IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI

WRIT PETITION No.25317 OF 2011

% Dated 31.12.2024

#W.P.No.25317 OF 2011

M/s. Lanco Kondapalli Power Limited,

Plot No.4, Softsol Building,

Software Units Layout,

Hitec City, Madhapur

Hyderabad – 500 081 and another

….. Petitioners

Vs.

$

Andhra Pradesh Power Coordination Committee,

Vidyut Soudha, Hyderabad

Rep by its Chief Engineer (Commercial) & 6 others

…....Respondents

JUDGMENT PRONOUNCED ON: 31.12.2024

THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

Whether Reporters of Local newspapers

may be allowed to see the Judgments?

Whether the copies of judgment may be marked to Law

Reporters/Journals

Whether Their Ladyship/Lordship wish to see the fair

copy of the Judgment?

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W.P.No.25317 of 2011

* THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

+ WRIT PETITION No.25317 OF 2011

% Dated 31.12.2024

#W.P.No.25317 OF 2011

M/s. Lanco Kondapalli Power Limited,

Plot No.4, Softsol Building,

Software Units Layout,

Hitec City, Madhapur

Hyderabad – 500 081 and another

….. Petitioners

Vs.

$

Andhra Pradesh Power Coordination Committee,

Vidyut Soudha, Hyderabad

Rep by its Chief Engineer (Commercial) & 6 others

…....Respondents

! Counsel for the petitioner : Sri D.S. Sivadarshan

^ Counsel for the respondent :

1. Learned Advocate General

2. Sri V.R. Reddy Kovvuri

3. Sri Anup Kowshik Karavadi

<GIST:

> HEAD NOTE:

? Cases referred

1. 2008 ELR (SC) 0001

2. CA (AT) (Insol) No.650 of 2020 dated 25.02.2022

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W.P.No.25317 of 2011

THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

WRIT PETITION No.25317 OF 2011

ORDER:-

1. The writ petition is filed challenging the action of the respondents

in limiting the installed capacity of the 1

st

petitioner company’s project to

361.92 MW as against 368.144 MW pending adjudication of the issue by

competent forum and making the monthly payment basing on the

reduced installed capacity as arbitrary, illegal, in violation of Principles of

Natual Justice besides violating the rights guaranteed under Articles 14

and 19(1)(g) of Constitution of India.

2. The 1

st

Petitioner is a company, initially incorporated as M/s. Lanco

Power Limited and later renamed multiple times, engaged in electricity

generation. It entered into a Power Purchase Agreement (PPA) with the

A.P. State Electricity Board for a power project at Kondapalli Village,

Krishna District. The PPA was later reentered and later constituted with

various government utilities under the Andhra Pradesh Electricity

Reforms Act, 1998.

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W.P.No.25317 of 2011

3. The Petitioner owns and operates a 368.144 MW power project at

Kondapalli, which commenced operations in October 2000. Despite

initial delays, the respondents began purchasing power from the

Petitioner in January 2001. The installed capacity was tested and

confirmed to be 368.144 MW, which was accepted by the 2nd

Respondent. However, in 2003, the 2

nd

Respondent sought to reduce

the installed capacity, proposing adjustments based on ISO standards

and tolerance limits. The Petitioner objected, arguing that the installed

capacity had been agreed upon in 2001 and could not be re-examined.

4. The dispute escalated when the 2

nd

Respondent threatened to

revise the capacity and related payments. The Petitioner filed a Civil

Court case in 2003 under the Arbitration and Conciliation Act, which

resulted in an order in its favor in 2008. The respondents appealed, and

the case remains pending.

5. Meanwhile, the 2

nd

Respondent approached the A.P. Electricity

Regulatory Commission (APERC) in 2004 to resolve the dispute,

bypassing the dispute resolution mechanism outlined in the PPA. The

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W.P.No.25317 of 2011

Petitioner subsequently filed a writ petition in 2004 challenging APERC’s

jurisdiction, and the case is ongoing.

6. The Andhra Pradesh Government constituted a committee in 2008

to resolve the issue, which referred the matter to the Central Electricity

Authority (CEA). The CEA’s report in 2010 said that an installed capacity

of 361.92 MW, for which the Respondents issued subsequent billings.

The Petitioner contested this, arguing that the CEA report ignored

certain technical aspects, and requested the Government to reconsider

the issue of its production capacity

7. Despite the pending disputes, the Respondents unilaterally

reduced the installed capacity in 2011, which the Petitioner challenged

as illegal and in violation of court orders. The reduction led to short

payments, and the Petitioner faced severe financial difficulties. The

Petitioner seeks interim relief, including the restoration of the original

installed capacity and the payment of the full amounts owed, pending

the final resolution of the dispute.

8. The Petitioner requests a writ to declare the Respondents' actions

as unlawful and to restrain them from making deductions based on the

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W.P.No.25317 of 2011

disputed CEA report, pending the outcome of the proceedings before the

competent authorities.

9. The Respondents deny the Petitioner's claims, asserting that the

installed capacity of the Petitioner’s project is 351.49 MW, not the

claimed 368.144 MW. They explain that in 2001, due to an error, the

capacity was mistakenly considered as 368.144 MW, which was later

corrected in 2003, and the Petitioner was notified of this mistake. They

contend that their actions were neither arbitrary nor illegal and that the

Petitioner is estopped from disputing the CEA report dated 12-01-2010.

Regarding the Commercial Operation Date (COD), the Respondents

argue that the date and capacity determination are disputed, with the

capacity initially overstated due to an incorrect calculation in 2001, and

the correct capacity should be 351.49 MW.

10. The Respondents further assert that the dispute should be

adjudicated by APERC, following the dismissal of the Petitioner’s

arbitration application, and that the dispute resolution mechanism in the

PPA does not apply. Concerning the CEA report, the Respondents

clarify that the report dated 12-01-2010, which sets the installed capacity

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W.P.No.25317 of 2011

at 361.92 MW, was issued at the Petitioner’s request, and they are

willing to adopt this figure temporarily until APERC’s final decision. The

Respondents argue that the Petitioner cannot contest the CEA report

since it was initiated by the Petitioner.

11. The Respondents also defend their action of revising the capacity

to 361.92 MW, stating that it was not unilateral or in violation of natural

justice. The revision was made after consulting the Petitioner and was

necessary to correct the earlier error, which led to the Petitioner

receiving excess payments. They emphasize that the revision was in the

public interest, as the Petitioner had been overpaid by over Rs. 1 crore

per month, and continuing with these payments would cause significant

financial burden to public exchequer.

12. Finally, the Respondents request that the Petition should be

dismissed, arguing that any interim relief in favor of the Petitioner would

burden the consumers, and that the balance of convenience is in favour

of the Respondents.

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W.P.No.25317 of 2011

13. During hearing, learned counsel for the petitioner submits that the

writ petition is liable to be dismissed as infructuous, in view of the orders

passed in C.M.A.No.1284 of 2008 by the Division Bench of Hon’ble High

Court of Telangana.

14. On the other hand, learned Advocate General appearing for the

respondents opposed the contention of the learned counsel for the

petitioner and submits that, the claim of the respondents did not become

infructuous, for the reason that, in view of the ratio laid down by the

Hon’ble Supreme Court in Gujarat Urja Vikash Nigam Limited vs.

Essar Power Limited

1

, conferring the jurisdiction of Andhra Pradesh

Electricity Regulatory Commission (for short hereinafter referred as

APERC’) in respect of disputes between the state power utilities and

licensees/power generating companies, as per the provisions of the

Electricity Act, 2003.

15. He submits that, in consonance with the ratio laid down by the

Hon’ble Apex Court in Essar Power Limited case, the 2

nd

respondent

invoked the jurisdiction of APERC in respect of the installed capacity of

1

2008 ELR (SC) 0001

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W.P.No.25317 of 2011

the project of the petitioners by way of O.P (SR) No.10 of 2004 before

the Hon’ble APERC. He further submits that, the order in O.P.(SR)

No.10 of 2004 have attained finality and the said order was assailed in

W.P.No.738 of 2004, challenging the vires of the Electricity Act, 2003, as

unconstitutional and sought relief to declare that APERC has no

jurisdiction.

16. He submits that, initially, Hon’ble High Court of Telangana granted

interim order directing APERC not to proceed with O.P.(SR) No.10 of

2004, as such the same is still pending for further consideration. He

further submits that, considering the project installed capacity as 351.49

MW, the excess payment made to the petitioner comes to Rs.145 crores

from the year 2001 and by considering 361.92 MW as capacity of

project, as per the second report of Central Electricity Authority, the

excess payment made is Rs.53.00 crores, thereby the said excess

amount needs to be recovered. Therefore, the impugned proceedings in

the writ petition did not become infructuous, as contended by the learned

counsel for the petitioner, in view of the fact that the petitioner underwent

IBC and in view of the orders passed by NCLT, as mentioned above.

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W.P.No.25317 of 2011

17. Heard learned Senior Counsel for the petitioner, learned Advocate

General for the respondents and perused the material available on

record.

18. The contention of the learned Senior Counsel for the petitioner that

once the petitioner company underwent the process of Insolvency and

Bankruptcy Code, at any stage of pending proceedings against the

Corporate Debtor Company, as an outgoing concern, it cannot enforce

against the Corporate Debtor Company is valid and sustainable, in view

of the ratio laid down by the Hon’ble National Company Law Appellate

Tribunal, Principal Bench, New Delhi in M/s. Shiv Shakti Inter Globe

Exports Pvt. Ltd vs. M/s. KTC Foods Private Limited & another

2

,

wherein it is held as follows:

21. Adverting to the contention of the Learned Counsel for

the Appellant that the Adjudicating Authority has erred in

denying the sale of the ‘Corporate Debtor’ as a ‘going

concern’ to the Appellant without including any contingent

liabilities, we hold that it is a settled law that when the sale

proceeds of a” ‘Corporate Debtor’ are duly distributed in the

Order of priority and in the manner prescribed under Section

2

CA (AT)(Insol) No.650 of 2020 dated 25.02.2022

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W.P.No.25317 of 2011

53 of the Code, claims of any other Creditor cannot be

entertained contrary to the provisions entailed under Section

53; subsequent to the distribution of sale proceeds under

Section 53 no other entity including any Government entity

can claim any past unpaid or outstanding dues against the

Appellant who has purchased the ‘Corporate Debtor

Company’ as a ‘going concern’. It is significant to mention

that the second Respondent/Liquidator has specifically

submitted that even these claims by the Uttar Haryana Bijili

Vitran Nigam were not submitted in the prescribed form either

during the CIRP Process or at the Liquidation stage. We are

of the considered view that at this stage subsequent to the

sale of the ‘Corporate Debtor Company’ as a ‘going concern’,

these claims cannot be foisted upon the Appellant. The

scope and objective of the Code is to extinguish all claims

specifically the ones which were not even made during the

CIRP or in the Liquidation stage, to aid the purchaser of the

Company as a ‘going concern’ to start on a ‘clean slate’. The

Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt.

Ltd.’ Vs. ‘Edelweiss Asset Reconstruction Company Ltd. &

Ors.’, Civil Appeal No. 8129 of 2019 and in ‘CoC of Essar

Steel India Ltd.’ Vs. ‘Satish Gupta & Ors.’ (2020) 8 SCC 531

has laid down the proposition that the purchaser of the

Company even in the Liquidation stage cannot be burdened

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W.P.No.25317 of 2011

with past liabilities when it is not mentioned in the ‘Sale

Notice’.”

19. Therefore, the submission of the learned counsel for the petitioner

that the claim of the respondents regarding recovery of money which is

not finally determined so far and after finalization of proceedings under

IBC Code, the respondents are not entitled for any claim, more

particularly, the claim under the impugned proceedings became

infructuous, as held by the Division Bench of the Hon’ble High Court of

Telangana in C.M.A.No.1284 of 2008 is incorrect. The contention of the

petitioner that the impugned proceedings have become infructuous is

not a merit submission, since the proceedings for determination between

the parties is pending by way of O.P on the file of APERC, much before

to the proceedings invoked under IBC. Moreso, the said proceedings

were allowed at the instance of the petitioner by filing W.P.No.7838 of

2004 on the file of the Hon’ble High Court of Telangana.

20. The contention of the learned Advocate General for the

respondents that, the Central Electricity Authority submitted a report, one

in the year 2005 at the instance of the respondents holding that the

installed capacity of the petitioner is 351.49 MW only and received

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W.P.No.25317 of 2011

money at the rate of the installed capacity of the petitioner 368.144 MW.

But, later, at the instance of the petitioner, the Central Electricity

Authority finally submitted its another report, wherein it is held that, in the

year 2010, the installed capacity of the petitioner is only 361.92 MW.

21. From the above, it is clear and categorical that the petitioner is

under liability to the respondents for extra claim amount already received

by the petitioner, for which, the respondents invoked the jurisdiction of

APERC, which is the competent adjudicating authority for redressal of

the disputes between the respondents and the petitioners, as held in

Gujarat Urja Vikash Nigam Limited vs. Essar Power Limited, is a

valid submission and liable to be accepted.

22. Further, the adjudicatory proceedings filed for redressal of the

disputes regarding the installed capacity of the project of the petitioner

are pending on the file of the APERC did not become infructuous. Since

the claimant before the Commission is a public authority and the

petitioner received excess amount from the public exchequer. Therefore,

the question whether the respondents can recover the amount or not

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W.P.No.25317 of 2011

even after completion of adjudication before the APERC can be decided

by invoking appropriate proceedings before the competent authority.

23. Having considered the facts and circumstances of the case and

the legal proposition relied upon by both the counsel, liberty is granted to

the petitioner and respondents to sort out their claims by themselves,

proposing out of these legal principles pending before APERC.

24. With the above, writ petition is disposed of. No costs.

25. Consequently, miscellaneous applications pending if any, shall

stand closed.

_____________________________________

JUSTICE VENKATESWARLU NIMMAGADDA

Date: 31.12.2024

SP

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W.P.No.25317 of 2011

THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

WRIT PETITION No.25317 OF 2011

Date: 31.12.2024

Note: LR copy to be marked

W

SP