ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
Hyderabad
Sri
Surinder Pal, Member
Sri. R.Radha Kishen, Member
In
O.P.
No.28 of 2006
1. Central Power Distribution Company of A.P.Ltd.
2. Southern Power Distribution Company of A.P.Ltd.
3. Eastern Power Distribution Company of A.P.Ltd.
4. Northern Power Distribution Company of A.P.Ltd ... Petitioners
and
M/s. Spectrum Power Generation Limited ... Respondent
This Interlocutory Application coming on for hearing on 06.01.2007 and 17.02.2007 in the presence of Sri P.Shiva Rao, Advocate, for the petitioners and Sri S.Ravi, Advocate, for the respondent and having stood over for consideration to this day, the Commission delivered the following:
This application is filed by the respondent herein on 29.07.2006 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter, ‘Arbitration Act’) praying the Commission to decline to adjudicate upon the petition (O.P.No.28 of 2006) filed by the petitioners under Section 86(1)(f) of the Electricity Act, 2003 (hereinafter ‘the Act’) read with clauses 8 and 9 of Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999, as the parties are open to refer their disputes to arbitration according to the provisions of Article 15 of Power Purchase Agreement (hereinafter, ‘PPA’) dated 23.01.1997.
2. Earlier on 31.01.2006, the petitioners herein filed the petition (O.P.No.28 of 2006) before the Commission under Section 86(1)(f) of the Act raising a dispute with regard to deduction of excess amount paid towards Return on Equity (hereinafter, ‘ROE’) during the open cycle period, from the bill of the respondent for the month of December, 2005, and the claim for payment of said deducted amount by the respondent. It is prayed therein that the Commission may be pleased to pass orders :-
i) to declare that the claim of the respondent made through its letters dated 12.01.2006 and 16.01.2006 is illegal, nonest and redundant.
ii) To direct the respondent to oblige the deduction made by the applicants in the December energy bill of respondent.
iii) To award costs of the petition
iv) To pass any other relief which the petitioners are entitled in the circumstances of the case.
3. After admitting the said petition filed by the petitioners, the Commission issued notices to the parties for hearing on the matter. On 29.07.2006, the respondent filed the present application under Section 8 of the Arbitration Act and in brief the averments mentioned therein are as follows:-
(i) The respondent is a generating company and it entered into PPA dated 23.01.1997 with the petitioners. Article 15 of the said PPA deals with arbitration for resolution of disputes, differences or questions which may at any time arise between the parties and also lays down detailed mechanism for resolution of such disputes. The disputes raised by the petitioners are squarely covered by Article 15 of the PPA and therefore, the petitioners herein are bound to resolve the said disputes through the dispute resolution mechanism stated under the said Article. The respondent is ready and willing to invoke and participate in the dispute resolution mechanism as provided in Article 15 of the PPA and resolve the dispute between the parties.
(ii) It is a settled legal proposition that the parties are bound by the provisions of the contract entered between them. As they have agreed to resolution of disputes through a certain dispute resolution mechanism, they are debarred from approaching any other judicial authority to seek redressal of such disputes. The said mandate flows from the statutory provisions of Section 8 of the Arbitration Act.
(iii) Section 8 of the Arbitration Act casts a duty on the judicial authority, before whom any action / petition is brought relating to the matter which is the subject of an arbitration agreement, to refer the parties to arbitration proceedings. Therefore, it is prayed that the Commission may refer the parties to arbitration as envisaged under Article 15 of the PPA. Section 8 of the Arbitration Act is mandatory. Moreover, there is no non-obstante clause in Section 86 of the Act, which sets at naught the contractual clauses. Therefore, the terms of PPA prevail over anything stated to the contrary anywhere else. Section 86(1)(f) of the Act is not derogatory to the rights of the parties as mentioned in Article 15 of the PPA and in fact, provisions of Article 15 of the PPA prevail over entitlement of the petitioners to invoke Section 86(1)(f) of the Act.
4. On 16.09.2006, counter was filed on behalf of the petitioners praying the Commission to dismiss the application filed by the respondent, wherein it is stated that :-
(i) There is no valid arbitration clause in the PPA entered between the parties. Even at the time of entering into PPA, as per the provisions of the Electricity Act, 1910, and Electricity (Supply) Act, 1948, no such dispute of the nature presently before the Commission was amenable for resolution by way of mechanism of arbitration clause in Article 15 of the PPA.
(ii) It is a settled proposition of law that statute prevails over terms of an agreement. In the instant case though there is a arbitration clause in the PPA, but the same is beyond the scope of provisions of the Electricity Act then in force, whereunder only certain disputes specified in the Electricity Act, 1910, were only amenable for arbitration. The Hon’ble Supreme Court of India in the case reported in AIR 2004 SC at page 2544 held that Arbitration Act is general law and Electricity law is a special law and based on the doctrine generalis specialasus non derogant, the Electricity Act being a special law will have over-riding effect on arbitration law, which is a general law. Therefore, there is no valid arbitration clause in the PPA and the said Article 15 in the PPA is void abinitio.
(iii) A Constitutional Bench of the Hon’ble Supreme Court of India in a case reported in AIR 1963 SC 1128 categorically held that merely because there is an arbitration clause in the agreement, unless the dispute is permissible for arbitration under electricity law, the dispute need not be referred to arbitration and the same has to be dealt otherwise by adopting the procedure either under the Electricity Act which is in force or under general civil law. The Hon’ble Supreme Court in the case of SBP & Co vs. Patel Engineering Ltd reported in 2005 SCC (8) 618, held that only after it is found that there is a valid agreement, then only the issue of referring the matter to arbitration has to be considered.
(iv) In view of the above, it can be concluded that Article 15 of the PPA is not a valid arbitration clause. Section 158 of the Act states that only the matters by or under the said Act directed to be determined by arbitration shall be determined by such person as appropriate Commission may nominate in that behalf, on the application of either party unless it is otherwise provided expressly in the licence of a licensee. Further, Section 174 of the Act states that, provisions of the said Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. The PPA entered into between the parties comes within the meaning of ‘instrument’ as referred to in Section 174 of the Act and therefore, the provisions of the said Act shall have over-riding effect.
(v) In the light of above settled legal propositions of law, there is no valid arbitration clause as contended by the respondent. As such, the dispute filed by the petitioners is not amenable for arbitration, more particularly private arbitration.
5. On 18.11.2006, the counsel for the respondent submitted that in view of the order dated 02.06.2006 of the Hon’ble Appellate Tribunal for Electricity in Appeal No.1 of 2005 and batch, all the clauses in the PPA will survive and therefore as per the terms of PPA, the petition filed by petitioners under Section 86(1)(f) of the Act has to be referred to an Arbitrator for arbitration in view of Section 8 of the Arbitration Act and the Commission should decline to adjudicate upon the dispute brought before it by the petitioners.
6. On 6.1.2007, the counsel for the petitioners submitted arguments and stated that:-
(i) Once the Commission admitted the petition filed by the petitioners, it cannot decline to adjudicate upon the dispute brought before it. The prayer of the respondent to decline to adjudicate upon the matter as the parties are open to refer their disputes for arbitration is not contemplated either by the Arbitration Act or the Act or the Conduct of Business Regulations issued by the Commission.
(ii) Section 8(1) of the Arbitration Act states that “A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute refer the parties for arbitration”. The Commission is not a ‘Judicial Authority’ and the respondent did not apply to refer the parties to arbitration. The respondent filed the application to decline to adjudicate upon the matter brought before the Commission, but not for referring the parties to arbitration. Hence, this application can be dismissed for the simple reason that there is no application to refer the matter to arbitration.
(iii) Section 76 of the Electricity (Supply) Act, 1948 refers to arbitration and it states that where any question or matter is by that Act, required to be referred to arbitration, it shall be so referred in cases where the Act so provides to the Central Electricity Authority and in other cases, to two arbitrators, one to be appointed by each party to the dispute. As the PPA refers to the period when the Electricity (Supply) Act, 1948, was in force, and the mandate of Section 76 that not all disputes are referable to arbitrators, applies to the case on hand. Even under Electricity Act, 1910, not all disputes can be referred to arbitration.
(iv) Merely because there exists a clause in the PPA relating to arbitration for dispute resolution, it cannot be said that there exists a valid arbitration agreement. Therefore, it is necessary to decide whether Article 15 is valid or not and whether the present dispute is covered by the word ‘dispute’ contemplated by the Electricity Act. Till the year 2005, High Courts and Civil Courts were referring parties to arbitration, wherever there was arbitration agreement irrespective of the fact that it (the arbitration agreement) was valid or not. But in the year 2006, the Hon’ble Supreme Court in the case of SBP & Co. vs. Patel Engineering Limited reported in (2005) 8 SCC 618 observed (paragraph 16) that “where there is an arbitration agreement between the parties and one of the parties, ignoring it, files an action before a Judicial Authority and the other party raised the objection that there is an arbitration clause, the Judicial Authority has to consider that objection and if the objection is found sustainable to refer the parties to arbitration………… . Thus, the Judicial Authority is entitled to, has to and is bound to decide the jurisdictional issue raised before it, before making or declining to make a reference.”. Therefore, the Commission should not decline to adjudicate upon the matter and refer the parties to arbitration mechanically.
(v) In the case of Mysore State Electricity Board vs. Bangalore Woolen, Cotton and Silk Mills reported in AIR 1963 SC 1128, a larger Bench of the Hon’ble Supreme Court of India observed (at paragraph 19) that in the Electricity Act, 1910, the main section that deals with arbitration is Section 52 which lays down that where any matter is by or under the said Act directed to be determined by arbitration, the matter shall be determined by arbitration in the manner laid down in that Section. The scheme is that arbitration will take place only when any matter is by or under the Electricity Act, 1910, directed to be determined by arbitration. In the light of the above observation, the words “any matter” used in Section 52 are significant. Only those matters that are arbitrable by or under the Electricity Act, 1910, are to be directed to be determined by arbitration, but not “all matters”. Thus it is not necessary to refer all and every matter to arbitration.
(vi) In the case of Fair Air Engineers (Pvt) Limited vs. N.K.Modi reported in (1996) 6 SCC 385, the Hon’ble Supreme Court held that District Forum, State Commission and National Commission created under the Consumer Protection Act, 1986, are Judicial Authorities and they are at liberty to proceed with the matters in accordance with the provisions of the said Consumer Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the said Consumer Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the Forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate Forum for adjudication of the dispute would be otherwise those given in that Act. The Hon’ble Supreme Court categorically held that the dispute need not be referred to arbitration under Clause (12) of the agreement and the matter could be decided on merits by the State Commission itself. Thus the dispute now raised before this Commission need not be referred to arbitration notwithstanding the clause in the PPA and the Commission is competent to adjudicate upon the same.
(vii) In the case of APGPCL vs. APERC reported in 2005(6) ALD 368, it was urged on behalf of APGPCL, that any dispute in relation to or arising out of MoU-II has to be settled by way of arbitration and that APERC has no jurisdiction to resolve the dispute under Section 86(1)(f) of the Act. Hon’ble Justice V.V.S.Rao negated the said contention and held that the dispute brought before the Commission is a dispute between licensee and generating company and therefore, the Commission has jurisdiction to adjudicate upon the same. Further, the Hon’ble Judge observed that the power is conferred on the Commission to act as an effective grievance redressal forum in the matter of generation, distribution, transmission of electricity and tariff fixation. Thus, it is amply clear that it is the Commission alone which has got jurisdiction to adjudicate upon the matter brought by the petitioners and it should not be referred to arbitration.
(viii) Similarly in the case of Punjab State Electricity Board vs. Bassi Cold Storage reported in AIR 1994 SC 2544 also, the Hon’ble Supreme Court categorically asserted that only matters which are directed by the Electricity Act, 1910, as determinable by arbitration only can be decided by arbitration and no other, as the provisions of the said Electricity Act, 1910, over-ride provisions of the Arbitration Act. Moreover, it is also clarified that in the matter of interpretation of statutes, later Act prevails over earlier Act and a special Act over-rides a general Act. As the Arbitration Act is a general Act, and the Electricity Act, 2003, is a Special Act as well as a later Act in point of time, the Electricity Act, 2003, will prevail. Therefore, there is no merit in the contention that the Commission should decline to adjudicate upon the disputes between the parties and refer the same to arbitration.
(ix) In the case of BSES Ltd vs. Tata Power Co. Ltd reported in (2004) 1 SCC 195, the Hon’ble Supreme Court dealt at length with the ambit of Electricity Regulatory Commissions and observed that in the light of the Objects and Reasons, it would be proper to interpret Electricity Regulatory Commissions Act (subsequently repealed by the Electricity Act, 2003) broadly and not in a narrow or restrictive sense insofar as the jurisdiction of Commissions under it were concerned, so that the purpose for which the Act had been enacted could be achieved. Thus, it is settled once for all that this Commission alone has got jurisdiction to adjudicate upon the disputes brought before it by the petitioner herein.
(x) In the case of Skypak Couriers Limited vs. Tata Chemicals Limited reported in 2001(1) CPR 1 (SC), the Hon’ble Supreme Court of India while dealing with jurisdiction of National Commission under the Consumer Protection Act, 1986, categorically stated that existence of arbitration clause is not a bar to entertain complaints and that it is an unhealthy practice for Courts / Commissions / Tribunal to abdicate their duties and functions and to delegate adjudication of disputes before them to third parties. The adjudication can only be by the concerned Court / Commission / Tribunal.
(xi) In view of the overwhelming and settled principles of law, Article 15 in the PPA is void ab initio, as only those disputes that are directed by electricity laws can only be referred to arbitration and the dispute brought before the Commission by the petitioners herein is not one such dispute that can be referred to arbitration. On the other hand, this Commission alone has exclusive jurisdiction to adjudicate upon such dispute.
(xii) For all these reasons, it is prayed by the petitioners that the application filed by the respondent may be dismissed.
7. On 17.02.2007, the counsel for the respondent submitted reply arguments and stated that:-
(i) Section 158 of the Act deals with arbitration, and nowhere in it, it is mentioned that arbitration is excluded. A cursory reading of the said section reveals that it contains two parts. Firstly it deals with nomination of a person or persons by the Commission to arbitrate on the application of either party. It does not state at all that arbitration will not apply. Secondly, it states that in all other respects, Arbitration Act shall apply. The dispute resolution mechanism provided in the said provision of law excludes adjudication by the Commission.
(ii) The contention of the petitioners that the PPA entered into between the parties comes within the meaning of ‘instrument’ as referred in Section 174 of the Act and therefore, the provisions of the Act shall have over-riding effect or that Article 15 of the PPA is not a valid arbitration clause, is not correct, for the simple reason that there is no inconsistency between the Act on one hand and the Arbitration Act on the other. Section 174 of the Act comes into operation only if there is inconsistency between these two enactments. Thus the contention of the petitioner that in view of Section 174 ibid, the provision for arbitration is lost, is not correct.
(iii) Articles 15.1 and 15.2 of the PPA were amended on 31.07.1999. Even before coming into force of the Act, parties herein have consciously chosen to resolve their disputes through arbitration. There is a specific reference to Arbitration and Conciliation Act, 1996, in Article 15.2 (a) of the PPA, wherein it is stated that “In the event of any dispute between the parties not being resolved by following the procedure prescribed under Article 15.1, such dispute shall be referred to an arbitral tribunal and resolved by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996”.
(iv) The decision of the Hon’ble Supreme Court reported in AIR 1963 SC 1128 referred to by the counsel for the petitioners is not applicable to the facts of this case. The common question of law therein relates to the revision of rates, and not to a PPA. With regard to the decision reported in (2004) I SCC 195, no doubt the Hon’ble Supreme Court dealt with the ambit of jurisdiction of Regulatory Commissions, but it had no occasion to deal with controversy relating to PPAs. Likewise, the judgments referred to by the counsel to elucidate the contention of the petitioners that the Act provides a special mechanism and it excludes reference of a dispute to arbitration, are not relevant to the facts of this case and are mis-quoted, as the facts appearing in those cases are different from those relating to the present case. Therefore, decisions rendered in those cases do not have a bearing on the case on hand and they should not be relied upon.
8. The issue that arises for consideration is:-
“whether the respondent is entitled for the relief prayed for”
9. Before adverting to rival contentions, it is necessary to briefly trace the history of electricity laws in India. The Electricity Act, 1910, was the first important legislation on the subject of electricity. It created the basic framework for electricity supply industry in India, provided for issue of licences to any person by the State Government to supply electricity and setting up procedures to regulate the licensees. After independence, the Government of India enacted the Electricity (Supply) Act, 1948. The said Act enabled creation of State Electricity Boards for promoting the co-ordinated development of generation, supply and distribution of electricity. Over the period of time, the performance of State Electricity Boards deteriorated on account of various factors. Under such circumstances, the Central Government was forced to initiate reforms in the year 1991. Constitution of independent Regulatory Commissions is one of the most essential aspects of reforms. As the restructuring should have legislative sanction, and reform in the State electricity sector could not be achieved by an executive action of the government or the Boards, the Electricity Regulatory Commissions Act, 1998 was enacted. It created the Central Electricity Regulatory Commission and had an enabling provision through which a State Government could create a State Electricity Regulatory Commission. The Government of A.P. enacted the Andhra Pradesh Electricity Reform Act, 1998, which provided for the constitution of Andhra Pradesh Electricity Regulatory Commission, which was established in the year 1999. With the enactment of the Electricity Act, 2003, while certain State Reform Acts, including the A.P. Electricity Reform Act, 1998, were saved, the earlier Central Acts, viz., the Electricity Act, 1910, the Electricity (Supply) Act, 1948, and the Electricity Regulatory Commissions Act, 1998, have all been repealed. As the very names of these enactments suggest, each one of them dealt with a technical and specialized subject of an intangible phenomenon called electricity in the past before being repealed or continues to deal with the same now. Each one of the repealed or the existing electricity enactments, is a special enactment by its very nature of the subject matter with which it deals.
10. Electricity Act, 2003, was enacted by the Parliament with the objective of not only consolidating the laws relating to generation, transmission, distribution, trading and use of electricity, but also, in general, for taking measures conducive to the development of electricity industry including promoting competition, protecting the interests of the consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring efficient and environmentally benign policies, etc. The purpose of a consolidating statute is to present the whole body of statutory law on a subject in complete form, repealing the former statute. It is thus relevant to refer to the previous state of the law or to judicial decisions interpreting the repealed Acts for purposes of construction of corresponding provisions in the consolidating Act. Indeed the question of construction of a section in a consolidating Act may for this reason be really a question of construction of an earlier Act in which that section first appeared and it may be necessary to refer to the various Acts in the series as also to the common law existing at the time when the earliest Act was enacted. A consolidating statute is often not a mere compilation of earlier enactments. “The very object of consolidation”, said Lord Watson,“ is to collect the statutory law bearing upon a particular subject, and to bring it down to date, in order that it may form a useful Code applicable to the circumstances existing at the time when the consolidating Act is passed”. The process of consolidation involves co-ordination and simplification of former enactments resulting in modernisation of language with a view to making it applicable to changed circumstances.
11. Even though the repealed statutes are considered to have never existed, aid can be taken from provisions of such statutes for looking at the repealed Acts in pari materia or question of construction. Moreover, it is well-settled rule of construction that when a statute is repealed, re-enacted and words in the repealed statute are reproduced in the new statute, they should be interpreted in the sense which had been judicially put on them under the repealed Act, because Legislature is presumed to be acquainted with the construction which the courts have put upon the words, and when they repeat the same words, they must be taken to have accepted the interpretation put on them by the court as correctly reflecting the legislative mind, per Hon’ble Justice Venkatarama Aiyar in the case of Bengal Immunity Company Ltd vs. State of Bihar reported in AIR 1955 SC 661 and in many other cases.
12. Lastly, it is not out of place here to mention that one of the most important organisational innovations currently under implementation in the structure and process of decision-making and in governance relating to the major sectors of the Indian economy, including the electricity sector, is the emergence of independent regulation. Constitution of State Electricity Regulatory Commission is a mandatory requirement as per the scheme of things envisaged under the Electricity Act, 2003. This Commission is the regulator of electricity industry in the State of Andhra Pradesh and it is entrusted with several functions in discharge of its statutory duties, which are enumerated in Section 86 of the Electricity Act, 2003. A cursory reading of several clauses under Sub-Section(1) of Section 86 reveals that the Commission is practically entrusted with each and every aspect relating to governance of the electricity sector, including to the extent of distancing of governments from determination of tariffs. For easy reference, the relevant clauses are extracted hereunder:-
86. Functions of State Commission.
(1) The State Commission shall discharge the following functions, namely:
-
(a)
………………;
(b)
regulate electricity
purchase and procurement process of distribution licensees including the price
at which electricity shall be procured from the generating companies or
licensees or from other sources through agreements for purchase of power for
distribution and supply within the State;
(c)
……………..;
(d)
……………..;
(e)
……………..;
(f)
adjudicate upon the disputes
between the licensees, and generating companies and to refer any dispute for
arbitration;
13. The above provisions cast a clear responsibility on the Commission to adjudicate upon disputes between the licensees and the generating companies, either by itself or through arbitration. It is an indisputable fact that the petitioners are “licensees” and the respondent is a “generating company” within the meanings assigned to the terms in the Act.
14. In the light of the above backdrop, rival contentions of the parties are examined. Apart from contending that there is no valid arbitration clause in the PPA between the parties and therefore, Article 15 in the PPA is void abinitio, the other strong contention of the petitioners is that even at the time of entering into PPA as per the provisions of Electricity Act, 1910 and Electricity (Supply) Act, 1948, no such dispute of the nature presently before the Commission was amenable for resolution by way of arbitration in pursuance of Article 15 of the PPA. In the case of Mysore State Electricity Board vs. Bangalore Woolen, Cotton and Silk Mills Ltd (AIR 1968 SC 1128), the Hon’ble Supreme Court categorically stated that there is some difference between the scheme of Section 76 of 1948 Act from that of Section 52 of 1910 Act, but none of the provisions of the 1910 Act or the 1948 Act make the present dispute therein (emphasis supplied), a matter directed or required to be referred to arbitration either under Section 52 of 1910 Act or Section 76 (2) of the 1948 Act. Thus even at that time, the law was well-settled that it is not each and every dispute that can be referred to arbitration under the 1948 Act, but only those disputes that are required to be referred to arbitration under the said Act. The same analogy applies even to the 1910 Act.
15. Section 158 of the Electricity Act, 2003, reproduced below:
“158. Arbitration
Where any matter is, by or under this Act, directed to be determined by
arbitration, the matter shall, unless it is otherwise expressly provided in the
licence of a licensee, be determined by such person or persons as the
Appropriate Commission may nominate in that behalf on the application of either
party; but in all other respects the arbitration shall be subject to the
provisions of the Arbitration and Conciliation Act, 1996. (26 of 1996)”
is in para materia with Section 52 of 1910 Act and Section 76 of 1948 Act. Thus it can be safely concluded that, as observed by the Supreme Court, referring a question, matter or dispute to arbitration on the application of either party is not a matter of right of that party or automatic under the Arbitration Act. Further, the categorical assertion made by the Supreme Court in the case of Punjab State Electricity Board vs. Bassi Cold Storage reported in AIR 1994 SC 2544 that only matters which are directed by the Electricity Act, 1910, as determinable by arbitration can only be decided by arbitration and no other matter, as the provisions of the said Electricity Act, 1910, over-ride provisions of Arbitration Act, sets at rest the overriding effect of electricity laws over Arbitration Act. The said proposition of law applies with equal force to the Electricity Act, 2003. The contentions of the counsel for the respondent with regard to Section 158 of the Act are therefore rejected, as untenable, except to the extent they relate to the second part of the Section 158 ibid, that “but in all other respects the arbitration shall be subject to the provisions of the Arbitration and Conciliation Act, 1996. (26 of 1996)”. In other words, as and if, due to peculiar circumstances of a dispute, the Commission does decide to exercise the option, in discharge of its functions under 86(1)(f), to refer the dispute for arbitration, the arbitration shall have to be carried out in accordance with the procedure laid down in the Arbitration Act, while the Commission alone will have the jurisdiction – under section 86(1)(f) – to decide whether to adjudicate upon the dispute itself or to refer it for arbitration.
16. As mentioned supra, Section 86 (1) (f) of the Electricity Act, 2003, casts a clear responsibility on the Commission to adjudicate upon disputes between the licensees and the generating companies, either by itself or through arbitration. Moreover, the decision rendered in the case of APGPCL vs. APERC reported in 2005(6) ALD 368 clearly drives home the point that it is the Commission which alone has got the jurisdiction to resolve the dispute brought before it by the petitioners herein, notwithstanding the fact that the decision in the said case relates to existence of arbitration clause in the Memorandum of Understanding between the parties therein, who are a ‘licensee’ and a ‘generating company’.
17. Section 86 (1) (f) of the Electricity Act, 2003, leaves the choice to the Commission to adjudicate upon disputes between the licensees and generation companies, either by itself or through arbitration. It is permissible to read ‘or’ as ‘and’ and vice-versa as is now well established in the case of Fakir Mohd vs. Sita Ram reported in (2002) 1 SCC 741(paragraph 7) and several other decisions. The ample authority to construe the word “and” as meaning “or” is discussed with suitable case law in the case of Dabhol Power Company vs. M.S.E.B. and others by the Hon’ble High Court of judicature in its judgment dated 05.03.2002 in W.P.No.1205/2001. Therefore, notwithstanding the existence of arbitration clause in the PPA in the case on hand, it is for the Commission to make a decision whether to itself adjudicate upon the dispute or to refer it for arbitration. Looking at the nature of the dispute, the Commission does not intend to abdicate its duties and functions and to delegate the function of adjudication of the dispute between the parties herein, to third parties. Doing so, would amount to unhealthy practice as pointed by the Supreme Court in the case reported in 2001 (1) CPR 1 (SC), as the circumstances of the dispute in no way warrant referring the dispute for arbitration.
18. In the light of the above discussion, the other contention of the respondent that there is no inconsistency between the Electricity Act, 2003 on one hand and the Arbitration Act on the other, is not tenable and is liable to be rejected. The decision of the parties to resolve their disputes through arbitration even before coming into force of the Electricity Act, 2003, by replacing Article 15 of the PPA through an amendment to it on 31.07.1999, will not help the cause of the respondent, notwithstanding the specific reference to Arbitration Act in Article 15.2 (a) of the PPA.
19. Even though the court had no occasion to deal with controversy relating to PPA in the case reported in (2004) 1 SCC 195, the ambit of jurisdiction of the Commission which is constituted with technically qualified persons, who could in addition take assistance from consultants, experts and professional persons is well highlighted by the Hon’ble Supreme Court in the said judgment. The observation of the Supreme Court substantiates the stand of the Commission that under the Act, it has unfettered jurisdiction to adjudicate upon the disputes between the licensees and generating companies.
20. For all the aforesaid reasons, the respondent is not entitled for the relief prayed for and the issue is answered accordingly. In the result, the application filed by the respondent under Section 8 of the Arbitration Act is dismissed.
The
order is corrected and signed on this 2nd day of March, 2007.
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(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
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MEMBER |
MEMBER |
CHAIRMAN |
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