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Home News Power Sector News State's direction to Tata Power illegal - Bombay High Court

State's direction to Tata Power illegal - Bombay High Court

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Bombay HCThe Bombay High Court on 18-01-2011 set aside a Maharashtra Government directive that asked Tata Power to supply 360 MW power to Anil Ambani led R-Infra. A Division Bench of Justices Dhananjay Chandrachud and Anoop Mohata held that such a directive was "ultravires" to the provisions of the Electricity Act. The State Government had issued a directive last year to state load dispatch centre to continue to supply power to R-Infra from Tata Power.

Last year, the company said it would stop selling 360 MW power to R-Infra following which the Ambani-owned power supply company sought the state's intervention.

The Maharashtra state government on May 19, 2010, had directed the State Load Dispatch Centre (SLDC), a body that allots power to power companies, to give 360 MW to RInfra till June 2010 and 200 MW thereafter till further directives from the Maharashtra Electricity Regulatory Commission (MERC) or the government .

As a consequence, the Anil Ambani-led RInfra was getting 200 MW of electricity generated by Tata Power. This amount was significant-it was about one-seventh the requirement of RInfra which, if denied, would have hit about four lakh of its 27 lakh consumer base.

Although the HC did not specifically set aside the May 19 memorandum, the judges clarified that the May 19, 2010 memo of the state was consequential to the May 7 memorandum which says that Tata Power should continue to supply power to RInfra "in the public interest". What this means is that since the May 7 memorandum has now been set aside, there cannot be a request by the state to MERC or a direction to allot power to RInfra.

Tata Power says that the effect of the HC verdict is that it will be free to apply for power from the SLDC and should be given it. However, an RInfra spokesperson interpreted the order as positive for it. "Since the HC has refused to set aside the Maharashtra government's directive to SLDC, we are happy that RInfra consumers will not get impacted, as RInfra will continue to get at least 200 MW from TPC at a regulated rate till MERC decides the issue of abuse of dominance by TPC."

With disputes between Tata Power and RInfra raging, the state had intervened last year to protect tariffs from shooting up dramatically. The state had set up a committee which made suggestions after hearing both Tata Power and RInfra. The state then told MERC to formulate suitable measures as the tariff regulator to protect the interest of consumers. The state also said that it expected that Tata Power would abide by its direction to sell power to RInfra at the regulated rate.

When Tata Power dragged the state and RInfra to court, questioning the power of the state to issue such a "directive" in the May 7 memorandum, the state government argued that it had "not issued a directive" but had made a "mere request" . However, the HC noted that this appeared to be more than a mere request. It added that in the context of the Electricity Act, the power of the state government to issue directions was restricted to certain specific and extraordinary situations.

Based on the May 7 memorandum , MERC had issued a public notice and held a series of public hearings and is yet to pass its order. But in the meantime , the Tata Power-versus-RInfra matter reached the high court for final hearing. After concluding the hearing on Tuesday, Justice Chandrachud, while dictating the order, said the state could not bypass the need for observing a statutory requirement.

He said the state might call it a request, but the manner in which it went about trying to get it enforced showed that it was more than a mere request. The HC, however, said that MERC was free to exercise its powers independent of the memorandum dated May 7 which has been quashed by the court.


Source- Economic Times


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