Judgment in Pet.68.2002 - GERC

Petn.No.68/2002BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSIONAT AHMEDABADPetition No. 68/2002“In the matter of:For reduction of contract demand from 25000 KVA to 3000 KVA with effectfrom 1 st January,1998.Petitioner : United Phosphorous Limited[Search Chem Industries Ltd.]750, GIDC Estate,Post Box No.9, Jhagadia-393 110,Dist: Bharuch.Represented by:S/shri Abhishekh Mehta, Rakaesh Gupta & Tejas Barot.V/s.Respondents :Represented by:(1) Gujarat Urja Vikas Nigam Ltd., (erstwhile GEB)(2) Dakshin Gujarat Vij Company Ltd.,Race Course, Vadodara.S/Shri Nirav Majmudar, J.M.Vachhani, Kamlesh Jahangir,P.J.Jani for respondent no.1 GUVNL.S/Shri B.C.Parikh, B.N.Mehta & K.M.Patel for Resp.-2.CORAMShri K.P.Gupta, Member (F)Shri Man Mohan, Member(T)JUDGMENT[1] The present petition is for reduction of contract demand from 25000 KVA to 3000KVA with effect from 1 st January,1998.[2] The facts mentioned in the petition are briefly as under:2.1 Upon establishment of the Captive Power Plant, the petitioner under his letterdt.25.6.1997, requested the respondent Board to reduce his contract demand fromPage 1 of 17

Petn.No.68/200225000 KVA to 3000 KVA. The Board, however, under its letter dt.15.7.1997informed the petitioner that he should approach the Board for reduction incontract demand on completion of the two year period of agreement i.e. after31.12.1997. The petitioner therefore once again approached the Board forreduction in contract demand from 1.1.1998. The Board, however, keptinexplicable silence. The petitioner understands that during those days, the policyon captive power plants was under consideration of the Government of Gujarat.The petitioner therefore, approached the Govt. of Gujarat, Energy &Petrochemicals Department to give appropriate provisional directions to theBoard until the formal Captive Power Policy of the state was announced. TheGovt.of Gujarat under its letter dt.2.7.1998 addressed to the Board permittedwheeling of power from captive power plant to group companies as well as to theown company at different locations and further directed that as against theexisting contract demand of 25000 KVA, the petitioner would pay as per reducedcontract demand of 6250 KVA. This arrangement was to be made effective from22.6.1998. Pursuant to the said direction of the Government, the Board under itsletter dated 18.7.1998 advised the petitioner that its contract demand standstemporarily reduced as a stop gap arrangement on ad hoc basis from 25000 KVAto 6250 KVA from 22.6.1998. Thereafter the Govt. of Gujarat announced thePolicy for Supply of Surplus Electrical Power to Group Companies &GEB/Licensees, Wheeling of power, etc. by Captive Power Projects under Energy& Petrochemicals Deptt. Resolution No.CCP 1197/2263/PP Cell dated 9.11.1998.As per para 10 of the said resolution, all ad hoc arrangements allowed forwheeling and reduction of contract demand were required to be regularized inaccordance with the provisions contained in the said resolution. Even though theBoard accepted reduction in contract demand from 22.6.1998, the petitionerreceived a letter dt.12.5.1999 in which the respondent Board took a U-turn andstated that its earlier decision of giving effect to reduction in demand from22.6.1998 was not correct and it has since been reviewed and that the reduction incontract demand would be effective from 9.11.1998 the date on which thePage 2 of 17

Petn.No.68/2002Government announced its Captive Power Policy and not from 22.6.1998 asdecided earlier. It is the say of the petitioner that the approach of the Board beingtotally unjust, the petitioner once again submitted a representation to therespondent on 24.5.1999 and to the Addl. Chief Secretary to the Govt. of Gujarat,Energy & Petrochemicals Department under its letters both dated 24.8.1999pointing that the petitioner had requested for reduction in contract demand from1.1.1998 in light of the then existing policy dated 22.12.1997. It may be open tothe Government to revise the policy from time to time but the petitioner who hadacted on the extant policy should not be adversely affected because of suchrevision, which in all fairness should be prospective. The petitioner was within hisrights to request for reduction in contract demand from 1.1.1998 in terms ofpolicy dt.22.12.1997 and therefore, the Board ought to have given effect from1.1.1998 itself. The Board, however, did not accede to this just and reasonablerequest of the petitioner and rejected the request and the effect was given from9.11.1998, viz. the date of the Government Resolution, regardless of what wasresolved by the Government in para 10 thereof.2.2 The respondent has been prompted in raising a bill of astronomical figure ofRs.1,45,70,832.58 towards the differential contract demand charges from22.6.1998 to 9.11.1998 as according to the respondent, the CPP Policy announcedby the Government is not retrospective and therefore the contract demand wouldnot stand reduced from 22.6.1998 regardless of the fact that it already stoodreduced with effect from 22.6.1998 on ad hoc basis and the Joint Secretary to theGovernment of Gujarat, Energy & Petrochemicals Department, also advised therespondent that ad hoc arrangements which were already allowed were to beregularized in light of the new CPP Policy. It would indeed be unreasonable andunrealistic that although both in practical and technical terms the contract demandwas effectively reduced from 22.6.1998, yet that fact should be ignored onlybecause the announcement of the new CPP Policy took some time and it came tobe announced from 9.11.1998. It is the submission of the petitioner that the BoardPage 3 of 17

Petn.No.68/2002ought to have agreed to reduce contract demand with effect from 1.1.1998 afterexpiry of the period of agreement on 31.12.1997. The decision of the Board isincompatible with and contrary to the Government’s power policy with regard tothe captive power plants. The Board ought to have appreciated that the petitioner,(which installed the captive power plant) in fact augmented the power generationin the State of Gujarat right in the period when Gujarat was facing acute powershortage, and by running the industry with the help of captive power plant, hasalso generated additional manufacturing capacity and a perennial source ofrevenue to the Government earned on sale of its products and has also generatedemployment opportunities. Therefore, it is prayed by the petitioner to declare thebill dt.27.8.1999 for Rs.1,45,70,832.58 raised by the respondent Board as null andvoid. The petitioner has also prayed to give effect of reduction in contract demandfrom 25000 KVA to 3000 KVA with effect from 1.1.1998 with consequentialrelief in energy bills from 1.1.1998 onwards. Alternatively, the petitioner hasprayed to give effect of reduction in contract demand from 25000 KVA to 6250KVA with effect from 22.6.1998.[3] The Commission issued notice to the respondent and the respondent (GEB) filed areply contending inter alia that the GEB had already taken a stand to the effectthat initially the petitioner consumer was having contractual demand of 25000KVA. However, the said contractual demand was sought to be reduced by thepetitioner and accordingly, the petitioner approached the Government requestingthem to permit the petitioner to reduce the contractual demand to 6250 KVA from25000 KVA. At the relevant time, the CPP Policy was not in existence, but theprocedure of formation/ finalization of CPP Policy was in progress and theGovernment authorities were pleased to grant permission by communicationdt.2.7.1998 and on ad hoc basis, interim arrangement came to be made and loadreduction permission came to be granted on absolutely stop gap arrangement andthat too, subject to finalization of CPP Policy. It was also made clear that ifultimately the CPP policy prescribed other way round, then the petitioner willPage 4 of 17

Petn.No.68/2002have to pay additional charges of difference in this regard with 15% interest.Ultimately, the CPP policy came into existence on 9.11.1998. As per the saidpolicy, the petitioner had become entitled to get the benefit of load reduction by75% of the contractual demand. The said policy came to be introduced on9.11.1998 and therefore, the said policy could not have retrospective effect. Infact, the load reduction came to be granted by interim arrangement and, therefore,from 22.6.1998 to 9.11.1998, the petitioner became liable to make paymenttowards load reduction. Even the CPP policy was made effective from 9.11.1998and load reduction permission was granted as an interim arrangement and theultimate decision in this regard was made subject to the CPP policy. It is statedthat had the policy been given retrospective effect, then naturally the petitionerwould have become entitled to get the advantage. But admittedly, the policy is notgiven retrospective effect and, therefore, during the aforesaid period, even inrespect of load reduction which was absolutely an interim arrangement whichcould not have been treated as full-fledged permission granted by the authoritiesand, therefore, the petitioner became entitled to make payment. The respondenthas further submitted that the GEB authorities have already invoked provisions ofSection 9 of the Civil Procedure Code by way of preferring a suit in the court ofLearned Civil Judge (S.D.), Bharuch for recovery of the amount of the bill whichis the subject matter of challenge before this Commission and, therefore, in viewof the aforesaid facts and circumstances of the case, since the suit is filed and ispending before the competent authority, this Commission may not entertain thepresent application and the same deserves to be dismissed with costs.3.1 The respondent has further submitted that if the present petitioner’s prayer isaccepted, then it would impose burden of more than Rs.46 crores upon the GEBexchequer and other similarly situated number of CPP consumers would also rushbefore the GEB and therefore also, it is prayed that since the petitioner is notlegally entitled to get any relief, no indulgence be shown and the presentapplication be dismissed. Any order which may be passed by the CommissionPage 5 of 17

Petn.No.68/2002may affect the prospects of the Civil suit and, therefore also, this applicationdeserves to be dismissed.[4] The petitions were kept for hearing on 15.3.2002 and the Commission had heardLearned Addl. Advocate General Mr.Kamal Trivedi for some times and thereafterCommission ordered to issue notice to the GEB.[5] Thereafter the petitions were kept for hearing on 21.6.2002, but Ld. Counsel forthe applicant was not present and Ld. Counsel Mr.Nirav Majmudar made astatement that he shall be filing his appearance in these group of matters andmatter was adjourned.[6] Thereafter the petitions were kept for hearing on 3.9.2002. On that day, theLearned Counsel Mr.Nirav Majmudar, who appeared on behalf of GEB asked forsome time as the last opportunity for filing affidavit. Ld. Counsel Mr.RakeshGupta who appeared on behalf of M/s.Trivedi & Gupta for the petitioner, had noobjection for granting a reasonable period and therefore, time was granted.[7] Thereafter the petitions were kept for hearing on 18.9.2002 and on that date, asper the request of Mr.Hemant Gohedia, who was present on behalf of LearnedCounsel Mr.Nirav Majmudar, time was granted.[8] Thereafter the Commission suggested for amicable settlement but it could not bedone and therefore, the petition was kept for hearing on 25.2.2005. On that day,the Learned Advocate Shri Nirav Majmudar, representing GEB submitted that thematter is sub-judice as the petitioner had already approached the Hon’ble HighCourt of Gujarat on the same subject matter and the petitioner has also obtainedinterim order restraining the GEB from making adjustment in the bill. Therefore,petitioner should submit the correct position of the subject matter before theCommission. The Learned Advocate Shri Rakesh Gupta submitted that in fact, thePage 6 of 17

Petn.No.68/2002petitioner had approached the Hon’ble High Court of Gujarat only against theillegal adjustment in the bills but in fact, the matter is not sub-judice.[9] The Hon’ble High Court of Gujarat has passed order in Civil ApplicationNo.1517 of 2005 in SCA No.7213 of 2004 as under:-“Under the circumstances, it will be just and proper to clarify that there is no stayagainst proceeding further with the petition no.68 of 2002 pending before theGujarat Electricity Regulatory Commission. On the contrary, it will be in interestof justice that Petition No.68/2002 pending before the Commission is decided anddisposed of by the commission. As agreed between the parties, the commissionmay continue with the hearing of the Petition No.68/2002 and final decisionwhich would be rendered by the Regulatory Commission in Petition No.68 of2002, the same may not be implemented without prior permission of this Courtand the decision that may be rendered by the Gujarat Electricity RegulatoryCommission be placed on record before this Court in the present Special CivilApplication i.e. SCA No.7213 of 2004 and appropriate application may be movedby either party for implementation of such order which may be considered at thetime of hearing of the main special civil application.”[10] In view of above order of the Hon’ble High Court of Gujarat, the petition waskept for hearing on 12.5.2005. It came to the notice of the commission that theEnergy & Petrochemicals Deptt. Govt. of Gujarat, has addressed a letter to theMember (Fin), GEB, Baroda on 28.10.1999 on the subject of reduction in contractdemand and it is mentioned in the said letter as under:“M/s. Search Chem Industries Ltd. had requested for reduction in contractdemand. The State Government have passed the orders on 22.6.98 to allowreduction in contract demand from 25000 KVA to 6250 KVA on adhoc basisw.e.f. 22.6.98 subject to condition that the reduction will be regularized inPage 7 of 17

Petn.No.68/2002accordance with the final policy that may be decided by the State Governmentabout Captive Power Plant. Subsequently, the State Government has finalized theCPP policy vide G.R.No.CPP-1197-2253-PP Cell dated 9.11.98. As per the clauseno.10 of the G.R. all the adhoc arrangements allowed for wheeling and reductionof contract demand shall be regularized in accordance with the provisionscontained in the resolution.”[11] Thereafter the petition was kept for hearing on 9.3.2006. On that day, LearnedAdvocate S/Shri Abhishek Mehta and Rakesh Gupta for Trivedi & Gupta andShri B.K.Anand, DGM were present on behalf of the petitioners. S/ShriJ.M.Vachhani, Kamlesh Jahangir, P.J.Jani were present on behalf of GUVNL,S/Shri B.N.Mehta, K.M.Patel were present on behalf of DGVCL. LearnedAdvocate Shri Nirav Majmudar was present on behalf of all the unbundledcompanies (of erstwhile GEB) at the time of hearing.11.1 Learned Advocate Shri Rakesh Gupta reiterated the facts mentioned in thepetition. He specifically invited our attention to the letter dt.2.7.1998 of Energy &Petrochemicals Deptt., Gandhinagar, wherein the permission for wheeling wasallowed subject to the following terms and conditions:1) “GEB should prepare the bill as per the existing contract demand of 25000KVA. However, industry would pay as per the reduced contract demand of6250 KVA.”The above temporary stop gap ad-hoc arrangement shall be effective from22.6.1998. It is further clarified that difference amount between bill as perexisting contract demand and that as per the reduced contract demand should betreated as deferred amount without any penal interest. The difference in amountfor System Losses and wheeling charges, if any, ultimately to be decided as perthe Captive Power Policy to be issued by the Government will also be payablePage 8 of 17

Petn.No.68/2002along with the difference in the demand charges, if any, within the period equal tothe time lapsed between this ad-hoc arrangement and the final policy with interestat the rate of 15% per annum.11.2 He also invited our attention to Clause 10 of Guidelines for Captive PowerProjects dated 22.12.1997 which is reproduced below:“10. Contract DemandThe reduction of contract demand of the consumer would be permitted upto 25%of original contract demand if consumers intend to have parallel operation.However, contract demand would not be necessary/ would not be insisted upon ifCPP intends operation on isolated and stand alone basis. Any drawl of powerfrom the State Grid by the industrial unit would be subjected to HTP I tariff ofGEB. “In the light of above, Shri Rakesh Gupta argued that the aforesaid GovernmentResolution dated 22.12.1997 permits the reduction in contract demand upto 25%.11.3 He further submitted that there was another issue pertaining to charges for thepower supplied by the petitioner to the respondent (GEB) was heard by theHon’ble High Court of Gujrat and that issue has been settled by the judgment ofthe Hon’ble High Court. As regards the present issue the Hon’ble High Court inthe same judgement (SCA 7213 of 2004) has observed as follows :“8.4 In pursuance of the same the Petitioner made various representationswhich did not meet with any positive results. The respondent Board thereafterraised a demand for a sum of Rs. 1.25 crores purporting to be towards thedemand charges for the period from 22.6.1998 to 9.11.1998. Ultimately thepetitioner company approached the Gujarat Electricity Regulatory Commission(GERC) which is registered as Case No. 68/2002. The said case is still pendingPage 9 of 17

Petn.No.68/2002before the GERC. In short the dispute with regard to the payment of the demandraised by the respondent Board is pending for adjudication.”In the light of the aforesaid, Shri Rakesh Gupta submitted that the High Court hasnot given any decision on this issue and has observed that it is for theCommission to decide this issue.He further submitted as follows :(i)During the entire period (22.6.1998 – 9.11.1998) the Petitioner’s demandcatered to by GEB was only 6250 KVA and as such they can not charge for25000 KVA.(ii) Clause 10 of the Government CPP Policy dated 9.11.98 states as follows :“All the adhoc arrangements allowed for wheeling and reduction ofcontract demand shall be regularized in accordance with the provisionscontained in the regulation.”According to Shri Rakesh Gupta, this clause has been specifically inserted tofacilitate regularization of adhoc arrangements of reduction in contract demandw.e.f. 22.6.1998. If it were to be argued that earlier adhoc arrangements forreduction in contract demand were only to be regularized prospectively afterannouncement of this Policy i.e. CPP Policy dated 9.11.98, there was no need tospecifically insert this clause as without this clause also the reduction in contractdemand upto a level of 25% (as per clause 8 of this Policy) would have beenpermitted. He argued that according to several judgments which he cited in thisregard (given below) no provision can be interpreted in a way to make itredundant.Page 10 of 17

Petn.No.68/2002(a) AIR 1986 SC 1499(b) IR 1953 SC 394(c) 1992(2) GLR 1006(d) 1983 ELT (54) (P. & H.)(e) AIR 1962 Punjab 74(f) 1990 (49) ELT 127(g) 1984 (15) ELT 25911.4 Learned Advocate Shri N.K.Majmudar submitted that at the relevant time, therewas no policy authorizing the petitioner to have reduction in contract demand.Therefore, the petitioner approached the State Government and ultimately theState Government issued a letter to GEB and the said contract demand of 25000KVA was reduced to 6250 KVA with effect from 22.6.1998. The saidarrangement was temporary stop gap arrangement till the policy in this regard wasframed by the State Government. Ultimately, the final policy came into existencein November,1998 and as per the said policy, the petitioner was entitled to havereduction of only 25% of total contract demand and accordingly, the petitionerwas entitled to reduction in demand to 6250 KVA from 25000 KVA with effectfrom 9.11.1998, the date on which the policy had come into force. Even the letterof the State Government dt.2.7.1998, makes it clear that the said arrangement ofreduction in contract demand and payment on reduced contract demand was atemporary stop gap arrangement and condition was imposed in the said letter thatas and when the policy is framed by the State of Gujarat, the difference, if at all,would be paid by the petitioner with 15% interest. In fact, the captive powerpolicy and clause 10 of the policy prescribed that if any adhoc arrangement orindulgence is shown by the Government in respect of reduction of contractdemand, then the same may be regularized in accordance with the provisions ofpolicy which had come into force in November,1998. As per Clause 10, itauthorizes the GEB to regularize the period of ad-hoc arrangement and, therefore,rightly so, the GEB demanded the amount from the petitioner towards differencePage 11 of 17

Petn.No.68/2002of contractual demand since the reduction in contractual demand is given effectfrom 9.11.1998 and, therefore, the benefit which was given on temporary basispursuant to the letter of the State of Gujarat was absolutely temporary one and,therefore, the difference of demand charges prior to coming into force of the saidpolicy is required to be recovered by the GEB and, therefore, the petitioner hasapproached this Commission at premature stage. The demand by the GEB is inconsonance with the policy and, therefore, the petition should be dismissed.[12] Thereafter the petition was kept for hearing on 26.7.2006. On that day, theLearned Advocate S/Shri Abhishek Mehta and Rakesh Gupta for Trivedi & Guptawere present on behalf of the petitioner. S/Shri J.M.Vachhani, Kamlesh Jahangir,P.J.Jani were present on behalf of GUVNL, S/Shri K.M.Patel, T.D.Davada andJ.J.Gandhi were present on behalf of DGVCL. The Learned Advocate Shri NiravMajmudar was present on behalf of all the unbundled companies (erstwhile GEB).Shri D.D.Halpati, Dy.Section Officer, Energy & Petrochemicals Deptt.,Government of Gujarat, Gandhinagar was present on behalf of the Government atthe time of hearing.12.1 Shri D.D.Halpati submitted adjournment application stating that due to someadministrative reasons, affidavit or reference from Government could not be filedand therefore, he requested that adjournment may be granted for filing a referencebefore the Commission.12.2 The Learned Advocate Shri Nirav Majmudar submitted that as per the orderpassed by the Commission, GUVNL has submitted information regarding othercompanies which had applied for the reduction of contract demand to GEB andthe cases in which GEB has granted reduction in contract demand. GUVNL havealready filed affidavit with details regarding the companies which had applied forreduction of contract demand and date from which the request for reduction incontract demand was granted. He further submitted that the respondent afterPage 12 of 17

Petn.No.68/2002collecting details from all Discoms of GUVNL and after going through the oldrecords, has submitted the details of CPP units which had demanded reduction incontract demand before 9.11.1998 and approval given thereof. Such details weregiven at Annexure-I of the affidavit. He also submitted that only in Search Chemcase, there was an ad-hoc arrangement after the expiry of two year contract periodtill the introduction of new policy. As such, it is a different case from others.12.3 Learned Advocate Shri Rakesh Gupta emphasized that only in the present case(M/s.Search chem), there was an ad-hoc arrangement which was to be regularizedas per the policy to be made by the Government of Gujarat. He read out thedetails of other cases in which reduction in contract demand was granted. In oneof the cases i.e. Gujarat Alkali’s case, reduction in contract demand was madew.e.f.9.11.1998 by the respondents which was even before the expiry of twoyears stipulation. As such, in this case, reduction in contract demand was allowedeven before expiry of two years and there was no ad-hoc arrangement like that ofM/s.Search Chem Industries. He also invited our attention to clause 10 of the CPPpolicy and also referred to our oral order dt.9.3.2006. According to him, no clauseshould become redundant while interpreting an order/ policy. In support of hissubmission he cited the Supreme Court Order (1986 SC 1499) and referred toPage 6 of the said judgment.12.4 Replying to the submission made by the Learned Advocate Shri Rakesh Gupta,Learned Advocate Shri Nirav Majmudar mentioned that as far as Gujarat AlkaliesLtd. is concerned, the reduction in contract demand was permitted (w.e.f.9.11.1998) even before expiry of two years period since the same was stipulatedin clause 8 of the CPP Policy of Govt. of Gujarat which took effect on 9.11.1998.As such, there was no deviation from CPP Policy in this case. Secondly, inrespect of M/s.Search Chem, the reduction in contract demand was also allowedfrom 9.11.1998 based on the same CPP Policy and accordingly, the GEB hasissued circular for administrative guidelines. The clause 10 of the CPP PolicyPage 13 of 17

Petn.No.68/2002does not state that the policy has to be applied with retrospective effect.Regarding the Supreme Court judgment referred to by the Learned Advocate ShriRakesh Gupta, he submitted that it is a matter of interpretation and the court maydepart from the plain reading. In the present case, clause 10 requires to beconsidered for interpretation.[13] Thereafter, the petition was kept for hearing on 10.8.2006. On that day, LearnedAdvocate Shri Abhishek Mehta for Trivedi & Gupta was present on behalf of thepetitioner. Learned Advocate Shri S.J.Nayak for Advocate Shri N.K.Majmudarwas present on behalf of GUVNL. Nobody remained present for DGVCL &Government of Gujarat.13.1 The Commission had received a fax from GUVNL for adjourning the hearing ofthe above petition, since the concerned officers had to attend meeting of UltraMega Power Project at New Delhi and hearing at the Appellate Tribunal forElectricity on 10.8.2006 at New Delhi. We found that full opportunity of beingheard should be given to the parties. Hence, we granted adjournment in theinterest of justice.13.2 The Government had not filed affidavit regarding details of CPP Policy. Hence,we directed the Government of Gujarat to file affidavit regarding details of CPPPolicy on or before 22.8.2006 by furnishing a copy of the same to the petitioner aswell as GUVNL and DGVCL.[14] Thereafter, the petition was kept for hearing on 22.8.2006. On that day, LearnedAdvocate Shri Abhishek Mehta for Trivedi & Gupta was present on behalf of thepetitioner. Learned Advocate S/Shri N.K.Majmudar and S.J.Nayak were presenton behalf of GUVNL along with Shri J.M.Vachhani, Ex.Engineer and ShriP.J.Jani, Dy.Engineer from GUVNL . S/Shri K.M.Patel, Dy.Engineer andPage 14 of 17

Petn.No.68/2002K.P.Jangid were present on behalf of DGVCL. Nobody remained present forGovernment of Gujarat.14.1 The Commission vide its oral order dated 9 th March,2006 (followed by 26 th Julyand 10 th August,2006) directed the Govt. of Gujarat for filing affidavit regardingdetails of CPP policy and clarification regarding effective date of reduction incontract demand with reference to clause 10 of CPP Policy and Govt. of Gujarat,Energy & Petrochemical Department’s Letter (No.CPP-1198-396-PP Cell) dated2.7.1998 But the Government did not file the affidavit. Hence, we again directedthe Government of Gujarat to file the affidavit on or before 19.9.2006 and furnisha copy of the same to the petitioner as well as GUVNL and DGVCL failing whichit would be presumed that GoG have nothing to say in the matter and the petitionwould be disposed off in accordance with law.[15] Thereafter, the petition was kept for hearing on 19.9.2006. On that day, LearnedAdvocates S/Shri Abhishek Mehta & Rakesh Gupta for Trivedi & Gupta werepresent on behalf of the petitioner. Learned Advocate Shri N.K.Majmudar waspresent on behalf of GUVNL along with Shri J.M.Vachhani, Ex.Engineer andShri P.J.Jani, Dy.Engineer from GUVNL . S/Shri K.M.Patel, Dy.Engineer andD.T.Davda, ACE were present on behalf of DGVCL. Nobody remained presentfor Government of Gujarat.15.1 Finally the Under Secretary to the Government, Energy & Petrochemicals Deptt.filed the Affidavit in reply on behalf of Government of Gujarat on 5 thSeptember,2006.15.2 The Government of Gujarat clarified in its Affidavit that as the Captive PowerPolicy was in the pipeline, an adhoc arrangement as envisaged in the Government,Energy & Petrochemicals Department letter No.CPP/1198/398/CP celldt.02.7.1998 for wheeling of surplus power through erstwhile GEB network toPage 15 of 17

Petn.No.68/2002M/s.Searchchem’s own units located at Vapi and Ankleshwar, was grantedsubject to the conditions mentioned therein. As per the provisions of ConditionNo.1, erstwhile GEB was allowed to bill as per the existing Contract Demand of25000 KVA, where as the concerned industry was allowed to pay as per thereduced contract demand of 6250 KVA i.e. 25%. It was clarified in the said letterdated 2.7.1998 that this ad-hoc arrangement shall come into force w.e.f. 22.6.1998and remain in force till either the recipient company or supplying companycontinues to hold 40% of issued share capital in the other company. As decidedby Government, at relevant point of time, this was an absolutely stop-gap ad-hocarrangement to take care of the long pending demand of industry and subject tothe adjustments as per the provisions of final policy. This decision of theGovernment has also been reflected in para 10 of the Captive Power Policyannounced vide Government GR dated 9.11.1998. The same has been repeated inthe letter dt.28.10.1999, from Joint Secretary to Government, Energy &Petrochemicals Department addressed to Member (Finance) erstwhile GEB. Asper the provisions of final policy for captive power, as contained under para 8 ofGR dated 9.11.1998, the industries on commissioning of Captive Power Plants,require to be allowed to reduce their existing contract demand up to a level of25% of their original Contract Demand. The reduction in Contract Demandallowed to the unit on ad-hoc basis (i.e. upto 25%) is exactly in line of thisprovision. “As per the provisions of Para 10 of the said GR dated 9.11.1998, thead-hoc arrangement sanctioned by Government vide letter dated 2.7.1998 has tobe regularized as per the provisions of the Captive Power Policy-1998 w.e.f.22.6.1998 i.e. from the date of commencement of the ad-hoc arrangement grantedearlier”.[16] In view of letter dt.28.10.1999 and in view of Affidavit filed by the Governmentof Gujarat on 6.9.2006, the opponents have to take appropriate action in thematter of reduction of contract demand. It is clear from the above letter that theState Government had passed orders on 22.6.1998 to allow reduction in contractPage 16 of 17

Petn.No.68/2002demand from 25000 KVA to 6250 KVA on adhoc basis w.e.f. 22.6.98 andthereafter the State Government finalized the CPP policy on 9.11.1998. It istherefore crystal clear that the State Government had ordered to regularize theorder of 22.6.1998 and, therefore, the reduction in contract demand of thepetitioner from 25000 KVA to 6250 KVA is to be regularized from 22.6.1998.Hence, we direct the opponents to regularize the reduction in contract demand ofthe petitioner from 25000 KVA to 6250 KVA from 22.6.1998.[17] As brought out in para [9], the petition has been heard and decided as per thedirections of Hon’ble High Court of Gujarat. However, the implementation of thedecision is to be carried out as per the directions of the Hon’ble High Court whichmay be given in the SCA No.7213 of 2004. Either party may move theappropriate application in the High Court for such an order.[18] We order accordingly.[18] With this order, petition stands disposed of.(K.P.GUPTA)MEMBER(F)(MAN MOHAN)MEMBER(T)Place: AhmedabadDate: 12/10/2006Page 17 of 17