SAL STEEL LTD Vs. STATE LOAD DISPATCH CENTRE

JUDGEMENT

(1.) The petitioners have filed this petition under Article 226 of the Constitution of India praying for quashing and setting aside the action of the respondent No.1 unilaterally revising the accounting system of unscheduled interchange charges by retrospectively denying credit thereof to the petitioner No.1 in contravention of Order No.3 of 2006 passed by the Gujarat Electricity Regulatory Commission, communicated to the petitioners vide communications dated 11.01.2010, 22.01.2010 and 10.02.2010. The petitioners have also prayed for the declaration that the petitioner No.1 Company is entitled to credit / payment of UI Charges for the period 30.03.2009 to 12.01.2010 and that the respondent No.1 has no legal authority to revise the accounting treatment unilaterally so as to deny the said credit with retrospective effect and recover the same from the petitioner No.1. The petitioners have also prayed for an order or direction in the nature of prohibition permanently restraining the respondent No.1 from encashing the Bank Guarantee dated 04.03.2009, as extended, in order to recover the revised UI charges with retrospective effect.

(2.) This Court has issued notice on 09.03.2010 and by way of ad-interim relief, the respondents were directed not to encash the Bank Guarantee. On service of notice, affidavit-in-reply was filed on behalf of the respondent No.1 on 11.03.2010, to which affidavit-in-rejoinder was filed on behalf of the petitioners on 15.03.2010. Further affidavit-in-reply was filed on behalf of the respondent No.1 on 18.03.2010. Further affidavit-in-reply was filed on behalf of the respondent No.1 on 21.03.2010, to which affidavit-in-rejoinder was filed on behalf of the petitioner No.1 on 30.03.2010. On completion of the pleadings of the parties, the matter was heard at length. Mr. Mihir Joshi, learned Senior Advocate appears with Mr. Gaurav Mathur for the petitioners and Mr. S.B. Vakil, learned Senior Advocate appears with Mr. Premal Joshi for respondent No.1 and Mr. N. K. Khare, learned advocate appears with Mr. V. M. Gohil for the respondent No.2 Bank.

(3.) It is the case of the petitioners that the petitioner No.1 is engaged in the business of manufacturing Sponge Iron and Ferry Alloys in the State of Gujarat. In order to meet its requirement of continuous and cost effective electricity, the petitioner No.1 also set up a Captive Power Plant as defined in Section 2 (8) read with Section 9 of the Act of 45 MW capacity. The said Captive Power Plant is situated at the manufacturing facility of the petitioner No.1. At the time of commencement of business by the petitioner No.1 in the year 2005, the petitioner No.1 was availing benefit of exemption from payment of duties of excise granted vide Notification No.39/2001-C.E. Dated 31.07.2001. However, severe economic recession that befell the industry in the year 2007 was particularly severe for the Steel industry. Coupled with economic meltdown, on account of which the petitioner No.1 was facing resource crunch, the aforesaid exemption notification came to be amended in a manner that a substantial portion of the benefit was withdrawn. This led to reduction of demand of the products and the petitioner No.1 was faced with idle capacity of its manufacturing facility and the Captive Power Plant. In this scenario, the petitioner No.1 decided to avail of the Open Access mechanism provided under the Act and Gujarat Regulations by entering into bilateral transactions of sale of power. Initially, the petitioner No.1 sold power to Gujarat Urja Vikas Nigam Limited (GUVNL) which is one of the recognized entities of the Gujarat Electricity Board and it is presently functioning as the nodal agency for electricity in the State of Gujarat. Thereafter, the petitioner No.1 decided to sell power on the Indian Energy Exchange for which it has obtained necessary Standing Clearance / No Objection dated 08.12.2008 which was forwarded to the petitioner No.1 vide letter dated 09.12.2008. the said clearance came to be amended from time to time vide No Objection Certificates dated 11.02.2009 and 05.03.2009.