# A.P. POWER COORDINATION COMMITTEE & ORS v. MIS. LANCO KONDAPALLI POWER LTD. & ORS

- **Citation:** [2015] 12 S.C.R. 447
- **Court:** Supreme Court of India
- **Decided:** 2015-10-16
- **Case number:** Civil Appeal No. 6036 of 2012
- **Bench:** Vikramajit Sen, Shiva Kirti Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/a-p-power-coordination-committee-ors-v-mis-lanco-kondapalli-power-ltd-ors-30444
- **Pages:** 51

## Headnote

B
Electricity Act, 2003 - s. 86(1 )(f), 17 4 - Limitation Act,
1963 - ss. 3, 14, Schedule - Disputes between /icencees c
and power generating company- Bill for capacity chargesClaim for reimbursement of minimum alternate Tax (MAT) -
Whether the Limitation Act, s. 3 and the Schedule would
apply to any action instituted before the Commission uls.
86(1)(f) - Whether the impugned order passed by APTEL D
permitting application of principles emerging from s. 14, is
against law - Whether the claim for reimbursement of MAT
is in contravention of relevant terms and conditions of the
Power Purchase Agreement (PPA) - Held: A claim coming
before the Commission cannot be entertained or allowed if it E
is barred by limitation prescribed for an ordinary suit before
the civil court - However, in appropriate case, a specified
period may be excluded on account of principle underlying
salutary provisions like s. 5 or 14 - Further, such limitation
upon the Commission would be only in respect of its judicial F
power uls. 86(1 )(f) and not in respect of its other powers or
functions which may be administrative or regulatory - As
regards order passed by APTEL, in law, the APTEL could
grant exclusion of certain period on the basis of principles ul G
s. 14 - On facts, AP TEL adopted a just and lawful approach
in examining the relevant facts and in excluding the entire.
period claimed by respondent which starts from the notice
for arbitration dated 8.9.2003 given by the respondent, till
the application of the respondent u/s. 11 of the Arbitration H
448
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A Act before the High Court was finally disposed of on
18. 3. 2009 - Challenge to impugned order in respect of views
taken on the issue of limitation in the light of principles of s.
14 fails - As regards the claim for reimbursement, entire
phraseology used in Article 3.8 of the PPA clarifies that
B parties were aware that tax regime keeps changing and
therefore any advance income tax payable for the income
from the project only had to be reimbursed by the Board -
As a successor of the Board the appeliant cannot avoid the
liability to reimburse advance income tax paid by_ the
C respondent, on the ground that MAT was a new variety of tax
concept introduced subsequently in which minimum tax
became payable on the basis of mere book profits of even
power generating companies - It cannot be said that such,
0
tax is not on income from the project and thus, not covered
by Article 3.8- Taxable income became amenable to MAT
on account of s. 115JB - Claim for MAT covered by Article
3. 8 and payable as such when requisite conditions stand
E
~~~d
.
Dismissing the appeals, the Court
HELD: 1.1 There is no possibility of any difference
of opinion in accepting that on account of judgment of
this Court in Gujarat Urja the Commission has been
F elevated to the status of a substitute for the Civil Court
in respect of all disputes between the licencees and
generating companies. Such dispute need not arise from
the exercise of powers under the Electricity Act. Even
claims or disputes arising purely out of contract like in
G the instant case have to be either adjudicated by the
Commission or the Commission itself has the discretion
to refer the dispute for arbitration after exercising its
power to nominate the arbitrator. A statutory authority
H like the Commission is also required to determine or
A.P. POWER COORDINATION COMMITTEE v. LANCO
449
KONDAPALLI POWER LTD.
decide a claim or dispute either by itself or by referring it A
to arbitration only in accordance with law and thus
Section 174 and 175 of the Electricity Act assume
relevance. Since no separate limitation has been
prescribed for exercise of power under Section 86(1)f)
nor this adjudicatory power of the Commission has been B
enlarged to entertain even the time barred claims, there
is no conflict between the provisions of the Electricity
Act and Limitation Act to attract the provisions of Section
17 4 of the Electricity Act. I

## Text

_Characters 0–39,692 of 96,322. This is a partial read: ask again with offset=39692 for what follows._

[2015] 12 S.C.R. 447
A.P. POWER COORDINATION COMMITTEE & ORS.
A
v.
MIS. LANCO KONDAPALLI POWER LTD. & ORS.
(Civil Appeal No. 6036 of 2012)
OCTOBER 16, 2015
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
B
Electricity Act, 2003 - s. 86(1 )(f), 17 4 - Limitation Act,
1963 - ss. 3, 14, Schedule - Disputes between /icencees c
and power generating company- Bill for capacity chargesClaim for reimbursement of minimum alternate Tax (MAT) -
Whether the Limitation Act, s. 3 and the Schedule would
apply to any action instituted before the Commission uls.
86(1)(f) - Whether the impugned order passed by APTEL D
permitting application of principles emerging from s. 14, is
against law - Whether the claim for reimbursement of MAT
is in contravention of relevant terms and conditions of the
Power Purchase Agreement (PPA) - Held: A claim coming
before the Commission cannot be entertained or allowed if it E
is barred by limitation prescribed for an ordinary suit before
the civil court - However, in appropriate case, a specified
period may be excluded on account of principle underlying
salutary provisions like s. 5 or 14 - Further, such limitation
upon the Commission would be only in respect of its judicial F
power uls. 86(1 )(f) and not in respect of its other powers or
functions which may be administrative or regulatory - As
regards order passed by APTEL, in law, the APTEL could
grant exclusion of certain period on the basis of principles ul G
s. 14 - On facts, AP TEL adopted a just and lawful approach
in examining the relevant facts and in excluding the entire.
period claimed by respondent which starts from the notice
for arbitration dated 8.9.2003 given by the respondent, till
the application of the respondent u/s. 11 of the Arbitration H
448
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A Act before the High Court was finally disposed of on
18. 3. 2009 - Challenge to impugned order in respect of views
taken on the issue of limitation in the light of principles of s.
14 fails - As regards the claim for reimbursement, entire
phraseology used in Article 3.8 of the PPA clarifies that
B parties were aware that tax regime keeps changing and
therefore any advance income tax payable for the income
from the project only had to be reimbursed by the Board -
As a successor of the Board the appeliant cannot avoid the
liability to reimburse advance income tax paid by_ the
C respondent, on the ground that MAT was a new variety of tax
concept introduced subsequently in which minimum tax
became payable on the basis of mere book profits of even
power generating companies - It cannot be said that such,
0
tax is not on income from the project and thus, not covered
by Article 3.8- Taxable income became amenable to MAT
on account of s. 115JB - Claim for MAT covered by Article
3. 8 and payable as such when requisite conditions stand
E
~~~d
.
Dismissing the appeals, the Court
HELD: 1.1 There is no possibility of any difference
of opinion in accepting that on account of judgment of
this Court in Gujarat Urja the Commission has been
F elevated to the status of a substitute for the Civil Court
in respect of all disputes between the licencees and
generating companies. Such dispute need not arise from
the exercise of powers under the Electricity Act. Even
claims or disputes arising purely out of contract like in
G the instant case have to be either adjudicated by the
Commission or the Commission itself has the discretion
to refer the dispute for arbitration after exercising its
power to nominate the arbitrator. A statutory authority
H like the Commission is also required to determine or
A.P. POWER COORDINATION COMMITTEE v. LANCO
449
KONDAPALLI POWER LTD.
decide a claim or dispute either by itself or by referring it A
to arbitration only in accordance with law and thus
Section 174 and 175 of the Electricity Act assume
relevance. Since no separate limitation has been
prescribed for exercise of power under Section 86(1)f)
nor this adjudicatory power of the Commission has been B
enlarged to entertain even the time barred claims, there
is no conflict between the provisions of the Electricity
Act and Limitation Act to attract the provisions of Section
17 4 of the Electricity Act. In such a situation on account
of provisions in Section 175 of the Act or even otherwise C
the power of adjudication and determination or even the
power of deciding whether a case requires reference to
arbitration must be exercised in a fair manner and in
accordance with law. In the absence of any provision in
the Electricity Act creating a new right upon a claimant. o·
to claim even monies barred by law of limitation, or taking
away a right of the other side to take a lawful defence of
limitation, in the light of nature of judicial power
conferred on the Commission, claims coming for E
adjudication before it cannot be entertained or allowed
if it is found legally not recoverable in a regular suit or
any other regular proceeding such as arbitration, on
account of law of limitation. This view is taken not only
because it appears to be more just but also because F
unlike Labour laws and Industrial Disputes Act, the
Electricity Act has no peculiar philosophy or inherent
underlying reasons requiring adherence to a contrary
view. [Para 29] [489-B-D, H; 490-A-F]
1.2Aclaim coming beforethe Commission cannot
be entertained or allowed if it is barred by limitation
prescribed for an ordinary suit before the civil court. But
in appropriate case, a specified period may be excluded
G
on account of principle underlying salutary provisions H
450
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A like Section 5 or 14 of the Limitation Act. Further, such
limitation upon the Commission on account of the
decision in V.R.Kal/iyanikutty would be only in respect
of its judicial power under clause (f) of sub-section (1) of
s. 86 of the Electricity Act, 2003 and not in respect of ifs
B other powers or functions which may be administrative
or regulatory. [Para 30] [491-C-E]
1.3 The respondent rightly appreciated the hurdle
of limitation in its way when such an objection was taken
C by the appellant and it rightly chose to seek exclusion
of the period it was pursuing arbitration proceeding
before the High Court, on the basis of principles
underlying Section 14 of the Limitation Act. [Para 31] [491F-G]
D
1.4 In law, the APTEL could grant exclusion of
certain period on the basis of principles under Section
14 in view of law laid down or clarified in M.P. Steel
Corporation. On facts, there is no difficulty in holding that
E APTEL has adopted a just and lawful approach in
examining the relevant facts and in excluding the entire
period claimed by the respondent which starts from the
notice for arbitration dated 8.9.2003 given by the
respondent, till the application of the respondent under
F Section 11 of the Arbitration Act before the High Court
was finally disposed of on 18.3.2009. The issue whether
the first notice dated 8.9.2003 or the next notice dated
26.3.2004 should be treated as notice for arbitration for
the purpose of Section 21 of the Arbitration Act was
G rightly not pursued further by the counsel. But since this
issue was touched, the entire Article 14 of the PPA as
well as the notice dated 8.9.2003 is looked at and there
is no difficulty in holding it as the notice for arbitration
which amounted to initiation of arbitral proceedings as
H contemplated by Section 21 of the Arbitration Act. The
A.P. POWER COORDINATION COMMITTEE v. LANCO
451
KONDAPALLI POWER LTD.
submission on behalf of appellant that after the judgment A
of this Co.urt in Gujarat Urja on 13.3.2008, the
continuance of the arbitral proceedings before the High
Court at the instance of the respondent should not be
accepted as bona fide and that the commission was
justified in not excluding this period of about one year B
on the ground that it was not bona fide and in such facts
APTEL should not have taken a contrary view, cannot
be accepted. [Para 32] [492-A-E]
1.5 The appellant had notice of the arbitral C
proceeding and after judgment in. Gujarat Urja, the
appellant also took no steps to get the application under
Section 11 listed and disposed of earlier to 18.3.2009.
The averments and the materials are not sufficient to
establish the claim of the appellant that the proceeding D
ceased to be bona fide after 13.3.2008. As a
consequence thereof, the challenge to impugned order
in respect of views taken on the issue of limitation in the
light of principles of Section 14 of the Limitation Act fails.
[Para 32][493-C-D]
E
1.6 The issue whether MAT is covered by Article 3.8
of the PPA was clearly covered by Arbitration notice. The
filing of upto date claims through amendment or
otherwise before the Arbitral Tribunal could not happen F
for the obvious reason that application under Section
11 of the Arbitration Act itself remained pending till
18.03.2009 before the High Court and thereafter before
the Commission. [Para 33] [494-A-B]
G
1.7 The claim for reimbursement of MAT for the
period 2001-2005 was rejected by the Commission on
the ground of limitation and after impugned order by
APTEL reversing such order, that claim stands remitted.
to the Commission for passing a consequential order. H
452
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A The claims for other periods have been allowed by the
Commission. On account of the view indicated earlier
upholding the order of APTEL on the issue of limitation,
the claim of MAT for 2001-2005 cannot be treated as
barred by limitation. Thus the claim of MAT for entire
B concerned period that is from 2001-2012 will be covered
by the decision on Merits of Claim relating to MAT. The
submission that MAT cannot be covered by the
provisions in Article 3.8 of the PPA providing for claims
for taxes on income because the appellant had not
C foreseen such eventuality in view of the then prevailing
tax regime under which income from such power
projects stood exempted, is noticed only to be rejected.
The entire. phraseology used in Article 3.8 of the PPA
0
leaves no manner of doubt that parties were aware that
tax regime keeps changing and therefore any advance
income tax payable for the income from the project only
had to be reimbursed by the Board. As a successor of
the Board the appellant cannot avoid the liability to
E reimburse advance income tax paid by the respondent,
on the ground that MAT was a new variety of tax concept
introduced subsequently in which minimum tax became
payable on the basis of mere book profits of even power
generating companies. The argument that such tax is
F not on income from the project and thus, not covered
by Article 3.8 of the PPA is without any substance.
[Para 34] [494C-H; 495-A]
1.8 The objective of levying MAT, as declared by the
G Income Tax Department is to bring into the tax net "Zero
Tax Companies" which inspite of having earned
substantial book profits and having paid handsome
dividends, do not pay any tax due to various tax
concessions and incentives provided under the Income
H Tax Law. It is no body's case that in fact the respondent
AP. POWER COORDINATION COMMITTEE v. LANCO
453
KONDAPALLI POWER LTD.
had not generated income from the project during the A
relevant years. The taxable income, of course, became
amenable to MAT on account of Section 115JB. The
legislative changes in respect of MAT show that it came
into force initially with e·ffect from 1.4.1988 by
introduction of Section 115J in the Income Tax Act, 1961
B
but this provision was amended to exempt power
generating companies with.effect from 1.4.1989 and from
1.4.1991 MAT became inapplicable because of deletion
of Section 115J which was reintroduced with effect from
1.4.1997 by insertion of Section 115JA. But it was not C
made applicable ~o power generating companies till
31.3.2001. However, Section 115JAwas withdrawn and
Section ·115JB was inserted with effect from 1.4.2001 to
make MAT applicable to all targeted corporate entities 0
including power generating companies. The submission
on behalf of the appellant that Section 115JB is a tax not
on profit but of different character is based on
misconception. No doubt this Section has a special
provision for payment of tax by certain companies on E
the basis of its book profit which is deemed to be the
total income of the assessee and is subjected to income
tax at a specified rate. The provisions of Sections 115JA
and 11 SJB have been also construed as a self-contained
code But that does not change the basic nature of the F
provision. It remains a provision under the Income Tax
Act and what is levied is income tax on the assessment
of income as per such a special provision. [Para 35]
[495-B-H; 496-A]
1.9 Article 1.4 of the PPA provides inter alia that
reference to any 'Law' shall be construed as a reference
G
to such Law as from time to time amended or re-enacted.
This general provision in our view is sufficient to take
care of all the taxes on income under Article 3.8 of the H
454
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A PPA notwithstanding different rates of income tax or
other changes which may be brought about in the
Income Tax Act. This view commends itself because
such change in Law relating to Income Tax does not
require any additional claim to be raised by the power
B generating companies. There is no specific amount-or
rate which is to be reimbursed by the Board. Rather, the
entire advance income ·tax payable requires
reimbursement on account of Article 3.8 of the PPA
provided of course that the accounts are maintained in
C the manner required by the Agreement so that tax is only
on the basis of income from the project. No such dispute
has been raised in the instant case. (Para 36] (496-B-D]
1.10 The claim of the appellant that liability of MAT
D is on account of change in Law and therefore required
the respondent to adopt the procedure for making claims
under Article 11.4 of the PPA does not appeal for the
aforesaid reasons. The entire stipulation in Article 11.4
of the PPA is in respect of additional or reduced
E expenditures or costs which have not been catered for
and arise later due to change in Law. The burden on
account of income tax as per Article 3.9 of the PPA cannot
be treated as additional or reduced burden because the
entire actual advance income tax payable for the project
F is required to be reimbursed by the Board. It is immaterial
whether the income tax payable is high or low in any
particular year. When there is already a special provision
in respect of entire payable taxes on income under Article
3.8 of the PPA, that should have precedence over the
G general provisions in Article 11.4 of the PPA. [Para 37]
(496-E-H]
1.11 Section 2(43) defines 'Tax' to mean income tax
chargeable under the provisions of Income Tax Act and
H 'Total Income' has been defined with reference to Section
A.P. POWER COORDINATION COMMITTEE v. LANGO
455
KONDAPALLI POWER LTD.
5 which enlarges the scope of total income not only to A
income received. or accrued but also deemed to be
received or deemed to be accrued in India (for a resident).
Simply because the exemption earlier granted to power
generating companies has been withdrawn so as to
subject them to income tax liability under a special B
provision, cannot lead to any inference as suggested
on behalf of the appellant that it is not an income tax but
some other tax which is levied under s.115JB of the
Income Tax Act. Hence the claim for MAT covered by
Article 3.8 of the PPA and payable as such when C
requisite conditions stand satisfied. [Para 38] [497-B-D]
M.P Steel Corporation v. Commissioner of Central
Excise (2015) 7 SCC 58; State of Kera/av. V.R.
Kalliyanikutty 1999 (2) SCR 372: (1999) 3 SCC
657 - relied on.
Gujarat Urja Vik as Nigam Ltd. v. Essar Power Ltd. ·
2008 (4) SCR 822: (2008) 4 sec 755; Tamil
Nadu Generation & D[stribution Corpn. Ltd. v.
PPN Power Generating Co. (P) Ltd. 2014 (4)
SCR 667: (2014) 11 SCC 53; Hans Raj Gupta v.
Dehra Dun-Mussoorie Electric Tramway Co. Ltd.
AIR 1933 PC 63; New Delhi Municipal Committee
v. Ka/u Ram 1976 (0) Suppl. SCR 87:(1976) 3
SCC 407; Kihoto Hallahan v. Zachillhu 1992 (1)
SCR 686: 1992 Supp. (2) SCC 651; Thakur Jugal
Kishore Sinha v. Sitamarhi Central Co-operative
Bank Ltd. 1967 (3) SCR 163; Brajnandan Sinha
v. Jyoti Narain AIR 1956 SC 66: 1955 SCR 955;
P Sarathy v. State Bank of India 2000 (1) Suppl.
SCR 402: (2000) 5 SCC 355; Commissioner of
Sa/es Tax v. Parson Tools and Plants (1975)4
SCC 22; Ujjam Bai v. State of U.P AIR 1962 SC
D
E
F
G
H
456
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2015] 12 S.C.R.
1621 :1963 SCR 778; Jagannath Prasad v. State
of UP AIR 1963 SC 416: 1963 SCR 850; Mukri
Gopalan v. Cheppilat Puthanpurayil Aboobacker
1995 (2) Suppl. SCR 1: (1995) 5 sec 5;
Consolidated Engg. Enterprises v. Irrigation Deptt.
2008 (5) SCR 1108: (2008) 7 SCC 169; Trans
Mediterranean Airways v. Universal Exports 2011
(14) SCR 47: (2011) 10 SCC 316; Henry
Hauenstein v. John.A. Lynham 100 U.S. 483; Re.
Jarvis (Deceased) Edge v. Jarvis (1958) 2 All.ER
336; Bombay Gas Co. Ltd. v. Gopal Bhiva 1964(3)
SCR 709; Hindustan Times Ltd. v. Union of India
1998 (1) SCR 4:(1998) 2 SCC 242; State of
Gujarat · v.
Patil Raghav Natha
1970
(1) SCR 335:(1969) 2 SCC 187; Ram Chand v.
Union of India 1993 (2) Suppl. SCR 558: (1994)
1 SCC 44; Bombay Dyeing & Manufacturing Co.
Ltd. v. The State of Bombay AIR 1958 SC
328:1958 SCR 1122; Mis. Tilokchand and
Motichand v. H.B. Munshf (1969) 1 SCC 110;
Ajanta Pharma Limited vs. CIT 2010 (11)
SCR 404:2010 (9) SCC 455- referred to.
Case Law Reference
2008 (4) SCR 822
Referred to.
Para 5
2014 (4) SCR 667
Referred to.
Para 14
1999 (2) SCR 372
Referred to.
Para 17
AIR 1933 PC 63
Referred to.
Para 17
1976 (0) Suppl. SCR 87
Referred to.
Para 18
1992 (1) SCR 686
Referred to.
Para 19
1967 (3) SCR 163
Referred to.
Para 19
A.P. POWER COORDINATION COMMITTEE v. LANCO
457
KONDAPALLI POWER LTD.
1955 SCR 955
Referred to.
Para 19
A
2000 (1) Suppl. SCR 402
Referred to.
Para 20
(2015) 1 sec 58
Relied on.
Para 20
(1975) 4 sec 22
Referred to.
Para 20
B
1963 SCR 778
R~ferred to.
Para 20
1963 SCR 850
Referred to.
Para 20
1995 (2) Suppl. SCR 1
Referred to.
Para 20
c
2008 (5) SCR 1108
Referred to.
Para 20
2011 (~4) SCR 47
Referred to.
Para 21
100 U.S. 483
Referred to.
Para 26
D
(1958) 2 All.ER 336
Referred to.
Para 26
1964(3) SCR 709
Referred to.
Para 26
1998 (1) SCR 4
Referred to.
Para 26
E
1970 (1) SCR 335
Referred to.
Para 26
1993 (2) Suppl. SCR 558
Referred to.
Para 26
1958 SCR 1122
Referred to.
Para 27
F
(1969) 1sec110
Referred to.
Para 27
2010 (11) SCR 404
Referred to.
Para 35
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
6036 of 2012
G
From the Judgment and Order dated 02.07.2012 of the
Appellate Tribunal for Electricity, New Delhi in Appeal No. 129
of 2011
WITH
H
458
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A
C. A. Nos. 6061and6138 of 2012
C. A. No. 9304 of 2013 and C. A. No. 6835 of 2015
V. Giri,A. Subba Rao, ManavVohra, Svadha Shankar,
K. L. D. S. Vinober, P. Siva Rao, Rakesh K. Sharma, Anand
8 K. Ganesan, Swapna Sheshadri, K. V. Balakrishnan, K. V.
Mohan for the Appellants.
C. A. Sundaram, Jayant Bhushan, Vikas Singh, S. B.
Upadhyay, Sakya Singha Chaudhuri, Avijeet Lala, Kanika
C Chugh, Saloni Tangri, Rohini Musa, Zafar lnayat, D. Bharathi
Reddy, Shivani Khandekar, Sakya Singha Chaudhuri, Vishrov
Mukehrjee, Apoorva Misra, ·Rohit Venkat, Deipika Kalia, Sum it
Kumar Vats, Pukhrambam Ramesh Kumar, Pawan Upadhyay,
Kaustav P. Pathak, Sarvjit Pratap Singh, Sharmila Upadhyay
D for the Respondents.
The Judgment of the Court was delivered by
SHIVAKIRTI SINGH, J.1. The leading matter -
E C.A.No.6036 of 2012 as well as C.A.No.6061 of 2012 are
statutory appeals arising out of a common order dated
2. 7.2012 passed by Appellate Tribunal for Electricity (for short,
'APTEL') whereby pleas under Section 14 of the Limitation
Act, 1963 to explain the alleged delay in preferring claims by
F the common respondent- M/s. Lance Kondapalli Power Ltd.
(for brevity referred to as 'M/s. LAN CO') a power generating
company before the Andhra Pradesh Electricity Regulatory
Commission (hereinafter referred to as 'the Commission') has
been accepted and as a result the main claim in the leading
G matter relating to Bill for Capacity Charges and in the other
appeal for Minimum Alternate Tax (MAT) for 2001-2005 have
been remanded for a follow up order by the Commission on
the actual claims and interest. In respect of MAT, a concession
on merits was recorded in respect of period 2006-2009 and
H
A.P. POWER COORDINATION COMMITTEE v. LANCO
459
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
for the earlier period (2001-2005) the contest was confined A
only to issue of limitation, as evidenced by Original Order of
Commission dated 13.6.2011. Hence, through a SLP leading
to C.A.No.6835 of 2015, the Appellant has chosen to make a
direct challenge to aforesaid order to explain and overcome
.the alleged concession in respect of claim for reimbursement B
of MAT for the entire period of 2001-2009. C.A. No.6138 of
2012 is a statutory appeal to again challenge MAT for 20062009 but directed against appellate order dated 20.7.2012
by APTEL. The last matter, C.A.No.9304 of 2013 arises out
of a SLP against the original order of Commission dated C
8.8.2013 relating to MAT claim for the period 2009-2012.
Since issues are same or similar between the same appellant
and respondent in all these appeals, they have been heard
together and shall be governed by this common judgment. 0
Unless otherwise indicated the facts·have been noted from
the records of the main matter, i.e., C.A.No.6036 of2012.
2. Instead of merits of bills raised by M/s. LANCO for
capacity charges the issue of limitation has assumed greater
significance and has thrown up two important points. First,
E
whether the Limitation Act is applicable to a claim before the
Commission and if the answer is in positive, then second,
whether APTEL's order reversing the views of Commission.
and accepting claim under Section 14 of the Limitation Act is
F
in accordance with law or not. ft is not in dispute that if the
order of APTEL is upheld, the issue of correctness or validity
of capacity charges will stand remanded for decision by the
Commission in accordance with law. So far as claim of M/s.
LANGO for reimbursement of MAT for the period 2001-2005 G
is concerned, it shall stand rejected if APTEL's order on the
issue of limitation is reversed, otherwise such claim for the
aforesaid period as well as for later period upto 2012 will be
governed by the present judgment on the issue of legality and
admissibility of claim for MAT.
H
460
SUPREME COURT REPORTS
[2015] 12 S.C.R.
A
3. Before adverting to the issues noticed above and the
rival contentions, it will be useful to notice the essential facts
relevant for deciding the issues. M/s. LANGO is engaged in
the generation and sale of electricity. Its Registered Office is
at Hyderabad and it has set up its power project at Kondapalli
B Industrial Development Area in Krishna District of Andhra
Pradesh. A.P. Power Co-ordination Committee, the appellant
no.1, as the name suggests, was constituted on 07.06.2005
to ensure coordination between the four distribution
companies of Andhra Pradesh who are appellant nos.3 to 6.
C M/s. Transmission Corporation of Andhra Pradesh
(APTRANSCO) is the second appellant. At the relevant time
the appellant no.2 was engaged in procurement of power for
the Distribution Companies. In the first phase of power sector
D reforms, Andhra Pradesh State Electricity Board was
unbundled into Generation and Transmission Corporation and
subsequently the four Distribution Companies were notified
by the Government on 31.3.2000 on account of unbundling of
the Transmission Corporation in the subsequent phase of
E reforms.
4. There is no dispute between the parties that the
erstwhile A. P. State Electricity Board had invited bids for short
,gestation power projects. M/s. LANCO also submitted its bid
F which was accepted by the Board and approved by the
Government of Andhra Pradesh leading to a Power Purchase
Agreement (for brevity, 'PPA') dated 31.3.1997. M/s. LANCO
then set up a 355 MW (ISO) Combined Cycle Gas Power Plant.
The completion of the plant took more than the scheduled
G period of 16 months. It is not necessary to go into reasons for
the delay in the present proceeding. It will suffice to note that
Mis. LA NCO declared 25.10.2000 as the date of
commissioning of their project but this was not accepted as
the Commercial Operation Date (COD) by APTRANSCO.
H However, M/s. LANCO continued to generate power and
A.P. POWER COORDINATION COMMITTEE v. LANGO
461
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
delivered it to grid. It raised bills from 19.9.2000. While the A
charges for the energy delivered were accepted, the bill for
capacity charges was disallowed on the ground that it was not
in accordance with the PPA. On 8.9.2003 M/s. LANCO issued
a notice of arbitration under Article 14 of the PPA. There is
some dispute as to whether this notice was only for invoking B
the mechanism for informal dispute resolution or also a notice
for resolution of dispute by Arbitration. The appellants through
a reply dated 24.9.2003 requested for an ordinary meeting to.
discuss pending problems before considering the request for
arbitration. On 14.10.2003 Mis. LANCO wrote a letter C
intimating the nomination of its Company's Secretary as its
representative to participate in the proceeding for informal
dispute resolution required by Article 14.1. It requested the
other side to designate their representative and to intimate 0
the date and venue of the meeting. The appellants through a
letter dated 25.11.2003 designated their Chief General
Manager to act as their representative but the meeting
scheduled could not take place. On 26.3.2004, M/s. LANCO
issued another notice for arbitration and intimated the name E
of Justice B.P. Jeevan Reddy as its arbitrator. Through a letter
dated 8.4.2004, APTRANSCO raised various grounds in
support of its stance that the arbitration clause was not
enforceable, particularly in the light of Section 86(1 )(f) of the
Electricity Act, 2003.
F
5. M/s. LANCO did not accept the stand of appellants
arid filed an Arbitration Application bearing No.31 of 2004 on
27.4.2004 before the High Court of Andhra Pradesh at
Hyderabad under Section 11(4) of the Arbitration and G
Conciliation Act, 1996 seeking appointment of arbitrator for
APTRANSCO so that the disputes raised by it could be
resolved through arbitration. APTRANSCO contested the
maintainability of arbitration proceedings on various grounds
including Section 86(1 )(f) of the Electricity Act, 2003. While H
462
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[2015] 12 S.C.R.
A the matter before the High Court was still pending, the scope
and effect of Section 86( 1 )(f) of the Electricity Act was decided
by a judgment of this Court dated March 13, 2008 in the case
of Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.
(2008) 4 SCC 755. This Court held that all disputes between
B the licencee such as the appellants and generating companies
such as Mis. LANGO require adjudication only by the State
Commission which is alone competent to either adjudicate
the disputes or refer them for arbitration and to appoint
arbitrator. It was clearly held that it is the State Commis~ion or
C its nominee under Section 86(1 )(f) of the Electricity Act, 2003
and not the Chief Justice cir his nominee under Section 11 of
the Arbitration and Conciliation Act, 1996 who will have the
authority to appoint an arbitrator if it decides to refer the
0
disputes to arbitration. This Court further clarified that except
the power of appointing arbitrator getting shifted to the State
Commission, conduct of arbitration even under Section 86(1 )(f)
of the Electricity Act would be governed by provisions of the
Arbitration and Conciliation Act, 1996. Only in cases of conflict
E the Electricity Act would prevail.
6. In view of law settled by the judgment in the case of
Gujarat Urja (supra), the Arbitration Application No.31 of 2004
was closed by the High Court on 18.3.2009 with liberty to M/s.
F LANCO to approach the Commission under Section 86(1 )(f)
of the Elec~ricity Act. M/s. LANCO filed O.P.No.33 of 2009
before the Commission on 5.6.2009 to claim capacity charges
on the basis of bills raised from 15.9.2000 onwards to
11.1.2001. The appellants resisted the claim inter a/ia on the
G ground of limitation. The appellants preferred a specific
application for rejecting the O.P.No.33 of 2009 on the ground
of limitation. M/s. LANCO preferred a reply in which Section
14 of the Limitation Act was invoked for seeking exclusion of
time when the arbitration proceeding had remained pending
H with the High Court in the form of Arbitration Application No.31
A.P. POWER CCORDINATION COMMITTEE v. LANGO
463
KONDAPALLI POWER LTD. [SHIVA KIRTI SINGH, J.]
of 2004. The Commission rejected the claim by order dated A
13.6.2011 on the ground of limitation by holding that the time.
spent in the arbitration proceedings did not merit exclusion
under Section 14 of the Limitation Act because it had not been
pursued in good faith. M/s. LAN CO preferred Appeal No.129
of 2011 before APTEL. That appeal was allowed by the B
impugned judgment presently under appeal, dated 2.7.2012.
APTEL reversed the findings of the Commission on the issue
of limitation and directed the Commission to pass appropriate
follow up order on the actual claims and interest.
c
7. So far as claim of M/s. LAN CO for reimbursement of
MAT for various periods is concerned, the claim for the period
2001-2005 was rejected by the Commission on the ground of
limitation but it got revived on account of common appellate
order by APTEL dated 2.7.2012 and after the remand only a D
consequential order is required to be passed by the
Commission. For other periods, the claim for reimbursement
of MAT has been allowed in favour of M/s. LANCO. The
Commission allowed the claim for the periods 2006-2009 and
2009-2012 on account of its earlier order in respect of similar E
claim in another case which elicited a concession by the
counsel for the appellants, although in the written statement
before the Commission the appellants had seriously contested
such claim on merits. It is contended by Mr. V. Giri, learned
F
senior counsel for the appellant that the concession was
misconceived and unauthorized. Learned senior counsel for
M/s. LANCO, Mr. Sundaram, fairly conceded that the issue
relating to claim for reimbursement of MAT may be heard and
decided by us on merits and accordingly the parties have been G
heard in detail on the merits of such claim for the entire period,.
i.e., from 2001to2012. But in case the claim of MATfor20012005 is held by us to be barred by limitation, it will not be
considered on merits.
H
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[2015] 12 S.C.R.
A
8. Appearing for the appellants, learned senior advocate
Mr. V. Giri pointed out that in the impugned on;ler under appeal
APTEL has not considered the claim of capacity charges on
merits and therefore this Court is not required to go into facts
for deciding the merits of bills for capacity charges. On the
B issue of limitation he contended that there was no issue raised
before the Commission that bar of limitation as per Limitation
Act is not applicable to the proceedings before the
Commission. He referred to the arguments advanced on
behalf of Mis. LAN CO before APT EL to highlight that even in .
C appeal it claimed exclusion of time spent in arbitration
proceedings under Section 14(2) of the Limitation Act and
hence this Court should not allow Mis. LANCO to now urge
that the Limitation Act cannot apply and hence there will be no
0 bar of any limitation in preferring a claim before the State
Commission. We have noticed that in para 28 of the judgment
under appeal APTEL has noted that the appellant no.1 (M/s.
LANCO) does not seriously dispute the fact that the Limitation
Act would be applicable to the present case. But learned
E counsels have conceded that the issue whether Limitation Act
is applicable or not is one of law and accordingly the parties
have advanced detailed submissions on this issue. Hence
we propose to consider these submissions also.
F
9. From the above stand of the parties, the following
issues emerge for our consideration and adjudication :-
G
H
(i) Whether the Limitation Act, 1963, particularly Section
3 and the Schedule will apply to any action instituted
before the Commission under Section 86(1)(f) of the
Electricity Act, 2003?
(ii) Whether the impugned order passed by APTEL
permitting application of principles emerging from
Section 14 of the Limitation Act, is against Law so as to
warrant interference?
AP. POWER COORDINATION COMMITTEE v. LANCO
465
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
(iii) And whether on merits the claim for reimbursement A
of MAT is in contravention of relevant terms and
conditions of the Power Purchase Agreement (PPA)?
10. At this juncture, relevant provisions or articles of PPA
need to be noticed. They are as follows:
B
"Article 3.8 - Claims for Taxes on Income
Any advance Income tax payable for the Project in any
month supported by a certificate of a chartered
accountant approved by the Board (such approval not to C
be unreasonably withheld or delayed) shall be
reimbursed by the Board. After the tax assessment is
completed for any year: and the liability thereon is
determined by the taxation authorities in India, the excess 0
or shortfall in the tax liability so determined will be
adjusted in the supplementary bill (as defined in Article
5.5) for the succeeding month or on the due date of
paymentthereof, whichever is later, subject to Article 3.9.
Tax to be reimbursed will be calculated on the income E
from the project only, and calculated on the assumption
that the Company is engaged solely in the ownership,
design, financing, construction, operation and
maintenance of the Project and will not include tax
reimbursements of the previous year.
F
5.5.
- Supplementary Bills
For payments due to the Company for reimbursement of
taxes on income, incentives or taxes and duties levied
on generation and/or sale of electricity, payments for G
periods of political Force Majeure affecting either Party
or Non-Political Force Majeure affecting tile Board or
any other adjustments or payments due to the Company
hereunder, the Company shall present a supplementary H
466
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SUPREME COURT REPORTS
[2015] 12 S.C.R.
bill, in such form as may be mutually agreed upon by the
Board and the Company, (duly supported by supporting
data). Each supplementary bill shall be payable by the
Board on the Due Date of Payment, except in case of
supplementary bill for taxes on income. At least thirty
(30) days prior to the date when income tax is required
to be paid by the Company, the Company shall submit to
the Board a supplementary bill for the same. This bill
shall be payable by the Board within twenty-five (25) days
of its presentation to the Board by the Company or at
least five (5) days before the date on which the tax is
required to be paid by the Company, whichever is later.
5.7
- Billing Disputes
Notwithstanding any dispute as to all or any portion of
any bill submitted by the company to the Board, the Board
shall pay the full amount of the bill provided that the amount
of the bill is based on (a) a meter reading that has either
been signed by both Parties or certified by the Company
with respect to the Board's refusal to sign within three
(3) days of the meter reading date and (b) the provisions
of this Agreement. The Board shall notify the Company
of any disputed alllount, and the Company shall rectify
the defect or otherwise notify its rejection of the disputed
amount, with reasons, within five (5) days of the reference
by the Board, falling agreement on which the provisions
of Article 14 shall apply with respect thereto. If the
resolution of any dispute requires the Company to
reimburse the Board, the amount to be reimbursed shall
bear interest at the Working Capital Rate applicable to
the Board from the date of payment by the Board to the
date of reimbursement. The Board may not dispute any
amount after sixty (60) days following the Due Date of
Payment therefor.
A.P. POWER COORDINATION COMMITTEE v. LANGO
467
KONDAPALLI POWER LTD. [SHIVAKIRTI SINGH, J.]
11.1
- Definition of Law
A
For the purposes of this Agreement, "Law" means the
constitution of India and any act, rul~, regulation, directive,
notification, order or instruction having the force of Law
enacted or issued by any competent legislature, or 8
Government Agency.
11.2
- Definition of Change in Law
For the purposes of this agreement, "Change in Law"
means
(i) any enactment or issue of any new Law,
c
(ii) any amendment, alteration, modification or repeal of
any existing Law or any new or modified directive or
order thereunder,
D
(iii) any change in the application or interpretation of any
Law by a competent legislature or GovernmentAgency
in India which is contrary to the existing accepted
application or interpretation thereof, in each case coming
E
into effect after the date of this Agreement, provision for
which has not been made elsewhere in the Agreement.
11.4 - Additional/Reduced Expenditures or Other
Increased/Reduced Costs due to a Change in Law F
or Change in Permits
(a) Within sixty (60) days after the COD of the first
Generating Unit or the end of any Tariff Year, the Company
shall determine after accounting for the net economic G
effects on the Company during the period prior to the
COD of the first Generating Unit or, as the case may be,
such Tariff Year of any Changes in Law or Cha.nges in
Permits, based on an accounting conducted by an
independent chartered accountant reasonably H
468
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[2015] 12 S.C.R.
acceptable to the Board. If as a result of such accounting,
the company suffers an increase in costs or a reduction
in after-tax cash flow or any other net economic burden
which it would not nave experienced but for such changes
in Law or Changes in Permits (taking into account the
reasonable costs offinancing of any capital improvement
in the period prior to the COD of the first Generating Unit
or, as the case may be, such Tariff Year), the aggregate
economic affect of which exceeds the equivalent of
Rupees three (3) crores per 100 MW or pro-rata for any
part thereof during the period prior to the COD of the
first generating unit and Rupees one ( 1) crore per 100
MW or pro-rata for any part thereof during the period after
the COD of the first Generating Unit, during any Tariff
Year (excluding cost adjustments in respect of Changes
in Law or Changes in Permits from any prior period), the
Company may notify the Board of any proposed
amendments to this Agreement required to put the
Company in the same economic position it would have
occupied in the absence of such cost increase reduction
in the net after-tax cash flow or any other economic
burden. Such notice shall be accompanied by a
certification of the Company's independent chartered
accountant and a reasonably detailed explanation of
certification of any officer of the Company respecting the
basis for such net economic burden increase. The
amount of an net economic burden claimed by the
Company shall be net of any insurance proceeds
received in respect thereof.
(b) Within sixty (60) days after the COD of the first
Generating Unit or the end of any Tariff Year, if after
accqunting as provided in subsection (a) for the net
economic effects on the Company during the period prior
to the COD of the first Generating Unit or as the case
A.P. POWER COORDINATION COMMITTEE v. LANCO
469
KONDAPALLI POWER LTD.