Regulator can review power tariff in PPA

The tariff fixed in a power purchase agreement (PPA) is not sacrosanct and it could be reviewed by the State Electricity Regulatory Commission, which is the statutory authority for fixing tariff under the Electricity Act, the Supreme Court ruled last week in its judgment, Gujarat Urja Vikas Nigam Ltd vs Tarini Infrastructure Ltd. The state regulatory commission had declared that it had no such power to review.

However, the appellate tribunal decided that the commission did have the power. Therefore, the state distribution corporation appealed to the Supreme Court, which dismissed it and upheld the appellate body's view. Tarini, a hydro-power producer signed a PPA with the state distribution licencee at a particular rate. Later, it wanted a hike in view of intervening circumstances.

The commission rejected the request as the tariff fixed in the PPA could not be re-determined at the unilateral request of the producer. Another producer, Junagadh Power Projects Ltd, also faced the same problem. The Supreme Court stated that it must "lean in favour of flexibility and not read inviolability in terms of the PPA insofar as the tariff stipulated therein as approved by the commission… if public interest dictated by the surrounding events and circumstances require a review of the tariff."

Andhra units' challenge to levy dismissed

The Supreme Court last week dismissed a large number of appeals moved by Andhra Pradesh industrial units (Sai Bhaskar Iron Ltd vs AP commission) challenging the levy of "fuel surcharge adjustment" collected from them in addition to fixed tariff for consumption of power. They argued that the levy violated the Electricity Act. The court stated that price fixation is not in the realm of the judiciary and fuel surcharge is really a surcharge levied to meet increased cost of generation. The court asked the firms to pay the dues with interest.

Secretary can't judge his own case

The practice of naming a top executive of a public sector enterprise as arbitrator when a dispute arises between it and a contracting party received another blow in the Madhya Pradesh high court in the case, Pragat Akshay Urja Ltd vs State of MP. The Supreme Court has criticised contracts containing clauses which nominates its own officials as arbitrators.

In this case, the MP Urja Vikas Nigam Ltd terminated three projects leading to the contracting firm invoking the arbitration clause. It was the Managing Director who terminated the contract and it was he who is the sole arbitrator under the contract. The firm sought the appointment of an independent arbitrator, alleging possible bias by the MD as he had pervasive control over the affairs of the corporation.

The government denied he had such control and further argued that the firm had signed the contract and now it could not resile from it. However, the high court agreed with the firm and citing Supreme Court cases dealing with such situations, observed that "it leaves no iota of doubt that the MD/Secretary, Department of New and Renewal Energy cannot be allowed to judge his own cause." The high court therefore named one of its former judges as an arbitrator.

Agent not liable for uncleared cargo

If a consignee of a cargo shows no interest in clearing it or abandons it, or disappears from the scene who will pay the expenses in storing and handling the goods? The port authorities cannot claim damages from the ship owner or the shipping agent, ruled the Calcutta High Court in its judgment, Kolkata Port Trust vs India Trident Maritime Ltd.

The latter was a shipping agent which imported poppy seeds in 125 containers from Karachi to Kolkata for a consignee in Nepal. The consignee did not clear the goods, leading to disputes over the demurrage charges since the import in 1994. The port authorities demanded charges from the agent, who approached the authorities for a settlement without success while the goods perished.

The court ruled that the goods were of nil value now because of the "tardy conduct" of the port authorities. It had a lien on the cargo and had a right to sell the goods if the consignee was missing, but it could not go after the agent once the bill of lading is endorsed and the cargo delivered.

Reliance Industries loses trade mark suit

The Bombay High Court has dismissed the petition of Reliance Industries Ltd seeking an injunction against Concord Enviro Systems Ltd for violation of its trade mark in the logo. Reliance argued that the rival company had copied its logo. However, the high court, after examining the designs, rejected the allegation.

There was absolutely no similarity in the logos which would deceive customers. In deciding the issue, the nature and kind of customers and surrounding circumstances are important. In this case, Concord is in the business of development, manufacturing and installation of waste water treatment and recycling systems. They are not sold across the counter. Their clients also would not be swayed by logos as they deliberate on other factors, the high court asserted while dismissing the petition with costs.

Sales tax appeal against HUL dismissed

The Supreme Court has dismissed the appeal of the Karnataka Commercial Taxes Commissioner against the judgment of the high court ruling in favour of Hindustan Unilever which had claimed sales tax benefits as part of incentives offered by the state government.

The vigilance department alleged that the price of tea packets manufactured in Dharwad, where the incentive was allowed, and those made in other places carried the same price. Therefore, the claim for exemptions was rejected. The company produced 350,000 invoices and 1,200 price circulars to refute the charge. The Supreme Court ruled that the company was not liable to pay tax and had not passed on the liability to the consumers.

High court asked to name arbitrator

The Supreme Court has asked the Punjab and Haryana High Court chief justice or his designate to appoint an arbitrator in the dispute between a contractor, Emm Enn Associates and Commander Works Engineer. The firm had built a security fence on the border and received the undisputed part of the payment in 2001.

However, its claim with regard to the disputed amount continued for nearly three years. Failing to get the amount, it moved the high court for arbitration. It dismissed its petition stating that in view of the delay, it was a dead claim. The firm appealed to the Supreme Court. It overruled the high court and stated that the disputed claims were still alive and they were not barred by limitation.