Breaking News Can’t interfere with concurrent findings of forum below in...

Can’t interfere with concurrent findings of forum below in second appeal under Section 125 of the Electricity Act: Supreme Court


New Delhi, Oct 9 (ILNS) The Supreme Court today said it cannot reappreciate the evidence at the stage of the second appeal under Section 125 of the Electricity Act 2003 when forums/courts below it have already analysed it and adjudicated on the basis of it.

A two-judge bench of Justice Indira Banerjee and Justice V. Ramasubramanian dismissed the appeal of Maharashtra State Electricity Distribution Company Limited while stating that this Court cannot in a second appeal under Section 125 of the Electricity Act, 2003 interfere with concurrent factual findings arrived at by MERC & APTEL on the basis of facts admitted by the Appellant/Maharashtra State Electricity Distribution Company Limited.

The main issue amongst other substantial issues raised by MSEDCL (Maharashtra State Electricity Distribution Company Limited) remained to be decided that whether the change applicable akin to interest charged by banks and financial institutions from the Prime Lending rate to Base Rate and then to MCLR amount to change in the law in terms of Power Purchase Agreement. 

The supreme court said, that the notification is unambiguous that whenever a notification is being issued by RBI, it constitutes law, such can be altered, modified, cancels or replaces an earlier notification tantamount to a change in the law. 

Notifications pertaining to alteration of lending rates which is charged by banks and financial institutions are not laws, particularly if PPA are in question and therefore do not attract. 

The 2 judges bench did not considered such RBI guidelines/circulars to be of relevant concerning the issues raised by Mahrashtra State Electricity Distribution Company Limited. 

“Directions for time-bound payment within a prescribed time frame are in conformity with the judgment of this Court in Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power which has been upheld by this Court”- the apex court observed.

Appellate Tribunal noticed that Documents such as disputed energy bills and delay in making payment raised by Power Generating Company never disputed by Mahrashtra State Electricity Distribution Company Limited. 

The Supreme court took in reference to Section 63 of Electricity Act and contention of Maharashtra State Electricity Distribution Company Limited regard to the determination of tariff regulations framed by MERC is untenable in eyes of law and such regulations has no application where PPA have been executed pursuant to the bidding process. 

Mahrashtra State Electricity Distribution Company Limited preferred an appeal under section 125 of Electricity Act 2003 against Maharashtra Electricity Regulatory Commission and Appellate Tribunal for Electricity, vide such judgment dated 27.04.2021 which has been passed by Appellate Tribunal for Electricity, affirmed the order dated 16.11.2017 passed by Maharashtra Electricity Regulatory Commission. MERC had also dismissed the contentions of MSEDC that since RBI has introduced base rate system and Marginal cost of funds based lending rate system, it has created a change in law, within the definition of ‘Change in Law’ as mentioned in Power Purchase Agreements executed between Maharashtra State Electricity Distribution Company Limited and Power Generating Companies so as to alter rate of LPS i.e. Late Payment Surcharge payable by Appellant MSEDCL to Power Generating Companies under PPA i.e. Power Purchase Agreements. 

The bench reached the conclusion that this court cannot reappreciate the evidence at the stage of the second appeal under section125 of Electricity when below forums/courts has already been analysed and based on that adjudicated the matter. It cannot reopen the factual question of whether at all PLR rates were being notified by SBI Short Loans. 

SBAR has been defined in Power Purchase Agreements which is the Prime Lending rate per annum fixed by the State Bank of India (SBI) from time to time for loans with one-year maturity. 

Supreme court also observed with regard to Power Purchase Agreement, wherein the parties have mutually agreed on a particular rate of interest, in case there is no SBI Prime Lending Rate , provisions of change in law contained in Article 13 of PPA to LPS will not be applied at all.

Referring to Uttar Haryana Bijli Vitran Nigam Limited and Another v Adani Power Limited and Others(2019)5 SCC 325 Mr. Mukherjee for Appellant argued that a change or amendment in the LPS rate does not constitute Change in Law because there is no impact on cost or revenue of the Generating Company. 

Mr. Singhvi for Power Generating Companies  submitted that the second appeal filed by the Appellant should be dismissed with directions to the Appellant to make payment of the balance reconciled outstanding interest liability of Rs.48.55 crore

Maharashtra State Electricity Board, is a Distribution Licensee under the provisions of the Electricity Act, 2003, with license to supply electricity all over the State of Maharashtra, except some parts of the city of Mumbai. The Appellant is a bulk purchaser of electricity from generators of electricity.  

Power Generating Companies submitted their bids on the tender notice issued inviting bids for the supply of electricity to Maharashtra State Electricity Board. The two sets of PPA i.e stage 1 and stage 2 of PPAs contained similar terms and conditions. 

By notification dated 1.7.2010, the pre-existing BPLR (Benchmark Prime Lending Rate) system ceased to exist with the present system of Base Rate System. Soon after this, the Reserve Bank of India introduced the Marginal Cost of Funds Based Lending Rate (MCLR) replacing the Base Rate System with effect from 1st April 2016. 

The supreme court acknowledged the fact that there was no dispute at all w.r.t. the obligation to pay Late Payment Surcharge (LPS) in case of delay in payment of bills raised by the Power Generating Companies on the Appellant arises from the Power Purchase Agreements.  LPS is payable at the rate agreed upon by the parties to the Power Purchase Agreements. The Power Purchase Agreements stipulate that LPS for the delay in payment of bills is to be computed on the basis of the Prime Lending Rate fixed as per SBAR, that is, the State Bank Advance Rate./ILNS/KY/KR/SNG/IL/


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