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Electricity & Energy LawSupreme Court of India

Transmission Corporation of Andhra Pradesh Limited v. M/S Rain Calcining Limited & Others

Civil Appeal · 2019 INSC 1300Decided 29 Nov 2019
Civil Appeal No. 4569 of 2003
Justice Arun Mishra · Justice M.R. Shah · Justice B.R. Gavai

Background

This lead case was part of a large batch (over 80 tagged civil appeals) arising out of Andhra Pradesh's post-liberalization restructuring of its electricity sector. After the Andhra Pradesh Electricity Regulatory Commission (APERC) fixed wheeling charges and grid-support charges payable by captive power generators and other high-tension consumers using the state transmission network, several generators (including Rain Calcining Limited) challenged these charges, and the Andhra Pradesh High Court and the Appellate Tribunal for Electricity (APTEL) ruled partly in the generators' favour, including continuing certain wheeling-charge incentives granted by old government orders from 1997-98 on the doctrine of promissory estoppel. The Transmission Corporation of Andhra Pradesh (APTRANSCO) and APERC appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that APERC, as the statutory regulator under the AP Electricity Reforms Act, 1998, was competent to determine and levy both wheeling charges and grid support charges, and that the generators could not resist regulated tariff determinations on the basis of commercial arrangements predating the regulatory regime. On the promissory estoppel question, the Court held there was no unequivocal government promise and no material change in circumstances that would bind the State to continue the old subsidised wheeling-charge incentives, especially since any subsidy going forward had to be routed through the statutory mechanism in Section 65 of the Electricity Act, 2003, which the government had chosen not to invoke. Accordingly, the Court set aside the High Court's and APTEL's orders and restored APERC's original tariff orders, allowing all the appeals with no order as to costs.

Lesson Learnt

Once a sector is brought under a statutory tariff regulator, pre-existing government concessions or incentives do not automatically survive as enforceable promises, unless a clear, continuing promise is shown and a fresh statutory subsidy mechanism is invoked, regulated consumers must pay tariffs as fixed by the regulator, not as previously informally promised.

Transmission Corporation of Andhra Pradesh Limited v. M/S Rain Calcining Limited & Others – Legal Case Shots | LegalAware