CW / 18587 / 2018 INDIAN WIND POWER ASSOCIATION (RAJASTHAN STATE COUNCIL) Vs. RAJASTHAN ELECTRICITY REGULATORY COMMISSION

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
(1) D.B. Civil Writ Petition No. 18587/2018
Indian Wind Power Association (Rajasthan State Council), Having
Its Registered Office Located At Gulab Niwas, Mi Road, Jaipur,
Through Authorized Representative, Kuldeep Gupta.
----Petitioner
Versus
1. Rajasthan Electricity Regulatory Commission, Through Its
Secretary, Sahakar Marg, Jaipur.
2. State Of Rajasthan Through Its Secretary, Energy
Department, Government Of Rajasthan, Jaipur.
3. Rajasthan Rajya Vidhyut Prasaran Nigam Limited, Vidhyut
Bhawan, Jyoti Nagar, Jaipur.
4. State Load Dispatch Centre, (Through Chief Engineer
SO&Ld) Rajasthan Rajya Vidhyut Prasaran Nigam Limited,
Vidhyat Bhawan, Jyoti Nagar, Jaipur.
----Respondents
Connected With
Tanot Wind Power Ventures Pvt. Ltd., Having Its Registered Office
At - Plot No. 1366, Road No. 45, Jubilee Hills, Hyderabad- 500
033 Telangana State, And Working Site/office At 220 Kv GSS
Habur And Chhatrail Villages, District - Jaisalmer Raj., Through
Mr. Sunil Bora S/o Late O.P. Bora, Aged About 37 Years, Working
as Sr. Manager - Corporate Relations, and for this matter as an
Authorized Signatory, in the Petitioner Company.
----Petitioner
Versus
1. Rajasthan Electricity Regulatory Commission Rerc, Vidyut
Viniyamak Bhawan, Sahakar Marg, Nr. State Moter
Garage, Jaipur Raj.- 302 001.
2. Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. Rrvpnl,
Vidhyut Bhawan, Janpath, Jyoti Nagar, Jaipur Raj.-
302005.
3. State Of Rajasthan Through The Secretary, Department Of
Energy, Secretariat, Jaipur Raj. 302 005.
----Respondents
(Downloaded on 01/06/2019 at 03:43:23 PM)

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M/s Ramgad Minerals And Mining Limited, A Company Registered
Under Companies Act, 1956 Having Its Registered Office At
Baldota Enclave, Abheraj Baldota Road, Hospet - 583 203,
Karnataka Through Its Authorised Singnatory, Mr. Meda
Venkataiah S/o. Obayya R/o M.j. Nagar, Hosapete - 583201
Karnataka India Aged About 72 Years
----Petitioner
Versus
1. State Of Rajasthan Through Its Principal Secretary,
Department Of Energy, Government Of Rajasthan, IT
Center, Chambal Power House Campus, Hawa Sarak,
Jaipur- 302006.
2. Rajasthan Electricity Regulatory Commission Through Its
Chairman, Vidhyut Viniyaman Bhawan, Sahkar Marg, Near
State Motor Garage, Jaipur.
3. Rajasthan Rajya Vidyut Prasaran Nigam Through Its Chief
Managing Director, Vidhyut Bhawan, Jyoti Nagar, Jaipur.
4. Jaipur Vidyut Vitran Nigam Limited Through Its Chairman,
Madhav Vilas Palace, Old Power House Premises, Near
Ram Mandir, Bani Park, Jaipur.
5. Jodhpur Vidyut Vitran Nigam Limited Through Its
Chairman, New Power House Road, Industrial Area,
Jodhpur – 342003.
6. Ajmer Vidyut Vitran Nigam Limited Through Its Chairman,
Vidhyut Bhawan, Makarwali Road, Panchsheel Nagar,
Ajmer – 305004.
----Respondents
For Petitioner(s) : Mr. Ravi Bhansali, Sr. Advocate along
with Mr. Sanjeev Johari, Mr. Shubham
Modi and Mr. Lalit Parihar
Mr. Ravi Chirania
Mr. Vikas Balia
For Respondent(s) : Mr. M.S. Singhvi, Sr. Advocate,
assisted by Mr. K.S. Lodha and
Mr. Abhishek Mehta
Ms. Susan Mathew
Mr. Kuldeep Mathur
Mr. C.P. Soni

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HON'BLE MR. JUSTICE SANGEET LODHA
HON'BLE MR. JUSTICE DINESH MEHTA
Judgment
(per Hon’ble Mehta,J.) 29/05/2019
1. These writ petitions have been filed by the petitioners laying
challenge to the Rajasthan Electricity Regulatory Commission
(Forecasting, Scheduling, Deviation Settlement and Related
Matters of Solar and Wind Generation Sources), Regulations, 2017
(hereinafter referred to as ‘the Forecasting & Scheduling
Regulations or the Regulations of 2017’).
2. The first petitioner Indian Wind Power Association, is an
association of wind power generators, having 1570 members,
some of whom are operating their wind farms in Rajasthan. The
second petitioner, Tanot Wind Power Ventures Pvt. Ltd. (D.B. Civil
Writ Petition No.3882/2018) is also a member of first petitioner,
i.e. Indian Wind Power Association, whereas third petitioner
though engaged in generation of power, but not a member of first
petitioner.
3. As all the above writ petitions involve common facts and
question of law, they are being decided conjointly, however, the
facts stated by the Association are being taken into consideration.
4. The members of the first petitioner-Association, engaged in
business of generation of power through wind energy, have their
own separate agreements for sale of power generated by them
with various electricity distribution companies, known as
DISCOMs. The said agreements executed between the generators
of power and various DISCOMs, such as Rajasthan Rajya Vidhyut
Prasaran Nigam Ltd. (hereinafter referred to as ‘the RRVPNL’)

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known as Power Purchase Agreements contain all the terms and
conditions relating to the supply of power by the members to the
RRVPNL.
5. The power generated by the Members through wind energy
is injected into grid developed and maintained by the respondent
RRVPNL. These grids have been developed and maintained by an
agency known as State Load Dispatch Committee (hereinafter
referred to as ‘the SLDC’). The SLDC takes care of the capacity of
the grid, the load on the grid, forecasting, scheduling etc.
6. Rajasthan Electricity Regulatory Commission, in exercise of
powers available to it under Section 181 of the Electricity Act,
2003, published draft regulations for forecasting and scheduling
and invited objections by way of notice issued in various
newspapers. After consideration of the objections submitted by
various stake holders, the Regulations were finalized on
14.09.2017 and came to be published in the official gazette on
14.09.2017. The Regulations of 2017 have however, come into
force w.e.f. 01.01.2018.
7. By way of the writ petitions, the petitioners have made a
prayer to quash the entire Regulations of 2017 and so also the
framework as approved by the Commission for forecasting and
scheduling.
8. Mr. Ravi Chirania, learned counsel appearing on behalf of the
Indian Wind Power Association, navigated the Court through
various provisions of the Regulations of 2017 and the framework
issued by the Commission. Before adverting to the contentions
raised by the petitioner, it would be appropriate to reproduce

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various important and relevant definitions provided under the
Regulations, 2017, which we hereby do:
“(h) CERC means the Central Electricity Regulatory
Commission referred to in sub-section (1) of Section
76 of the Act;
(i) ‘Deviation’ in a time-block for a seller means its
total actual injection minus its total scheduled
generation and for a buyer means its total actual
drawal minus its total scheduled drawal;
(n) ‘Pooling Station’ means the sub-station where
pooling of generation of individual wind generators or
solar generators is done for interfacing with the
grid/transmission or distribution system: Provided
that where there is no separate pooling station for a
wind/solar generator and the generating station is
connected through common/dedicated feeder and
terminated at a substation of distribution
company/STU, the sub-station of distribution
company/STU shall be considered as the pooling
station for such wind/solar generator, as the case may
be;
(o) ‘Qualified Coordinating Agency or QCA’ means the
mutually agreed agency registered with SLDC, to act
as a coordinating agency on behalf of Wind/Solar
Generators connected to a pooling station and may be
one of the generators;
(r) ‘Scheduled Generation’ at any time or for a time
block or any period time block means schedule of
generation in MW or MWh ex-bus;
(s) ‘Scheduled drawal’ at any time or for a time block
or any period time block means schedule of dispatch
in MW or MWh ex-bus;
(v) ‘State Pool Account’ means State account for
receipts and payments on account of deviation by
buyers or sellers including wind and solar generators
and shall be maintained by SLDC;
(x) ‘Time Block’ means a time block of 15 minutes, for
which specified electrical parameters and quantities
are recorded by special energy meter, with first time
block starting at 00.00 hrs;”

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9. By virtue of Regulation 3 of the Regulations of 2017, these
Regulations are applicable to all wind power generators supplying
power to the DISCOMs through open access or for captive
consumption. Regulation 4 of the Regulations of 2017 defines role
of Qualified Coordinating Agency (QCA) in the following terms:
“4. The Qualified Coordinating Agency (QCA) as
defined at Regulation 2(1)(o) shall be nominated
based on consensus and mutually agreed terms and
conditions amongst the wind and solar generators.
The wind and solar generators shall also inform SLDC
to this effect. QCA shall be the single point of contact
with SLDC on behalf of its coordinated generator(s)
connected to a pooling station for the following
purposes:
(1) Provide schedules with periodic revisions as per
these Regulations on behalf of all the Wind/Solar
Generators connected to the pooling station.
(2) Responsible for coordination with STU/SLDC and
other agencies for metering, data collection and its
transmission, communication.
(3) Undertake commercial settlements on behalf of
the generators, of such charges pertaining to
generation deviations only including payments to the
State pool account through the concerned SLDC.
(4) Undertake de-pooling of payments received on
behalf of the generators from the State Pool account
and settling them with the individual generators in
accordance with these Regulations.
(5) Undertake commercial settlement of any other
charges on behalf of the generators as may be
mandated from time to time.
(6) All other ancillary and incidental matters.”
10. Regulation 5 of the Regulations of 2017 provides that each
pooling station shall have one QCA. It has however been provided
that in case only one seller or wind power generator is connected
to the pooling station, then such generator shall act as a QCA.

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11. Regulations 6 to 10 of the Regulations encompass various
provisions in relation to forecasting and scheduling.
12. Part-3 of the Regulations deal with metering telemetry and
data communication, whereas Part-4 encaptulates various
provisions in relation to commercial and deviation settlement. The
petitioners’ essential concern, rather grievance, is regarding
deviation charges in case of under or over injection for sale of
power within the State as stipulated in Regulation 18 of the
Regulations, which reads thus:
“18. In the event of actual generation of generating
station or a pooling station, as the case may be, being
less or more than the generation scheduled as per
Regulation 16 above, the deviation charges for
shortfall or excess generation shall be payable by the
wind and solar generator or the QCA, as the case may
be, to the State Pool, as prescribed in Table-I below:
Table-I: Deviation Charges in case of under or
over-injection for sale of power within the State
S.No. Absolute Error in the 15-
Minute time block
Deviation charges payable
to the State DSM pool
1. <=15% At Rs.0.50 per unit for the
shortfall or excess of energy
for absolute error beyond
15% and upto 25%.
2. >25% but <=35% At Rs.0.50 per unit for the
shortfall or excess energy
beyond 15% and up to 25%
+ Rs.1.0 per unit for
balance energy beyond 25%
and upto 35%
3. > 35% At Rs.0.50 per unit for the
beyond 15% and upto 25%
beyond 25% and upto 35%
balance energy beyond 35%

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13. The petitioner Association despite challenging the
Regulations, has come with a specific case that the Association is
not against the forecasting and scheduling as such. It has rather
conceded that its members are major sufferers due to
unscheduled cuts, non-taking of the powers by the DISCOM
despite good generation in the peak hours, but has raised
grievance that by way of the Regulations of 2017, the Commission
has unilaterally implemented the same without inviting
suggestions/objections/comments etc. from the energy generators
and other affected parties, as stated in para No.26 of the memo of
writ petition.
14. While questioning the legality and propriety of the
Regulations of 2017, learned counsel for the petitioner-Association
submitted that the respondents have restricted the choice of
selection of QCAs from amongst four agencies and have compelled
the members to choose one of them. It has been contended that
none of the QCAs suggested by the respondents is technically
competent. A grievance has been raised that the respondents
have given more weightage to the financial capacity than their
technical expertise, while selecting QCAs and none of them have
any expertise of forecasting 500 MW for a year. Work of QCA
become more daunting in a terrain like Western Rajsthan, where
climatic conditions are more unpredictable than other parts as the
desert areas witness many sand storms and the wind velocity in
this part is also highly variable making it almost impossible to
predict.
15. Learned counsel further contended that the Regulations have
been framed in such a fashion that it is the SLDC, which is

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required to satisfy itself on the credentials of the QCA and the
generator is left at the mercy of the QCA. Without being satisfied
about the technical expertise or capacity to forecast, the generator
has to accept one out of the available four registered QCAs.
16. Though the petitioner has found fault with almost every
Regulation of the Regulations, but during the course of arguments,
learned counsel has confined his grievance towards generators’
compulsion to opt for QCA and the deviation charges prescribed
vide Regulation 18 of the Regulations of 2017.
17. Calling Regulations of 2017 in question, Mr. Chirania
submitted that huge deviation charges have been prescribed by
the Regulations that too in both the eventualities, not only in a
case when the injection is more but also when it is less than the
scheduled generation. He vehemently argued that deviation
charges of Re.0.50 per unit and more is excessive and arbitrary.
18. Counsel for the petitioner pointed out that though scheduling
part is to be done by the generators, but the same is totally
dependent upon the forecasting to be provided by the QCA. If the
input for scheduling i.e. forecasting about the wind is improper or
inaccurate, the scheduling or the forecasting of the generation
given by the generator is bound to go wrong. According to the
learned counsel for the petitioner, the members of the petitioner
Association are sought to be penalized for the fault of QCA in not
being able to correctly forecast the weather or wind.
19. Highlighting the problems and lack of expertise/experience of
the QCA, learned counsel for the petitioner submitted that none of
the QCAs are having experts or expertise to predict or forecast the
weather with accuracy. He submitted that their estimation or

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forecasting of weather is only an hypothesis. He repeatedly and
rhetorically asserted that no instrument or technique is available,
with which a proper forecasting of the wind can be made,
particularly in a terrain like Western Rajsathan.
20. Mr. Chirania submitted that the members of the petitioner
Association have separate Power Purchase Agreement, wherein all
financial terms have been set out. By virtue of Regulation 18 of
the Regulations of 2017, the respondent RERC has prescribed
deviation charges, as a result whereof huge amount will have to
be paid by the generators, which would adversely affect their
financial health. According to him, levy of deviation charges
overrides or tramples upon the terms of supply of energy, duly
finalized and spelt out in separate Power Purchase Agreement
executed between the members and the RRVPNL.
21. According to him, when the Regulations have been made
applicable from 01.01.2018, the Regulation 18 of the Regulation
relating to deviation charges, if at all to be applied, can be applied
to the Power Purchase Agreements executed after the date of
coming into force of the Regulations of 2017, i.e. 01.01.2018.
22. Learned counsel for the petitioner contended that since there
is no stipulation like the deviation charges in the existing Power
Purchase Agreement signed by the generators with the RRVPNL,
even going by Clause 11 of the Agreement, Regulation 18 of the
Regulations of 2017 cannot be made applicable.
23. Learned counsel for the petitioner further contended that
Regulation 18 of the impugned Regulations is arbitrary and
contrary to the Power Purchase Agreement and the same deserves
to be declared ultra-vires the Constitution.

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24. Inviting attention of the Court towards various Regulations of
the definition Regulation 2 of the Regulations, namely, ‘deviation’
defined in Regulation 2(i), pooling station defined in 2(n), QCA
defined in Regulation 2(o) of the Regulations, he contended that
the Regulations are not clear as to who will act as a QCA, what will
be its role and what shall be the modalities. Learned counsel for
the petitioner asserted with certainty that all the members of the
Association would try to give the highest generation of the energy
and would not like to deviate from the scheduling given by them.
He urged that the generators are required to give a day ahead
scheduling, in which they are bound to err. He urged that there is
every possibility of deviation in scheduling and the actual injection
or generation; as it is very difficult to forecast and predict the
generation of the electricity, more particularly when it comes to
generation by wind energy and that too in a State like Rajasthan.
He alleged that Regulation 18 of the Regulations of 2017 is a
double edged sword, inasmuch as it penalizes the generator in
both the situations alike; whether the injection is more or less
than the scheduled generation.
25. Learned counsel took us through various correspondences
and pointed out that it was the instructions or directions of the
Central Electricity Regulatory Commission (CERC) to make
Regulations in relation to the generation and sale of electricity
within the State. He submitted that the RERC has promulgated
Regulations notwithstanding the fact that implementing agency
itself was not equipped. He argued that the Regulations of 2017
are not implementable as the same are incomplete. In support of
his arguments, he contended that though the Regulations have

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been brought into force from 01.01.2018, still the respondents
have been able to generate demand notice with respect to the
deviation charges for two months only, because they are not
having correct figure of deviation of each individual generator. It
was asserted that the framework brought in by the Commission is
nothing but an endeavor to fill the lacunae left in the Regulations,
while the Regulations have been framed with the view to penalize
the generators of power.
26. He tried to impress upon us that even Indian Metrological
Department is not in a position to give accurate forecasting of the
wind. According to learned counsel for the petitioner, the
impugned Regulations, which provide for a day ahead scheduling,
and imposition of deviation charges in the event of deviation is
highly arbitrary.
27. Mr. Ravi Bhansali, learned Senior Counsel appearing on
behalf of the other petitioner, Tanot Wind Power Ventures Pvt. Ltd.
invited attention of the Court towards para No.23 of his writ
petition, wherein a comparative chart has been given showing the
revenue as per earlier mechanism vis-à-vis a revenue as per the
new mechanism. With the help of comparison given in the said
table, he contended that after coming into force of the new
Regulations, per unit revenue or price payable to the generator
will be substantially reduced as against the rates already fixed, i.e.
Rs.5/- per unit. He submitted that Regulation 18 of the
Regulations is a subterfuge to generate revenue for the RRVPNL or
to curtail the rightful entitlement of the generators. Learned
Senior Counsel submitted that the petitioner had ventured to
install a wind farm and invested a huge amount keeping in mind

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the assured rate of Rs.5/- per unit, without anticipating that the
respondents would bring in the impugned legislation, substantially
reducing the amount payable to it. Rajasthan was an electricity
scarce State, when the petitioner had installed its wind farm and
the respondents were inviting entrepreneurs to establish wind
farms, and when there is sufficient generation of electricity, now
they have taken a U-turn. Finding the rates fixed in the power
purchase agreements unprofitable, they have deviced a way to
reduce the rates under the guise of deviation charges. He also
echoed the Association’s voice that the petitioner has to depend
upon the QCA for weather forecasting and that for the fault of the
QCA, an agency thrusted upon it, the petitioner cannot be saddled
with heavy penalty under the garb of deviation charges. He
argued that Regulation 5 of the Regulations provides that the price
to be paid by DISCOM shall be net of all GoR and local taxes and
duties as leviable on generation and/or sale of electricity and the
same shall be based on the tariff attached as Annexure-B to the
Regulations. Taking the Court through the tariff contained therein,
he argued that neither the Regulation 5 envisages deviation
charges leviable under Regulation 18 nor does the tariff shown in
Annexure-B of the Regulation takes into account the deviation
charges. As such, the deviation charges levied under Regulation
18 are hidden deduction for the tariff payable to a generator and
the same is impermissible in law.
28. Mr. Vikas Balia, learned counsel appearing for the third
petitioner (D.B. Civil Writ Petition No.2623/2018, M/s. Ramgad
Minerals and Mining Ltd.), at the outset pointed out that neither

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the petitioner company is a Member of the Indian Wind Power
Association nor has it entered into an agreement with the QCA,
hence his case deserves separate hearing as he has raised certain
additional grounds albeit for assailing the Regulations.
29. At the outset, he submitted that there are three factors; first
forecasting, second scheduling and third deviation, as far as the
Regulations of 2017 are concerned and the generator has control
over none. Inviting attention towards Regulation 6 of the
Regulations, he submitted that the same provides for methodology
for scheduling of the energy by the generators connected to the
State Grid so also the methodology of handling deviation of such
wind and solar energy generators, but it does not provide any
mechanism for forecasting. By virtue of of such provision, the
respondents have conveniently passed on the SLDC’s burden of
forecasting to the QCAs and/or to the generators, whereas the
same is an essential function, rather obligation of the SLDC. He
submitted that Regulation 7 of the Regulations mandates SLDC to
undertake forecasting of the power, i.e. expected to be injected
into the State Grid with an objective of ensuring secure grid
operation by planning for the requisite balancing of resources. He
pointed out that the said Regulation 7 of the Regulations of 2017
provides the QCA or wind and solar generators will have the
option of accepting the SLDC’s forecasting for preparing its
schedule or carry out their own forecasting for preparing schedule
to be given to the SLDC, but by dint of these Regulations, the
respondents have not only shifted the onus of forecasting upon
the QCAs but in a way have compelled the generators to engage

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one out of the four QCAs registered with the respondents.
According to him, regardless of the fact that the Regulation
mandates the SLDC to carry out forecasting, the respondents have
forced the petitioner and other power generators to enter into an
agreement with the QCA, realizing that the SLDC, which is one of
its arms, is not in a position to carry out forecasting accurately.
30. Mr. Balia invited our attention towards explanatory
memorandum for the draft regulations, published by the
respondents prior to bringing in the impugned Regulation,
particularly Clause 3.2 thereof to highlight that the respondents
themselves were aware that forecasting in case of wind energy is
not possible as against the solar energy, yet, they have framed
combined regulations without providing separate yardsticks for
wind energy and solar energy. With this anamoly, the Regulations
of 2017 are arbitrary being enforced without due application of
mind, he argued. Learned counsel in this regard referred to and
relied upon clause 3.2.1 of the explanatory memorandum, which
we consider beneficial to reproduce hereunder:
“3.2.1 Solar plants are now mandated to undertake
forecasting. Notwithstanding the lack of indigenous
experience, solar forecasting methodologies are
quickly maturing worldwide and have higher accuracy
levels than wind forecasting. With the present aim for
ambitious solar power targets, this is the opportune
moment to ensure that these plants connect to the
grid in a sustainable and streamlined manner.”
31. We were then navigated through “Procedure for
Implementation of the Framework of Forecasting and Scheduling
for renewable energy (RE) Generating Stations (wind and solar)”,
(hereinafter referred to as ‘the framework’). It was contended that
Clauses (8) and (9) of the framework do not prescribe any penalty

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or fine upon the QCA, if such QCA mis-judge or go wrong in the
forecasting. He raised grievance qua Clause 8(2) of the framework
by saying that it is totally tilted in favour of the QCAs, so much so
that in case of non-performance of function by QCA, it provides
that the generator shall not, in any manner, be absolved from
meeting its responsibilities under the Regulations.
32. He drew our attention towards Clause (9) of the framework,
and asserted that it is the SLDC whih is responsible for scheduling,
communication, coordination with QCA and RE generators and it is
enjoined upon the QCAs to carry out forecasting and publish the
same on its website.
33. Main thrust of the challenge was for Regulation 18 of the
Regulations, which prescribes deviation charges upon the
generator on failure to meet with the scheduling. Learned counsel
branded them to be patently arbitrary and violative of
fundamental rights of the generators guaranteed under Articles 14
and 19(1)(g) of the Constitution of India. He submitted that the
impugned provision inflicts penalty in the form of standard
contract without any notice or adjudication, hence the same
deserves to be struck down. He argued that the Regulations of
2017 has an effect of changing the terms of power purchase
agreement, duly executed between petitioner and the RVVPNL.
34. He submitted that the petitioner has been coerced or forced
to pay additional amount in the name of deviation charges, as the
Regulations of 2017 have been made applicable to the existing
power purchase agreement unilaterally, without notice to the
generators let apart seeking their consent. In support of the
argument that the condition deserves to be quashed as it is

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unconscionable and arbitrary, learned counsel relied upon the
judgment of Hon’ble the Supreme Court rendered in the matter of
LIC of India & Anr. Vs. Consumer Education and Research
Centre & Ors., reported in (1995) 5 SCC 482.
35. Petitioner’s learned counsel argued that by way of
Regulations, the respondents may be justified in requiring the
generator to provide a week ahead or day ahead scheduling, but
asking for the scheduling for every 15 minutes and that too with
such exactitude is asking for too much. A generator can schedule
its generation in case of traditional source of generation but as far
as generation from wind energy is concerned, the scheduling is
totally dependent upon forecasting of wind and since wind velocity
is not in the hands of generator, neither forecasting nor scheduling
with the desired precision is possible. According to him, when the
requisite ingredient or input for scheduling is not in the command
or control of the generator, he cannot be penalized for the error in
scheduling, which may vary as a result of variation in such input
data or other hordes of factors out of his control.
36. Contending that by way of Regulation 18, the respondents
have provided deviation charges, which in a sense is a penalty, Mr.
Balia submitted with concern that the respondents have evolved a
source of generating revenue in the guise of deviation charges. He
argued that the penalty cannot be made a source of revenue and
respondents’ such attempt is impermissible in law.
37. Assailing the legislative competence of the impugned
regulations, learned counsel submitted that though the
Regulations do not refer to specific source of power available to
the Commission under the Electricity Act and the same uses

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generic expression "in exercise of the powers conferred under
Section 181 of the Electricity Act, 2003”, but the same appears to
have been enacted under the residuary power available to the
Commission under Section 181(2)(zp) of the Act of 2003. He
argued that neither Section 181(2)(zp) nor any other provision
authorizes Regulatory Commission to levy or impose such penalty
or tax. According to him, the impugned deviation charges cannot
be claimed to be a fee, incidental to regulation and the same is
thus nothing less than a tax or penalty.
38. Advancing his argument further, he submitted that the power
to levy tax on electricity is beyond the legislative competence of
the Parliament. Entry No.38 of List III of the 7th
Schedule and so
also the Entry No.47 of the same List authorizes the Central and
the State Government to levy fee with respect to electricity. As far
as power to levy tax on consumption and sale of electricity is
concerned, the repository of such power is Entry No.53 of List II of
the 7th
Schedule and such power vests with the State. The
impugned Regulation framed by the RERC imposing penalty is,
therefore, clearly outside the ambit of the competence of the
RERC or the Central Government and thus the Regulations
deserves to be declared ultra-vires, being violative of Articles 246
and 265 of the Constitution of India.
39. Mr. M.S. Singhvi, learned Senior Counsel appearing on behalf
of the respondents, vehemently opposed the petitioners’
contentions by stating that almost all the submissions and the
arguments advanced by the petitioners are dehors the pleadings.
He argued that Tanot Wind Power Ventures Pvt. Ltd. cannot

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maintain a separate petition, when the Indian Wind Power
Association is already espousing the cause of all the members,
including the petitioner.
40. He contended that going through the pleadings of the writ
petition filed by the Association, one fails to comprehend as to on
what counts, the challenge to the Regulations of 2017 has been
made. He submitted that the Regulations are having statutory
force and its challenge can be entertained only if the petitioner
shows them to be violative of certain statutory provision or highly
arbitrary. Learned Senior Counsel argued that notwithstanding the
fact that the arguments advanced by the petitioners are dehors
the pleadings, no substantial and sustainable ground has been
canvased by the petitioners, for which Regulations of 2017 can be
declared unconstitutional or otherwise invalid.
41. Averting to the purported flaws pointed by the petitioners,
learned Senior Counsel submitted that even if it is presumed that
there are certain deficiencies or lacunae in the Regulations or
certain difficulties in their implementations, the Regulations do not
become bad, invalid, unconstitutional or otherwise illegal. All the
procedural hazards or operational difficulties whatever have been
canvassed before this Court, can well be brought or agitated
before the RERC itself, which has expertise and requisite power
even to relax the Regulations in exercise of power available to it
under Regulations 24 and 25.
42. Expanding the preliminary objection, Mr. Singhvi submitted
that Regulations of 2017, particularly Regulations 24, 25 and 26 of
the Regulations provide in-house mechanism for redressal of the

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grievance which the petitioners have raised before this Court. He
submitted that whatever has been alleged by the petitioners, even
if accepted as such, the same do not render the Regulations to be
ultra-vires the Electricity Act or the Constitutional provisions. If
the petitioners have any grievance qua these Regulations, they
should well approach the RERC, which has been conferred with the
power not only to relax the Regulations but also to vary, alter or
amend any of the provisions of these Regulations.
43. He pointed out that the Indian Wind Power Association had
though filed a review petition, which is evident from the
averments made at page No.3 of Writ Petition No.18587/2018, but
did not pursue the same, for the reasons best known to it. He
argued that the petitioners have rushed to this Court which
definitely has a power to declare the Regulations as ultra-vires but
does not have the desired level of technical expertise on the
subject, which is required to address the petitioners’ concerns or
to give the reliefs sought for by the petitioners.
44. We do not find it out of context to reproduce Part-5 of the
Regulations, which encompasses the provisions relied upon by
learned Senior Counsel for the respondents:-
“Part-5
Miscellaneous:
24. Power to Relax
The Commission may by general or special order, for
reasons to be recorded in writing, and after giving an
opportunity of hearing to the parties likely to be
affected by grant of relaxation, may relax any of the
provisions of these regulations on its own motion or on
an application made before it by an interested person.
25. Power to issue directions”
If any difficulty arises in giving effect to these
regulations, the Commission may on its own motion or

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on an application filed by any affected party, issue
such directions as may be considered necessary in
furtherance of the objective and purpose of these
Regulations.
26. Power to amend
The Commission, may at any time, vary, alter, modify
or amend any provision of these Regulations.”
45. While making the aforesaid submission that the Regulatory
Commission has enough power to redress the grievance of the
petitioners, including power to amend the same, learned Senior
Counsel however, conceded that the Regulatory Commission does
not have power to test the validity of the Regulations and the
same is required to be examined by this Court in its power of
judicial review under Article 226 of the Constitution of India. He
placed before under Section the judgment of Hon’ble the Supreme
Court rendered in the case of PTC India Ltd. Vs. Central
Electricity Regulatory Commission, reported in (2010) 4 SCC
603, so as to apprise us with correct position of law.
46. Learned Advocate General contended that much has been
said about the lack of technical expertise and infrastructure,
including non-availability of equipments with the QCAs and
consequential financial implication upon the members of the
petitioner Association on the failure of such QCAs’, but all such
allegations have been hurled at their back. The petitioners have
not chosen to implead the QCAs as a party respondent. The
petitioners’ allegation that the QCAs do not have equipments or
expertise to forecast the wind velocity, cannot be gone into or
considered in absence of the QCAs. He pointed out that all the
members of the petitioner Association, and so also the other writ

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petitioner Tanot Wind Power Ventures Pvt. Ltd. have chosen one
QCA out of the four QCAs, registered with the RERC and have
entered into agreements, yet none of them (QCAs) is before this
Court to respond to the allegations about their incompetence.
According to Mr. Singhvi, the petitioners’ writ petitions are liable to
be rejected for non-joinder of necessary parties.
47. While reading para No.10 of the writ petition of the
Association, Mr. Singhvi pointed out that it is the assertion of the
Association that as some of the members are in a position to do
their own forecasting and scheduling,they are not interested to
appoint QCAs and that the QCAs cannot be thrusted upon
generators, whereas while arguing their case, the petitioners have
contended that neither with the SLDC nor with the QCAs, nor with
them, technique to forecast the wind is available. According to
him, the arguments advanced were contrary to the pleadings, and
thus cannot be gone into, urged Senior Counsel.
48. Learned Senior Counsel asserted that the Regulations
nowhere compel the generators to engage a QCA and a generator
is free to have its own forecasting and scheduling. As such, the
entire case of the petitioners is factually incorrect, besides being
baseless. Mr. Singhvi submitted that the petitioners are neither
clear about their grievance nor is their stand firm. At some place
Association has asserted that the QCAs are not in a position to
forecast and that they want to have their own forecasting,
whereas Para 26 of the writ petition demonstrates that it is the
assertion of the Association that they are in support of forecasting
and scheduling. Highlighting these conflicting and self-defeating
stand, learned Senior Counsel submitted that one fails to

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comprehend as to what is the stand of the petitioner Association
and what is their grievance, for which they have approached this
Court.
49. As far as QCAs are concerned, learned Senior Counsel tried
to convince us that the qualification requirements of QCAs are well
defined in the Regulations itself and each QCA is required to have
requisite qualification and expertise, including reasonable financial
status to qualify for securing registration with the respondents or
SLDC. He assured that all the four QCAs registered with the
respondents are having Pan-India presence and they are
successfully performing their duties in all States, having different
geographical and climate conditions. Mr. Singhvi further pointed
out that provisions like the present Regulations prescribing
deviation charges, exists not only in the Regulations framed by the
CERC but also in the Regulations framed by other States and
despite having all India presence of the wind power generators,
nowhere such challenge has been made or if made, has
succeeded.
50. It was further argued that the petitioners have leveled bald
allegation that the QCAs are not having technical expertise or are
unable to perform their responsibilities, without pin pointing any
technical flaw with a QCA or bringing on record any such failure on
the part of the QCAs. He argued that entire petition is based on
apprehension, conjectures and surmises and the same is bereft of
requisite pleadings, for which it is liable to be dismissed.
51. Mr. Singhvi submitted that Clause 11 of the Power Purchase
Agreement is so drafted that it takes into its sweep not only the
existing Rules and Regulations, but also makes all amendments

(24 of 41) [CW-18587/2018]
thereto and new enactments applicable to the parties
automatically applicable. According to him, by virtue of Clause 11
of the Power Purchase Agreement, the Regulations of 2017 have
been made applicable and in absence of any challenge to such
Clause, petitioners’ challenge to the provisions of Regulations is an
exercise in futality.
52. Learned Senior Counsel then relied upon the judgment of
Hon’ble the Supreme Court in the case of Central Power
Distribution Company and Ors. Vs. Central Electricity
Regulatory Commission & Ors., reported in (2007) 8 SCC,
197 and submitted that by this judgment, the power to frame
Regulations so also the levy of deviation charges has been held to
be valid. He pointed out that Hon’ble the Supreme Court while
dealing with the identical Regulations framed by the Central
Electricity Regulatory Commission, has upheld not only the
Regulations but also the ‘Unscheduled Interchange’ levied
thereunder, which provisions are para-meteria to the Regulations
under consideration and the charges levied vide Regulation 18 of
the Regulations.
53. Mr. Vikas Balia, appearing for the third petitioner, i.e.
Ramgarh Mineral and Mining Ltd., in rejoinder, contended that the
stand of the respondents that petitioner No.1 and its members
had, in principle, agreed to engagement of QCAs, cannot turn
around and lay challenge to the Regulation, is untenable in law.
54. While maintaining that neither his client is a Member of the
Association nor has it consented to such provision, learned counsel
contended that even if some of the members have agreed to the
appointment of QCAs and made admission in this regard,

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petitioner and even other members of the Association cannot be
precluded from challenging the vires of the Regulations, as the
validity of any legislation is not dependent upon any concession.
55. As regards judgment of Hon’ble the Supreme Court in the
case of Central Distribution Company (supra), he submitted that
the said judgment cannot be taken as a binding precedent in the
present case, inasmuch as the Regulations under consideration
before Hon’ble the Supreme Court were with respect to traditional
source of energy, i.e. thermal power, the generation whereof is not
dependent upon any unpredictable variables, whereas the
generation of power through wind energy is primarily dependent
upon wind velocity, which is highly speculative. The principles and
reasoning for upholding UI Charges in case of thermal power
cannot decide the fate of the impugned Regulations, was the crux
of Mr. Balia’s submissions.
56. As regards argument of the learned Advocate General that
the petitioners’ writ petitions are not maintainable, as they have
not challenged Clause (11) of the Power Purchase Agreement, he
submitted that since the Regulations of 2017 itself has been
challenged, there was no occasion or requirement for the
petitioners to challenge Clause (11) of the Power Purchase
Agreement. He argued that Clause (11) of the Power Purchase
Agreement only makes the change in any law applicable to the
existing power purchase agreement, but when the Regulations
themselves have been assailed on the ground of being arbitrary
and unconstitutional, they will cease to apply to the petitioners’

(26 of 41) [CW-18587/2018]
existing power purchase agreement, once they are declared
unconstitutional.
57. Reiterating the petitioners’ grievance, he submitted in other
words that the cost in the form of deviation charges cannot be
saddled on the petitioners for someone else’s fault. Elaborating his
argument further, he submitted that a generator will have to
depend upon the forecasting done by other agency, namely, QCA,
and if the forecasting done by the QCA turns out to be wrong
because of the wageries of the nature, a generator cannot be
burdened with the deviation charges. As such, Regulation 18 of
the Regulations is arbitrary and violative of Articles 14 and 19(1)
(g) of the Constitution of India, emphatically argued learned
counsel.
58. Thereafter, learned counsel for the petitioner pointed out
numerous other grievances of the petitioner, which were all
procedural and operational hassels, such as; (i) choice of QCA is
not in petitioner’s domain, (ii) no mechanism for registration has
been provided, (iii) no recording of metering is carried out, (iv)
there is no mechanism of be-pooling etc.
59. Responding to the argument advanced by Mr. Singhvi that
the petitioners have not challenged the CERC Regulations, which
are the foundation stone of the impugned Regulations of 2017, Mr.
Balia submitted that the petitioners were not required to challenge
the CERC Regulations as they are applicable to inter-State
generation and supply of power and not to the petitioners’
arrangements whose supply and sale is limited within the confines
of the State of Rajasthan.

(27 of 41) [CW-18587/2018]
60. He argued that if the deviation charges in question are not
tax, fee or penalty, as contended by the respondents, then the
only category in which they can possibly fall is “damages”; and if
the deviation charges are to be reckoned as damages, the
respondents are required to show, at least to this Court; as to
what is the loss suffered or likely to be suffered by them, in case
the scheduling made by a generator turns down to be erroneous
or inaccurate. He submitted that recovery of such damages,
without there being any corresponding loss or harm to the
respondents, and that too in a mechanical manner by way of a
mathematical formula, is per se arbitrary. The impugned
Regulation 18 prescribing the deviation charges, thus deserves to
be declared violative of Articles 14 and 19(1)(g) of the
Constitution of India.
61. In support of his argument that the deviation charges are
penalty, he asserted that even the respondent No.5 has admitted
in express terms that the deviation charges are penalty, which is
evident from perusal of para No.14(F) of the reply. We deem it
appropriate to reproduce the same hereunder:-
“In the respectful submissions of the answering
respondent, the condition of depositing penalty as
mentioned in the regulation is just to enforce discipline
in the Grid that this regulation has been put in place.
The QCA’s have the requisite expertise to forecast wind
energy. Clause 81, 82, 83 of the order sheet dated
14.09.2017 clearly emphasis the need for forecasting
of RE power. The intent if very clear in the regulation
which is instill grid discipline among the generators.
The charges are for those who shall not maintain grid
discipline.”
62. Similar was the stand taken by the respondent No.3 in para
No.14 of its reply, which reads thus:

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“In the respectful submissions of the answering
respondent, the condition of depositing penalty as
mentioned in the regulation is just to enforce
discipline in the Grid that this regulation has been put
in place. The QCA’s have the requisite expertise to
forecast wind energy. Clause 81, 82, 83 of the order
sheet dated 14.09.2017 clearly emphasis the need for
forecasting of RE power. The intent if very clear in the
regulation which is instill grid discipline among the
generators. The charges are for those who shall not
maintain grid discipline.”
63. Learned counsel further submitted that the petitioner does
not dispute that the scheduling is desirable, but the same does not
necessarily mean that it is possible and feasible in the present
situation. He asserted that the petitioner’s pleading is that the
forecasting is neither possible nor feasible, which is evident from
perusal of para No.81 of the order-sheet dated 14.09.2017
(Annex.1), which records as under:-
“Wind and solar energy sources are variable,
uncertain and intermittent in nature, which not only
poses a challenge to the system operator in operation
of the power system but also in maintaining the load-
generation balance in it at any given point of time.
Thus, integration of variable generation from solar
and wind sources is a real challenge for a system
operator which is to ensure reliability and security of
the power system. In order to facilitate large scale
integration of generation from such sources, the
Forecasting and Scheduling of electricity generated
from these sources is needed.”
While reading above referred para No.81, he urged that the
respondents, despite being alive to the fact that wind and solar
energy sources are variable, uncertain and intermittent in nature
and such sources have their own challenges, have proceeded to
frame and enforce the Regulations, which can be implemented
only in ideal situation. For seemless implementation of these

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Regulations, the basic facilities, equipment and software etc. are
sine qua non and in absence of such facilities hasty
implementation of these Regulations and hurling deviation
charges, being oblivious of the ground realities, had adversely
impacted the viability of generation from wind power and survival
of wind plants.
64. Learned counsel thereafter argued that the respondent
RERC, in a given case, can bring in appropriate legislation and the
same may be permitted to apply to an existing agreement; but in
the instant case, since the RERC is a party to the Power Purchase
Agreement, it is discharging dual role. The Commission is acting
as a rule making authority on the one hand and on other it is a
party to the contract, hence it cannot introduce a legislation and
amend the terms of the agreement, unilaterally to serve its own
interest or cause. Exercise of legislative power in such a manner is
clearly a colourable exercise of power; fervently argued learned
counsel.
65. Heard learned counsel for the parties and perused the
material available on record.
66. The basic reason for which the petitioners have come before
this Court, while bye-passing the statutory and other remedies
available to them, is the challenge to the Constitutional validity of
the Regulations of 2017. In light of the judgment of Hon’ble the
Supreme Court rendered in case of PTC India Ltd. Vs. Central
Electricity Regulatory Commission, reported in (2010) 4 SCC
603, this issue remains no more res integra that the validity of
Regulations, which are statutory in nature, can be challenged only

(30 of 41) [CW-18587/2018]
before this Court, in its power of judicial review conferred by
Article 226 of the Constitution of India. The other fora provided
under the Regulations or the Electricity Act, 2003 can neither
examine the RERC’s competence to frame Regulations nor can
they pronounce upon its validity. As such, the writ petitions at
hand are maintainable, so long as they are confined to challenging
the validity of the Regulations.
67. Then comes the moot question, as to whether Regulation 18
and other Regulations are arbitrary and violative of Articles 14 and
19(1)(g) of the Constitution of India, so as to be struck down,
and/or they are ultra-vires the provisions of Electricity Act, 2003,
as alleged by the petitioners.
68. Much has been said/claimed by the petitioners about the
Regulations of 2017, more particularly Regulation 18 thereof with
a view to get them declared arbitrary and violative of Article 14 of
the Constitution of India. Crux of the petitioners’ contentions in
this regard has been that Regulation 18 provides for deviation
charges in case a generator fails to adhere to the schedule given
by it. According to the petitioners, the scheduling of the
generation of electricity is totally subservient of the forecasting,
which is neither possible nor feasible for want of technical
expertise or mechanism. As per the petitioners even the QCAs are
not in a position to predict or forecast wind velocity and
consequential power generation.
69. In our considered opinion, mere fact that the generators as
well as the QCAs are not in a position to forecast wind velocity
with certitude, by itself is not enough to render the requirement of
scheduling to be arbitrary or violative of Article 14 of the

(31 of 41) [CW-18587/2018]
Constitution of India. While refraining from recording any finding
in this regard, even if it is presumed that such technology or
expertise is not available, the petitioners should well be advised to
approach RERC for redressal of their grievance or for its
intervention to ensure procurement or installation of requisite
equipment etc. to carry out accurate forecasting or to absolve the
generators from the rigours of the deviation charges on failure to
meet the scheduled or targeted production.
70. It is true that the statutory provision subordinate or primary
can be declared unconstitutional on the anvil of Article 14 of the
Constitution, in case the Court comes to a conclusion that any
particular provision of the Act is manifestly arbitrary. But the same
can be done only in those cases where the extent of arbitrariness
or unreasonableness is so apparent and glaring that the Courts
have no other option but to pronounce them to be arbitrary and
violative of Article 14 of the Constitution of India. In other words,
in a bid to declare the Regulations to be arbitrary and
unconstitutional, the petitioners are required to demonstrate and
prove that the same are so arbitrary and one sided that any
legislative body having rational and judicious approach could not
have enacted the same.
71. Having gone through the contentions and pleadings of the
parties, we do not find that the provisions of Regulations including
Regulation 18 to be so unreasonable or capricious impinging upon
the fundamental rights including right to carry on trade
guaranteed by the Constitution.
72. By way of the arguments advanced and contentions raised,
the petitioners have tried to establish that they have been

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compelled to engage one of the QCAs registered with the
respondents and provide a week ahead or a day ahead schedule of
their generation. On their failure to match their injection in tune
with the scheduling, they are liable to pay deviation charges as
prescribed under Regulation 18 of the Regulations. In our
considered opinion, requirement of wind energy Generators to
provide a week ahead or a day ahead scheduling, is well within
the powers of RERC to regulate the forecasting, scheduling and
generation of the electricity. Merely because precise forecasting is
not possible or feasible as alleged by the petitioners, the
provisions requiring such scheduling cannot be held as arbitrary.
Similarly, imposition of deviation charges by Regulation 18 in the
event of failure to adhere to the scheduled generation can also not
be declared arbitrary.
73. It is altogether a different aspect that looking to the different
geographical and climatic conditions peculiar to the western part
of the State, in a case of generation by wind energy, the
imposition of deviation charges may turn out to be excessive, but
then also, they cannot be held to be arbitrary until and unless
they are found to be confiscatory.
74. Excerpts from the following judgments support our above
view:
(I) R K Garg Vs Union of India [(1981) 4 SCC
675]:
“Another rule of equal importance is that laws relating
to economic actives should be viewed with greater
latitude than laws touching civil rights such as freedom
of speech, religion etc. It has been said by no less a
person than Holmes, J. that the legislature should be
allowed some play in the joints, because it has to deal
with complex problems which do not admit of solution
through any doctrine or straight jacket formula and

(33 of 41) [CW-18587/2018]
this is particularly true in case of legislation dealing
with economic matters, where, having regard to the
nature of the problems required to be dealt with,
greater play in the joints has to be allowed to the
legislature. The court should feel more inclined to give
judicial deference to legislature judgment in the field
of economic regulation than in other areas where
fundamental human rights are involved. Nowhere has
this admonition been more felicitously expressed than
in Morey v. Doud 354 US 457 where Frankfurter, J.
said in his inimitable style:
In the utilities, tax and economic regulation
cases, there are good reasons for judicial self-
restraint if not judicial difference to legislative
judgment. The legislature after all has the
affirmative responsibility. The courts have
only the power to destroy, not to
reconstruct. When these are added to the
complexity of economic regulation, the
uncertainty, the liability to error, the
bewildering conflict of the experts, and the
number of times the judges have been
overruled by events-self-limitation can be seen
to be the path to judicial wisdom and
institutional prestige and stability.
The court must always remember that "legislation is
directed to practical problems, that the economic
mechanism is highly sensitive and complex, that many
problems are singular and contingent, that laws are
not abstract propositions and do not relate to abstract
units and are not to be measured by abstract
symmetry" that exact wisdom and nice adoption of
remedy are not always possible and that "judgment is
largely a prophecy based on meagre and un-
interpreted experience". Every legislation particularly
in economic matters is essentially empiric and it is
based on experimentation or what one may call trial
and error method and therefore it cannot provide for
all possible situations or anticipate all possible abuses.
There, may be crudities and inequities in complicated
experimental economic legislation but on that account
alone it cannot be struck down as invalid. The courts
cannot, as pointed out by the United States Supreme
Court in Secretary of Agriculture v. Central Reig
Refining Company 94 Lawyers Edition 381 be
converted into tribunals for relief from such crudities
and inequities. There may even be possibilities of
abuse, but that too cannot of itself be a ground for
invalidating the legislation, because it is not possible
for any legislature to anticipate as if by some divine
prescience, distortions and abuses of its legislation
which may be made by those subject to its provisions
and to provide against such distortions and abuses.
Indeed, howsoever great may be the care bestowed on

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its framing, it is difficult to conceive of a legislation
which is not capable of being abused by perverted
human ingenuity. The Court must therefore
adjudge the constitutionality of such legislation
by the generality of its provisions and not by its
crudities or inequities or by the possibilities of
abuse of any of its provisions. If any crudities,
inequities or possibilities of abuse come to light, the
legislature can always step in and enact suitable
mendatory legislation. That is the essence of
pragmatic approach which must guide and inspire the
legislature in dealing with complex economic issues.
It is true that certain immunities and exemptions are
granted to persons investing their unaccounted money
in purchase of special bearer bonds but that is an
inducement which has to be offered for unearthing
blackmoney. Those who have successfully evaded
taxation and concealed their income or wealth despite
the stringent tax laws and the efforts of the tax
department are likely to disclose their unaccounted
money without some inducement by way of immunities
and exceptions and it must necessarily be left to the
legislature to decide what immunities and exemptions
would be sufficient for the purpose. It would be
outside the province of the court to consider if any
particular immunity or exemption is necessary or not
for the purpose of inducing disclosure of black money.
That would depend upon diverse fiscal and economic
considerations based on practical necessity and
administrative expediency and would also involve a
certain amount of experimentation on which the Court
would be least fitted to pronounce. The court would
not have the necessary competence and expertise to
adjudicate upon such an economic issue. The court
cannot possibly assess or evaluate what would be the
impact of a particular immunity or exemption and
whether it would serve the purpose in view or not.
There are so many imponderables that would enter
into the determination that it would be wise for the
court not to hazard an opinion where even economists
may differ. The court must while examining the
constitutional validity of a legislation of this kind, "be
resilient, not rigid, forward looking, not static, liberal,
not verbal" and the court must always bear in mind
the constitutional proposition enunciated by the
Supreme Court of the United States in Munn v. Illinois
94 U.S. 13 namely, "that courts do not substitute their
social and economic beliefs for the judgment of
legislative bodies". The court must defer to
legislative judgment in matters relating to social
and economic policies and must not interfere,
unless the exercise of legislative judgment
appears to be palpably arbitrary. “

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(II) Bhavesh D Parish Vs Union of India [(2000) 5
SCC 471]:
“The services rendered by certain informal sectors of
the Indian economy could not be belittled. However, in
the path of economic progress, if the informal system
was sought to be replaced by a more organised
system, capable of better regulation and discipline,
then this was an economic philosophy reflected by the
legislation in question. Such a philosophy might have
its merits and demerits. But these were matters of
economic policy. They are best left to the wisdom of
the legislature and in policy matters the accepted
principle is that the courts should not interfere.
Moreover in the context of the changed economic
scenario the expertise of people dealing with the
subject should not be lightly interfered with. The
consequences of such interdiction can have large-scale
ramifications and can put the clock back for a number
of years. The process of rationalisation of the
infirmities in the economy can be put in serious
jeopardy and, therefore, it is necessary that while
dealing with economic legislations, this Court, while
not jettisoning its jurisdiction to curb arbitrary action
or unconstitutional legislation, should interfere only in
those few cases where the view reflected in the
legislation is not possible to be taken at all.”
(III) Shayara Bano & Ors. Vs Union of India & Ors.
[(2017) 9 SCC 1]:
“95. On a reading of this judgment in Natural
Resources Allocation, IN re, Spe ial Reference No.1 of
2012 [(2012) 10 SCC 1], it is clear that this Court did
not read McDowell (supra) as being an authority for
the proposition that legislation can never be struck
down as being arbitrary. Indeed the Court, after
referring to all the earlier judgments, and Ajay Hasia
(supra) in particular, which stated that legislation can
be struck down on the ground that it is "arbitrary"
Under Article 14, went on to conclude that
"arbitrariness" when applied to legislation cannot be
used loosely. Instead, it broad based the test, stating
that if a constitutional infirmity is found, Article 14 will
interdict such infirmity. And a constitutional
infirmity is found in Article 14 itself whenever
legislation is "manifestly arbitrary"; i.e. when it
is not fair, not reasonable, discriminatory, not
transparent, capricious, biased, with favoritism
or nepotism and not in pursuit of promotion of
healthy competition and equitable treatment.
Positively speaking, it should conform to norms
which are rational, informed with reason and
guided by public interest, etc.”

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(IV) In Indian Express Newspapers v. Union of
India, (1985) 1 SCC 641, Hon’ble the Apex Court
held that it is a settled law that subordinate legislation
can be challenged on any of the grounds available for
challenge against plenary legislation. This being the
case, there is no rational distinction between the two
types of legislation when it comes to this ground of
challenge Under Article 14. The test of manifest
arbitrariness, therefore, as laid down in the aforesaid
judgments would apply to invalidate legislation as well
as subordinate legislation Under Article 14. Manifest
arbitrariness, therefore, must be something done
by the legislature capriciously, irrationally
and/or without adequate determining principle.
Also, when something is done which is excessive and
disproportionate, such legislation would be manifestly
arbitrary. We are, therefore, of the view that
arbitrariness in the sense of manifest arbitrariness as
pointed out by us above would apply to negate
legislation as well Under Article 14.
(V) Khoday Distilleries Ltd. Vs State of Karnataka
[(1996) 10 SCC 304]:
“13. It is next submitted before us that the amended
Rules are arbitrary, unreasonable and cause undue
hardship and, therefore, violate Article 14 of the
Constitution. Although the protection of Article 19(1)
(g) may not be available to the appellants, the rules
must, undoubtedly, satisfy the test of Article 14, which
is a guarantee against arbitrary action. However, one
must bear in mind that what is being challenged here
under Article 14 is not executive action but delegated
legislation. The tests of arbitrary action
which apply to executive actions do not necessarily
apply to delegated legislation. In order that delegated
legislation can be struck down, such legislation must
be manifestly arbitrary; a law which could not be
reasonably expected to emanate from an authority
delegated with the lawmaking power. In the case of
Indian Express Newspapers (Bombay) Pvt. Ltd. and
Ors. v. Union of India and Ors. [(1985) 1 SCC 641]
this Court said that a piece of subordinate legislation
does not carry the same degree of immunity which is
enjoyed by a statute passed by a competent
legislature. A subordinate legislation may be
questioned under Article 14 on the ground that it is
unreasonable; "unreasonable not in the sense of not
being reasonable, but in the sense that it is manifestly
arbitrary". Drawing a comparison between the law in
England and in India, the Court further observed that
in England the Judges would say, "Parliament never
intended the authority to make such Rules; they are
unreasonable and ultra vires". In India, arbitrariness is
not a separate ground since it will come within the

(37 of 41) [CW-18587/2018]
embargo of Article 14 of the Constitution. But
subordinate legislation must be so arbitrary that it
could not be said to be in conformity with the statute
or that it offends Article 14 of the Constitution.”
75. An argument has been advanced by learned counsel for the
petitioners that the deviation charges are in a way tax or penalty
and the same is not permissible within the powers available to
RERC under Section 181 of the Electricity Act, 2003. According to
us, instead of being tax or a penalty, the deviation charge is a
‘fine’ imposed on a generator on its failure to adhere to a week
ahead or a day ahead schedule of injection assured/guaranteed.
In our view, the fine in the form of deviation charges on failure to
meet with the schedule, is a necessary tool to keep the generator
within the confines of its schedule of generation and the same is
incidental rather quintessential to the regulatory mechanism.
Hence, provision for deviation charges in Regulation 18 of the
Regulations is within the expanse, scope and powers available to
RERC under Section 181 of the Act of 2003.
76. Our aforesaid view flows from judgment of Hon’ble the
Supreme Court in the case of Central Power Distribution
Company [(2007) 8 SCC 197], wherein identical levy in the
name of ‘Unscheduled Inter-change Charges’ (UI charges) has
been held to be valid. We wish to make a gainful reference of para
No.22.1 of the aforesaid judgment, which according to us, clinches
the issue in its entirety:-
“The application of availability-based tariff and
imposition of Unscheduled Interchange (UI) charges
are essential part of the functions of the Central
Commission under Section 79(1)(h) of the Electricity
Act, 2003 which reads ‘to specify Grid Code having
regard to the grid standards’, and sub-section (2) of

(38 of 41) [CW-18587/2018]
Section 28 read with Section 178(2)(g) dealing with
the Central Commission’s power to frame Grid Code.
The maintenance of Grid discipline envisaged under
the Grid Code is regulated by the mechanism of ABT
and UI charges. There is no basis for the appellant to
contend that unless something is a part of tariff the
Central Commission cannot exercise powers and
functions. ABT and UI charges are commercial
mechanism to control the utilities in scheduling,
dispatch and drawal and UI charges are tariff or
charges payable for deviations. In the facts and
circumstances mentioned above the legal position is
clear and there is no ambiguity in respect of the
jurisdiction of the Central Commission.”
77. Petitioners’ attempt, in our opinion, fails, that the above
judgment in case of Central Power Distribution Company (supra) is
distinguishable on facts and law. Learned counsel tried to draw a
distinction by saying that the case before Hon’ble the Supreme
Court was of thermal power, a traditional source of energy,
whereas in the present cases, the generators before this Court are
generating the electricity by wind energy, which is totally
dependent upon the vagaries of weather.
78. We are of the firm view that, whatever may be the source of
generating the power, the principle as far as power to levy charges
or fine by whatever name called on account of deviation is
concerned, they have been settled and shall remain unaltered. It
is different matter altogether that it is for the Regulatory
Commission to bear in mind the facts that in the case of
generation by wind energy, the scheduling or forecasting may not
be as accurate or flawless as in case of thermal power or other
traditional mode of generation of electricity.
79. A perusal of the pleadings of the Association, more
particularly para No.13 thereof, reveals that though the petitioner
has stated that the members are not against the forecasting as

(39 of 41) [CW-18587/2018]
such and they are in favour of forecasting and scheduling, yet
numerous arguments have been advanced finding fault with the
forecasting regulations. It is thus clear that the petitioners have
made a half-hearted challenge to the validity of the Regulations.
80. Argument of Mr. Bhansali that the respondents cannot levy
deviation charges under Regulation 18 of the Regulations as the
same would violate the provisions of the Regulations more
particularly Regulation 5, is untenable. According to him, the
impugned deviation charges interfere with the tariff fixed in the
Regulations without there being any stipulation of levy of deviation
charges in the tariff. This argument of Mr. Bhansali lacks merit as
deviation charges are in the nature of fine on account of failure to
meet the scheduled generation. As such the fine cannot be treated
to be an amount deductible from the tariff or the generation
charges. In our opinion, the deviation charge is independent and
divorced of the tariff and as such the stipulation regarding amount
payable contained in Regulation 5 does not get interfered or
breached as a result of the deviation charges prescribed in the
Regulation 18.
81. For what has been discussed above, we do not find anything
offending or arbitrary in the impugned Regulations, making them
vulnerable to Part III of the Constitution. Petitioners’ challenge to
the Regulations, thus, fails.
82. The petitioners have raised host of arguments, some of
which touch upon the constitutional validity, while others seek to
unravel their innate unreasonableness or impracticability.
Notwithstanding the fact that we have upheld the validity of the
impugned Regulations, we feel that certain grievances raised by

(40 of 41) [CW-18587/2018]
the petitioners, need to be appropriately addressed to, which we
have noticed while hearing the arguments laying challenge to the
vires of the Regulations of 2017.
83. We are cognizant of our constraints so far as the technical
aspects are concerned. Needless to observe that with a view to
appreciate the adversities allegedly faced and in a bid to fathom
the financial disadvantages purportedly meted out by the wind
power generators, one is supposed to know the nitty-gritties of
generations; distribution; grid functions; and the technology, not
only which is presently available, but also which is in offing. We
thus refrain from embarking upon such unfamiliar terrain, and
leave the technical aspects to be dealt with by the subject experts.
84. Learned Advocate General has assured us that RERC is a
statutory body, comprising of experts of various subjects and is
competent to deal with the grievances of the petitioners–power
generators, besides possessing regulatory powers. Upon perusal of
Regulations 23 to 26 of the Regulations, we find that they are
wide enough to address the concerns raised by the petitioners.
85. We, therefore, relegate the petitioners to approach the RERC
with their grievances, (including those which have been raised
before us) for their efficacious redressal. The petitioners may file
their representation/petition(s) ventilating their grievance(s)
within a period of 15 days from today. In case such
petition/review is filed, the RERC shall decide the same within a
period of two months from the date of filing, after providing
opportunity of hearing to all stake holders, including the
petitioners. Until the petitioners’ representation/review petitions
are decided, the respondent RRVPNL shall remain restrained from

(41 of 41) [CW-18587/2018]
recovering the deviation charges from the petitioners and/or
QCAs.
86. With these observations, all the three writ petitions are
disposed of.
(DINESH MEHTA),J (SANGEET LODHA),J
/skm/-
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CW / 18587 / 2018 INDIAN WIND POWER ASSOCIATION (RAJASTHAN STATE COUNCIL) Vs. RAJASTHAN ELECTRICITY REGULATORY COMMISSION

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CW / 18587 / 2018 INDIAN WIND POWER ASSOCIATION (RAJASTHAN STATE COUNCIL) Vs. RAJASTHAN ELECTRICITY REGULATORY COMMISSION