Decided on September 06,2021

Indsil Hydro Power And Manganese Limited Appellant


UDAY UMESH LALIT,J. - (1.) Civil Appeal Nos.9845-9846 of 2016 preferred by M/s Indsil Hydro Power and Manganese Limited (hereinafter referred to as "INDSIL") and Civil Appeal Nos.9847-9850 of 2016 preferred by Carborundum Universal Limited (hereinafter referred to as "CUMI") are directed against the common judgement ied and order dated 03.04.2014 passed by the Division Bench of the High Court(The High Court of Kerala at Ernakulam) allowing Writ Appeal Nos.1345 and 1355 of 2013 preferred by State of Kerala against INDSIL and CUMI respectively.
(2.) On 07.12.1990, the Government(The Government of Kerala) framed a policy vide G.O.(MS)No.23/90/PD (the Policy, for short) allowing private agencies and public undertakings to set up hydel schemes for generation of electricity at their own cost. As per the Policy, the matters concerning the construction, operation and maintenance of the hydel scheme were to be managed as per the stipulations made by the Government/Board(Kerala State Electricity Board). Clauses 2, 14 and 15 of the Policy were as under: - "2. Private agencies/ public undertakings shall be allowed the setting up of sanctioned hydel schemes of the category small/ mini/ micro at their own cost, the construction, operation and maintenance being managed by them as per the stipulations insisted upon by Government/ Board. (The stipulated conditions as per Indian Electricity Act, 1910. Electricity (Supply) Act, 1948, other related rules and orders from Central and State Governments). 14. Royalty for the use of water together with the tax and duties on generation of power as fixed by Government/Board from time to time have to be paid by the agency. Normally generation of power from schemes of the category small/mini/micro utilizing the storage benefits of existing reservoirs and tailrace benefit of existing power stations will not be entrusted with private agencies. But, Government may under special circumstances allow such schemes to be set up by private parties. In such cases, in order to account for the additional advantage gained by the agency by way of getting the Controlled releases, the agency will have to pay to Government or the Board, as the case may be, in tariff equivalent to the cost component for the controlled release utilized by the agency for the energy generated from the scheme. This will be in addition to the royalty of water if any, to be paid. The tariff storage/controlled release as above are to be worked out in respect of each scheme separately taking into account the above factors. 15. For assessment of water quantity used, the application of the formula BH-Power in KW where Q is in NI/Sec and H is the net head in meter for which the machines are designed by the manufacturers, will be made use of."
(3.) CUMI has three factories in State of Kerala and is in the business of manufacturing electro minerals using electric arc furnaces, which process requires continuous supply of electricity. CUMI filed an application with the State for allotment of "Maniyar Hydel Scheme" in the River Kakkad Basin. After the Scheme was allotted vide order dated 18.01.1991, CUMI undertook to establish the Maniyar Hydro Electric Project with 12 MW capacity on River Kakkad, as a Captive Generating Station for its industrial units. An Agreement was entered into between CUMI and the Board on 18.05.1991 (CUMI Agreement for short), which specifically referred to the Policy and stated that the terms and conditions of the Policy "shall form part of this agreement as if incorporated herein". Clauses 8 and 14 of CUMI Agreement were as under:- "8. The energy from Maniyar Hydro Electric Project fed into the K.S.E.B. Grid will be metered at a location as detailed above (using meter duly calibrated by K.S.E.B.) and this quantum of energy less twelve percent towards wheeling charges and T and D Lesses will be delivered free of cost to CUMI at their E.B.T. Terminate at the point of supply in their installations. In the case of supply or receipt made in LT Lines the allowance for lessee and wheeling charges will be more and will be as stipulated by the KSEB. In case energy in excess of the requirement of CUMI is generated from the projects during one accounting year such excess energy shall be fed into the KSEB grid itself at rates to mutually agreed upon. Under no circumstances shall CUMI be entitled for the sale or transfer of any excess energy or any energy produced from the project to any party other than the KSEB. The accounting of the energy fed into the grid and supplied by KESB to CUMI or operating their factories in Kerala at Palakkad, Koratty and Kalamaooery will be settled on an annual basis, the year being reckoned from lot of July to 30th June. ... ... ... 14. Royalty for the use of water together with the tax and duties on generation of power as fixed by govt/KESB from time to time have to be paid by CUMI, to K.S.E.B. Maniyar Hydro Electric Projects will utilize the existing head works benefit of the Maniyar Irrigation Dam of P.W.D. which is fed mainly by the controlled release of water from existing Moozhiar Power House of KSEB. In order to account for the additional advantage gained by way of getting such controlled released, CUMI will have to pay to KSEB the cost components for the energy generated from the scheme. This will be in addition to the royalty on water to be paid. The charges for controlled release as above as well as royalty on water, will be reckoned on the quantum of energy generated and shall be ten percent of energy tariff rate for E.H.T. consumer current from time to time for every unit of energy generated and shall be paid to the K.S.E.B." ;

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