M/S Petronet LNG Ltd v. Kerala State Electricity Board Ltd and Others

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ``` TUESDAY, THE 24[TH] DAY OF MAY 2022 / 3RD JYAISHTA, 1944 ``` ## **`WP(C) NO. 5537 OF 2016`** ## **`PETITIONER:`** ``` M/S. PETRONET LNG LTD ``` ``` A PUBLIC LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT, HAVING ITS REGISTERED OFFICE AT WORLD TRADE CENTRE, FIRST FLOOR, BABAR ROAD, BARAKHAMBA LANE, NEW DELHI, PIN-110001 AND UNIT AT SURVEY NO. 347, PUTHUVYPU P.O., KERALA, KOCHI, PIN-682508, REPRESENTED BY ITS VICE PRESIDENT (O&M), MR. T.N.NEELAKANTAN. ``` ``` BY ADVS. SRI.THOMAS M.JACOB SRI.AKHIL K.MADHAV SRI.T.R.JERRY SEBASTIAN ``` ## **`RESPONDENTS:`** ``` 1KERALA STATE ELECTRICITY BOARD LTD., HAVING ITS REGISTERED OFFICE AT VYDHYUTHI BHAVANAM, PATTOM, THIRUVANANTHAPURAM, PIN-695004, REPRESNTED BY ITS SECRETARY. ``` ``` 2THE SPECIAL OFFICER R(EVENUE) OFFICE OF THE SPECIAL OFFICER (REVENUE), VYDHYUDHI BHAVANAM, KERALA STATE ELECTRICIY BOARD LTD., THIRUVANANTHAPURAM, PIN-695004. ``` ``` 3THE DEPUTY CHIEF ENGINEER KERALA STATE ELECTRICITY BOARD, ELECTRICAL CIRCLE, POWER HOUSE ROAD, KOMBARA, ERNAKULAM, PIN-682018. ``` ``` 4THE EXECUTIVE ENGINEER ELECTRICAL DIVISION, KSEB, MATTANCHERY, PIN-682002. ``` ``` 2 ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 5THE ASSISTANT EXECUTIVE ENGINEER ELECTRICAL SUB DIVISION, KSEB, VYPIN, PIN-682511. 6THE ASSISTANT ENGINEER ELECTRICAL SECTION, KSEB, VYPIN, PIN-682511. BY ADVS. SRI.RAJU JOSEPH (SR.) SRI.C.JOSEPH ANTONY ``` ``` SRI S SREEKUMAR SR ADV SRI.B.PREMOD ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.05.2022, ALONG WITH WP(C).15161/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` 3 ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** # **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE AMIT RAWAL TUESDAY, THE 24[TH] DAY OF MAY 2022 / 3RD JYAISHTA, 1944 WP(C) NO. 15161 OF 2019 ``` ## **`PETITIONERS:`** ``` 1DEPUTY CHIEF ENGINEER, KERALA STATE ELECTRICITY BOARD LTD., ERNAKULAM CIRCLE, POWER HOUSE ROAD, KOMBARA, ERNAKULAM-682018. ``` ``` 2THE SPECIAL OFFICER (REVENUE), OFFICE OF THE SPECIAL OFFICER (REVENUE), VYDHYTHI BHAVANAM, KERALA STATE ELECTRICITY BOARD LTD., THIRUVANANTHAPURAM-695004. ``` ``` BY ADVS. RAJU JOSEPH (SR.) SRI.C.JOSEPH ANTONY SHRI. JOHN MANJOORAN ``` ## **`RESPONDENTS:`** ``` 1THE CONSUMER GRIEVANCE REDRESSAL FORUM, (CONSTITUTED UNDER SECTION 42(5) OF THE ELECTRICITY ACT, 2003), CENTRAL REGION, POWER HOUSE BUILDING, CEMISTRY JUNCTION, COCHIN-682018. 2M/S. PETRONET LNG LTD., A PUBLIC LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT HAVING ITS REGISTERED OFFICE AT WORLD TRADE CENTRE, 1ST FLOOR, LABOR ROAD, BARAKHAMBA LANE, NEW DELHI-110001 AND HAVING UNIT AT SURVEY NO.347, ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 4 ``` ``` PUTHUVYPE P.O., KOCHI, KERALA-682508. ``` ``` BY ADV SRI.THOMAS M.JACOB ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.05.2022, ALONG WITH WP(C).5537/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` 5 ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ## **JUDGMENT** [WP(C) Nos.5537/2016, 15161/2019] This order of mine shall dispose two writ petitions; W.P. (C).No.5537/2016 titled as M/S Petronet LNG Ltd. v. KSEB and Others (hereinafter called first writ petition) and W.P. (C).No.15161/2019 titled as Deputy Chief Engineer and Another v. The Consumer Grievance Redressal Forum and Another (hereinafter called second writ petition) preferred against the common order rendered by the Consumer Grievance Redressal Forum. Challenge by the petitioner in the first writ petition is against demand dated 28.05.2014 whereby a sum of Rs.3,17,70,460/- was ordered to be deposited on account of change of tariff plan from HT-I industrial tariff to HT-IV commercial tariff against the consumer code No.21/6539. Petitioner in the first writ petition received a notice dated 20.05.2014 (Ext.P2 in the second writ petition) an intimation given by the Special Revenue Officer of the Kerala State Electricity Board in purported compliance of the provisions of regulation 97 of Kerala State Electricity Supply Code, 2014, wherein the licensee is empowered ``` WP(C)NOs.5537/2016 & 15161/2019 ``` ``` 6 ``` to suo motu reclassify the energy of the consumer and on the next date, demand was raised (Ext.P1 in the first writ petition) which was deposited by the petitioner under protest. Petitioner had taken the dispute under the aforementioned Electricity Supply Code before the CGRF. The CGRF on examination of the documents and controversy quashed the demand and it is in compliance of the same, first writ petition has been filed whereas the second writ petition, after three years of the order of the CGRF dated 29.10.2015, has been filed alleging that the order is not sustainable in the eyes of law as it is within the provisions of Electricity Supply Code and the activity carried on by the first petitioner is not of manufacture but a commercial and therefore rightly it was reclassified to HT-IV tariff. The short question which involved in the present writ petitions is whether the licensee had actually followed the regulation 97 of the Electricity Supply Code, 2014 or not. 2. It would be expedient to extract the contents of the intimation dated 20.05.2014 Ext.P2 in the second writ petition. The same reads as under : ``` WP(C)NOs.5537/2016 & 15161/2019 ``` ``` 7 ``` “Inviting in a reference to the subject matter, it is informed that at the time of availing HT connection and furnishing draft HT agreement, M/s. Petronet LNG Ltd. produced a Permit from the Department of Factories & Boilers and claimed that the activities carried out in its premises fall under Industrial Tariff. Accordingly, the tariff of M/s. Petronet LNG Ltd. was fixed as HT-I Industrial Tariff. But as per the said Permit, the activity carried out in the premises is storing, pumping and re-gasification of liquified natural gas and distribution of compressed natural gas. As there was no tariff assigned for the above mentioned purpose in the schedule of tariff in the Gazette Notification dated 28-11-12, clarification has been sought for from the Chief Engineer (Commercial & Tariff), KSE Board Ltd. regarding the appropriate tariff. The Chlef Engineer (Commercial & Tariff) as per the letter referred to second above has Informed that the activity permitted as per the Permit Issued from the Department of Factories & Boilers is of commercial nature and hence directed to classify the consumer under HT-IV Commercial tariff. Accordingly, the tariff of M/s. Petronet LNG Ltd., Con.code 21/6539 has been changed from HT-I Industrial to HT-IV Commercial tariff with effect from the date of connection. Therefore, the previous invoices issued to M/s. Petronet LNG Ltd. from 05/13 to 05/14 under HT-I tariff and the Security Deposit realized under HT-I tariff will be revised under commercial tariff. Arrear notices on account of the same will be issued in due course.” ``` WP(C)NOs.5537/2016 & 15161/2019 ``` ``` 8 ``` 3. The demand notice of May, 2014 issued is Ext.P2 in the first writ petition. In response to the notice dated 20.05.2014, Ext.P2 in the second writ petition, petitioner/consumer duly replied on 07.06.2014 giving all the reasons of activity being carried out in the unit, terming it to be only industrial and not commercial. Licensee vide intimation dated 07.03.2015, Ext.P4 in the second writ petition, projected the same in the following manner: “Inviting your kind attention to the reference cited, am to inform you that Industrial tariff (HT-I) was allowed to your above HT service connection since separate tariff for the purpose of import, storage and re-gasification of Liquified Natural Gas (LNG) was not found assigned in the prevailing tariff orders of the Board. The matter was examined by the Board in details and comes to the conclusion that the above activities are comes under the commercial nature and tariff also decided to change accordingly (HT IV) and as such bills were issuing under commercial tariff with effect from 05/2014 onwards. You have also remitted the bills without any default. The monthly invoices issued under HT-I tariff from 05/2013 to 04/2014 have also been revised under HT-IV tariff and an amount of 3,17,70,460/- is due from your above HT service connection to KSE Board Ltd. A detailed statement of accounts and the revised Invoices are appended herewith. I am therefore request you to remit the amount of ``` WP(C)NOs.5537/2016 & 15161/2019 ``` ``` 9 ``` Rs.3,17,70,460/ (Rupees Three Crore Seventeen Lakhs Seventy Thousand Four Hundred and Sixty Only) on or before 20-032015 in order to avoid disconnection.” 4. Now the question which arises in the writ petitions is whether the licensee has strictly followed the regulation 97 of the Kerala Electricity Supply Code, 2014 or not. To determine the aforementioned question, it would be axiomatic to extract the provisions aforementioned. The same reads thus: ## **97. Suo motu reclassification of consumer category by** **the licensee.-** (1) If it is found that a consumer has been wrongly classified in a particular category or the purpose of supply as mentioned in the agreement has changed or the consumption of power has exceeded the limit of that category as per the tariff order of the Commission or the category has changed consequent to a revision of tariff order, the licensee may suo motu reclassify the consumer under appropriate category. (2) The consumer shall be informed of the proposed reclassification through a notice with a notice period of thirty days to file objections, if any. (3) The licensee after due consideration of the reply of the consumer, if any, may reclassify the consumer appropriately. (4) Arrear or excess charges shall be determined based on the actual period of wrong classification and the account of ``` WP(C)NOs.5537/2016 & 15161/2019 ``` ## **`10`** the consumer shall be suitably adjusted. (5) If the actual period of wrong classification cannot be ascertained reasonably, the period shall be limited to a period of twelve months or a period from the date of last inspection of the installation of the consumer by the licensee whichever is shorter: Provided that in the case of reclassification consequent to change of the purpose of supply by the consumer without due authorisation, the licensee may examine each case and initiate proceedings under Section 126 of the Act if found necessary.” On perusal of the sub regulation 2 of regulation 97, it is evident that whenever such powers of suo motu are being exercised by the licensee, consumer has to be informed about the proposed reclassification through a notice period of 30 days to file objection. 5. The argument of Sri.Raju Joseph, learned Senior Counsel representing the licensee is that the notice dated 20.05.2014 can be treated as in purported compliance of sub clause 2. I am afraid the aforementioned argument is not sustainable for the reason that no period is prescribed for replying though the consumer had also replied. ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 11 ``` 6. On perusal of the decision dated 07.03.2015 of the licensee, there has not been any deliberation or pondering of the stand and activity undertaken by the licensee to justify the opinion with regard to the reclassification of the tariff. The authorities at the helm of affairs are legitimately expected to apply their mind and give cogent reasons in justifying the stand or otherwise. Though CGRF had an occasion to deliberate upon the merits of the matter but the fact remains both the parties are aggrieved of the same non-compliance and being against the provisions. I am of the view that an effective opportunity of hearing as per the provisions of sub regulation 2 of regulation 97 in strict sense ought to have been given to the consumer and a decision should have been taken after affording an opportunity of hearing in terms of the findings arrived herein above. Accordingly, the matter is relegated to the licensee to take a call on the reclassification by issuing a fresh notice under regulation 97(2). As and when such notice is issued, the consumer would reply within the period aforementioned along with any documents in support of the stand and thereafter by affording an ``` 12 ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** opportunity of hearing to the consumer, would be taken note of by the competent authority by taking a call as to whether the demand is justified or was not required to be taken, keeping in view the activities undertaken by the consumer. Since the consumer had already paid the demand the further demand on the basis of the reclassification is ordered to be kept in abeyance till such time when the adjudication is being undertaken. Let the entire exercise be undertaken within a period of five (5) months. The amount deposited the consumer would be adjusted in the future bills till the adjudication by the Special Revenue Officer. Writ petitions are disposed off. **Sd/-** **AMIT RAWAL JUDGE** nak ## **`WP(C)NOs.5537/2016 & 15161/2019`** ## **`13`** ## **`APPENDIX OF WP(C) 15161/2019`** ``` PETITIONER EXHIBITS ``` - `EXHIBIT P1` - `TRUE COPY OF THE SCHEDULE OF TARIFF ISSUED AS PER ORDER NO.OP 2/2013 DATED 30/04/2014.` - `EXHIBIT P2 TRUE COPY OF THE NOTICE ISSUED BY THE 2ND PETITIONER TO 2ND RESPONDENT.` - `EXHIBIT P3 TRUE COPY OF THE REPLY SUBMITTED BY 2ND RESPONDENT DATED 07/06/2014.` - `EXHIBIT P4 TRUE COPY OF THE LETTER ISSUED BY THE 2ND PETITIONER TO THE 2ND RESPONDENT.` - `EXHIBIT P5 TRUE COPY OF THE ORDER PASSED BY THE 1ST RESPONDENT IN (CGRF-CR-CDMP 56-16/415 DATED 29/10/2015.` - `RESPONDENT EXHIBITS` - `EXHIBIT R2(a) TRUE COPY OF DEMAND NOTICE OF FEBRUARY 2016, MARCH 2016 AND SEPTEMBER 2019.` - `EXHIBIT R2(b) TRUE COPY OF ORDER DATED 15.2.2016 IN WPC NO.5537 FOF 2016.` - `EXHIBIT R2(c) TRUE COPY OF THE AGREEMENT DATED 6.5.2013 BETWEEN THE 2ND RESPONDENT AND KSEB.` - `EXHIBIT R2(d) TRUE COPY OF DEMAND NOTICE FOR MAY 2014.` - `EXHIBIT R2(e) LETTER NO. PLL/KOCHI/KSEB/2014-15/C-17 DATED 21.3.2015.` - `EXHIBIT R2(f) TRUE COPY OF THE COMPLAINT DATED 24.7.2015 FILED BY THE 2ND RESPONDENT BEFORE THE CGRF.` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 14 ``` - `EXHIBIT R2(g) TRUE COPY OF JUDGMENT DATED 30.7.2015 IN WP(C) NO. 23095/2015.` - `EXHIBIT R2(g) TRUE COPY OF JUDGMENT DATED 30.7.2015 IN WPC NO.23095/2015.` - `EXHIBIT R2(h) TRUE COPY OF THE STATEMENT OF FACTS SUBMITTED BY THE DEPUTY CHIEF ENGINEER BEFORE THE CGRF TOGETHER WITH ITS EXHIBITS.` - `EXHIBIT R2(i) TRUE COPY OF REPLY STATEMENT DATED 15.10.2015 FILED IN CGRF.` - `EXHIBIT R2(j) TRUE COPY OF LICENSE DATED 10.12.2014 FROM THE DEPARTMENT OF FACTORIES AND BOILERS.` - `EXHIBIT R2(k) TRUE COPY OF ACKNOWLEDGMENT DATED 7.9.2011 FOR FILING OF INDUSTRIAL ENTREPRENEUR MEMORANDUM IN THE MINISTRY OF COMMERCE AND INDUSTRY, GOVERNMENT OF INDIA.` - `EXHIBIT R2(l) TRUE COPY OF THE OPERATION AND CONTROL PHILOSOPHY DESCRIBING OPERATION AND CONTROL OF LNG TERMINAL.` - `EXHIBIT R2(m) TRUE COPY OF SCHEMATIC DRAWING OF THE PLANT AT KOCHI.` - `EXHIBIT R2(n) TRUE COPY OF THE LIST OF EQUIPMENT'S IN THE PLANT AT KOCHI.` - `EXHIBIT R2(o) TRUE COPY OF THE LAY OUT PLAN APPROVED BY CHIEF CONTROLLER OF EXPLOSIVES.` - `EXHIBIT R2(p) TRUE COPY OF THE PLANT LAY OUT APPROVED BY FACTORIES AND BOILERS DEPARTMENT.` - `EXHIBIT R2(g) TRUE COPY OF THE PROCESS FLOW DIAGRAMS IN THREE PAGES FOR THE PLANT.` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 15 ``` - `EXHIBIT R2(r) TRUE COPY OF RELEVANT PAGES OF THE EUROPEAN STANDARD - EN 1473 USED TO DESIGN LNG TERMINALS.` - `EXHIBIT R2(s) TRUE COPY OF RELEVANT PAGES OF THE AMERICAN STANDARD - NFPA 59A, WHICH IS USED TO DESIGN LNG TERMINALS.` - `EXHIBIT R2(t) TRUE COPY OF KERALA POLLUTION CONTROL BOARD CONSENT ORDER NO: PCB/HO/EKM/ICO/40/2013.` - `EXHIBIT R 2(u) TRUE COPY OF MINISTRY OF ENVIRONMENT AND FORESTS LETTER F.NO.J-16011/26/2001-IAIII DATED 2ND JUNE 2003 FOR ENVIRONMENT CLEARANCE.` - `EXHIBIT R2(v) TRUE COPY OF THE APPROVAL LETTER DATED 17.2.2011 FROM OFFICE OF DIRECTOR OF FACTORIES AND BOILERS.` - `EXHIBIT R2(w) TRUE COPY OF THE RELEVANT PORTION OF THE NOTIFICATION FOR PETROLEUM AND NATURAL GAS REGULATORY BOARD (CODES OF PRACTICES FOR EMERGENCY RESPONSE AND DISASTER MANAGEMENT PLAN) (ERDMP) REGULATIONS 2010.` - `EXHIBIT R2(x) TRUE COPY OF RELEVANT EXTRACT OF OIL INDUSTRIES SAFETY DIRECTORATE STANDARD FOR THE STORAGE AND HANDLING OF LIQUEFIED NATURAL GAS (LNG).` - `EXHIBIT R2(y) TRUE PHOTOGRAPHS (5 NUMBERS) OF THE PLANT SHOWING THE LARGE SCALE MACHINERIES AND OPERATIONS.` - `EXHIBIT R2(z) TRUE COPY OF STATEMENT SHOWING EXCESS AMOUNT PAID TO THE RECOVERED FROM KSEB.` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ## **`16`** ## **`APPENDIX OF WP(C) 5537/2016`** ``` PETITIONER EXHIBITS ``` ``` TRUE COPY OF THE AGREEMENT DATED 6-5-2013 EXHIBIT P1- BETWEEN THE PETITIONER AND KSEB. ``` ``` EXHIBIT P2- ``` ``` TRUE COPY OF DEMAND NOTICE FOR MAY 2014. ``` ``` TRUE COPY OF COMMUNICATION NO. HTB- 21/6539/2014-2015 DATED 20-5-2014 FROM EXHIBIT P3- 2ND RESPONDENT UNILATERALLY CHANGING THE TARIFF OF THE PETITIONER. ``` ``` EXHIBIT P4- ``` ``` TRUE COPY OF REPRESENTATION NO. PLL/KOCHI/KSEB/2014-2015/C-04 DATED 7-6- 2014. ``` ``` EXHIBIT P5- ``` ``` TRUE COPY OF DEMAND NO. HTB-21/6539/2014- 2015 DATED 7-3-2015 FROM THE 2ND RESPONDENT. ``` ``` TRUE COPY OF JUDGMENT DATED 30-7-2015 IN EXHIBIT P6- WPC NO. 23095/2015. ``` ``` EXHIBIT P7- ``` ``` TRUE COPY OF THE ORDER NO. CGRF-CR/COMP.56/2015-16/415 DATED 29-10- 2015. ``` - `EXHIBIT P8-` ``` TRUE COPY OF THE LETTER DATED 6-11-2015 COMMUNICATING EXT. P7 ORDER TO THE RESPONDENTS. ``` ``` THE TRUE COPY OF THE DEMAND NOTICE FOR EXHIBIT P9- THE MONTH OF DECEMBER 2015. ``` ``` THE TRUE COPY OF THE LAWYERS NOTICE DATED EXHIBIT P10- 28-12-2015 ISSUED TO THE RESPONDENTS. ``` ``` THE TRUE COPY OF THE DEMAND NOTICE FOR EXHIBIT P11- THE MONTH OF JANUARY 2016. ``` ## **`WP(C)NOs.5537/2016 & 15161/2019`** ``` 17 ``` ``` THE TRUE COPY OF THE DEMAND NOTICE FROM EXHIBIT P12- FEBRUARY 2016 TO MARCH 2019 ``` ``` THE TRUE COPY OF THE STATEMENT SHOWING EXCESS AMOUNT PAID TO BE RECOVERED FROM EXHIBIT P113 KSEB ```