PTC moves SC against Jaypee group on power purchasing pact

State-owned Power Trading Corporation (PTC) on Tuesday moved the Supreme Court requesting it to restrain Jaypee group from selling power from its Rs 7,000 crore Karamcha Hydel Power project to other firms. PTC has challenged the orders of the Delhi High Court, which refused to restrain Jaypee Karcham Hydro Corporation (JKHC) from signing agreements with other power distributing firms. 

Admitting the plea, a bench comprising Justices Altamas Kabir and A K Patnaik issued notices to JKHC and Central Electricity Regulatory Commission (CERC) directing them to file replies within three weeks. The bench said that if they find any third party agreement by JKHC, then it would the subject to the outcome of the PTC's petition. The Apex court would hear the matter on December 7, 2010. 

According to PTC, it had entered into a power purchase agreement (PPA) with the Jaypee group in March 2006 for drawing 704 MW of the installed capacity. Based on the PPA, PTC entered into agreement for sale of power from Punjab, Haryana, Uttar Pradesh and Rajasthan, the PSU submitted. The dispute started after JKHC approached CERC in July 2009 for fixation of tariff, taking into account the project cost of Rs 7,080 crore. 

However, CERC said that under the provisions, it could fix the tariff only six months prior to commercial operations of the project. The JKHC project is to be operational from November, 2011. 

In the light of CERC's refusal to fix the tariff, PTC sought a meeting with Jaypee to discuss the PPA. JKHC, however, said that their PPA was void, and it has the right to determine the tariff. 

"Declaration of the PPA as void is in utter disregard to the provision of the agreement and the regulations of CERC and therefrom it was illegal and bad in law," said PTC in its petition. 

PTC approached High Court in January 2010 seeking stay on JKHC from entering into agreement with third parties. However, the court declined PTC's plea. It was later challenged by PTC before a division bench of the Court, but on August 13, 2010 it also upheld the earlier decision. Meanwhile, JKHC and PTC has also appointed arbitrators to resolve the issue.