Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5159 OF 2005

M/s Sagar Sugars & Allied Products Ltd.           …     Appellant

Versus

The Transmission Corporation of A.P. Ltd. & Ors.                                 … Respondents

WITH

CIVIL APPEAL NO.5157 OF 2005

M/s Sagar Sugars & Allied Products Ltd.           …     Appellant

Versus

The Transmission Corporation of A.P. Ltd          … Respondent

J U D G M E N T

A. K. PATNAIK, J.

These are the appeals against the common order dated  

30.07.2004  passed  by  the  Division  Bench  of  the  Andhra  

Pradesh High Court in Writ Appeal No. 191 of 2004 and C.M.A  

No. 3613 of 2003.

2. The facts relevant for deciding these appeals very briefly  

are  that  on  29.04.2000  the  appellant  entered  into  a  

Memorandum  of  Understanding  with  Non-Conventional  

Energy Development Corporation of Andhra Pradesh Limited  

(for short ‘the NEDCAP’), a nodal agency for non-conventional  

projects up to 20 MW, for setting up of a power plant in which  

power  was  to  be  generated  from  bagasse,  a  by-product  of  

sugar factory.  On 25.01.2002, the Andhra Pradesh Electricity  

Regulatory Commission (for short ‘the APERC’) set up under  

the Andhra Pradesh Electricity Reforms Act, 1998, permitted  

the appellant-company to supply the power generated in its  

plant  to  the  respondent  no.1,  which  had  taken  over  the  

functions of the erstwhile Andhra Pradesh Electricity Board.  

On 10.07.2002, a Power Purchase Agreement (for short ‘the  

PPA’)  was  entered  into  between  the  appellant  and  the  

respondent no.1 which  inter  alia provided that the power to  

the extent of 9.99 MW will be supplied during the season and  

power to the extent of 16.94 MW will be supplied during the off  

season.   On  11.01.2003,  respondent  no.1  permitted  the  

appellant to synchronize its plant with the power grid and on  

13.01.2003, the appellant started supplying electricity energy  

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to the power grid.  On 01.03.2003, the appellant wrote to the  

APERC to direct the respondent no.1 to purchase unutilized  

power of the appellant as sugar plant of the appellant could  

not  be  commissioned  due  to  some  difficulties  and  power  

generated  in  its  power  plant  remained  unutilized  and  on  

17.03.2003,  APERC directed the  respondent  no.1  to  amend  

the PPA to provide for surplus/ additional quantity of power  

from the  appellant.   On 17.03.2003,  the  Chief  Engineer  of  

respondent No.1 wrote  to Superintending Engineer directing  

him to stop evacuation of power from the power plant of the  

appellant  and to cut off  the supply on the ground that  the  

plant of the appellant cannot be classified as co-generation till  

the sugar plant of the appellant was commissioned.  

3. The appellant then filed Writ Petition No. 7395 of 2003 in  

the Andhra Pradesh High Court challenging the letter dated  

17.03.2003 of the Chief Engineer of the respondent No.1 and  

the  learned  Single  Judge  passed  the  orders  on  02.05.2003  

directing issue of notice to the respondents and directing the  

respondents, as an interim measure, to purchase power from  

the appellant and to pay to the appellant Rs.2.00 per unit.  

The respondent No.1 then filed a review petition before  the  

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APERC for reconsideration of its earlier directions to amend  

the PPA issued on 17.03.2003 and on 01.10.2003 the APERC  

allowed the review petition and cancelled its directions issued  

on 17.03.2003.  The appellant then challenged the order dated  

01.10.2003 of  the  APERC before  the  Division  Bench of  the  

High Court in C.M.A. No. 3613 of 2003 and the Division Bench  

of  the  High  Court  granted  interim  stay  of  the  order  dated  

01.10.2003 of the APERC.   

4. On  15.12.2003,  the  learned  Single  Judge  of  the  High  

Court allowed Writ Petition No. 7395 of 2003 of the appellant  

and quashed the letter dated 17.03.2003 of the Chief Engineer  

of the respondent No.1 and directed the respondent No.1 to  

evacuate the power as agreed under the PPA and as directed  

by the APERC by order dated 17.03.2002.  Against the said  

order  dated  15.12.2003  of  the  learned  Single  Judge,  the  

respondent  filed  Writ  Appeal  No.  371  of  2004  and  on  

12.02.2004 the Division Bench passed an interim order that  

no further payment need to be made by respondent no.1 to the  

appellant.   Thereafter,  on  22.04.2004  the  Division  Bench  

modified  its  earlier  interim  order  dated  12.02.2004  and  

directed the  respondent  to  pay  the  appellant  at  the  rate  of  

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Rs.2.69 per unit instead of Rs.2.00 per unit and the said order  

was to continue till further orders in the Writ Petition.   

5. Finally  on 30.07.2004,  the Division Bench of  the High  

Court passed the impugned order in Writ Appeal No. 191 of  

2004 as well as in C.M.A. No. 3613 of 2003 setting aside the  

order dated 15.12.2003 of  the learned Single Judge in Writ  

Appeal No. 7395 of 2003 and directed the parties to approach  

the appropriate forum chosen by the parties under the PPA for  

resolving the  dispute.   By the  impugned order  the  Division  

Bench also held that the appellant will be entitled to tariff as  

fixed by the Division Bench of the High Court in Writ Appeal  

No. 371 of 2004.   

6. Dr.  Rajeev  Dhavan,  learned  senior  counsel  for  the  

appellant,  submitted  that  the  sugar  plant  has,  in  the  

meanwhile, commenced the production on 21.01.2004 and the  

only dispute which has to be decided by this Court is with  

regard to the price of the power supplied by the appellant to  

the  respondent  during  the  period  from  13.01.2003  to  

21.01.2004.   

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7. Mr.  Dhavan  submitted  that  by  the  order  dated  

22.04.2004 of the Division Bench in Writ Appeal No. 371 of  

2004, the respondent No.1 was to be paid at the revised rate of  

Rs.2.69 per unit  and on 08.02.2006,  this  Court  has  by  an  

interim order, directed that the appellant would be entitled to  

receive payment at the rate of Rs.3.11 per unit as an interim  

measure for  the  period from 13.01.2003 to 20.01.2004 and  

also  at  the  same  rate  of  Rs.3.11  per  unit  for  the  period  

21.01.2004 onwards, as has been paid to other co-generating  

plants, excluding the money already paid.  He submitted that  

in  Transmission  Corporation  of  Andhra Pradesh  Limited  and   

Another etc. etc.  v.  Sai Renewable Power Private Limited and   

Others etc.etc.   [(2010) 6 SCALE 541= (2010) 8 SCR 636 = JT  

2010 (7) SC 1] this Court has issued some directions relating  

to price payable for power supplied by non-conventional power  

projects.  He referred to Para 4 of the judgment of this Court in  

the aforesaid case to show that the APERC had approved the  

rate of Rs.2.25 per unit with 5% escalation per annum from  

1994-1995, being the base year, for supply of power generated  

by the non-conventional power projects and this was also the  

price fixed in clause 2.2 of the P.P.A for supply of electricity by  

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the appellant to the respondent no.1.  He submitted that the  

benefit  of  the aforesaid judgment of  this Court delivered on  

08.07.2010 should therefore be granted to the appellant and  

directions be issued to respondent no.1 accordingly.

8. Learned counsel for respondent no.1, on the other hand,  

submitted  that  the  judgment  of  this  Court  delivered  on  

08.07.2010  in  Transmission  Corporation  of  Andhra  Pradesh   

Limited and Another etc. etc.  v.  Sai Renewable Power Private   

Limited and Others etc.etc. (supra) was on tariff and purchase  

price  of  power  produced  by  co-generation  non-conventional  

energy plants and the plant  of  the appellant  was not  a co-

generation  plant  during  the  period  from  January,  2003  to  

January,  2004, as there was no production of  sugar in the  

plant during the aforesaid period and therefore the judgment  

of this Court in  Transmission Corporation of Andhra Pradesh   

Limited and Another etc. etc.  v.  Sai Renewable Power Private   

Limited  and  Others  etc.etc. (supra)  has  no  relevance  to  the  

price  of  power  supplied  by  the  appellant  to  the  respondent  

No.1 during January, 2003 to January, 2004.  

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9. We  have  considered  the  submissions  of  the  learned  

counsel for the parties and we find that clause 2.2 of P.P.A.  

between the appellant and respondent no.1 reads as follows:   

“2.2. The company shall be paid the tariff for the  energy delivered at the interconnection point for  sale  to  APTRANSCO at  Rs.2.25  paise  per  unit  with escalation at 5% per annum with 1994-95  as  base  year  and  to  be  revised  on  1st April  of  every year up to the year 2003-2004.  Beyond the  year  2003-2004,  the  purchase  price  by  APTRANSCO will be decided by Andhra Pradesh  Electricity Regulatory Commission.  There will be  further review of purchase price on completion of  ten years from the date of commissioning of the  project, when the purchase price will be reworked  on the basis of Return on Equity, O& M expenses  and the Variable Cost.

The dispute between the appellant and respondent No.1 before  

us  is  whether  or  not  during  the  period  13.01.2003  to  

21.01.2004, when the sugar plant  of  the appellant  had not  

commenced  production  of  sugar,  the  unutilized  power  

supplied by the appellant to the respondent No.1 will have the  

same price as the price of power supplied by non-conventional  

energy projects in the State of Andhra Pradesh determined by  

the APERC.  It will be more appropriate for the APERC, which  

is a regulatory commission with expertise in determination of  

price and tariff of power, to decide what would be the price for  

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supply  of  power  by  the  appellant  to  the  respondent  no.1  

during  the  disputed  period  13.01.2003  to  21.01.2004  and  

thereafter.  By the judgment dated 08.07.2010 of this Court in  

Transmission  Corporation  of  Andhra  Pradesh  Limited  and   

Another etc. etc.  v.  Sai Renewable Power Private Limited and   

Others  etc.etc. (supra),  this  Court  has  also  remanded  the  

matters  to  APERC  to  decide  the  ‘purchase  price’  for  

procurement of the electricity generated by non-conventional  

energy developers in the facts of the circumstances of the case.

10. We, therefore, dispose of these appeals by directing that  

the APERC will consider all relevant materials and factors and  

finally determine the price of power supplied during the period  

13.01.2003 to 21.01.2004 and thereafter and in accordance  

with  the  determination  made  by  the  APERC,  balance  

payments, if any, will be made by the respondent no.1 to the  

appellant.   The appeals  are  disposed of  accordingly.   There  

shall be no order as to costs.  

.……………………….J.                                                            (R.V. Raveendran)

………………………..J.                                                            (A. K. Patnaik) New Delhi, October 13, 2011.   

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