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Power tribunal backs Ispat against discom

Regulatory liability charges paid by subsidised consumers to power distribution companies in order to save the latter from a financial crisis should be treated as a loan, the Appellate Electricity Tribunal has ruled.

business Updated: Sep 08, 2010 23:05 IST
Bhadra Sinha

Regulatory liability charges paid by subsidised consumers to power distribution companies in order to save the latter from a financial crisis should be treated as a loan, the Appellate Electricity Tribunal has ruled. Such an amount would have to be repaid with interest at the prevailing rate, the tribunal said.

While allowing an appeal filed by Ispat Industries Limited, the tribunal bench headed by Justice PS Datta set aside the decision of Maharashtra State Electricity Regulatory Commission and directed the State Electricity Distribution Company Limited to refund R200 crore with interest to the petitioner.

The bench said: "A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for such a deprivation through interest. It is the duty of the court to give full and complete relief to the party by ordering for interest as well."

Hemant Kumar, president (Legal) of Ispat Industries Limited said: "The company had given R200 crore as regulatory liability charges to the state power distribution company. Of this amount R75 crore has already been adjusted through tariff. However, the appellate tribunal's judgment would fetch us around R75 crore as interest amount since it would apply retrospectively."

Contesting the petitioner's claim, the distribution company had argued that companies such as Ispat had voluntarily agreed to pay the regulatory liability charges and the same had to be returned through tariff when the transmission and distribution losses came down. Therefore, it added, the company could not claim interest on the liability charges.