Vedanta, Ambuja Cements, Ultratech Cement, and Rajasthan Spinning Mills Association have won a legal battle against electricity distribution companies in Rajasthan, at the Appellate Tribunal for Electricity (APTEL), over an increase in cross-subsidy surcharge (CSS). The companies buy electricity through ‘open access’ — directly from power producers — and pay the CSS.

The CSS goes towards supply of electricity to poor and under-privileged customers, but the Electricity Act, 2003, says it should be “progressively reduced” because it is really a form of tax. A 2007 amendment, however, removed the word ‘eliminated’.

Industrial consumers of electricity pay this levy in most states. But in the Rajasthan case the companies objected because the CSS was raised, that too when the distribution companies — the Vidyut Vitaran companies of Jaipur, Ajmer and Jodhpur — did not file tariff petitions, which would require them to make a case for the hikes based on their income and expenditure.

The CSS rates were previously 18 paise per unit for 132 KV consumers, 13 paise per unit for 33 KV consumers, and 5 paise per unit for 11 KV consumers. These were raised to ₹1.63, ₹1.39, and ₹0.83, respectively, for consumers of large industrial service.

The companies protested before the Rajasthan Electricity Regulatory Commission on the grounds that the levies were to be “progressively reduced” and hence could not be raised. The commission overruled the objections and allowed the hike.

APTEL did not approve of it. It noted that “the manner in which the impugned order has been passed to be unfair, unjust and violative of the procedure and norms prescribed thereof”. It set aside the order of the commission. However, it clarified that the commission would be within its jurisdiction to revisit the subject in future.

Eye on payment aggregators

Payment aggregators fall within the definition of ‘designated payment system’ under Section 23A of the Payment and Settlement Systems Act, the Delhi High Court has ruled. The Reserve Bank of India can issue guidelines for running such payment systems. A division bench comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju dismissed a plea by Lotus Pay Solutions, which provides recurring payment solutions for businesses. The company challenged clauses 3, 4 and 8 of an RBI circular dated March 17, 2020, titled ‘Guidelines on regulation of payment aggregators and payment gateway’. The court said that services offered by payment aggregators to the payer and beneficiary through technology should fall within the ambit of the payment system. Because the gateways do not handle funds, and only provide technology to route and/or facilitate online payments, clauses 3, 4 and 8 are not applicable to them, it observed.

Bank of India directed to pay

Sometimes the money involved in an issue isn’t much, but the underlying principle is. Bank of India must have felt so, because it refused to release Rs 1 crore, given on behalf of a corporate borrower, against whom insolvency proceedings were initiated. The bank said that the Rs 1 crore belonged to it. The Resolution Professional held the view that it still belonged to the corporate debtor (Actif Corporation Ltd) and hence ought to be treated as part of the assets that would be divvied up in the corporate insolvency resolution process.

The NCLT, Ahmedabad bench, judged that the Rs 1 crore belonged to the corporate debtor; the bank had held it in a separate, “no-lien” account. The bank went on appeal to NCLAT. The appellate tribunal upheld the NCLT verdict.

It said: “It is clear that the said amount (Rs 1 crore) was to be adjusted/utilized upon approval of the Resolution Plan and was not to be adjusted towards ‘Interest’ or ‘Principal’ till then. Prior to the commencement of CIRP, this amount was not adjusted by the Bank towards the loan account of Bank as the OTS Proposal had failed. Once the CIRP was initiated, keeping in view that the OTS had failed, the amount lying in the ‘no lien account’ belongs to the ‘Corporate Debtor’ and under Section 18(f) of the Insolvency and Bankruptcy Code, 2016.”