Companies

Verdict on Hindustan Zinc case a precedent by apex court

M Ramesh Chennai | Updated on January 23, 2018 Published on May 17, 2015

Ruling implies that India Inc can’t duck buying green power

In a precedent-setting judgement pronounced last week, the Supreme Court of India has laid down that owning a captive power plant does not absolve a company of its obligation to purchase part of its power consumption from green sources, such as wind and solar.

The judgement implies that the various companies who have not been buying green power by taking shelter under a legal ambivalence, now face enforcement of their obligations.

The case pertains to an appeal of Vendanta group’s Hindustan Zinc Ltd against a 2012 verdict of the Rajasthan High Court, which said that the State electricity regulatory commission was right in imposing the ‘renewable purchase obligation’ on the company, even though the company runs its own captive power plants, of about 475 MW capacity.

Consequent to the judgement, HZL may have to shell out annually about ₹65 crore to buy green power.

“The renewable purchase obligation imposed upon captive power plants and open consumers through the impugned regulation cannot in any manner be said to be restrictive or violative of the fundamental rights conferred on the appellants…..we do not find any reason to interfere with the impugned judgement (of the Rajasthan High Court),” the apex Court’s order said.

It dismissed Hindustan Zinc’s appeal saying it was “devoid of merit”.

Impact of the order

The Supreme Court’s order brings clarity to the point as to whether or not companies that have captive power plants are covered by the law that mandates green power purchase.

Some other companies had impleaded themselves in the case, filing counter affidavit with the Supreme Court — Ultratech Cements, Mangalam Cements, Binani Cements, Trinetra Cements, Shree Cement, Rajasthan Textile Mills Association, DCM Shriram Consolidated Ltd, JK Tyre Industries and Lucid Coloids Ltd.

“All other interlocutory applications for impleadment/intervention/stay/directions are disposed off,” the order says.

As such, the order will have far reaching implications on India Inc. Vishal Pandya, Founder of REConnect, a consultancy that operates in the area of renewable energy certificates trading, observes that several High Courts have stayed the imposition of RPO on captive power producers.

“With the Supreme Court, these stays will become redundant,” Pandya said.

“The order will provide support to the State electricity regulators to impose RPO regulations more forcefully and enforce them effectively,” he said.

Published on May 17, 2015

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