Levy 1% free power rule prospectively: HC tells HP

While passing the orders,Justice Rajiv Sharma allowed two separate writ petitions filed by JSW Energy Limited — a company executing the 260-MW Kutehr project and GMR company,which is executing the 180-MW Bajoli Holi project. The bench also struck down the provision in the implementation agreement of the companies signed by the government,where the companies were made liable to spare additional one percent free power,beside the existing 12 per cent free power as royalty.

Contesting the logic and legal standing of the mandatory one percent free power clause,the petitioners had claimed that the companies had already accepted a provision of keeping 1.5 per cent cost of the project for LADF. By sparing another one per cent free power,the projects will be adversely affected,they added.

The government,in its replies,however claimed that the provision had been made applicable to provide a regular stream of revenue for income generation and welfare schemes,creation of additional infrastructure and common facilities.

The counsels for the petitioners claimed that the clause cannot be made binding on the promoters,who had submitted their bids before the new notification was issued. “The new hydro-power policy can’t be applied retrospectively as they had given technical/financial bids on the basis of 2006 policy. Rights of the parties have crystallized on the day when bids were accepted and implementation agreements signed,” the petitioners argued.

While allowing the petitions,the court maintained that the notification of November 30,2009 will apply only prospectively on hydro-power projects.