Appellate Tribunal for Electricity: In an appeal filed by wind power generators of Karnataka against the order passed by Karnataka Electricity Regulatory Commission (‘Commission’), wherein the claim of the power generators for interest on the delayed payment of invoices was rejected by the Commission, the two-member bench of Sandesh Kumar Sharma, Technical Member and Virender Bhat*, Judicial Member, while setting aside the impugned order, directed BESCOM to pay interest at the rate of SBI medium term lending rate per annum on the delayed payment of invoice amounts to the power generators for the period of delay.
The power generators were aggrieved by the fact that the impugned order does not direct the Bangalore Electricity Supply Company (‘BESCOM’) to pay energy charges to them, from December 2020 onwards.
The Tribunal referred to clauses 6.2, 6.3 and 6.4 of the Power Purchase Agreement (‘PPAs’) executed between the power generators and BESCOM, and noted that in case, BESCOM does not pay the amount of tariff invoices when due, it shall pay interest at the rate of SBI medium term lending rate per annum on such payment from the date such payment was due until actual payment is made in full. Thus, as per the mechanism provided in the PPAs, BESCOM was not authorised to stop or withhold payment of any tariff invoices in any eventuality and in case of any dispute, the procedure prescribed in clause 6.4 was to be followed.
The Tribunal noted that BESCOM did not follow the procedure prescribed in clause 6.4 of the PPAs. It abruptly stopped making payment of tariff invoices to the power generators upon receipt of directions from the Principal Chief Conservator of Forests issued by him vide letter dated 27-11-2018.
The Tribunal further noted that the Commission, in the impugned order, has observed that the interest is usually charged against the wrongful withholding of debts, and said that in the present case it cannot be concluded that BESCOM has wrongfully withheld the payment of energy bills to the power generators.
The Tribunal said that it is unable to countenance either the arguments raised on behalf of BESCOM, or the reasoning given by the Commission in the impugned order for rejection of claim of the power generators for interest on delayed payments, as BESCOM has not adhered to the procedure prescribed in clause 6.4 of the PPAs to notify the power generators about the dispute which had cropped up in view of the directive issued by Principal Chief Conservator of Forests on 27-11-2018, and instead proceeded to withhold the payment under the tariff invoices with effect from December 2018.
The Tribunal stated that even if BESCOM stopped the payment of amount under the tariff invoices to the power generators under the said directive of the Principal Chief Conservator of Forests, still it was required under clause 6.4 of the PPA to notify the power generators about the said action before actual stoppage of the payment of the tariff invoices.
The Tribunal further noted that BESCOM continued to receive electricity from the Wind Turbine Generators (‘WTGs’) of the power generators without any demur and utilized the same by selling it to its consumers, thereby enriching itself from the same. BESCOM has conveniently ignored the directive dated 27-11-2018, of the Principal Chief Conservator of Forests to take immediate action to stop functioning of windmills on the project land until forest clearance is obtained by the power generators. Therefore, it cannot be said that BESCOM has acted bonafide.
The Tribunal clarified that “interest” cannot be equated to payment of “penalty” or “fine”. “Interest” denotes normal accretion to money when invested lawfully by the person in whose hands it is.
The Tribunal noted that in the instant case, it was a commercial transaction between the power generators and BESCOM, where under the power generators were selling electricity to BESCOM for which BESCOM was making payments as per the invoices raised by the power generators. However, BESCOM stopped paying invoices but continued to receive electricity from WTGs, which it sold to its consumers and earned revenue from it. Thuys, BESCOM cannot escape liability of payment of interest / late payment surcharge to power generators.
The Tribunal said that as per clause 6.2 of the PPAs, BESCOM was obliged to make payment of the invoices to power generators within 15 days from the date of receipt of the tariff invoices, failing which it was liable to pay penal interest as per clause 6.3 of the PPAs.
The Court said that in case, the BESCOM wanted to avoid liability of payment of interest / late payment surcharge as per clause 6.3 of the PPAs, it ought not to have continued receiving the electricity from the WTGs of power generators and ought to have stopped receiving the same before stopping payment of invoice amount to them.
Thus, the Tribunal found the impugned order erroneous as well as perverse and set aside the same.
Further, the Tribunal directed BESCOM to pay interest at the rate of SBI medium-term lending rate per annum on the delayed payment of invoice amounts to the power generators for the delay period. The Court further directed that the interest amount payable by BESCOM to the power generators should be calculated by the Commission within one month of the date of receipt of this order.
The Tribunal directed BESCOM to make the payments of all the invoices to the power generators, which are still unpaid, along with interest at the rate stated hereinabove and continue to make future payments regularly as per the tariff invoices.
[Ramgad Minerals and Mining Limited v Bangalore Electricity Supply Company (BESCOM), 2024 SCC OnLine APTEL 72, decided on 13-08-2024]
*Judgment Authored by: Justice Virender Bhat, Judicial Member
