Case Law Details
1. This appeal has been filed against the Division Bench judgment of Gujarat High Court dated 07. 09. 2016 dismissing Letters Patent Appeal of the appellants affirming the judgment of Learned Single Judge dated 25. 02. 2010. Special Civil Application was filed by appellant challenging the order dated 24. 09. 2099 passed by the State Government as well as the demand notice dated 06. 10. 2009. Learned Single Judge dismissed the Writ Petition.
2. Brief facts of the case which are necessary to be noticed for deciding this appeal are:
The appellant no. 1 is duly incorporated company under the provisions of Companies Act, 1956 engaged in business of manufacturing and selling steel products. The appellant no. 2 is also a duly incorporated company under the provisions of Companies Act, 1956, which is a generating company selling/supplying electrical energy. The appellant no. 1 company set upits gas based steel plant at Hazira, in the year 1990 or thereabout for production of HBI. It also set up a 20 MW Open Cycle Power Plant for captive consumption of power for its HBI plant. On the application made by the appellant no. 1 Company, the State Government granted exemption from payment of electricity duty for a period of 10 years commencing from 21. 07. 1990 with respect to the said Open Cycle Power Plant. Subsequently, the appellant no. 1 Company converted the said Open Cycle Power Plant of 20 MW into 30 MW Combined Cycle Mode Power Plant by adding steam turbine. Consequent upon such conversion, the appellant no. 1 company was granted by the State Government exemption from payment of electricity duty for a period of 15 years commencing from 21. 07. 1990. In the year 1991, the appellant no. 1 company also desired to put up a composite plant after making substantial investment for production of both HBI and HRC. Therefore, in or about the year 199192, the appellant no. 1 company thought of setting up another Captive Power Plant of 300 MW of capacity in Combined Cycle Mode at Hazira for meeting its requirement of more power. The appellant thought of doing so, in view of the benefits available to the Captive Power Plant at the relevant time. The Government of Gujarat and the Gujarat Electricity Board granted in principle approval to the appellant no. 1 company for setting up the said Captive Power Plant of 300 MW. There was, however, a change in the Power Policy of Government of India, in the year 199192, which allowed the participation of private sector in power generation. Government of Gujarat also, with a view to give effect to that policy, issued a Notification dated 27. 02. 1992 under Section 3 of the Bombay Electricity Duty Act, 1958(hereinafter referred to as 1958 Act). The appellant no. 1 Company, therefore, abandoned its plan to set up the said Captive Power Plant of 300 MW in Combined Cycle Mode and in place and instead thereof, promoted and incorporated a separate generating company under the name and style of “ESSAR Power Limited”, the appellant no. 2 is a Special Purpose Vehicle promoted by the appellant no. 1 company for supply of power to the appellant no. 1 company as well as to the Gujarat Electricity Board.
3. The Government of Gujarat issued an Order dated 16. 06. 1995 agreeing in principle to the demand of appellant no. 2 to set up 510 MW generating station at Hazira. The appellant no. 2 started production of electricity w. e. f. 08. 08. 1995. The appellant no. 1 held equity shares of 42% of appellant no. 2 company. Out of 515 MW, 300 MW capacity has been allocated to GEB (Gujarat Electricity Board) which constitute 58% of the installed capacity, remaining capacity of 215 MW which constitute 42% to the ESSAR Group of company as per the stipulation contained in the Power Purchase Agreement dated 30. 05. 1996.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
