Explore the intricate legal analysis by the court regarding the retrospective application of changes to open access agreements. Discover the potential consequences of substantial modifications on the parties involved and the considerations surrounding retrospective effects of such changes. Gain insights into the complexities of electricity regulations and their implications on businesses.
Arguments
- Changes under the order of 15 September, 2007 are as per Regulations 2004.
- Parties are bound by changes in terms and conditions notified by the Commission.
- Commission has introduced changes in the open access agreement dated 22 September, 2006.
- Clarifications by the Commission are deemed incorporated into the agreement from the date of execution.
- Learned counsel for the respondents supports the finding by the Tribunal.
- The Commission made substantial changes in the open access agreement, particularly in Clause 29(1)(f).
- The change replaced the temporary supply tariff with the regular supply tariff for inadvertent drawal.
- These modifications cannot be seen as mere clarifications.
- Any substantial changes made under the agreement cannot be prejudicial to the parties’ interests.
- Giving retrospective effect to such changes would seriously prejudice the rights of the respondents.
- The conditions of the open access agreement in dispute do not contradict the Regulations 2004 or Amendment 2006.
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Analysis
- The appeal under Section 125 of the Electricity Act, 2003 is filed by Ajmer Vidyut Vitran Nigam Limited (AVVNL) against a judgment of the Appellate Tribunal for Electricity.
- Hindustan Zinc Limited (HZL) has a captive generating plant in Rajasthan and uses AVVNL’s distribution system to wheel electricity to its units in various districts.
- Open access facility allows the transmission of electricity from generating point to drawal point.
- Regulations 2004 and its amendments specify terms and conditions for open access agreements and pricing mechanisms like unscheduled interchange pricing.
- Open Access Customer is defined as someone using transmission or distribution systems for wheeling electricity.
- Open Access Agreement encompasses commercial agreements with relevant parties and includes provisions for premature termination.
- State Load Dispatch Centre notifies the open access customer regarding the availability of open access within 3 days of agreement.
- The Order dated 15 September, 2007 of the Commission is a substantial amendment to the standard format agreement.
- It changes the tariff for inadvertent drawal from temporary supply rate to regular supply rate, which is a significant alteration.
- The Commission’s order cannot be considered a mere clarification as it modifies the original Clause 29(1)(f) extensively.
- There is a genuine grievance on the part of the appellant regarding this substantial change in billing for inadvertent excess supply.
- The Appellate Tribunal’s finding that these changes should apply prospectively is being challenged.
- The Tribunal’s decision that these changes in billing shall be prospective lacks sustainability in this context.
- The challenge primarily revolves around whether the changes should affect future billings or be applied retrospectively.
- The bills shall be for wheeling charges for the contracted open access power on the distribution system as determined by the Commission from time to time.
- Substantial modifications to a commercial agreement cannot be permitted with retrospective effect
- Changes made by a statutory authority in the guise of correction or mistake may not be advisable
- Substantial changes prejudicial to the parties’ interests should not apply retrospectively from the agreement date
- Guiding principles from the Code of Civil Procedure suggest unintentional errors may be corrected later, but substantial amendments can cause prejudice
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Decision
- Appellant directed to file an undertaking in the format of an affidavit for refunding money if the appeal fails
- Parties in long business relations, money deposited by respondents to be adjusted against future bills
- Order to refund amount deposited by respondents with interest clarified
- Appeal dismissed with observations
- Pending application(s) disposed of
Case Title: AJMER VIDYUT VITRAN NIGAM LTD. Vs. HINDUSTAN ZINC LTD. (2022 INSC 194)
Case Number: C.A. No.-004124-004124 / 2009
