Sudalagunta Sugars Ltd. v. Transmission Corporation of Andhra Pradesh
2019-08-22
D.V.S.S.SOMAYAJULU
body2019
DigiLaw.ai
ORDER : D.V.S.S. Somayajulu, J. 1. This writ petition, under Article 226 of the Constitution of India, is filed by the petitioner for the following relief: ".....to issue a writ in the nature of a writ of mandamus or any other appropriate writ, Direction order or orders declaring the action of the respondents in refusing to renew the power purchase and wheeling agreement, dated 29.1.2000 entered between the 1st respondent APTRANSCO and the petitioner as communicated in the Lr. No. CGM/Projects & IPC/APSPDCL/F, Sudalagunta/D. No. 44/2019, dated 6.6.2019, of the 5th respondent as wholly arbitrary, illegal, offending the principles of Natural Justice and void and consequently direct the respondents to renew the said agreement for a period of twenty years with the same terms and conditions...." 2. Heard, Sri M.P. Chandramouli, learned Counsel appearing for the petitioner and Sri N. Shiva Reddy, learned Counsel appearing for respondents 4 to 7. 3. A counter-affidavit has also been filed on behalf of the contesting respondents. Facts in brief: 4. The submissions of the learned Counsel for the petitioner are that the petitioner is a Company that has been incorporated in the year, 1994 under the Companies Act. It established a Sugar Factory along with captive power generation plant of 3 MW. The petitioner company entered into an agreement with the erstwhile APSEB on 4.3.1998 called power purchase and wheeling agreement. As per this agreement, the power produced by the petitioner company could be consumed; be sold to third party consumers; it could also be banked with the APSEB, etc. Later, after the advent of the Electricity Reforms Act, 1998, a fresh agreement was entered into with APTRANSCO on 29.1.2000. This agreement was also agreed by all the statutory authorities. Learned Counsel submits that from the year 2000 onwards, the agreement was in-operation. He draws the attention of this Court to Article 9 of the said agreement which is as follows: "Article 9.
This agreement was also agreed by all the statutory authorities. Learned Counsel submits that from the year 2000 onwards, the agreement was in-operation. He draws the attention of this Court to Article 9 of the said agreement which is as follows: "Article 9. Duration of agreement: This Agreement shall be effective upon its execution and delivery thereof between parties hereto and shall continue in force from the schedule date of completion and until the twentieth (20th) anniversary that is for a period of twenty years from the Scheduled Date of Completion, and this Agreement may be renewed for such further period of time and on such terms and conditions as may be mutually agreed upon by the parties, 90 days prior to the expiry of the said period of twenty years". 5. Learned Counsel submits that basing on the said article the petitioner company exercised its option for a renewal by addressing an appropriate letter, dated 30.1.2019, which, however, was rejected by the 4th respondent by their letter, dated 6.6.2019. In view of the said rejection, the present writ petition came to be filed. Submissions: 6. The submission of the petitioner is that the petitioner has established an industry at a great cost and that the industry is generating power. It is his contention that the rejection of the request by the 4th respondent by their letter, dated 6.6.2019 is incorrect. He states that any subsequent modification or change in the law will not apply, because, the petitioner has entered into an agreement based on the initial representations and the promises made by the APSEB. He submits that the petitioner is a "co-generator" of power and is not an open access generator of power. He submits that this is clearly spelt out in Para 4 of the writ affidavit itself wherein he clearly stated that as a co-generator of power the petitioner is entitled to sell the power to scheduled customers and that the surplus energy can be purchased by the said Electricity Board. In addition, the policy which is referred to in the said paragraph also provides for banking of the unallocated power. He points out that the agreement has to be renewed periodically and it does not contain stipulation limiting it to a fixed period of time. He submits that Article 9 provides for the extension.
In addition, the policy which is referred to in the said paragraph also provides for banking of the unallocated power. He points out that the agreement has to be renewed periodically and it does not contain stipulation limiting it to a fixed period of time. He submits that Article 9 provides for the extension. Therefore, learned Counsel submits that as they have established generating facility at a great cost, the agreement should be renewed, as prayed for. As otherwise, he submits that the entire industry will be lost and that the damages and losses would be in crores of rupees. Learned Counsel for the petitioner relies upon the Hon'ble Supreme Court of India judgment in State of U.P. and others v. Lalji Tandon (Dead) through LRs., (2004) 1 SCC 1 and argues when there is a clause for renewal of a lease, the same can be extended by an unilateral act of the lessee and the consent of the lessor is not really necessary. Relying on this judgment learned Counsel argued that as the petitioner has exercised its option for renewal the consent of the 4th respondent is not really necessary and that, therefore, the respondents are bound to extend the lease on the same terms and conditions for another period of 20 years. 7. In reply to this, learned Standing Counsel appearing for the respondents submits that Article 9 states that the agreement "may" be renewed for further period and that, therefore, it is not incumbent upon the respondents to renew the agreement for further period of 20 years. Learned Standing Counsel submits that the extension is at the absolute discretion of the respondents. He points out that this agreement was in force for 20 and odd years and that, therefore, today the petitioner cannot seek the relief on a different interpretations at the same article. 8. Learned Standing Counsel also submits that the petitioner is not a co-generator of power. He submits that the power that is generated is consumed by the petitioner's company and then the same is only sold in the unseason to the Distribution Companies. Apart from that the learned Standing Counsel also submits that there is a dispute between the parties about the extension of the agreement.
He submits that the power that is generated is consumed by the petitioner's company and then the same is only sold in the unseason to the Distribution Companies. Apart from that the learned Standing Counsel also submits that there is a dispute between the parties about the extension of the agreement. Therefore, without prejudice to any of his contention, he submits that as per Section 86(1)(f) of the Electricity Act, 2003, all disputes are to be adjudicated by the A.P. Electricity Regulatory Commission. Hence, he contends that there is an effective alternative remedy which precludes this Court from granting any relief. 9. Learned Standing Counsel also submits that assuming for the sake of arguments that the petitioner sustains any loss, the remedy of the petitioner lies elsewhere and the remedy of the writ cannot be invoked. 10. In reply to this, learned Counsel for the petitioner points out that a learned Single Judge of this Court in Andhra Pradesh State Road Transport Corporation, Hyderabad rep. by its Executive Director (E & IT) and others v. Central Power Distribution Company of Andhra Pradesh Ltd., rep., by its Managing Director, Hyderabad and others, 2008 (5) ALD 787 : 2008 (5) ALT 87 , has clearly held that the writ is also maintainable in the similar circumstances. He points out that the Power Distribution Company of Andhra Pradesh is a parry to this judgment and that a learned Single Judge of this Court held that a writ not being entertained due to the existence of an effective alternative remedy is a self-imposed restriction imposed upon themselves by the High Courts. He points out that the learned Single Judge held that the availability of an alternative remedy is not an absolute bar to entertain a writ petition. Therefore, the learned Counsel for the petitioner submits that in view of this clear and categorical pronouncement by the learned Single Judge of this Court, the submission of the learned Standing Counsel appearing for the respondents about the existence of the alternative remedy is not a bar for the writ being entertained. Points for determination: 11. The crux of the matter in this case is the prayer of the petitioner. The petitioner wants a writ of mandamus for renewal of the agreement, dated 29.1.2000 and a direction to the respondents to renew the said agreement for a period of 20 years with the same terms and conditions.
Points for determination: 11. The crux of the matter in this case is the prayer of the petitioner. The petitioner wants a writ of mandamus for renewal of the agreement, dated 29.1.2000 and a direction to the respondents to renew the said agreement for a period of 20 years with the same terms and conditions. In effect the petitioner is seeking specific performance of the Article of the agreement. The question that, therefore, arises that; (a) Whether writ is maintainable to seek this relief? (b) Whether in view of the terms and conditions agreed upon such a prayer can be granted? Findings: (a) The law on the subject is very clear that the writ Court cannot enter into this area of controversy and grant a relief of specific performance. This is a matter which is solely within the jurisdiction by the civil Court. The case law on this subject is well-settled. Rishi Kiran Logistics v. Kandla Port Ltd., (2015) 13 SCC 233 , is relied upon, as it is a case on the point. (b) In addition, apart from the legal bar, this Court notices that the Article 9 is to the following effect: "This Agreement shall be effective upon its execution and delivery thereof between parties hereto and shall continue in force from the schedule date of completion and until the twentieth (20th) anniversary that is for a period of twenty years from the Scheduled Date of Completion, and this Agreement may be renewed for such further period of time and on such terms and conditions as may be mutually agreed upon by the parties, 90 days prior to the expiry of the said period of twenty years". (Emphasis supplied). 12. Therefore, the renewal that is sought is solely and completely depending upon the agreement of the parties. The Article clearly states that the agreement "may" be renewed for "such further period" and on "such terms and conditions" "as may be mutually agreed". Therefore, from a primary reading of the contract or its plain language interpretation, it is clear that; (a) Renewal is not automatic; (b) The period of time/extension has to be agreed; (c) The terms and conditions have also to be agreed. 13.
Therefore, from a primary reading of the contract or its plain language interpretation, it is clear that; (a) Renewal is not automatic; (b) The period of time/extension has to be agreed; (c) The terms and conditions have also to be agreed. 13. As rightly pointed out by the learned Standing Counsel for respondents, that the extension of the agreement is thus not mandatory or automatic in the circumstances and is solely dependent upon the consent and the concurrence of both parties. This article is clearly distinguishable from the clause considered by the Hon'ble Supreme Court of India in Lalji Tandon's case (supra). In the clause before the Hon'ble Supreme Court of India it was agreed that the lease would be renewed for further period of 50 years subject to the same conditions and provisions. Thus, the present clause is clearly distinguishable. In this case the consent of both parties is essential; they have to agree upon (a) the period, (b) the terms and (c) the need for a renewal. Such clauses are clearly uncertain and to that extent they are void for uncertainty under Section 29 of the Indian Contract Act. Neither period nor the terms and conditions nor the agreement can be spelt out from the said clause. This is not, therefore, a clause which can be directed to be enforced. The Hon'ble Supreme Court of India in Shanti Prasad Devi v. Shankar, 2005 (4) ALD 116 (SC) : (2005) 5 SCC 543 , held that a clause where the future rent is to be fixed by "agreement" cannot be enforced by the Court. The Hon'ble Supreme Court held that such rent can be fixed only by an agreement. 14. This Court also derives support for this conclusion from two other cases reported in Hitkarini Sabha v. Corporation of the City, AIR 1961 MP 324 and M. Suryaprakasha Gupta v. T.S. Muthuswami Iyer, 1988 (2) Law Weekly 462. In Hitkarini Sabha's case (supra), the clause (h) was as follows: "(h) The lessee shall, on expiry of the period of this lease, be entitled to have the same renewed on such terms and conditions as may be agreed to between the parties." 15. This was held to be a clause that is bad under Section 29 of the Contract Act. A clause of this nature cannot, therefore, be enforced.
This was held to be a clause that is bad under Section 29 of the Contract Act. A clause of this nature cannot, therefore, be enforced. If the term in the contract said that the agreement can be renewed on the same terms and conditions, such a clause can be enforced; similarly clauses which state that the agreement can be extend on the same terms, etc., subject to enhancement of rent by 10% etc., can also be enforced. But, whether the agreement is subject to the decision of the owner/lessor and the owner's/lessors consent is required for the period of lease, for the rent and for other conditions, this Court is of the opinion that such a clause is void for uncertainty. Hence, this Court is of the opinion that the petitioner cannot seek enforcement of this clause. 16. Apart from the above legal findings, this Court also notices that the prayer that is sought is contrary to the clause of the agreement itself. As mentioned earlier, the Article 9 clearly states that the agreement should be on such terms and conditions as may be decided upon by the parties. This Court cannot grant the order as prayed for since the relief is claimed for extension/renewal of the agreement for a period of 20 years on the same terms and conditions. This prayer is totally contrary to the Article 9. 17. For all these reasons, this Court holds that the petitioner is not entitled to a direction as prayed for. Consequently, the writ petition is dismissed. If the petitioner sustains any loss, it is open for him to seek his remedy elsewhere. No order as to costs. 18. As a sequel, pending miscellaneous petitions, if any, shall stand closed.