Rajasthan High Court – Jodhpur
M/S. South West Miniing Limited (Swml) vs Rajasthan Electricty Regulatory … on 4 February, 2025
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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Special Appeal Writ No. 742/2023
M/s. South West Miniing Limited (SWML), having its Registered
Office at Vidyanagar, Talur Cross, Toranagallu, Bellary Karnataka
583275 and Head Office at B-13,14, Riico Industrial Area, Opp.,
Rajasthan State Ware House, Barmer-344001 Rajasthan, India
through its Authorised Signatory Hemant Sharma son of Sh. G. l.
Sharma aged about 45 Years, presently working as Assistant
General Manager.
----Appellant
Versus
1. Rajasthan Electricty Regulatory Commission, Vidyut
Viniyamak Bhawan, Near State Motor Garage, Sahakar
Marg, Jaipur.
2. The Managing Director, Barmer Lignite Mining Company
Limited, Man Upasana Plaza, C- 44, Sardar Patel Marg,
Jaipur-302001, Jagdish Chandra Bissa son of Sh. Punam
Chand, aged 63 Years, resident of Achlaaton Ka Bas,
Brahampuri, Navchokiyan, Jodhpur, Rajasthan.
3. Jodhpur Vidyut Vitran Nigam Limited (JdVVNL), through
its Chairman and Managing Director, New Power House,
Industrial Area, Jodhpur.
----Respondents
For Appellant(s) : Mr. Vikram Nankani, Senior Advocate
assisted by Mr. Vinay Kothari with
Mr. Rohan Talwar
Mr. Mehul Kothari
Mr. Ayush Goyal
Mr. Bhavyadeep Singh, Advocates
For Respondent(s) : Mr. Rajendra Prasad, Senior Advocate
assisted by Mr. Anirudh Singh
Shekhawat for respondent no.3 with
Mr. Kartik Seth (through VC)
Mr. P.N. Bhandari (through VC)
Mr. Chiranjeev Sharma,
Mr. Harshwardhan Singh Chundawat,
Mr. Sunil Purohit for respondent no.1
Mr. Sachin Mathur, for respondent
no.2 with Mr. Kanishk Sharma
Mr. Amit Kapoor (through VC)
Mr. Aman Anand, Advocates
HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR
HON'BLE MR. JUSTICE CHANDRA SHEKHAR SHARMA
Judgment/Order
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04/02/2025
Per, Shree Chandrashekhar, J.
M/s. South West Mining Limited (SWML) which was
nominated as the Mining Development Operator (MDO) for
undertaking the mining operations for the Barmer Lignite Mining
Company Limited (BLMCL) is aggrieved by the judgment
pronounced by the writ Court on 31 st August 2023 in S.B. Civil
Writ Petition No.8291 of 2023. By the said judgment, the
challenge laid by the appellant-company to the orders passed by
the RERC and/or the communication made to it on 21 st April 2023,
25th April 2023, 1st May 2023, 23rd May 2023, 24th May 2023 and
30th May 2023 was rejected by the writ Court.
2. Before the writ Court, the orders passed by the RERC were
challenged by the appellant-company primarily on the ground of
jurisdiction of the RERC to issue directions to it to disclose its
confidential informations pertaining to the mining expenses
incurred by it. The main prayer made on behalf of the appellant-
company was formulated thus :
"(i) By an appropriate writ, order or directions, the impugned
orders/communications/summons dated 21.4.2023, 25.4.2023,
(Annexure-4), 1.5.2023 (Annexure-5), 23.5.2023 (Annexure-6),
24.05.2023 (Annexure-7) & 30.5.2023 (Annexure-8) passed by the
respondents, qua the Petitioner, may be declared, without authority
of law, non-est, arbitrary and illegal and may kindly be quashed and
set aside with all consequential directions".
3. Objecting to the challenge laid to the orders passed by the
RERC, the JdVVNL raised a question to maintainability of the writ
petition in view of the alternative statutory remedy of appeal
available to the appellant-company under section 111 of the
Electricity Act. In support of its own orders, the RERC joined
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hands with the JdVVNL and the decision in "Than Singh Nathmal
v. Superintendent of Taxes"1 was pressed into service on behalf of
these respondents. To support the directions issued by the RERC,
it was contended before the writ Court that the mining expenses
incurred by the appellant-company would have significant impact
on the overall transfer pricing of the Lignite and that shall have a
consequential effect to fix the final rate of electricity and a
reference to the judgments in "Gujarat Urja Vikas Nigam Ltd. v.
Tarini Infrastructure Ltd. & Ors." 2, "Gujarat Urja Vikas Nigam Ltd.
v. Solar Semiconductor Power Co. (India) (P) Ltd. & Anr.", 3 and
"Gujarat Urja Vikas Nigam Ltd. v. Renew Wind Energy (Rajkot)
Private Limited & Ors."4 was made on behalf of the RERC and the
JdVVNL which are the respondent nos.1 & 3. However, on behalf of
the BLMCL it was contended that seeking information from the
mining contractor for prudence check of the actual expenditure
incurred in mining operations for assessing the transfer price of
the Lignite would be contrary to law and beyond the powers of the
RERC under section 94 of the Electricity Act.
4. A Lignite Mining Power Generation Project as envisaged by
the Government of Rajasthan in 1996 and a Consortium of the
appellant-company, JSW Energy Limited and Raj West Power
Limited was formed for the Project and the Consortium so formed
on 28th February 2006 was approved by the Government of
Rajasthan on 07th March 2006. The Barmer Lignite Mining
Company Limited which is a Government company incorporated
for the specific purpose of development and operation of Kapurdi
1 (1946) 6 SCR 654
2 (2016) 8 SCC 743
3 (2017) 16 SCC 498
4 Civil Appeal Nos.3480-3481 of 2020 decided on 13.04.2023
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and Jalipa Lignite Mining Blocks in the Barmer district of Rajasthan
is the mining leaseholder of those mining blocks. The Raj West
Power Limited now known as JSW Energy (Barmer) Limited is a
Lignite-based thermal power generating company which receives
the Lignite mined from Kapurdi and Jalipa mining blocks from the
BLMCL and it supplies the electricity generated by it to the
Distribution licensees including the JdVVNL in the State of
Rajasthan at the rate fixed by the RERC. On 29 th May 2006, an
Implementation Agreement was entered into between the
Government of Rajasthan and the RWPL for implementation,
operation and maintenance of the Lignite Mining- cum-Power
Generation Project and, in pursuance thereto, a Joint Venture in
the name and style of the BLMCL was created which entered into
an exclusive Fuel Supply Agreement with the RWPL for supply of
the Lignite. This is also important to indicate that the RWPL and
the JdVVNL executed a Power Purchase Agreement on
26th October 2006.
5. A bidding process was initiated by the CRISIL in August 2008
for appointment of the Mining Developer and Operater in which
only three entities participated but the said bidding process was
rejected by the RERC vide its order dated 17 th August 2011. The
2nd bidding process conducted by the Engineers India Limited
which recommended award of MDO to "Durga Shakti Construction
Private Limited and Jayprakash" was also rejected by the RERC
vide its order dated 6th April 2017. Thereafter, on a joint request of
the Discoms and the BLMCL, the NTPC was nominated to conduct
3rd bidding process for the award of work of the MDO and this
arrangement was affirmed by the RERC. In 3 rd bidding process
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conducted by the NTPC, the appellant-company emerged as the
lowest bidder on 19th December 2019.
6. In the proceeding of the Petition Nos. RERC/608/2016 and
609/2016, I.A. No.1 was filed by the Discoms for obtaining
laboratories' figures of the Lignite and the informations regarding
actual payments made by the BLMCL to the MDO towards mining
expenses as also the mining expenses incurred by the MDO which
is the appellant-company. The BLMCL also filed I.A. No.2/2023
seeking confirmation of the final transfer price of the Lignite and
both the applications were heard together and decided by the
common order dated 21st April 2023. In this order, the RERC dealt
with the rival contentions under the heading "principles to be
adopted by the Committee in determination of final transfer price".
By the order dated 21st April 2023, the RERC directed the BLMCL
to obtain monthly mining expenses from the appellant-company
for a prudence check and, in turn, the BLMCL wrote the letter
dated 25th April 2023 seeking information from the appellant-
company regarding monthly mining expenses incurred by it. This
request made by the BLMCL was not accepted by the appellant-
company on the ground that it was not under any legal obligation
to disclose such information and, that, the disclosure of such
information would even otherwise jeopardize its Pan India
operations. Later on, the order dated 12 th July 2023 was passed
whereby the RERC issued a show-cause notice under section 142
of the Electricity Act to the appellant-company through its
Managing Director, Executive Director and the Chief Executive
Officer in his individual capacity for non-compliance of the order
dated 21st April 2023. Our attention has also been drawn to the
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order dated 18th April 2024 passed by the RERC whereby a notice
under section 146 of the Electricity Act has been issued to the
appellant-company. For easy reference, the relevant portions of
the order dated 21st April 2023 are extracted herein-below:
1. Respondent taking directions for berdim Application (IA) no.
01/2023 on 07.02.2023 seeking directions for obtaining Laboratory
figures of lignite regarding GCV, and seeking Information about the
actual payments made by Petitioner to the MDO towards mining
expenses, besides the mining expenses incurred by the
MDO(SWML).
2. M/s Barmer Lignite Mining Company Limited has also filed
Interim Application (IA) No. 02/2023 on 13.02.2023 seeking
confirmation of the principles governing determination of final
transfer price of lignite in petition No. 608/2016 8609/2016.
3. Notices were issued to the respective Respondents to file reply on
both L.A.'s. BLMCL and Discom's have filed their replies on
20.02.2023. Sh. D.P. Chirania and Sh. G. L. Sharma also filed their
comments on I.A.'s on 18.02.2023 and 20.02.2023 respectively.
4. The matter was heard finally on 27.03.2023. Sh. Amit Kapur,
Advocate appeared for Petitioner BLMCL, Sh. P. N. Bhandari,
Advocate appeared for Respodent Discoms. Stakeholder Sh. B. M.
Sanadhya appeared for Samta Power, Sh. G. L. Sharma and Sh.
D.P. Chirania appeared as stakeholders.
.............................................................................................................
10.8 It is an important fact that earlier two bids conducted by
CRISIL and EIL respectively in different years were rejected. It was
the firm opinion of the Commission that norms of transparency,
RTPP Act & Rules and directions of the Commission were not
adhered to during these two bid processes, hence above narrated
two bids of CRISIL and EIL were rejected. The Commission is
mandated to watch the larger public interest. The price arrived at by
any of the process will ultimately affect the consumer at large.
Considering all these facts and circumstances of the case, previous
two events of rejection of bids and nature of the case, it is utmost
essential to have laboratory figures of lignite regarding GCV, actual
payments paid by the petitioner BLMCL to the MDO towards mining
expenses and mining expenses Incurred by the MDO. These data &
details can be gathered from books of accounts maintained by the
petitioner. Petitioner can summarize above details and submit to the
Commission since the beginning till 31.03.2023. Some detalls are
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available with MDO (who was nominated by the Petillioner itself),
therefore the petitioner can collect all relevant detalls pertaining to
this petition from MDO and should submit to this Commission within
a fortnight.
10.9 If above facts are summarized, in nutshell, It is observed that
in IA (implementation Agreement), Cost Plus method was proposed
for computation of transfer price of lignite. By order of 2006 &
2011, the Commission directed for adopting a two part transparent
bidding route for the same. Subsequently, two bids were conducted
by CRISIL & EIL in the relevant period of the said petitions 608-
609/2016. Both the bids were rejected by the Commission on
account of lack of transparency and reasonableness. So practically
there is no extraction cost/transfer price arrived at by the
competitive bidding route is available with the Commission for the
relevant period.
10.10 In light of above facts, now we consider the issues emerged
one by one. Actual GCV figures recorded by the laboratory at the
mine site for the relevant period.
10.11 In this regard, the petitioner (BLMCL) has submitted that the
information was furnished in response to the query of the
Commission vide affidavit dated 10.07.2018, at Annexure C,
running from page 1058 to page 1139. The Commission has
perused the said information and found that GCV figures of the
relevant perlod has been submitted by the petitioner supported by
the lab reports issued by M/s Bhagavathi Ana Labs Ltd.
10.12 Per contra, respondent Discoms has submitted that actual
GCV figures recorded by the laboratory every day at the mine site
have been consistently suppressed by the petitioner and therefore
now the actual GCV figures recorded by the laboratory alone should
be considered.
10.13 The Commission observes that as per applicable tariff
regulations 2009 & 2014, the petition for determination of transfer
price shall contain salient features of the project along with
approved mining plan and other requisite Information e.g. annual
mining capacity, mine reserve, period of avallability of fuel,
washing/beneficiation plan, financial package, performance
parameters, reference price levels, amortization of initial costs, etc.
It is an established fact that apart from others, GCV Is also an
important “performance parameter”. Also, the list of
information/parameters is not exhaustive. Further, Hon’ble APTEL in
its judgment dated 02.12.2022 in IA No. 1961/2022 in Appeal No.
430/2022 also noted that the Commission does have all the powers
to call for such further information or document or material as is
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deemed necessary for consideration of the petition. Actual GCV
figures are recorded by the laboratory every day at the mine site.
The Commission is of the considered view that the monthly average
of actual GCV figures shall be submitted by BLMCL on the basis of
every day figures recorded by the laboratory in soft copy as well as
hard copy within two weeks from date of this order. These details
should be submitted since the beginning (2011-12) till 31.03.2023
within a fortnight. Actual payments made by the petitioner to the
MDO towards mining expenses.
10.14 in this regard, the respondent Discoms has submitted that
the details of the month wise payments made by the petitioner to
the MDO (SWML) may be provided.
10.15 in response, the petitioner submitted that statement of the
invoices raised by the MDO along with details of the amount
entertained/pold for the relevant period was furnished in response
to the query of this Commission by the petitioner vide affidavit
dated 13.12.2016 at Annexure Q, running from page 1481 to page
1492.
10.16 The Commission has gone through the affidavit filed by
petitioner on 13.12.2016. In view of expeditious proceedings to be
taken up in future, Commission directs the petitioner BLMCL to
submit complete detalls of month wise payments (with documentary
evidence) made by petitioner to the MDO (SWML) since the
beginning till 31.03.2023 within a fortnight.
Mining expenses incurred by the MDO itself.
10.17 In this regard, the Respondent Discoms has submitted to
direct the petitioner to provide mining expenses incurred by the
MDO (SWML).
10.18 In response, the petitioner (BLMCL) has submitted that the
Respondent desires SWML to furnish documentary evidence of the
monthly expenses incurred by it from year 2011-12. The said
Information is not available with the petitioner. The petitioner is a
company owned 51% by GoR and has no access/means to access
the monthly expenses Incurred by the contractor.
10.19 In this regard, the Commission does not accept the
arguments of the petitioner that it has no access/means to access
the monthly expenses Incurred by the MDO. The Commission
observes that the MDO (SWML) was nominated by the petitioner
(BLMCL). It is the responsibility of the petitioner to do prudence
check of the invoices raised by the MDO before making payments to
the MDO. Further, supporting documents and bifurcation of the
amount of the invoices is a must while doing the prudence check. In
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view of this, in the larger interest of consumer, the Commission is of
considered view that prudence check of the Invoices ralsed by the
MDO to the petitioner is necessarily required. The Commission
directs the petitioner (BLMCL) to obtain the relevant information
regarding monthly mining expenses from the MDO for prudence
check and submit to the Commission within two weeks. This
Information & detalls of monthly mining expenses should be
submitted since the beginning of this project fill 31.03.2023 within a
fortnight.
Principles to be adopted by the Commission in determination
of final transfer price.
10.20 The submission of the petitioner is that in the present
circumstances, to enable the petitioner to effectively assist this
Commission in the matter of determination of final transfer price of
lignite for FY 2011-12 to 2015-16, it is necessary that this
Commission confirms the principles, benchmarks and the norms
that it will consider and apply in the present petition. It is only once
the principles are confirmed, that the petitioner would be in a
position to make its submissions on the various aspects of transfer
price determination.
10.21 Per contra, the respondent Discoms submitted that normally
the petitioners and respondents flag their respective issues and
leave it to the court or commission to take a final view but, here the
petitioner wants advance disclosure from the Commission, as to
how it will proceed on various issues. No court or Commission is
supposed to give in advance, in black and white, an outline of its
prospective order. Also, it would grossly prejudice the final
proceedings, if any such declaration/clarification is made in
advance.
10.22 The Commission finds force in the submissions of the
respondent Discoms. The Commission agrees with the contention of
the respondent Discoms that It is the prerogative of any court or
commission as to what course of action it adopts under the law. The
Commission is of the view that any declaration/clarification of
course of action at this stage will be prejudice to the final
proceedings. In view of this, the Commission is of the considered
view that at this stage any confirmation of the principles to be
adopted by the Commission to determine lignite transfer price is
neither required nor necessary.
10.23 The Commission has gone through the citations referred by
counsel of the petitioner BLMCL. These citations are not applicable
in favour of petitioner because facts and circumstances of all these
citations are altogether different from the facts and circumstances
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of the present case of the petitioner. Also, doctrine of election has
no relevance at this stage and it is not applicable in this case
considering facts and circumstances of the case.
10.24 All the data and details called for from the petitioner and the
MDO will be used for prudence check to arrive at the transfer price
in a systematic and rational way. These actuals (GCV figures, detalls
of expenditure and payments) may also assist prudence check in
evaluating the third bid. Hon’ble APTEL has also directed this
commission to expedite the matter vide order date 02.12.2022 in IA
No. 1961/2022 In Appeal No. 430/2022. In view of above directions
of Hon’ble APTEL the whole exercise is being done to obtain relevant
data and details from petitioner BLMCL as well as from MDO so that
concrete steps may be taken for prudence check of last bidding
process conducted by NTPC and to take necessary steps to
determine transfer price in expeditious and prudent way.”
7. To support the orders passed by it, the RERC filed a
preliminary reply in the writ proceeding the relevant portions of
which are reproduced as under :-
“2. That essentially, the present writ petition is being preferred
challenging the summons/orders issued to the petitioner company
to place on record the monthly mining expenses of the petitioner
company being a Mining Developer and Operator (MDO) so as to
examine the prudence check as the mining expenses incurred is
having a significant impact on the overall transfer pricing of lignite
and which in turn shall also have the consequential effect upon the
final rate of electricity supplied by the generator and as an end
result, the burden would lie upon the public at large as it will impact
the cost of electricity to be paid by consumers of respective Discoms
in the entire state of Rajasthan. In such circumstances, the
prudence check of the mining expenses is very much necessary and
as such, there is no logical reasoning available with the petitioner
company as to why such records cannot be examined by the humble
answering respondents while exercising the powers available under
Electricity Act, 2003 read with the Tariff Regulations of 2009 and
2014.
3. That even otherwise also, the summons/orders issued to the
petitioner company is well within the jurisdiction of the humble
answering respondents and the said summons are issued while
invoking the powers available under Section 94 of the Act of 2003
which envisages the powers of the humble answering respondent
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[2025:RJ-JD:7036-DB] (11 of 41) [SAW-742/2023]and the Commission is vested with all powers as equivalent to a
Civil Court under the Code of Civil Procedure, 1908 in respect of the
matters pertaining to summons etc. The Section 94 of the Act of
2003 reads as under :-
94. Powers of Appropriate Commission – (1) The Appropriate
Commission Shall, for the purposes of any inquiry or proceedings
under this Act, have the same powers as are vested in a Civil Court
under the Code of Civil Procedure, 1908 (5 of 1908) in respect of
the following matters, namely:-
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) discovery and production of any document or other material
object producible as evidence;
(c) receiving evidence on affidavits;
(d) requisitioning of any public records;
(e) issuing commission for the examination of witnesses;
(f) reviewing its decisions, directions and orders;
(g) any other matter which may be prescribed.
(2) The Appropriate Commission shall have the powers to pass such
interim order in any proceeding, hearing or matter before the
Appropriate Commission, as that Commission may consider
appropriate.
(3) The Appropriate Commission may authorize any person, as it
deems fit, to represent the interest of the consumers in the
proceedings before it.
In such circumstances, from the bare perusal of aforesaid provision,
it is ample clear that the summons issued to the petitioner company
while invoking the provision of Order 16 Rule 6 read with Order 16
Rule 14 of the CPC, 1908 is completely lawful and the said
summons in no manner can be said to be as without jurisdiction and
as such, the plea raised by the petitioner company is non-est in the
eye of law.
4. That the record of mining expenses of the petitioner company is
necessary for one another reason that the proceedings pending
before the humble answering respondents relates to the
determination of final transfer price of the mineral lignite for the
financial year 2011-12 to 2015-16 and for the purpose of
determination of transfer price, international competitive bidding
was undertaken to appoint the Mine Developer and the said process
of bidding organized by the petitioner group were already
questioned before the humble answering respondents and after
examining the record, it was found that there were manipulations
and excessive costing in this first two bidding processes which
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resulted that the earlier two processes were quashed by the humble
answering respondent. Further, the third bidding process organized
through NTPC for determination of transfer price was undertaken for
the year 2019 onwards and as such, the provisional transfer price
was adjudicated for the years starting from 2011 to 2018 by the
humble answering respondents but however, in the proceedings
pending adjudication before the humble Commission, the application
was moved by the respondent party to examine the actual expenses
incurred by the Mining Developer and Operator (MDO) i.e., the
petitioner company so that a clear picture for assessment can be
arrived and the same would also be helpful in determination of fair
transfer pricing but however, it appears that the petitioner company
is trying to shy away for the reasons best known to it and thus, the
summons issued to the petitioner company are completely
justifiable and lawful.
5. That it would also be just and proper to mention here that in the
entire writ petition, the petitioner company has not pleaded any
justifiable reason as to why the records pertaining to the mining
expenses cannot be produced before the humble answering
respondents and what prejudice would cause to the petitioner
company in doing so and as a matter of fact, the mining expenses
incurred by the petitioner company are very much relevant and
necessary for the determination of fair transfer price of the mineral
lignite and it is rather in the larger interest of public at large if the
accurate determination of the transfer price is made based on the
details made available by the petitioner company but however, the
petitioner company wants to conceal and hide the mining expenses
incurred by it for no good reason and as such, the plea raised by the
petitioner company is completely unfounded and baseless and as
such, the summons/orders issued to the petitioner company cannot
be said to be as arbitrary or illegal from any stretch of imagination
and hence, the present writ petition deserves to be dismissed with
exemplary costs.”
8. The JdVVNL took the following stand:-
“7. That the averments contained in para 7 of the writ petition are
not admitted and hence denied. The averment of the petitioner
regarding price discovery is absolutely false and contrary to record
and proceedings before the Commission and the Appellate
Authority. It is submitted that the commission while quashing the
first International Competitive Bidding conducted by CRISIL had
clearly held that the process of competitive bidding was not for the
purposes of price discovery and the same was one of the reasons(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (13 of 41) [SAW-742/2023]for quashing of the bidding process. The Commission had rejected
outright the competitive bidding merely for “price discovery”. A copy
of the order dated 17.8.2011 passed by the commission is
submitted herewith and marked as Annexure – R3/2. It is further
submitted that the said order came to be challenged by way of an
appeal and the said appeal was dismissed by the APTEL. It is thus
evident that the averment of the petitioner that the bidding process
was for price discovery is absolutely false and misleading.
It is further relevant to mention here that the Petitioner
SWML, who was illegally appointed as MDO, was neither technically
nor financially qualified. In fact it did not even participate in the
bidding. And yet it was illegally appointed as MDO by the above
Consortium (wherein the Managing director is appointed by the JSW
Energy and therefore the decision making power does not vest with
the Government). Since the bidding was quashed, there is no
relevance of the so-called price discovery.
10. That the averments contained in para 11 of the writ petition are
not admitted and hence denied. The petitioner is again
SUPPRESSING the basic facts and therefore the writ petition
deserves to be dismissed for concealment of relevant facts. It is
submitted that M/s. Engineers India Ltd. (EIL) had sought the
opinion of the then Additional Solicitor General of India, who had
opined that the financial bid of the petitioner cannot be opened as it
was a related company of the Consortium of Respondent No 2
(BLMCL & JSW). Consequently it was disqualified and its financial
envelope was not opened. Thus it is evident that the petitioner and
respondent no. 2 are related companies and the present writ
petition is nothing but a means to multiply the litigation and to
bypass the appellate authority. It is further submitted that the
second International Competitive Bidding was also quashed by the
Commission on the ground of large scale manipulations by the
above stated Consortium and the inflated price. A copy of the order
dated 6.4.2017 passed by the commission is submitted herewith
and marked as Annexure R3/3. The so-called “understanding” about
revising the mining payments is again a figment of the fertile
Imagination of the petitioner.
11. That the averments contained in para 12 of the writ petition are
not admitted and hence denied. There is no question of delaying the
consideration of the bidding organised by NTPC. The NTPC bidding
was organised in 2019. It could not have a retrospective effect. Its
rates if found to be valid could be valid only from FY 2019 onwards.
Since final determination of transfer price has been pending since
2011, hence the issue of NTPC bid can be taken up by the(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (14 of 41) [SAW-742/2023]Commission only after the final transfer price is determined for the
first NINE YEARS. The Commission is taking up the matter
chronologically. There is no justification for jumping the queue.
Moreover the orders passed by the Commission do not pertain to
the bidding conducted by the NTPC and therefore the petitioner is
trying to confuse the issue.
12. That the averments contained in para 13 of the writ petition as
stated are grossly misleading. To say that Respondent No.2, the
Commission is unnecessarily delaying the NTPC bidding is patently
FALSE. As stated above NTPC bid of 2019 can be considered only
after determination of Transfer Price for first NINE YEARS. If the
Commission had rejected the earlier two International Competitive
Biddings, it was due to gross manipulations by this Group and
including excessive costs. It is irresponsible of the Petitioner to say
that the Commission is delaying the final determination of transfer
price. Rather it is this Consortium which has deliberately and
mischievously delayed the conduct of bidding for all these years, so
that the petitioner, who was illegally appointed, could continue as
MDO indefinitely.
13. That the averments contained in para 14 of the writ petition are
not admitted and hence denied. The Commission under the
Electricity Act and the Regulations is empowered to determine not
only the tariff of the generator but also the transfer price of the fuel
supplier.
The Commission has no where attempted to regulate the
raising cost of lignite but for determining the final transfer price, the
Commission has to scrutinise all inputs, which are the components
of transfer price. BLMCL, which is part of the project Consortium,
has been filing petitions for determination of ad-hoc transfer price,
every year. And the Commission has allowed year after year ad hoc
Transfer Price, which is based on broad estimates, extrapolations &
somewhat guess work.
14. That the averments contained in para 15 of the writ petition are
not admitted and hence denied. The direction for furnishing ACTUAL
MINING EXPENSES was an innocuous direction for finalising the
actual mining expenses. Since the petitioner was not appointed
through competitive bidding, as mandated by the Commission, it is
all the more necessary to get the inputs from the petitioner
regarding the actual mining cost, as it would lay the very foundation
of the final transfer price. The petitioner has been conducting
mining of the entire project from the very beginning of the project.
The petitioner is not a stranger to the project, as it is pretending.
Rather it is the key functionary of the project as the entire mining is(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (15 of 41) [SAW-742/2023]being conducted by it. It is further submitted that the commission
while exercising powers as a court as enshrined under section 94 of
the act has called upon the petitioner to furnish documents and
therefore there is no requirement or mandate of providing
opportunity of hearing and the averment of the petitioner that no
opportunity of hearing was granted is in itself baseless and contrary
to the act. It is further submitted that a court has the power to
summon any person to produce any document or give witness and
the commission has been empowered with the same powers as per
section 94 of the Act. Section 94 of the Act of 2003 reads as under:-
Section 94. (Powers of Appropriate Commission):-
(1) The Appropriate Commission shall, for the purposes of any
inquiry or proceedings under this Act, have the same powers as
are vested in a civil court under the Code of Civil Procedure, 1908
in respect of the following matters, namely :-
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) discovery and production of any document or other material
object producible as evidence;
(c) receiving evidence on affidavits;
(d) requisitioning of any public record;
(e) issuing commission for the examination of witnesses;
(f) reviewing its decisions, directions and orders;
(g) any other matter which may be prescribed.
(2) The Appropriate Commission shall have the powers to pass
such interim order in any proceeding, hearing or matter before
the Appropriate Commission, as that Commission may consider
appropriate.
(3) The Appropriate Commission may authorise any person, as it
deems fit, to represent the interest of the consumers in the
proceedings before it.
A bare perusal of the aforesaid provision goes to show that
Commission is having all the trapping of the civil court and
therefore, it has the power to summon a 3 rd party for production of
document or for the purpose of giving evidence.
15. There is no question of the petitioner’s mining expenses being a
proprietary right. Rather the Commission is supposed to consider all
reasonable expenses of mining and accordingly determine the
transfer price, broadly based on the mining expenses. The biggest
input for determination of Transfer Price is the mining expenses. In
a way, the information about the payments of actual mining
expenses is already in the public domain. TDS deducted by the
petitioner from the contractors has been deposited by the Petitioner
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[2025:RJ-JD:7036-DB] (16 of 41) [SAW-742/2023]
in the Income Tax department, year after year. Therefore such
payments cannot be claimed to be proprietary or confidential.
16. That the averments contained in para 16 of the writ petition are
not admitted and hence denied. It is submitted that the Commission
has the power to call upon any person to adduce evidence or
produce documents as a court and it is in exercise of this power that
the petitioner had been called upon since the petitioner as MDO has
the key role in the entire project. The entire mining operations are
conducted by the petitioner. Therefore the submission of the
petitioner that it is not even a party to the proceedings is absolutely
baseless.
17. That the averments contained in para 17 of the writ petition are
not admitted and hence denied. For seeking data from the petitioner
as MDO, it is not necessary for impleading it as a party. The
petitioner as MDO has the key role in the entire project. The entire
mining operations are conducted by the petitioner. But if certain
relevant information is available with it, the Commission has
adequate powers, under Section 94 of the Electricity Act, to seek
any relevant information, when the determination of transfer price
is to be done by the Commission under the Electricity Act and the
Regulations. It is further submitted that for the purposes of
determination of transfer price the mining cost is an essential factor
since the transfer price is the sum total of the mining cost and
handling charges.”
9. The writ Court in its order dated 31st August 2023 held as
under :-
“6. This Court observes that the petitioner and the respondent no.2-
BLMCL have duly entered into the Mine Development & Operation
Contract. Thereafter, the respondent-BLMCL vide letter dated
25.04.2023 asked the petitioner to furnish the details of actual
monthly expenditure incurred in the raising operations on strength
of the order dated 21.04.2023 passed by respondent-RERC.
Subsequently, the respondent-RERC issued the aforementioned
impugned notices/summons to the petitioner requiring it to furnish
details of the monthly mining expenses since beginning till
31.03.2023 and also directed the Authorized Representative or the
Officer of the petitioner to appear in person.
7. This Court further observes that the earlier two bids were
quashed by the Commission because certain gross manipulations
were discovered therein; on count of rejection of the previous two
bids, no bidding rates were available, and it is difficult to determine
the final transfer price, as result of the same, the Commission asked(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (17 of 41) [SAW-742/2023]for details of the monthly expenses from the petitioner through the
impugned notices/summons.
8. At this juncture, it is concerned appropriate to reproduce Section
94 of the Act of 2003, as hereunder:
“94.Powers of Appropriate Commission.-(1) The
Appropriate Commission shall, for the purposes of any inquiry or
proceedings under this Act, have the same powers as are vested in
a civil court under the Code of Civil Procedure, 1908 (5 of 1908) in
respect of the following matters, namely:–
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) discovery and production of any document or other material
object producible as evidence;
(c) receiving evidence on affidavits;
(d) requisitioning of any public record;
(e) issuing commission for the examination of witnesses;
(f) reviewing its decisions, directions and orders;
(g) any other matter which may be prescribed.
(2) The Appropriate Commission shall have the powers to pass such
interim order in any proceeding, hearing or matter before the
Appropriate Commission, as that Commission may consider
appropriate.
(3) The Appropriate Commission may authorise any person, as it
deems fit, to represent the interest of the consumers in the
proceedings before it.
8.1 A bare perusal of the aforementioned provision of law clearly
reveals that the Commission has power to issue notices/summons
and thus, the impugned action taken by the Commission was not
beyond its jurisdiction.
9. This Court also deems it appropriate to reproduce the relevant
portion of the judgment rendered in the case of Gujarat Urja Vikas
Nigam Ltd. Vs. Solar Semiconductor Power Co.(India) (P) Ltd.,
(Supra) as hereunder:-
“31. Having referred to the above decisions, we shall now
make an independent endeavour to analyse the present case in the
context of factual matrix and the relevant statutory provisions. An
amendment to tariff by the Regulatory Commission is permitted
under Section 62(4) read with Section 64(6) of the Act. Section
86(1)(a) clothes the Commission with the power to determine the
tariff and under Section 86(1)(b), it is for the Commission to
regulate the price at which electricity is to be procured from the
generating companies. Section 86(1)(e) deals with promoting co-
generation and generation of electricity from renewable sources of(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (18 of 41) [SAW-742/2023]energy. Therefore, there cannot be any quarrel with regard to the
power conferred on the Commission with regard to fixation of tariff
for the electricity procured from the generating companies or
amendment thereof in the given circumstances.
32. Part X of the Act from Sections 76 to 109 deals with
“Regulatory Commissions” providing for their constitution, powers
and functions. Section 92 read with Section 94 provides for the
proceedings and power of the Commission while exercising its
functions and powers. Under Section 92, the proceedings of the
Commission are to be governed by what is specified in the
appropriate Regulation with regard to the transaction of business at
its meetings. It is that Regulation which is referred to under Section
181(2)(zl) “rules of procedure for transaction of business under sub-
section (1) of Section 92“.Under Section 181(2)(zp) other matters
also can be specified. Section 2(62) defines “specified” as “specified
by regulations made by the appropriate Commission or the
Authority, as the case may be, under this Act.
33. Section 94 provides that the appropriate Commission shall be
vested with certain powers as are vested in a civil court, only in six
specified areas. Under Section94(1)(g), the Commission has the
powers of a civil court in respect of “any other matter which may be
prescribed”. Under Section 2(52) “prescribed means prescribed by
rules made by the appropriate Government under this Act”.
“37. This Court should be specially careful in dealing with matters of
exercise of inherent powers when the interest of consumers is at
stake. The interest of consumers, as an objective, can be clearly
ascertained from the Act. The Preamble of the Act mentions
“protecting interest of consumers” and Section61(d) requires that
the interests of the consumers are to be safeguarded when the
appropriate Commission specifies the terms and conditions for
determination of tariff. Under Section 64 read with Section
62,determination of tariff is to be made only after considering all
suggestions and objections received from the public. Hence, the
generic tariff once determined under the statute with notice to the
public can be amended only by following the same procedure.
Statutory power of the State Electricity Regulatory Commission to
determine the tariff.
47. The State Electricity Regulatory Commission is a body corporate
constituted in terms of Section 82 of the Act, vested with certain
important functions and powers specified under Sections 86 and 94
of the Act respectively. The body functions to achieve the purpose of
the Electricity Act, 2003 viz.”…taking measures conducive to
development of electricity industry, promoting competition therein,(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (19 of 41) [SAW-742/2023]protecting interest of consumers and supply of electricity to all
areas, rationalisation of electricity tariff….”
10. This Court also observes that the respondent-RERC has no fair
transfer price before it, due to previous bidding processes were not
successful, and therefore, it was necessary for the respondents to
examine the mining expenses, for which they have sought the
requisite information from the present petitioner, vide the impugned
orders.
11. This Court further observes that the fair price is necessary for
safeguarding the interests of the public at large, and thus, on that
count also the impugned action of the respondents are justified in
law. This Court further observes that in the aforementioned
precedent laws, the Hon’ble Apex Court has held that, “specially
careful in dealing with matters of exercise of inherent powers when
the interest of consumers is at stake. The interest of consumers, as
an objective, can be clearly ascertained from the Act. The Preamble
of the Act mentions “protecting interest of consumers” and Section
61 (d) requires that the interests of the consumers are to be
safeguarded when the appropriate Commission specifies the terms
and conditions for determination of tariff”.
12. This Court also observes that the prudence check in question
was only for the evaluation of the fair price, and that, information in
question was sought by the respondent-RERC from the petitioner for
the said purpose, as, if the price is not evaluated properly, then it
would adversely affect the interests and rights of the consumers
(public) at large, as has also been held by the Hon’ble Apex Court in
the aforementioned judgment.
12.1.This Court also observes that it is necessary for the
respondent-RERC to determine the transfer fair price on the basis of
authentic and reliable documents, so also to ensure transparency in
the process of evaluating transfer fair price.
13. This Court also observes that at this stage, the limited issue in
question is pertaining to the aforementioned impugned
notices/summons, and this Court does not find any legal infirmity in
the impugned orders/notices/communications/summons issued by
the respondents, as the same are perfectly justified in law.
14. The judgments cited on behalf of the petitioner also does not
render any assistance to its case.
15. Thus, in light of the aforesaid observations and in view of the
aforementioned precedent laws as well as looking into the factual
matrix of the present case, this Court does not find it a fit case so
as to grant any relief to the petitioner in the present petition.
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[2025:RJ-JD:7036-DB] (20 of 41) [SAW-742/2023]
16. Consequently, the present petition is dismissed. All pending
applications stand disposed of.”
10. The written submissions of the parties are taken on record.
11. Mr. Vikram Nankani, the learned senior counsel appearing for
the appellant-company submits that the RERC cannot seek any
information regarding the actual monthly mining expenses
incurred by the appellant-company and, that too, in the garb of
some prudence check. The exercise of powers by the RERC under
section 94 of the Electricity Act, 2003 read with Regulation 30 of
the Rajasthan Electricity Regulatory Commission (Transaction of
Business) Regulations, 2021 to obtain information from the
appellant-company and to issue summons to the authorized
Officer of the appellant-company are objected to on the ground
that the scope of section 94 cannot be wider than section 86 and
the provisions of this section that lays down the powers of the
RERC would restrict the application of section 94 to pass such
orders and issue summons to the appellant-company as has been
done in the present case. The learned senior counsel for the
appellant-company further contended that if the impugned
directions passed by the RERC are sanctioned in law that would
amount to rewriting the provisions under section 94 of the
Electricity Act and, moreover, a direction for production of the
documents could not have been issued even to the BLMCL because
such a direction can be issued to a party only if that party is in
possession of the document and not otherwise.
12. The learned senior counsel for the appellant-company laid
stress over the expression “for the purposes of any inquiry or
proceeding under this Act” as appearing in section 94 of the
Electricity Act to submit that the primary function of the RERC is
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[2025:RJ-JD:7036-DB] (21 of 41) [SAW-742/2023]
determination of tariff and a mechanism for that has been
provided under the Act and, therefore, the RERC cannot exercise
its powers beyond what has been provided under the Electricity
Act. The learned senior counsel read out the observations of the
Hon’ble Supreme Court in “Solar Semiconductor Power Co. (India)
(P) Ltd.”3 to submit that the reliance placed by the writ Court on
that decision was not correct and the RERC has no jurisdiction to
issue the impugned directions/summons to the appellant-
company.
13. The learned senior counsel for the appellant-company
contended that not only the appellant-company was not a party in
the proceeding before the RERC, its activities are not at all related
to generation, transmission, distribution or sale of energy which
are regulated under the Electricity Act and the RERC has no
jurisdiction to peep into the commercial transactions of the
appellant-company with the BLMCL which is a Joint Venture
between the Rajasthan State Mines and Minerals Limited and the
Raj West Power Limited, with RCMML being the majority
shareholder. It was further contended that the price of Lignite is
not regulated under the mines and minerals regime and the
Central Government is only competent authority to deal with the
major minerals.
14. The learned senior counsel for the appellant-company
assailed the writ Court’s decision not to interfere in the matter
also on the ground that the question of jurisdiction of the RERC
could not have been decided by merely reproducing the provisions
of law and the decision of Hon’ble Supreme Court in “Solar
Semiconductor”3 and, that, the writ Court overlooked an important
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[2025:RJ-JD:7036-DB] (22 of 41) [SAW-742/2023]
issue germane to the question of jurisdiction that the inherent
power of the RERC cannot be exercised in violation of or in excess
of the statutory provisions under the Electricity Act. The
observation of the writ Court that there was no fair transfer price
before the RERC has been sought to be contradicted on the
ground that the bid price of the appellant-company conducted by
the NTPC in 2019 under the directions of the RERC is a matter of
record.
15. Supporting him, the learned counsel for the BLMCL
contended that the RERC consistently held since 2006 (vide order
dated 19th October 2006) that a transparent bidding process has
to be followed even in respect of out-sourcing and the JdVVNL
supported this method in later years arguing that the bidding
process is necessary to discover the most competitive rates of
mining so as to fix the transfer price (vide order dated 17 th August
2011) but it took a huge u-turn after about a decade and raised
frivolous objections to the bid offered by the appellant-company in
the 3rd bid which has been declared the lowest bidder by the
NTPC.
16. On the other hand, Mr. Rajendra Prasad, the learned senior
counsel appearing for the JdVVNL submits that the objections
raised by the appellant-company are frivolous and, in fact, it is
bound under the contractual obligations under the Implementation
Agreement which provided that the RERC shall assess the transfer
price of the Lignite to be supplied by the Mining Entity to the
Project as a part of the tariff determination process. It is
contended that the Consortium approved by the Government of
Rajasthan consists of JSWEL and the appellant-company and there
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[2025:RJ-JD:7036-DB] (23 of 41) [SAW-742/2023]
are specific stipulations, such as (i) the transfer price of the
Lignite to be supplied to the Project would be computed on the
basis of a cost plus formulae and (ii) as a part of the tariff
determination process the RERC shall assess the transfer price of
the Lignite to be supplied by the Mining Entity to the Project and,
therefore, the appellant-company being a part of the Consortium
cannot suppress the informations relating to actual mining
expenses incurred by it. Clause 3.5 of the Implementation
Agreement provided as under :-
“3.5 Grant of Mining Lease/Right shall be governed by the
following:-
(i) Government of Rajasthan shall after prior approval for GOI will
grant Mining Lease to RSMML for the Mines.
(ii) A JV Company would be formed between the RSMML and RWPL
in which RSMML would hold 26 percent equity and 74 percent equity
would be held by RWPL. Mining Lease will be transferred to this JV
company after obtaining prior approval of the GOI.
(iii) In case Government of India does not permit transfer of the
lease to the JV company as proposed above then RSMML will hold
51 percent equity in the JV company and the mining lease will be
transferred in this JV company after seeking prior approval of GOI
and all investment will be made by RWPL with no financial liability
on RSMML.
(iv) In either event all investment shall be made by the Company
with no financial liability on RSMML.
(v) Government of Rajasthan shall grant to the Mining Entity all
consents, permissions, statutory/non statutory within its purview,
within 60 days of application thereof, as required by the Mining
Entity to develop, establish, open, operate and maintain the Mines
subject adherence of all applicable Central and State Laws by the
Mining Entity.
(vi) The Joint Venture Company would enter into an exclusive fuel
supply agreement (FSA) with RWPL for a period of 30 years (at par
with the duration of PPA) for supply of lignite from the Mines for the
power project. The transfer price of the lignite to be supplied to the
Project would be computed on the basis of a cost plus formula (cost
of extractions, transportation plus royalty/applicable taxes +
margin).
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[2025:RJ-JD:7036-DB] (24 of 41) [SAW-742/2023]
(vii) The Joint Venture Company would enter into an exclusive &
irrevocable mining contract with RWPL its consortium members for
the development, opening and extraction of lignite from the Mines
and transportation of lignite to the Power Plant on nomination basis.
The cost of extraction in this long term contract on nomination basis
would be scrutinized by an independent person to be appointed by
Government of Rajasthan and acceptable to RWPL. This would
ensure that the cost of extraction of mineral is independently
scrutinized and determined. The Mining Contract shall provide for an
indemnity to the Mining Entity against any liability under the FSA
arising out of non-performance by the Mining Contractor.
(viii) As a part of the tariff determination process, the RERC shall
assess the transfer price of the lignite to be supplied by the Mining
Entity to the Project. In case the Regulatory Authority revises the
transfer Price, the Cost of Extraction shall be revised accordingly to
adjust the Transfer Price to a level acceptable to the Regulatory
Authority.
17. In the aforesaid background, this is the submission of
Mr. Rajendra Prasad, the learned senior counsel that the whole
object of the exercise of powers under section 62 is to ensure the
determination of fair price keeping in mind the public interest. The
learned senior counsel for the JdVVNL further submitted that the
appellant-company was not qualified either technically or
financially for the bidding and it was illegally appointed as MDO by
the Consortium for the Project inasmuch as there was no
International Competitive Bidding (ICB) as directed by the RERC.
18. Mr. Sunil Purohit, the learned counsel for the RERC seeks to
support the impugned directions issued by the RERC by referring
to the provisions under Order XVI Rule 14 of the Code of Civil
Procedure which according to him shall vest powers in the RERC to
issue summons or enforce attendance of any person and to
examine him on oath.
19. At the outset, we would indicate that the writ Court did not
advert to the objection raised by the RERC and the JdVVNL as to
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[2025:RJ-JD:7036-DB] (25 of 41) [SAW-742/2023]
the alternative remedy of appeal available to the appellant-
company under section 111 of the Electricity Act and there is no
decision rendered by the writ Court on this issue. On the contrary,
the writ Court proceeded to examine the power of the RERC to
issue the impugned directions/summons to the appellant-company
and held that the orders passed by the RERC were in furtherance
of the public interest. Pertinently, there is no cross objection taken
by the RERC or the JdVVNL to the implied rejection of their
objection to maintainability of the writ petition. We understand
that these respondents may contend before this Court that the
issue of maintainability ought to have been decided in their favour
but this issue seems to have been given up by the RERC and the
JdVVNL. In course of the hearing of this Special Appeal, no serious
argument was advanced by the RERC or the JdVVNL on the issue
of maintainability of the writ petition. Even so, this is by now a
well-settled proposition in law that the writ Court should not limit
its powers to interfere with an order which was passed in breach
of the rules of natural justice or by an authority which has no
jurisdiction over the subject matter (refer, “Whirlpool Limited v.
The Union of India“5). We may also indicate that the decision in
“Than Singh Nathmal”1 pertains to assessment of sales tax. It was
observed by the Hon’ble Supreme Court that the appellants
therein had the right to move to the Commissioner to seek
transfer of the case to High Court under section 32 of the Assam
Sales Tax Act, and to move to High Court if the Commissioner
refused to transfer the case. On the contrary, they move to the
High Court in its jurisdiction under Article 226 of the Constitution
for reopening the decision of the Taxing authority on the question
5 (2017) 14 SCC 468
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[2025:RJ-JD:7036-DB] (26 of 41) [SAW-742/2023]
of fact which jurisdiction was exclusively vested by the statute in
the Taxing authority. In that background, the Hon’ble Supreme
Court held that the appellants could not have asked the High
Court to act as an appellate authority in clear violation of the
statutory provision and by passing the machinery provided by the
Assam Sales Tax Act. The decision in “Siemens Ltd. v. State of
Maharashtra & Ors.“6 was also cited before the writ Court. There,
a demand notice for payment of cess labeling the same as a show
cause notice was under challenge. The Hon’ble Supreme Court
held that the writ Court may not ordinarily exercises its
discretionary jurisdiction questioning a notice to show cause but
where such a notice is issued with premeditation indicating that
the statutory authority had already formed its opinion regarding
liability of the party, a writ of certiorari shall lie.
20. For examining the matter on merits, we would refer to the
relevant provisions of the Electricity Act 2003 which are
reproduced below for easy reference :-
“”Section 62. (Determination of tariff) : — (1) The Appropriate
Commission shall determine the tariff in accordance with the
provisions of this Act for –
(a) supply of electricity by a generating company to a distribution
licensee:
Provided that the Appropriate Commission may, in case of
shortage of supply of electricity, fix the minimum and maximum
ceiling of tariff for sale or purchase of electricity in pursuance of an
agreement, entered into between a generating company and a
licensee or between licensees, for a period not exceeding one year
to ensure reasonable prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the same
area by two or more distribution licensees, the Appropriate6 (2006) 12 SCC 33
(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (27 of 41) [SAW-742/2023]Commission may, for promoting competition among distribution
licensees, fix only maximum ceiling of tariff for retail sale of
electricity.
(2) The Appropriate Commission may require a licensee or a
generating company to furnish separate details, as may be specified
in respect of generation, transmission and distribution for
determination of tariff.
(3) The Appropriate Commission shall not, while determining the
tariff under this Act, show undue preference to any consumer of
electricity but may differentiate according to the consumer’s load
factor, power factor, voltage, total consumption of electricity during
any specified period or the time at which the supply is required or
the geographical position of any area, the nature of supply and the
purpose for which the supply is required.
(4) No tariff or part of any tariff may ordinarily be amended, more
frequently than once in any financial year, except in respect of any
changes expressly permitted under the terms of any fuel surcharge
formula as may be specified.
(5) The Commission may require a licensee or a generating
company to comply with such procedures as may be specified for
calculating the expected revenues from the tariff and charges which
he or it is permitted to recover.
(6) If any licensee or a generating company recovers a price or
charge exceeding the tariff determined under this section, the
excess amount shall be recoverable by the person who has paid
such price or charge along with interest equivalent to the bank rate
without prejudice to any other liability incurred by the licensee.”
Section 82. (Constitution of State Commission): — (1) Every
State Government shall, within six months from the appointed date,
by notification, constitute for the purposes of this Act, a Commission
for the State to be known as the (name of the State) Electricity
Regulatory Commission:
Provided that the State Electricity Regulatory Commission,
established by a State Government under section 17 of the
Electricity Regulatory Commissions Act, 1998 and the enactments
specified in the Schedule, and functioning as such immediately
before the appointed date, shall be the State Commission for the
purposes of this Act and the Chairperson, Members, Secretary, and
other officers and other employees thereof shall continue to hold
office, on the same terms and conditions on which they were
appointed under those Acts: Provided further that the Chairperson
and other Members of the State Commission appointed, before the
commencement of this Act under the Electricity Regulatory(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (28 of 41) [SAW-742/2023]Commissions Act, 1998 or under the enactments specified in the
Schedule, may on the recommendations of the Selection Committee
constituted under sub-section (1) of Section 85 be allowed to opt for
the terms and conditions under this Act by the concerned State
Government.
(2) The State Commission shall be a body corporate by the name
aforesaid, having perpetual succession and a common seal, with
power to acquire, hold and dispose of property, both movable and
immovable, and to contract and shall, by the said name, sue or be
sued.
(3) The head office of the State Commission shall be at such place
as the State Government may, by notification, specify.
(4) The State Commission shall consist of not more than three
Members, including the Chairperson.
(5) The Chairperson and Members of the State Commission shall be
appointed by the State Government on the recommendation of a
Selection Committee referred to in section 85.
Section 83. (Joint Commission):— (1) Notwithstanding anything
to the contrary contained in section 82, a Joint Commission may be
constituted by an agreement to be entered into –
(a) by two or more Governments of States; or
(b) by the Central Government, in respect of one or more Union
territories, and one or more Governments of States, and shall be in
force for such period and shall be subject to renewal for each
further period, if any, as may be stipulated in the agreement:
Provided that the Joint Commission, constituted under section 21 A
of Electricity Regulatory Commissions Act, 1998 and functioning as
such immediately before the appointed day, shall be the Joint
Commission for the purposes of this Act and the Chairperson,
Members, Secretary and other officers and employees thereof shall
be deemed to have been appointed as such under this Act and they
shall continue to hold office, on the same terms and conditions on
which they were appointed under the Electricity Regulatory
Commissions Act, 1998.
(2) The Joint Commission shall consist of 1 Member from each of
the participating States and Union Territories and the Chairperson
shall be appointed from amongst the Members by consensus, failing
which by rotation.
(3) An agreement under sub-section (1) shall contain provisions as
to the name of the Joint Commission, the manner in which the
participating States may be associated in the selection of the
Chairperson and Members of the Joint Commission, manner of
appointment of Members and appointment of Chairperson by(Downloaded on 10/02/2025 at 09:29:41 PM)
[2025:RJ-JD:7036-DB] (29 of 41) [SAW-742/2023]rotation or consensus, places at which the Commission shall sit,
apportionment among the participating States of the expenditure in
connection with the Joint Commission, manner in which the
differences of opinion between the Joint Commission and the State
Government concerned would be resolved and may also contain
such other supplemental, incidental and consequential provisions
not inconsistent with this Act as may be deemed necessary or
expedient for giving effect to the agreement.
(4) The Joint Commission shall determine tariff in respect of the
participating States or Union Territories separately and
independently.
(5) Notwithstanding anything contained in this section, the Central
Government may, if so authorised by all the participating States,
constitute a Joint Commission and may exercise the powers in
respect of all or any of the matters specified under sub-section (3)
and when so specifically authorized by the participating States.
Section 86. (Functions of State Commission): — (1) The State
Commission shall discharge the following functions, namely :-
(a) determine the tariff for generation, supply, transmission and
wheeling of electricity, wholesale, bulk or retail, as the case may be,
within the State: Provided that where open access has been
permitted to a category of consumers under section 42, the State
Commission shall determine only the wheeling charges and
surcharge thereon, if any, for the said category of consumers; (b)
regulate electricity purchase and procurement process of
distribution licensees including the price at which electricity shall be
procured from the generating companies or licensees or from other
sources through agreements for purchase of power for distribution
and supply within the State; (c) facilitate intra-State transmission
and wheeling of electricity; (d) issue licences to persons seeking to
act as transmission licensees, distribution licensees and electricity
traders with respect to their operations within the State; (e)
promote co-generation and generation of electricity from renewable
sources of energy by providing suitable measures for connectivity
with the grid and sale of electricity to any person, and also specify,
for purchase of electricity from such sources, a percentage of the
total consumption of electricity in the area of a distribution licensee;
(f) adjudicate upon the disputes between the licensees, and
generating companies and to refer any dispute for arbitration; (g)
levy fee for the purposes of this Act; (h) specify State Grid Code
consistent with the Grid Code specified under clause (h) of sub-
section (1) of section 79; (i) specify or enforce standards with
respect to quality, continuity and reliability of service by licensees;
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(j) fix the trading margin in the intra-State trading of electricity, if
considered, necessary; and (k) discharge such other functions as
may be assigned to it under this Act. (2) The State Commission
shall advise the State Government on all or any of the following
matters, namely :- (i) promotion of competition, efficiency and
economy in activities of the electricity industry; (ii) promotion of
investment in electricity industry; (iii) reorganization and
restructuring of electricity industry in the State; (iv) matters
concerning generation, transmission, distribution and trading of
electricity or any other matter referred to the State Commission by
that Government.
(3) The State Commission shall ensure transparency while
exercising its powers and discharging its functions.
(4) In discharge of its functions, the State Commission shall be
guided by the National Electricity Policy, National Electricity Plan and
tariff policy published under section 3.
Section 94. (Powers of Appropriate Commission): —
(1) The Appropriate Commission shall, for the purposes of any
inquiry or proceedings under this Act, have the same powers as are
vested in a civil court under the Code of Civil Procedure, 1908 in
respect of the following matters, namely :-
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) discovery and production of any document or other material
object producible as evidence;
(c) receiving evidence on affidavits;
(d) requisitioning of any public record;
(e) issuing commission for the examination of witnesses;
(f) reviewing its decisions, directions and orders;
(g) any other matter which may be prescribed.
(2) The Appropriate Commission shall have the powers to pass such
interim order in any proceeding, hearing or matter before the
Appropriate Commission, as that Commission may consider
appropriate.
(3) The Appropriate Commission may authorise any person, as it
deems fit, to represent the interest of the consumers in the
proceedings before it.”
21. The Electricity Act, 2003 was enacted to take measures
conducive to development of electricity industry, promoting
competition and protecting the interest of consumers. The
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Preamble to the Electricity Act recites that it intends to ensure
transparent policies regarding subsidies, promotion of efficient and
environmentally benign policies, constitution of Central Electricity
Authority, etc. and the matters connected therewith or incidental
thereto. Clause 4 to section 2 of the Electricity Act defines
“Appropriate Commission” to mean the Central Regulatory
Commission referred to in sub-section (1) of section 76 or the
State Regulatory Commission referred to in section 82 or the Joint
Commission referred to in section 83, as the case may be. The
State Commissions which are constituted under section 82 shall be
a body corporate having perpetual succession and a common seal
with power to acquire, hold or dispose of a property, both movable
and immovable, and to contract and shall, in its name sue or be
sued. Section 95 provides that all proceedings before the
Appropriate Commission shall be deemed to be judicial
proceedings within the meaning of sections 193 and 228 of the
Indian Penal Code and the Appropriate Commission shall be
deemed to be a Civil Court for the purposes of sections 345 and
346 of the Code of Criminal Procedure.
22. Section 62 provides that the Appropriate Government shall
adopt the tariff if such tariff has been determined through
transparent process of bidding in accordance with the guidelines
issued by the Central Government, notwithstanding anything
contained in section 62. This is also quite clear from section 64
that the application for determination of the tariff under 62 shall
be made by a generating company or licensee. Sub-section (2) to
section 62 provides that the Appropriate Commission may require
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a licensee or a generating company to furnish separate details, as
may be specified in respect of generation, transmission and
distribution of tariff. The whole exercise under section 62 for
determination of tariff revolves around the generating company
and the licensee. Under section 86 of the Electricity Act, the State
Commissions discharge several functions including the
determination of tariff for (i) generation, (ii) supply,
(iii) transmission and (iv) billing of electricity. The tariff
determination may be for wholesale, bulk or retail within the
State. This is easily inferred on a glance at the provisions under
part (vii) and (x) that the tariff determination process should
accord with the provisions under sections 62 and 64 of the Act.
The opening words of the section 62 mandates that Appropriate
Commission shall determine the tariff in accordance with the
provisions of the Act. Under section 94, the powers of the
Appropriate Commission are confined to (a) summoning and
enforcing the attendance of any person and examining him on
oath; (b) discovery and production of any document or other
material object producible as evidence; (c) receiving evidence on
affidavits; (d) requisitioning of any public records; (e) issuing
commission for the examination of witnesses; (f) reviewing its
decisions, directions and orders and (g) any other matter which
may be prescribed. This is by now well settled that a statutory
authority draws powers from the written words of the statute and
the RERC cannot go beyond the provisions of the Electricity Act,
2003. Quite apparently, the Appropriate Commission is not vested
with all the powers that a Civil Court can exercise.
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23. This is the primary duty of every Court and Tribunal to
examine its jurisdiction whenever a petition is presented before it
and it is expected that the Court/Tribunal shall give some reason
for exercising its powers and jurisdiction to pass the order. In the
Halsbury’s Laws of England, it is stated that the Courts exist for
the purpose of enforcement and protection of the legal rights and
that is achieved by investing the Courts with authority to take
cognizance of the matters presented before it in a formal way for
their decision (Hailsham Edn. volume 8, page 531, para 1176).
However, all Courts or Tribunals do not possess its authority in the
same manner or extent the jurisdiction of a Court or Tribunal may
be fixed with reference to area or territory or with reference to
persons over whom it can exercise its powers or, of the subject
matter of the dispute. The jurisdiction may again be exercisable as
a Court of first instance, a Court of appeal, a Court of revision or
as a Court of reference and the expressions such as territorial
jurisdiction, pecuniary jurisdiction, civil jurisdiction, criminal
jurisdiction, appellate jurisdiction, etc. are employed to indicate
the character or quality of the jurisdiction which a Court or
Tribunal may be authorized to exercise. This is also a settled legal
position that the statutory body has its limit in the matter of
exercising their power. For example, an individual can do whatever
he likes save and except as are not prohibited under a law but a
statutory body is required to act and/or exercise its powers in
terms of the statute and, therefore, in the event of any order
passed beyond the power and jurisdiction vested under a statute,
such an order would become a nullity and the decision so reached
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is liable to be set aside. In “Shridhar C. Shetty (Deceased)
through L.R.s v. The Additional Collector and Competent Authority
& Ors.“7 the Hon’ble Supreme Court observed that the competent
authority being a creature of the statute under section 2(d) of the
Act could not have been acted beyond its statutory jurisdiction
and the exercise of its power shall remain circumscribed by the
provisions of the Act. The Hon’ble Supreme Court further observed
that even if the aggrieved party had given any undertaking the
same shall not expand the statutory jurisdiction of the authority.
24. This is the stand taken by the appellant-company that the
entire regime in the Implementation Agreement was superseded
giving way to the bidding process and this position is recorded in
paragraph no.24 of the order dated 8 th April 2013 passed by the
Appellate Tribunal for Electricity. The Implementation Agreement
dated 29th May 2006 provided under clause 3.5 (vii) that the Joint
Venture Company would enter into an exclusive and irrevocable
mining contract with the RWPL/its Consortium members for the
development of opening and extraction of Lignite from the mines
and transportation of the Lignite to the power plant on nomination
basis. It further provided that the cost of extraction in this long
term contract on nomination basis would be scrutinized by an
independent person to be appointed by the Government of
Rajasthan and acceptable to the RWPL. The object for
incorporating this clause is provided therein itself to ensure that
the cost of extraction of mineral is independently scrutinized and
determined. Under clause 3.5 (viii), it is provided that the RERC
shall assess the transfer price of the Lignite to be supplied by the
7 (2020) 9 SCC 537
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Mining Entity to the Project as a part of the tariff determination
process and in case the Regulatory Authority revises the transfer
price the cost of extraction shall be revised accordingly to adjust
the transfer price to be acceptable to the Regulatory Authority.
However, this provision under the Implementation Agreement
does not cover the MDO to the extent that the RERC can stretch
its hands to the appellant-company to seek the details of its
mining expenses. In our opinion, the RERC could not have
proceeded against the appellant-company in the manner as
reflected in the orders passed by it on mere asking of the
Discoms. There is absolutely no reason given by the RERC for
passing the impugned directions against the appellant-company.
In “State of U.P v. Synthetics and Chemical“8 the Hon’ble Supreme
Court has observed that a conclusion without reference to relevant
provisions of law is weaker than even casual observation. The
powers of the RERC are well defined and it cannot issue any
direction under the avowed object of protecting the public interest.
25. Furthermore, Article 11 of the Consortium Agreement
contained a confidentiality clause which provides that each party
must treat as confidential or information or documents relating to
the Project or to the business and the financial affairs of the other
parties including, but not limited to information or documents
relating to sales, trade secrets, customers, industrial and
intellectual property, financial and accounting details, employees
and agreements with the suppliers. The following are some
relevant stipulations under the Consortium Agreement :-
“Article 1: Nature of Consortium
8 (1991) 4 SCC 139
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[2025:RJ-JD:7036-DB] (36 of 41) [SAW-742/2023]1.1 JSWEL and SWML hereby become members of an exclusive
Consortium (the “Consortium”) for the purpose of co-operating for
the proper execution of the Project.
…………………………………………………………
Article 3: Scope of Work
3.2 JSWEL as the Lead Member shall:
(i) Coordinate the day to day activities of the Consortium,
(ii) assist the Company in:
(a) executing and monitoring the power plant,
(b) preparing the specifications for procurement of items for the
power plant,
(c) design and detailed engineering, procurement and supply of
equipment for setting up the power plant,
(d) testing and commissioning of the power plant,
(e) financing of the power plant and the mines,
(f) operation and maintenance of the power plant
(g) deputing trained manpower at various levels,
(h) Performing the Company’s obligations.
3.3 SWML as the Second Member of the Consortium shall assist in
the coal/ lignite mining activities Including assisting the Company
in :- (a) executing and monitoring the mining related operations,
(b) preparing the specifications for procurement of items for mining
related operations,
(c) design and detailed engineering, procurement and supply of
equipment for mining related operations,
(d) testing and commissioning of the mine and mining related
operations,
(e) operation and maintenance of mine and mining related
operations,
(f) taking up sub-contracting works wherever required.
……..
Article 11: Confidentiality
11.1 Each Party must treat as confidential all Information or
documents relative to the Project or to the business and the
financial affairs of the other Parties Including but not limited to,
Information or documents relating to sales, trade secrets,
customers, Industrial and Intellectual property, financial and
accounting details, employees and arrangements with suppliers.
26. The writ Court heavily relied on the decision in “Solar
Semiconductor Power Co. (India) (P) Ltd.” 3. However, the reliance
placed by the writ Court on the decision in “Solar Semiconductor
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Power Company India Ltd.”3 was clearly misplaced inasmuch as
the Hon’ble Supreme Court clearly held in paragraph no.34 of the
reported judgment that the inherent power of the Commission is
available to it only to the extent of making such orders as may be
necessary for the ends of justice or to prevent the bias of the
process of the Commission. The Hon’ble Supreme Court further
held that the specified inherent powers are not as pervasive the
powers as available to a Civil Court under section 151 of the Code
of Civil Procedure. The Hon’ble Supreme Court further held in the
said decision that the Commission being a creature of statute
cannot assume to itself any power which is not otherwise
conferred on it. This is an accepted proposition in law that a
judgment should be read as a whole and not in a piecemeal
manner. In “Maktul v. Manbhari“9 the Hon’ble Supreme Court
indicated that the doctrine of stare decisis is not imperative or
inflexible and to what extent it is to be applied must be
determined by the Court in each case. In “Union of India v.
Dhanwanti Devi“10 the Hon’ble Supreme Court observed that
everything said by a Judge while giving judgment does not
constitute a precedent and the only thing in the decision which
binds the parties is the principle upon which the case is decided.
The Hon’ble Supreme Court further observed that the essence of a
decision is its ratio and not every observation found therein nor
what logically follows from the various observations made in the
judgment. Indeed, the enunciation of the reason or principle on
which a question before a court has been decided is alone binding
as a precedent. In “Ambica Quarry Works & Anr. v. State of
9 AIR 1958 SC 918
10 (1996) 6 SCC 44
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Gujarat & Ors.”11, the Hon’ble Supreme Court observed as
under :-
“18. The ratio of any decision must be understood in the
background of the facts of that case. It has been said long time ago
that a case is only an authority for what it actually decides, and not
what logically follows from it.”
27. In “Solar Semiconductor Power Company (India) Private
Ltd.”3 the Hon’ble Supreme Court held that the sanctity of PPA is
not breachable and the inherent powers of the Commission is
available for exercise only in those areas where the Act or Ruels
are silent. In the supplementing judgment, the Hon’ble Judge
observed that the inherent powers of the State Commission are
said to make such orders as may be necessary (i) to secure the
ends of the justice and (ii) to prevent abuse of process of the
Commission. The Hon’ble Supreme Court was dealing with
Regulation 80 of the Gujarat Electricity Regulatory Commission
(Conduct of Business) Regulations, 2004. It was observed that the
inherent powers preserved under Regulation 80 are with respect
to the procedure to be followed by the Commission in dealing with
the cause before it and are not over substantive rights which a
litigant possess. It was further held that the PPA entered into by
the parties by mutual consent cannot be allowed to be breached
by the decision of the State Commission to extend the earlier
control period beyond its expiry date. The decision in “Renew
Wind Energy (Rajkot) Private Limited” 4 is also not germane to the
issue of the jurisdiction of the RERC. In that case, the State
Commission had determined the tariff for procurement of power
11 (1987) 1 SCC 213
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[2025:RJ-JD:7036-DB] (39 of 41) [SAW-742/2023]
by distribution licensee from wind energy generators and also
ruled on other commercial issues for wind energy generators set
up under a preferential tariff mechanism. The main argument
raised on behalf of the “Gujarat Urja Vikas Nigam Limited” was
that the State Commission has no jurisdiction to decide the tariff
contrary to the agreement. The Hon’ble Supreme Court held that
the agreements voluntarily entered into by the parties before the
second amendment were not affected by its terms. In “Tarini
Infranstructure Ltd. & Ors.”2 the issue which fell for consideration
was whether the tariff fixed under a power purchased agreement
is sacrosanct and inviolable and beyond review and correction by
the State Electricity Regulatory Commission. These decisions were
rendered in different fact-situation and do not even indicate that
the RERC can go on to issue notices/summons to anyone and
everyone who is even remotely concerned with the mining
operations; such as a labourer also.
28. Just for the sake of fullness, we would observe that the
appellant-company was not a party in the proceeding before the
RERC and no matter that it did not respond to the notice issued to
it or made some excuse for not appearing in the proceeding before
the RERC, without impleading it as a party in the proceeding no
direction could have been issued to the appellant-company. The
rules of natural justice are not codified and these rules are not
rigid norms of unchanging content. In “Russel v. Duke of Norfolk
& Ors.”12 observed that “there are in my view, no words which are
of universal application to every kind of enquiry and every kind of
domestic tribunal”. The requirement of natural justice depends on
12 1949 1 All ER 109 Tucker, L.J.
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[2025:RJ-JD:7036-DB] (40 of 41) [SAW-742/2023]
the circumstances of the case, the nature of the inquiry, the rules
under which the Tribunal is acting and the subject-matter that is
being dealt with. In “Swadeshi Cotton Mills v. Union of India“13 the
Hon’ble Supreme Court observed that the phrase “natural justice”
is not capable of a static and precise definition and it cannot be
imprisoned in the straitjacket of a cast-iron formulae. The Hon’ble
Supreme Court held as under :-
“106. The principles of natural justice have taken deep root in the
judicial conscience of our people, nurtured by Dr Bina Pani [AIR
1967 1269 : (1967) 2 SCR 625], Kraipak [(1969) 2 SCC 262 :
(1970) 1 SCR 457], Mohinder Singh Gill [(1978) 1 SCC 405 : (1978)
2 SCR 272], Maneka Gandhi [1964 AC 40 : (1963) 2 All ER 66
(HL)]. They are now considered so fundamental as to be “implicit in
the concept of ordered liberty and, therefore, implicit in every
decision-making function, call it judicial, quasi-judicial or
administrative. Where authority functions under a statute and the
statute provides for the observance of the principles of natural
justice in a particular manner, natural justice will have to be
observed in that manner and in no other. No wider right than that
provided by statute can be claimed nor can the right be narrowed.
Where the statute is silent about the observance of the principles of
natural justice, such statutory silence is taken to imply compliance
with the principles of natural justice. The implication of natural
justice being presumptive it may be excluded by express words of
statute or by necessary intendment. Where the conflict is between
the public interest and the private interest, the presumption must
necessarily be weak and may, therefore, be readily displaced. The
presumption is also weak where what are involved are mere
property rights. In cases of urgency, particularly where the public
interest is involved, pre-emptive action may be a strategic
necessity. There may then be no question of observing natural
justice. Even in cases of pre-emptive action, if the statute so
provides or if the courts so deem fit in appropriate cases, a
postponed hearing may be substituted for natural justice. Where
natural justice is implied, the extent of the implication and the
nature of the hearing must vary with the statute, the subject and
the situation. Seeming judicial ambivalence on the question of the
applicability of the principles of natural justice is generally traceable
13 (1981) 1 SCC 664
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to the readiness of Judges to apply the principles of natural justice
where no question of the public interest is involved, particularly
where rights and interests other than property rights and vested
interests are involved and the reluctance of Judges to apply the
principles of natural justice where there is suspicion of public
mischief, and only property rights and vested interests are
involved.”
29. Adherence to the rules of natural justice is necessary not
only to secure justice but to prevent mis-carriage of justice. In
“M/s Sahara India (Firm), Lucknow v. Commissioner of Income
Tax, Central-I & Anr.“14 the Hon’ble Supreme Court observed that
even where there is no requirement under the statue for providing
hearing before passing an order which entails civil and evil
consequences the authority is under a duty to afford opportunity
of hearing. In the present case, the RERC committed serious
procedural errors and without reflecting on its own jurisdiction has
passed the impugned orders which are liable to be quashed.
30. For the foregoing reasons, D.B. Special Appeal Writ No.742
of 2023 is allowed and order dated 31 st August 2023 passed by
the writ Court is set aside. As a consequence thereof, the orders
under challenge before the writ Court are quashed and the writ
petition filed by the appellant-company stands allowed.
(CHANDRA SHEKHAR SHARMA),J (SHREE CHANDRASHEKHAR),J
1-Arjun/-
Whether fit for reporting : Yes/No
14 (2008) 14 SCC 151
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