SC remands WBERC, CESC?s plea back to Aptel
The Supreme Court has remanded back the two appeals to the electricity tribunal for fresh determination of the wheeling charges to be paid by Hindalco Industries. The West Bengal Electricity Regulatory Commission (WBERC), Calcutta Electricity and Supply Company Ltd (CESC) and Hindalco are fighting over the methodology and formula for determining the wheeling charges for 2005-06.
While setting aside the Appellate Tribunal for Electricity?s (Aptel) order of October 2007, the court asked the tribunal to decide afresh the various issues that ?seem to have escaped the notice of the tribunal rendering its decision vulnerable?. Hindalco (erstwhile Indian Aluminium Company Ltd) had paid wheeling charges for transmission of surplus captive power of an approximately 9 mw from its power plant at Hirakud, Orissa, to its Belur factory at the rate of 9.57 paise per unit for 550 km. However, the Commission in November 2006 had asked it to pay higher charges at the rate of 83.54 paise per kwh for the balance 5 km. Of these 5 km, the company was using only 3 km of the CESC network.
The company had challenged the WBERC?s order before the tribunal, which asked the latter to re-determine the charges. The tribunal?s order was challenged by the WBSEB and CESC before the apex court on the grounds that the wheeling charges had been correctly re-determined on the basis of the total distribution network cost as mandated under various electricity regulations. WBSEB counsel Malini Poduval submitted that Hindalco had challenged the wheeling charges for 2005-06 during which not a single unit of energy was wheeled by the company and, therefore, no such charges were payable.
Its appeal should have been dismissed as having become infructuous since Hindalco did not pay any charges for 2005-06, she added. Advocate Anil Kumar Tandale had represented Hindalco in the court.
Jharkhand HC to decide afresh mining levy issue
The apex court has set aside the Jharkhand High Court?s decision that quashed a state government?s order imposing higher surface rent equal to 5% of the market price of the mining land leased out to major and minor mineral leaseholders. While disposing of 52 appeals filed by the Jharkhand government against Misrilall Jain & Sons and others, the Supreme Court has asked the high court to decide the issue afresh. It observed, ?It was difficult to sustain the impugned judgment due to patent errors.? The state government had moved the Supreme Court challenging the high court order that held its demand notices as invalid. The government had treated the entire leased area at par with the land under commercial use for the purposes of the levy. The high court had allowed the leaseholders? plea that the state government had no competence and authority to issue such a resolution of June 2005.
Defending the government?s action, senior counsel MS Ganesh and Gopal Prasad argued that the resolution was issued in terms of the power conferred upon it under various mining laws, including the Mines and Minerals (Development Regulation) Act, 1957.
Besides, Sections 13 and 15 of the 1957 Act empowered the state government to make rules in respect of minerals and Section 17 especially empowered the Central government to undertake prospecting or mining operations in certain lands. Ganesh contended that the high court overlooked the conceptual distinction between the state?s sovereign capacity to levy taxes and duties and the state?s capacity as a lessor to collect rent. Even the lessees had all along been paying surface rent without demur and their challenge to the enhancement of surface rent had no merit, he said.
Senior counsel AK Ganguli and Arup Banerjee, appearing on behalf of the lessees, argued that the entire field of legislation?Regulation of Mines and Minerals Development?was fully under the control of the Central government and consequently the state legislature was denuded of its power to make any law on the issue. The surface rent as determined by the state government was required to be specified in the lease deed itself, they submitted, adding that although royalty or rent was variable but surface rent was not.
SC rejects Amravati Co-op bank?s plea
The Supreme Court has dismissed the Amravati District Central Co-operative Bank Ltd?s appeal seeking insurance claim of Rs 3.58 lakh from the United India Fire and General Insurance Company Ltd for the loss suffered due to embezzlement of money by its employee at Dhamangaon branch. The insurance company had issued a renewal insurance policy in July 1976 insuring the bank against losses caused by acts or omission of its employees to a limit of Rs 6 lakh (basis cover) and Rs 9 lakh (cash in safe) for 1976-77. The bank had claimed indemnity in terms of its policy after reporting a series of embezzlements. But, the insurer had assessed the reimbursable loss at only Rs 29,000. While the bank had referred the dispute over the claim to an arbitrator, the firm didn?t participate in the arbitration proceedings.
The arbitrator in an ex parte award of August 1983 held that the bank was bound to bear 25% of the total loss and the rest was payable by the bank as the employee had embezzled more than Rs 3.44 lakh by resorting to forgery. He held that embezzled amounts had to be aggregated. A civil court had also upheld the arbitrator?s award.
The Bombay High Court, on the firm?s plea, had set aside the award and remitted the matter back to the arbitrator to decide the claim afresh on the ground that the arbitrator should have considered each item of embezzlement separately for the purpose of fixing the insurer?s liability. However, the apex court while upholding the high court decision fixed the insurance company?s liability at Rs 29,000 in case the bank didn?t proceed afresh before the arbitrator. Counsel Rameshwar Prasad Goyal and Rajeev Kumar Bansal represented the bank and the firm, respectively.