PSPCL beating the dead horse – got mouthful from SC; penalised for Rs 65 lacs
Kanwar Inder Singh/ royalpatiala.in News/ October 10,2023
In a significant development that has raised eyebrows and stirred controversy, the Supreme Court of India vide its judgment dated October 9,2023 overturned the decision of the Punjab State Regulatory Commission which sought to reopen a case that had been conclusively settled by the Supreme Court after enduring five rounds of litigation, including two instances of contempt proceedings.
The Supreme Court’s ruling comes in response to a series of disputes raised by the PSPCL against Independent Power Producers (IPPs) or private power generating plants in Punjab. Allegations of undue disputes and disproportionate decisions by the State Regulatory Commission prompted the highest court to intervene, thereby creating an embarrassment for the state.
The Apex court observed that “When we examined the issue, we find the same thing being raked up again and again only as an endeavour to not make payments, till in the
Contempt proceedings they were compelled to make payment.”
The Apex Court orders” We, thus, feel that some example must be set in such cases and the appeals are liable to be allowed with costs, which were actually incurred by the appellants. It was the aforesaid, which was the reason for us to call upon the parties to file the actual bill of costs. The Bills of cost have been filed by both the appellants, Nabha Power Limited and Talwandi Sabo Power Limited. There are, however, multiple counsels appearing for the appellant, Nabha Power Limited, and the total invoice amount is Rs.1,95,80,081/-. In the case of Talwandi Sahoo Power Limited the total invoice amount is Rs.1,67,40,563/-.The Bill of cost has also been filed by the respondent and the total invoice amount is Rs.34,81,500/-. In view of this nature of fee, we consider to modulate and quantify the cost in favour of Nabha Power Limited and Talwandi Sabo Power Limited at Rs.40.00 lakhs and Rs.25.00 lakhs, respectively. The appeals are allowed and impugned order is set aside with costs as quantified aforesaid to be paid within 4 weeks.”
The dispute centred around the actions of the PSPCL, which, according to the private power generating plants, engaged in practices that were not only detrimental to their interests but also questionable in legal terms. The State Regulatory Commission, tasked with overseeing such matters, came under scrutiny for endorsing decisions that were later deemed to be bad in law by the Supreme Court.
Legal experts and industry analysts have expressed concerns over the impact of such misadventures on the power sector in Punjab. The undue disputes and flawed decisions by the PSERC have not only strained relations with private power generators but have also raised questions about the regulatory framework governing the sector in the state.
In its verdict, the Supreme Court not only overturned the order of the State Regulatory Commission but also imposed costs of Rs. 65 Lakhs on the PSPCL for its actions. The court’s decision sends a strong message about the importance of adherence to legal principles and fair practices in the energy sector.
The embarrassment faced by the State of Punjab before the Supreme Court serves as a wake-up call for authorities to review and strengthen the transparent regulatory mechanisms in place. Industry stakeholders are now calling for a thorough investigation into the conduct of the PSPCL and the State Regulatory Commission to ensure transparency, accountability, and the restoration of trust in the power sector.
As Punjab grapples with the aftermath of this legal debacle, the state government is expected to face heightened scrutiny over its management of the power sector. The Supreme Court’s intervention highlights the need for a comprehensive and fair approach to dispute resolution and regulatory decision-making to foster a conducive environment for both public and private entities involved in power generation.
This incident is not an isolated event, shedding light on a broader pattern of financial strain for the state. Previously, the state had to bear the brunt of a late payment interest amounting to a staggering Rs 1150 crores owed to private power plants in various matters, a burden that ultimately trickled down to the pockets of the consumers.In addition, closed to Rs 500 crores interest amount is pending to be paid by PSPCL in various other matters. This substantial financial setback not only adversely affected the economic health of the state but also underscored the repercussions for the ordinary citizens.
PSPCL beating the dead horse – got mouthful from SC; penalised for Rs 65 lacs.Adding to the financial woes, the PSPCL finds itself incurring a substantial legal expenditure of approximately 10-12 crores annually in dealing with such contentious matters. This continuous drain on resources creates a significant debacle for the state, diverting funds that could otherwise be channelled towards essential public services. The cumulative impact of these legal and financial challenges raises serious concerns about the overall management and decision-making processes within the power sector in Punjab, demanding a comprehensive review and reform.
The repercussions of this case are likely to resonate not only within the power sector but also in legal and regulatory circles. The Supreme Court’s decision will undoubtedly set a precedent for future cases and prompt a re-evaluation of the regulatory landscape in Punjab to prevent similar misadventures in the future.
Beyond the immediate financial repercussions, events of this nature significantly tarnish the image of the state, casting a shadow over its attractiveness for potential investments. The recurrent controversies and legal battles involving the Punjab State Power Corporation Limited not only create an unfavorable business environment but also generate negative sentiments among investors. The instability and uncertainty surrounding the state’s regulatory and legal landscape can deter businesses from considering Punjab as a viable destination for future investments.
The ripple effect of these events extends beyond the power sector, impacting the overall economic climate of the state. Investor confidence plays a pivotal role in fostering economic growth and development, and instances like these erode the trust that businesses place in the stability and reliability of the state’s regulatory framework.
To ensure sustained economic progress, it becomes imperative for authorities to address these systemic issues, fortify regulatory mechanisms, and establish a conducive environment that inspires confidence among investors and stakeholders alike. Failure to do so may impede the state’s ability to attract crucial investments essential for its long-term prosperity.
Meanwhile, Punjab state power corporation limited director finance Surinder Beri can’t be contacted despite repeated attempts.
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