ORDER
D.S.R. Varma, J.
1.The petitioner seeks a declaration that the action of the respondents 1 and 2 in abruptly stopping the evacuation of the power generated by the petitioner-company pursuant to the letter dated 17.3.2003, as without authority of law, contrary to the terms of the power purchaser agreement and directives of the A.P. Regulatory Commission and illegal and consequently seeks a direction to the respondents to evacuate the entire power generated by the petitioner-company forthwith and pay the bills.
2. The backdrop that lead to the present litigation is that the petitioner is a registered company. Initially the petitioner wanted to establish a sugar factory at Nalavoy Village in Chittoor District and accordingly obtained necessary permissions from the Government of India and started erection of the sugar factory. With a view to utilize the bagasse (agro-waste), which is the by-product of the sugar factory, the petitioner wanted to establish the power project with bagasse as fuel.
3. The petitioner approached the Non-Conventional Energy Development Corporation of Andhra Pradesh Limited (for short hereinafter referred to as 'NEDCAP') with a proposal to set up 20 MW bagasse based power plant. It is not in dispute that the NEDCAP is the delegated authority for granting approval for setting up of power plant up to 20 MW capacity. Considering the application of the petitioner, the NEDCAP granted approval. Consequently the petitioner entered into a Memorandum of Understanding (for short 'MOU') with NEDCAP on 29.4.2000 as contemplated, for establishment of the power plant subject to certain terms and conditions. Initially the petitioner was permitted to set up power plant on or before 15.12.2002. It appears that the petitioner obtained necessary approval for setting up of the plant and obtained loan assistance from IREDA. The petitioner contemplated to start operation of sugar plant during the year 2002-2003 crushing season. But the same could not be achieved because of some delay in import of equipment from the foreign countries and consequently sugar plant could not be commissioned as expected. But however the power plant, which was established at a cost of Rs. 61 crores became operational within the time allowed by the NEDCAP. To manage the power plant, bagasse is the basic and essential ingredient. Petitioner appears to have already entered into agreements with the cane growers for supply of cane to the petitioner's contemplated sugar factory and in order to fulfil the said contractual obligations with the cane growers, diverted the already purchased cane to the other sugar factories and the bagasse emerged from out of it, was utilized for the purpose of operating the power plant already established, pending commissioning of the sugar plant.
4. The Government of India issued certain guidelines regarding the promotional and fiscal incentives to be given to the State Governments for power generation from Non-Conventional Energy Sources. In a suo motu proceedings in O.P. No. 1075 of 2000 dated 20.6.2001, the A.P. Electricity Regulatory Commission, Hyderabad (for short 'the Commission'), which is constituted under the A.P. Electricity Reforms Act, 1998 (for short 'the Reforms Act'), passed orders directing all the generating stations from Non-Conventional Energy Sources, to supply power to the 1st respondent-A.P. TRANSCO only for a specified price, particularly prohibiting the sale of the power so generated to third parties. Therefore, having regard to the said directions of the Commission and in view of the conditions of the Power Purchase Agreement (for short 'PPA'), the power generated by the petitioner was being pumped to the State grid only.
5. It is also not in dispute that part of the non-conventional power so generated by the petitioner shall have to be utilized by the sugar plant during crushing season, which was originally contemplated to come into operation during the year 2002-2003 and the remaining has to be pumped to the grid and as such the power plant has to be treated as co-generation unit. Similarly during the un-season of the sugar factory, more power was permitted to be supplied to the grid. In this regard, the petitioner approached the Commission for utilizing the power generated by the power plant for captive consumption. The same has been acceded to by the Commission by order dated 25.1.2002. Petitioner also entered into PPA with the 1st respondent on 10.7.2002, wherein it was agreed by the 1st respondent to purchase 9.99 MW to export to the grid during the season and 16.94 MW during the off season. Petitioner had commissioned the power plant within the stipulated/extended time set by the NEDCAP. The 1st respondent through its letter dated 11.1.2003 also granted permission to synchronize the power plant to the grid to purchase such energy. Initially the commissioning of the plant and export to the grid started with effect from 13.1.2003.
6. As the sugar factory could not be commissioned within the expected period, the petitioner addressed a letter dated 24.2.2003 requesting the 1st respondent to purchase the unutilized power also. Since there was no response, the petitioner approached the Commission, seeking permission to export the whole of the energy generated by the petitioner to the grid. Consequently the Commission directed the 1st respondent to amend the PPA by providing for purchase of surplus/additional power generated by the petitioner company. The said letter is on record. Despite the said direction of the Commission, and the fact that the 1st respondent started purchasing the power from 13.1.2003, it has not been paying the monthly bills raised by the petitioner in terms of PPA. In the meanwhile the 2nd respondent - Chief Engineer addressed a letter dated 17.3.2003 stating that as per PPA, the petitioner was a co-generation plant with captive consumption for its processing plant and inasmuch as the sugar plant was yet to be commissioned, the power plant cannot be treated and classified as co-generation plant and a decision was also taken not to allow the petitioner to pump energy into the grid. Pursuant to the said letter, the 1st respondent stopped the evacuation of power generated by the petitioner with effect from 18.3.2003 and as a result of which there was no other option to the petitioner, but to shut down its power plant from the said date. Hence the writ petition.
7. The learned Counsel for the petitioner Sri B. Adinarayana Rao firstly contended that abruptly stopping of the evacuation of the power generated by the petitioner is irrational, arbitrary, contrary to the principles of natural justice and contrary to the terms of the PPA. It is his further contention that the 1st respondent had no unilateral power to stop evacuation of the power generated by the petitioner company, having entered into an agreement with the approval of the Commission, Secondly he contended that the respondents instead of obeying the directions of the Commission, issued the impugned letter dated 17.3.2002 refusing to evacuate the power generated by the petitioner and the same is contrary to Section 15(4)(b) of the Reforms Act. Thirdly he contended that the 1st respondent is in gross error in not classifying the petitioner as co-generating unit on the sole ground that the sugar factory was not commissioned. Accordingly to the learned Counsel, such illegal classification is not within the jurisdiction of the 1st respondent and the same is contrary to the PPA and violative of the terms of the agreement. Fourthly he contended that, in compliance with the Reforms Act, the Commission had accorded consent for entering into PPA under Section 21(4) of the Reforms Act. Therefore, he contended that the impugned letter dated 17.3.2003 is illegal and liable to be set aside.
8. On the other hand the learned Senior Counsel Sri N.Subba Reddy appearing for the respondents contended that the petitioner cannot be classified as a co-generation plant till the sugar plant is commissioned and since the petitioner failed to commission the sugar plant, the petitioner is not entitled to export energy to the grid. In other words, the case of the respondents is that since the petitioner is not a co-generation power plant, the petitioner is not entitled to evacuate the power by operating the power plant. The further contention of the learned Senior Counsel is that when it was alleged by the petitioner that there are violations of the PPA, the petitioner is entitled to seek the specific performance of the agreement and claim damages available under law, by giving 30 days notice to the 1st respondent as per Article 9 of PPA. Hence he contended that the only course open to the petitioner is to file a suit for specific performance of the contract by giving 30 days notice to the 1st respondent and the writ petition under Article 226 of the Constitution of India is not maintainable.
9. The learned Senior Counsel for the respondents further submitted that it is the NEDCAP that initially gave the approval for the installation of the co-generation power plant. He further submitted that by order dated 8.4.2003, the NEDCAP cancelled the permission granted to the petitioner and, therefore, the same is proper and necessary party and inasmuch as the NEDCAP is not made a party, the writ petition is not maintainable for non-impleadment of necessary party.
10. In support of his contentions, he relied on the judgment of the Apex Court reported in State of Bihar v. Jain Plastics and Chemicals Ltd, : AIR2002SC206 , and a Division Bench judgment of this Court in E.B. Veera Raghavaiah v. Mohd. Imthiazuddin, : 1997(2)ALT327 .
11. While repelling the above contentions of the learned Senior Counsel for the respondents, the Counsel for the petitioner submitted that by virtue of the prohibition imposed by Commission in its order dated 20.6.2001 in O.P. No. 1074/2000, the petitioner cannot supply the energy generated to third parties. Further the price also is fixed by the Commission at Rs. 2.25 ps. per unit with 5 per cent escalation per annum with 1994-95 as the base year. It is further submitted that the existence of an alternative remedy is not a bar to entertain the writ petition and in support of his contention, he relied on the judgments of the Apex Court in Union of India v. Graphic Industries Co., : AIR1995SC409 , Whirlpool Corporation v. Registrar of Trade Marks, : AIR1999SC22 , Chairman, Railway Board v. Chandrima Das, : 2000CriLJ1473 , Shashi Gaur v. NCT of Delhi, : (2001)10SCC445 and Harbanslal Sahnia v. Indian Oil Corporation Ltd., : AIR2003SC2120 .
12. In view of the above contentions, the following issues would fall for my consideration:
1. Whether the 1st respondent is right in not classifying the petitioner as a co-generation plant on the sole ground that the sugar factory was not commissioned ?
2. Whether the directions of the Commission and the resultant PPA and the conditions therein are binding on the 1st respondent ?
3. And if binding and in case of breach, what is the remedy available to the petitioner ?
4. Whether NEDCAP is a necessary party?
13. Issue No. 1: The petitioner approached the NEDCAP, which is the delegated authority for granting approval for setting up of a power plant up to 20 MW capacity. In fact NEDCAP was identified as a single window agency through G.O. Ms. No. 253 Energy and Forests (RES) Department dated 15.11.1994. The relevant portion at paragraph Nos.1 and 4 of the G.O. is extracted as under for ready reference:
'The Government of India have conveyed approval of pilot programmes through various bio-energy technologies, such as bio-mass gasifiers, urban and industrial waste utilization, bagassee based co-generation, etc., for promotion of bio-mass combustion based power generation technologies. The Government of India have identified these projects as Non-Conventional Energy Sources.
4. Government, after careful consideration of the matter, hereby order that the NEDCAP should act as a 'Single Window Agency' for obtaining all clearances from the Departments concerned for developing the bio-energy technology projects, such as bio-mass gasifiers, urban and industrial waste utilization, bagassee based co-generation and other projects, which come under the definition of Non-Conventional Energy Sources and assist the private developers in these sectors in A.P., besides wind farm projects....
14. From the above it is clear that the NEDCAP has to act as an agency for obtaining all the clearances from all the departments concerned for development of bio-technology projects of different firms. Bagasse based co-generation is also one among them. In fact in the first paragraph of the G.O. itself it was stated that bagasse based co-generation was identified as Non-Conventional Energy Source. Accordingly, on an application made by the petitioner, NEDCAP accorded sanction to the petitioner through proceedings dated 7.4.2000, to set up 20 MW capacity co-generation project with a specific condition that the petitioner should use only the bagasse, cane trash, bio-gas and conventional fuel like coal etc., for power generation.
15. From the said proceedings it further appears that the petitioner requested only for approval to set up 20 MW capacity bagasse based co-generation plant. But it is clear from a reading of the said proceedings, that nowhere any mention was made about the installation of sugar factory as a condition precedent while seeking or granting permission to install bagasse based co-generation plant. Therefore, it is clear that NEDCAP had accorded sanction for installation of bagasse based co-generation plant, irrespective of the installation of sugar factory.
16. As requested by the NEDCAP through proceedings dated 7.4.2000, the petitioner entered into MOU. Some terms and conditions in M.O.U., at 1, 4, 5, 6, 7 and 9 which are relevant, are extracted as under for ready reference:
1. The Company shall promote to establish the Co-Generation Power Plant with the guidelines issued by the Government of India and Government of Andhra Pradesh.
4. The company shall take necessary action that is required for procurement of Bagasse for uninterrupted supply of running of Co-generation Plant.
5. The Company shall abide by the regulations of the Andhra Pradesh Electricity Regulatory Commission (APERC). The proceedings issued by APERC shall be followed. The Company shall enter into Power Purchase Agreement (PPA) or Power Purchase and Wheeling Agreement (in case of captive consumption) with AP TRANSCO. The Company shall approach APERC for obtaining licence/exemption from obtaining licence.
6. The company shall comply with the provisions of the Electricity (Supply) Act, 1948.
7. The Company shall pay Rs. 15,11,052/- as service charges to NEDCAP @ 0.25 % on the project cost of Rs. 6,044.21 lakhs, before entering into MOU.
9. The Company shall execute the project within 15 months from the date of MOU entered and generation of power should be made by 7.7.2001. For every quarter the progress report on implementation to be submitted to NEDCAP, . . .
17. Consequent to the entering of the above MOU, the power generation had actually started with effect from 13.1.2003. The Commission constituted under Reforms Act, having examined the application made by the petitioner under Section 44 of the Electricity Supply Act read with Section 21 (3) of the Reforms Act, consented for the installation of the captive power plant sets as standby for the initial start up power supply of the bagasse based co-generation plant, through order dated 25.1.2002 in O.P. No. 372/2001, subject to certain terms and conditions. Some of the excerpts of the said order at paragraphs 2, 4, 6 and 11, which are relevant, are extracted as follows for ready reference:
2. The applicant intends to set up a sugar manufacturing unit along with a co-generation plant.
4. The applicant proposed to install 1 x 25500 KVA (20 MW) Bagasse based co-generation plant to run in parallel with the grid of the licensee and 2 x 725 KVA.DG sets for use on a standby basis and to provide starting power supply to the Bagasse based co-generation plant.
6. The applicant stated that though they proposed to set up Bagasse based co-generation plant of 20 MW for captive use, they are only generating 15 MW in the season and 20 MW during off season. Out of the above capacity generated from the plant they intend to utilize 5.01 MW of power during the season and 3.06 MW of power during the off season for their own consumption. The balance of energy that is 9.99 MW and 16.94 MW of power respectively will be sold to M/s Transmission Corporation of Andhra Pradesh.
11. After examining the application in the light of the Practice Directions (REV-I) APERC No. 7 dated 20.2.2001 issued by the Commission, the Commission hereby consents for installation of Captive Power Plant 2 x 725 KVA. DG sets as standby for the initial start up power supply of the Bagasse based co-generation plant of 20 MW and in emergency and also consents for captive consumption of up to 5.01 MW of power from the Bagasse based co-generation plant of 20 MW, subject to following terms and conditions
18. From the above said proceedings it appears that the petitioner made the application expressing his intention to set up sugar manufacturing unit along with the co-generation plant. But it is clear from a reading of the entire proceedings that nowhere the Commission consented to install co-generation plant, subject to the condition of installing sugar plant simultaneously in a time frame. It is also clear that only the 'intention' to install the sugar plant along with co-generation plant was taken note of. Precisely for the said reason, installation of co-generation power plant of 20 MW was consented and also consented for captive consumption of power up to 5.01 MW. It is further clear that the Commission had also taken note of the statement of the petitioner that only 15 MW in season and 20 MW during off season could be generated and out of the said capacity, it was made clear by the petitioner that it would utilize only 5.01 MW power during season and 3.06 MW during off season for its consumption. The balance power of 9.99 MW and 16.94 MW respectively would be sold to the 1st respondent.
19. From the above it is also clear that primacy was given only to the installation of co-generation plant, but not the installation of sugar plant. In other words, again installation of sugar plant was not treated as a condition precedent for the installation of co-generation plant. Taking the overall circumstances, including the aspect relating to the intention of the petitioner to install sugar plant and also the approval granted by the NEDCAP and the MOU thereof entered into by the petitioner, the Commission granted permission to install co-generation plant. Further course of action was also permitted by the 1st respondent through letter dated 11.1.2003.
20. It is further on record that the petitioner made an application to the Commission, representing that the petitioner could not commission the sugar plant as scheduled, though the installed co-generation power plant was commissioned. It appears that the petitioner further stated that they are able to generate more power and offered to supply entire generated power to the grid as they were not able to use the power for captive consumption and further requested the Commission that the period upto April, 2003 may be treated as off season and sought permission to export the entire power generated to the grid through letter dated 24.2.2003. Upon such representation, the Commission after due consideration, through proceedings dated 17.3.2003 directed the 1st respondent to amend the PPA accordingly by providing for purchase of surplus/additional quantity of power and reduction of captive consumption by the petitioner in case of exigencies or otherwise, with a further direction to send the suitably amended agreement to the Commission for record. The Commission had further directed the 1st respondent that the above provision be incorporated in all captive consumption agreements already entered or to be entered into with non-conventional energy developers.
21. From the above it is clear that the Commission had taken into account the practical difficulty represented by the petitioner and directed the Transco to amend not only the PPA between the petitioner and the Transco, but also all other agreements already entered into or to be entered into in cases of similar nature. A perusal, of the said letter dated 17.3.2003, appears to have been signed on 15.3.2003 and received on 19.3.2003.
22. Perhaps the request made by the petitioner to evacuate the entire power in view of the delay in installation of the sugar unit, had ignited the present controversy.
23. In the impugned letter dated 17.3.2003 addressed by the Chief Engineer to the Superintending Engineer, Cuddapah it is to be noted that the 1st respondent came to know from the letter addressed by the petitioner dated 24.2.2003 that the installation of the sugar plant was not yet completed due to delay in import of the necessary equipment from the Germany. It is recorded in the said letter that 'the Company obtained permission for commercial operation of the power plant, without indicating that the Sugar Plant is yet to be commissioned. The power plant cannot be classified as 'Co-generation ' till the sugar plant is commissioned'. Ultimately through said letter the Chief Engineer addressed the Superintending Engineer to stop the evacuation of power from the petitioner's power plant. It was further indicated in the said letter that the Superintending Engineer shall inform the 1st respondent about completion of sugar plant, for obtaining permission for commercial operation.
24. From the said letter, the obvious view of the respondents is that bagasse based co-generation plant is necessarily connected with captive consumption. In other words, the comprehension of the 1st respondent appears to be that the sugar plant must be installed first, as a condition precedent, to bring the bagasse based co-generation plant into operation and to allow the additional power generated to be pumped to the grid; or at least both the plants must be started simultaneously. To put it in a different way, the understanding of the 1st respondent appears to be that the terms and conditions of the PPA would become operational only when the sugar plant is installed and the power generated must be utilized both as captive consumption and also as co-generation.
25. In this context, it is essential to look into the Gazetted resolution of the Government of India dated 6.11.1996, which deals with the promotion of co- generation power plant. In the said resolution it is noted that urgent need has been recognized, to open an alternative route to augment the industrial growth and also the power generation. Further through the said resolution, the State Governments were requested to give high priority to set up captive power plants in their States and also encourage absorption of available surplus power to be generated from captive power plant into the State grid at a remunerative tariff. With the combined objectives of promoting better utilization of precious energy resources in the industrial activities and creation of additional power generation capacity in the system, encouragement to co-generation plants in the country was suggested through the said resolution. The original language employed in the said resolution dated 6.11.1996 is as follows:
'Accordingly the State Governments were requested to accord high priority to setting up of captive plants in their States and also encourage absorption of the available surplus power, to be generated in a captive power plant, in the State grid at a remunerative tariff.'
26. For better appreciation it is necessaly to extract the definition of co-generation and the objectives of the policy in the resolution dated 6.11.1996 as under:
'2. Definition of co-generation
2.1 A co-generation facility is defined as one which simultaneously produces two or moreforms of useful energy such as electric power and steam, electric power and shaft (mechanical) power etc. Co-generation facilities, due to their ability to utilize the available energy in more than one form, use significantly less fuel input to produce electricity, steam, shaft power or other forms of energy than would be needed to produce them separately. Thus by achieving higher efficiency, co-generation facilities can make a significant contribution to energy conservation.
3. Objectives of the policy.
3.1 As electricity and heat are fundamental inputs to most of the industrial activities the present policy strives to achieve the dual objectives of achieving higher efficiency in fuel use in the industry as well as the availability of surplus electricity to the State grid, by combining power and heat generation for industrial use.
27. From a combined reading of the above excerpts, the object of the resolution-dated 6.11.1996 of the Government of India is very clear. It focuses not only on the priority to be given to the captive consumption, but also to encourage absorption of available surplus power after captive utilization ,of the industrial plants. Absorption to the State grid was overwhelmingly recognized and encouraged.
28. Therefore, in my view, the objection of the 1st respondent regarding non-setting up of sugar plant and the resultant rejection to take additional power to the grid, is contrary to the very spirit of the above Gazetted resolution of Government of India dated 6.11.1996. Further when the state is reeling under acute power shortage because of various reasons mainly because of vagaries of nature, it is always desirable for all the authorities concerned, particularly the 1st respondent to accept the power supplied by the statutorily recognized source. It is rather unfair on the part of the 1st respondent in stifling the power supply to the State grid through a recognized source, by not giving plausible, rational and contemporaneous interpretation to the agreements and directions, keeping in view the resolution issued by the Government of India and thereby making electric power management more rigid, inflexible and hypertechnical. The reading and application of rules or any statutory provisions or the guidelines should subserve, but not subvert the cause and need of the general public. After all the cost has to be born by the consumer, who is the ultimate beneficiary.
29. Hence, in my considered view, the attitude on the part of the respondents is wholly unreasonable and unfair not only towards the petitioner, but also to the general public.
30. As already noticed and recorded, the NEDCAP gave the approval for the co-generation plant without establishment of sugar plant as a condition precedent. The Commission also having considered the application of the petitioner, by order dated 25.1.2002 in O.P.No.372/2001 gave the statutory consent, having taken note of only the intention of the applicant to set up sugar manufacturing unit. The Commission also never made the installation of sugar plant a condition precedent for the approval of co-generation power plant.
31. In this background the action of the respondents in not classifying the petitioner as a co-generation plant on the sole ground that the sugar factory was not commissioned, is not proper and hence the action is liable to be declared as unreasonable, irrational and arbitrary.
32. Accordingly the Issue No. 1 is answered in favour of the petitioner.
33. Issue No. 2: In order to appreciate this issue that whether the directions of the Commission and the resultant PPA and the conditions therein are binding on the 1st respondent, it is necessary to look into the provisions of the Act.
34. Section 21 of the Reforms Act deals with the restrictions on licensees and generating companies. The said provision is extracted as under for ready reference;
(1) No licensee or Generating company shall at any time, without the previous consent in writing of the Commission, acquire by purchase or otherwise the licence or the undertaking of, or associate himself with, so far as the business of generating, transmitting, distribution or supply of energy is concerned, any other licensee or person generating, transmitting, supplying or intending to generate, transmit or supply electricity:
Provided that before granting the consent the commission shall hear such person or authority as the Commission shall consider appropriate.
(2) The licensee shall not, at any time, assign his licence or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Commission.
(3) The provisions of Section 44 of the Electricity (Supply) Act, 1948 shall apply except that the person to whom the section applies shall be required to obtain the sanctions and consents from the Commission, instead of such sanctions and consents to be obtained from the Board as provided under that Section.
(4) A holder of a supply or transmission licence may, unless expressly, prohibited by the terms of its licence, enter into agreements for the purchase of electricity form:
(a) the holder of a supply licence which permits the holder of such licence to supply energy to other licensees for distribution by them; and
(b) any person or Generating Company with the consent of the Commission.
(5) Any agreement relating to any transaction of the nature described in subsections (1), (2), (3), or (4) unless made with or subject to such consent as aforesaid, shall be void.
35. Clause (b) of Sub-section (4) of Section 21 of the Reforms Act postulates that the licensee - TRANSCO may enter into agreement for the purchase of electricity from a generating company, only with the consent of the Commission and subsection (5) further mandates that any agreement without such consent as mentioned in the other sub-sections, shall be void.
36. It is to be further noted that the PPA entered into between the petitioner and the 1st respondent is pursuant to the consent accorded by the Commission in order dated 25.1.2002 in O.P.No.372/2001 and also having regard to the nod of approval by the NEDCAP through letter dated 7.4.2000. Of course the said agreement is again subject to certain terms and conditions. It is made clear in the PPA dated 10.7.2002 at Condition No. 5 itself and the same condition is extracted as under for better appreciation:
'This agreement is enforceable subject to obtaining consent of Andhra Pradesh Electricity Regulatory Commission as per Section 21 of Andhra Pradesh Electricity Reforms Act, 1998 (Act No. 30 of 1998).'
37. Now it is to be seen that the very same Commission, which is the statutory authority under the Reforms Act, having considered the difficulty expressed by the petitioner though letter dated 24.2.2003, and particularly note of non-commissioning of the sugar plant as scheduled, directed the 1st respondent to amend the PPA accordingly, through proceedings dated 17.3.2003. For convenience and ready reference, the directions of the Commission at paragraph No. 2 of the proceedings dated 17.3.2003 are extracted below:
'Commission after due consideration of the request of the developer, directs AP TRANSCO to amend the Power Purchase Agreement accordingly by providing for purchase of surplus/additional quantity of power and reduction of Captive Consumptionby the company in case of exigencies or otherwise. Copy of amended Agreement be sent to the Commission for record.'
38. As already noticed, the Commission in fact directed the 1st respondent to incorporate the above provision in all the copies of consumption agreements that are already entered or to be entered into in future with non-conventional energy developers like the petitioner.
39. It is clear from the above position that both the Commission and the 1st respondent are well aware of their respective statutory rights and duties. In other words, the 1st respondent had the knowledge that the PPA was entered into only pursuant to the sanction given by the Commission under Section 21(4)(b) of the Reforms Act. In such a case, the agreement that is entered into between the petitioner and the 1st respondent should be understood as consequential to the statutory power exercised by the Commission.
40. Therefore, it is clear that the directions of the Commission, which is constituted under a statutory authority and the terms and conditions in the power purchase agreement, which were entered into pursuant to the directions of the Commission, are binding on the 1st respondent.
41. Accordingly the Issue No. 2 is answered in favour of the petitioner.
42. Issue No. 3: Here the contention of the learned Counsel for the respondents is that as per Article 9 of the PPA, the petitioner has to file a suit for specific performance and claim damages, if there is any breach of the terms and conditions of the PPA. He further contended that when there is an alternative remedy available, the petitioner cannot approach this Court under Article 226 of the Constitution of India. In support of this contention, the learned Senior Counsel relied on the judgment of the Apex Court inState of Bihar v. Jain Plastics and Chemicals Ltd. (supra), wherein it was held at paragraph No. 3 that:
'A writ is not the remedy for enforcing contractual obligations. A writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the Court of competent jurisdiction for appropriate relief for breach of contract. When an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the Court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226.'
43. From the above it could be seen that the Apex Court never intended to totally bar the High Court from exercising judicial review under Article 226 of the Constitution of India in contractual matters. From the above it could be understood, that in appropriate cases, notwithstanding the availability of the alternative remedy, the discretionary jurisdiction under Article 226 of the Constitution of India can be exercised. Therefore, this decision is not of complete help to the contention of the learned Counsel for the respondents.
44. The facts of the case in Union of India v. Graphic Industries Co. (supra) reveal that the respondents therein approached the High Court aggrieved by the action of the Eastern Railways in not paying certain amount for the goods supplied by them. The Division Bench on appeal directed the Railway authorities to make payment. Aggrieved by the said direction, the Union of Indian filed an appeal to the Supreme Court. One of the contentions of the Union of India before the Supreme Court was that since the matter being purely in the realm of contract, the public law remedy of seeking mandamus by approaching under Article 226 was not available de hors the terms of the agreement which included an arbitration clause. The Apex Court did not agree with the submission of the appellant-Union of India and recorded a finding that the Appellants acted unfairly in withholding the payments to the respondents. The Apex Court referring to its earlier judgment reported in Kumari Shrilekha Vidyarthi v. State of U.P., : AIR1991SC537 , held that in contractual matters the public authorities have to act fairly and if they fail to do so, approaching the High Court under Article 226 of the Constitution of India would always be permissible, because the acts of unfairness amounts to violation of Article 14 of the Constitution of India.
45. Further the Apex Court in Whirlpool Corporation v Registrar of Trade Marks, (supra) held that existence of an alternative statutory remedy is not a constitutional bar to High Court's jurisdiction, but is only a self-imposed restriction. In the said judgment, the Apex Court held that the existence of an alternative remedy would not operate as a bar in at least three contingences viz., (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is violation of principles of natural justice; or (iii) where the order or the proceedings are wholly without jurisdiction or the vires of an act is challenged.
46. The facts of the case in the decision of the Apex Court in Chairman, Railway Board v. Chandrima Das, (supra) reveal that a lady was subjected to rape by the railway employees and the question that arose for consideration was whether compensation can be awarded by the High Court exercising the power of judicial review under Article 226 of the Constitution of India. In those set of facts, the Apex Court held that compensation can be awarded under writ jurisdiction irrespective of availability of alternative remedy. While coming to the above conclusion, the Apex Court had taken into account the observations in the earlier judgment of the Apex Court in Common Cause, A Regd. Society v. Union of India, : [1999]3SCR1279 . The relevant observations at paragraph No. 40 of the judgment are re- extracted as under for ready reference:
'... The exercise of constitutional powers by the High Court and the Supreme Court under Articles 226 and 32 has been categorised as power of 'judicial review'. Every executive or administrative action of the State or other statutory or public bodies is open to judicial scrutiny and the High Court or the Supreme Court can, in exercise of the power of judicial review under the Constitution, quash the executive action or decision which is contrary to law or is violative of fundamental rights guaranteed by the Constitution. With the expanding horizon of Article 14 read with other articles dealing with fundamental rights, every executive action of the Government or other public bodies, including instrumentalities of the Government, or those which can be legally treated as 'Authority' within the meaning of Article 12, if arbitrary, unreasonable or contrary to law, is now amenable to the writ jurisdiction of this Court under Article 32 or the High Courts under Article 226 and can be validly scrutinised on the touchstone of the constitutional mandates.
47. The Apex Court in the above case i.e., in Chairman, Railway Board v. Chandrima Das case (supra) ultimately held at paragraph No. 11 as under:
'Having regard to what has been stated above, the contention that Smt. Hanuffa Khatoon should have approached the Civil Court for damages and the matter should not have been considered in a petition under Article 226 of the Constitution, cannot be accepted. Where public functionaries are involved and the matter relates to the violation of the fundamental rights or the enforcement of public duties, the remedy would still be available under the public law notwithstanding that a suit could be filed for damages under private law.'
48. To the same effect are the decisions of the Apex Court in Shashi Gaur v. NCT of Delhi, (supra) and Harbanslal Sahnia v. Indian Oil Corporation Ltd. (supra).
49. From the above decisions the principle that emerges as regards the judicial review in matters of contractual obligation, is that where there is unfairness or unreasonableness, violation of fundamental rights and principles of natural justice and where there is apparent illegality, the High Court has the jurisdiction to interfere by invoking its discretionary and extraordinary jurisdiction under Article 226 of the Constitution of India, despite the availability of alternative remedy.
50. Now it is necessary to extract Article 9 of PPA on which the learned Senior Counsel for the respondents placed heavy reliance in support of his contention that the petitioner has to avail the alternative remedy:
(9.1) In the event, AP TRANSCO commits a breach of any of the terms of this agreement, the Company shall be entitled to specific performance of this Agreement or claim such damages as would be available under Law or both, at its option, by giving 30 days notice to AP TRANSCO.
(9.2) In the event, Company commits a breach of any of the terms of this Agreement, the AP TRANSCO shall be entitled to specific performance of this Agreement or claim such damages as would be available under Law or both, at its opinion, by giving 30 days notice to Company.
(9.3) If the default continues for a period of 30 days or more, either party will have a right to issue a preliminary notice for termination of this Agreement. If the default is not cured within 30 days thereafter, either party can terminate this Agreement and can claim damages as its option.
51. From the above Article 9 of PPA it is clear that both the parties have the right to approach the competent Civil Court seeking specific performance and damages by giving 30 days notice to either party in case of breach of the terms and conditions of the agreement.
52. In the present case, the 1st respondent-TRANSCO issued proceedings dated 17.3.2003 rejecting to evacuate the power generated by the petitioner on the ground that sugar plant has not been installed. In other words, in the eye of the 1st respondent, the petitioner had committed breach. In such a case, even assuming that alternative remedy is provided under PPA, it is for the TRANSCO to inform about the alleged breach committed by the petitioner by giving 30 days notice and proceed appropriately. Admittedly no notice as contemplated under Clause 9.2 of Article 9 of PPA has been issued and the evacuation of the power generated by the petitioner co-generation power plant had been stopped. This reaction on the part of the 1st respondent to the alleged breach by way of issuing impugned letter dated 17.3.2003 directing the concerned Superintending Engineer to stop the evacuation of power generated by the petitioner, until the completion of sugar factory is unilateral and without notice. Even assuming for argument sake that this alternative remedy is also available to the petitioner, it is to be noted that in view of the judgments of the Apex Court referred to supra and also in view of the specific finding of this Court that the directions of the Commission are binding and the attitude of the 1st respondent is unfair and violative of principles of natural justice, this Court is not barred from interfering with the illegal action on the part of the respondents, by exercising extraordinary jurisdiction of judicial review under Article 226 of the Constitution of India.
53. Accordingly this issue is also answered in favour of the petitioner.
54. Issue No. 4: Coming to the issue whether NEDCAP is a necessary party or not, it is to be rioted that from the facts already recorded and sequence of events, in the entire process of giving sanction for the establishment of co-generation power plant, no doubt NEDCAP has a role and as already noted, it is the delegated authority to given approval. Further as already noticed, NEDCAP gave the sanction to install the co-generation power plant subject to the condition of petitioner using only the bagasse, cane trash, bio-gass and conventional fuel like coal etc., as raw material for power generation and consequently the petitioner also had entered into MOU with the NEDCAP, No where either in the letter of consent dated 7.4.2000 or in the MOU, establishment of sugar plant was a condition precedent to sanction the co-generation power plant.
55. However, it is to be further noticed that as per Condition No. 3 of PPA, the petitioner shall fulfil the conditions of MOU entered with NEDCAP and in the event of cancellation of the projected allotted to the Company by NEDCAP for any reason, the PPA with APTRANSCO will automatically get cancelled. Therefore, as per this condition it is clear that the petitioner has to fulfil the conditions of MOU and there is no dispute with regard to the fulfillment of the conditions.
56. In this context the learned Senior Counsel for the respondents pointed out that NEDCAP had already cancelled the approval given to the petitioner through letter dated 8.4.2003.
57. In order to meet the above contention, it is necessary to note the contents of the letter dated 8.4.2003 at paragraph No. 2 as under:
'In this connection, it is to inform you that NEDCAP sanctioned 20 MW capacity bagasse based Co-generation Power Plant. If you operate power plant only without operating sugar mill, it will not meet the requirements of co-generation clause. Therefore, you are requested to operate the power plant after commissioning the sugar mill in order to meet the co-generation clause. NEDCAP may be intimated the date of commissioning of your sugar mill to take further action on your request.'
58. From the above expression it is clear that there is no actual cancellation order, nor any full information is forthcoming from the Counsel for the respondents in this regard. Even otherwise the letter of NEDCAP dated 8.4.2003 is subsequent to the impugned letter dated 17.3.2003 issued by the 1st respondent, which already caused effective damage to the petitioner. Therefore, the cause of action had already arisen to the petitioner, inasmuch as the process of evacuation of power generated has come to a halt.
59. It can be further noticed by a close scrutiny that even the letter dated 8.4.2003 was pursuant to the letter addressed by the 2nd respondent - Chief Engineer in Lr.No.CE/IPC/131/F. Sagar Sugars/D.No.636/ 03 dated 17.3,2003. The said letter was specifically referred to in the letter of the NEDCAP dated 8.4.2003, which is sought to be treated by the Counsel for the respondents, as an order of cancellation of approval granted to the petitioner for establishment of co-generation power plant. That letter said to have been addressed by the Chief Engineer to the petitioner, which is also part of the record, goes to show that it contains the same contents as in letter dated 17.3.2003 addressed by the Chief Engineer to the Superintending Engineer in Lr.No.CE/IPC/131/F Sagar Sugars/D.No.635/ 2003. Both the letters addressed by the Chief Engineer-2nd respondent, to the petitioner and the Superintending Engineer, Cuddapah, are dated 17.3.2003. The intriguing aspect is that the letter addressed to the petitioner dated 17.3.2003 was referred to by the NEDCAP in its letter dated 8.4.2003 and it did not refer to the letter addressed to the Chief Engineer to the Superintending Engineer. Of course, these aspects may not be very relevant. But so far as the other aspects are concerned, they will certainly through some light on the aspect of unfairness and violation of principles of natural justice.
60. As already pointed out, the initial cause of action is letter dated 17.3.2003 issued by the 1st respondent rejecting to evacuate the power generated by the petitioner on the ground that sugar plant was not installed and the effective date of actual stoppage being from 18.3.2003.
61. The aspects of rationality and reasonableness have already been discussed above while dealing with the above issues. Therefore, no further discussion on those aspects is necessary in this issue. But however, inasmuch as the initial cause of the action was the letter dated 17.3.2002 addressed by the 1st respondent to the petitioner, the aspect of further or consequential action initiated by the NEDCAP is an altogether different question.
62. This Court is primarily on the aspects of fairness and reasonableness on the part of 1st respondent in rejecting to evacuate the power from the petitioner power plant and in interpreting the sanction of NEDCAP and adhering to the directions of the Commission and violation of the principles of natural justice while dealing with not only the case of the petitioner, but also with the necessity of the electric power of the general public.
63. It is to be further noticed that in any event, even if the additional power generated by the petitioner or similarly situated companies is purchased by the TRANSCO, it has to be distributed to the consumers for a price prescribed by the competent authority, perhaps by the Commission.
64. For the foregoing reasons, at best NEDCAP can be treated as a proper party, but not necessarily as a necessary party to be impleaded for the adjudication of the writ petition and passing orders and also inasmuch as no relief is sought against the NEDCAP. For the present, the cause of action is not generated from the side of the NEDCAP and accordingly non-impleadment of NEDCAP does not by itself vitiate the writ petition and the Division Bench decision relied on by learned Senior Counsel for the respondents in this regard in E.B. Veera Raghavaiah v. Mohd. Imthiazuddin (supra) does not apply to the facts of the present case.
65. Accordingly this issue is also answered in favour of the petitioner.
66. The Division Bench of mis Court in order dated 10.7.2003 while dealing with the appeal in W.A. No. 745/2003 filed challenging the interim order dated 2.5.2003 passed in WPMP.No.9660/2003 in W.P. No. 7395/2003, noticed that a review petition had been preferred and the same was directed to be disposed of expeditiously. As on the date of completion of hearing in writ petition, admittedly the said review petition has not been disposed of and the same was still pending. Therefore, I do not propose to make any observation of that aspect.
67. For the foregoing reasons, the impugned letter dated 17.3.2003 and the consequent action of the respondents is liable to be set aside and accordingly set aside and the respondents are directed evacuate the power as agreed under the original PPA dated 10.7.2002 or as per the amended agreements, if any, made, or to be made, as directed by the Commission through proceedings dated 17.3.2002, as the case may be.
68. With the above direction, the writ petition is allowed. No costs.