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C.A.No.6036/2012 etc.  

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6036 OF 2012

A.P. Power Coordination Committee & Ors.       …..Appellants

Versus

M/s. Lanco Kondapalli Power Ltd. & Ors.       …..Respondents

W I T H

C.A.Nos. 6061 of 2012; 6138 of 2012; 9304 of 2013  and 6835 of 2015

J U D G M E N T

SHIVA KIRTI SINGH, J.

1. The  leading  matter  –  C.A.No.6036  of  2012  as  well  as  

C.A.No.6061 of 2012 are statutory appeals arising out of a common  

order dated 2.7.2012 passed by Appellate Tribunal for Electricity (for  

short, ‘APTEL’) whereby pleas under Section 14 of the Limitation Act,  

1963 to explain the alleged delay in preferring claims by the common  

respondent – M/s. Lanco Kondapalli Power Ltd. (for brevity referred to  

as  ‘M/s.  LANCO’)  a  power  generating  company  before  the  Andhra  

Pradesh Electricity Regulatory Commission (hereinafter referred to as  

‘the Commission’) has been accepted and as a result the main claim in  

the leading matter  relating to Bill  for  Capacity Charges and in the  

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C.A.No.6036/2012 etc.  

other appeal for Minimum Alternate Tax (MAT) for 2001-2005 have  

been remanded for a follow up order by the Commission on the actual  

claims and interest.  In respect of MAT, a concession on merits was  

recorded in respect  of  period 2006-2009 and for  the earlier  period  

(2001-2005) the contest was confined only to issue of limitation, as  

evidenced by Original Order of Commission dated 13.6.2011.  Hence,  

through a  SLP leading  to  C.A.No.6835 of  2015,  the  Appellant  has  

chosen to make a direct challenge to aforesaid order to explain and  

overcome the alleged concession in respect of claim for reimbursement  

of MAT for the entire period of 2001-2009.  C.A. No.6138 of 2012 is a  

statutory appeal to again challenge MAT for 2006-2009 but directed  

against appellate order dated 20.7.2012 by APTEL.  The last matter,  

C.A.No.9304 of 2013 arises out of a SLP against the original order of  

Commission  dated  8.8.2013  relating  to  MAT  claim  for  the  period  

2009-2012.   Since  issues  are  same  or  similar  between  the  same  

appellant and respondent in all these appeals, they have been heard  

together and shall  be governed by this common judgment.  Unless  

otherwise indicated the facts have been noted from the records of the  

main matter, i.e., C.A.No.6036 of 2012.

2. Instead of  merits  of  bills  raised by M/s.  LANCO for  capacity  

charges the issue of limitation has assumed greater significance and  

has thrown up two important points.  First, whether the Limitation  

Act is applicable to a claim before the Commission and if the answer  

is in positive, then second, whether APTEL’s order reversing the views  

of Commission and accepting claim under Section 14 of the Limitation  

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Act is in accordance with law or not.  It is not in dispute that if the  

order  of  APTEL  is  upheld,  the  issue  of  correctness  or  validity  of  

capacity charges will stand remanded for decision by the Commission  

in  accordance  with  law.   So  far  as  claim  of  M/s.  LANCO  for  

reimbursement of MAT for the period 2001-2005 is concerned, it shall  

stand rejected if APTEL’s order on the issue of limitation is reversed,  

otherwise  such  claim  for  the  aforesaid  period  as  well  as  for  later  

period upto 2012 will  be governed by the present judgment on the  

issue of legality and admissibility of claim for MAT.

3. Before  adverting  to  the  issues  noticed  above  and  the  rival  

contentions, it will be useful to notice the essential facts relevant for  

deciding the issues.  M/s. LANCO is engaged in the generation and  

sale of electricity.  Its Registered Office is at Hyderabad and it has set  

up its  power  project  at  Kondapalli  Industrial  Development  Area  in  

Krishna  District  of  Andhra  Pradesh.   A.P.  Power  Co-ordination  

Committee, the appellant no.1, as the name suggests, was constituted  

on 07.06.2005 to ensure coordination between the four distribution  

companies of Andhra Pradesh who are appellant nos.3 to 6.   M/s.  

Transmission  Corporation  of  Andhra  Pradesh  (APTRANSCO)  is  the  

second  appellant.   At  the  relevant  time  the  appellant  no.2  was  

engaged in procurement of power for the Distribution Companies.  In  

the  first  phase  of  power  sector  reforms,  Andhra  Pradesh  State  

Electricity Board was unbundled into Generation and Transmission  

Corporation and subsequently the four Distribution Companies were  

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notified by the Government on 31.3.2000 on account of unbundling of  

the Transmission Corporation in the subsequent phase of reforms.

4. There is no dispute between the parties that the erstwhile A.P.  

State  Electricity  Board  had  invited  bids  for  short  gestation  power  

projects.  M/s. LANCO also submitted its bid which was accepted by  

the  Board  and  approved  by  the  Government  of  Andhra  Pradesh  

leading  to  a  Power  Purchase  Agreement  (for  brevity,  ‘PPA’)  dated  

31.3.1997.  M/s. LANCO then set up a 355 MW (ISO) Combined Cycle  

Gas Power Plant.  The completion of the plant took more than the  

scheduled period of 16 months.  It is not necessary to go into reasons  

for the delay in the present proceeding.  It  will suffice to note that  

M/s.  LANCO declared 25.10.2000 as the date of  commissioning  of  

their project but this was not accepted as the Commercial Operation  

Date  (COD)  by  APTRANSCO.   However,  M/s.  LANCO continued  to  

generate power and delivered it to grid.  It raised bills from 19.9.2000.  

While the charges for the energy delivered were accepted, the bill for  

capacity  charges  was disallowed on the  ground that  it  was not  in  

accordance with the PPA.  On 8.9.2003 M/s. LANCO issued a notice of  

arbitration under Article 14 of the PPA.  There is some dispute as to  

whether this notice was only for invoking the mechanism for informal  

dispute  resolution  or  also  a  notice  for  resolution  of  dispute  by  

Arbitration.   The  appellants  through  a  reply  dated  24.9.2003  

requested for an ordinary meeting to discuss pending problems before  

considering the request for arbitration.  On 14.10.2003 M/s. LANCO  

wrote a letter intimating the nomination of its Company’s Secretary as  

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its representative to participate in the proceeding for informal dispute  

resolution required by Article  14.1.   It  requested the other  side to  

designate their representative and to intimate the date and venue of  

the  meeting.   The  appellants  through  a  letter  dated  25.11.2003  

designated their Chief General Manager to act as their representative  

but the meeting scheduled could not take place.  On 26.3.2004, M/s.  

LANCO issued another notice for arbitration and intimated the name  

of Justice B.P. Jeevan Reddy as its arbitrator.  Through a letter dated  

8.4.2004, APTRANSCO raised various grounds in support of its stance  

that  the arbitration clause was not  enforceable,  particularly  in the  

light of Section 86(1)(f) of the Electricity Act, 2003.

5. M/s. LANCO did not accept the stand of appellants and filed an  

Arbitration Application bearing No.31 of 2004 on 27.4.2004 before the  

High Court of Andhra Pradesh at Hyderabad under Section 11(4) of  

the  Arbitration  and Conciliation  Act,  1996  seeking  appointment  of  

arbitrator for APTRANSCO so that the disputes raised by it could be  

resolved  through  arbitration.   APTRANSCO  contested  the  

maintainability  of  arbitration  proceedings  on  various  grounds  

including  Section  86(1)(f)  of  the  Electricity  Act,  2003.   While  the  

matter before the High Court was still pending, the scope and effect of  

Section 86(1)(f) of the Electricity Act was decided by a judgment of this  

Court dated March 13, 2008 in the case of Gujarat Urja Vikas Nigam  

Ltd. v. Essar Power Ltd. (2008) 4 SCC 755.  This Court held that all  

disputes between the licencee such as the appellants and generating  

companies  such  as  M/s.  LANCO require  adjudication  only  by  the  

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State Commission which is alone competent to either adjudicate the  

disputes or refer them for arbitration and to appoint arbitrator.  It was  

clearly  held  that  it  is  the  State  Commission  or  its  nominee  under  

Section 86(1)(f) of the Electricity Act, 2003 and not the Chief Justice  

or his nominee under Section 11 of the Arbitration and Conciliation  

Act, 1996 who will  have the authority to appoint an arbitrator if it  

decides  to  refer  the  disputes  to  arbitration.   This  Court  further  

clarified that except the power of appointing arbitrator getting shifted  

to the State Commission, conduct of arbitration even under Section  

86(1)(f) of the Electricity Act would be governed by provisions of the  

Arbitration and Conciliation Act, 1996.  Only in cases of conflict the  

Electricity Act would prevail.

6. In view of law settled by the judgment in the case of  Gujarat  

Urja (supra), the Arbitration Application No.31 of 2004 was closed by  

the High Court on 18.3.2009 with liberty to M/s. LANCO to approach  

the Commission under Section 86(1)(f)  of  the Electricity  Act.   M/s.  

LANCO filed O.P.No.33 of 2009 before the Commission on 5.6.2009 to  

claim capacity charges on the basis  of  bills  raised from 15.9.2000  

onwards to 11.1.2001.  The appellants resisted the claim inter alia on  

the  ground  of  limitation.   The  appellants  preferred  a  specific  

application  for  rejecting  the  O.P.No.33  of  2009  on  the  ground  of  

limitation.  M/s. LANCO preferred a reply in which Section 14 of the  

Limitation Act was invoked for  seeking exclusion of  time when the  

arbitration proceeding had remained pending with the High Court in  

the form of Arbitration Application No.31 of 2004.  The Commission  

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rejected  the  claim  by  order  dated  13.6.2011  on  the  ground  of  

limitation  by  holding  that  the  time  spent  in  the  arbitration  

proceedings did not merit exclusion under Section 14 of the Limitation  

Act  because it  had not  been pursued in good faith.   M/s.  LANCO  

preferred  Appeal  No.129  of  2011  before  APTEL.   That  appeal  was  

allowed  by  the  impugned  judgment  presently  under  appeal,  dated  

2.7.2012.   APTEL reversed  the findings  of  the  Commission on the  

issue of limitation and directed the Commission to pass appropriate  

follow up order on the actual claims and interest.

7. So far as claim of M/s. LANCO for reimbursement of MAT for  

various periods is concerned, the claim for the period 2001-2005 was  

rejected  by the Commission on the ground of  limitation but  it  got  

revived  on  account  of  common  appellate  order  by  APTEL  dated  

2.7.2012 and after the remand only a consequential order is required  

to be passed by the Commission.  For other periods,  the claim for  

reimbursement of MAT has been allowed in favour of M/s. LANCO.  

The  Commission  allowed the  claim for  the  periods  2006-2009 and  

2009-2012 on account of its earlier order in respect of similar claim in  

another  case  which  elicited  a  concession  by  the  counsel  for  the  

appellants, although in the written statement before the Commission  

the  appellants  had seriously  contested  such  claim on merits.  It  is  

contended by Mr. V. Giri, learned senior counsel for the appellant that  

the concession was misconceived and unauthorized.  Learned senior  

counsel  for  M/s.  LANCO,  Mr.  Sundaram,  fairly  conceded  that  the  

issue relating to claim for reimbursement of MAT may be heard and  

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decided by us on merits and accordingly the parties have been heard  

in detail on the merits of such claim for the entire period, i.e., from  

2001 to 2012.  But in case the claim of MAT for 2001-2005 is held by  

us to be barred by limitation, it will not be considered on merits.

8. Appearing for the appellants, learned senior advocate Mr. V. Giri  

pointed out that in the impugned order under appeal APTEL has not  

considered the claim of capacity charges on merits and therefore this  

Court is not required to go into facts for deciding the merits of bills for  

capacity charges.  On the issue of limitation he contended that there  

was no issue raised before the Commission that bar of limitation as  

per  Limitation  Act  is  not  applicable  to  the  proceedings  before  the  

Commission.   He referred to the arguments advanced on behalf  of  

M/s. LANCO before APTEL to highlight that even in appeal it claimed  

exclusion of time spent in arbitration proceedings under Section 14(2)  

of  the  Limitation Act  and hence  this  Court  should  not  allow M/s.  

LANCO to now urge that the Limitation Act cannot apply and hence  

there will be no bar of any limitation in preferring a claim before the  

State Commission.  We have noticed that in para 28 of the judgment  

under appeal APTEL has noted that the appellant no.1 (M/s. LANCO)  

does not seriously dispute the fact that the Limitation Act would be  

applicable to the present case.  But learned counsels have conceded  

that the issue whether Limitation Act is applicable or not is one of law  

and accordingly the parties have advanced detailed submissions on  

this issue.  Hence we propose to consider these submissions also.

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9. From the above stand of the parties, the following issues emerge  

for our consideration and adjudication :-

(i) Whether the Limitation Act, 1963, particularly  

Section 3 and the Schedule will apply to any action instituted  

before the Commission under Section 86(1)(f) of the Electricity  

Act, 2003?

(ii) Whether the impugned order passed by APTEL  

permitting application of principles emerging from Section 14 of  

the Limitation Act, is against Law so as to warrant interference?

(iii) And  whether  on  merits  the  claim  for  

reimbursement of MAT is in contravention of relevant terms and  

conditions of the Power Purchase Agreement (PPA)?  

10. At this juncture, relevant provisions or articles of PPA need to  

be noticed.  They are as follows:

“Article 3.8 - Claims for Taxes on Income

Any advance Income tax payable for the Project  in any month supported by a certificate of a chartered  accountant approved by the Board (such approval not  to  be  unreasonably  withheld  or  delayed)  shall  be  reimbursed by the Board.  After the tax assessment is  completed  for  any  year,  and  the  liability  thereon  is  determined  by  the  taxation authorities  in  India,  the  excess  or  shortfall  in  the tax liability  so determined  will be adjusted in the supplementary bill (as defined  in Article 5.5) for the succeeding month or on the due  date of payment thereof, whichever is later, subject to  Article 3.9.  Tax to be reimbursed will be calculated on  the income from the project  only,  and calculated on  the assumption that the Company is engaged solely in  the  ownership,  design,  financing,  construction,  operation and maintenance of the Project and will not  include tax reimbursements of the previous year.

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5.5. - Supplementary Bills

For payments due to the Company for reimbursement  of  taxes  on  income,  incentives  or  taxes  and  duties  levied  on  generation  and/or  sale  of  electricity,  payments  for  periods  of  political  Force  Majeure  affecting  either  Party  or  Non-Political  Force  Majeure  affecting  the  Board  or  any  other  adjustments  or  payments  due  to  the  Company  hereunder,  the  Company shall present a supplementary bill, in such  form as may be mutually agreed upon by the Board  and  the  Company,  (duly  supported  by  supporting  data).  Each supplementary bill shall be payable by the  Board on the Due Date of Payment, except in case of  supplementary bill for taxes on income.  At least thirty  (30) days prior to the date when income tax is required  to be paid by the Company, the Company shall submit  to the Board a supplementary bill for the same.  This  bill  shall be payable by the Board within twenty-five  (25)  days  of  its  presentation  to  the  Board  by  the  Company or at least five (5) days before the date on  which the tax is required to be paid by the Company,  whichever is later.

5.7 - Billing Disputes

Notwithstanding any dispute as to all or any portion of  any bill submitted by the company to the Board, the  Board shall  pay the full  amount of the bill  provided  that  the amount  of  the bill  is  based on (a)  a  meter  reading that has either been signed by both Parties or  certified by the Company with respect to the Board’s  refusal  to  sign  within  three  (3)  days  of  the  meter  reading date and (b) the provisions of this Agreement.  The Board shall notify the Company of any disputed  amount, and the Company shall rectify the defect or  otherwise notify its rejection of the disputed amount,  with reasons, within five (5) days of the reference by  the Board, falling agreement on which the provisions  of Article 14 shall apply with respect thereto.  If the  resolution  of  any  dispute  requires  the  Company  to  reimburse  the  Board,  the  amount  to  be  reimbursed  shall  bear  interest  at  the  Working  Capital  Rate  applicable to the Board from the date of payment by  the Board to the date of reimbursement.  The Board  may  not  dispute  any  amount  after  sixty  (60)  days  following the Due Date of Payment therefor.

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11.1 - Definition of Law

For the purposes of this Agreement, “Law” means the  constitution  of  India  and  any  act,  rule,  regulation,  directive, notification, order or instruction having the  force  of  Law  enacted  or  issued  by  any  competent  legislature, or Government Agency.

11.2 -  Definition of Change in Law

For the purposes of this agreement, “Change in Law”  means (i) any enactment or issue of any new Law,

(ii) any  amendment,  alteration,  modification  or  repeal  of  any existing Law or any new or   modified  directive or order thereunder,

(iii) any change in the application or interpretation  of any Law by a competent legislature or Government  Agency  in  India  which  is  contrary  to  the  existing  accepted application or interpretation thereof, in each  case  coming  into  effect  after  the  date  of  this  Agreement,  provision  for  which  has  not  been  made  elsewhere in the Agreement.

11.4  - Additional/Reduced Expenditures or Other  Increased/Reduced Costs due to a Change in Law  or Change in Permits

(a) Within  sixty  (60)  days  after  the  COD of  the  first  Generating  Unit  or  the  end  of  any  Tariff  Year,  the  Company shall determine after accounting for the net  economic  effects  on the Company during the period  prior to the COD of the first Generating Unit or, as the  case may be, such Tariff Year of any Changes in Law  or  Changes  in  Permits,  based  on  an  accounting  conducted  by  an  independent  chartered  accountant  reasonably acceptable to the Board. If as a result of  such accounting, the company suffers an increase in  costs or a reduction in after-tax cash flow or any other  net  economic  burden  which  it  would  not  have  experienced but for such changes in Law or Changes  in Permits (taking into account the reasonable costs of  financing  of  any  capital  improvement  in  the  period  prior to the COD of the first Generating Unit or, as the  

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case may be, such Tariff Year), the aggregate economic  affect of which exceeds the equivalent of Rupees three  (3) crores per 100 MW or pro-rata for any part thereof  during  the  period  prior  to  the  COD  of  the  first  generating unit and Rupees one (1) crore per 100 MW  or pro-rata for any part thereof during the period after  the COD of the  first Generating Unit, during any Tariff  Year  (excluding  cost  adjustments  in  respect  of  Changes in Law or Changes in Permits from any prior  period),  the  Company  may  notify  the  Board  of  any  proposed amendments to this Agreement required to  put  the  Company  in  the  same economic  position  it  would  have  occupied  in  the  absence  of  such  cost  increase  reduction in the net after-tax cash flow or  any  other  economic  burden.   Such  notice  shall  be  accompanied  by  a  certification  of  the  Company’s  independent  chartered  accountant  and a  reasonably  detailed explanation of certification of any officer of the  Company respecting the basis for such net economic  burden  increase.   The  amount  of  an  net  economic  burden claimed by the Company shall be net of any  insurance proceeds received in respect thereof.    

(b) Within  sixty  (60)  days  after  the  COD of  the  first  Generating Unit or the end of any Tariff Year, if after  accounting as provided in subsection (a)  for  the net  economic  effects  on the Company during the period  prior to the COD of the first Generating Unit or as the  case may be, such tariff year of any changes in law or  Changes  in  Permits,  the  Company  experiences  a  reduction in costs or an increase in after-tax cash flow  or any other net economic benefit which it would not  have  experienced  but  for  such  Changes  in  Law  or  Changes in Permits, the aggregate economic effect of  which  exceeds  the  equivalent  of  Rs.3  crore  per  100  MW or pro-rata for any part thereof during the period  prior to the COD of the first Generating Unit or Rupees  one (1)  crore per  100 MW  or pro-rata for  any part  thereof, following the COD of the first Generating Unit,  during any tariff Year, the Company shall provide to  the Board results of such accounting together with a  certificate  of  the  Independent  chartered  accountant  and  the  Board,  in  response  thereto  may  notify  the  company  of  any  proposed  amendments  to  this  Agreement required in its good faith judgment to put  the Company in the same economic position it would  have occupied in the absence of such cost reduction,  increase  in the net  after-tax cash flow or any other  economic benefit.  Such notice shall be accompanied  

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by a reasonably detailed explanation of a certification  of an officer of the Company respecting the basis for  such decrease.

(c) Only  increased  costs  which  are  necessarily  and  unavoidably incurred in complying with or as a direct  result of the Changes in Law or Changes in Permits  taking into account, all reasonable steps which may be  taken  by  the  Company  to  minimize  such  increased  costs,  shall  be considered as increased costs for the  purposes of this Article.

(d) As soon as practicable during the period prior to  the COD of the first Generating Unit or any Tariff Year  after the Company becomes aware of any Change in  Law or Change in Permits which could reasonably be  expected to give rise to an increase/reduction in costs  or reduction/increase in after-tax cash flow pursuant  to paragraph (a) and (b), the Company shall provide an  interim notice thereof to the Board describing, to the  extent possible, the expected effect on the costs and  the cash flow of  the Company.   The Company shall  consult  with  the  Board  regarding  such  increased  expenditures  and  the  Company  shall  use  all  reasonable  efforts  to  implement  the  Board’s  recommendations, if any, to minimize such increased  expenditures consistent with Prudent Utility Practices  and the Company’s obligations under this Agreement.  If  prior  to  the  end  of  any  Tariff  year  the  Company  demonstrates  on  the  basis  of  a  certification  of  its  chartered  accountant  that  any  Change  in  Law  or  Change  in  Permits  would  result  in  the  Company’s  being  unable  to  meet  its  payment  obligations  to  its  lenders under the Financing Documents on a current  basis, then in addition to the Company’s right under  sub-section (a) but notwithstanding the time period for  exercising such rights specified therein, the Company  shall  be  entitled  to  propose  amendments  to  this  Agreement  as  provided  in  sub-section(a)  and  the  Parties  shall  consider  such  proposal  as  provided  in  subsection (e) below, provided that any benefits which  the Company is eligible to receive under subsection (a)  shall  be  reduced  by  any  benefits  received  by  the  Company prior to the end of the relevant period under  this subsection.

(e) Within thirty (30) days after receiving any proposal  pursuant to paragraph (a), (b) or (d), the Parties shall  

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C.A.No.6036/2012 etc.  

meet  and  agree  on  either  amendments  to  this  Agreement or alternative arrangements to implement  the foregoing.  If no such agreement has been reached  within ninety (90) days after any meeting pursuant to  Article  11.3(a),  (b)  or  (d),  as  the  case  may  be,  the  proposals  of  the  Parties  shall  be  submitted  to  the  Independent  chartered  accountant  referred  to  in  paragraphs (a), (b) and (d), as the case may be.

14.1  - Informal Dispute Resolution

(a) Each  Party  shall  designate  in  writing  to  the  other Party a representative who shall be authorized to  resolve any dispute arising under this Agreement in an  equitable manner.   

(b) If  the designated representatives are unable to  resolve a dispute under this Agreement within fifteen  (15)  days,  such  dispute  shall  be  referred  by  such  representatives  to  a  senior  officer  designated  by  the  Company and a senior officer designated by the Board,  respectively, who shall attempt to resolve the dispute  within a further period of fifteen (15) days.

(c) The Parties hereto agree to use their best efforts  to  attempt  to  resolve  all  disputes  arising  hereunder  promptly,  equitably  and  in  good  faith,  and  further  agree  to  provide  each  other  with  reasonable  access  during  normal  business  hours  to  any  and  all  non- privileged records, information and data pertaining to  any such dispute.

14.2  - Arbitration

    (a)   In the event that any dispute is not  resolved between the Parties pursuant to Article 14.1,  then  such  disputes  shall  be  settled  exclusively  and  finally by arbitration.  It is specifically understood and  agreed  that  any  dispute  that  cannot  be  resolved  between the Parties, including any matter relating to  the  interpretation  of  this  Agreement,  shall  be  submitted to arbitration irrespective of the magnitude  thereof,  and the amount in dispute or whether such  dispute would otherwise be considered justiciable or  ripe for  resolution by any court or arbitral tribunal.  This Agreement and the rights and obligations of the  Parties hereunder shall remain in full force and effect  

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pending  the  award  in  such  arbitration  proceedings,  which  award  shall  determine  whether  and  when  termination of this Agreement if relevant shall become  effective.”

11. Although, we were taken through various other Articles of PPA  

but it is not imperative to reproduce all such provisions.  Article 3.1  

provides for capacity charge which is required to be computed as per  

Article 3.2 and is meant to be paid by the Board.  This is in respect of  

the Cumulative Available Energy provided by the Project in respect of  

any tariff year, upto  (but not exceeding) an amount calculated on the  

basis  of  Prescribed  Plant  Load factor.   Since  the  issue of  capacity  

charge is not required to be addressed by us on merits, further details  

need not detain us.   Clause 3.8 has been read over again and again  

because it is of immense significance in deciding the issue relating to  

MAT.  Article 5 contains various sub-articles relating to billing and  

payment.  They provide for monthly tariff bills which are payable by  

the  Board  or  the  licensee  on  the  Due  Date  of  Payment.   The  

supplementary bills are covered by Article 5.5.  They cover different  

items and are required to be supported by supporting data.  Such bills  

are  also  payable  on  the  Due  Date  of  Payment,  except  the  

supplementary bill for taxes on income which is to be submitted at  

least 30 days prior to the time when the income tax is required to be  

paid by the generating company.   Such  bill is payable by the Board  

within 25 days of presentation or at least 5 days before the date on  

which the tax is required to be paid by the company, whichever is  

later.

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12. Article  5.7  relates  to  billing  disputes  and  it  refers  to  the  

provisions of Article 14 which governs Arbitration including Informal  

Dispute Resolution.  Article 11 caters to the effects of Change in Law  

upon  the  rights  and  liabilities  of  the  parties.   This  has  assumed  

relevance in the present  context  on account of  stand taken by the  

appellant that MAT does not fall under Article 3.8 governing claims for  

Taxes on Income but under Article 11.4 which provides an altogether  

different  procedure  for  making  claim  for  additional  costs  by  the  

company on account of any Change in Law etc.  In this context it may  

usefully  be noted that  Article  1 of  PPA contains definitions  for  the  

purposes of  the agreement.   Article 1.2 adopts definition of  several  

terms as defined in the Indian Electricity (Supply Act) 1948 and set  

out  in Schedule  B to  the Agreement.   Article  1.4  contains  various  

general provisions such as - unless the context otherwise requires, the  

singular shall include plural etc.  and vice versa  and that “ …….a  

reference to any Law shall be construed as a reference to such Law as  

from time to time amended or re-enacted.”

13. Mr.  Giri   drew  our  attention  to  various  provisions  of  the  

Electricity Act, 2003 particularly to Section 86 providing for various  

functions of  a State Commission which include the function under  

clause  (f)  in  Sub-Section  (1)  empowering  the  Commission  to  

“adjudicate upon the disputes between the licensees and generating  

companies and to refer any dispute for arbitration.”  He also referred  

to  Section  94  which  vests  the  Commission,  for  purposes  of   any  

inquiry or proceedings under this Act, with same powers as are vested  

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in Civil Court under the Code of Civil Procedure, 1908 in respect of  

various matters such as summoning and enforcing the attendance of  

any person and examining him on oath; discovery and production of  

any document  etc;  receiving  evidence  on affidavit;  requisitioning  of  

any  public  record;  issuing  commission  for  the  examination  of  

witnesses;  reviewing  its  decisions,  directions  and  orders;  and  any  

other  matter  which  may  be  prescribed  by  the  Commission.   The  

Commission shall also have powers to pass suitable interim order and  

authorize  any  suitable  person  to  represent  the  interest  of  the  

consumers in the proceedings before it.   Section 95 declares that all  

proceedings  before  the  Commission  shall  be  deemed to  be  judicial  

proceedings within the meaning of Sections 193 and 228 of the Indian  

Penal Code and it shall be deemed to be a Civil Court for the purposes  

of  Sections 345 and 346 of the Code of  Criminal Procedure,  1973.  

Section  158  is  a  solitary  provision  in  Part  XVI  which  provides  for  

arbitration under  the heading “Dispute Resolution”.    According to  

Section  158,  any  matter  directed  to  be  determined  by  Arbitration,  

unless there is expressed provision to the contrary in the license of a  

licensee,  shall  be  determined  by  such  person  or  persons  as  the  

Commission may nominate in that behalf on the application of either  

party; but in all other respects the Arbitration shall be subject to the  

provisions of the Arbitration and Conciliation Act, 1996.

14. On  the  basis  of  powers  and  functions  of  the  Commission  

highlighted above  and on account  of  law declared  in  Gujarat Urja  

(supra) as well as in Tamil Nadu Generation & Distribution Corpn.  

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C.A.No.6036/2012 etc.  

Ltd. v. PPN Power Generating Co. (P) Ltd.,  (2014) 11 SCC 53, the  

contention  of  Mr.  Giri  is  that  in  discharge  of  its  functions  to  

adjudicate  all  disputes  between  the  licensees  and  generating  

companies and/or in referring a dispute to arbitration under Section  

86(1)(f) of the Electricity Act, the Commission deserves to be treated as  

a substitute and therefore equivalent of civil court for the purpose of  

attracting  the  bar  of  limitation  provided  under  the  Limitation  Act,  

1963.    According  to  him  the  law  laid  down  by  this  Court  that  

Limitation Act applies only to civil  courts in the strict sense of the  

term  requires  reconsideration  in  an  appropriate  case  but  in  the  

present matter, since in the case of  PPN Power Generating Co. (P)   

Ltd.(supra) it has been categorically held that the State Commission  

discharges judicial functions and judicial power of far reaching effect  

and  has  essential  trapping  of  the  Courts,  the  same  should  be  

sufficient  to  make  the  Limitation  Act  applicable  to  petitions  or  

applications that come before the Commission requiring adjudication  

even of matters arising purely out of contract like in the present case  

and not from the statutory provisions of the Electricity Act.  He also  

advanced  a  supplementary  or  alternative  submission  that  there  is  

nothing in the Electricity Act, 2003 to restore to any party the right to  

sue for a cause which has already become barred by law of Limitation,  

rather under the mandate of Section 175 of the Electricity Act, the  

Limitation Act has to be given full respect as a law for the time being  

in  force  unless  any  provision  of  the  Limitation Act  is  found to  be  

inconsistent with the Electricity Act.  Only in a situation of conflict,  

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C.A.No.6036/2012 etc.  

the electricity Act will have a superior or overriding force by virtue of  

Section 174 of the Electricity Act.

15. Yet another submission of Mr. Giri is that the matter does not  

attract Section 2(4) of the Arbitration and Conciliation Act, 1996 (for  

brevity ‘Arbitration Act’) rather Section 43 of the Arbitration Act shall  

govern the rights of the parties and it mandates that the Limitation  

Act, 1963 shall apply to arbitrations as it applies to proceedings in  

courts.  It may however be noted here that in the case of PPN Power  

Generating Co. (P) Ltd.  (supra) in para 65, the Court held that the  

Limitation Act would not be applicable in such matters for various  

reasons  including  Section  2(4)  of  the  Arbitration  Act  which  was  

extracted to highlight that sub-section (1) of Section 40, Sections 41  

and  43  all  in  Part  I  of  the  Arbitration  Act,  would  not  apply  to  

arbitration under any other enactment.  Only rest of the Limitation  

Act would be applicable to the extent not inconsistent with the other  

enactment or any Rule made thereunder.  On that basis in Paragraph  

66 it was held that the provisions with regard to Limitation Act under  

Section 43 of the Arbitration Act would not be applicable to statutory  

arbitrations conducted under the Electricity Act, 2003.

16. In fairness to the submission of Mr. Giri, it is noted that in the  

PPN Power Generating Co. (P) Ltd.(supra), in Paragraphs 64 and 68,  

this Court was satisfied on facts itself that the principle of delay and  

laches was not attracted. Further, the provisions in the PPA in that  

case provided that the seat of Arbitration shall be in London and that  

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C.A.No.6036/2012 etc.  

alone made part I of the Arbitration Act inapplicable to the arbitration  

proceeding and ruled out applicability of Section 43 also.

17. Mr. Giri has placed considerable reliance upon a judgment by  

three Judges of this Court in State of Kerala v. V.R. Kalliyanikutty  

(1999) 3 SCC 657.  The question of law in that case was whether a  

debt  which is  barred by the law of  limitation can be  recovered by  

resorting to recovery proceedings under the Kerala Revenue Recovery  

Act of 1968.  The High Court held that in the absence of any provision  

in the aforesaid Kerala Act creating a substantive right to recover time  

barred  debts,  such  debts  could  not  be  recovered  through  the  

summary proceedings under that Act.  As per Section 71 of the Kerala  

Act the Government could issue a notification making the provisions  

of the Act applicable to the recovery of “amounts due” from any person  

or  class  of  persons  to  any  specified  institution  or  any  class  of  

institutions.   The say of State Government and the State Financial  

Corporation was that the words “amounts due” will encompass time  

barred claims also.  This Court placed reliance upon judgment of the  

Privy Council in the case of Hans Raj Gupta v. Dehra Dun-Mussoorie  

Electric Tramway Co. Ltd. AIR 1933 PC 63.  It found that the Kerala  

Act did not create any new right rather it only provided a process for  

speedy  recovery  of  moneys  due.   Therefore  the  person  claiming  

recovery cannot claim amounts which are not legally recoverable nor  

can a defence of limitation available to a debtor in a suit or other legal  

proceeding be taken away under the provisions of the Kerala Act.  The  

State supported its stand by highlighting the settled legal principle  

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C.A.No.6036/2012 etc.  

that the statute of limitation merely bars the remedy without touching  

the  right.   But  such  submission  did  not  cut  any  ice.   Relevant  

provisions of  the Kerala  Act  led  to  a  conclusion  that  although the  

necessity  of  filing  a  suit  stood  avoided,  the  claim  which  could  be  

legally recovered was not enlarged.  In para 16 this Court concluded  

thus :  

“……… An Act must expressly provide for such enlargement  of  claims  which  are  legally  recoverable,  before  it  can  be  interpreted as extending to the recovery of those amounts  which have ceased to be legally recoverable on the date when  recovery proceedings are undertaken. …..”

In fact  this Court  looked to the scheme of  the Kerala Act  to  

come to a conclusion that “amounts due” are those amounts which  

the creditor could have recovered had he filed a suit.

18. It  is noteworthy that  besides drawing relevant inference from  

the  provisions  of  the Kerala  Act,  in  paragraph 11 the Court  acted  

cautiously in interpreting the words “amounts due” in view of Article  

14 of the Constitution.  It expressed its views thus :  

“….. Moreover, such a wide interpretation of “amounts due”  which destroys an important defence available to a debtor in  a  suit  against  him  by  the  creditor,  may  attract   Article 14 against the Act.  It would be ironic if an Act for  speedy  recovery  is  held  as  enabling  a  creditor  who  has  delayed recovery beyond the period of limitation to recover  such delayed claims.”

In para 12 the Court referred to and relied upon judgment in the case  

of New Delhi Municipal Committee  v.  Kalu Ram (1976) 3 SCC 407  

wherein this Court had similarly interpreted Section 7 of the Public  

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C.A.No.6036/2012 etc.  

Premises (Eviction of Unauthorised Occupants) Act, 1958.  The words  

“arrears  of  rent  payable”  were  given  a  limited  meaning  by  holding  

thus:  

“…..  In  the  context  of  recovery  of  arrears  of  rent  under  Section 7, this Court said that if the recovery is barred by  the law of limitation, it  is difficult  to hold that the Estate  Officer could still insist that the said amount was payable.  When a duty is cast on an authority to determine the arrears  of rent the determination must be in accordance with law.  ….”       

(emphasis added)

19. Mr. Giri referred to paragraphs 98 and 99 of the judgment in  

the case of Kihoto Hollohan v. Zachillhu 1992 Supp. (2) SCC 651 to  

highlight the attributes of a “Court” and those of a Tribunal and also  

the relevant tests which led the court to hold that the Speaker while  

deciding  certain  disputes  is  a  Tribunal.   Similarly  in  the  case  of  

Thakur  Jugal  Kishore  Sinha v.  Sitamarhi  Central  Co-operative  

Bank Ltd.   1967 (3)  SCR 163,  this  Court  held  that  the  Assistant  

Registrar of Co-operative Societies was a court within the meaning of  

the Contempt of Courts Act, 1952.  This inference was based on the  

pronounced view that the subordination for the purpose of Section 3  

of the Contempt of Courts Act means judicial subordination under the  

constitutional  provisions  and  not  subordination  under  the  usual  

hierarchy  of  courts  as  per  Civil  Procedure  Code  or  the  Criminal  

Procedure Code.  The next case in this series is that of  Brajnandan  

Sinha v. Jyoti Narain AIR 1956 SC 66.  In this case it was found that  

the Commissioner appointed under the Public Servants (Inquiries) Act  

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C.A.No.6036/2012 etc.  

1850 (Act 37 of 1850) is not a court within the meaning of the term  

under  Section  3  of  the  Contempt  of  Courts  Act.   This  view found  

favour  largely  because  the  Commissioner  did  not  have  the  legal  

capacity under that Act to deliver “definitive judgment”.  Mr. Giri has  

however  sought  to  highlight  paragraphs  14  to  18  of  the  judgment  

which deal with the essential attributes of a Tribunal so as to clothe it  

with the status of a court.  Those paragraphs are as follows :

“(14)  The pronouncement  of  a  definitive  judgment  is  thus  considered the essential ‘sine qua non’ of a Court and unless  and  until  a  binding  and  authoritative  judgment  can  be  pronounced  by  a  person  or  body  of  persons  it  cannot  be  predicated that he or they constitute a Court.

(15) The Privy Council in the case of ‘Shell Co. of Australia v.  Federal  Commissioner  of  Taxation’,  1931 AC 275 (A)  thus  defined ‘Judicial Power’ at p.295:

‘Is  this  right?   What  is  ‘Judicial  power’?   Their  Lordships  are  of  opinion  that  one  of  the  best  definitions  is  that  given  by  Griffith  C.J.  in  –  ‘Huddart, Parker & Co. v. Moorehead’, (1909) 8 CLR  330 at p.357 (B) where he says: ‘I  am of opinion  that the words ‘judicial power’ as used in S.71 of  the  Constitution  mean  the  power  which  every  sovereign  authority  must  of  necessity  have  to  decide  controversies  between  its  subjects,  or  between itself and its subjects, whether the rights  relate to life,  liberty or property.   The exercise of  this  power  does  not  begin  until  some  tribunal  which has power to give a binding and authoritative  decision (whether subject to appeal or not) is called  upon to take action’.

Their  Lordships  further  enumerated  at  p.297  certain  negative propositions in relation to this subject :

‘1.  A  tribunal  is  not  necessarily  a  Court  in  this  strict sense because it gives a final decision;

2. Nor because it hears witnesses on oath;

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3.  Nor  because  two  or  more  contending  parties  appear before it between whom it has to decide;

4. Nor because it gives decisions which affect the  rights of subjects;

5. Nor because there is an appeal to a Court;

6.  Nor because it  is  a body to which a matter is  referred by another body.

See  ‘Rex  v.  Electricity  Commissioners’  1924-1KB  171(C)’

and observed at page 298:

‘An administrative tribunal may act judicially, but  still  remain  an  administrative  tribunal  as  distinguished from a Court, strictly so-called. Mere  externals  do  not  make  a  direction  to  an  administrative  officer  by  an  ad  hoc  tribunal  an  exercise by a Court of judicial power.’

(16)  The same principle  was reiterated by this  Court  in –  ‘Bharat Bank Ltd. v. Employees of Bharat Bank Ltd.’,  AIR  1950  SC  188  (D);  and  –  ‘Meqbool  Hussain  v.  State  of  Bombay’, AIR 1953 SC 325 (E), where the test of a judicial  tribunal as laid down in a passage from – ‘Cooper v. Willson’,  1937-2 KB 309 (F) at p.340, was adopted by this Court :

‘A  true  judicial  decision  presupposes  an  existing  dispute  between  two  or  more  parties,  and  then  involves four requisites: - (1) The presentation (not  necessarily orally) of their case by the parties to the  dispute,  (2)  if  the  dispute  between  them  is  a  question of  fact,  the ascertainment of  the fact by  means of  evidence  adduced by the parties  to the  dispute and often with the assistance of argument  by or on behalf of the parties on the evidence; (3) if  the dispute between them is a question of law, the  submission of legal arguments by the parties; and  (4) a decision which disposes of the whole matter by  a  finding  upon  the  facts  in  dispute  and  an  application of  the law of  the land to the facts so  found, including where required a ruling upon any  disputed question of law’.

(17)  ‘Maqbool  Hussain’s  case  (E)’,  above  referred  to,  was  followed by this Court in – ‘S.A. Venkataraman v. Union of  

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India’, AIR 1954 SC 375 (G), where a Constitution Bench of  this  Court  also  laid  down  that  both  finality  and  authoritativeness  were  the  essential  tests  of  a  judicial  pronouncement.

(18) It is clear, therefore, that in order to constitute a Court  in the strict sense of the term, an essential condition is that  the  Court  should  have,  apart  from  having  some  of  the  trappings of a judicial tribunal, power to give a decision or a  definitive judgment which has finality and authoritativeness  which are the essential tests of a judicial pronouncement.”

20. On behalf of appellants reliance was next placed upon case of P.  

Sarathy v.  State Bank of India (2000) 5 SCC 355.  A Bench of two  

Judges considered the scope of the word “Court” occurring in Section  

14 of the Limitation Act and held that any authority or tribunal having  

trappings of a court is covered because “Court” does not necessarily  

have to be a civil court. On such reasonings the appellate authority  

under Section 41 of Tamil Nadu Shops and Establishments Act was  

held to be a court.  One must notice here only that the judgment in  

the  case  of  P.  Sarathy  (supra)  has  been  considered  in  a  recent  

judgment of this Court rendered by a Bench of two Judges in the case  

of M.P. Steel Corporation v. Commissioner of Central Excise (2015)  

7 SCC 58.  In this case it was held that although the Limitation Act  

including Section 14 thereof would not apply to appeals filed before a  

quasi-judicial tribunal such as the Collector (Appeals) mentioned in  

Section 128 of the Customs Act, 1962 but the principles underlying  

Section  14  of  the  Limitation  Act  would  nevertheless  apply  as  they  

advance the cause of justice.  The Court repelled the submission that  

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C.A.No.6036/2012 etc.  

Section  128  of  the  Customs  Act  excludes  the  application  of  the  

principles underlying Section 14 of  the Limitation Act.  In order to  

reach the conclusion that only principles underlying Section 14 and  

not the very Section itself can apply to tribunals having attributes of  

Court,  in  M.P.  Steel  Corporation  (supra)  the  Court  analysed  the  

precedents and the Limitation Act 1963. It concluded that a quasi-

judicial Tribunal will suffer Limitation Act only as per the statutory  

scheme under which it is created and functions. On the other hand,  

on its own the Limitation Act is applicable in respect of proceedings  

before courts proper, i.e., courts as understood in the strict sense of  

being part of  the Judicial  Branch of  the State.   In support  of  this  

principle several judgments of this Court were noted such as a three-

Judge  Bench  judgment  in  Commissioner  of  Sales  Tax v.  Parson  

Tools and Plants (1975)4 SCC 22 in which reliance was placed upon  

Ujjam Bai v. State of U.P. AIR 1962 SC 1621.  For the same purpose  

reliance was also placed upon judgment in the case of  Jagannath  

Prasad v. State of U.P. AIR 1963 SC 416.  A contrary view taken by a  

two-Judge  Bench  in  the  case  of  Mukri  Gopalan v.  Cheppilat  

Puthanpurayil Aboobacker (1995) 5 SCC 5 was therefore held to be  

at variance with at least five earlier binding judgments and also at odd  

with a later judgment in the case of Consolidated Engg. Enterprises  

v.  Irrigation  Deptt. (2008)  7  SCC 169.   The  latter  judgment  was  

considered  in  detail  because  the  three-Judge  Bench  examined  the  

provisions of the Arbitration and Conciliation Act 1996 and held that  

provisions  of  Section  14  of  the  Limitation  Act  1963  would  be  

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C.A.No.6036/2012 etc.  

applicable to an application under Section 34 of the 1996 Act filed  

before a Civil Court for setting aside an Arbitral Award.  This view in  

Consolidated Engg.(supra) has been further clarified by Ravindran, J.  

(as he then was) in his separate but concurring judgment, particularly  

in paragraph 44.

21. In  an  attempt  to  show  that  the  word  “Court”  has  been  

interpreted differently in context of different statutes, Mr. Giri referred  

to the case of  Trans Mediterranean Airways v.  Universal Exports  

(2011)  10 SCC 316.   In paragraphs 44 and onwards a  number  of  

precedents were noticed as to the meaning and interpretation of the  

word “Court” and in paragraph 57 it was held that the word “Court” in  

Rule 29 of the Second Schedule of the Carriage by Air Act 1972 has  

been borrowed from the Warsaw Convention and had not been used in  

the strict sense as used in the procedural laws of this country.  The  

word “Court” was, therefore, held to include the consumer forums.  In  

para  58  it  was  reiterated  that  in  legislations  like  the  Consumer  

Protection Act the word “Court” cannot be given a strict meaning.

22. In reply on this issue, learned senior advocate Mr. Sundaram  

took a frontal stand that Limitation Act does not apply to a proceeding  

before the Commission because it is not a court stricto-sensu.  For  

this proposition he relied upon judgments in the case of  PPN Power  

Generating Co. (P) Ltd. (supra) and M.P. Steel Corporation (supra).  

He  however  floated  a  suggestion  that  even  when  no  period  of  

limitation is applicable for initiating action before the Commission, if  

this  Court  finds  it  necessary  and in the interest  of  justice,  then a  

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C.A.No.6036/2012 etc.  

reasonable period may be indicated by this Court for the aforesaid  

purpose.  He hastened to add that such reasonable period can only be  

as an illustration and not  as a fixed period.   According  to  him, a  

reasonable  illustrative  period  indicated  by  the  court,  in  practical  

application, can vary from case to case as per facts of each case.  He  

also contended that even if a definite limitation period is found to be  

attracted, in view of law laid down clearly in M.P. Steel Corporation  

(supra), the principles underling Section 14 will be applicable and the  

same  has  been  rightly  applied  by  APTEL  while  rendering  the  

impugned order under appeal.

23. Mr. Sundaram referred to PPN Power Generating Co. (P) Ltd.  

(supra)  and placed reliance upon a solitary sentence at the end of  

paragraph 64 which reads thus :  

“In  any  event,  the  Limitation  Act  is  inapplicable  to  proceeding before the State Commission.”

He also placed reliance upon paragraph 65 which is as follows:

“65. The submission of the appellant that the Limitation Act  would be available in case the reference was to be made to  arbitration, in our opinion, is also without merit.  Firstly, the  State  Commission  exercised  its  jurisdiction  to  decide  the  dispute itself.   The matter was not referred to arbitration,  therefore,  the  Limitation  Act  would  not  be  applicable.  Secondly, Section 43 of the Arbitration and Conciliation Act  would not be applicable even if the matter was referred to  arbitration by virtue of Section 2(4) of the Arbitration Act,  1996.  Section 2(4) of the Arbitration Act reads as under :

‘2(4) This Part except sub-section (1) of Section 40,  Sections 41 and 43 shall apply to every arbitration  under  any other  enactment for  the time being in  force,  as  if  the  arbitration  were  pursuant  to  an  

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C.A.No.6036/2012 etc.  

arbitration  agreement  and  as  if  that  other  enactment  were  an  arbitration  agreement,  except  insofar  as  the  provisions  of  this  Part  are  inconsistent with that other enactment or with any  rules made thereunder.”

24. Mr.  Sundaram placed reliance upon judgment in the case of  

M.P.  Steel  Corporation (supra)  to  support  his  submission  that  

Limitation Act applies only to courts stricto-sensu and not to quasi-

judicial tribunals.  It may be noted here that the matter in M.P. Steel  

Corporation (supra) had arisen from proceedings under the Customs  

Act and hence in that case there was no occasion to consider the issue  

whether the Limitation Act is applicable to an action initiated before  

the Commission by virtue of provisions of the Electricity Act, 2003.  

However,  this judgment does help the respondents to an extent  by  

holding that principles underlying Section 14 of the Limitation Act will  

be  applicable  even  in  matters  filed  before  a  quasi-judicial  tribunal  

such  as  the  Commission.   But  the  moot  question  remains  to  be  

answered – whether the bar of limitation is required to be respected by  

the  Commission  on  the  ground  that  there  is  no  provision  in  the  

Electricity Act conferring additional rights upon a party moving the  

Commission for relief  so as to claim even such reliefs which stand  

barred  by  limitation  before  the  Civil  Court  or  even  for  arbitral  

proceedings.  The other ancillary issue required to be answered is –  

whether  by  virtue  of  provisions  of  the  Electricity  Act  2003  the  

Limitation  Act  has  been  made  applicable  to  an  action  before  the  

Commission by express provision or even by necessary intendment.

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C.A.No.6036/2012 etc.  

25. Before answering the aforesaid two issues and then adverting to  

the question whether principles of Section 14 were rightly applied by  

APTEL (in case any period of limitation is held to be attracted), it will  

be  proper  to  note  some  relevant  contentions  advanced  by  learned  

senior advocate Mr. Jayant Bhushan who has appeared for some of  

the respondents.

26. Mr.  Bhushan  pointed  out  that  Commission  is  a  creature  of  

Statute and hence it cannot reject a claim on the ground of limitation  

unless limitation is found to be applicable by virtue of the provisions  

of the Electricity Act 2003.  According to him if Limitation Act does not  

apply,  courts  cannot  import  limitation  and  the  exceptional  cases  

where this Court has introduced principles of delay and laches relate  

to proceedings before quasi-judicial tribunals which are vested with  

discretionary or suo motu jurisdiction like revisional power; the other  

exception  being  courts  having  extraordinary  or  equity  jurisdiction  

such as writ jurisdiction vested in the High Courts or the Supreme  

Court.   In  support  of  the  limited  and  exceptional  applicability  of  

principles of delay and laches as distinguished from limitation, Mr.  

Bhushan placed reliance upon an old judgment of Supreme Court of  

United States in the case of  Henry Hauenstein v.  John A. Lynham  

100 U.S. 483 and also upon extracts from Halsbury’s Laws of England  

and  a  judgment  of  Chancery  Division  in  the  case  of  Re.  Jarvis  

(Deceased) Edge  v. Jarvis (1958) 2 All.ER 336.  Since the principle  

noted  above  is  well  settled,  the  above  authorities  need  not  be  

discussed particularly when this Court has taken similar view in the  

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C.A.No.6036/2012 etc.  

case of  Bombay Gas Co. Ltd. v.  Gopal Bhiva 1964(3) SCR 709 and  

Hindustan Times Ltd. v.  Union of India (1998) 2 SCC 242.  In the  

latter case the issue under consideration was of delay in passing order  

levying damages under Employees Provident Funds and Miscellaneous  

Provisions Act, 1952.  The Court distinguished long line of cases such  

as  State of Gujarat v.  Patil Raghav Natha (1969) 2 SCC 187 and  

Ram Chand v.  Union of India (1994) 1 SCC 44 by pointing out that  

same principles will not apply to moneys withheld by a defaulter when  

he actually holds the money in Trust for the beneficiaries.  Paragraph  

19 of that judgment highlights that the concerned Statute does not  

contain  any  provision  prescribing  a  period  of  limitation  either  for  

assessment  or  recovery  and although the moneys payable  into the  

Fund are for the ultimate benefit  of  the employees but there is no  

provision  by  which  the  employees  can  directly  recover  the  due  

amounts.  The power of recovery is vested in the statutory authorities  

to be exercised in the manner provided by the Statute and not by way  

of suit.

27. Mr. Bhushan also referred to some judgments in support of the  

principle  that  Statute  of  limitation  only  bars  a  remedy  through  

ordinary suit and not a remedy provided under a special Statute such  

as the Industrial Disputes Act which must be given effect to on the  

basis of various provisions contained therein.   For this purpose he  

relied upon a Constitution Bench judgment in the case of  Bombay  

Dyeing & Manufacturing Co. Ltd. v. The State of Bombay AIR 1958  

SC 328.  He sought to explain the Constitution Bench judgment in the  

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C.A.No.6036/2012 etc.  

case of  M/s. Tilokchand and Motichand v.  H.B. Munshi (1969) 1  

SCC  110  by  pointing  out  that  delay  and  laches  were  held  to  be  

applicable to a petition under Article 32 of the Constitution of India for  

the reason that such jurisdiction was always recognized and held to  

be a discretionary one.

28. Coming back to the issues relating to limitation, in view of law  

noticed above and for the reasons noted in  M.P. Steel Corporation  

(supra), we respectfully concur and hold that by itself the Limitation  

Act  will  not  be  applicable  to  the  Commission  under  the  Indian  

Electricity Act 2003 as the Commission is not a Court stricto sensu.  

Further  stand  of  the  respondents  that  the  Commission  being  a  

statutory tribunal, cannot act beyond the four walls of the Electricity  

Act  also  does  not  brook any exception.  In the case  of  PPN Power  

Generating Co.  (P)  Ltd.  (supra)  this  Court  examined  the  issue  of  

limitation in a very  summary manner  and without referring to  the  

relevant provisions of the Electricity Act 2003, at the end of para 64 it  

was  observed  in  a  single  sentence  that  the  Limitation  Act  is  

inapplicable to proceeding before the State Commission. But in view of  

detailed discussion in the case of M.P. Steel Corporation (supra), we  

have held above that  by itself  the Limitation Act  is inapplicable  to  

proceeding or action brought before the State Commission. However,  

the Electricity Act 2003 requires a further scrutiny to find out whether  

by virtue of Section 175 of the Electricity Act or otherwise it can be  

inferred that the provisions of Limitation Act will govern or curtail the  

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C.A.No.6036/2012 etc.  

powers of the Commission in entertaining a claim under Section 86(1)

(f) of the Electricity Act.  Section 175 reads thus:

“175. Provisions of this Act to be in addition to  and not in derogation of other laws. – The provisions of  this Act are in addition to and not in derogation of any  other law for the time being in force.”

A plain reading of this Section leads to a conclusion that unless  

the provisions of the Electricity Act are in conflict with any other law  

when  this  Act  will  have  overriding  effect  as  per  Section  174,  the  

provisions of Electricity Act will not adversely affect any other law for  

the time being in force. In other words, as stated in the Section the  

provisions of the Electricity Act will be additional provisions without  

adversely affecting or substracting anything from any other law which  

may be in force. Such provision cannot be stretched to infer adoption  

of  the  Limitation Act  for  the  purpose  of  regulating  the  varied  and  

numerous powers and functions of authorities under Electricity Act  

2003.  In this  context  it  is  relevant  to  keep  in  view that  the  State  

Commission  or  the  Central  Commission  have  been  entrusted  with  

large  number  of  diverse  functions,  many  being  administrative  or  

regulatory and such powers do not invite the rigours of the Limitation  

Act.  Only  for  controlling  the  quasi  judicial  functions  of  the  

Commission under Section 86(1)(f), it will not be possible to accept the  

contention of  the appellant that by Section 175 the Electricity Act,  

2003  adopts  the  Limitation  Act  either  explicitly  or  by  necessary  

implication.

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C.A.No.6036/2012 etc.  

29. The  only  other  weighty  contention  of  Mr.  Giri  that  there  is  

nothing in the Electricity Act 2003 to create a right in a suitor before  

the Commission to seek claims which are barred by law of limitation  

merits a serious consideration. There is no possibility of any difference  

of opinion in accepting that on account of judgment of this Court in  

Gujarat Urja (supra) the Commission has been elevated to the status  

of a substitute for the Civil Court in respect of all disputes between  

the licencees and generating companies. Such dispute need not arise  

from the exercise of powers under the Electricity Act. Even claims or  

disputes arising purely out of contract like in the present case have to  

be either adjudicated by the Commission or the Commission itself has  

the discretion to refer the dispute for arbitration after exercising its  

power to nominate the arbitrator. It is in view of such far reaching  

judicial  powers  vested  in the Commission  that  in the case  of  PPN  

Power Generating Co. (P) Ltd. (supra) this Court advised the State to  

exercise enabling power under Section 84(2) to appoint a person who  

is/has been a  Judge of  a  High Court  as Chairperson  of  the State  

Commission. In such a situation it falls for consideration whether the  

principle of law enunciated in State of Kerala v. V.R. Kalliyanikutty  

(supra) and in the case of New Delhi Municipal Committee v.  Kalu  

Ram (supra) is attracted so as to bar entertainment of claims which  

are  legally  not  recoverable  in  a  suit  or  other  legal  proceeding  on  

account of bar created by the Limitation Act. On behalf of respondents  

those judgments were explained by pointing out that in the first case  

the peculiar words in the statute – “amount due” and in the second  

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C.A.No.6036/2012 etc.  

case “arrears of rent payable” fell for interpretation in the context of  

powers of concerned tribunal and on account of aforesaid particular  

words  of  the  statute  this  Court  held  that  the  duty  cast  upon the  

authority to determine what is recoverable or payable implies a duty  

to determine such claims in accordance with law. In our considered  

view a statutory  authority  like the  Commission is  also  required to  

determine or decide a claim or dispute either by itself or by referring it  

to arbitration only in accordance with law and thus Section 174 and  

175  of  the  Electricity  Act  assume  relevance.  Since  no  separate  

limitation has been  prescribed for  exercise  of  power  under  Section  

86(1)f)  nor  this  adjudicatory  power  of  the  Commission  has  been  

enlarged to entertain even the time barred claims, there is no conflict  

between the provisions  of  the Electricity  Act  and Limitation Act  to  

attract the provisions of Section 174 of the Electricity Act. In such a  

situation on account of provisions in Section 175 of the Electricity Act  

or even otherwise the power of adjudication and determination or even  

the power of deciding whether a case requires reference to arbitration  

must be exercised in a fair manner and in accordance with law. In the  

absence of any provision in the Electricity Act creating a new right  

upon a claimant to claim even monies barred by law of limitation, or  

taking  away  a  right  of  the  other  side  to  take  a  lawful  defence  of  

limitation,  we are persuaded to  hold  that  in the light  of  nature of  

judicial  power  conferred  on  the  Commission,  claims  coming  for  

adjudication before it cannot be entertained or allowed if it is found  

legally  not  recoverable  in  a  regular  suit  or  any  other  regular  

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C.A.No.6036/2012 etc.  

proceeding such as arbitration, on account of law of limitation.  We  

have taken this view not only because it appears to be more just but  

also  because  unlike  Labour  laws  and Industrial  Disputes  Act,  the  

Electricity  Act  has  no  peculiar  philosophy  or  inherent  underlying  

reasons requiring adherence to a contrary view.

30. We have taken the aforesaid view to avoid injustice as well as  

possibility  of  discrimination.  We  have  already  extracted  a  part  of  

paragraph 11 of the judgment in the case of State of Kerala v.  V.R.  

Kalliyanikutty (supra) wherein Court considered the matter also in  

the light of Article 14 of the Constitution. In that case the possibility of  

Article 14 being attracted against the statute was highlighted to justify  

a particular interpretation as already noted. It was also observed that  

it would be ironic if in the name of speedy recovery contemplated by  

the statute, a creditor is enabled to recover claims beyond the period  

of limitation. In this context, it would be fair to infer that the special  

adjudicatory role envisaged under Section 86(1)(f) also appears to be  

for speedy resolution so that a vital developmental factor - electricity  

and its supply is not adversely affected by delay in adjudication of  

even ordinary civil disputes by the Civil Court. Evidently, in absence  

of any reason or justification the legislature did not contemplate to  

enable a creditor who has allowed the period of limitation to set in, to  

recover such delayed claims through the Commission. Hence we hold  

that a claim coming before the Commission cannot be entertained or  

allowed if  it  is  barred by limitation prescribed for an ordinary suit  

before the civil court.  But in appropriate case, a specified period may  

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C.A.No.6036/2012 etc.  

be excluded on account  of  principle  underlying  salutary  provisions  

like Section 5 or 14 of the Limitation Act.  We must hasten to add here  

that such limitation upon the Commission on account of this decision  

would be only in respect of its judicial power under clause (f) of sub-

section (1) of Section 86 of the Electricity Act, 2003 and not in respect  

of  its  other  powers  or  functions  which  may  be  administrative  or  

regulatory.

31. In the light of above there can be no difficulty in appreciating  

that  M/s. LANCO rightly appreciated the hurdle of limitation in its  

way when such an objection was taken by the appellant and it rightly  

chose  to  seek  exclusion  of  the  period  it  was  pursuing  arbitration  

proceeding  before  the  High  Court,  on  the  basis  of  principles  

underlying Section 14 of the Limitation Act.  

32. The  issue  as  to  whether  the  impugned  order  by  APTEL  

permitting application of principles on Section 14 of the Limitation Act  

is in accordance with law or warrants interference now requires to be  

answered on the basis of law as well as facts. In law, the APTEL could  

grant  exclusion  of  certain  period  on  the  basis  of  principles  under  

Section  14  in  view  of  law  laid  down  or  clarified  in  M.P.  Steel  

Corporation  (supra). On facts, although the parties have argued at  

length, we find no difficulty in holding that APTEL has adopted a just  

and lawful approach in examining the relevant facts and in excluding  

the entire period claimed by M/s. LANCO which starts from the notice  

for  arbitration  dated  8.9.2003  given  by  M/s.  LANCO,  till  the  

application of M/s. LANCO under Section 11 of the Arbitration Act  

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C.A.No.6036/2012 etc.  

before the High Court was finally disposed of on 18.3.2009. The issue  

whether  the  first  notice  dated  8.9.2003  or  the  next  notice  dated  

26.3.2004 should be treated as notice for arbitration for the purpose  

of Section 21 of the Arbitration Act was rightly not pursued further by  

Mr.  Giri  after  some  initial  arguments.  But  since  this  issue  was  

touched, we have looked at the entire Article 14 of the PPA as well as  

the notice dated 8.9.2003 and we find no difficulty in holding it as the  

notice  for  arbitration  which  amounted  to  initiation  of  arbitral  

proceedings as contemplated by Section 21 of the Arbitration Act. A  

spirited argument was advanced on behalf of appellant that after the  

judgment  of  this  Court  in  Gujarat  Urja  (supra)  on 13.3.2008,  the  

continuance of the arbitral proceedings before the High Court at the  

instance of M/s. LANCO should not be accepted as bona fide and that  

the commission was justified in not excluding this period of about one  

year on the ground that it was not bona fide and in such facts APTEL  

should  not  have  taken  a  contrary  view.  Having  considered  

submissions  of  the  parties  we  find  no  merit  in  the  aforesaid  

contention advanced on behalf of appellant. The view which we are  

going to take has been indicated by this Court in several judgments  

including M.P. Steel Corporation (supra).  But the point requires no  

debate in view of clear stipulation in explanation (a) to sub-section (3)  

of Section 14 of the Limitation Act. This explanation reads as follows:

“Explanation – For the purposes of this section, - (a) in excluding the time during which a former  

civil  proceeding  was  pending,  the  day  on  which  that  proceeding was instituted and the day on which it ended  shall both be counted………..”

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C.A.No.6036/2012 etc.  

The same conclusion is inevitable even on other relevant facts.  

The appellant had notice of the arbitral proceeding and after judgment  

in  Gujarat Urja  (supra), the appellant also took no steps to get the  

application  under  Section  11  listed  and  disposed  of  earlier  to  

18.3.2009.  The  averments  and  the  materials  are  not  sufficient  to  

establish the claim of the appellant that the proceeding ceased to be  

bona fide after 13.3.2008. As a consequence of aforesaid discussion,  

the challenge to impugned order in respect of views taken on the issue  

of limitation in the light of principles of Section 14 of the Limitation  

Act fails.

Issues relating to MAT

33.     The notice of Arbitration dated 8.9.2003, inter alia, made a  

demand  for  reimbursement  of  income  tax  payment  made  by  M/s.  

LANCO, as per Article 3.8 of the PPA.  No doubt the claim on this head  

for the subsequent years was not and could not be in this notice but  

the difference between the parties on the issue had already arisen.  In  

the notice  claims for advance income tax for the period 1.4.2001 to  

15.6.2003 amounting to Rs.13.14 crores were included under   the  

heading  “General  Nature  of  Claims”  and under  the  heading  “Relief  

Sought”,  M/s. LANCO claimed – “a declaration that the claimant is  

entitled  to  reimbursement  of  advance  income  tax  paid  by  the  

claimant”.  Under the same heading M/s. LANCO mentioned that it  

reserves its rights to seek such other reliefs or amend/supplement the  

reliefs in the Statement of Claim as it may deem appropriate whenever  

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C.A.No.6036/2012 etc.  

the same is filed before the Arbitral Tribunal.  Thus the issue whether  

MAT  is  covered  by  article  3.8  of  the  PPA  was  clearly  covered  by  

Arbitration notice. The filing of upto date claims through amendment  

or  otherwise  before  the Arbitral  Tribunal  could not  happen for  the  

obvious reason that application under Section 11 of the Arbitration  

Act  itself  remained  pending  till  18th March,  2009  before  the  High  

Court and thereafter before the Commission.

34.    It has already been noted that the claim for reimbursement of  

MAT for the period 2001-2005 was rejected by the Commission on the  

ground of  limitation and after  impugned order  by APTEL reversing  

such order, that claim stands remitted to the Commission for passing  

a consequential order.  The claims for other periods have been allowed  

by  the  Commission.   On  account  of  our  view  indicated  earlier  

upholding the order of APTEL on the issue of limitation, the claim of  

MAT for 2001-2005 cannot be treated as barred by limitation.  Thus  

the claim of MAT for entire concerned period that is from 2001-2012  

will be covered by our decision on Merits of Claim relating to MAT.  

The  argument  of  Mr.  Giri  that  MAT  cannot  be  covered  by  the  

provisions in Article 3.8 of the PPA providing for claims for taxes on  

income because the appellant had not foreseen such eventuality in  

view of the then prevailing tax regime under which income from such  

power projects stood exempted, is noticed only to be rejected.   The  

entire phraseology used in Article 3.8 of the PPA leaves no manner of  

doubt that parties were aware that tax regime keeps changing and  

therefore any advance income tax payable  for the income from the  

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C.A.No.6036/2012 etc.  

project only had to be reimbursed by the Board.  As a successor of the  

Board the appellant cannot avoid the liability to reimburse advance  

income tax paid by the M/s. LANCO, on the ground that MAT was a  

new  variety  of  tax  concept  introduced  subsequently  in  which  

minimum tax became payable on the basis of mere book profits of  

even power generating companies.  The argument that such tax is not  

on income from the project and therefore, not covered by Article 3.8 of  

the PPA is also found to be without any substance.

35.    The objective of levying MAT, as declared by the Income Tax  

Department is to bring into the tax net “Zero Tax Companies” which  

inspite  of  having  earned  substantial  book  profits  and  having  paid  

handsome  dividends,  do  not  pay  any  tax  due  to  various  tax  

concessions and incentives provided under the Income Tax Law.   It is  

no body’s case that in fact M/s. LANCO had not generated income  

from the  project  during the relevant  years.  The taxable  income,  of  

course, became amenable to MAT on account of Section 115JB.  The  

Legislative changes in respect  of MAT show that it  came into force  

initially with effect from 1.4.1988 by introduction of Section 115J in  

the Income Tax Act, 1961 but this provision was amended to exempt  

power  generating  companies  with  effect  from  1.4.1989  and  from  

1.4.1991  MAT  became  inapplicable  because  of  deletion  of  Section  

115J which was reintroduced with effect from 1.4.1997 by insertion of  

Section 115JA. But it was not made applicable to power generating  

companies  till  31.3.2001.   However,  Section 115JA was withdrawn  

and Section 115JB was inserted with effect from 1.4.2001 to make  

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C.A.No.6036/2012 etc.  

MAT  applicable  to  all  targeted  corporate  entities  including  power  

generating companies.  The submission on behalf of the appellant that  

Section 115JB is a tax not on profit but of different character is based  

on misconception. No doubt this Section has a special provision for  

payment of tax by certain companies on the basis of its book profit  

which  is  deemed  to  be  the  total  income  of  the  assessee  and  is  

subjected to income tax at a specified rate.  The provisions of Sections  

115JA and 115JB have been also construed as a self-contained code  

in Ajanta Pharma Limited vs. CIT, 2010 (9) SCC 455 and in several  

other judgments as stand alone sections.  But that does not change  

the basic nature of the provision.  It remains a provision under the  

Income Tax Act and what is levied is income tax on the assessment of  

income as per such a special provision.  

36.   Article 1.4 of the PPA provides inter alia that reference to any  

‘Law’ shall be construed as a reference to such Law as from time to  

time amended or re-enacted.  This general provision in our view is  

sufficient to take care of all the taxes on income under Article 3.8 of  

the  PPA  notwithstanding  different  rates  of  income  tax  or  other  

changes which may be brought about in the Income Tax Act.   This  

view commends itself to us because such change in Law relating to  

Income Tax does not require any additional claim to be raised by the  

power generating companies.  There is no specific amount - or rate  

which is to be reimbursed by the Board.  Rather, the entire advance  

income tax payable requires reimbursement on account of Article 3.8  

of the PPA provided of course that the accounts are maintained in the  

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C.A.No.6036/2012 etc.  

manner required by the Agreement so that tax is only on the basis of  

income from the project.   No such dispute has been raised in the  

present case.

37.    The claim of the appellant that liability of MAT is on account of  

change  in  Law  and  therefore  required  M/s.  LANCO  to  adopt  the  

procedure for making claims under Article 11.4 of the PPA does not  

appeal  to  us  for  the  aforesaid  reasons.   The  entire  stipulation  in  

Article  11.4  of  the  PPA  is  in  respect  of  additional  or  reduced  

expenditures or costs which have not been catered for and arise later  

due to change in Law.  The burden on account of income tax as per  

Article  3.9  of  the  PPA  cannot  be  treated  as  additional  or  reduced  

burden because the entire actual advance income tax payable for the  

project is required to be reimbursed by the Board.   It is immaterial  

whether the income tax payable is high or low in any particular year.  

When there is already a special provision in respect of entire payable  

taxes  on  income  under  Article  3.8  of  the  PPA,  that  should  have  

precedence over the general provisions in Article 11.4 of the PPA.

38.    We have also considered other relevant provisions of the Income  

Tax such as definition of income, total income, tax and find that they  

do not help the case of the appellant in any manner.   Section 2(43)  

defines ‘Tax’ to mean income tax chargeable under the provisions of  

Income Tax Act and ‘Total Income’ has been defined with reference to  

Section 5 which enlarges the scope of total income not only to income  

received or accrued but also deemed to be  received or deemed to be  

accrued in India (for a resident). Simply because the exemption earlier  

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C.A.No.6036/2012 etc.  

granted to power generating companies has been withdrawn so as to  

subject them to income tax liability under a special provision, cannot  

lead to any inference as suggested on behalf of the appellant that it is  

not an income tax but some other tax which is levied under Section  

115JB  of  the  Income  Tax  Act.  Hence  we  hold  the  claim  for  MAT  

covered by Article 3.8 of the PPA and payable as such when requisite  

conditions stand satisfied.           

39.    In the final conclusion, we find no scope to interfere with the  

impugned order  in  these  appeals.   The  appeals  are  dismissed  but  

without any order as to costs.      

……………………………….J. [VIKRAMAJIT SEN]

..……………………………..J. [SHIVA KIRTI SINGH]

New Delhi. October 16, 2015

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