SUO MOTU REVIEW BY THE COMMISSION Vs. NORTH EASTERN ELECTRIC POWER CORPORATION LTD, SHILLONG AND NORTH EASTERN REGIONAL LOAD DESPATCH CENTRE, SHILLONG

JUDGEMENT

(1.) THE Commission by its order dated 22.8.2012 directed the respondents including North Eastern Electric Power Corporation Ltd, Shillong (NEEPCO) to show cause as to why action under Section 142 of the Electricity Act, 2003 should not be taken against them for non -compliance of the provisions of Regulation 10(4) of the UI Regulations for not opening the Letter of Credit for the amount required under the regulations. In its reply dated 14.9.2012, it was submitted by NEEPCO that LC for Rs. 31.64 lakh had been opened in favour of NERLDC and therefore, there was no default on its part in opening of LC during 2012 -13. The Commission after considering the replies filed by NEEPCO came to the conclusion that NEEPCO had opened the LC for an insufficient amount whereas it was required to open LC for an amount of Rs. 34.80 lakh during 2012 -13 calculated with reference to the UI amount of Rs. 31.60 lakh during 2011 -12. Accordingly, a penalty of Rs. 90,000 was imposed on NEEPCO for non -compliance of the Regulation 10(4) of UI Regulations. The respondent NEEPCO has by its letter dated 4.12.2012 addressed to Secretary of the Commission has brought to our notice that since the average payable weekly liability of NEEPCO during the financial year 2010 -11 was Rs. 8.91 lakh, it had opened LC for Rs. 9.8 lakh in 2011 -12. However, as the average weekly payable liability of NEEPCO during the week for the year 2011 -12 (from 17.10.2011 to 23.10.2011) was Rs. 31.64 lakh, which is more than 50% of the previous financial year's average payable weekly liability, NEEPCO had opened LC for Rs. 31.64 lakh in terms of the 'illustration' given under the provisions of Regulation 10(4) of the UI Regulations. NEEPCO has also submitted that in response to the Commission's order dated 22.8.2012, submissions were filed bringing to the notice of the Commission of the fact that the requisite amount of LC as worked out, was opened in favour of NERLDC and no communication was received by NEEPCO from NERLDC till the issuance of order dated 22.8.2012 by the Commission as regards insufficient amount of LC. In the circumstances, the respondent NEEPCO has prayed that the order dated 5.11.2012 may be reviewed and NEEPCO may be exempted from payment of the said penalty. The matter has been examined. Regulation 10(4) provides as under:

(2.) IF the average payable weekly UI liability of a regional entity during 2009 -10 is Rs. 20 crore, the regional entity shall open LC for Rs. 22 crore in 2010 -11. If the weekly payable liability during any week in 2010 -11 is Rs. 35 crore which is more than 50% of the previous financial year's average payable weekly liability, the concerned regional entity shall increase the LC amount to Rs. 35 Crore by adding Rs. 13 Crore.

(3.) THE weekly payable UI liability of NEEPCO during the week 17.10.2011 to 23.10.2011 of the year 2011 -12 was Rs. 31.64 lakh which was more than 50% of the previous financial year's average payable weekly liability. In terms of the Regulation 10(4) of the UI Regulations, the respondent NEEPCO should have been opened LC for Rs. 34.80 lakh (i.e. 110% of Rs. 31.64 lakh). However, the respondent NEEPCO had opened LC for Rs. 31.64 lakh in terms of the 'illustration' given under Regulation 10(4) of the UI Regulations. This fact was brought to the notice of the Commission by the respondent NEEPCO, vide its reply dated 14.9.2012 which admittedly had been overlooked by the Commission at the time of passing the order dated 5.11.2012. Since NEEPCO has opened the LC for a lesser amount on the basis of its bona fide understanding of the Regulation 10(4) of UI Regulations in the light of the Illustration thereunder, we are of the view that NEEPCO cannot be held liable for non -compliance of the UI Regulations. Accordingly, we withdraw the penalty of Rs. 90,000 imposed on NEEPCO in our order dated 5.11.2012. It is however made clear that the respondent NEEPCO shall revise the LC amount to Rs. 34.80 lakh in terms of the second proviso to Regulation 10(4) of the UI Regulations and submit the same within a period of 15 days from the date of this order. We direct the staff of the Commission to examine and submit the proposal for amendment of the Illustration under Regulation 10(4) of the UI Regulations in line with the main regulation. In this case, since there is a conflict between the second proviso under Regulation 10(4) and the Illustration thereunder, the provisions of the second proviso will prevail. Accordingly, RLDCs while calculating the liability of the entities to open the LCs shall be strictly guided by the main provision of the Regulation 10(4) of UI Regulations, pending amendment to the UI Regulations.