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SC issues notice to Reliance discoms in Orissa

The SC has issued notices to three Reliance Energy-controlled power distribution companies on a petition by Orissa Electricity Regulatory Commission.

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NEW DELHI: The Supreme Court has issued notices to three Reliance Energy-controlled power distribution companies on a petition by Orissa Electricity Regulatory Commission, which had earlier faulted the discoms for failing to repay their creditors.

A Bench headed by Justice BN Agarwal, in a recent order, issued notices to the discoms, Western Electricity Company of Orissa, Southern Electricity Company of Orissa and North Eastern Electricity Supply Company of Orissa, in which Reliance Energy owns 51 per cent stake.

The petitioner had approached the Supreme Court, challenging the order of the Appellate Tribunal for Electricity, which had quashed showcause notices issued to these discoms by the regulatory commission (OERC).

According to OERC, the Tribunal was not right in interfering with the commission's proceedings at a stage where it had only issued showcause notices.

The notices were issued after prima facie conclusion that the discoms were unable to discharge their functions and perform duties under the Electricity Act, 2003.

It had held that the discoms had failed to pay Grid Corporation of Orissa and others creditors, including NTPC Ltd, for bulk supply of electricity. Besides, the distribution utilities had failed to act as per their business plans.

OERC argued that non-payment of the dues by these discoms meant that they were not in a position to carry on the business and maintain supply of electricity in their respective areas.

The OERC had, in its notice, asked the discoms why their licences should not be suspended and wanted them to file their replies. However, the companies approached the Tribunal, which quashed the notices.

The regulator argued before the Supreme Court that it was not right in construing that the commission's order had the effect of suspending the licences granted to discoms.

"The obligation of respondents is not limited to say that they would pay what they are able to pay... they are not in a position to pay because they are not able to realise the dues from the retail supply consumers.

"This is contrary to the terms on which the distribution and retail supply activities were vested in them and the agreements as Bulk Supply Agreement, Loan Agreement etc, signed by them," OERC stated in its petition filed through counsel KV Mohan.

A consumer, Sharad Chandra Mohanty, had moved the State Commission seeking revocation of the licences granted to discoms for violations.

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