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DPC seeks HC's intervention to decide MERC jurisdiction

Enron-promoted Dabhol Power Company on Monday sought intervention of Bombay high court to decide the jurisdiction of Maharashtra Electricity Regulatory Commission, restraining the multinational from activating escrow account and initiating international arbitration proceedings against Maharashtra State Electricity Board.

A bench, headed by Justice Ajit Shah, was hearing a petition filed by DPC urging for staying or quashing the May 29 order of MERC, which had ordered DPC to refrain from activating the escrow account and initiating international arbitration proceedings.

Justice Shah suggested that the jurisdiction issue could be decided by MERC itself and also inquired from DPC's counsel Atul Setalvad, whether it was necessary for the high court to intervene at this stage.

DPC's counsel, however, felt that the high court had a right to decide on the jurisdiction of subordinate courts like MERC and cited an apex court judgement to buttress his argument.

"The dispute between DPC and MSEB over PPA between them could only be decided through international arbitration," he said.

He said DPC had appointed New South Wales-based Andrew Rogers as its arbitrator while MSEB had appointed former high court judge M L Pendse as its arbitrator "unconditionally and without protest." This showed that both sides were inclined to refer the dispute to arbitration.

Advocate General Goolam Vahanvati, on behalf of the state, said MERC would hear DPC's argument on June 14 whether it had the jurisdiction to restrain the company from initiating arbitration proceedings.

DPC had sought a direction from the high court to call for records from MERC and after perusing it, set aside the impugned May 29 order in favour of MSEB. It has also sought a direction to MSEB to withdraw proceedings pending before MERC.

DPC has argued that Electricity Regulatory Commission Act 1998 came into affect much after PPA was signed between it and MSEB on December 8, 1993. The PPA has clearly provided for international arbitration in case of dispute between them.

Therefore, DPC argued, MERC had no jurisdiction to act, entertain or adjudicate upon any disputes and differences, which have arisen between it and MSEB in connection with PPA.

DPC said MSEB had entered into PPA after seeking state government's approval. Both parties were fully aware that PPA contained a dispute resolution mechanism, which provided for an arbitration of disputes and differences, in accordance with arbitration agreement set out in clause 20.3.

MSEB, in an affidavit, contended that DPC had acted "in haste" and it should have waited for MERC to pass an order or at least take a decision over jurisdiction on June 14 hearing.

MSEB has sought orders from the court, directing DPC back to MERC saying that High Court could do so as the regulator was yet to pass an order in this case, which could be challenged.

"DPC has jumped the gun," it said.

MSEB prayed that it was too premature for the HC to intervene in the matter, orders for which have not yet been passed by other concerned quasi-judicial authority.

The MSEB affidavit said, the court should take in to account MERC's stand over this imbroglio and refer the case back to the regulator, they said.

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