RAKESH NATH, J. - (1.)THIS appeal has been filed by Tamil Nadu Electricity Board against the order dated 16.4.2010 passed by the Tamil Nadu Electricity Regulatory Commission (hereinafter referred to as 'State Commission') in DPR no. 10 of 2008 filed by M/S. GMR Power Corporation, the first respondent herein. The State Commission is the second respondent. M/s. Hindustan Petroleum Corporation Ltd. , fuel supplier to the respondent no. 1, has also been impleaded as the respondent no.3.
(2.)THE brief facts of the case are as under: 2.1. In 1994, the appellant invited bids for setting up diesel engine based power projects at various places in the State of Tamil Nadu, including the one in question at Basin Bridge, Chennai. The 1st respondent being the successful bidder entered into a Memorandum of Understanding on 13.1.1995 with the appellant for setting up a diesel based power projects of 200 MW capacity at Basin Bridge. Following the same, Techno Economic Clearance for the power project was granted by the Central Electricity Authority on 10.7.1996 as required under the provisions of the 1948 Act. Thereafter, a Power Purchase Agreement ('PPA') was entered into between the appellant and the 1st respondent on 12.9.1996 for a period of 15 years. There were two addenda to the PPA, Addendum no. 1 on 26.2.1999 and Addendum no. 2 on 1.3.2000 which were made after the signing of the Land Lease Agreement. 2.2. In terms of the PPA, a Land Lease Agreement ('LLA') was entered into between the appellant and the 1st respondent on 26.3.1997 which provided for land belonging to the appellant to be leased to the 1st respondent on rental basis. The LLA, inter -alia, included the payment of rent that was fixed for the first three years and thereafter to be revised once in three years on the basis of the guidelines of the Government of Tamil Nadu. 2.3. The first and the second units at the power project of the appellant were commissioned on 31.12.1998, and the third and the fourth units on 15.12.1999. The 1st respondent had been generating and supplying energy to the appellant and had been raising invoices for payment of the said energy periodically. The appellant had been making payments after availing itself of the rebates as per the PPA and after deducting the rentals for land leased to the first respondent. There were exchange of correspondences between the parties with reference to the quantum of lease rent and its pass through in tariff, interest on working capital, start -stop charges, refund of rebate and interest on delayed payment. Ultimately, the first respondent on 18.1.2008 raised demand under the various heads on the appellant. Thereafter, on 23.6.2008, the first respondent issued a notice to the appellant invoking the clause of PPA regarding arbitration, designating its representative to resolve the dispute. 2.4. On 25.7.2008 the 1st respondent filed a petition, being no. DPR 10 of 2008, before the State Commission for adjudication on its claims. 2.5. The State Commission passed an order on 16.4.2010 allowing the claims of the respondent no. 1 alongwith interest directing the appellant to make payment as per the said order. 2.6. Aggrieved by the order dated 16.4.2010 of the State Commission, the appellant has filed this appeal. 2.7. M/s. Hindustan Petroleum Corporation, the fuel supplier to the respondent no. 1 filed IA no. 19 of 2011 during the proceedings of the appeal before this Tribunal. The Tribunal by its order dated 1.2.2011 allowed the application and impleaded M/s. Hindustan Petroleum Corporation as the respondent no. 3.
(3.)THE appellant has raised the following issues: - I. Land Lease rentals and pass through: (i) The claim of the respondent no. 1 before the State Commission was that the fixation and revision of the rent was exorbitant and unreasonable that was required to be corrected and that the land lease rentals paid during the period 1997 to 2009 amounting to Rs. 89.81 Crores should be refunded treating it as an element of pass through with future interest. The State Commission incorrectly decided the liability of the respondent no.1 towards land lease rentals and held that the entire rentals have to be treated as 'pass through' in the tariff and to be paid with interest w.e.f. 17.4.1997. The State Commission also wrongly held that the claim was not hit by laches and delay. (ii) According to the appellant, the original PPA and LLA were voluntarily executed and acted upon by the parties and there was no scope to amend the same unilaterally at the instance of one party to the detriment of the other. (iii) Even before the signing of the PPA, the claim of the respondent no. 1 for pass through of land lease rental was rejected by the CEA at the time of according Techno Economic Clearance. The respondent no. 1 had also given an undertaking to pay the land lease rentals. After the Government of India notification dated 17.4.1997, a claim for pass through was raised by the respondent no. 1 which was rejected in December 1998 by the appellant and thus the issue was put to rest. (iv) The direction to pay the lease rent at 2% for the period 19.12.1999 to 9.3.2005 based on GOM no. 460 dated 4.6.1998 was not sustainable as the GOM was applicable to lands situated in Panchayat areas where local cess and local surcharge are leviable and not to the land in question which is within the limits of Chennai City Corporation governed by the Corporation Act. In fact this has been clarified by the Revenue Department of Government of Tamil Nadu in letter dated 10.3.2005 and after the date of this clarification the State Commission has by its order directed that the lease rent will be leviable at 14% of the market value. Thus, the ruling on lease rent fixing the lease rent at 2% for the period 19.12.1999 to 9.3.2005 is illegal. (v) The finding of the State Commission for pass through of the lese rent which is based on clause 17.1 (b) of the PPA is wrong in view of the provision of clause 17.1(a) which does not allow amendment of the agreement except by prior written agreement between the parties. Assuming that clause 17 would entitle the respondent no. 1 for an amendment of PPA on the basis of Government of India ("GOI") notification dated 17.4.1997, the same would be applicable after the amendment of the agreement in terms of clause 17 and not the date of GOI notification. (vi) There is also no justification in the State Commission's order regarding payment of interest w.e.f. 17.4.1997 in view of delay in raising of claim by the respondent no. 1 from the year 1998 till the year 2008. II. Interest on Working capital (i) The appellant had by sheer mistake paid interest on working capital computed at 85% Plant Load Factor (PLF), despite the fact that the average of actual PLF for last three years was far lesser. When this mistake came to be noticed in March, 2005 deductions were made for retrieving the excess payment in consonance with Section 72 of the Indian Contract Act, 1872. The conclusion of the State Commission that actual PLF should be interpreted with reference to the definition of the PLF and deemed generation for addition to physical generation for the purpose of interest on working capital is contrary to the PPA as well as known principles of interpretation. III. Start Stop Charges: (i) The respondent no. 1 had forwarded the claim for the first time in the petition. Even in the year 2005 when the appellant had sought to deduct the excessive amounts claimed towards interest on working capital, the respondent no. 1 had sought to justify the claim for interest on working capital at 85% PLF as a set off for expenses incurred towards excessive dispatch instructions resulting in more numbers of start and stop. The State Commission has since allowed both the claims i.e. interest on working capital computed at 85% PLF and cost of excessive start stop. The respondent no. 1 is not entitled to both the claims. Hence, it is only in the event of rejecting the claim of the respondent no. 1 in respect of interest on working capital at 85% PLF that the claim for payment of start stop charges would fall for consideration. (ii) Though there is not much dispute regarding the actual number of start stop effected, the claim of the respondent no. 1 for Rs. 76,000/ - per start is exaggerated. According to the Committee constituted by the appellant to enquire into the cost, the cost per start up was only around Rs. 9,000/ -. The State Commission had refused to take that enquiry report on the ground that it had been produced after reserving orders in the matter and proceeded to qualify at the rate of Rs. 76,000/ - per start up as claimed by the respondent no. 1. The State Commission should have considered the contentions of the appellant. IV. Payment of rebate deducted: (i) In terms of clause 8.3 of PPA, the appellant is eligible for rebate of 2.5% of the invoice amount, if full payment is made within 5 working days of its receipt. (ii) For the period from 1999 to 2001, the appellant paid to the respondent no.1 at the agreed rate of Rs. 3/ - per unit within time and thereafter a sum of Rs. 0.15 per unit was deducted from the sum of Rs. 3/ - per unit as agreed to by the respondent no. 1. (iii) For the period from 2001 to 2005, the respondent no. 1 was fully conscious of the financial position of the appellant and by 41 separate but similar letters spread over that period had agreed to accept payments against the invoices with deduction of rebate, thus waiving the conditions during the said period. (iv) For the period from 2005 to 2008, the respondent no. 1 had submitted the invoices for amounts that had not been strictly in accordance with PPA and the appellant had made payments within 5 working days to the extent of the amounts that the respondent no. 1 was entitled to in terms of the PPA. (v) The claim of payment of rebate deducted by the appellant had never been raised by the respondent no. 1 at any time prior to the filing of the petition in the year 2008. Thus, this claim is hit by the doctrine of acquiescence and laches apart from being barred by the law of limitation. V. Payment of interest for delayed settlement of invoice: (i) The PPA provided for timely payment of invoice amount and if not paid within 30 days, payment of interest on delayed payments. (ii) Interest is agreed to be paid to compensate for loss occasioned due to breach of contract by delayed payment. It, therefore, pre -supposes that the party claiming interest has suffered a loss which is to be compensated for by interest. In the present case the respondent no. 1 has not suffered any loss and, consequently, is not entitled to payment of interest for the delayed payment. (iii) It has now come to be known that the respondent no. 3 has been giving credit periods to the respondent no. 1 varying from 25 days to 90 days whereas, according to the Fuel Supply Agreement, the appellant was required to make advance payments on 11th, 21st and 1st of every month for the fuel supplied by the third respondent. Therefore, the respondent no. 1 has not suffered any loss for the delayed payments made by the appellant. VI. Refund of Entry Tax (i) The appellant had been reimbursing the respondents with the entry tax remitted by them for the fuel purchased at Vizag and brought to Tamil Nadu. However, the 3rd respondent had given certain credits based on which the appellant had deducted about Rs. 10 Crores. However, later, the 3rd respondent reversed the credit entry. The State Commission in the impugned order has wrongly issued direction that the appellant should pay the amount of Rs. 10 Crores directly to the 3rd respondent on account of reversal of entry. (ii) In this appeal, the 3rd respondent has stated that the credit to the extent of Rs. 29 Crores was extended under clause 6.2(e) of the Fuel Supply Agreement and later the audit had raised objections to the effect that the respondent no. 1 had claimed reimbursement of the entry tax from the appellant and, therefore, the credit given by the 3rd respondent amounted to double benefit. Based on the audit objections, the 3rd respondent had reversed all the credit entries. After such reversal, the respondent no. 1 paid bill of Rs. 19 Crores leaving a balance of about Rs. 10 Crores. (iii) According to clause 6.2 (e) of the FSA, the credits had been voluntarily given, treating the sale to had taken place in Tamil Nadu. It is, therefore, not open for the 3rd respondent to reverse the entries based only on audit objections. Therefore, the claim of this amount is illegal and not in order. VII. Minimum Alternte Tax (MAT) (i) The appellant has accepted the MAT and had already made part payments thereof. The dispute pending would only be in respect of the interest claimed on this amount. As the appellant has agreed to reimburse the amount of MAT, it is reasonable for the first respondent to give up its claim for interest.
On the above issues the learned Sr. counsel for the appellant made detailed submissions assailing the findings of the State Commission in the impugned order.

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