Supreme Court pulls up Maharashtra discom for defying relief order

The Supreme Court on Wednesday issued notice to the top brass of Maharashtra State Electricity Distribution Company (MSEDC), including its CMD Vijay Singhal and its director finance Ravindra Sawant, asking them to explain why contempt proceedings should not be initiated against them for willfully disobeying its order that gave relief to captive producers/consumers of electricity like JSW Group of companies.

JSW Steel Coated Products, a part of JSW Group, being a captive consumer/user, had moved the contempt petition against MSEDC alleging that despite the SC holding that additional surcharge was not payable by it, the superintending engineer (O&M) had issued a disconnection notice and also raised a demand for arrears of additional surcharge to the tune of over Rs 4.35 crore.

While seeking to restrain the contemnors from taking any coercive action for non-payment of additional surcharge for past periods, JSW company said that instead of adjusting the additional surcharge in the future bills, the contemnors had in willful default not only demanded additional surcharge but also imposed delayed payment charges for non-payment for November.

A bench led by Justice MR Shah sought response from the officials of the state discom and also asked “the responsible officer, who has raised the demand towards the additional surcharge for November 2021” to remain present before it on March 15, the next date of hearing.

The act of contemnors continously insisting on payment of additional surcharge is deliberate and in willful breach of the SC judgment, JSW senior counsel Gopal Jain and counsel Mahesh Agarwal argued.

If a consuming entity or entities consume at least 51% of the power generated and owns at least 26% of the equity, it is called captive user.

The Supreme Court on December 10 had held that captive consumers/captive users are not liable to pay additional surcharge of Rs 1.25 per unit under Section 42(4) of the Electricity Act, as directed by the Maharashtra Electricity Regulatory Commission (MERC), a distribution licensee.

While upholding the Appellate Tribunal for Electricity’s March 2019 decision, it had also asked MERC to refund the additional surcharge collected from the captive consumers like JSW. However, the top court stated that since “there shall be huge liability on the Commission if it has to now refund the amount of additional surcharge recovered at a stretch, we direct that the additional surcharge already recovered from the captive consumers/captive users shall be adjusted in the future wheeling charges bills”.

The commission in September 2018 had held that the additional surcharge leviable under Section 42(4) is not applicable to captive users to the extent of their self-consumption from such plants, but is applicable to all consumers who have availed open access to receive supply from sources other than the distribution licensee to which they are connected.

JSW Steel, JSW Energy, JSW Cement and other group companies had challenged MERC’s decision in the Aptel, saying that the commission had totally ignored the concept of non-discriminatory open access in terms of the Act as well as National Electricity Policy, which eliminates competition and provides supply of power directly to the consumers through open access.