The Commercial Court, granted stay of the notice of NTPC, averting of power cuts in State

Shillong, May 7: The State Government, in pursuance of its objective of resolution of legacy issues in relation to the supply and transmission of power within the State of Meghalaya has been taking decisive steps.

The State Government identified huge expenditure being incurred from the Government Exchequer towards capacity charges being demanded by the NTPC under the Power Purchase Agreement of 2007.

Power minister Mr James said upon detailed examination of the same, it was observed that several crores of Rupees were being demanded by the NTPC under the said PPA, even though the State Government had surrendered its entire allocation under the said PPA in 2015 itself.

The State was also not drawing on its allocation of power from NTPC as the cost of power per unit was higher than prevailing market price and therefore, the continuation of the PPA had become unviable, unnecessary, and burdensome on the State Exchequer and did not serve any gainful purpose.

On 15th April 2021, when the country was in the middle of the 2nd wave of the deadly COVID-19 Pandemic, the NTPC raised a demand to clear an amount of INR 416.72 Crores of which INR 294 Crores was demanded to be paid in April 2021 itself and the NTPC further intimated to the MeECL that in case the said amount was not paid, then the Letter of Credit of an amount of INR 18 Crores (approximately), submitted by the MeECL would be invoked and forfeited immediately.

In the opinion of the State Government, none of the amounts demanded by NTPC are due and payable to it and the continuation of the PPA is not warranted. Therefore, the State Government, through MeECL took decisive steps and terminated the PPA by a notice dated 16.04.2021.

The State Government also took immediate steps to approach the Hon’ble District Commercial Court, Shillong on 22nd April 2021 seeking urgent stay against the action of NTPC.

That despite the threat of the COVID-19 Pandemic, the Hon’ble Commercial Court, Shillong presided upon by Shri N.A. Khan, Commercial Judge, was pleased to take up the matter and conducted physical hearing in view of the extreme urgency and in view of the great public interest involved in the matter.

The State Government was represented by Advocate General, Shri Amit Kumar, Sr. Advocate and assisted by advocates Mr. Sibasis Sen, Chetan Joshi and Arkin Kharwanlang.  The Hon’ble Court was pleased to pass an order of status quo in favor of the State Government on 22.04.2021 and the invocation of the Letter of Credit was averted.

Thereafter, the NTPC preferred an application for vacation of the stay order, however, the stay was not vacated and continues till date.

The NTPC again, by its letter dated 04.05.2021 notified to MeECL that since dues are not paid, Regulation of power would be done from 11.05.2021 onwards in the State of Meghalaya. In the present circumstances of growing COVID-19 cases, a decision to regulate power and subject the state to long power cuts would be disastrous and would seriously impact the fight against COVID-19.

The Government of Meghalaya therefore immediately approached the Hon’ble Commercial Court, Shillong presided upon by Shri N.A. Khan again on  07.05.2021 seeking stay of the decision of NTPC to regulate power supply in Meghalaya.

On 07.05.2021, despite enforcement of strict lockdown in East-Khasi Hills District, looking into the urgency of the matter, the Hon’ble Court, presided by Hon’ble Shri N.A. Khan was again pleased to conduct a physical hearing.

The hearing was also attended physically by the Advocate General, Shri Amit Kumar, Sr. Advocate, Sibasis Sen and and Arkin Kharwanlang Advocate for the Government of Meghalaya. The NTPC was also represented by its counsel before the Hon’ble Court.

The Hon’ble Court upon hearing the matter for almost two hours granted stay of the notice of NTPC dated 04.05.2021 thereby averting possibility of power cuts in the State from 11.05.2021.

In the above manner, the Government of Meghalaya is consistently making earnest endeavors to resolve the issues being faced by the Power Sector in the State and all channels for reforming the sector are being actively explored with the interest of the public being paramount in the eyes of the Government, said power minister Mr. James k Sangma in the press statement issued today.



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