The Bombay High Court today dismissed a writ petition filed by the Dabhol Power Company (DPC) challenging the jurisdiction of the state power regulator, Maharashtra Electricity Regulatory Commission (MERC), to adjudicate on contentious issues between the company and the Maharashtra State Electricity Board (MSEB).
The high court also told MERC to decide in six weeks whether it had the jurisdiction to adjudicate on the disputed issues between MSEB and DPC. However, the high court stayed its decision by two weeks in order to enable DPC to challenge the verdict in the Supreme Court.
The interim stay granted by MERC on May 29 on DPC going in for arbitration in the London Court as well as for operationalising the escrow account for the 1,444 mw, second phase of the controversial Dabhol power project continues to be in force, the high court ruled.
More From This Section
A division bench of the high court comprising justice A P Shah and justice S A Bobde, while delivering this verdict, said DPC had been "premature" in filing a writ petition.
They pointed out that MERC itself was trying to decide upon the jurisdiction issue and had said categorically that in case the regulator decided that it did not have the jurisdiction to adjudicate on the issue, the matter can be referred to the London Court of Arbitration. Under the circumstances, there was no need for DPC to rush matters, the court felt.
Earlier, the counsel for DPC Atul Setalvad argued that MERC had no jurisdiction to adjudicate on any dispute between MSEB and DPC. He contended that clause 20.3 of the power purchase agreement (PPA) between MSEB and DPC provided for arbitration in the London Court of Arbitration.
In fact both DPC and MSEB had nominated independent arbitrators for resolving payment disputes. MSEB, he pointed out had done a serious about turn in May and said that all issues had to be settled by MERC.
Since, the regulatory body had been set up in 1999 and the last amendment to the PPA was in 1998, the only recourse left to MSEB was to go in for arbitration.
An amendment to the Electricity Regulatory Commission's Act, in October, 2000 authorising MERC to settle disputes between licensees and utilities was not applicable in this case as both MSEB and DPC were not licensees , Setalvad argued.
Maharashtra advocate general G Vahnavatti argued that DPC had jumped the gun. "When MERC itself is trying to decide on the issue of its jurisdiction, why should high court be brought into the picture? Besides, if MSEB were to buy phase II power it would be forced to pay Rs 540 crore per month when its revenues were only about Rs 850 crore per month," he said.
The issue also could not be looked into only through the narrow prism of a PPA. He argued that social and public issues were involved in the case.