Events
in 1996
81. Around January 1996 Project revival was
formally announced by the GOM.
82. On or around 26th of February 1996, the
Proposed Power Purchase Agreement for both phases was initialed. The clause pertaining to MSEB option about
the 2nd phase is one of the crucial clauses that been dropped.
83. On 7th of March 1, 1996, the DPC wrote to
the CEA detailing “Minor” changes in the project. In particular:
“..there is no change in the
capacity charges for Phase 1”
Thereby
reveling that the GOM is guilty of fraud and misrepresentation when it had
claimed reductions in capacity charges as a result of reductions in capital
costs.
84. On 8th April 1996, a writ petition (WP 2456 of 1996) was filed
in the Bombay High Court and notice given. The grounds taken in the petition
are set out below.
·
The
CEA’s granting clearance/concurrence was a breach of statute and that the
concurrence is void. and that the project requires fresh sanction under S 32 of
the Electricity [supply] Act
·
The GOM
had filed a suit against the 3rd and 5th respondents inter alia alleging fraud
and illegality; misrepresentation etc. Consequently the GOM could not ratify of
novate or modify the agreement which the GOM claims is void; and cannot
approbate any such ratification, novation of modification;
·
That the
1st to 5th respondents are trustees of the public and/or repositories of public
trust. The GOM’s suit enured to the public benefit and is, inter alia, based on
public policy and public interest and could not be withdrawn in the absence of
cogent reasons. Pending the suit, the 2nd respondent could not contract with
persons/permit contracts with persons whom it indicts for corruption, fraud and
misrepresentation etc.
·
In the
event the 2nd respondent disowned its own suit, it must be proceeded against
for subverting the process of justice, abuse of process, contempt and perjury.
·
The petitioners were concerned at the cost of electricity.
Given the mandate of S 59 of the Electricity (Supply) Act, the petitioners
wished to be informed of the rate at which electricity will be sold to the
public so as to earn the mandatory 3% surplus;
·
That there were breaches of guidelines in fixing tariffs
and that excessive returns were granted in breach of tariff guidelines;
·
That the GOM and MSEB intend to enter into, in effect a
partnership since liability is unlimited, with the other party’s financial
status being dubious;
·
The proposed amended PPA ought to be made public;
·
The MSEB should comply observations in the audit note from
the office of the Accountant General
85. On 17.4.96, MOP wrote to the GOM that
“...increase
in installed capacity from 695 MW to 740 MW for phase 1 and 1320 MW to 1444 MW
in phase 2 due to adoption of frame 9FA instead of 9f as approved by
authority,”
9FA turbines were always to be used. The project report dated April 1993 specifies the use of 9 FA turbines. The PPA dated 8.12.93 has an entire section devoted to the 9FA turbines.
The
contention of increased output is dishonestly
done by attributing it to a change in turbines. This vitiates even the so
called “technical clearance” given by the CEA as the CEA states that increase
in the nominal capacity was due to “use of 9FA frames against 9F approved”.
86. 28th April, WP 2456 of 1996 was admitted by the High Court on the
grounds that there was no prima facie bar of res judicata in dismissing the
petition in limine, the issues raised in this case having been neither
considered nor answered in the previous judgments, the petitioners contentions
were the very contentions urged in the suit by the State government to avoid
the PPA and it remained to be seen whether the novatio required concurrence of
the CEA under the Act.
87. On June 3, the High Court directed the
petitioners to amend the WP to include all possible challenges and that it
would examine all matters afresh. The High Court also directed Enron to place
on record, audited accounts of the 20 million dollars alleged to have been
spent on education of officials, failing which an adverse inference would be
drawn.
88. On or around June’ 96, DPC stated that it
will include regassification in the main plant. There is no change in tariff
after adding Rs. 1580 crores to the project costs by way of the regassification
plant.
89. On or after 22nd June 1996, the IDBI
considered the loan requested by DPC. “It was noted that even after
renegotiation, Phase I of the project had not
undergone any significant change except that the capacity had been increased
from 695 MW to 740 MW and the plant will
have the flexibility to use naphtha in addition to distillate as feed
stock”
90. In August 1996, the largest contract in the
history of India, with contractually binding payments by MSEB to DPC exceeding
U$ 30 billion, (Rs 1, 00,000 Crores currently) in the form of a binding PPA is
reported to have been signed. No information nor copy offered to petitioners or
the Court when the matter is subjudice and claimed by all parties to be
directly and substantially in issue
91. On 3rd Sept. 1996, pursuant to directions
by the High Court to support that contention and to place on record the
material on which allegations of fraud, misrepresentation and corruption made
in the suit filed by the GOM in the Bombay High Court before the High Court, the chief minister (the ‘CM’) of Maharashtra
files an affidavit that is deliberately false.
The Hon’ble CM affirms on oath, that all the
allegations of fraud, misrepresentation and corruption made in the suit, were
made on the basis of newspaper reports that were later found to be baseless.
The complete testimony of Ms. Linda Powers
was available when the suit was filed and has been specifically referred to in
the plaint. Further, the suit filed by the GOM gave specific illustrations and
examples of fraud and misrepresentation, based on the documentary record, a
comprehensive list of which was annexed to the suit.
The affidavit also does not refer,
inter alia, to the substantial
infringement of public policy and interest; breach of norms and propriety etc.
that had motivated cancellation
92. The High Court did not permit the
petitioners to reply to the CM’s perjurious
affidavit.
93. On 2.12.1996, the High Court delivered its
judgment dismissing the Writ Petition on technical grounds. In its judgment the
High Court noted that
“This case has highlighted to the people as to how
even after 50 years of independence, political considerations outweigh the
public interest and the interest of the State and to what extent the Government
only can go to justify its actions and not only before the public but even
before the Courts of law..”
94. It went on to note that the renegotiated
contract was shrouded in as much secrecy as the original contract and observed
that that Enron had conquered much more than it did earlier,.
95. However it simply allowed the matter to
rest there. The High Court in its judgment did not dealt with the challenges on
merits dismissing it on technical grounds.
The case
in seeking judicial review had been confined to the questions of legality,
rationality and propriety of decision-making process.
96. Interestingly enough, none of the above mentioned
evidence was taken into account in the judgment nor is there any mention in the judgment of
the fact that all this evidence was placed before the court
97.
The key and sole issue of whether or not the project had a
valid clearance under the provisions of the Electricity (Supply) Act and
whether the CEA had failed in its statutory duties is not addressed at all in the judgment.