Legislation UpdatesNotifications

The Securities and Exchange Board of India has notified revised guidelines for Liquidity Enhancement Scheme in the Equity Cash and Equity Derivatives Segments vide circular dated September 1, 2021

 

Initially, on April 23, 2014, SEBI had issued circular permitting stock exchanges to introduce liquidity enhancement schemes in the equity cash and equity derivatives segments to enhance liquidity in illiquid securities. Observing the stock exchanges, SEBI has decided to modify clauses 3.1 and 4.1 of said Circular in the following manner:

  • The Scheme shall have prior approval of the Governing Board of the Stock Exchange which will be valid for one year. The Governing Board of the Stock Exchange may give yearly approval till the time the scheme is in operation. Further, its implementation and outcome shall be monitored by the Governing Board at quarterly intervals.
  • The Stock Exchange shall introduce liquidity enhancement schemes on any security. Once the scheme is discontinued, the scheme can be re-introduced on the same security.

 

These changes shall also be applicable to existing schemes. Other conditions prescribed in aforesaid SEBI Circular dated April 23, 2014 shall remain unchanged.

 


*Tanvi Singh, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Orissa High Court: A Division Bench of Mohammed Rafiq and B. R. Sarangi, JJ., disposed off the writ petition holding that equity has to be maintained between industrialization and eco-system itself.

The facts of the case are such that the petitioner-club New Light Yubak Sangha, registered under the Cooperative Society Act was established for the purpose of development of the poor, unemployed and downtrodden persons as well as the welfare and social public works of village Sodamal and its nearby area and also put grievance before the authority for their fundamental rights of enjoyment of pollution-free water and air for full enjoyment of their life as well as other inhabitants of the locality. In 2011 and 2015, Tahasildar, Kolabira issued a public notice that the land in question would be handed over to IDCO, Bhubaneswar for the establishment of industry on a permanent lease basis as it is government land which was opposed by the local people especially scheduled caste and scheduled which was thereby cancelled. But, again in the year 2019, a notification has been issued stating that the land is jungle kisam, would be handed over to IDCO on a lease basis so that IDCO would hand over the same to opposite party 8 for setting up of the industry by allotting the area measuring Ac. 8.00 decimals for the project. The District Level Single Window Clearance Committee without giving the opportunity of hearing to the local villagers approved the application of opposite party 8 for allotment of forest land in which newly planted valuable trees are growing. Aggrieved by the same, instant writ petition has been filed seeking direction to the opposite parties to cause an inquiry on the basis of the grievance made by the villagers of Sodamal and further seeks to cancel the notification.

Counsel for the petitioners submitted that the area having been located in the district of Jharsuguda wherein full-grown forest has been undergone with the help of local people, it helps the people to get free air and water. In the event the industry of opposite party 8 is established, it will destroy the eco-system and people will be deprived of getting free air and water, which will affect their right to live with dignity enshrined under Article 21 of the Constitution of India.

The Court observed that “steps taken by opposite party 8 at the cost of local people is serious one, thereby as has been stated earlier if the lease was allotted in the year 2011 and 2015 and the said proposal was cancelled, subsequently there was no valid justifiable reason to set up the industry by opposite party no.8 in the said land by destroying the eco-system without hearing the grievance of the local people. No doubt, industrialization is required for enhancement of revenue, but that does not mean at the cost of the lives of human being by destroying eco-system. Thereby, equity has to be maintained between industrialization and eco-system itself. Unless there is equilibrium between the two systems, ultimate result will be devastated.”

The Court directed  opposite party 2 “to pass a reasoned and speaking order by affording opportunity of hearing the petitioner vis-à-vis opposite party 8 and other affected persons, if any, as expeditiously as possible preferably within a period of three months from the date of production of this order.”

In view of the above, writ petition was disposed off.[New Light Yubak Sangha v. State of Odisha, 2020 SCC OnLine Ori 931, decided on 18-12-2020]


Arunima Bose, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

Appellate Tribunal for Electricity (APTEL): A Coram of Manjula Chellur, J. (Chairperson) and S.D. Dubey (Technical Member), allowed an appeal which was filed under Section 111 of the Electricity Act, 2003 against order passed by the Uttar Pradesh Electricity Regulatory Commission (State Commission) whereby the State Commission had rejected the petition of the Appellant seeking loss of fixed charges on account of the lower plant availability of 54.78% only, during the year 2017-18, which was directly due to the Appellant being not able to declare capacity to the full extent wholly and exclusively due to the persistent non-payment of the bills in accordance with the terms of Power Purchase Agreement (PPA) by the Respondent No. 2, Uttar Pradesh Power Corporation Limited (UPPCL) for the Electricity generated and supplied by the Appellant.

Facts:

The Appellant is a generating company within the meaning of Section 2(28) of the Electricity Act, 2003 having established a 3 x 660 MW power plant in villages, existing under the provisions of the Companies Act, 2013 in the State of Uttar Pradesh. The Respondent 1 – State Commission is the Electricity Regulatory Commission for the State of Uttar Pradesh exercising powers and discharging its functions under the provisions of the Electricity Act, 2003, it determined the tariff for the supply of electricity and also exercises the powers to adjudicate and decide on any disputes that arise between the Appellant and UPPCL. The Respondent 2 UPPCL is the Apex Body in the State of Uttar Pradesh which is overseeing the distribution and supply of electricity for and on behalf of the Distribution Companies (Respondents 3-6). They have authorized UPPCL to execute/sign the Power Purchase Agreements and also to carry out all necessary actions on their behalf in relation to the power purchase and supply. For the establishment of the generating station of the appellant, a Memorandum of Understanding (MoU) dated 22-04-2010 was entered into between the Government of Uttar Pradesh (GoUP) and a consortium of companies led by Bajaj Hindusthan Sugar Limited (BHSL) under a Special Purpose Vehicle (SPV), the Appellant which had already been incorporated by Respondent 2. The Appellant and UPPCL had entered into a PPA. The State Commission had allowed provisional tariff of Rs 1.88 towards fixed cost and Rs 2.95 as variable charge computed on capital expenditure of Rs 12,868 crores incurred. The said provisional tariff of fixed charges was further revised to Rs 2.24 with effect from 07-03-2018. The final tariff of the Appellant was pending determination from the date of commercial operation. The Appellant had been supplying the entire capacity of the generating station to UPPCL in terms of the PPA however UPPCL had been making substantial delays in making payment of the Appellant’s invoices as per the provisions of the PPA and not been providing and maintaining the payment security mechanism as per PPA. The Appellant had filed a petition before the State Commission seeking directions for payments of the outstanding dues. The State Commission had dismissed the petition based on the undertaking of UPPCL to clear all the dues forthwith and that the escrow mechanism would be created at the earliest. during the year for the purchase of coal and the Appellant was left with only a sum of Rs 2,833 crore out of which the Appellant had to meet its debt service obligations, working capital cost and O&M Charges including salary payment as essential and inevitable cash outgo prior to incurring any amount on procurement of coal. The Appellant kept on financing the coal purchase during the period from working capital facilities to the extent best possible and finally consumed the entire working capital facilities limits as available from time to time. Due to non-payment by UPPCL and the Appellant became a defaulter of its lenders with respect to working capital facilities also in addition to the default of payment of interest and installments of its term loans. This forced the Appellant in a financially stressed situation and the lenders started adjusting the entire money they received towards their dues, owing to which there was no or very little money available with the Appellant.

Arguments:

The Counsel for the appellant, submitted that due to default on the part of UPPCL the appellant has suffered financial misery and was required to pay the coal companies 100% of the cost of coal and also pay 100% of the railway freight in advance, for which the Appellant is required to be paid in time to ensure adequate working capital. The UPPCL have not disputed the fact that it has continuously defaulted in payment of the monthly bills of the Appellant for continuously 10 months in a row. The only defense of UPPCL was that the Appellant was compensated by Late Payment Surcharge (LPSC).

Issues:

  1. Whether the Appellant has changed its prayers during the course of the proceedings in the matter and if so, should the change of prayer be allowed?
  2. Whether Second Respondent has paid the outstanding amounts to the Appellant in accordance with the terms of the PPA and the Regulations specifically in light of the contention of UPPCL that the average payment made during the period was never more than 90 days;
  3. If not, whether the Appellant has actually suffered losses solely due to the non-payment of its outstanding dues in time;
  4. Whether the Regulations can be relaxed to allow the Appellant to recover its full fixed cost for the impugned period and as a consequence, can the PAF of Appellant be reduced to 54.78% from 85%;
  5. Whether late payment surcharge as envisaged in the Regulations and PPA are adequate to compensate the loss;
  6. Whether in facts and circumstances of the case, the Appellant is entitled to carrying cost?

Findings:

The Tribunal while setting aside the order of the State Commission allowed the appeal explaining all the issues at length. The Court relied on the principle founded in 1848 in Robinson v. Harman which supported innocent parties in the event of breach of contract. The Court further answered the issues at length as follows:

Issue No. 1: that the Appellant has not changed its prayer during the course of the proceedings either through its short Rejoinder Note or in Final Written submissions, as alleged by the Second Respondent.

Issue No. 2: that the second Respondent (UPPCL) has not paid the outstanding amounts to the Appellant in accordance with the terms of the PPA and the Regulations. We dismiss the concept of average payments introduced by R2 to justify its default of non-payment. We further observe that the outstanding of the Appellant remained substantial during most of the period in financial year 2017-18. Further, Respondent UPPCL has failed to establish Escrow/ Payment Security Mechanism as yet despite repeated categorical directions by the State Commission in its various orders.

Issue No. 3: Having established a clear correlation between delayed payments and coal shortage, we hold that the Appellant has actually suffered losses solely due to the non-payment of its outstanding dues in time by R-2. As a result, the applicant was not able to procure sufficient coal to declare full Capacity in spite of its generating units being technically available.

Issue No. 4: Having regard to various rulings of his Tribunal and the Hon’ble Apex Court, we are of the view that the instant case is a fit case to relax the Norms to allow the Appellant to recover its full fixed cost for the impugned period at actual PAF of 54.78% instead of normative 85% in the interest of justice and equity.

Issue No. 5: that in view of the facts& circumstances of the matter, late payment surcharge as envisaged in the Regulations and PPA is not meant for or otherwise, adequate to compensate the consequential loss suffered by the Appellant in full. Hence, it is entitled to further relief over and above LPSC.

Issue No. 6: that as per the settled principles of law, the Appellant is entitled to restitution and thus, to carrying cost from the date of capacity lost to date of actual payment at the prevailing rate of interest in accordance with UPERC Regulations.

[Lalitpur Power Generation Co. Ltd. v. Uttar Pradesh Electricity Regulatory Commission, 2020 SCC OnLine APTEL 82, decided on 28-09-2020]


Suchita Shukla, Editorial Assitant has put this story together