Decided on August 04,2015

Andhra Pradesh Central Power Distribution Co. Ltd. And Ors. Respondents


- (1.) ON the basis of the competitive bidding carried out under Section 63 of the Act, Reliance Power Ltd. was selected as the successful bidder to execute the 3960 MW UMPP (the generating station) in Krishnapatnam district of Andhra Pradesh and acquired Coastal Andhra Power Ltd. as its fully owned subsidiary. Coastal Andhra Power Ltd., the petitioner herein, entered into a Power Purchase Agreement dated 23.3.2007 with the respondents to supply electricity for a period of 25 years. The tariff of the generating station was adopted by the Commission under Section 63 of the Electricity Act, 2003 (the Act) vide order dated 25.1.2008 in Petition No. 170 of 2007. Subsequently, the Commission vide its order dated 2.8.2010 in Petition No. 128 of 2010, also approved the changes of unit configurations of the project from 5x800 MW to 6X660 MW.
(2.) THE project was envisaged to be executed on the basis of the imported coal as per the provisions of the Power Purchase Agreement. The petitioner entered into a Fuel Supply Agreement dated 8.4.2010 with Reliance Coal Resources Private Limited (RCRPL), whereunder RCRPL agreed to supply imported coal at fixed price from the mines located in Indonesia. The Government of Indonesia promulgated "Regulations of Ministry of Energy and Mineral Resources" (hereinafter referred to as Indonesian Regulation) on 23.9.2010 mandating that with effect from 23.9.2011, holders of mining permits for production and operation of mineral and coal mines would be obliged to sell mineral and coal in domestic and international markets with reference to international benchmark price. The petitioner vide its letter dated 3.6.2011 informed the lead procurer namely, Andhra Pradesh Power Coordination Committee ('APPCC') about the new Indonesian mining law and its impact on the project viability. A meeting of the 12th Joint Monitoring Committee ('JMC') was held on 22.6.2011 under the aegis of the Central Electricity Authority ('CEA') to discuss the change in Indonesian law and its impact on the project. The petitioner vide its letter dated 25.7.2011, addressed to APSPDCL, pointed out that the change in Indonesian law had made the project unviable and that it would be impossible for it to procure coal at the price fixed under the current FSA and sought adjustment of energy charges. Further discussions were held on 28.11.2011 and 22.12.2011 with the procurers without any solution. APSPDCL vide its letter dated 28.1.2012 advised the petitioner to resume the construction works forthwith. In response, the petitioner by its letter dated 21.2.2012 informed the procurers about the progress made by the petitioner fulfilling its obligations under Articles 3.1.2 and 4.1 of the PPA and requested APSPDCL not to take any coercive measures on account of the adverse impact of the changed Indonesian law. Subsequently, the petitioner issued notice dated 13.3.2012 under Article 17.3.2 of the PPA raising a dispute regarding force majeure. APSPDCL vide its letter dated 15.3.3012 issued notice for termination of the PPA and requested the petitioner to pay a sum of Rs. 400 crore for the default in complying with the terms of the PPA, failing which APSPDCL threatened to invoke the bank guarantee of Rs. 300 crore furnished by the petitioner under Article 3.2.2 of the PPA.
(3.) THE petitioner filed OMP No. 267/2012 before Hon'ble High Court of Delhi challenging the Notice of Termination dated 15.3.2015 and to adjudicate the dispute between the petitioner and the respondents under Section 9 of the Arbitration and Conciliation Act, 1996. Hon'ble High Court vide its order dated 2.7.2012 dismissed the said OMP No. 267 of 2012 with the following observations: "17. In the present case, while the issue concerning increase in price of the Indonesian coal and the consequent invocation of the force majeure clause by CAPL may not be strictly construed as a dispute arising from a claim by either party "for any change in or determination of the tariff or any matter related to tariff", it is not as if the change in the price of coal will not affect the tariff at all. It is possible that the determination of such dispute could result in a change in the tariff. Such a dispute can then be said to have arisen within the ambit of Article 17.3.1. Therefore, one way of approaching the problem would be for CAPL to approach the CERC which will, in terms of Section 79(1)(f) of the EA, determine which part of the dispute between the parties is referable to arbitration. The words "and to refer any dispute for arbitration" occurring at the end of Section 79(1)(f) of the EA contemplates such a course. This power to refer any dispute to arbitration, which is common to both the CERC under Section 79(1)(f) and the SERC under Section 86(1)(f), has to be seen in addition to the power of the CERC to decide the disputes arising under Sections 79(1)(a) to (d). Where the CERC is of the view that the dispute actually relates to the determination of tariff, it will exercise its jurisdiction and decide such dispute. On the other hand, a dispute not involving the tariff can be referred to arbitration. This interpretation harmonizes Section 79(1)(f) of the EA with Article 17.3.1 of the PPA. Although the decision of the Supreme Court in GUVNL case concerned the scope of the powers of the SERC, it would equally apply to the interpretation of Section 79(1)(f) of the EA insofar as it concerns the power of the CERC to refer disputes to arbitration. 18. Resultantly, CAPL will have to first approach the CERC as regards the dispute arising out of the letter dated 15th March 2012 of the APSPDCL. Therefore, the present petition under section 9 of the Act is not maintainable at this stage. The preliminary objection of the Respondents as regards maintainability of the petition is accordingly upheld.";

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