERC (Terms and Conditions for
Determination of Tariff according to Multi-Year Tariff Principles)
Regulations, 2010 (for short, the Tariff Regulations, 2010), "variations in
power purchase unit costs" are classifiable as an "Uncontrollable Item", a
position that is further confirmed and reinforced by the subsequent
Regulations promulgated by learned State Commission. By virtue of
Regulation 5.10(b) of the Tariff Regulations, 2010, a specific and
exhaustive mechanism exists for the treatment of aggregate revenue
losses arising from uncontrollable items. Under this mechanism, such
losses cannot be passed on to a Generating Company. Therefore, there
is no regulatory basis to burden the generator with losses arising from the
tariff determination or true-up proceedings. Such an erroneous and
arbitrary interpretation of Section 62(6) of the Act, would have the effect
21
of allowing a distribution licensee to first voluntarily pay a Generating
Company under a mutually agreed contract, then initiate tariff
proceedings without impleading the Generating company, obtain findings
against itself, and then use those findings to recover money from the
Generating Company who was never heard. Such an interpretation
violates the most elementary principles of natural justice and due
process, which cannot be the intent of Section 62(6) of the Electricity Act.
Even if the provisions of Section 62(6) were to be construed as
applicable to the present facts, the same must be preceded by a
determination in a proceeding to which the appellant No. 1 was a party.
In the absence of such a proceeding, there exists no legal basis for the
demand raised by respondent No.2/CSPDCL. Hence, the learned Single
Judge while passing the impugned judgment failed to appreciate that the
Tariff Order dated 12.06.2014 and the Tribunal’s Judgment dated
26.05.2016 contain no direction of recovery against the appellant. The
Tribunal’s judgment records findings against respondent No.2/CSPDCL,
thereby holding that respondent No.2/CSPDCL acted negligently in
procuring 'non-firm' power and the consequence fastened is upon
respondent No.2/CSPDCL (disallowance of power purchase cost).
Converting a disallowance against respondent No.2/CSPDCL into a
recovery from appellant No. 1, without any proceeding against it, is a
legal impossibility. Recovery of amount paid by a distribution Company to
a Generating Company can only be permitted under Section 62(6) of the
Electricity Act where a regulatory commission determines (under an
independent Section 62 proceeding between a Generating Company and
a distribution company), that cost charged by the said generator was
more than the permissible limits as per generation tariff regulations.
Admittedly, no such proceeding has ever taken place in the present
22
circumstances.
11Mr. Jain would also submit that the PPA dated 02.11.2011 and the
subsequent supplementary PPAs contained no provision for refund of
money by appellants in case the cost of procurement of power was
disallowed by learned State Commission. Further, clause 21 of the PPA,
lays down that if there is any change in tariff conditions subsequently
introduced by learned State Commission, then a supplementary PPA is
required to be signed, for incorporating the said change introduced by
learned State Commission. However, in the present case there is neither
any specific direction passed by learned State Commission directing
modification of PPA nor any subsequent /consequent supplementary
PPA which was signed by the parties, on the basis of which it can be
contended by respondent No.2/CSPDCL that the appellant was liable to
be paid only Rs. 1.50/unit for supply of power, in modification of terms of
PPA. The tariff determination exercise qua a distribution licensee cannot
lead to amendment of terms of a PPA signed by such licensee with a
Generating company. Further, the learned State Commission has
misinterpreted the provisions of Electricity Act to hold that the tariff order
passed by learned State Commission will prevail over contracts entered
into between parties. It is a settled principle of law that the sanctity of
PPAs cannot be altered / changed by judicial fora, unless the said PPA is
contrary to the prevailing regulatory and statutory framework. There is a
distinction between regulation making powers of Commissions under
Section 178 of Electricity Act and other orders of electricity regulatory
Commissions, holding that terms of PPA can only be modified by way of
framing of regulations and not passing orders. The learned Single Judge
failed to appreciate that the Hon'ble Supreme Court vide its judgment in
23
Haryana Power Purchase Centre v. Sasan Power Limited & Ors .
{2023 SCC Online SC 577} has held that a PPA could be interfered with
by the concerned Electricity Regulatory Commission, only by framing
Regulations, and not by exercising quasi-judicial power. Further, the
Hon'ble Supreme vide Judgment dated 13.04.2023 passed in Civil
Appeal No(s). 3480-3481 of 2020: Gujarat Urja Vikas Nigam & Ors.
vs. Renew Wind Energy (Rajkot) Private Limited & Ors, has held
that when the PPAs are entered into in the exercise of equal bargaining
power, after due negotiation by the parties, and within the framework of
existing regulations, then in that case unless any later amendment
expressly overrides existing contracts, the terms of such agreements
bind the parties. The learned Single Judge has failed to take note of the
aforesaid important distinction between regulations framed by learned
State Commission and tariff orders passed by the learned State
Commission. In the present case, PPA is not in any manner contrary to
then prevailing regulatory and statutory framework. Therefore, the terms
of the PPA cannot be understood to have been modified merely by
passing of the true-up otrder, especially considering no specific direction
existed in the aforesaid order for modification of the PPA.
12Mr. Jain would also submit that the PPAs were not examined by the
learned State Commission and the contractual framework between
parties negates Demand Notice dated 07.07.2016. It is an admitted and
undisputed fact on the record that appellant No.1 was not afforded an
opportunity to refer to the detailed terms contained in executed PPAs
before learned State Commission in the Tariff Petition No. 07/2014. As a
consequence, learned State Commission did not have the benefit of
examining the contractual formula for computation of tariff, the load factor
24
mechanism, the permissible injection limits, and the agreed minimum
effective rate under the PPAs. learned State Commission's
characterization of appellant No.1's power as 'non-firm' was based upon
a load curve analysis conducted without reference to the contractual
framework that both parties had agreed upon. The learned Single Judge
has continued with this error by entertaining the present writ petition and
referring to the terms of the PPA but still not analyzing the said terms as
well as submissions made by appellant No. 1. The learned State
Commission did not had the opportunity to consider the following terms
and conditions agreed between appellant No. 1 and respondent
No.2/CSPDCL under the aforesaid PPAS:
(i) During off-peak hours i.e., between 00.00 hrs. to 18.00 hours &
23.00 hours to 24.00 hours, appellant will be permitted to inject up to
110% of scheduled power and for such over-injection, tariff of only
Re 1.00 per kWh was payable by respondent No.2/ CSPDCL.
(ii) During peak hours (18.00 hours to 23.00 hours), appellant No.1
will be permitted to inject up to 120% of scheduled power and for
such over-injection, tariff of only Re. 1.00 per kWh was payable by
respondent No.2/CSPDCL.
(iii) Units supplied up to permitted injection rate of 110% during the
off-peak hours and 120% during the peak hours will be booked as
eligible units for calculation of load factor and payment.
(iv) The load factor was to be computed on weekly basis and for
power supplied below the load factor of 80% on weekly basis, the
tariff of such power supplied was to be reduced proportionately. It is
noteworthy that in terms of the aforesaid provisions, appellant No.1
25
raised its invoices for the power and has charged only Re. 1.00/- per
kWh for the power injected above 110% (during off-peak hours) and
120% (during peak hours) wherein the applicable load factor was
computed on weekly basis in terms of the PPAs.
13The appellant had always abide by the terms and conditions of the PPA.
Hence, appellant cannot be penalised for no fault of its own when it had
complied with all terms and conditions of the PPA as a diligent party. It is
established principle of law that a person cannot be penalized for no fault
on his part. Under the PPA, the appellant is permitted fluctuation/
deviation of +/-20%. Since it is impossible to ensure constant power
injection throughout the term of the agreement (especially in the case of
Captive Plants), all agreements provide for permitted fluctuations and
deviations. If the generator stays within the limits provided, then the
nature of supply is taken to be firm. If there is an injection of power within
the permitted deviation, appellant is entitled to the full agreed base rate
(i.e. Rs.2.50/Unit). However, in case of deviations above and beyond the
permitted limit of 20%, Clause 5 of the PPA is relevant. In terms of
Clause 5 of the PPA, in case of supply of power beyond the over-
injection limit, a tariff of Re.1/kWh is payable by the respondent No.
2/CSPDCL for the supply of "infirm power" by appellant. The appellant
had stayed within the aforesaid limit of permitted fluctuation and
therefore, the power supplied by it could not have been termed as "infirm"
power. The aforesaid position was clear from the power export invoices
for applicable period brought on record by appellant No.1 in the writ
petition. Hence, the Demand Notice dated 07.07.2016 is contrary to the
terms of the PPA and liable to be quashed. The PPA does not contain
any provision for fixing the 'minimum base rate' at Rs. 1.50 per kWh in
26
case of deviation from schedule. Accordingly, in terms of the said PPAs,
the respondent No 2/CSPDCLhas paid appellant No. 1 at an average
rate of Rs. 2.42 per kWh for the power supplied during FY 2011-12 and
at an average rate of Rs 2.66/- per kWh in FY 2012-13. The maximum
amount of tariff payable was Rs. 3.00/- per kWh, however, the payment
made by respondent No. 2/CSPDCL was at a lesser rate as stated herein
above, which already factored the fluctuations in supply of power, if any,
basis the load factor calculations and concept of Eligible Units. The
learned Single Judge has erroneously and arbitrarily held that
respondent No.2/CSPDCL, being a distribution licensee, is bound to act
in accordance with statutory tariff orders and cannot be estopped from
enforcing the same merely because payments were earlier made under a
different understanding and that the doctrine of estoppel cannot operate
against a statute. In this regard, it is submitted that appellant's estoppel
argument does not seek to use estoppel to override a statute. The
argument is that respondent No.2/CSPDCL, having voluntarily and
unconditionally entered into the PPAs with appellant No 1, having
accepted power supply under those PPAs for 2 (two) full financial years,
having made full payment of all invoices without any objection or protest,
and having expressly admitted in its own pleadings before learned State
Commission and Hon'ble Appellate Tribunal that the power was as per
terms of PPA cannot now, several years later, turn around and seek
refund of the same amounts from the appellant. The learned Single
Judge has also erred in holding that the doctrine of estoppel cannot
operate against a statute, nor can it be invoked to defeat public interest
embedded in tariff regulation. The aforesaid finding is erroneous on 2
(two) counts, firstly, there was no question of public interest being
affected since the disallowance of power purchase cost was only
27
required to be borne by respondent No.2/CSPDCL and not its consumers
Secondly, the ground for estoppel raised by appellant No. 1 before this
Hon'ble Court was in the context of express terms of a contract signed by
respondent No 2/CSPDCL with appellant No 1. The Hon'ble Supreme
Court, in Union of India vs. Indo-Afghan Agencies Limited, {(1968) 2
SCR 366}, has held that the principle of promissory estoppel applies
against the government and public authorities, and that a representation
made to a party in the course of a transaction, on the basis of which the
party has acted to its detriment, creates a binding obligation even where
the underlying promise may not be enforceable as a contract in the
traditional sense. Pertinently, it is also settled law that principle of
estoppel is applicable in context of submissions made in other
proceedings. In this regard, reference is made to the decision of the
Supreme Court in Heeralal v. Kalyan Mal & Ors. {AIR 1998 SC 618}.
Therefore, respondent No.2/CSPDCL having entered into a binding
contract with appellant No. 1 and also made submissions in support of
the power supply by appellant No. 1 in various proceedings before
learned State Commission and Hon'ble Appellate Tribunal could not
have resiled from such binding terms and statements. One category of
public interest cannot be given precedence over another category of
public interest. Appellant No. 1 being a public listed Company, any illegal
and erroneous recovery made from it will adversely impact its
shareholders, ie, the public at large Therefore, merely to purportedly
protect interest of consumers of respondent No. 2/CSPDCL, the interest
of shareholders of appellant No. 1 cannot be adversely affected. The
respondent No. 2/CSPDCL, having entered into a PPA (which was
blessed by learned State Commission itself vide the suo-motu order
dated 30.04.2010) which permitted fluctuation of power to the extent
28
given under terms therein with open eyes, cannot seek to wriggle out of
such agreement. It is settled position of law that those who enter into
contract with open eyes must accept the burden of the contract along
with its benefits. Therefore, once respondent No.2/CSPDCL had
accepted the power supplied by the appellant and made the payment
towards the monthly bill in terms of the PPA, it was estopped from raising
the alleged claim of refund of monies for the said period ie., for FY 2011-
12, by way of the alleged Demand Notice dated 07.07 2016. In this
regard, reference is made to the judgment of the Apex Court in Har
Shankar & Ors. v. DY. Excise and Taxation Commissioner & Ors.
{(1975) 1 SCC 737} and Haryana Power Purchase Centre v. Sasan
Power Limited & Ors. {2023 SCC Online SC 577 (Para 95 & 96)}. The
doctrine of finality of concluded transactions is a fundamental principle of
contract law and of the law of restitution. Where a contract has been fully
performed i.e., power supplied, received, and paid for without any
contemporaneous dispute, protest, or reservation, the transaction is
conclusively settled. A party cannot, years later, seek to reopen and
revise the terms of a concluded transaction on the basis of subsequent
regulatory proceedings. Where one party makes a clear and
unambiguous representation to another party, and the other party acts in
reliance upon that representation to its detriment, the first party is
estopped from resiling from its representation even where the
representation relates to a matter within the domain of statutory authority.
In this regard, reference is made to the judgment of the Apex Court in
Motilal Padampat Sugar Mills Company Limited vs. State of Uttar
Pradesh {(1979) 2 SCC 409}.
14Mr. Jain would also submit that the impugned judgment, in upholding a
29
unilateral and retrospective demand for refund of monies already paid
under fully performed PPAs proceeds on an approach that is contrary not
only to settled legal principles but also to the most basic and foundational
economic principles governing commercial certainty, contractual sanctity
and investment-backed expectations in the electricity sector. The
electricity industry is by its very nature a capital-intensive sector,
dependent upon long-term investment decisions, financial closure,
bankability of contracts, predictability of tariff treatment, and certainty in
enforcement of concluded bargains. Generating companies commit
substantial capital, arrange debt and equity, and structure their
commercial operations on the basis of binding PPAS and the legitimate
expectation that payments validly received under such contracts, after
due supply and acceptance of power, will attain finality unless displaced
by a lawful adjudicatory process to which they are parties. If a distribution
licensee, after consciously entering into a contract, accepting supply
thereunder, making payment without protest, and even defending such
contractual arrangement before the regulatory forums, is nevertheless
permitted years later to reopen concluded transactions and recover
monies by relying upon findings rendered in proceedings to which the
generator was not impleaded, it would strike at the root of commercial
confidence and legal certainty in the power sector.
15With respect to the finding that the appellant supplied non-firm or infirm
power, is unsustainable. The concept of infirm power is only applicable to
the power plants that have not achieved Commercial Operation Date
("COD") in terms of the applicable regulatory and legal framework. The
term "infirm power” has been defined under Regulation 3.23 of the Tariff
Regulations 2010 as electricity injected into the grid prior to the
30
commercial operation of a unit or block of the generating station".
Therefore, even in terms of the definition provided under the regulations
of the learned State Commission, the supply of power by appellant to
respondent No 2/CSPDCL could not have been termed as infirm power.
Notably, the Raigarh Captive Plant of appellant, which is the subject
matter in this case, had achieved COD in the year 2005. Under the
PPA/regulations of learned State Commission, there was no defined
term/concept of 'non-firm' power for the short-term procurement of
conventional/thermal supply of power in the PPA(s) signed between
appellant No. 1 and respondent No.2/CSPDCL. In fact, the term 'non-
firm' power was only used in the CSERC (Terms and Conditions for
Determination of Generation tariff and related matters for electricity
generated by plants based renewable energy sources) Regulations,
2012 (read with subsequent amendments) in the context of
biomass/renewable energy. Therefore, the usage of the term 'non-firm'
power in the present case is irrational and without any basis in law, as
the CPPs of appellant No. 1 are based on conventional source of power
i.e., coal (Thermal Power Plants). Notably, there is a fundamental
technical difference between the terms ‘infirm power’ and ‘irregular
power’. ‘Infirm power’ is the power which is generated from generating
plant before it has achieved commercial operation. Further, the foregoing
power is called 'infirm power’ because a generating plant is said to
achieve commercial operation only when it has proved its ability to
generate power constantly for a minimum period of time which in normal
parlance is 72 hours. If a generating plant is unable to generate constant
power for such a period, then the power so generated is said to be ‘infirm
power’. Pertinently, in case of a captive generating plant, the plant is fully
capable of generating power consistently, therefore, the power is not
31
unstable' or 'infirm power'. However, in the present case since the power
is primarily used by the steel plant of appellant No. 1 and it is only the
surplus power that is sold to respondent No. 2/ CSPDCL, the power
albeit stable is not readily available for entire period. Simply because the
power is not available at the same quantity across the time blocks that
does not mean the power is 'infirm power’. It only means that the power is
not consistently available, but whenever the power is available it is stable
and firm. Further, the method of calculation of load factor and rate of
power supply as laid down in the said PPAs was based on the learned
State Commission's suo-motu order dated 30.04.2010 passed in Suo
Motu Petition No. 05 of 2010, which has attained finality in absence of
any challenge to them. The appellant cannot be punished for following
the suo motu order of the learned State Commission and also for
diligently abiding by each and every term of the said PPAs. The
'minimum effective rate' of Rs.1.50/- per kWh in the suo motu order dated
30.04.2010 was provided as a safeguard in the interests of the power
generators and not as a penal rate to be made applicable to supply by
such companies in case the power generated by them is fluctuating. The
doctrine of unjust enrichment applies where a party has received a
benefit that it is not legally or contractually entitled to retain. In the
present case, the appellant received payment under a valid, subsisting,
and duly executed PPA. The amounts received were the agreed
contractual consideration for the supply of power. They cannot be
characterised as a benefit received without legal basis. The appellant did
not receive any windfall or unilateral gain, it received the precise
consideration agreed upon in the PPAs, which were executed by
respondent No.2/CSPDCL and which the respondent No.2/CSPDCL
performed without any contemporaneous objection. The appellant
32
retained nothing unjustly, rather it received consideration for goods
supplied under a binding agreement. Therefore, the loss suffered by
respondent No.2/CSPDCL, if any, flows from its own negligence in
procuring 'non-firm' power, which it was expressly warned against by the
regulatory framework. Further, the doctrine of unjust enrichment cannot
be invoked to compel restitution where the enrichment is contractually
justified and where the party seeking restitution was itself responsible for
the circumstances giving rise to the claim. It is an established principle of
law that the writ jurisdiction of this Hon'ble Court is wide and can be
exercised in case there is a breach of principles of natural justice or
fundamental rights of a party have been infringed upon by the decision of
an expert body.
16Mr. Jain would also submit that the denial of open access was founded
solely on a disputed claim and could not be sustained on new grounds.
The learned Single Judge while passing the impugned judgment failed to
take into account an important aspect that denial of NoC by respondent
No. 3/CSPTCL for open access was only because of the alleged
outstanding amount as per demand notice dated 07.07.2016. However,
the learned Single Judge while passing the impugned judgment has
erroneously held that the denial of open access was not solely on
account of alleged outstanding dues but is rooted in the larger
consideration of maintaining grid discipline and ensuring secure, reliable,
and economic operation of the power system. It has further been
erroneously and arbitrarily observed that grant of open access is not a
matter of right but is subject to fulfillment of regulatory conditions
including adherence to grid discipline, technical feasibility and system
security. On the date of the demand notice (07.07.2016) and the denial of
33
NoC (21.07.2016), there were no outstanding dues from the appellant to
respondent No.2/CSPDCL or respondent No. 3/CSPTCL. All invoices
had been fully paid and settled by 01.06.2013. The alleged "dues" of Rs.
153.55 Crores were a new and disputed claim raised by respondent No.
2/CSPDCL for the first time on 07.07.2016, and which the appellant had
immediately disputed in its reply dated 22.07.2016. The letter dated
21.07.2016 denying NoC expressly stated "As per our records notice for
payment of Rs. 153.55 Cr issued to you on dated 07.07.2016 which is
still unpaid." Similarly, the rejection letter dated 25.07.2016 from
respondent No. 3/CSPTCL referred specifically to the alleged dues as
the basis for rejection. There were no contemporaneous communications
denying open access on the ground of grid indiscipline or injection
pattern at the time of the impugned denials. Hence, the learned Single
Judge's reliance upon grid discipline concerns to uphold the denial of
NoC goes beyond the stated grounds in the aforesaid letters and cannot
be sustained. The learned Single Judge has materially erred in failing to
adjudicate one of the substantive prayers specifically sought by appellant
No. 1 in the Writ Petition (Civil) No 1927/2016, namely, the challenge to
the letter dated 21.07.2016 issued by respondent No. 2/ CSDPCL The
impugned judgment is entirely silent on this prayer and contains no
finding, reasoning, or conclusion whether of acceptance or rejection in
respect thereof. The complete absence of any adjudication on this prayer
is contrary to settled position of law that a Courtseized of a matter is
duty-bound to adjudicate all prayers placed before it and to return
findings on each, whether in favour of or against the party seeking relief.
The failure to do so amounts to an error of law and a failure to exercise
jurisdiction vested in the learned Single Judge. In terms of Section 5(3)
of the CSERC (Connectivity and Intra-State Open Access) Regulations,
34
2011, which was invoked by respondent No.2/CSPDCL as the basis for
denying NoC, pertains to "unpaid outstanding dues". A disputed claim,
the legal basis of which itself was under challenge, does not constitute
"unpaid outstanding dues" within the meaning of the regulation. However,
the learned Single Judge while passing the impugned Judgment failed to
draw this distinction, thereby permitting respondent No.2/CSPDCL to use
a disputed and legally contested claim as a unilateral mechanism to deny
the appellant access to the power market. In this regard, it is pertinent to
note that denial of open access to the appellant constitutes a direct
restriction on the appellant 's right to carry on trade and business under
Article 19(1)(g) of the Constitution of India.
17Mr. Jain would lastly submit that this is a case of arbitrary singling out of
the appellant and violation of Articles 14 and 19(1)(g) of the Constitution.
The impugned judgment violates Article 14 of the Constitution, since the
appellant's supply has been singled out and appellant has not been
treated at par with the other similarly placed captive power plants. The
learned Single Judge has erroneously held that appellant No. 1 is
seeking negative parity by referring to PPAs signed by respondent No.
2/CSPDCLwith other similarly placed CPPs, where similar tariff has been
paid for similar quality of power respondent No.2/CSPDCL had
purchased surplus power from various other captive generators
operating in the State of Chhattisgarh, only the appellant's purchase was
singled out. In fact, respondent No 2/CSPDCL had itself made the
aforesaid submission before the Hon'ble Appellate Tribunal. Therefore,
there is a clear discrimination by the statutory authority against the
appellant. This discrimination against the appellant without there being
any fault on its part is violative of Article 14 of the Constitution. Hence,
35
the appellant herein was not in any manner trying to make any negative
parity argument. The impugned judgment dated 30.03.2026 passed by
the learned Single Judge in WPC No. 1927/2016 suffers from patent
illegality and thus, deserves to be set aside and the writ petition deserves
to be allowed.
18In support of his contentions, Mr. Jain would place reliance on the
decisions rendered in Prem Singh & Others v. Birbal & Others
{(2006) 5 SCC 353}, Balvant N. Vishwamitra & Others v. Yadav
Sadashiv Mule (Dead) through LRs & Others {(2004) 8 SCC 706},
PTC India Ltd. v. Central Electricity Regulatory Commission &
Others {(2010) 4 SCC 603}, BSES Rajdhani Power Ltd. v. Delhi
Electricity Regulatory Commission {(2023) 4 SCC 788},
Pushpendra Surana v. Central Electricity Regulatory Commission
& Others {judgment dated 10.03.2014 passed in IA No. 7 of 2014 in
DFR No. 2675/2013 and batch}, Moreshar S/o Yadaorao Mahajan v.
Vyankatesh Sitaram Bhedi (Dead) Through LRs and Others {Civil
Appeal Nos. 5755-5756 of 2011}, Kumar Gaurav v. State of Bihar
{judgment dated 06.03.2024 passed by Patna High Court in Civil
Miscellaneous Jurisdiction No. 482/2021}, Cellular Operators
Association of India v. Chhattisgarh State Electricity Regulatory
Commission & Another {order dated 06.08.2024 passed by the
Appellate Tribunal in Appeal No. 126/2024}, State of Orissa v. Dr.
Binapani Dei {(1967) 2 SCR 625}, A.K.Kraipak v. Union of India
{(1969) 2 SCC 262}, Airports Economic Regulatory Authority of
India v. Delhi International Airports Ltd. & Others {judgment dated
18.10.2024 passed in Civil Appeal Nos. 3098-2099 of 2023}, Olga
Tellis v. Bombay Municipal Corporation {(1985) 3 SCC 545},
36
Maneka Gandhi v. Union of India {(1978) 1 SCC 248}, BSES
Rajdhani Power Ltd. v. Delhi Electricity Regulatory Commission
{(2023) 4 SCC 788}, Omar Salay Mohamed Sait v. Commissioner of
Income Tax, Madras {AIR 1959 SC 1238}, Ballu v. State of M.P.
{(2024) 12 SCC 202}, Bachha Nahar v. Nilima Mandal {(2008) 17
SCC 491}, Mohinder Singh Gill v. Chief Election Commissioner,
New Delhi {1978 AIR 851}, Andhra Pradesh Power Coordination
Committee & Others v. Lanco Kondapalli Power Ltd. & Others
{(2016) 3 SCC 468}.
19On the other hand, Mr. Adhiraj Surana, learned counsel appearing for the
respondent/Commission, placing reliance on the return filed before the
learned Single Judge would submit that the learned Single Judge has
committed no illegality or irregularity while dismissing the petition filed by
the appellant-Company. He would submit that the writ petition was also
liable to be dismissed on the count of availability of alternative remedy of
filing a review under Section 120(2)(f) of the Electricity Act, 2003 in case
it has not been granted any opportunity of hearing. Further, the appellant
had the effectively equal alternate remedy to approach the respondent
No.1 Commission, for redressal of its grievances, under Section 86 (1) (f)
of the Electricity Act, 2003 which has not been done by the appellant.
Unless the order dated 26.05.2016 was challenged before the Hon'ble
Supreme Court, under Section 125 of the Electricity Act, the notice dated
07.07.2016 need not be interfered with by this Hon'ble order Court. The
demand letter and the said recovery of Rs.153.55 Crores is absolutely
reasoned and justified in light of the tariff orders dated 12.06.2014 and
08.12.2014 and any protection against such demand shall lead to severe
burden to be shred over to the public-at-large for assessing the Tariff
37
order for the forthcoming years. Mr. Surana would submit that the
Electricity Act, 2003 was introduced for regulating the electricity supply in
the country, to preserve it's core features other than those relating to the
mandatory existence of the State Electricity Board and the responsibility
of the State Government and the State Electricity Board, with respect to
regulating licensees. There was also a need to provide newer concept
like power and trading open access. By this Act, it was to be ensured that
the development of electricity industries are promoted for competition
together with protecting the interests of consumers and supply of
electricity to all areas, rationalization of electricity tariff, ensuring
transparent policies regarding subsidies, promotion of efficient and
environmentally benign policies. Under the Section 82 of the Electricity
Act, 2003, the respondent No. 1 was constituted and is discharging
functions as described in Section 86 of the Act. The Commission,
according to the Section 94 of the Act, for purposes of any inquiry or
proceeding under this Act, have the same power as are vested in a Civil
Court under the Code of Civil Procedure, 1908. The Commission has
been entrusted with the duty of determination of tariff under the
provisions of part VII of the Act. The Commission had notified
Chhattisgarh State Electricity Regulatory Commission Conditions for
determination of tariff according to Multi Year Tariff principles and
Methodology and Procedure for determination of Expected revenue from
Tariff and Charges) Regulations, 2012 (for short, the Regulations, 2012)
in Chhattisgarh Rajpatra Dated 06.10.2012. The tariff petitions filed by
the power companies i e. P No. 05 of 2014 by Chhattisgarh State Power
Generation Company Limited, P.No. 06 of 2014 by Chhattisgarh State
Power Transmission Company Limited (the respondent No.3 in this
case), P. No. 08 of 2014 by Chhattisgarh State Load Despatch Centre
38
and P.No. 07 of 2014 by Chhattisgarh State Power Distribution Company
Limited (the respondent No. 2 in this case) were decided and disposed of
by the Commission through its order dated 12.06.2014, after complying
the process under the Regulations, 2012. It is a fact that the demand for
electricity has been rising fast in the State, but there was no significant
addition of generation capacity by the State Utility, ie CSPGCL in past
few years. It is not always feasible to meet the consumers' demand from
the long-term PPAs only. For various reasons, including varying load-
generation balance, weather conditions, seasonal demand, planned and
forced outages of generators supplying power, a distribution utility may
require alternative means to meet the seasonal or peaking demands. The
CSPDCL needed to purchase power through short term power purchase
agreements from various generators either CPP or IPP, generating
electricity in small quantities. Looking to the requirement of the CSPDCL,
the Commission has initiated a suo-motu proceedings as suo-motu
petition No. 05 of 2010 and passed its order on 30.04.2010. As pleaded
by the appellant, according to the order dated 30.04.2010, the appellant
No. 1 and the respondent No.2 had entered into a PPA for short term
power sale. These were executed for sale of firm power of 75 MW and
firm power of 150 MW. In agreement executed between the appellant
No.1 and respondent No.2, it is provided that "notwithstanding to the
above, in case the CSERC issues any other guidelines or specifies/
modifies terms and conditions of power purchase by the licensee, the
same shall be acceptable and binding on both the parties". According to
the provisions of agreement the Commission's order is binding on the
parties. The appellant No. 1 has accepted in several letters that they are
not able to maintain consistence power supply as per their schedule and
their power injection to CSPTCL network varies. M/s JSPL has been
39
operating in this manner for last 15 years and they never had any issue
with CSPTCL authorities, regarding irregular power injection. In true-up
process for FY 2011-12 and 2012-13 for CSPDCL i.e. the respondent
No.2, the Commission in order dated 12/06/2014 observed as follows:
"6.3.2 Power Purchase Cost
CSPDCL in its petition submitted that it had purchased power
from CSPGCL generating stations, Central generating stations
and other sources such as captive generating plants, bio-mass
based power plants, IPPs, solar and other RE sources,
CSPTrCL and other short term sources to meet the energy
requirement of the State. The CSPDCL also submitted that net
expenses of Rs 29.69 Crore on account of Ul charges in FY
2012-13 has been reduced from income from inter state sales in
the balance sheet, thereby reducing the income receipt.
CSPDCL has submitted power CSERC MYT Order FY 2014-15
86 purchase cost of Rs. 5046.49 Crore for FY 2011-12 and Rs.
5138.96 Crore for FY 2012-13 respectively CSPDCL further
requested the Commission to approve the power purchase
expenses including transmission charges on actuals.
Commission's View:
The details submitted by CSPDCL regarding power purchase
were analysed; source wise power purchase quantum and cost
was verified from form R-4. From the R-4 submitted by CSPDCL
it is observed that the utility has incurred Rs. 89.83 Crore for FY
2011-12 and Rs. 264.65 Crore for FY 2012-13 towards short-
term power purchase from Mis Jindal Steel and Power Limited
(JSPLI CSPDCL had purchased 359.32 MU at the average rate
of Rs. 2.50 per unit in FY 2011-12 and 980.19 MUs of the
average rate of Rs. 2.66 per unit in FY 2012-13.
The load curve prepared by the SLDC shows that the injection
pattern of the power supplied by JSPL to CSPDCL has wide
variation. Supply from JSPL is changing frequently and it is
unstable /non-firm power. To check sanctity of the fact, the
Commission has done detailed analysis of the power supplied
by JSPL.”
20In the judgment passed by Hon'ble Appellate Tribunal in the Appeal
No.89 of 2012 dated 07.03.2014, in the case of Raigarh Ispat Udyog
Sangh v. CSERC and Jindal Steel and Power Ltd., JSPL itself has
40
submitted that surplus power at different times of the day was dependent
on the actual consumption of steel plant which varied frequently. JSPL
has shown inability to supply power from its captive plant to licensee area
in which one of the reason is fluctuation of quantum of surplus power
available from its Captive Power Plant due to fluctuating load of its steel
plant The relevant clauses of the order reads as under:
“17. According to Jindal Steel, the surplus of annual aggregate
generation of energy does not correctly reflect the surplus power
on continuous and sustainable basis each day. The surplus power
at different times of the day was dependent on the actual
consumption of Steel Plant which varied frequently. Jindal Steel
also submitted sample graphs of export from its Captive Power
Plant for the months of July, 2010 and July, 2011 to substantiate its
point. It is further submitted that their supply to CSPDCL formed a
small part of total capacity handled by the network of CSPDCL,
hence their network was able to absorb the fluctuations in power
supply CSPDCL also refused to grant increase in contract demand
from 1 MW to 80 MW for tts Steel Plant on 22.12.2008 against the
request made by Jindal Steel on 6.9.2008 to enhance the contract
demand to meet the increased demand of their Steel Plant.
18. Thus, Jindal Steel has given the following reasons for non-
supply of power from its captive power plant to its licensed area:
(a) Increase in demand of electricity in its Steel Plant due to
expansion of its steel plant.
(b) Refusal of CSPDCL to increase contract demand for supply of
power to its steel plant consequent to its increase in the power
demand of its Steel Plant.
(c) Fluctuation in quantum of surplus power available from its
Captive Power Plant due to fluctuating load of its Steel Plant
whereas Jindal Industrial Park required supply on continuous and
sustainable basis Therefore, the surplus power from its captive
41
Power Plant could not be utihsed in Jindal Industrial Park...”
It is amply clear that power supplied by JSPL to CSPDCL is
fluctuating in nature In such a case, it is very difficult for CSPDCL
to manage its load generation balance and some time it may have
to over draw/ under draw from grid for which heavy penalty is
required to be paid. The CSPDCL has signed power purchase
agreement with JSPL for RTC power supply and not for non-firm
power. It is also seen that CSPDCL has not taken any corrective
steps overcome this situation and continued purchasing such
power of poor quality. The Commission takes serious note on the
same and directs CSPDCL for not to purchase unstable/non-firm
power which creates disturbance in demand supply balance. As
power purchased from JSPL by CSPDCL is of non-firm nature. The
purchase price of non firm (unstable) power cannot be same as
that of firm power. The Commission in suo motu Petition No. 05 of
2010 has decided the base rate for power supply based on load
factor for stable power. The CSPDCL plans its power purchase on
the basis of load factor and executes agreements accordingly so
that CSPDCL may supply quality and reliable power to its
consumers. The load factor base tariff has been determined to
take care outages of generating plants The injection pattern of
such generators causes commercial implications to the State
distribution utility the State does not resort to drawal limitations for
drawl of power from the regional grid.
It has been noticed that CSPDCL has ignored the quality of power
(unstable supplied by JSPL, and entered in power purchase
agreement for such power The Commission is of the strong view
that burden of negligence of the CSPDCL should not be passed on
to the consumers and hence approves minimum base rate of Rs.
1.50 per kWh as part of power purchase cost."
21The aforesaid order dated 07.03.2014 passed in the abovesaid Appeal
No.89/2012 led to taking cognizance of the payments made by the
CSPDCL to JSPL against the said short term power supplied and
ultimately into passing of the order dated 12.06.2014, review order dated
42
08.12.2014 was passed, after due regulatory process and giving
opportunity of being heard to all stakeholders and the common public. A
due notice of the hearing of the abovesaid case was published in local
news papers. A review petition against the said order dated 12.06.2014
was preferred by the respondent No. 2-CSPDCL before the respondent-
Commission, which was registered as petition No. 35 of 2014 and was
decided on 08.12.2014. Even in this review petition, a prior notice of
hearing was duly published by the respondent No. 1, as well as by the
CSPDCL, and significantly enough, the representative of the appellant
No. 1 had dulv participated in the proceedings. Hence, the appellant
cannot now turn its back and take flimsy ground that, it was unaware
about the proceedings as no opportunity of hearing was given to it. Even,
the Hon'ble Appellate Tribunal, before passing of the impugned order
dated 26.05.2016, has published notices in local news papers of
Chhattisgarh and thereafter, the appeals were decided through the
impugned order dated 26.05.2016, hence, the appellants purposely
chose not to appear in the matter so as to take the malafide ground of no
opportunity of hearing before this Hon'ble Court. It is significant to submit
here that all the stakeholders including general public were invited
through public notice published in largely circulated news papers in the
State, with summary of proposals of the Annual Revenue Requirement
(ARR), a copy of tariff petition was also uploaded in the website of the
Commission and hard copies of the petition were available on payment of
nominal cost in the office of the Commission. All the stakeholders
including public were heard personally who attended the hearing held for
this purpose and wanted to put their submissions. Hence the allegation of
the appellant -Company was not given an opportunity of hearing is
denied. Further, the Commission has not at all erred in terming the
43
power supplied by the appellant in the FYs 2011-12 and 2012-13 as 'non
firm power' as the same is in consonance to the Commission's own suo-
motu order dated 30.04.2010 and the PPAs. After going through the
materials available to the Commission for determination of tariff and for
the true-up process and prudently analyzing them, the Commission found
that though the agreement executed between the appellant No. 1 and
respondent No.2 was for sale of firm power, however, the power actually
sold was non-firm in nature and therefore, the Commission approved
minimum base rate of Rs. 1.50 per kWh for power purchase cost. By
approving such base rate, the respondent No. 1 being a regulator
actually denied to pass on the expenses made carelessly, to the common
consumers. Hence, the present appeal deserves to be dismissed.
22Mr. Raj Kumar Mehta, learned counsel appearing for the respondent No.
2 and 3, placing reliance on the return filed before the learned Single
Judge, in addition to what has been stated by learned counsel for the
respondent No. 1, would submit that the Chhattisgarh State Electricity
Commission (Conduct of Business) Regulations, 2009 (for short, the
2009 Regulations), do not provide for issuance of individual notices to
the interest parties. On the contrary, according to the Regulations 2009,
public notice was issued with wide circulation during hearing of the
aforesaid petitions so that the interest parties may attend the
proceedings conducted by the respondent No. 1. Further, a public notice
was also issued by the respondent No. 1 dated 26.04.2014 and as such,
the appellants stood duly noticed by the respondent No. 1 about the
impugned hearing conducted within the knowledge of the general public
also. The respondent No. 2/CSPDCL also filed review petition being No.
35/2014 (T) before the respondent No. 1 on or about 31.07.2014. During
44
the proceedings of the hearing of the aforesaid review petition the
authorized representative of the appellant No. 1, namely
N.K.Chandiramani DGM, JSPL attended the proceedings on 28.10.2014
proof whereof about the marking of his attendance and mention in the
order sheet of the respondent No. 1. However, the final order was made
in the review petition only on 08.12.2014. Thus the appellants were well
informed about the proceedings drawn and concluded by the respondent
No. 1 for determination of tariff and other relevant issues. Still the
appellants demonstrated their negligence and unwillingness to join the
appropriate proceedings. Thereafter, the respondent No. 2 filed appeals
bearing No. 41 and 67 of 2015 before the Appellate Tribunal. However,
the Appellate Tribunal also dismissed the appeals filed by the respondent
No. 2 vide order dated 26.05.2016. The respondent No. 2/CSPDCL also
filed written submissions before the Appellate Tribunal. The order of
Appellate Tribunal was communicated to the appellant according to its
own admission by the respondent No. 2 at least through receipt of the
demand letter vide No. 02-02/ACE-1/998 dated 07.07.2016 (Annexure
P/2) mentioning therein clearly that "it is pertinent to note that the
CSERC's findings regarding the non firm nature of the power supplied by
JSPL have been upheld by the Appellate Tribunal, in its judgment dated
26.05.2016 in Appeal No. 41 and 67 of 2015 wherein the Appellate
Tribunal has observed that it was of the considered opinion that injection
pattern of such unstable power supply causes even commercial
complications besides creating disturbance in the demand supply
balance.
23The appellants, despite knowledge of the aforesaid judgment did not
take suitable remedial measures by approaching Appellate Tribunal for
45
rederssal of wrongs if allegedly done to the appellants as claimed. In this
regard a public notice was also issued informing about the proceedings
pending before Appellate Tribunal which is already filed along with all
such public notices with regard to the proceedings drawn before the
respondent No. 1. In view of the aforesaid development of the facts and
circumstances concerning the dispute raised herein the appellants have
neglected and avoided the proper course of adjudication of the likely
dispute but had filed the writ petition although without any jurisdiction due
to the statutory availability of the alternative remedy and forum in
accordance with the provisions contained in the commanding institute
being the Electricity Act 2003. Moreover vide Section 120 (2)(f) of the Act
the appellants could have filed a review petition before Appellate Tribunal
before approaching this Hon'ble Court. The order of the respondent No.
1 as also of Appellate Tribunal is based on technical data and details
furnished by the respondent No. 3 as mentioned in the aforesaid binding
orders.
24Mr. Mehta would further submit that it is settled law of the Hon'ble Apex
Court that under Article 226 the writ courts may refuse to entertain such
petitions wherein intricate technical issues are so involved that it may not
be justifiable to decide such issues for want of competent technical
assistance to the Hon'ble Court. Moreover the dispute as raised involves
several facts which are sought to be controverted against each other by
the contesting parties and may be subjected to recording of evidence. As
such also it has been already settled by the pronouncements of the
Hon'ble Apex Court that the writ courts may refrain from deciding such
issues involving complicated and several disputed facts. Hence, the
learned Single Judge was justified in dismissing the petition. Further, the
46
appellants have not challenged the order dated 12.06.2014 made by the
respondent No. 1 which was a product of the application of Regulations
2009, the applicability of which also has not been challenged. Several
persons and associations attended the proceedings and even opposed
the review petition filed by the respondent No. 2 through oral and written
submissions. Such persons and institutions would be necessary and
proper parties to the writ petition. But the appellants did not implead such
persons and institutions as respondents in their own wisdom Therefore
also the petition could not have been entertained by the learned Snigle
Judge. The respondent No. 2 not having filed any appeal before the Apex
Court as provided under Section 125 of the Electricity Act, and also the
appellants not having resorted to filing any proceedings, the order and
judgment of Appellate Tribunal has become final. There is no further
scope to conduct any enquiry in that regard because the dispute
whatever sought to have raised by the appellant has been hit by the
doctrine of acquiescence due to the conduct of the appellants
themselves. The appellant and the respondent No. 2 did have a common
case until the decision of the Appellate Tribunal the dispute as
unsuccessfully raised by the appellants would be regulated by the
statutory provision contained vide Section 62 (6) of the Act which
provides that 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.
25Mr. Mehta would next submit that the term “infirm power” has been
defined in the Central Electricity Regulatory Commission (Terms and
47
Conditions of Tariff) Regulations, 2014 which states that "Infirm Power"
means electricity injected into the grid prior to the commercial operation
of a unit or block of the generating station in accordance with Central
Electricity Regulatory Commission (Grant of connectivity, Long-term
Access and Medium-term Open Access in inter-State Transmission and
related maters) Regulations, 2009 as amended from time to time." The
decision/derivation of 'non firm power distinguishing it from 'infirm power'
and even equating the 'non firm power' supplied by the appellants to be
paid at at par with the rate fixed for infirm power has been settled by
Appellate Tribunal rather finally. Hence it cannot be questioned by the
appellants as also the respondent/CSPDCL except in an appropriate
forum. The respondent No. 2 being a distribution licensee as provided
for in Section 14 of the Act procures power on short term basis to meet
its total demand and energy requirement. In this regard the respondent
No.1 had passed an order on 18.04.2009 in Suo Motu Petition No.
9/2009(M) and specified maximum ceiling rates and terms and
conditions of short term power purchase for the period 2009-2010. The
aforesaid order remained effective from 01.04.2009 to 31.03.2010. The
respondent No. 2 for the same purpose for the year 2010-2011
submitted a proposal for pricing and other terms and conditions vide
letter dated 19.02.2010 to the respondent No. 1. The respondent No. 1
thereupon registered a Suo Motu Petition vide No. 05/2010 The proposal
contained in the aforesaid letter was forwarded to the State Government,
members of the State Advisory Committee, all captive generation
plants/independent power plants who are supplying power to the
respondent No. 2 for offering their comments/views. The proposal was
uploaded on the website of the respondent No. 1 on 24.02.2010 which
was followed by a public notice in the newspapers dated 25.02.2010
48
asking for comments and suggestions up to 17.03.2010 followed by a
public hearing in the matter which took place on 19.03.2010. The stake
holders who submitted suggestions/comments and also participated in
the aforesaid hearing included active participation of the appellants also.
Mr. Mehta would refer to Section 86 (1) (b) of the Act, which states that
"the State Commission shall 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
powers for distribution and supply within the state." Further, Section 62
(1)(a) of the Act states that the Appropriate Commission shall determine
the tariff in accordance with the provisions of this Act for supply of
electricity by a Generating Company to a distribution licensee provided
that in 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.
26According to Mr. Mehta, the respondent No.1 once again took in suo
motu jurisdiction the determination of Tariff Order vide petitions No. 05 to
8 of 2014 (1) wherein the petition filed by the respondent No. 2 vide
Petition No. 07/01/2014 (T) was also considered with regard to the
power purchase agreements read with the earlier Tariff Order which was
considered in relation to the appellants. The respondent No. 2 in its
petition vide No. 07 of 2014 had contended that it had entered into short-
term PPAs with the appellant No. 1 and also with other CPPs/IPPs on
terms and conditions in accordance with the orders of the respondent
49
No. 1 dated 15.07.2011 and 05.05.2012, extracts whereof annexed/
quoted with the aforesaid order dated 30.04.2010 and also in
accordance with the original draft PPAs approved by the respondent
No.1 on 12/07/2010. The short term power purchase agreements were
accordingly executed and the payments also made as provided for in the
PPAs. The respondent No. 1 took the short-term power purchases made
from the appellant No. 1 by the respondent No. 2 under consideration
and referred to a load curve of injection pattern of the appellant No. 1 to
conclude that the power injected was non-firm in nature. The respondent
No. 2 submitted that the observations of the respondent No. 1 that the
earlier order dated 30.04.2010 was for supply based on load factor for
stable power and that the load factor based tariffs were determined to
care of outages of generating plants and inferences sought to be drawn
there from were not correct and were contrary to such previous orders
and even considering that the short term supplies from other CPPS
follow the same load curve. Several short term purchases followed the
same injection pattern as that of the appellant No. 1. However the
respondent No. 1 disagreed with the contentions of the respondent No. 2
and dismissed the aforesaid petition vide order dated 12.06.2014 made
in Petition No. 07/2014. The respondent No. 1 was of the view that the
power purchases from the appellant No. 1 were intermittent and caused
grid disturbance. The respondent No. 1 therefore decided to limit the cost
of such purchase to Rs1.50 per unit as fixed vide its order dated
30.04.2010. The appellant No. 1, in addition to having its power plant
also possesses distribution license and supplies power to consumers in
its industrial area. The respondent No. 1 also determines the distribution
of electricity and retail supply tariff thereof for the appellant No. 1. The
respondent No. 1 has not given any tariff hike to the appellants since the
50
appellant No. 1 did not fully comply with the directions of the Appellate
Tribunal made on 07.03.2014 in Appeal No. 89/2012. Aggrieved by the
impugned order dated 12.06.2014 passed by the respondent No. 1 in
Petition No. 07 of 2014 (T) comprised in the common order passed in
Petition Nos. 05 to 08 of 2014 (T), the respondent No. 2 filed the Appeal
No. 212 of 2014 before the Appellate Tribunal on 19.08.2014. The said
appeal was dismissed by order dated 10.11.2014 allegedly being not
maintainable on the ground that the Review Petition on the same issue
was pending before the respondent No. 1. Liberty, however, was given to
the respondent No. 2 to file appeal against the order subject to the
outcome of the review pending before the respondent No. 1 and subject
to condonation of delay as well. The Review Petition, vide No. 35 of
2014 of the respondent No. 2 filed on 04.08.2014 before the respondent
No. 1 was disposed of by an order dated 08.12.2014 partly allowing the
review petition and partly rejecting. Aggrieved by the impugned order
dated 12.06 2014 and in so far as the respondent No. 1 had rejected the
Review Petition of the respondent No. 2 vide its order dated 08.12.2014,
the respondent No. 2 filed Appeal No. 41 of 2014 and Appeal no 67 of
2014 before the Appellate Tribunal. Since the Appeals i.e. No. 41 of
2015 and 67 of 2015 were against the same impugned original order i.e.
12.06.2014 read in conjunction with the Review Order dated 08.12.2014,
both the appeals were considered together by Appellate Tribunal which
made a common order (Annexure P/1 to the writ petition). It was
emphatically held by the Appellate Tribunal that "the injection pattern of
such unstable power supply causes even commercial implications,
besides creating disturbance in the demand supply balance. Since the
surplus power supply from the JSPL has been fluctuating in nature and
unstable the purchase price of non firm power cannot be equated with
51
purchase price of firm power and has to be given treatment as in the
case of purchase of infirm power and the purchase cost of such type of
power has to be significantly lower than the cost of firm power. We are in
agreement with the findings of the impugned order of the State
Commission on this issue and decide this issue against the appellant.”
27As such, the findings of the impugned order of the respondent No. 1 on
the issue were affirmed. The observations of the respondent No. 1 that
the burden of Rs.153.55 Crore should not be passed on to the
consumers is in conformity with the provisions contained in Section 62
(6) of the Act. It is noteworthy that the order of the respondent No. 1 has
been statedly made under Sections 32 (3), 45, 62 and 86 (1) of the Act.
There was no need for the respondent No. 1 and the Appellate Tribunal
to issue any specific directions for recovery for the aforesaid over paid
amount having become due to be paid by the appellants in view also of
the statutory provisions contained in Section 62 (6) of the Act. As such,
the learned Single Judge was fully justified in dismissing writ petition and
the present appeal also deserves to be dismissed.
28In support of their contentions, learned counsel for the respondents No. 2
and 3 would place reliance on the decisions of the Apex Court in Power
Grid Corporation of India Ltd. v. Madhya Pradesh Power
Transmission Co. Ltd. & Others {(2025) 8 SCC 705}, State of
Himachal Pradesh & Another v. JSW Hydro Energy Ltd. & Others
{2025 SCC OnLine SC 1460}, Jaipur Vidyut Vitran Nigam Ltd. &
Another v. MB Power (Madhya Pradesh) & Others {(2024) 8 SCC
513}, Educanti Kistamma (Dead) through LRs v. S.Venkatareddy
(Dead) through LRs & Others {(2010) 1 SCC 756}, Uttar Haryana
Bijli Vitran Nigam Limited & Another v. Adani Power (Mundra) Ltd.
52
& Others {(2023) 14 SCC 736}, Maharashtra State Electricity
Distribution Company Ltd. v. Adani Power Maharashtra Ltd. &
Others {(2023) 7 SCC 401}, GMR Warora Energy Ltd. v. Central
Electricity Regulatory Commission (CERC) & Others {(2023) 10
SCC 401}, Indian Council for Enviro Legal Action v. Union of India
{(2011) 8 SCC 161} and R.Muthukumar & Others v. Chairman and
Managing Director, TANGEDCO {2022 SCC OnLine SC 151}.
29We have heard learned counsel appearing for the parties, perused the
pleadings and materials available on record.
30The principal issue which falls for consideration is whether the findings
recorded in tariff true-up proceedings and affirmed by Appellate Tribunal
could be enforced against the appellant-Company without they being
impleaded or afforded an effective opportunity of hearing. It is not
disputed that the appellants were not arrayed as parties in the original
tariff proceedings. Mere publication of public notices or alleged presence
of some representative during review proceedings cannot substitute
compliance with principles of natural justice where specific adverse
findings are proposed against an identifiable contracting party.
31This appeal came up for hearing before this Court on 25.04.2026 when
during course of argument, in support of his contentions, Mr. Jain placed
reliance upon the decision rendered by the Supreme Court in the matter
of Krishnadatt Awasthy v. State of M.P. & Others {Civil Appeal No.
4806/2011, decided on 29.01.2025} and on the request of learned
counsel for the respondents No. 2 and 3, the matter was directed to be
listed on 05.05.2026 and till then, it was submitted by the learned
counsel for the respondents No. 2 and 3 that the open access permission
53
to the appellants would be continued. On 05.05.2026, as the counsel for
the respondent No. 1 was on adjustment, the matter was listed for
08.05.2026 and the interim relief granted to the appellant continued. The
matter was finally argued on 08.05.2026 and reserved for judgment.
32According to the learned counsel for the appellants, this is a clear case of
violation of principles of natural justice and the consequence of violation
of natural justice is fatal and consequently the demand for recovery by
order dated 07.07.2016 is illegal in light of the decision rendered in
Krishnadatt Awasthy (supra). Both the parties have placed their
reliance on the said judgment. The appellants have placed reliance on
paragraphs 66 and 67 whereas, the respondents have placed their
reliance on paragraphs 42, 44 and 46 of the said judgment.
33One of the core contention of the learned counsel for the appellant is that
there is no provision under the PPA dated 02.11.2011 or any direction in
any order of the learned Commission or the Appellate Tribunal to seek
refund or recovery from the appellants which makes the demand ex-facie
illegal. Rather, it is the respondent’s own pleading that the appellant’s
invoices were cleared strictly in accordance with the PPA. In addition, the
invoices raised by the appellants having been fully paid and settled by
the respondent No. 2/CSPDCL, the said respondent could not have
reopened the same without any opportunity of hearing which is another
facet of violation of principles of natural justice. The consistent stand of
the respondent No. 2/CSPDCL has been that the supply of power by the
appellant/JSPL was as per the suo motu order of the learned
Commission and the PPA. Respondent No. 2/CSPDCL is bound by its
stand and was estopped from making a u-turn/change its stand. This
goes to the root of the matter and vitiates the impugned demand notice.
54
Even the learned Single Judge has observed that the appellant was
neither impleaded nor afforded any effective opportunity of hearing in the
proceedings before the learned State Commission or before the
Appellate Tribunal despite the fact that the entire subject matter of those
proceedings pertained to power supplied by the appellant under duly
executed PPA.
34According to learned counsel for the appellants, power was supplied by
the appellants to the respondent No. 2/CSPDCL in terms of the PPA.
Supply was made in terms of the suo motu order dated 30.04.2010 which
was for the benefit of the State. The respondent No. 2 accepted the same
without any protest. The appellants raised invoices time to time at the
agreed rate of Rs. 3/- per unit which were fully paid by the respondents.
However, the respondent No. 2 raised a demand notice dated
07.07.2016 for Rs. 153.55 cores and withheld granting NoC for open
access/use of the transmission system. This was precisely the subject
matter of challenge before the learned Single Judge wherein an interim
order was granted on 10.08.2016 to the effect staying the demand notice
and to permit the open access to the appellants. The demand notice in
effect amounts to retrospective recovery of energy bills already paid by
Rs. 2/-despite the fact that there is no provision in the PPA for recovery /
refund in any event. The reason for raising demand notice was the
finding given by the respondent No. 1 wherein the respondent No. 2/
CSPDCL has been held to be negligent. The appellants were not a party
to the true up proceedings before the Commission, or the subsequent
review petition filed by the respondent No. 2/CSPDCL or the Appellate
Tribunal and was not afforded any opportunity to present its case, clarify
the contractual framework or defend the PPA.
55
35It is also the contention of the learned counsel for the appellants that the
learned Single Judge has misdirected itself and has gone beyond the
scope of the impugned demand notice. The learned Single Judge
entered into the arena of fluctuating power without any material on record
and failed to note that the nature of short term supply from CPP was
fluctuating/schedule variation, and not power variation, whereas, the
fluctuation in CPP supply was expressly contemplated by the
Commission. The Commission itself has recognized that fluctuation is the
very nature of electricity supply from CPPs. According to the appellants,
fluctuation was not treated as breach or irregularity but was expressly
contemplated and provided for in the tariff mechanism. The Commission
had always considered short term supplies from CPPs as likely to
fluctuate, and therefore, the supply by the appellant No. 1 could not have
been singled out or treated adversely on the ground of fluctuation
especially when such fluctuation was already recognized under the
Commission’s own order. Moreover, the respondent No. 2/CSPDCL has
pleaded that the PPAs were entered into in accordance with the
Commissions orders and that payments were made as per the said
PPAs.
36According to Mr. Mehta, the doctrine of audi alteram partem should be
understood in the context of nature of the proceedings in question. Tariff
determination and true-up exercise undertaken by the Commission are
legislative or quasi legislative in character, carried out in accordance with
the Conduct of Business Regulations, which contemplates issuance of
public notice and stakeholder participation rather than individual
impleadment of every entity that may be indirectly affected. Notices were
duly issued, proceedings were conducted and representatives of the
56
industry including the appellant participated at various stages. The
appellant-Company did not chose to participate in the true-up
proceedings. The role of the appellant-Company in the present case was
of a fence sitter awaiting result of the proceedings initiated by others
before initiating legal proceedings to challenge the orders by which it is
aggrieved.
37Section 64 of the Electricity Act provides the procedure for tariff order. It
reads as under:
“64. Procedure for tariff order.– (1)An application for
determination of tariff under section 62 shall be made by a
generating company or licensee in such manner and accompanied
by such fee, as may be determined by regulations.
(2) Every applicant shall publish the application, in such abridged
form and manner, as may be specified by the Appropriate
Commission.
(3) The Appropriate Commission shall, within one hundred and
twenty days from receipt of an application under sub-section (1)
and after considering all suggestions and objections received from
the public,–
(a) issue a tariff order accepting the application with such
modifications or such conditions as may be specified in that
order;
(b) reject the application for reasons to be recorded in
writing if such application is not in accordance with the
provisions of this Act and the rules and regulations made
thereunder or the provisions of any other law for the time
being in force:
Provided that an applicant shall be given a reasonable
opportunity of being heard before rejecting his application.
(4) The Appropriate Commission shall, within seven days of
making the order, send a copy of the order to the Appropriate
Government, the Authority, and the concerned licensees and to the
person concerned.
(5) Notwithstanding anything contained in Part X, the tariff for any
inter-State supply, transmission or wheeling of electricity, as the
case may be, involving the territories of two States may, upon
application made to it by the parties intending to undertake such
supply, transmission or wheeling, be determined under this section
57
by the State Commission having jurisdiction in respect of the
licensee who intends to distribute electricity and make payment
therefor.
(6) A tariff order shall, unless amended or revoked, continue to be
in force for such period as may be specified in the tariff order.
38The demand notice dated 07.07.2016 (Annexure P/2 to the writ petition)
was issued to the appellant pursuant to the Tariff Order dated
12.06.2014 (Annexure P/10 to the writ petition) passed by the
respondent No. 1/Commission on the petition filed by the respondent No.
2/CSPDCL. The Tariff Order (Annexure P/10) was further challenged by
the respondent No. 2/CSPDCL before the Appellate Tribunal which also
stood dismissed vide order dated 26.05.2016 (Annexure P/1 to the writ
petition). Both while passing the order dated 12.06.2014 by the learned
Commission as well as the order dated 26.05.2016 by the learned
Appellate Tribunal, the appellant-Company was not a party to the said
proceedings. Without the appellant being noticed, the impugned orders
were passed and a huge amount of Rs. 153.55 Crores have been
saddled upon the appellants.
39Clause 9 of the Chhattisgarh State Electricity Regulatory Commission
(Conduct of Business) Regulations, 2009 is in respect to initiation of
proceedings by the Commission. It reads as under:
“9. Initiation of Proceedings.
(1) The Commission may initiate any proceedings suo motu or on
a petition filed by any affected or interested person.
(2) Initiation of proceedings shall be by issuance of notices to the
affected or interested parties for filing of replies and rejoinders.
(3) The Commission may, in appropriate cases, issue orders
giving due publicity to the petition, through newspaper or
otherwise inviting comments on the issues involved in the
proceedings, in such forms as it may direct.
58
(4) While issuing notice, in suo motu proceedings and in any
other appropriate cases, the Commission may designate an
officer or any other person to present the matter in the capacity of
a petitioner in the case.”
40Clause 13 of the Regulations 2009 deals with service of notice and
processes issued by the Commission. The same reads as under:
“13. Service of notices and processes issued by the
Commission.
(1) Any notice or process to be issued by the Commission may
be served by any or more of the modes provided in section 171 of
the Act and the Means of Delivery of Notice, Orders and
Document Rules, 2004 notified by the Central Govt. which inter
alia are the following:-
(i) Service by the petitioner or the party to the proceedings;
(ii) by hand delivery through a messenger obtaining signed
acknowledgement;
(iii) by registered post with acknowledgment due;
(iv) by publication in newspaper in cases where the Commission
is satisfied that it is not reasonably practicable to serve the
notices, processes, etc. on any person(s) in the manner
mentioned above;
(v) by fax; or
(vi) by such other mode of service as may be provided from time
to time.
xxx xxx xxx”
41A bare perusal of the above provisions makes it amply clear that the
Regulatory Commission may initiate any proceedings suo motu or on a
petition filed by any affected or interested person. Further, the notice may
be served by various modes as stated above, and if the Commission is
satisfied that it is not reasonably practiacable to serve the notices,
process etc. on any persons, then paper publication can also be made.
However, in the present case, the appellant-Company could have been
easily served notice on its registered address. The contention of the
59
appellants is that they were never heard before passing of the impugned
orders. It is a settled proposition that no person shall be condemned
unheard and any order passed in breach of the audi alteram partem rule
is nullity in law The Hon'ble Supreme Court has categorically held that an
order which is void ab initio cannot be validated by subsequent conduct
and remains unenforceable.
42The Apex Court in Krishnadatt Awasthy (supra), at paragraphs 66 to
68 observed as under:
“66. Additionally, a perusal of the order(s) of the Collector
and Commissioner in Revision would also show that they
are practically identical. An ineffective hearing at the initial
stage therefore taints the entire decision-making process
leading to a cascade of flawed orders at subsequent
stages. Providing a hearing to the affected individual,
minimizes the risk of administrative authorities making
decisions in ignorance off acts or other relevant
circumstances, as it allows all pertinent issues to be
brought to light. This process not only aids the
administration in arriving at a correct decisions but also
enables courts to more effectively review such actions. The
primary purpose of natural justice is to assist the
administration in reaching sound decisions at the outset,
reducing the likelihood of decisions being overturned later.
Its significance lies in fostering fair and well-informed
decision- making at the very first instance.
67. Following the above discussion, it must be concluded
that a defect at the initial stage cannot generally be cured at
the appellate stage. Even in cases where a ‘full jurisdiction’
may be available at the appellate stage, the Courts must
have the discretion to relegate it to the original stage for an
opportunity of hearing. Therefore, the ex-parte decision to
set aside the appellants selection stands vitiated.
68. The principle of audi alteram partem is the cornerstone
of justice, ensuring that no person is condemned unheard.
This principle transforms justice from a mere technical
formality into a humane pursuit. It safeguards against
arbitrary decision-making, and is needed more so in cases
of unequal power dynamics.”
60
43The contention of the respondents that tariff proceedings are legislative
in character and therefore individual hearing was unnecessary cannot be
accepted in the facts of the present case. While tariff determination may
ordinarily possess a regulatory or legislative flavour, the moment
proceedings culminate in specific findings fastening adverse financial
consequences upon a distinct Generating Company under identified
PPAs, the proceedings assume a quasi-judicial character qua such
entity. We also find substance in the submission of the appellants that
neither the tariff orders nor the judgment of Appellate Tribunal expressly
directed recovery from the Generating company. The Commission
primarily examined the extent to which CSPDCL could pass on purchase
cost to consumers while determining tariff. A regulatory disallowance vis-
à-vis a distribution licensee cannot ipso facto become an executable
recovery against a third-party generator without independent
adjudication of liability.
44Section 62(6) of the Electricity Act permits recovery where a licensee or
Generating Company has recovered tariff in excess of the tariff
determined under the Act. However, the provision does not dispense with
the requirement of adjudication, particularly where the very basis of
alleged excess recovery is seriously disputed and the concerned entity
was never heard in the original proceedings.
45The PPAs executed between the parties admittedly governed the field
during the relevant period. The respondents accepted supply of
electricity under the contracts and made payments accordingly. Whether
the supplied power answered the contractual description of “firm power”,
whether fluctuations were contractually permissible, and whether
payments were made contrary to the approved tariff are all matters
61
requiring proper adjudication after affording full opportunity to the
appellants.
46In the present case, the non-hearing of the appellants has led to issuance
of demand notice against them to the tune of Rs.153.55 crores which is
penal in nature as the respondent No. 2/CSPDCL had made the payment
to the appellant No. 1 Company as per the invoice generated and now,
after passing of the order by the learned Commission, the respondent
No. 2/CSPDCL is virtually seeking refund of the amount which has
already been paid by it and further, when the contention of the
respondent No. 2/CSPDCL is that the appellant’s invoices were cleared
strictly in accordance with the PPA. The appellant-Company never had
the opportunity to put forth its stand and the order passed by the learned
Commission which has been upheld by the Appellate Tribunal is clearly a
case of violation of principles of natural justice. The appellant-Company
was neither heard during tariff petition, review petition or the appeal
before the Appellate Tribunal which in no manner can be justified
especially when an order is passed on the basis of those proceedings
which results into payment of Rs. 153.55 crores back to the respondent
No. 2/CSPDCL. Such burden cannot be saddled upon the appellant-
Company without it being heard.
47The Court, in its opinion is unable to sustain the consequential denial of
NoC and open access. The refusal is founded solely upon disputed dues
arising from the impugned demand notice. In the absence of crystallized
and adjudicated liability, such disputed claims cannot be treated as
“outstanding dues” so as to deny open access rights.
48The learned Single Judge, in our respectful view, erred in declining
62
interference despite recording that principles of natural justice stood
violated. Once it was found that orders affecting the appellants had been
passed without adequate hearing, the writ petition could not have been
dismissed solely on the ground of availability of alternative remedies or
finality of prior proceedings. The rule regarding alternative remedy is a
rule of discretion and not one of compulsion. Where proceedings suffer
from breach of natural justice or where orders are passed against a
person without hearing, exercise of writ jurisdiction is fully justified. We
are therefore of the considered opinion that the impugned recovery
proceedings and consequential denial of NoC/open access cannot be
sustained in law.
49In view of the above discussion, this Court is of the considered opinion
that the view taken by the learned Single Judge in dismissing the writ
petition filed by the appellants/writ petitioners is palpably incorrect and as
such, the order dated 30.03.2026 passed by the learned Single Judge in
WPC No. 1927/2016 is set aside. It is directed that the the appellant-
Company shall be afforded an opportunity of hearing and put forth its
submissions before the learned Regulatory Commission in the
proceedings relating to tariff order of CSPDCL and final true-up. After
hearing the appellant-Company, the respondent No. 1/Commission may
proceed to hear and decide the matter afresh, in accordance with law.
Liberty is reserved to the respondents, if so advised, to initiate
appropriate proceedings for adjudication of their claims in accordance
with law after impleading the appellants and affording them full
opportunity of hearing. Any such proceedings shall be decided
independently on their own merits without being influenced by
observations, if any, contained in this judgment and till such adjudication
63
is undertaken and liability, if any, is duly determined, the appellants shall
not be denied NoC/open access solely on the basis of the impugned
disputed demand. Needless to state that any such exercise shall be
concluded by the learned Regulatory Commission preferably within a
period of two months from the date of receipt of a copy of this judgment,
if there is no legal impediment. Further, in case, any party is aggrieved by
the outcome of the order passed by the learned Commission, and the
same is challenged before the Appellate Tribunal, the Appellate Tribunal
shall decide the same preferably within a further period of two months, as
substantial period has already been passed.
50Till then, the effect and operation of the judgment dated 26.05.2016
(Annexure P/1 to the writ petition) passed by the learned Appellate
Tribunal, the demand notice dated 07.07.2016 (Annexure P/2 to the writ
petition) demanding refund of Rs. 153.55 Crores, the letter dated
21.07.2016 (Annexure P/3 to the writ petition), the letter dated
25.07.2016 (Annexure P/4 to the writ petition) issued by the respondent
No. 2/CSPDCL, shall be kept in abeyance.
51Resultantly, the writ appeal as well as the writ petition stand disposed
of.
Sd/- Sd/-
(Bibhu Datta Guru) (Ramesh Sinha)
JUDGE CHIEF JUSTICE
Amit
64
Head Note
An ineffective hearing at the initial stage vitiates the entire decision-making
process and may result in a series of flawed orders at subsequent stages.
Granting a hearing to the affected individual enables the authority to consider all
relevant facts and circumstances, thereby facilitating informed and fair
decision-making. It also assists Courts in effectively reviewing administrative
actions. The essence of natural justice lies in ensuring fair, informed, and legally
sustainable decisions at the very outset, thereby minimizing the likelihood of
such decisions being overturned later.
The recent Chhattisgarh High Court electricity tariff judgment addresses a crucial dispute concerning the enforcement of tariff true-up findings and the imperative of natural justice principles Electricity Act proceedings. This significant ruling, available on CaseOn, highlights the judiciary's role in safeguarding fair procedure even within highly regulated sectors, particularly when adverse financial consequences are imposed on a party.
The primary issue before the Chhattisgarh High Court was whether the findings from tariff true-up proceedings, which led to a demand for a refund of INR 153.55 Crores from Jindal Steel Limited (Appellant No. 1), could be enforced against the company without it having been properly made a party to those proceedings or given an effective opportunity to be heard. Related issues included:
The case hinged on several key legal principles and statutory provisions:
CaseOn.in Highlight: For legal professionals, navigating complex rulings like this becomes simpler with CaseOn.in's 2-minute audio briefs, offering quick analysis of key judgments in electricity law and natural justice, enabling swift comprehension of specific rulings and their implications for practice.
The High Court found a clear violation of natural justice. Despite the Single Judge acknowledging this violation in one part of the judgment, there was a contradiction in concluding that no prejudice was caused. The Appellate Court clarified that when proceedings culminate in specific adverse financial consequences for an identifiable entity (Jindal Steel), they assume a quasi-judicial character, demanding individual notice and a full hearing. Mere public notices, intended for general stakeholders or consumers, were deemed insufficient for a contracting party whose financial liability was directly affected.
The learned Single Judge had erroneously categorized tariff determination as purely legislative or quasi-legislative, implying that individual hearings were not always necessary. The Appellate Court, however, asserted that while tariff determination may have a regulatory flavor, it becomes quasi-judicial when it leads to specific findings that impose adverse financial burdens on a distinct entity. In such cases, the principles of natural justice must be strictly followed.
The PPAs between Jindal Steel and CSPDCL were recognized as binding contracts under which electricity was supplied and payments were made without protest for years. The Appellate Court emphasized that CSPDCL had previously defended these PPAs and accepted payments, thus it was estopped from making a "U-turn" and demanding a refund based on later regulatory findings to which Jindal Steel was not a party. The principle of estoppel applies against public authorities when a clear representation leads to another party acting to its detriment.
The High Court held that Section 62(6) of the Electricity Act, which pertains to the recovery of excess tariff, does not create an automatic or self-executing refund claim. It requires a proper adjudication process. The initial disallowance of power purchase cost was a finding of negligence against CSPDCL for procuring "non-firm" power, not a direct direction for Jindal Steel to refund monies. Converting a disallowance against a distribution licensee into a recovery from a generating company, without an independent proceeding where the generator is heard, is legally impermissible.
The classification of Jindal Steel's power as "non-firm" or "infirm" was deemed unsustainable. The court noted that Jindal Steel's plant had achieved Commercial Operation Date (COD) in 2005, making the "infirm power" definition (applicable pre-COD) irrelevant. The PPAs and a prior suo motu order of the State Commission already contemplated fluctuations in power supply and set a minimum effective rate as a safeguard for generators, not a penal rate for fluctuations. The Single Judge's reliance on "congestion charges" was also criticized as a suo motu finding outside the pleadings and record, denying the appellant a fair opportunity to contest it.
The denial of "No Objection Certificate" (NoC) and open access was solely based on the disputed demand notice for Rs. 153.55 Crores. The court clarified that a disputed claim, whose legal basis was under challenge, could not be treated as "unpaid outstanding dues" to restrict the appellant's right to trade and business under Article 19(1)(g) of the Constitution. The Single Judge's reliance on new grounds like "grid discipline" was inconsistent with the original denial letters, which exclusively cited the alleged dues.
The Appellate Court also noted that singling out the appellant's power purchase for disallowance, while other similarly placed captive power plants supplied power to CSPDCL under similar arrangements, amounted to arbitrary discrimination, thus violating Article 14 of the Constitution.
In light of the profound violations of natural justice and other legal infirmities, the Chhattisgarh High Court set aside the Single Judge's order. The Court ruled that the impugned recovery proceedings, including the demand notice dated 07.07.2016 and the consequential denial of NoC/open access, cannot be sustained in law. It directed that Jindal Steel Limited be afforded a proper opportunity of hearing before the Regulatory Commission in the ongoing tariff order and true-up proceedings. Furthermore, the respondents were granted liberty to initiate appropriate proceedings for adjudication of their claims, provided they properly implead the appellants and grant them a full opportunity to be heard. Until such adjudication, the effect and operation of the previous judgments and demand notices were ordered to be kept in abeyance.
This Chhattisgarh High Court electricity tariff judgment is a critical read for legal professionals and students specializing in administrative law, constitutional law, and electricity law. It reaffirms the non-negotiable importance of natural justice principles, particularly the right to be heard, even within highly regulated sectors and complex quasi-judicial proceedings. Lawyers can draw vital lessons on challenging orders passed without due process and the limitations of "public notices" in specific contractual disputes. For law students, it offers a practical application of the audi alteram partem rule, the doctrine of estoppel against public authorities, and the interplay between contractual sanctity and regulatory frameworks. The judgment also sheds light on the intricacies of tariff determination under the Electricity Act, distinguishing between legislative and quasi-judicial functions and the proper interpretation of recovery provisions. Understanding this case is crucial for navigating similar disputes involving regulatory bodies and contractual obligations in the energy sector.
All information provided in this article is for informational purposes only and does not constitute legal advice. While efforts have been made to ensure accuracy, readers are advised to consult with a qualified legal professional for advice pertaining to their specific circumstances.
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