DPC suffers setback as HC rules in favour of MSEB
A Bombay high court division bench comprising Justice A.P Shah and Justice V.K. Tahilramani on Tuesday passed a historic judgment directing that all disputes and arbitration in the electricity sector will be heard by the Maharashtra Electricity Regulatory Commission.
They observed that although there is a provision for arbitration agreement in the PPA between the Maharashtra State Electricity Board and Dabhol Power Company signed in December 1993, it is superseded by the Electricity Regulatory Commission Act passed in 1998 which is a special law specific to electricity.
The high court bench upheld the arguments of state advocate-general Goolam Vahanvati that the ERC Act had very important social objectives and the social purpose of consumer protection and, therefore, this act superseded the 1948 act as well as any private civil contract. He had argued that Section 22 (1) (a) and (1) (c) and 22 (2) (n) of the ERC Act provided for regulation and adjudication of disputes and differences between two utilities by MERC.
The advocate-general in his concluding argument also submitted to the high court that the state government had decided to confer special powers to enhance the authority of MERC and to make further rules and regulations to put in place a mechanism and procedure for the enforcement of the orders of MERC in case there is any procedural deficiency.
DPC counsel P. Chidambaram, a former finance minister, had argued that the powers of MERC were only tariff related and that the power to regulate was limited to regulation of tariff. He argued that the power to adjudicate disputes and differences must also be limited to the power to regulate tariff. The judges rejected this submission and said there was no warrant to read the words of the statutes in a restricted manner.
Chidambaram also argued that the provision of Sect 22 (2) (n), if recognised by the high court, would have the effect of ousting the jurisdiction of the civil courts and the original side of the high court. This argument was contested by the advocate-general, who argued that the 1998 act provided for a clear provision of appeal by any aggrieved person to the high court on the appellate side.
Another major argument advanced by DPC's lawyer was that the ERC Act provision was in effect in breach of a complete line of international treaties and conventions of the last 10 years which had fructified into arbitration laws under the Unicitral and New York conventions.
The division bench of the high court, however, disagreed and upheld the advocate-general's counter-argument that the sovereign government had through its Parliament passed the special act and that act alone would stand and must be given force.
Tuesday's order has tremendous international ramifications. In their order, the bench has clearly stated that it agrees with the state's defence that the ERC Act of 1998 has overriding social objectives and social purpose which is enunciated in the preamble of the act.
On an application from DPC's lawyer, the high court has given leave for appeal to the Supreme Court under Article 134A, saying that substantial questions of law are involved.
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