APTEL Overturns Compensation Order Against NETS in Rajasthan Power Dispute

The Appellate Tribunal for Electricity (APTEL) has overturned an order requiring power trader National Energy Trading and Services Ltd (NETS) to pay INR 1.68 crore in compensation to Rajasthan’s electricity distribution companies (discoms).

The tribunal ruled that the discoms’ claim, stemming from a 2011 power supply dispute, was barred by the legal limitation period. The verdict releases NETS from a financial liability that had lingered for nearly a decade.

The dispute arose from a 2011 contract where NETS agreed to supply 951 MW of electricity to Jaipur, Ajmer, and Jodhpur discoms. The contract included a clause requiring NETS to pay INR 2 per unit if the monthly supply fell below 80 percent of the contracted capacity. Following shortfalls in February, April, and May 2011, the discoms raised a Rs 1.68 crore bill, which was later deducted from generator V.S. Lignite Power Pvt Ltd (VSLP) in 2012.

In 2014, the Rajasthan Electricity Regulatory Commission (RERC) ruled that the deduction from VSLP was illegal and directed the discoms to recover the amount from NETS instead. Acting on this, the discoms filed a petition against NETS in October 2014, which RERC upheld in 2016.

Challenging the order, NETS approached APTEL. The tribunal ruled that the discoms' petition was filed after the three-year limitation window had closed in May 2014. The bench, comprising Judicial Member Virender Bhat and Technical Member Sandesh Kumar Sharma, rejected the discoms’ claim that NETS had acknowledged liability in its 2012 correspondence. “Such assumptions are absolutely erroneous,” the order stated, highlighting that NETS had categorically denied liability in its legal response at the time.

APTEL further noted that the discoms failed to establish any valid 'acknowledgment of liability' to justify extending the limitation period. With the compensation claim now void, NETS also retains its INR 60 lakh Earnest Money Deposit, which the discoms can no longer recover.

In its concluding remarks, the tribunal stated that the discoms' petition was 'barred by limitation' and found the RERC had erred in holding it within time. The commission’s order was set aside, NETS’ appeal was fully allowed, and petition filed by the discoms stands dismissed.

The ruling underscores the importance of adhering to limitation periods in commercial disputes.