# Indian Oil Corporation Ltd., Mathura Refinery v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 477
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-18
- **Case number:** Writ C No. 31555 of 2022
- **Bench:** Mahesh Chandra Tripathi, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/indian-oil-corporation-ltd-mathura-refinery-v-state-of-u-p-ors-51433
- **Pages:** 20

## Headnote

Civil Law - Constitution of India,1950Article
226-IOCL
entered
into
an
agreement with UPPCL in 1999 to use a
Parellel Operating System (POS) which
allowed synchronization between IOCL's
captive power plant and the grid-IOCL
augmented its captive power plant in
2001, eliminating the need for POS-IOCL
requested amendment of the agreement
to remove charges for the POS-UPPCL did
not act on IOCL's repeated requests to
amend the agreement or disconnect the
POS until 2007- Despite disconnection,
UPPCL continued to charge IOCL under
the original agreement-IOCL challenged
the charges and sought refunds for
payments made after discontinuationUPPCL issued demand notice in 2022 for
Rs. 246.5 crore claiming the charges were
valid
until
the
agreements
formal
termination in 2018-Held,IOCL's requests
and
UPPCL's
inaction
caused
unjust
delays-UPPCL's physical disconnection of
POS
in
2007
and
subsequent
acknowledgment meant no service was
provided,
charging
post-2007
was
unjustified-UPPCL delayed amending the
agreement for 17 years and tried to
benefit from its own inaction, violating the
legal maxim that no one should profit
from their wrongdoing-Henc,e the court,
ruled that IOCL is not liable to pay POS
charges after January 2008 and set aside
demand notices for arrears beyond that
period-the
court
emphasized
the
principles of fairness and accountability,
holding UPPCL responsible for the delay
and its consequences.(Para 1 to 66)

The writ petition is allowed. .( E-6)

List of cases cited:

## Text

_Characters 0–39,972 of 66,544. This is a partial read: ask again with offset=39972 for what follows._

2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
477
policy which appears better to the court.
The scope of judicial review is very limited
in such matters. It is only when a particular
policy decision is found to be against a
statute or it offends any of the provisions of
the Constitution or it is manifestly arbitrary,
capricious or mala fide, the court would
interfere with such policy decisions. In the
present matter, no such case is made out.

48. The writ petition is accordingly
dismissed on both counts, on the merits as
well as on the ground of delay and laches.
No order as to costs.
----------
(2024) 2 ILRA 477
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.01.2024
BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE PRASHANT KUMAR, J.

Writ C No. 31555 of 2022

Indian
Oil
Corporation
Ltd.,
Mathura
Refinery ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Ankush Tandon, Sri Anoop Trivedi (Sr.
Advocate)

Counsel for the Respondents:
C.S.C., Sri Alok Mishra, Sri Sunil Kumar
Dubey, Sri M.C. Chaturvedi (Sr. Advocate)

Civil Law - Constitution of India,1950Article
226-IOCL
entered
into
an
agreement with UPPCL in 1999 to use a
Parellel Operating System (POS) which
allowed synchronization between IOCL's
captive power plant and the grid-IOCL
augmented its captive power plant in
2001, eliminating the need for POS-IOCL
requested amendment of the agreement
to remove charges for the POS-UPPCL did
not act on IOCL's repeated requests to
amend the agreement or disconnect the
POS until 2007- Despite disconnection,
UPPCL continued to charge IOCL under
the original agreement-IOCL challenged
the charges and sought refunds for
payments made after discontinuationUPPCL issued demand notice in 2022 for
Rs. 246.5 crore claiming the charges were
valid
until
the
agreements
formal
termination in 2018-Held,IOCL's requests
and
UPPCL's
inaction
caused
unjust
delays-UPPCL's physical disconnection of
POS
in
2007
and
subsequent
acknowledgment meant no service was
provided,
charging
post-2007
was
unjustified-UPPCL delayed amending the
agreement for 17 years and tried to
benefit from its own inaction, violating the
legal maxim that no one should profit
from their wrongdoing-Henc,e the court,
ruled that IOCL is not liable to pay POS
charges after January 2008 and set aside
demand notices for arrears beyond that
period-the
court
emphasized
the
principles of fairness and accountability,
holding UPPCL responsible for the delay
and its consequences.(Para 1 to 66)

The writ petition is allowed. .( E-6)

List of cases cited:

1. Mah. St. Electricity Distribution Co. Ltd. Vs
JSW Steel Ltd. & ors.. (2022) 2 SCC 742

2. PTC India Ltd. Vs Central Electricity
Regulatory Commission (2010) 4 SCC 603

3. M.K. Shah Enggs. & Contractors Vs St. of
M.P.(1992) 2 SCC 594

4.
Mrutunjay
Pani
Vs
Narmada
Bala
Sasmal(1961)AIR SC 1353

5. Kusheshwar Prasad Singh Vs St. of Bih. &
ors.. (2007) 11 SCC 447

6. The Chairman, SBI & anr., Vs M.J
James(2022) 2 SCC 301
478 INDIAN LAW REPORTS ALLAHABAD SERIES
7. Dehri Rohtas light Railway Co. Ltd. Vs Distt
Board, Bhojpur(1992) 2 SCC 598

8. St. of Mah. Vs Digambar (1995) 4 SCC 683

9. Nirmala Anand Vs Advent Corpn. (Pvt) Ltd. &
ors..(2002) 5 SCC 481

 (Delivered by Hon'ble Prashant Kumar, J.)

1. Heard Sri Ankush Tandon, learned
counsel for the petitioner and Sri M.C.
Chaturvedi,
learned
Senior
Advocate
assisted by Sri Alok Mishra, learned
counsel for respondent nos.3 and 4.

2. The petitioner is public sector
undertaking, working under the aegis of
Ministry of Petroleum and Natural Gas,
Government of India. The preliminary
business of the petitioner is to refine crude
oil, market petroleum and petroleum
products. To refine the crude oil, the
petitioner has set up a refinery in Mathura.
Though the petitioner had a Captive Power
Plant, but it was not able to generate
required amount of electrical energy, so the
petitioner entered into an agreement on
30.11.1999 (hereinafter referred to as the
'Principal Agreement') with U.P. Power
Corporation Limited (hereinafter referred
to as 'UPPCL'), to provide a facility which
is commonly known as "Parallel Operating
System". The relevant clauses of the
'Principal Agreement'
are
reproduced
hereunder:-

"Clause 5

It has been agreed by the
consumer that during the continuance of
this agreement in addition to the minimum
consumption guarantee provided in the rate
schedule Clause 5(b) at annexure-2, he
shall pay to the supplier every month a
charge at the rate of 10% (ten per cent) of
the aforesaid minimum consumption per
KVA for 44118 (corresponding to 37500
KW) which is subject to revision from time
to time. At the current rate the ten per cent
of MCG works out to ₹50/- per KVA per
month & the amount so chargeable works
out to ₹22,05,900/- month.

Provided that if in any revision,
the minimum consumption guarantee is
revised downwards, the consumer shall
nevertheless, be liable to pay the charges
under this clause at the rates as were
charged and paid by consumer before the
revision.

Provided always that in the event
of non-payment or delayed payment of
aforesaid charge by the due date specified
in the bill, the consumer shall be liable to
pay 'Additional Charge' as provided in rate
schedule Clause 8(b) at Annex-2, without
prejudice tot he right of the supplier to
discontinue the parallel Operating.

Clause 19

This agreement shall subject
herein before provided be and remain in
force for one year from the date of
commencement
of
supply
(hereinafter
called the initial period of supply) and
thereafter from year to year basis on the
terms and conditions herein contained.

Provided that either party shall
be at liberty to determine this agreement at
any time after the expiration of the initial
period of supply on giving one month's
notice in writing of such intention, and on
the
expiration
of
such
notice,
this
agreement shall absolutely cease and
determine, but without prejudice to the
rights and remedies if any, of either party,
which may have accrued or arisen
hereunder in the meantime.

Provided further that if the
consumer ceases taking supply of electrical
energy due to any reason, he shall be liable
to pay to the Supplier necessary charges as
per provision made in the Regulation
2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
479
framed by the Supplier under Section 49 &
79 of the Electricity (Supply) Act, 1948."

3. The "Parallel Operating System" is
an additional facility where one electrical
system operates with the connectivity to
another
system
in
similar
operating
condition i.e. synchronized system having
same
voltage,
frequency
and
phase
difference. In a simplified form, it can be
said that in case if there is any variation in
voltage and frequency then the grid
stabilizes the variation of voltage.

4. As per the 'Principal Agreement',
the petitioner started paying for the
"Parallel Operating System". Subsequently,
the petitioner managed to augment its own
Captive Power Plant and realized that they
do not have any further requirements of the
"Parallel Operating System".

5. On 3.8.2001, petitioner sent a letter
to UPPCL requesting for amendment to the
'Principal Agreement' as there was no
requirement
of
"Parallel
Operating
System". This was followed by a number of
other similar communications requesting
for deletion of clause 5 from the 'Principal
Agreement' but respondent no.3 did not
take any action on the communications, and
continued to charge for the facility
provided, though the petitioner was not
using the same. However, this facility was
also disconnected, which is clear from the
letter dated 28.9.2006 of respondent no.3.
Though the "Parallel Operating System"
was disconnected, but respondent no.3 for
the reasons better known to them, chose not
to amend the agreement, and continued
charging for the facility.

6. On 19.2.2013, a demand notice was
issued by respondent no.3 to the petitioner
demanding parallel Operating charges @
₹22,05,900/- per month with effect from
January 2008. The entire dues came out to
₹21,12,29,268/-.

7. It was on 19.12.2018 that a
supplementary agreement to the 'Principal
Agreement' was executed between the
petitioner and respondent no.3, whereby,
Clause 5 of the 'Principal Agreement',
which was parallel Operating charge, was
deleted. The relevant provisions of Clause
5 of the supplementary agreement is quoted
hereunder for ready reference :

"It has been agreed by the
consumer that during the continuance of
this agreement in addition to the minimum
consumption guarantee provided in rate
schedule Clause 5(b) at annexure-2, he
shall also pay to the supplier every month a
charge at the rate of 10% (ten percent) of
the
aforesaid
minimum
consumption
guarantee
per
KVA
for
44118
(corresponding to 37500 KW) which is
subject to revision from time to time. At the
current rate the ten percent of MCG works
out to ₹50/- per KVA per month & the
amount so chargeable works out to
₹22,05,900/- per month.

Provided that if in any revision,
the minimum consumption guarantee is
revised downwards, the consumer shall
nevertheless, be liable to pay the charges
under this clause at the rates as were
charged and paid by consumer before the
revision.

Provided always that in the event
of non-payment or delayed payment of
aforesaid charge by the due date specified
in the bill, the consumer shall be liable to
pay 'Additional charge' as provided in rate
schedule Clause 8(b) at Annex-2, without
prejudice to the right of the supplier to
discontinue the parallel Operating."
480 INDIAN LAW REPORTS ALLAHABAD SERIES

8.

After
execution
of
the
supplementary agreement, a request was
made by the petitioner that as they have not
been using the paralleling facility since
2001, so the outstanding amount may not
be charged.

9. On 4.12.2020, the bill cum
disconnection
notice
was
issued
by
respondent no.3, wherein disconnection
date was stated to be 30.12.2020 and the
parallel Operating charges was shown as
arrears upto March 2019. In response to the
bill, the petitioner made a representation
and was in sanguine hope that the arrears of
paralleling charges would be waived.
However, on 1.10.2022 another demand
notice was issued by respondent no.3
demanding ₹2,46,50,33,498.00/- as arrears
with interest on paralleling charges. In
addition to it, another bill was issued on
3.10.2022 wherein the outstanding amount
towards paralleling charges was shown
₹2,46,50,33,498.00/-. Along with it they
added late payment surcharge for one
month, which came to ₹49,300669.96/- and
total arrears of paralleling charges was
shown
₹251,43,34,167.96/-
as
on
3.10.2022.

10. The petitioner by means of instant
writ
petition
has
challenged
the
disconnection notice as well as demand
notice. The petitioner sought for following
prayers in the writ petition:-

"I. Issue a writ, order or
direction in the nature of certiorari calling
for the records of the case and to quash the
impugned
demand
cum
disconnection
notice dated 1.10.2022 issued by Executive
Engineer, Dakshinanchal Vidyut Vitran
Nigam
Ltd.
Electricity
Distribution
Division-I, Mathura (Respondent no.4)
demanding ₹2465033498.00/- as arrears
with
interest
of
paralleling
charges
(Anenxure No.30 to the writ petition).

II. Issue a writ, order or direction
in the nature of certiorari calling for the
records of the case and to quash the
impugned bill dated 3.10.2022 issued by
Executive Engineer, Dakshinanchal Vidyut
Vitran Nigam Ltd. Electricity Distribution
Divison-I, Mathura (Respondent no.4)
demanding 246,50,33,498.00/- as arrears
with
interest
of
paralleling
charges
alongwith LPSC (late payment surcharge)
of ₹49,300,669.96/-for one month and total
arrears
of
paralleling
charges
as
₹251,43,34,167.96/- (Annexure No.31 to
the writ petition).

III. Issue a writ, order or
direction in the nature of mandamus
commanding
the
respondent
no.3
(Managing Director, Dakshinanchal Vidyut
Vitran Nigam Ltd.) to consider and decide
the
representation/objection
dated
7.10.2022 within a stipulated period of
time.

IV. Issue a writ, order or direction
in the nature of mandamus commanding the
respondents to refund paralleling charges
paid by the petitioner from August 2001 to
December 2007."

ARGUMENT OF PETITIONER

11. Before advancing the legal
argument, counsel for the petitioner has
placed several communications between
the parties, which are as follows:-

11(A). The 'Principal Agreement'
was signed on 30.11.1999 between the
parties to provide "Parallel Operating
System". However, the petitioner after
increasing the capacity of the Captive
Power Plant, no longer needed this facility,
so they wrote a letter for the first time to
the Power Corporation on 3.8.2001 stating
2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
481
that they have augmented the capacity of
the captive power plant and they do not
need
facility
of
"Parallel
Operating
System", and asked them to stop extending
the facility and stop charging for the same.
In the aforesaid letter, they also asked for
dropping Clause 5 from the 'Principal
Agreement', as it was no more needed.
This
was
followed
by
several
representations given by the petitioner,
which were sent on 14.2.2002, 16.10.2002,
12.2.2004 and 25.2.2004, wherein same
request was made for amendment to the
contract agreement.

11(B) Thereafter, on 19.5.2004,
the petitioner wrote to General Manager
(Distribution), UPPCL stating that they
have
been
requested
by
CGM
(Commercial), Lucknow to inspect the
premises of the petitioner for confirming
that the petitioner's system was operating
in islanding mode and to ensure that there
is no possibility of parallel Operating
between petitioner's system and UPPCL
grid.
Thereafter,
vide
letter
dated
18.6.2004, respondent no.3 has forwarded
letter dated 19.5.2004 to the General
Manager (Distribution), UPPCL for taking
immediate action in the matter as per
departmental rules. On great persuasion of
the petitioner, the respondent Corporation
set up high level meeting on 25.8.2004,
wherein, it was decided that the team of
Power
Corporation
would
visit
the
premises of the petitioner and take up call
on the request of the petitioner. The team
visited the premises of the petitioner on
24.9.2004
and
after
analysing
the
petitioner's system, recommended for
recall of the parallel Operating.

11(C) Again on 20.10.2004, the
petitioner sent a request that they do not
require the "Parallel Operating System"
and requested to remove the facilities
granted by the Corporation, which was
followed by yet another representation
dated 30.6.2005. Thereafter, on 3.1.2006, a
report was submitted by the Committee,
wherein, it was stated that petitioner's
request for deletion of Clause 5 could not
be entertained due to positioning of the
circuit breaker and non-removal of bus bar.
On 19.1.2006, petitioner again wrote to
respondent no.3, referring to Committee'
report on the issue of amendment of the
agreement and it was categorically stated
therein that the Committee Members of
UPPCL have taken unilateral decision not
to amend contract agreement even though it
was jointly agreed by the petitioner and
respondent no.3.

11(D) Another representation was
sent by the petitioner on 14.2.2006 in
which it was categorically stated that since
the cable through which grid power was
connected to petitioner's generation bus
had already been dismantled and re-routed,
there is no possibility of further paralleling
of two systems. In the letter, it was further
stated that the purpose for which parallel
Operating was arranged have ceased to
exist for quite a few years back, which was
notified to UPPCL and was requested to
amend
the
agreement.
They
further
requested
to
discontinue
the
system
immediately as it was causing huge
financial loss which was to the tune of ₹2.5
crores per year. Thereafter, on 21.3.2006
respondent no.3 sent a letter, wherein, they
admitted that site inspection was carried
out by their team. Wherein, officers of
both the parties had agreed that the 11
KV cable, through which the grid power
was connected, has been disconnected,
though the bus bar has not been
removed. They further admitted that
there is no "Parallel Operating System"
working.

11(E) Again the petitioner sent
another letter dated 28.3.2006 requesting
482 INDIAN LAW REPORTS ALLAHABAD SERIES
UPPCL to amend the agreement urgently.
On 6.5.2006, respondent no.3 wrote letter
to the petitioner stating that after the
meeting of the officers it has been decided
that H.T. Cable connected in the refinery of
UPPCL has been separated. Even the 11
KV circuit breaker, which was set up by
UPPCL for supplying power to the refinery,
has been disconnected. It was further
admitted in the letter, that due to technical
reason, it was not possible to remove the
bus from the system. The relevant part of
letter dated 6.5.2006 is being reproduced
hereunder for ready reference:

"इस समि्र् में आपके प्रविम्र संज्ञाि में लािा है प्रक
प्रदिांक 09.12.05 को संयुक्त रूप से मर्ुरा ररिायिरी मथुरा का
प्रिरीक्षण प्रकया गया था तथा प्रदिांक 27.02.06 को आपके
प्रविाग के अप्रर्काररयों से प्रविार प्रवमशष करिे के उपरा्त यह प्रिणषय
प्रलया प्रक वतषमाि में ररिायिरी की िणाली का पररिालि
यू०पी०पी०सी०एल० की प्रग्रड से एि०टी०केप्रिल को पृथक कर
प्रदया गया है। यू०पी०पी०सी०एल० को प्रग्रड व ररिायिरी के प्रसस्टम
में जो पावर हाउस में पररिालि हेतु पूवष में 11 के०वी० के सप्रकषट
ब्रेकर लगाये गये थे उिकी एि०टी० किैक्शि को जोडिे वाली
केप्रिल को प्रिकाल प्रदया गया है पर्तु िस िार अिी िी उसी
अवस्था में प्रस्थत है। इस िस को अलग हटािा तकिीकी कारणों से
समिव िहीं है। इस संयुक्त जॉि टीम में मुख्य िि्र्क पी०एण्ड०यू०
मथुरा ररिायिरी मथुरा के िी हस्ताक्षर है।

अतः अिुि्र् का क्लोज िं०-5 प्रिरस्त करिा
समिव िहीं है।"

11(F) Petitioner again sent letter
on 13.5.2006 asking UPPCL/DVVNL to
resolve the issue and asked them to delete
clause 5 from the 'Principal Agreement'. In
spite of this letter and separating the cables,
the parallel operating system was not
withdrawn by the respondent, and they
continued charging the petitioner.

11(G) On 8.12.2006, petitioner
again wrote to respondent no.3 with request
for deletion of Clause 5 from the 'Principal
Agreement', informing them that as per
suggestions, the Grid transformer incomer
cubicles may be completely isolated and
sealed
from
their
respective
busbar
arrangement, and as such paralleling of
their system with grid will no more be
possible after this modification.

11(H) Thereafter, on 14.2.2007,
an office memorandum was issued by
respondent
no.3(DVVNL)
mentioning
therein, that on inspection it was found that
the petitioner was not using "Parallel
Operating System" as Grid incomer panel
and
refinery
generation
bus
were
completely sealed and separated. Further
on 18.6.2007, a letter was issued by
DVVNL wherein it was stated that the
petitioner
does
not
require
"Parallel
Operating
System"
and
accordingly
appropriate amendment be done.

11(I) On 28.9.2007, DVVNL sent
letter to the petitioner admitting that a team
of DVVNL had inspected the premises of
the petitioner and found that grid incomer
panel had been delinked from the refinery
generation bus. The bus has also been
sealed and hence, the refinery is not
carrying out the parallel operating system
from the grid. The relevant portion of the
letter is being reproduced below for ready
reference:-

"इस
कायाषलय
के
पत्रांक
8060/ि०प्रि०/द०प्रव०प्रव०प्रि०प्रल०/(वा०)/मथुरा
ररिाइिरी
प्रदिांक 18.06.07 के तारतमय में अवगत करािा है प्रक प्रदिांक
14.01.07 को अर्ीक्षण अप्रिय्ता, प्रवद्युत प्रवतरण मण्डल मथुरा
एवं अप्रर्शासी अप्रिय्ता प्रवद्युत प्रवतरण खण्ड-िथम, मथुरा द्वारा
उपभोक्ता के परिसि की पुनः चैंककग की गई तो मौके पि पाया
कक किड इनकमि पैनल को रिफाइनिी जनिेशन बस से
किच्छेकित कि किया गया है तथा किड इनकमसस पैनल के
रिफाइनिी बस बाि व्यिस्था से किच्छेकित एिं सील्ड होने से
रिफाइनिी द्वािा उ०प्र० पािि किड सप्लाई के साथ समानान्ति
परिचालन नहीं ककया जा िहा है तथा 11 के०िी० फीडि को
अलग पैनल लगाकि पृथक कि कलया गया है जो मेन बस से
पूर्सतः अलग हैं।

इस स्दिष में अर्ीक्षण अप्रिय्ता, प्रवद्युत प्रवतरण
मण्डल मथुरा के पत्रांक 10909/ प्रव०प्रव०मं० (म०) प्रदिांक
14.02.07 की िप्रत संलग्ि हैं।
2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
483

अिुरोर् है प्रक कृपया आवश्यक प्रदशा प्रिदेश देिे का
कि करें।"

11(J) On 31.12.2007, a letter was
sent by Chief Engineer (Commerce) to
Chief Engineer (Distribution Region), Agra
(respondent no.3) stating therein that as the
petitioner has separated grid incomer panel
from refinery bus, thus a new agreement be
executed after removing clause of "Parallel
Operating System".

11(K) In spite of this letter,
DVVNL did not take any action, so the
petitioner sent reminder on 1.1.2008 again
requesting that they would not be paying
charges for the "Parallel Operating System"
as deletion of paralleling clause 5 has
already been approved by UPPCL but not
formally disconnected.

11(L) On the other hand, there
was a serious audit objection on the
petitioner, as the paralleling charges was
being paid by IOCL in spite of physical
removal of the paralleling facility and
certification by UPPCL authorities on
February 2007 itself. On 28.1.2008, the
petitioner asked respondent no.3 to
immediately issue a formal order of
deletion of paralleling charges clause
from the agreement. When DVVNL did
not take any action, a reminder was sent
on 12.3.2008 asking the Managing
Director, DVVNL to resolve the issue.
On 25.3.2008, respondent no.3 sent a
letter to the petitioner stating that they
will not delete Clause 5 from the
'Principal
Agreement'
until
the
"Parallel
Operating
System"
is
completely taken out from the premises
of the petitioner. The relevant portion of
the letter is quoted below:-

"जि तक आपके द्वारा सामािांतर पररिालि के
प्रसस्टम को पूरी तरह से पृथक कर पररसर से हटा िहीं प्रदया जाता
ति तक अिुि्र् के क्लॉज़-5 में संशोर्ि िहीं प्रकया जा सकता
ऐसी प्रस्थप्रत में पूवष में प्रकया गया अिुिंर् ही मा्य होगा।"

11(M) Another reminder was sent
by the petitioner on 16.4.2008 asking for
the similar relief as sought for in letter
dated 12.3.2008. Respondent no.3 on
3.5.2008 sent a very vague letter that the
"Parallel Operating System" has not been
removed and has only been sealed and it is
not possible for the officers of the
Electricity Department to go and check,
hence, there is possibility of usage of
"Parallel Operating System". The relevant
portion of the aforesaid letter is being
reproduced below for ready reference:

"अप्रर्शासी अप्रियंता िे सूप्रित प्रकया है प्रक आपिे
सामािांतर पररिालि प्रसस्टम को पररसर से ि हटाकर मात्र सील
प्रकया है। अर्ीक्षण अप्रियंता (प्रवतरण) मथुरा द्वारा िी यह अवगत
कराया गया है प्रक आपका सामािांतर पररिालि प्रसस्टम आपके
पररसर में कािी अंदर होिे के कारण एवं प्रवद्युत् प्रविाग के
अप्रर्काररयों की वहााँ तक आसाि पहुाँि ि होिे के कारण सामािांतर
पररिालि के प्रसस्टम के उपयोग होिे की समिाविा ििती है।
अतएव जि तक सामािांतर पररिालि प्रसस्टम को पूरी तरह से
पररसर से हटा िहीं प्रदया जाता ति तक अिुिंर् के Clause
संख्या-05 में संशोर्ि का औप्रित्य िहीं ििता है।"

It is argued that this letter was
just an eye wash exercise and a feeble
attempt to justify their inaction.

11(N) The petitioner again sent
letter
on
14.11.2008
requesting
the
respondents to sign the revised agreement
and
sought
for refund/adjustment
of
paralleling
charges,
which
has
been
wrongly realized from the refinery with
effect from 14.1.2007 to 31.12.2007.

11(O) In response, DVVNL again
sent a letter stating that unless and until the
entire "Parallel Operating System" is not
removed, till then there is no question of
amending clause 5. The relevant portion of
this communication dated 10.12.2008 is
quoted hereinbelow:

"उपरोक्त प्रवर्य के अंतगषत आपको अवगत करािा है
प्रक जि तक सामािांतर पररिालि प्रसस्टम को पूरी तरह से पररसर से
हटा िहीं प्रदया जाता ति तक अिुिंर् के क्लॉज़ सं.-05 में संशोर्ि
का औप्रित्य िहीं ििता है, प्रजसके िारे में इस कायाषलय के पत्रांक
484 INDIAN LAW REPORTS ALLAHABAD SERIES
सं-428 प्रदिांक 06.05.2006 के द्वारा िी अवगत कराया जा
िुका है।"

11(P)
Thereafter
again
on
3.1.2009, the petitioner sent another
communication to the respondent asking
them to scrap the paralleling clause from
the 'Principal Agreement' but nothing was
done
by
the
DVVNL.
Another
representation was sent by the petitioner on
9.2.2009 for scrapping the paralleling
clause from the agreement, however, as
usual no action was taken by DVVNL. On
8.9.2009, the petitioner again requested
DVVNL to discontinue the paralleling
facility and said that if UPPCL is not
satisfied with the compliance of its
instructions by Mathura Refinery, then the
petitioner is free to resort to clause 9 of the
agreement. Again no action was taken on
this representation. The petitioner again
sent another similar representation dated
9.10.2009 to Chairman and M.D., UPPCL
and sought for execution of fresh contract.

11(Q) On 9.1.2010, a meeting
between officials of IOCL (petitioner) and
UPPCL (respondent no.3) was held,
wherein, UPPCL responded positively and
assured that agreement will be revised and
signed very soon deleting Clause 5 after
constitution of a Committee by Managing
Director, DVVNL.

11(R) When nothing happened,
petitioner again sent a reminder on
10.2.2010 stating that as the issue of
"Parallel Operating System" was pending
for quite sometime, a Committee was
constituted
for
amendment
in
the
agreement, which has given finding that the
petitioner has not completely removed the
"Parallel Operating System" from its
premises, which was not correct, so a new
Committee should be constituted to inspect
the same.

11(S) The petitioner again sent a
letter
on
8.11.2011
and
requested
respondent no.3 for refund of amount
charged
towards
"Parallel
Operating
System" levied with effect from 1.4.2000
as they were unjustified to charge the same.
On 15.2.2013, the petitioner again wrote to
respondent
no.3
asking
them
for
modification of the 'Principal Agreement'.
Thereafter, instead of carrying out the
amendment in the 'Principal Agreement',
on 19.2.2013, respondent no.3 sent demand
notice asking the petitioner to deposit
₹21,12,29,268.00/- for "Parallel Operating
System" for the period from January, 2008
to December, 2012. Even though the said
demand was clearly barred by limitation
and also barred by Clause 56(2) of the U.P.
Electricity Supply Code, 2005.

11(T) The petitioner again sent
letter on 16.4.2016 and asked for executing
a new agreement and removing the
paralleling clause. It was further stated that
the paralleling charges are continuously
being claimed by DVVNL. In spite of
knowing that after removing the H.T.
Cables the paralleling Operating was not
being carried out, still they sent a bill of
₹48,89,95,968/-.

11(U) Yet again the petitioner
wrote to DVVNL on 7.5.2016 pointing out
that even though DVVNL authorities had
satisfied
themselves
that
"Parallel
Operating System" was not in use and also
had communicated for initiating actions for
signing new agreement without paralleling
charges clause. But, in spite of several
communications/reminders, no action has
been taken. The petitioner further requested
respondent no.3 to look into the matter and
to take call on the priority basis.

11(V) When respondent no.3 did
not taken any action and continued billing
for the paralleling charges, the petitioner
once again sent a letter on 2.9.2016
pointing out all communications besides
meetings held between the parties and
2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
485
requested to put chronological events
before M.D., DVVNL for expedite action
and also for waiving off the paralleling
charges. Thereafter, a meeting was held
between the petitioner and respondent no.3
on 23.8.2018. The minutes of the meeting
shows that the 11 KV power cable from
Grid transformers for "Parallel Operating
System" was disconnected and completely
removed from generation bus-01 and 02,
which were for providing paralleling for
the refinery. All old panels of generation
bus 1 and 2 have been removed due to
obsoleteness.

11(W) It is submitted that the
respondents
instead
of
signing
the
agreement again sent a cryptic letter on
27.9.2018. The operative portion of this
letter is reproduced hereunder:-

"उपरोक्त तथ्यों को संज्ञाि में लेिे से ितीत होता है
प्रक वतषमाि िणाली में प्रििा प्रकसी आवश्यक पररवतषि के, पैरप्रलंग
ऑपरेशि करिा संिव िहीं होगा यप्रद ररिाइिरी िशासि इस िणाली
मैं कोई पररवतषि करता है तो उसकी सुििा दप्रक्षणांिल प्रवद्युत
प्रवतरण प्रिगम प्रलप्रमटेड को देिी होगी तथा समिंप्रर्त प्रिगम
अप्रर्काररयों को स्थल का प्रिरीक्षण करािे के उपरांत, सहमप्रत प्रमलिे
पर ही पैरप्रलंग िणाली में आवश्यक पररवतषि प्रकया जाये।"

11(X) It is further submitted that
ultimately, on 19.12.2018, after 11 years of
great persuasion by the petitioner, a
supplementary agreement was signed.
Thereafter, the petitioner sent a letter on
18.1.2019 stating that respondent no.3 is
charging as per monthly bill of December
2018, the total amount of ₹101.15 crore,
out of which actual paralleling charges was
₹28.90 crore and had charged ₹72.25 crore
towards surcharge. The petitioner prayed to
stop claiming the outstanding paralleling
charges. Again, a reminder was sent on
26.2.2019 asking respondent no.3 for
redressal of paralleling charges claimed by
them. On 5.3.2019, an office order was
issued by the Managing Director, DVVNL,
whereby, a high level Committee consisting
of four Members was constituted for
Reversal of Paralleling Charge Claim by
the petitioner, which was to be headed by
Director
(Commerce),
DVVNL.
On
3.9.2019, the petitioner again wrote letter to
respondent no.3 asking them to reverse the
paralleling charges as the facility has not
been provided from 2001. Again another
reminder was sent by the petitioner on
13.1.2020, for the same.

11(Y) Respondent no.3 again sent
a letter on 30.3.2020 stating that the
petitioner has paid the parallel operating
charges upto December 2007 but because
of the dispute they have stopped paying the
same.
They
further
claimed
₹1,07,29,48,521.00/- as parallel operating
charges along with interest for period from
January 2008 to March, 2019.

12. Learned counsel for the petitioner
submitted that after augmentation of the
capacity of the captive power plant way
back in the year 2001, the petitioner wrote
to respondent no.3 for discontinuing the
"Parallel Operating System". In spite of
writing several letters, respondent no.3 did
not discontinue the facility.

13. He submitted that the entire
energy produced by the petitioner's Captive
Power Plant was used by them. In 2002, the
petitioner informed respondent no.3 that
the petitioner was keeping the electrical
system in isolated condition and requested
to put an end to the "Parallel Operating
System" and stop charging fees for the
same and to delete Clause 5 of the
'Principal Agreement'. The petitioner had
sent a number of reminders informing the
Power Corporation that, they were running
in islanding mode and do not require to
operate the "Parallel Operating System". In
spite of several communications and
reminder, the Power Corporation did not
486 INDIAN LAW REPORTS ALLAHABAD SERIES
remove the parallel operating facility. On
the contrary, it kept on charging minimum
consumer guarantee. In spite of repeated
reminders, the respondent did not take any
decision or action and continued to take
advantage of their own delay.

14. He has also placed reliance upon
letter dated 28.9.2007, which states that the
premises of the petitioner was inspected by
the officers of DVVNL and it was found
that grid incomer panel was disconnected
from the refinery generation bus and the
same was sealed and the refinery was not
taking any facility
of
the
"Parallel
Operating System". Once the supply was
disconnected by DVVNL it is not open for
them to charge for minimum consumer
guarantee or even ask for the same. The
petitioner had throughout been writing to
the respondents to disconnect the "Parallel
Operating System" and to execute a fresh
agreement deleting clause 5 from the
'Principal Agreement'. In spite of several
requests, respondent had failed to discharge
their obligation on one hand and on the
other hand, they were charging petitioner
an amount of ₹22,05,900/- per month.
Therefore, it was submitted that it is a clear
case where respondent no.3 is trying to take
advantage of their own wrong.

15. Counsel for the petitioner further
submitted that no opportunity of hearing
was granted before issuing bills dated
1.10.2022 and 3.10.2022 along with
disconnection notice. In the demand cum
disconnection notice it is indicated that a
six member team was constituted by
respondent no.3 to investigate into the
matter.
However,
no
opportunity
or
information was given to the petitioner
about the same. There was no adjudication
of the amount claimed in the demand cum
disconnection notice and the claim made
was illegal, highly excessive and based on
no evidence.

16. The levying of parallel Operating
charges is provided in Clause 4.26(e) of the
U.P. Electricity Supply Code, 2005, which
is as follows:-

"4.26 (e) Where old agreements
exist with the licensee, condition of paying
parallel Operational charges shall prevail
till the termination of the agreement."

17. Though Clause 4.26 of the U.P.
Electricity Supply Code, 2005 provides for
paying of parallel operating charges till the
modification/termination of the 'Principal
Agreement', but it does not give respondent
no.3 the right to keep charging for an
indefinite period, specially when the
petitioner had requested them to withdraw
the facility and amend the agreement.
Respondent
no.3
cannot
take
undue
advantage of a provision of the Code, when
they themselves have delayed in amending
the agreement.

18. The concept of "Open access
regime"
for
the
first
time
was
introduced in the Electricity Act, 2003,
as per the specific industrial policy of
the Central Government. Under this
"Open access regime" the distribution
companies and any other user have the
freedom to buy electricity directly by
electricity generating companies of
their choice.

19. After amendment of 2003 Act,
where "open access" has been introduced,
the earlier agreement lost its sanctity and
virtually became defunct. The term "open
access" has been defined under Section
2(47) of the Act, 2003, which is quoted
hereunder:-
2 All. Indian Oil Corporation Ltd., Mathura Refinery Vs. State of U.P. & Ors.
487

" 'open access' means the nondiscriminatory provision for the use of
transmission lines or distribution system or
associated facilities with such lines or
system by any licensee or consumer or a
person
engaged
in
generation
in
accordance with the regulations specified
by the Appropriate Commission."

20. Learned counsel for the petitioner
further stated that after disconnection,
respondent
no.3
had
raised
bill
on
19.2.2013 for the period from January,
2008 to December, 2012 for an amount of
₹21,12,29,268/-. Thereafter, another billcum-disconnection notice was raised on
4.12.2020,
and
another
bill
of
₹1,07,52,56,496.47
was
raised
on
3.9.2022 wherein date of disconnection
was
mentioned
as
31.9.2022.
Thereafter, impugned demand notice
dated
1.10.2022
was
issued
for
₹2,46,50,33,498.00(this
included
paralleling charges with interest) and
immediately two days thereafter, on
3.10.2022, yet another notice was
issued
for
₹2,51,64,15,916.21(this
included
paralleling
charges
with
interest).

21. Counsel for the petitioner further
submitted that the amount claimed through
demand
notice
dated
1.10.2022
and
3.10.2022 cannot be recovered from the
petitioner in terms of Section 56(2) of the
Electricity Act, 2003 as the period of two
years from the date when such sum became
first due has lapsed. The sum has also not
been shown as charges for electricity
supply and as such the amount is not
recoverable.

22. The relevant provisions of Section
56(2) of the Electricity Act, 2003 is quoted
hereinbelow:-

"Section 56(2). Notwithstanding
anything contained in any other law for the
time being in force, no sum due from any
consumer, under this section shall be
recoverable after the period of two years
from the date when such sum became first
due unless such sum has been shown
continuously as recoverable as arrear of
charges for electricity supplied and the
licensee shall not cut off the supply of the
electricity."
(Emphasis Supplied)

23. The word "Sum Due" in sub
clause (2) to the proviso to section 56 of the
Act
2003
means
amount
already
adjudicated between the parties. In the
present case there is no adjudication of any
amount. In this case, after 2008 there is
nothing on record to show that respondent
no.3 had been raising bill and as such, they
cannot recover the amount after period of
two years from the date when such sum
became first due. In this case, it cannot be
said that the sum has become due for the
simple
reason
that
respondent
no.3
themselves have disconnected the cables,
which resulted in discontinuance of service
with effect from September, 2007. Any
demand raised thereafter is clearly barred
by the provisions of Section 56(2) of the
Electricity Act, 2003.

24. Learned counsel for the petitioner
submitted that they were not availing the
"Parallel Operating System" since 2001.
After the disconnection of supply on
28.9.2007(which was acknowledged by
respondent
no.3
vide
letter
dated
31.12.2007) the payment towards the
paralleling
charges
was
made
till
December, 2007 and thereafter it was
stopped
from
January
2008
after
completion of due process of approval for
deletion of paralleling clause as per the
488 INDIAN LAW REPORTS ALLAHABAD SERIES
directives of UPPCL. Further, request was
made for executing a fresh agreement, as
per the approval.

25. Learned counsel for the petitioner
submitted that the petitioner corporation
has repeatedly requested the respondent
corporation to delete clause 5 of the
'Principal Agreement' and refund of
parallel charges which were paid from 2001
to 2007. He further submitted that the
petitioner corporation since 2001 had been
raising this issue before the respondent
corporation, and it took almost 7 years for
the respondent corporation to disconnect
the facility which was not being used by
the petitioner since 2001, and it took
another 10 years by them to amend the
'Principal Agreement' and respondent no.3
could not show any valid reason for this
inordinate delay in doing it. He further
submitted that respondent no.3 cannot
charge for a service ("Parallel Operating
System"), which was already disconnected
with effect from September, 2007.

26. Respondent no.3 cannot be
allowed to take advantage of its own
procrastination. He further submitted that
captive consumers have no obligation to
pay any additional surcharge under Section
42(4) even if they are not receiving
electricity from the distribution company.
He further submitted that levy of additional
charge under any name on the captive
consumer
would
be
discriminatory.
Unequals cannot be treated equally.

27. Learned counsel for the petitioner
further submitted that the provisions of
Section 42 and Section 9 of Electricity Act,
2003 makes it clear in case of open access,
a person who established the captive
generating plant for carrying the electricity,
no surcharge would be leviable on him.
Counsel for the petitioner cited judgment of
Hon'ble Supreme Court in the matter of
Maharashtra
State
Electricity
Distribution Company Ltd. vs. JSW
Steel Limited and others1 in which
Hon'ble Supreme Court has held that
captive
consumers
do
not
have
an
obligation to pay additional surcharge
under Section 42(4) of the Electricity Act,
even if they are not receiving electricity
from the distribution licensee.