GRID CORPORATION OF ORISSA LIMITED REPRESENTED THROUGH ITS CHAIRMAN-CUM- MANAGING DIRECTOR Vs. ORISSA POWER GENERATION CORPORATION LIMITED REPRESENTED THROUGH ITS MANAGING DIRECTOR AND ANR.

JUDGEMENT

(1.) THIS writ petition under Articles 226 and 227 the Constitution of India has been filed by the Grid Corporation of Orissa, Ltd. (in short 'G'RIDCO'), a Government Company, impleading the Orissa Power Generation Corporation Ltd. (in short OPGC), in which the Govt, of Orissa has 51% share and AES Corporation of U.S.A. which is in the day -to -day management of OPGC, has 49% share, and the Central Electricity Supply Company of Orissa Ltd. (in short 'CESCO'). an existing company within the meaning of the Companies Act, 1956 and a licensee for supply of electricity to the consumers within the Central zone of Orissa, as opposite parties.

(2.) CHALLENGE in this writ petition is made to the Fax letters dated 17.5.2001 and 18.5.2001 issued by the OPGC, vide Annexure 5 and 6 respectively, by which the OPGC decided not to' resume generation of electricity in one of its units, i.e. Unit 2 of IB Thermal Power Station (in short "ITPS'), and to stop supply of electricity to GRIOCO unless significant reduction in outstanding dues was made by the GRIOCO.

(3.) GRIDCO and OPGC are Government companies and are engaged in bulk supply the transmission of electricity, and generation and supply of electricity in the State of Orissa CESCO is the distribution and retail supply licensee of electricity for the central zone of Orissa. Both the opposite parties, i.e. OPGC and CESCO, are managed by AES Corporation of U.S.A. and AES Orissa Distribution (P) Ltd., a subsidiary of AES Corporation of U.S.A. respectively. An agreement called "Power Purchase Agreement" (shortly stated 'PPA') was executed between the GRIDCO and OPGC on 13.8.1996 wherein it was agreed that OPGC shall make available to GRIDCO the full quantum of electricity (energy) generated at the power generating stations of ITPS (Units 1 and 2) through the out -going 220 KV lines emanating from ITPS to evacuate and transmit the same through GRIDCO's own transmission system, subject' to the stipulations made in Clauses 2 and 3 of the PPA. In other words, the total available capacity of energy generated by Units 1 and 2 of ITPS will be fully allocated to the GRIDCO, which in its turn agreed to transmit and utilise the same through its own system as per Schedule I to the PPA, which is Annexure -1 to the writ petition. It is also stipulated in the said PPA that OPGC shall not make available to a third party any part of the capacity, of ITPS or sell to a third party or consume for any purpose other than ITPS, any energy generated by ITPS during the term of the agreement except with the GRIDCO's prior written consent. After the GRIDCO entered into the PPA on 13.8.1996. (Annexure -1) on 18.10.1998 a Tripartite Agreement was executed between the Govt, of Orissa GRIDCO and OPGC, vide Annexure -2, in which the mode of payment was prescribed. On 30.11.1998 Escrow and Security Agreement was signed by and executed along GRIDCO, OPGC and Union Bank of India, vide Annexure -3, wherein it was agreed that the entire receivables and payments from the consumers and purchasers of electric capacity and or energy from CESCO are to be utilised for payment of the monthly invoices of GRIDCO in order to enable GRIDCO to duly pay and discharge the amount becoming due for power purchased by GRIDCO from OPGC. Clause 3.1 of the aforesaid Escrow and Security Agreement stipulated the detailed arrangement for the same. In terms of the Escrow and Security Agreement. Bulk Supply agreement was executed on 18.9.1999 between GRIDCO and CESCO, vide Annexure -4. From the facts narrated in the wit petition, it further reveals that the GRIDCO is the Bulk Supplier of electricity to four distribution companies, one' of such being CESCO, which in their turn being the licensees are to supply electricity to various consumers in the State of Orissa, and OPGC has to supply the entire capacity of its generation of power to GRIDCO. It is alleged that the Managing Director of OPGC by the Fax message dated 17.5.2001 (Annexure -5) intimated the GRIDCO that though Unit 2 of ITPS was 100% available on that day yet they not going to resume normal operation due to non -payment of electricity dues by GRIDCO in terms of the PPA and that the out -put of the ITPS would remain at a reduced load until further notice. By Anr. Fax message dated 18.5.2001. (Annexure -6) the Deputy General Manager of ITPS intimated the Superintending Engineer, £LDC, GRIDCO, that though Unit 2 of the ITPS was ready in all respect for light -up and synchronization, yet due to non -payment of the dues by the GRIDCO, they were not lighting -up the same. It is further alleged in the writ petition that OPGC had also reduced the generation of Unit 1 of ITPS on 18.5.2001 to the extent of 115 MW. On receipt of the aforesaid Fax communication, GRIDCO by its Fax message dated 18.5.2001 (Annexure -7) protested the action to ITPS and requested to light -up Unit -2 of ITPS and synchronize early to meet the requirement of the load of GRIDCO. The GRIDCO authority also by letter dated 18.5.2001 (Annexure -8) brought the aforesaid highhanded and illegal action of the Managing Director of OPGC to the notice of the Principal Secretary to the State Govt, in Energy Department and stated therein that the unilateral decision of the Managing Director of OPGC in shutting down one of the units of ITPS on the ground of non -payment of dues by GRIDCO was not correct. By Anr. letter dated 19.5.2001 (Annexure -9). GRIDCO intimated the Principal Secretary to the State Govt, in Energy Department that while shutting down of Unit 2 of ITPS was continuing, in the meantime Unit 1 and also been shut down by OPGC since 1 P.M. on 19.5.2001, which ultimately caused loss to the GRIDCO and had also dislocated the flow of Central Sector Power from Eastern Region to Western Region. That apart, in reply to the Fax message dated 17.5.2001 (Annexure -5), the Managing Director of GRIDCO by Fax message dated 19.5.2001 (Annexure -10), protested the action of the Managing Director of OPGC as the same violated the terms of the PPA and the Tripartite Agreement which did not authorise the OPGC to shut down the units of ITPS and stop power supply to GRIDCO. The special Secretary to the State Govt, in Energy Department by letter dated 19.5.2001 (Annexure -11) intimated the Managing Director of OPGC that the shutting down of both the units of ITPS had caused serious dislocation in the management and operation of the Grid and directed him to take immediate steps to bring back both the units into operation and report compliance. It is alleged by the Petitioner that despite such direction of the State Govt, the Managing Director of OPGC did not comply with the same which caused serious dislocation in the operation of the Grid. According to the Petitioner, the outstanding dues of the OPGC as on March, 2001 was around Rs. 142.00 crores. The collection of CESCO was escrowed to OPGC and it was found that during the financial year 2000 -2001, CESCO's collection was about Rs. 439.00 crores against which Rs. 334.92 crores had been received by OPGC leaving a gap of Rs. 105.00 crores which was to be treated as payment to OPGC. According to the Petitioner, as on 31.3.2001, CESCO's default has been to the extent of Rs. 221.00 crores besides Rs. 174.00 crores which is payable by CESCO to GRIDCO in 12 equal monthly instalments commencing from 31.12.2002 along with interest as may be allowed by Orissa Electricity Regulatory Commission (in short 'OERC'). Therefore the amount CESCO owes to GRIDCO far exceeds the dues of GRIDCO to OPGC.