A.K Patnaik, J.:— The petitioner, Orissa Power General Corporation Limited (for short, “OPGC”) is a Limited Company in which the State Government of Orissa holds 51 per cent of equity shares and AES Corporation, U.S.A holds 49 per cent of equity shares. OPGC carries on the business of generation of electricity from thermal energy at its Thermal Station called “lb thermal Station”. The opposite party No. 2, Grid Corporation of Orissa Ltd., (for short, “Gridco”) is a Government company and is engaged in the business of bulk purchase and supply and transmission of electricity in the State of Orissa. The Orissa Electricity Reforms Act, 1995 (for short, “the Act, 1995”) came into force with effect from 1-4-1996 and under the provisions of the Act, 1995 the opposite party No. 1, Orissa Electricity Regulatory Commission (for short, “the Commission”) was established for regulating the electricity sector in the State of Orissa. Thereafter, on 13-8-1996, a Power Purchase Agreement (for short, “PPA”) was entered into between the OPGC and Gridco whereunder OPGC agreed to supply electricity to the extent of the total available capacity of its lb Thermal Station to Gridco. The PPA was approved by the Government of Orissa, Department of Energy by letter dated 24-12-1996 under Section 43A of the Electricity (Supply) Act, 1948 (for short, “the Act, 1948). Thereafter on 18-10-1998, a tripartite agreement was entered into by the Government of Orissa, Gridco and OPGC for making some changes in the provisions in the PPA relating to payment by Gridcod to OPGC for supply of power. The changes suggested where that Gridco shall set up an Escrow Account Mechanism to ensure timely payment of energy bills to OPGC and such Escrow Account Mechanism inter alia shall provide that proceeds from the sale of power by Gridco in pre-determined distribution zones every month will be transferred to a separate bank account designated as the Escrow Account and after payment of dues to OPGC, any balance in the Escrow Account will be transferred to the General Account of the Gridco. The opposite party No. 3, the Central Electricity Supply of Orissa Limited (for short, “CESCO”) carries on the business of distribution and retail supply of electricity in the electrical circles of Bhubaneswar, Cuttack, Dhenkanal and Paradeep and for the said business purchases power from Gridco under a Bulk Supply Agreement dated 18-9-1999. An Escrow and Security Agreement was entered into between the OPGC. Gridco and Union Bank of India on 30-11-1998 providing for establishment of a Gridco Escrow Account in the Union Bank of India (opposite party No. 4) and for deposit in such Gridco Escrow Account of all amounts received by Gridco from CESCO. In the Bulk Supply Agreement dated 18-9-1999 entered into by Gridco and CESCO it was provided that CESCO will transfer all the receivables to Gridco in compliance with the Escrow Agreement and cannot utilise the same to meet the specified expenses so long as the existing Escrow arrangement continues. An Escrow Agreement was also entered into between Gridco, CESCO and Union Bank of India on 11-7-2000 which authorised the Union Bank of India, the Escrow agent, to receive all receivables for electricity sold or supplied by CESCO and payments from customers and purchase of electricity capacity/energy from CESCO in the exclusive account to be maintained by the Union Bank of India as CESCO Escrow Account and to make payment from such CESCO Escrow Account to Gridco Escrow Account and discharge all outstanding dues of CESCO to Gridco. In terms of the aforesaid Escrow arrangements, CESCO remitted all its receivables out of the sale of energy as and when received from the consumers of electricity to the Union Bank of India.
2. When CESCO failed to pay its dues to Gridco towards purchase of power, Gridco filed case No. 31 of 2000 under Section 37 of the Act, 1999 before the Commission and Commission passed an order on 19-4-2001 directing inter alia that CESCO and Gridco must follow the terms and conditions of the Agreement between them. When CESCO failed to comply with the order dated 19-4-2001, Gridco filed case No. 32 of 2001 before the Commission and on 24-7-2001 the Commission passed orders directing CESCO and Union Bank of India to open a Letter of Credit by 31-8-2001. Thereafter CESCO asked Gridco to stop supply of power and in August 2001, Case No. 39 of 2001 was filed by Gridco before the Commission under Section 28 of the Act, 1995 and the Commission passed orders on 27-8-2001 in the said case No. 39 of 2001 that there was an urgent necessity to vest the management and control of CESCO along with its Undertakings, assets, interests and rights in an appropriate officer of the State Government, pending further inquiry in the matter, to ensure the maintenance of continued supply of electricity in the Central Zone (are of supply of CESCO) to protect the interest of consumers and the public. By the said order dated 27-8-2001 the Commission directed that with immediate effect the management and control of the Undertakings of CESCO with all the assets, interests and rights shall vest with Sri Suresh Chandra Mohapatra, IAS and Sri Suresh Chandra Mohapatra designated as Chief Executive Officer of the CESCO's Undertaking will manage the electricity supply activities in the licence are of CESCO till further arrangement. In the said case No. 39 of 2001, orders were also passed by the commission to relax the Escrow arrangement executed between Gridco and CESCO and to allow CESCO to draw Rs. 10 crores for the purpose of ensuring safe and uninterrupted supply of electricity and taking preventive maintenance of infrastructure in the interest of consumers and the general public.
3. Aggrieved, the petitioner filed this writ petition on 5-10-2001 praying for a writ of mandamus quashing the said order of the Commission permitting CESCO to relax the Escrow arrangement and praying for a declaration that the said order passed by the Commission was illegal, arbitrary and without jurisdiction and also praying for a writ of mandamus directing CESCO to comply with its contracted terms of the Bulk Supply Agreement dated 18-9-1999 and Escrow Agreement dated 11-7-2000 and for a writ of mandamus directing Gridco to act in terms of the PPA and Escrow and Security Agreement dated 30-11-1998. On 15-10-2001, the Court issued notice of admission to the opposite parties. Pursuant to the said notice counter-affidavits were filed. Along with the counter-affidavit of the Commission, copies of further orders passed by the Commission in the aforesaid case No. 39 of 2001 were annexed as Annexures-B/1 and C/1. In Annexure-B/1, the commission has on 3-10-2001 approved relaxation of the Escrow arrangement to the tune of Rs. 7.50 crores for payment of salary and other statutory dues of the employees of CESCO for the month of September 2001 and in Annexure-C/1, the Commission has on 3-11-2001 permitted the Chief Executive Officer, CESCO to appropriate from the revenue of CESCO the amount in excess of Rs. 30 crores including MCL adjustment subject to a maximum of Rs. 11 crores (of such excess) collected during the month of October 2001 to meet the salary and other statutory dues of the employees and O & M expenses. After hearing all parties, on 14-12-2001 the court while directing that the order passed by the Commission on 3-11-2001 will continue to be given effect to for the months of December 2001 and January 2002 directed the Commission to take a fresh decision on the matters covered by its various orders relating to the Escrow contract amongst the CESCO, Gridco and the Union Bank of India and the contract between the Gridco and the petitioner. In the said order dated 14-12-2001 the court further observed that after such fresh decision is taken by the Commission, the decision shall be made available by the Commission for the scrutiny of the court in this proceeding so as to enable the Court to finally dispose of the matter.
4. Thereafter the Commission re-heard the matter and passed fresh orders on 30-1-2002 and has submitted a copy thereof to this Court. In the said order passed on 30-1-2002, the commission has held that in order to ensure maintenance of continued supply of electricity and to protect the interest of the consumers as well as general public, the Commission in their order dated 27-8-2001, as an interim measure, invoked the provisions of Section 30(3) of the Act, 1995 and vested the management and control of the undertaking of CESCO with all its assets, interests and rights with an officer of the State Government pending further inquiry in the matter and this interim arrangement was to continue till disposal of the proceeding under Section 28 of the Act 1995. The Commission has further held in the said order dated 30-1-2002 that by orders dated 7-9-2001 and 3-10-2001 the Commission allowed the Chief Executive Officer, CESCO to draw Rs. 10 crores and Rs. 7.5 crores from the Escrow Account to enable him to meet the additional expenses of CESCO's undertaking and thereafter again by order dated 3-11-2001, the Commission allowed the Chief Executive Officer, CESCO to appropriate from the receivables of CESCO, within a fixed limit, an amount necessary for meeting expenses on account of salaries, wages, statutory dues of employees of the undertaking and other administrative and maintenance work. The Commission has further observed in the said order dated 30-1-2002 that without this funding, it would have been wellnigh impossible on the part of the Chief Executive Officer to maintain power supply and therefore this was not an allowance or diversion of funds to CESCO as a corporate entity. The Commission has also held in the said order dated 30-1-2002 that public policy envisaged in Section 30(3) of the Act, 1995 cannot be defeated by any contract and the regulatory order passed by the Commission thereunder is in the public interest overriding the rights and contractual obligations of CESCO, Gridco and OPGC. The Commission has also observed that the Escrow Agreement between the OPGC and Gridco cannot be given effect to by the Commission inasmuch as it was void being hit by Section 21(4)(b) read with Section 21(5) of the Act, 1995 and no consent had been taken from the Commission for entering into the said agreement. Finally, the Commission held that the arrangement that was made by the Commission in its order dated 3-11-2001 permitting the Chief Executive Officer, CESCO to appropriate from the revenue of CESCO the amount in excess of Rs. 30 crores including MCL adjustment subject to a maximum of Rs. 11 crores (of such excess), collected during the month of October, 2001 to meet the salaries, wages, statutory dues of the employees and O & M expenses shall continue till March, 2002 when it will be reviewed. The OPGC has challenged the said order dated 30-1-2002 passed by the commissioner in its objections numbered as Misc. Case No. 2460 of 2002.
5. Mr. K.K Raghavan, learned counsel for the OPGC, submitted that as a result of the relaxation of the Escrow Agreement between Gridco and CESCO by the commission in its different orders, OPGC is not being paid its dues for supply of power to Gridco in time and for this reason OPGC has locus standi to file the present writ petition challenging the orders passed by the Commission even though OPGC is not a party to the Escrow Agreement between Gridco and CESCO. He cited the decision of the Supreme Court in M.C Chacko v. The State Bank of Travancore, Trivandrum, AIR 1970 SC 504, for the proposition that a beneficiary under the contract can also enforce the contract even though he is not a party to the contract and submitted that since OPGC is a beneficiary of the Escrow Agreement between CESCO and Gridco and the Escrow Agreement has been relaxed by the orders passed by the Commission, the petitioner can always approach this Court under Article 226 of the Constitution and challenge the said orders passed by the Commission.
6. Mr. Raghavan next argued that the writ petition has been filed by the OPGC way back in 2001 and the Court has entertained the writ petition and passed orders from time to time and in the order dated 14-12-2001 the Court while directing the Commission to pass fresh orders after giving OPGC a hearing also observed that such fresh orders passed by the Commission will also be made available to the Court for judicial review in this proceeding so as to enable the court to finally dispose of the matter and it is for this reason that the Court should not dismiss the writ petition in limine only on the ground that an alternative remedy by way of appeal is available against the orders passed by the Commission relaxing the Escrow Agreement between the parties.
7. Mr. Raghavan submitted that the view taken by the Commissioner in the order dated 30-1-2002 that the Escrow Agreement between the OPGC and Gridco was void because no consent has been taken from the commission for entering into the agreement under Section 21(4)(b) read with Section 21(5) of the Act, 1995 is not at all correct. He submitted that the Act, 1995 came into force on 1-4-1996 whereas the PPA entered into by the OPGC and Gridco, though dated 13-8-1996, came into force with effect from 1-1-1995, i.e before the Act, 1995 came into force. He further submitted that at the time the PPA was entered into by the OPGC and Gridco, Section 43A of the Act, 1948 was in force and the Proviso to Section 43A provided that the terms, conditions and tariff for sale of electricity by generating company which is wholly or partly owned by the State Government be such as may be determined from time to time by the State Government concerned. He submitted that since OPGC was partly owned by the State Government of Orissa, the PPA entered into between OPGC and Gridco was required to be approved by the State Government under the said Proviso to Section 43A of the Act, 1948 and no consent of the Commission was required under Section 21(4)(b) read with Section 21(5) of the Act, 1995. He argued that if it is held that the PPA entered into by a generating company wholly or partly owned by the State Government needs approval of the State Government under the Proviso to Section 43A of the Act, 1948 as well as consent of the Commissioner under Section 21(4)(b) read with Section 21(5) of the Act, 1995, there would be a direct conflict between the provisions of Section 43A of the Act, 1948 and Section 21(4)(b) read with Section 21(5) of the Act, 1995. He submitted that to avoid such direct conflict, a provision has been made in Section 57(3) of the Act, 1995 that the provisions of the Act, 1948 mentioned thereunder shall in application to the State of Orissa be subject to the modifications and reservations in the Act, 1995 and Section 43A of the Act, 1948 has not been mentioned under Section 57(3) of the Act, 1995. He submitted that Section 51 of the Electricity Regulatory Commissions Act, 1998 which came into force with effect from 28-4-1998 provides that with effect from such date as the Central Government may, by notification, in the Official Gazette appoint, sub-section (2) of Section 43A of the Act, 1948 shall be omitted and different dates may be appointed for different States and in exercise of such powers under Section 51 of the Electricity Regulatory Commissions Act, 1998, the Central Government has, by a notification, omitted Section 43A(2) with effect from 15-5-1999 and the result is that only the PPAs entered into after 15-5-1999 by a generating company owned wholly or partly by the State Government will require the consent of the Commission under Section 21(5) of the Act, 1995.
8. Mr. Raghavan further argued that Section 6 of the Central General Clauses Act provides that unless a different intention appears, the repeal of an earlier Act does not affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed. He submitted that Sections 57 and 58 of the Act, 1995 would show that provisions of Section 43A of the Act, 1948 were not to be affected by the 1995, Act. Therefore the rights and obligations of OPGC and Gridco under the PPA and Escrow Agreement made under Section 43A of the Act, 1948 cannot be affected by exercise of any power by the Commission under Section 11 of the Act, 1995. Alternatively, he submitted that if it is held by the Court that consent was required under Section 21(4) read with Section 21(5) of the Act, such consent is deemed to have been granted by the Commission while passing different bulk supply tariff orders from time to time.
9. Mr. Raghavan next submitted that under Section 21 of the Act, 1995 the Commission has the power to examine and give consent to terms and conditions of tariff but has no power to examine and give consent with regard to commercial terms and conditions. He submitted that the Escrow Agreement between OPGC and Gridco did not contain any terms and conditions relating to tariff for bulk supply of power but only provided for the manner in which the payment will be made for such bulk supply by Gridco to OPGC and these terms and conditions of Escrow Agreement are only part of the bargain between the parties and represent the commercial terms and do not represent the statutory terms and conditions which require the examination and consent by the Commission. In support of this contention, he relied on the decision of the Supreme Court in Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. AIR 1987 SC 1023, India Thermal Power Ltd. v. State of M.P AIR 2000 SC 1005, and the decision of the Andhra Pradesh High Court in RCI Power Limited, Chennai v. Union of India, (2003) 3 Andha LD 762 (DB). Alternatively, he submitted that if the terms and conditions of the Escrow Agreement are held to be statutory in nature, the Commission cannot interfere and negate the valid exercise of the statutory power of the State Government under the Proviso to Section 43A of the Act, 1948. In support of this contention, he relied on the decision of the Supreme Court in Indian Aluminium Company v. Kerala State Electricity Board, AIR 1975 SC 1967, and the decision of the Andhra Pradesh High Court in RCL Power Limited, Chennai v. Union of India (supra).
10. Mr. Raghavan submitted that no express power has been vested in the Commission under Section 30 the Act, 1995 to suspend the obligations of the parties under the Escrow Agreement and the only power that is vested in the Commission under the said Section 30(3) of the Act, 1995 is to give directions for vesting of the management and control of the undertaking of the licensee with the assets, interests and rights of the company with any person or authority. He submitted that in the absence of any express power, the Commission cannot have any incidental or ancillary power to pass any order suspending the obligations arising under the Escrow Agreement between the parties. In support of this contention, he cited the decision of the Supreme Court in Union of India v. Paras Laminates (P) Ltd., (1990) 4 SCC 453 : (AIR 1991 SC 696) as well as the decision of the Delhi High Court in Mahanagar Telephone Nigam Limited. v. Telecom Regulatory Authority Of Delhi.. and etc. AIR 2000 Delhi 208, and the decision of the Andhra Pradesh High Court in RCI Power Limited, Chennai v. Union of India (Supra).
11. Mr. Raghavan relying on the decision in Re: Newdigate Colliery Ltd., (1912) 1 Ch. 468, submitted that a receiver in charge of business cannot break contracts and accordingly the Chief Executive Officer in whom the management and control of CESCO have been vested by the Commission in its order dated 27-8-2001 cannot break the Escrow Agreement between CESCO and Gridco and is obliged to fulfil the obligations of CESCO thereunder and the observation of the Commission in the order dated 30-1-2002 that the Chief Executive Officer acts as the Administrator and functions as a representative of the Commission and is a third party and not a privy to the contract between Gridco and CESCO is a finding erroneous in law.
12. Mr. Samareswar Mohanty, learned counsel for the Commission, on the other hand, submitted that the PPA though effective from 1-1-1995 was actually executed on 13-8-1996 and therefore cannot be taken out of the mischief of Section 21 of the Act, 1995. He submitted that the power of the Commission under Section 21 and in particular sub-sections (4) and (5) thereof, to give or withhold consent to an agreement for purchase of power under Section 21 of the Act, 1995 is ill addition to the power of the State Government under the Proviso to Section 43A of the Act, 1948 to determine the tariff and terms and conditions of sale of power by a generating company partly or wholly owned by the State Government. He submitted that unless therefore consent is granted under Section 21(4) read with Section 21(5) of the Act, 1995 by the Commission to a power purchase agreement between a bulk purchaser and a generating company, such power purchase agreement is not operative. He submitted that the view taken by the Commission in the order dated 30-1-2002 that the Escrow Agreement between the OPGC and Gridco without the consent of the Commission is void is correct in law.
13. Mr. Mohanty next submitted that wide powers are vested under Sections 28 and 30(3) of the Act, 1995 in the Commission to not only give directions for vesting of management and control of any undertaking of the licensee but also pass any interim or final orders for maintaining the continuity of supply of electricity in an efficient and safe manner to the consumers. He submitted that in exercise of such powers the Commission has vested the management and control of CESCO in the Chief Executive Officer and also relaxed the Escrow Agreement between CESCO and Gridco to maintain continued supply of electricity in an efficient and safe manner to the consumers in the areas for which CESCO has the licence for distribution and supply of electricity.
14. Mr. N.C Panigrahi, learned counsel appearing for Gridco, submitted that Section 39 of the Act, 1995 provides for an appeal against an order of the Commission on a question of law and hence OPGC has an alternative remedy byway of an appeal from the order of the Commission relaxing the Escrow Agreement and this Court should not therefore entertain this writ petition under Article 226 of the Constitution in this case. He cited the decision of the Supreme Court in Seth Chand Ratan v. Pandit Durga Prasad (D) by L.Rs, AIR 2003 SC 2736, State of Goa v. A.H Jaffar & Sons, AIR 1995 SC 333, Sadhana Lodh v. National Insurance Co. Ltd., AIR 2003 SC 1561, in support of this contention. He argued that when the statute itself has provided the forum of challenge, the parties should not have any choice in this respect and if such things are allowed, it will give rise to indiscipline in procedure. He submitted that had an appeal been filed and disposed of toy a learned single Judge, the aggrieved party could have a right of appeal to a Division Bench which right is not now available.
15. Mr. Panigrahi contended that case No. 39 of 2001 was a proceeding in which interim orders were passed under Section 30 of the Act, 1995 for appointment of the Chief Executive Officer to manage the CESCO and the Escrow Agreement between CESCO and Gridco was relaxed by the impugned order by the Commission to ensure continued supply of electricity to the consumers in the licensed area of CESCO. He submitted that the observations of the Commission in the order dated 30-1-2002 that the Escrow Agreement between OPGC and Gridco is void in the absence of consent of the Commission under Section 21(4)(b) read with Section 21(5) of the Act, 1995 to the Escrow Agreement were not necessary as in case No. 39 of 2001 in which the said observations were made, the validity of the Escrow Agreement were neither directly nor indirectly in issue. He submitted that Gridco has filed a separate case No. 13 of 2002 before the Commission for giving consent to the PPA entered into by Gridco with OPGC and the High Court should not give a finding which would prejudice the parties in the said case No. 13 of 2002.
16. He submitted that Section 21(5) of the Act, 1995 provides that any agreement relating to any transaction of the nature described in sub-sections (1), (2), (3) or (4) unless made with, or “subject to” such consent as aforesaid, shall be void and the PPA in the present case executed by Gridco and OPGC was made specifically subject to the consent of the Commission and Gridco and so long as the Commission does not pass finally an order in the said case No. 13 of 2002 withholding its consent, the PPA cannot be held to be void. In this context, he referred to regulation 110(3) of the Orissa Electricity Regulatory Commission (Conduct of Business) Regulations, 1996 which provides that the licensee shall apply to the Commission to approve the draft agreement which the licensee proposes to enter into and the Commission may pass order (a) approving the agreement, (b) approving the agreement with modification, or (c) reject the agreement.
17. Mr. Panigrahi submitted that the contention of the learned counsel for the OPGC that no consent under Section 21 of the Act, 1995 to the PPA is required is misconceived as the language of Section 21 is clear that such consent is required for any agreement for purchase of power by Gridco as a licensee from a generating company. In this regard, he further submitted that the PPA in question is valid for thirty years and it is just and fair that the same is approved by the Commission for the purpose of ensuring transparency in process.
18. He also contended that the Commission had sufficient powers under sub-section (3) of Section 30 of the Act, 1995 to issue any direction in the public interest including a direction superseding an agreement. He explained that under the Act, 1995, the functions of generation, transmission and distribution have been bifurcated and entrusted to different corporations and the legislature was alive to the possibility of licensee being unable to carry out its obligations for one reason or the other and to meet such a situation, sub-section (3) of Section 30 of the Act, 1995 was enacted. Hence in exercise of such powers under sub-section (3) of Section 30 of the Act, 1995, the Commission could relax the Escrow Agreement between Gridco and CESCO. He cited the decision of the Supreme Court in Grid Corporation Of Orissa Ltd. v. Indian Charge Chrome Ltd., AIR 1998 SC 1761, to show that the Commission has full control over generating company. He pointed out that the preamble and Sections 10, 11, 17 and 21 of the Act, 1995 vest sufficient regulatory powers with the Commission for exercising such regulatory powers even over generating Companies such as OPGC. He also cited the decisions of the Supreme Court, State of Orissa v. Radheshyam Meher, AIR 1995 SC 855 and Krishnan Kakkanth v. Government of Kerala, AIR 1997 SC 128, for the proposition that in case a conflict between, private interest and public interest, private interest must give (up) and public interest must prevail.
19. Finally, he submitted that this Court should allow CESCO to keep only Rs. 9 crores instead of Rs. 11 crores towards monthly expenses and deposit the entire balance amount in the Gridco Escrow Account as directed by this Court in its order dated 23-7-2002 because Gridco is finding it difficult to meet its commitments if Rs. 11 crores is retained every month by CESCO.
20. Mr. R.K Rath, learned counsel appearing for the CESCO, submitted that CESCO requires a minimum of Rs. 11 crores every month for meeting its expenses and pursuant to orders passed by this Court in Misc. Case Nos. 7261, 7262 and 7001 of 2002 on 23-7-2002 directing that the Chief Executive Officer will initially deposit a sum of Rs. 30 crores in the Escrow Account every month from 1st of July, 2002 and spend Rs. 11 crores for running CESCO, CESCO has been depositing Rs. 30 crores every month in the Escrow Account after spending Rs. 11 crores and if any further amount remains after spending Rs. 11 crores, the same is also being deposited in the Escrow Account. A statement showing the collection and deposits made by CESCO in the Escrow Account form July, 2002 to November, 2004 has been filed along with the affidavit dated 23-12-2004.
21. We have no doubt in our mind that OPGC has locus standi to file this writ petition challenging the impugned orders passed by the Commission inasmuch as by the impugned orders the Escrow Agreement between Gridco and CESCO of which the petitioner is a beneficiary has been relaxed by the Commission and as a result of such relaxation OPGC will not be able to get the payment of its bills raised for bulk supply of power under PPA to Gridco in the same manner as it would have the Escrow Agreement not been released by the Commission. We also find that in the order dated 30-1-2002, the Commission has observed in paragraph 6.5 that Gridco buys power from OPGC in order to supply it to CESCO and Gridco naturally has to pay for it and in this process OPGC is affected and hence has been heard at length. The counsel for the opposite parties have also not made any submission at the time of hearing of this writ petition that OPGC had no locus standi to challenge the impugned orders passed by the Commission relaxing the Escrow Agreement, between Gridco and CESCO.
22. We may now consider the preliminary objection raised by Mr. Panigrahi that the writ petition filed by the OPGC against the impugned orders should not be entertained as an alternative statutory appeal on a question of law was available to OPGC under Section 39 of the Act, 1995 against the order of the Commission. Under Section 39 of the Act, 1995, any person aggrieved by any decision or order of the Commission passed under the Act, 1995 may file an appeal to the High Court on any question of law arising out of such order within sixty days from the date of communication to him of the decision or order of the Commission. Hence, a statutory remedy by way of an appeal was available to the OPGC within sixty days from the date of communication of the impugned order of the Commission. But in this case, the OPGC has averred in para 21 of the writ petition that although the OPGC requested the Commission a number of times to give a copy of the impugned order passed by it, officers of the Commission have refused to do so. Thereafter, the OPGC made a written request to the Commission on 4th October, 2001 to give a copy of the impugned order to the OPGC but the officers of the Commission once again refused to do so. A copy of the written request dated 4th October, 2001 has been annexed to the writ petition as Annexure-13. In para 9 of the counter-affidavit filed on behalf of the Commission, the averments in paragraphs 19 to 27 of the writ petition have been dealt with, but the statement in para 21 of the writ petition that copies of the impugned orders were not given to the OPGC has not been denied. Hence, the impugned orders of the Commission were not communicated to OPGC and the OPGC had to file the present writ petition under Article 226 of the Constitution on 5-10-2001. Thereafter, the writ petition was entertained and heard from time to time and, as indicated above, an order was passed on 14-12-2001 that the Commission is to take a fresh decision ton the matters covered by its various orders relating to the Escrow contract amongst the CESCO, Gridco and the Union Bank of India and the contract between the Gridco and CESCO and after such fresh decision is taken by the Commission, the decision shall be made available by the Commission for the scrutiny of the Court in this proceeding so as to enable the court to finally, dispose of the matter. Pursuant to the said order passed on 14-12-2001, the Commission has reheard the matter and parsed a fresh order on 30-1-2002 and furnished a copy of the fresh order passed on 30-1-2002 to the Court. After all the aforesaid developments, at this stage, it will not be proper for the Court to refuse to entertain the writ petition only on the ground that an alternative statutory remedy by way of an appeal was available to the OPGC under Section 39 of the Act, 1995 against the impugned order.
23. Moreover, it is now well settled that even when a statutory remedy by way of an appeal is available against an order such an order can be challenged in a writ petition under Article 226 of the Constitution on the ground that the authority which has passed the order had no jurisdiction to pass it and when such a writ petition is filed, the High Court may not refuse to entertain the writ petition on the ground that a statutory remedy by way of an appeal is available against the order said to have been passed by the authority and instead the High Court may examine the order to find out whether the order is without jurisdiction. In Seth Chand Ratan v. Pandit Durga Prasad (D) by L.Rs (AIR 2003 SC 2736) (supra) on which great reliance has been placed by Mr. Panigrahi, learned counsel for the Gridco, the Supreme Court observed: (Para 13)
“…………..It has been settled by a long catena of decisions that when a right or liability is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before seeking the discretionary remedy under Art. 226 of the Constitution. This rule of exhaustion of statutory remedies is no doubt a rule of policy, convenience and discretion and the Court in exceptional cases issue a discretionary writ of certiorari. Where there is complete lack of jurisdiction for the officer or authority or Tribunal to take the action or there has been a contravention of fundamental rights or there has been a violation of rules of natural justice or where the Tribunal acted under a provision of law, which is ultra vires, then notwithstanding the existence of an alternative remedy, the High Court can exercise its jurisdiction to grant relief. …………….”
The aforesaid decision makes it clear that where there is complete lack of jurisdiction for the officer or the Tribunal to take action, then notwithstanding the existence of an alternative remedy, the High Court can exercise jurisdiction to grant relief. In the present case, the case of the OPGC, the writ petitioner, is that the impugned orders as well as the order dated 30-1-2001 are without jurisdiction inasmuch as under the provision of the Act, 1995 the Commission had no jurisdiction to pass the impugned orders relaxing the Escrow Agreement and to hold that the Escrow Agreement was void in the absence of consent to the said Agreement by the Commission under Section 21(4) read with Section 21(5) of the Act, 1995. Hence, notwithstanding the existence of the alternative remedy by way of an appeal, the High Court can examine as to whether the Commission had jurisdiction to either relax the Escrow Agreement between Gridco and CESCO or to hold that the Escrow Agreement was void for lack of consent of the Commission under Section 21(4) read with Section 21(5) of the Act, 1995.
24. The next question which arises for decision in this writ petition is whether the Commission had powers to relax the Escrow Agreement between Gridco and CESCO. The Commission has observed in the order dated 30-1-2002 that Gridco filed an application before the Commission and prayed inter alia that the Commission should direct CESCO to pay forthwith all amounts due to Gridco and while disposing of the said application of the Gridco, the Commission ordered in case No. 31 of 2000 that CESCO and Gridco must strictly follow the terms and conditions laid down in the agreement on which they have entered into. The said order passed by the Commission was however violated by CESCO and Gridco made another application before the Commission for a direction to the CESCO to comply with the Commission's order in Case No. 31 of 2000 and the Managing Director, CESCO pleaded that diversion of funds was necessary in order to make payment upwards salaries, wages and statutory dues and for maintenance of distribution network but the Commission ordered that diversion of funds or utilization of the past receivables for other purposes would be irregular. CESCO thereafter asked Gridco to stop further supply of power and intimated Gridco that any action for continuing supply of power would be at the risk of Gridco. The Commission took a view that this was a fundamental breach of CESCO's licence condition inasmuch as the basic purpose of licence was to maintain continuity in supply of electricity to the consumers in its licensed area and this act of CESCO would have plunged a huge densely populated area into total darkness and in these circumstances the Commission initiated proceedings under Section 28 of the Act, 1995 for enforcement of the licence conditions by order dated 24-8-2001 and pending inquiry and final disposal of such proceedings, as an interim measure, passed an order on 27-8-2001 under Section 30(3) of the Act, 1995 vesting the management and control of the undertaking of CESCO in an officer of the State Government designated as Chief Executive Officer of CESCO. The Commission has taken a view that this was an emergency measure intended to safeguard the public interest. The Commission has further observed in the order dated 30-1-2002 that on the representation of the Chief Executive Officer, CESCO, the Commission by its orders dated 7-9-2001 and 3-10-2001 allowed him to draw Rs. 7 crores and Rs. 10.5 crores respectively from the Escrow Account to enable him to meet the expenses of the CESCO undertakings and thereafter by order dated 3-11-2001 the Commission allowed him to appropriate from the receivables of CESCO, within a fixed limit, an amount necessary for meeting expenses on account of salaries, wages, statutory dues of employees of the undertaking and other administrative and maintenance work. According to the Commission, without this funding it would have been wellnigh impossible on the part of the Chief Executive Officer, CESCO to maintain supply of power in the Central Zone. Thus, the Commission has relied on Sections 28 and 30 of the Act, 1995 as the sources of its power for relaxing the Escrow Agreement between Gridco and CESCO.
25. Sections 28 and 30 of the Act, 1995 are quoted hereinbelow:
“28. (1) Where the Commission is satisfied that a licensee is contravening, or is likely to contravene any relevant conditions or requirement of its licence, it shall be final order under Section 29 and, if it thinks it appropriate in accordance with sub-section (2) by interim order under this section, issue such directions as it deems proper for securing compliance.
(2) In determining whether it is appropriate that an interim order be made, the Commission shall have regard in particular to-
(a) the extent to which the contravention or likely contravention by the licensee will affect the achievement of the objects and purposes of this Act;
(b) the extent to which any person is likely to sustain loss or damage in consequence of anything which is likely to be done or omitted to be done in contravention of the relevant condition or requirement, before a final order can be made; and
(c) the extent to which there is any other available remedy in respect of the alleged contravention of a relevant condition or requirement.
(3) If the Commission proposes to make an interim order, it shall give notice to the licensee—
(a) stating that it proposes to make the order;
(b) setting out:—
(i) the relevant conditions or requirement with which the proposed order is intended to secure compliance;
(ii) the acts or omissions which, in its opinion, constitute contravention of that condition or requirement;
(iii) the other facts which in its opinion, justify the making of the proposed order; and
(iv) the effects of the proposed order;
(c) specifying the period not being less than five days from the date of notice within which the licensee may make representations or objections to the proposed order.
(4) Subject to sub-section (5), having considered any representations or objections from the licensee pursuant to clause (c) of sub-section (3), the Commission may make an interim order at any time after expiry of the period referred to in clause (c) of the said sub-section, if—
(a) the Commission has reason to believe that the licensee to whom the order relates has contravened or is contravening or is likely to contravene any relevant condition or requirement; and
(b) the provisions made by the order are requisite for the purpose of securing compliance with that condition or requirement.
(5) The Commission may not make an interim order if it is satisfied that the licensee has agreed to take and is taking all such steps as the Commission considers that the licensee should take to secure compliance with the condition or requirement in question.
(6) An interim order—
(a) shall require the licensee to whom it relates to do, or to abstain from doing, such things as are specified in the order;
(b) shall take effect from such time as is specified in the order; and
(c) may be revoked, modified or rescinded at any time by the Commission, but in any event shall cease to have effect at the end of such period as is stated in the order, unless the Commission is at that time following the procedure set out in Section 29 to declare the interim order to be a final order.
(7) As soon as practicable, after making an interim order, the Commission shall—
(a) serve a copy of the order on the licensee to whom the order relates;
(b) publish the order in such manner as it considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by it; and
(c) commence proceedings to declare the interim orders to be a final order in accordance with Section 29.
29. xxxxxxxxx
30. (1) Without prejudice to Section 46 of this Act, all orders and directions, interim or final, passed by the Commission shall be enforceable in law as if it were a decree passed by a Civil Court.
(2) The Commission shall be entitled to take such assistance from the police and other authorities in the State required to effectively enforce the orders and directions given by it.
(3) The Commission shall be entitled to give directions for vesting the management and control of any of the undertaking of the licensee with the assets, interests and rights of the undertaking with any other person or authority pending any enquiry and passing of interim or final orders in the matter, if the Commission considers, taking into account the object and purposes of this Act and the need to maintain continued supply of electricity in an efficient and safe manner to the consumer, it is necessary to pass such directions:
Provided that no direction under this sub-section shall be issued without giving the licensee a reasonable opportunity of being heard.”
26. Sub-section (1) of Section 28 of the Act, 1995 quoted above provides that where the Commission is satisfied that a licensee is contravening or is likely to contravene any requirement or condition of its licence, it shall pass final order under Section 29 of the Act, 1995 and if it thinks appropriate shall also by an interim order in accordance with Sub-section (2) of Section 28 of the Act, 1995 issue such directions as it deems proper for securing compliance with any relevant condition or requirement of the licence contravended or likely to be contravened. Sub-section (2) of Section 28 quoted above provides that in determining whether it is appropriate that an interim order be made, the Commission shall have regard in particular to the extent to which the contravention or likely contravention by the licensee will affect the achievement of the objects and purposes of the Act and to the extent to which any person is likely to sustain loss or damage in consequence of anything likely to be done or omitted to be done in contravention of any relevant condition or requirement before a final order can be made and the extent to which there is any other available remedy in respect of the alleged contravention of a relevant condition or requirement. Sub-section (3) of Section 30 of the Act, 1995 quoted above further provides that the Commission shall be entitled to give directions for vesting the management and control of any of the undertaking of the licensee with the assets, interests and rights of the undertaking with any other person or authority pending any enquiry and passing of interim or final orders in the matter, if the Commission considers, taking into account the object and purposes of this Act and the need to maintain continued supply of electricity in an efficient and safe manner to the consumer, it is necessary to pass such directions.
27. In this case, the Commission has found that CESCO had asked Gridco to stop supply of power and thus CESCO as a licensee was likely to contravene the main condition of its licence, namely, to maintain continued supply of electricity to its consumers in its licensed area and stoppage of supply of power to consumers in its licensed area would have plunged a huge densely populated area into total darkness. The Commission has also taken a view that it was immediately necessary to vest the management and control of CESCO including its assets, liabilities and rights on a person to be designated as the Chief Executive Officer of CESCO. The Chief Executive Officer of CESCO after taking over the management and control of CESCO informed the Commission that he will not be able to discharge his functions as the Chief Executive Officer of CESCO unless he is allowed to retain some amount for expenses of CESCO. On these facts, the Commission could in exercise of its powers both under Section 28 and under Section 30(3) of the Act, 1995 pass an interim order to maintain continued supply of electricity by CESCO to the consumers in its licensed area including an order relaxing the Escrow Agreement between CESCO and Gridco.
28. In Union of India v. Paras Laminates (P) Ltd. (AIR 1991 SC 696) (supra) cited by Mr. Raghavan the Supreme Court held: (Para 8)
“There is no doubt that the Tribunal functions as a Court within the limits of its jurisdiction. It has all the powers conferred expressly by the statute. Furthermore, being a judicial body, it has all those incidental and ancillary powers which are necessary to make fully effective the express grant of statutory powers. Certain powers are recognised as incidental and ancillary, not because they are inherent in the Tribunal, nor because its jurisdiction is plenary, but because it is the legislative intent that the power which is expressly granted in the as signed field of jurisdiction is efficaciously and meaningfully exercised. The powers of the tribunal are no doubt limited. Its area of jurisdiction is clearly defined but within the bounds of its jurisdiction, it has all the powers expressly and impliedly granted. The implied granted is, of course, limited by the express grant and, therefore, it can only be of such powers as are truly incidental and ancillary for doing all such acts or employing all such means as are reasonably necessary to make the grant effective. As stated in Maxwell on the Interpretation of Statutes (11th Edn.) “where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution.”
It is clear from the aforesaid decision of the Supreme Court that a Tribunal which is conferred with express powers by a statute also has incidental or ancillary powers which are necessary to make fully effective the express grant of statutory powers. The language of Section 28 of the Act, 1995 is clear that the Commission has express powers to pass an interim order to secure compliance of the relevant conditions or requirement of a licence by a licensee and the language of sub-section (3) of Section 30 of the Act, 1995 quoted above is clear that the Commission has the express powers to pass an interim order for maintenance of continued supply of electricity in an efficient manner to the consumers. Thus, under the Act 1995 the Commission has been conferred with express powers to pass interim orders for maintenance of continued supply of electricity in the licensed area of CESCO for the purpose of securing compliance with the relevant conditions or requirement of its licence and accordingly also has incidental or ancillary powers to issue such directions/orders which are necessary for ensuring continuity of supply of electricity to the consumers in the licensed area of CESCO and in exercise of such express as well as incidental and ancillary powers, the Commission could relax the Escrow Agreement between CESCO and Gridco.
29. In Mahanagar Telephone Nigam Ltd. and etc. v. Telecom Regulatory Authority of Delhi and etc. : (AIR 2000 Del 208) (supra) cited by Mr. Raghavan the question that was raised before the Delhi High Court was whether the Telecom Regulatory Authority of India has the power to issue any Regulation which affects the rights of individuals under contracts or which seeks to override the terms and conditions of licenses issued by the Central Government to various parties and the Delhi High Court on examination of the provisions of the Telecom Regulatory Authority of India Act, 1997, and in particular Section 11 thereof, held that the Telecom Regulatory Authority of India had only recommendatory functions and powers qua the Central Government and regulatory and other functions qua the service providers only and the said authority in exercise of its recommendatory functions cannot either directly or indirectly vary the conditions which are laid down by the Central Government in a license to a service provider and accordingly quashed the Telecommunication Interconnection Charges and Revenue Sharing (First Amendment) Regulations, 1999 under which the authority had assumed overriding powers over the terms and conditions of a licence of a service provider fixed by the Central Government. In the aforesaid case of Mahanagar Telephone Nigam Ltd. and etc. v. Telecom Regulatory Authority of Delhi and etc. (supra), the Delhi High Court was not called upon to interpret provisions similar to Sections 28 and 30(3) of the Act, 1995 which confer wide powers on the Commission to pass an interim order to ensure compliance with the relevant conditions or requirement of licence by a licensee and continued supply of electricity to the consumers in the licensed area. This decision of the Delhi High Court therefore does not apply to the facts of the present case.
30. In RCI Power Limited, Chennai v. Union of India (supra), some generating companies had entered into agreements with the Andhra Pradesh Electricity Reforms Act, 1999 came into force and some generating companies entered into similar agreements after the said Act came into force. Under the said agreements, the wheeling charges and contracted periods were specified. The question that was raised before the Andhra Pradesh High Court was whether the Commission had jurisdiction to fix the charges for wheeling the energy generated by the petitioner company to be sold to or purchased by TRANSCO or private parties. The Division Bench of the Andhra Pradesh High Court held that the agreements executed by the generating companies with the Andhra Pradesh State Electricity Board are specifically saved under various provisions of the Andhra Pradesh Electricity Reforms Act, 1999 and are binding on its successor, namely, Andhra Pradesh TRANSCO. In the said decision, the Andhra Pradesh High Court further held that the Commission in exercise of its regulatory powers cannot either nullity or modify the concluded contracts entered into by the Andhra Pradesh State Electricity Board or Andhra Pradesh TRANSCO. The Andhra Pradesh High Court further held that Andhra Pradesh TRANSCO cannot approach the Commission to alter the wheeling charges unilaterally because it cannot do this by itself in view of the binding nature of the agreements and what it cannot do directly, it cannot get it done through the Commission under the guise of tariff fixation. The Andhra Pradesh High Court also held that the Commission has also no power to revise the wheeling charges under the guise of fixing tariff under Section 26 of the Andhra Pradesh Electricity Reforms Act, 1999. In the aforesaid decision, the Andhra Pradesh High Court was not called upon to decide whether the Commission in exercise of powers under the provisions similar to Sections 28 and 30(3) of the Act, 1995 can pass interim orders for the purpose of securing compliance of the relevant conditions or requirements of licence and for maintaining continued supply of electricity to the consumers of the licensed area of a licensee. The said decision of the Andhra Pradesh High Court therefore does not apply to the facts of the present case.
31. The next question to be decided in this case is whether the Commission had the jurisdiction to observe that the Escrow Agreement between OPGC and Gridco was void for lack of consent by the Commission under Section 21(4) read with Section 21(5) of the Act, 1995. The plea raised by OPGC before the Commission and the observations of the Commission in this regard are quoted herein below:
“3.0 The main contention of OPGC is that, there has been a tripartite agreement between GRIDCO, OPGC and UBI, called Escrow Agreement Dt. 30-11-1998 which has, inter alia, provided that in the event of GRIDCO's failure to make payments either through, letters of credit or otherwise the amounts deposited in the GRIDCO's Escrow Account shall be automatically transferred by the escrow agent (UBI) without any further act, deed or thing to be done by GRIDCO or OPGC on a daily basis to OPGC. There is also another Escrow Agreement dt. 11-7-2000 between GRIDCO, CESCO and UBI which has provided for the first charge in favour of GRIDCO over the receivables of CESCO in terms of the Bulk Supply agreement and the Loan Agreement and GRIDCO shall be entitled to recover all the amounts due to it from the Escrow Account. Neither the escrow agent nor CESCO shall use the amount in CESCO's escrow account for any purpose other than for making the payment of all the outstanding dues from CESCO to GRIDCO. There is a Bulk Supply Agreement between GRIDCO and CESCO dt. 3-9-1999, which provides that GRIDCO's ability to supply Bulk electricity to CESCO is dependent upon and inter-related to GRIDCO securing sufficient electrical energy from generating companies and other relevant sources and in essence both are back to back arrangements with all the consequences of one flowing to the other. In view of this, any change brought about in the payment mechanism under the CESCO's escrow agreement would not only affect OPGC's right to receive payments out of the GRIDCO's escrow account but would also affect OPGC's continued generation and supply of electrical energy to GRIDCO.
3.1 to 6.5 xxxxxxxxx
6.6 Furthermore, the alleged escrow agreement between OPGC and GRIDCO cannot be given effect to by the Commission inasmuch as it is void, being hit by S. 21(4)(b) read with S. 21(5) of the Orissa Electricity Reform Act, 1995. No consent has been taken from the Commission for entering into the agreement or arrangement. It is noteworthy that the escrow agreement between GRIDCO and CESCO, two licensees does not require consent of the Commission, since they are licensees and come within the purview of S. 21(4)(a) of the said Act, but consent of the Commission is a condition precedent for validity of the agreement or arrangement between OPGC, which is a generating company, and GRIDCO, which is a licensee within the meaning of Sec. 21(4)(a) of the Act. This distinction exists between clauses (a) and (b) of S. 21(4) of the said Act because generating companies do not come within the regulatory regime of the commission and so the rate at which the licensee purchases power, the quantum of such purchase, terms and conditions including the arrangement with the generating company as payment, and all such factors which have an impact on electricity industry in the State have been required by the statute to be subject to scrutiny of the Commission. To give effect to any agreement or arrangement between a generating company and a licensee is to validate what has been expressly declared by the statute to be void.”
It will thus be clear from the aforesaid observations that the Commission has held that the Escrow Agreement between OPGC and Gridco cannot be given effect to as it was void being hit by Section 21(4)(b) read with Section 21(5) of the Act, 1995. Sections 21(4) and 21(5) of the Act, 1995 on which the Commission has relied are quoted herein below:
“21. (1) to (3) xxxxxxxxx
(4) A holder of a supply or transmission licence may, unless expressly prohibited by the terms of its licence, enter into arrangements for the purchase of electricity from:—
(a) the holder of a supply licence which permits the holder of such licence to supply energy to other licensees for distribution by them; and
(b) any person or Generating Company with the consent of the Commission.
(5) Any agreement relating to any transaction of the nature described in sub-sections (1), (2), (3) or (4) unless made with, or subject to such consent as aforesaid, shall be void.”
Section 21(4)(b) quoted above provides that a holder of a supply or transmission licence may, unless expressly prohibited by the terms of its licence, enter into arrangements for the purchase of electricity from any person or Generating Company with the consent of the Commission and Section 21(5) quoted above provides that any agreement relating to any transaction of the nature described in inter alia sub-section (4) unless made with, or subject to such consent as aforesaid, shall be void. The said provisions in Section 21 however do not say why such consent of the Commission is required. To know why such consent of the Commission is required, we must examine the functions of the Commission. Section 11(1) of the Act, 1995 which enumerates the functions of the Commission is quoted herein-below:
“11. (1) Subject to the provisions of this Act, the Commission shall be responsible to discharge, amongst others, the following functions, namely:—
(a) to aid and advise, in matters concerning generation, transmission, distribution and supply of electricity in the State;
(b) to regulate the working of licensees and to promote their working in an efficient, economical and equitable manner;
(c) to issue licences in accordance with the provisions of this Act and determine the conditions to be included in the licences;
(d) to promote efficiency, economy and safety in the transmission, distribution and use of the electricity in the State including and in particular in regard to quality, continuity and reliability to service so as to enable all reasonable demands for electricity to be met;
(e) to regulate the purchase, distribution, supply and utilization of electricity, the quality of service, the tariff and charges payable keeping in view both the interest of the consumer as well as the consideration that the supply and distribution cannot be maintained unless the charges for the electricity supplied are reasonably levied and duly collected:
(f) to promote competitiveness and progressively involve the participation of the private sector, while ensuring a fair deal for the customers;
(g) to collect data and forecast on the demand for and use electricity and to require the licensees to collect such data and make such forecasts;
(h) to require licensees to formulate perspective plans and schemes in coordination with others for the promotion of generation, transmission, distribution and supply of electricity and
(i) to undertake all incidental or ancillary things.”
It will be clear from Section 11(1)(b) of the Act, 1995 quoted above that the Commission is to regulate the working of the licensee and to promote their working in an efficient, economical and equitable manner. Under Section 11(1)(d) the Commission is required to promote efficiency, economy and Safety in the transmission, distribution and use of the electricity in the State and in particular promote the quality, continuity and reliability of service so as to enable all reasonable demands for electricity to be met. Section 11(1)(e) further provides that the Commission is to regulate the purchase, distribution, supply and utilization of electricity, the quality of service, the tariff and charges payable keeping in view both the interest of the consumer and is required to take into consideration that the supply and distribution Cannot be maintainable unless the charges for the electricity supplied are reasonably levied and duly collected. Thus, the Commission will have to ensure that the arrangement or agreement for purchase of electricity by a holder of supply or transmission licence is such as will ensure that the holder of supply or transmission licence will be able to work in an efficient, economic and equitable manner and that such arrangement or agreement does not affect the quality and continuity of service to the consumers. If the terms and conditions of the arrangement or agreement for purchase of electricity by the holder of a supply or transmission licence is such as will affect the efficient, economic or equitable working of the holder of supply or transmission licence and in turn will affect the quality and continuity of service to the consumers of electricity, the Commission will be within its powers to withhold its consent to such terms and conditions and may ask the holder of supply or transmission licence to remove such terms and conditions from its arrangement or agreement for purchasing power from any person or generating company.
32. The submission of Mr. Raghavan, however, is that since the PPA executed on 13-8-1996 between OPGC and Gridco has received the approval of the State Government in the letter dated 24-12-1996 of the Government under Section 43A of the Act, 1948, no further consent of the Commission under Section 21(4) read with Section 21(5) of the Act, 1995 is required. Section 43A of the Act, 1948 is quoted hereunder:
“43A. Terms, conditions and tariff for sale of electricity by Generating Company.— (1) A Generating Company may enter into a contract for the sale of electricity generated by it—
(a) with the Board constituted for the State or any of the States in which a generating station owned or operated by the Company is located;
(b) with the Board constituted for any other State in which it is carrying on its activities in pursuance of sub-section (3) of Section 15A; and
(c) with any other person with consent of the competent Government or Governments.
(2) The tariff for the sale of electricity by a Generating Company to the Board shall be determined in accordance with the norms regarding operation and the Plant Load Factor as may be laid down by the Authority and in accordance with the rates of depreciation and reasonable return and such other factors as may be determined, from time to time, by the Central Government, by Notification in the Official Gazette:
Provided that the terms, conditions and tariff for such sale shall, in respect of a Generating Company wholly or partly owned by the Central Government, be such as may be determined by the Central Government and in respect of a Generating Company wholly or partly owned by one or more State Governments be such as may be determined, from time to time, by the Government or Governments concerned.”
Sub-section (1) of Section 43A of the Act, 1948 quoted above provides that a Generating Company may enter into a contract for the sale of electricity generated by it with the Board or any other person as detailed in Clauses (a), (b) and (c) thereof and the Proviso at the bottom of sub-section (2) states that the terms, conditions and tariff for such sale shall, in respect of a Generating Company wholly or partly owned by the State Government be such as may be determined from time to time by the Government concerned. The power under the Proviso to determine the terms, conditions and tariff for sale of electricity by a generating company wholly or partly owned by the State Government is exercised as an owner of such generating company. In exercising such power, the State Government may or may not examine whether such terms, conditions and tariff for sale of electricity will ensure that the holder of a supply or transmission licence purchasing electricity under an agreement with a generating company partly or wholly owned by the State Government will be able to work efficiently, economically and equitably and the terms, conditions and tariff for sale are such as will ensure quality and continuity of service to consumers for whom ultimately electricity will be purchased by the holder of supply or transmission licence. These aspects, on the other hand, will have to be looked into by the Commission while deciding whether to grant or withhold consent to an arrangement or agreement for purchase of power by the holder of supply or transmission licence from a generating company owned by the State Government because of the statutory functions vested in the Commission under Section 11 of the Act, 1995. We are thus of the view that even in a case where the terms, conditions and tariff of sale of electricity by a generating company, partly or wholly owned by the State Government, are determined by the State Government under the Proviso to Section 43A of the Act, 1948, consent of the Commission would be required under Section 21(4) read with Section 21(5) of the Act, 1995.
33. It will be clear from the observations of the Commission in paragraph 6.6 of the order dated 30-1-2002 quoted above that the Commission has not held that the PPA executed between OPGC and Gridco on 13-8-1996 is void being hit by Section 21(4) read with Section 21(5) of the Act, 1995. The Commission has held that the Escrow Agreement between OPGC and Gridco cannot be given effect to by the Commission as it is void being hit by Section 21(4)(b) read with Section 21(5) of the Act, 1995. On a perusal of the PPA executed between OPGC and Gridco on 13-8-1996, we do not find any escrow arrangement. It is only by the tripartite agreement executed between the Government of Orissa, Gridco and OPGC on 18-10-1998 that the three parties agreed for an escrow account mechanism and amendment of the PPA accordingly. Clauses-6 and 7 of the said tripartite agreement executed between the Government of Orissa, Gridco and OPGC on 18-10-1998 are quoted herein-below:
“6. To further strengthen mechanism of payment, under the PPA by Gridco to OPGC, following arrangements, in addition to the provisions provided in the PPA, shall be instituted within three months of this Agreement;
(i) GRIDCO shall set up a escrorw account mechanism to ensure timely payment of energy bills to OPGC. The mechanism shall provide that the proceeds from sale of power in predetermined distribution zones/inter State sale of power, so that the monthly amount collected from the above is 100% of OPGC's average monthly dues, is transferred to a separate bank account designated as the ‘escrow account’. After payment of dues to OPGC any balance in the ‘escrow account’ will be transferred to the general account of GRIDCO. Billing cycles of OPGC and GRIDCO may be synchronised to minimize the period for which the funds are retained in the ‘escrow account’.
(ii) every month the State Government shall disburse an amount which remains unpaid by GRIDCO subject to a maximum of 25% of the monthly verified energy bills payable by GRIDCO to OPGC into the said ‘escrow account’ within a period of 15 days of raising of bill by OPGC. The amount so disbursed shall be treated as demand loan extended to GRIDCO by the State Government. The demand loan shall carry interest at the rate of 15% per annum. This would be an interim arrangement until completion of privatization of distribution and shall be reviewed by all the parties to this agreement after a period of 18 months from April 1, 1998.
7. The PPA shall be amended to the extent required to give effect to the arrangements listed in clause 6 above.”
The aforesaid tripartite agreement was entered into on 18-10-1998 much after the Act, 1995 came into force on 1-4-1996. Clause 7 of the tripartite agreement quoted above provided that the PPA shall be amended to the extent required to give effect to the arrangement regarding escrow account mechanism. Thus, the Escrow Agreement became part of the arrangement or agreement for purchase of electricity by Gridco from OPGC and the Commission was required to examine the said Escrow Agreement under Section 21(4)(b) read with Section 21(5) of the Act, 1995 to find out whether the Escrow Agreement will affect in any manner the efficient working of Gridco as a supply or transmission licensee and would in any way affect the quality and continuity of service to the consumers by the distribution and retail licensees purchasing power from Gridco and thereafter decide whether to grant consent or withhold consent to such Escrow Agreement.
34. We are also unable to accept the submission of Mr. Raghavan that since the terms and conditions of the Escrow Agreement between OPGC and Gridco have been approved by the State Government in exercise of its statutory powers under the Proviso to Section 43A of the Act, 1948, the said terms and conditions cannot be negated by the Commission. In India Thermal Power Ltd. v. State of M.P : (AIR 2000 SC 1005) (supra) cited Mr. Raghavan, the Supreme Court held:
“11. ………………. Section 43-A(1) provides that a generating company may enter into a contract for the sale of electricity generated by it with the Electricity Board. As regards the determination of tariff for the sale of electricity by a generating company to the Board, Section 43(1)(2) provides that the tariff shall be determined in accordance with the norms regarding operation and plant-load factor as may be laid down by the authority and in accordance with the rates of depreciation and reasonable return and such other factors as may be determined from time to time by the Central Government by a notification in the Official Gazette. These provisions clearly indicate that the agreement can be on such terms as may be agreed by the parties except that the tariff is to be determined in accordance with the provision contained in Section 43-A(2) and notifications issued thereunder. Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an Escrow Account or an Escrow Agreement are not the statutory requirements and, therefore, merely because PPAs contemplate maintaining Escrow Accounts that obligation cannot be regarded as statutory.”
In the aforesaid judgment, the Supreme Court has held that the provisions with regard to determination of tariff, etc. provided in the contract in compliance with the statutory requirements of Section 43A(2) are statutory. In the aforesaid judgment, the Supreme Court has clarified that opening and maintaining of Escrow Account or Escrow Agreement are not the statutory requirements of Section 43A(2) and the obligation to main tain Escrow Account therefore is not statutory. In Indian Aluminium Company v. Kerala State Electricity Board : (AIR 1975 SC 1967) (supra) on which reliance has been placed by Mr. Raghavan, the Supreme Court found that Section 49(3) of the Act, 1948 provided for fixation of special tariff by the State Electricity Board and the Supreme Court held that once such special tariff is fixed by the Board in exercise of its statutory powers under Section 49(3) of the Act, 1948, and the stipulations of such special tariff are contained in the agreement with consumer, the Board could not unilaterally revise such stipulations made in exercise of such statutory power. The decision of the Supreme Court in Indian Aluminium Company v. Kerala State Electricity Board (supra) is of no assistance to Mr. Raghavan because Escrow Agreement between OPGC and Gridco does not contain any statutory stipulations made in exercise of statutory power under Section 43-A(2) as has been held by the Supreme Court in India thermal Power Ltd. v. State of M.P (supra). Thus, the Escrow Agreement between OPGC and Gridco can be negated by the Commission if its consent has not been taken by Gridco under Section 21(4) of the Act, 1995 before entering into it.
35. In the judgment of the Andhra Pradesh High Court in RCI Power Limited, Chennai v. Union of India (supra) cited by Mr. Raghavan, the Andhra Pradesh High Court has held that the Commission has no power to nullify or modify and concluded contract entered into by the Andhra Pradesh State Electricity Board or Andhra Pradesh TRANSCO with the generating companies. But on a perusal of the said decision of the Andhra Pradesh High Court, we find that in the said decision the question as to whether a contract for supply of power to a supply or transmission licensee by a generating company entered into without the consent of the Commission after the Andhra Pradesh Electricity Reforms Act, 1999 came into force was void or not was not in issue before the Court. Hence, the said decision of the Andhra Pradesh High Court in RCI Power Limited, Chennai v. Union of India (supra) has no relevance to this case in which the Escrow Agreement was entered into by Gridco and OPGC after the Act, 1995 came into force without the consent of the Commission even though Section 21(4) read with Section 21(5) of the Act, 1995 provides that an agreement or arrangement for supply of power to a supply or transmission licensee from a generating company will be entered into only with the consent of the Commission.
36. We are also unable to accept the submission of Mr. Raghavan that if the Court holds that any agreement for sale of power by a generating company partly or wholly owned by the State Government to the holder of supply or transmission licence would require the consent of the Commission under Section 21(4)(b) read with Section 21(5) of the Act, 1995, there will be a direct conflict between the provisions of Section 43A of the Act, 1948 and Section 21 of the Act, 1995 because, as we have seen, the matters which will have to be taken into consideration by the Commission while giving its consent to such an agreement under Section 21(4)(b) read with section 21(5) of the Act, 1995 would be those related to its functions under Section 11 of the Act, 1995 and would be entirely different from those which may be taken into consideration by the State Government while determining the terms,, conditions and tariff for sale of such power under the Proviso to Section 43A of the Act, 1948. Regarding the submission of Mr. Raghavan that the Chief Executive Officer, CESCO in whom the management and control of CESCO have been vested by the Commission in its order dated 27-8-2001 acts as receiver in charge of the business and in such capacity as receiver cannot break the contracts, we are of the view that the Chief Executive Officer, CESCO was required to discharge the contractual obligations of CESCO but the Commission by an interim order passed under Sections 28 and 30(3) of the Act, 1995 could relieve the Chief Executive Officer, CESCO from such contractual obligations for the purpose of ensuring continuity of supply of electricity to the consumers and securing compliance with the relevant conditions or requirements of licence of CESCO, when such contractual obligations were undertaken by CESCO pursuant to an Escrow Agreement between OPGC and Gridco which was made, without the consent of the Commission and was void as per the provisions of Section 21(4)(b) read with Section 21(5) of the Act, 1995. For the aforesaid reasons, we are also unable to accept the contention of Mr. Raghavan that the Escrow Agreement was saved under Section 6 of the Orissa General Clauses Act (corresponding to Section 6 of the Central General Clauses Act, 1897) and the rights and obligations of the OPGC, Gridco and CESCO arising therefrom could not be affected by exercise of any power of the Commission under Section 11 of the Act, 1995. It is also difficult to hold that the Commission while passing different bulk supply tariff orders from time to time has impliedly given its consent to the Escrow Agreement, because the Commission while passing the bulk supply tariff orders could not have considered whether the Escrow Agreement between OPGC and Gridco would in any way affect the efficient working of Gridco as a licensee and whether the Escrow Agreement would affect the quality and continuity of service to the consumers by CESCO to whom Gridco is to supply electricity.
37. Coming now to the submission of Mr. Panigrahi that it was not necessaiy for the Commission to hold that the Escrow Agreement between OPGC and Gridco was void for being hit by Section 21(4) read with Section 21(5) of the Act 1995, we find from paragraph 3 of the order dated 30-1-2002 of the Commission that the main contention of the OPGC before the Commission was that there was an Escrow Agreement between Gridco, OPGC and Union Bank of India and the Commission has negatived this plea in paragraph 6.6 of its order dated 30-1-2002 by holding that the Escrow Agreement not having received the consent of the Commission was void under Section 21(4) read with Section 21(5) of the Act, 1995. Hence, the question as to whether the Escrow Agreement between OPGC and Gridco was valid or void without the consent of the Commission was directly in issue before the Commission and it was necessary for the Commission to give its finding on this issue.
38. Regarding the submission of Mr. Panigrahi that under Section 21(5) of the Act, 1995 any agreement relating to any transaction of the nature described in sub-sections (1), (2), (3) or (4) unless made “subject to” such consent as mentioned in sub-section (4) is void and the PPA between Gridco and OPGC has been made subject to such consent, we find that in the tripartite agreement dated 18-10-1998 which introduced the Escrow Agreement in the PPA, there is no provision that the said tripartite agreement providing for Escrow Agreement would be subject to the consent of the Commission. But the language of Section 21(5) of the Act, 1995 makes it clear that an agreement which requires the consent of the Commission under Section 21(4) of the Act, 1995 even if made without such consent becomes a valid agreement as soon as it receives such consent of the Commission. Hence, it is even now open for the Commission to examine the provisions of the Escrow Agreement along with the PPA between OPGC and Gridco and grant consent with or without any modification or withhold consent to the Escrow Agreement keeping in mind its functions in Section 11 of the Act, 1995 as discussed above and this can be done on the application which has now been filed by Gridco numbered as case No. 13 of 2002.
39. We may mention here that the Electricity Act, 2003 has come into force during the pendency of the writ petition and Section 185(3) thereof provides that the provisions of the enactments specified in the Schedule thereto, not inconsistent with the provisions of the Electricity Act, 2003 shall apply to the States in which such enactments are applicable. In the Schedule to the Electricity Act, 2003, the Act, 1995 has been included. Hence, the provisions of the Act, 1995 which are not inconsistent with the provisions of the Electricity Act, 2003 still apply to the State of Orissa. It will be open for the OPGC, Gridco and CESCO to make submissions before the Commission that any provision of the Act, 1995 is or is not inconsistent with the provisions of the Electricity Act, 2003 and accordingly is or is not in force after the Electricity Act, 2003 has come into force and if such a contention is raised, the Commission will consider the same in accordance with law.
40. Although Mr. Panigrahi vehemently submitted that the amount of Rs. 11 crores that has been allowed to be retained by CESCO every month from out of its collection of bills be reduced to Rs. 9 crores and Mr. R.K Rath, learned counsel appearing for CESCO has resisted the said contention and submitted that CESCO requires Rs. 11 crores every month for its expenses, we think that it will be more appropriate for the Commission to consider these submissions particularly when the Commission has taken a view in its order dated 30-1-2002 that this matter would be reviewed in March, 2002.
41. For the aforesaid reasons, we are not inclined to quash the impugned orders of the Commission or direct CESCO to comply with the Escrow Agreement between CESCO and Gridco or direct Gridco to comply with the Escrow Agreement between OPGC and Gridco and instead dispose of the writ petition and the misc. case with the aforesaid observations and directions. Considering however the facts and circumstances of the case, the parties shall bear their own costs.
Ordered accordingly.
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