TREHAN INDUSTRIES PVT LTD Vs. STATE OF J&K

JUDGEMENT

(1.) WITH liberalization of fiscal and financial reforms in industry and to move the country to its pinnacles as a developed industrial country and to accomplish its right placement in the polity of the nation, the Government announced Privatization of the Power Sector. In order to supplement the power generation and bridge the gap between the supply and demand at various levels, not less than that of the Honble Chief Minister of the State announced and welcomed private participation in the energy field, both generation and distribution. It was in pursuance of the Policy of the Government for implementation of the Hydro Electric Projects in the State of Jammu and Kashmir through private investment, with a view to revive, modernize and make capable of generating electricity in the defunct Power House, known as "Canal Power House", after having remained defunct for more than 20 years, the petitioners, M/s Trehan Industries Pvt. Ltd., through its Managing Director, Ravish Trehan, claim to have come forward with a proposal for setting up of a power project as an Independent Power Producer (IPP). Managing Director, J&K State Power Development Corporation Limited (J&KSPDC) vide its communication dated 29 -8 -2001 advised the petitioners to prepare a Detailed Project Report (DPR) of the Canal Power House, Jammu on the basis of a residual life and I.F. Studies to be got conducted through any of the consultants enlisted by Power Finance Corporation of India. The petitioners were further advised by respondent -3 to submit the Detailed Project Report (hereinafter referred to as DPR) within a period of six months, failing which State Government would be at liberty to make alternative arrangements. In response to the advice of the respondent -3, a DPR was submitted by the petitioners on 18th September, 2001 addressed to respondent -3. It is further averred in the petition that the aforesaid communication along with Detailed Project Report indicated that the said Report has been prepared in association with T.A. Deo Dass, Ex -Member, Central Electricity Authority for renovating, modernizing and upgrading the Canal Power House, Jammu. It is further stated that the report submitted by the petitioners after having been thoroughly evaluated, was advised to be revised on the lines suggested and observations and the comments made by the Central Electricity Authority. It is further stated that respondent -3 advised and requested the petitioners vide its letter No. MD/PDC/CJ/1108 -9 dated 17 -11 -2001 to revise the DPR in the light of the observations made by the Central Electricity Authority and keeping in view the following:

(2.) A Detailed Revised Project Report, in conformity with the advice of the J&K SPDC as approved by the Central Electricity Authority and technically cleared by the consultants, was submitted on November 21, 2001. It is further stated that the respondents thereafter did not ask for any clarifications or changes in the Revised Detailed Project Report submitted by the petitioners, which, it is stated, clearly amounted to the acceptance of the Project Report in its totality and entirety. That after the fulfillment of the necessary requirements and observance of requisite formalities, the Government finally cleared the Project on 29 -1 -2002 and conveyed the approval of the Honble Chief Minister to departmental proposal in anticipation of approval of the Cabinet. The Department was directed to issue necessary orders for the handing over of the assets of the Canal Power House to M/s Trehan Industries Corporation, petitioners, and be allowed to proceed with the Project, by the aforesaid Order of sanction for construction of Mini Hydro Electricity Project and modernization and renovation of the old defunct Power House under the private sector. The terms and conditions for the transfer were directed to be formulated/negotiated by a Committee, consisting of Chief Secretary, Financial Commissioner, Planning & Development, Financial Commissioner, Finance, Principal Secretary, PDD and Managing Director, Power Development Corporation, vide Government Order No. 35 -PDD of 2002 dated 30 -01 -2002. The Power House is stated to have been handed over to the Petitioners, after proper inventory was prepared and the entire building and machinery was evaluated at the market rate by the approved valuers, vide Government Order No. 34 -PDD of 2002 dated 30 -01 -2002. The said order also provided for the constitution of the Committee for further finalization of the other terms and conditions. It is further stated that the work on the Power House was started thereafter by the petitioners. The matter, however, came to be examined finally at the top bureaucratic level Committee comprised of the Officers mentioned in the order dated 30 -1 -2002. The designated Committee, however, met on 25th February, 2002 and arrived at the following decisions:

(3.) IT is also stated that for completing further formalities regarding Power Purchase Agreement, Special Secretary to Government, Power Development Department, vide letter No. PDD/VII/STS/82/2001 dated 15 -3 -2002 asked the Development Commissioner, Power, J&K, to draft PPA/execution of the agreement and initiate other proceedings immediately and to sign the agreement with M/s Trehan Industries Corporation. Further case of the petitioners is that, in the meanwhile, elections were declared and the Power Development Department conveyed to the Election Commission that the assets of Canal Power House have already been handed over to M/s Trehan Industries Limited vide Government Order No. 34 -PDD of 2002 dated 30 -01 -2002 with the approval of Honble Chief Minister and sought concurrence only for its confirmation by the Cabinet. It was further conveyed that the works on the Project have already begun on February, 2002. The Election Commission, however, advised the Government to wait till the completion of the elections. Soon after the elections, the political set up in the State got changed and the present Government came in power in November, 2002. The petitioners further submitted that the new Government also reviewed the progress on the Project in asking the petitioners to submit physical and financial progress report. The work on the Project continued. As the Power House had become operational on the completion of the work and only generation of the power was to commence, the petitioners approached the Government and, accordingly, informed the Government that the Project has been completed and only needs to be connected with the Grid.