Isabella Mariam

The High Court of Rajasthan Single Bench of Justice Rekha Borana dismissed a writ petition challenging the blacklisting of a company from availing connectivity and open access from a central nodal agency. The Court upheld the agency's decision to blacklist the petitioner-firm for a period of three years, citing admitted acts of misrepresentation in critical documents required for connectivity approvals. The Court held that the revocation of the firm’s connectivity rights and termination of transmission agreements did not bar the authority from proceeding further against the petitioner. The final direction affirmed the legality of the blacklisting action and declined to interfere with the impugned order.

The petitioner, a firm authorised to develop solar parks in Rajasthan, had applied for Stage I and subsequently Stage II connectivity with the Central Transmission Utility of India Ltd. (CTU), a nodal agency responsible for granting inter-state transmission system (ISTS) connectivity. The petitioner sought Stage I connectivity for 600 MWs and 1200 MWs on 12.10.2021 and 30.11.2021 respectively. The applications were approved via communications dated 21.12.2021 and 22.01.2022.

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To comply with Clause 9.2.2 of the Connectivity Procedure, which mandates land rights documentation for at least 50% of the land needed for the proposed capacity, the petitioner applied for Stage II connectivity for 500 MWs, 600 MWs, and 700 MWs. CTU approved all three applications on 07.03.2022 and allocated connectivity via Bikaner II PS sub-station. Corresponding transmission agreements were signed on 12.04.2022.

Subsequently, CTU received two anonymous complaints dated 14.07.2022 and 25.07.2022, alleging discrepancies in the land documents submitted by the petitioner. Upon scrutiny, CTU found that the same land documents had been submitted in multiple applications, and certain registration endorsements were used with unrelated documents. CTU concluded that this amounted to a prima facie case of fraud.

A show cause notice dated 04.08.2022 was issued, and the petitioner requested time to respond and sought a personal hearing. During the hearing and in subsequent responses dated 18.08.2022 and 21.08.2022, the petitioner admitted to uploading incorrect and duplicated land documents, attributing the issues to inadvertent errors and clerical mistakes. Specifically, in the 500 MW application, two unclaimed land documents were uploaded. In the 700 MW application, four documents were identified as incorrect and nine documents carried unrelated registration endorsements.

Citing these admissions and unsatisfactory explanations, the petitioner on 30.08.2022 sought unconditional withdrawal of all three Stage II connectivity grants. CTU accepted the withdrawal via its letter dated 31.08.2022, revoked the connectivity approvals, terminated the agreements, and encashed the bank guarantee.

However, CTU reserved its rights concerning the identified misrepresentations. It subsequently issued the impugned order on 23.03.2023, blacklisting the petitioner for three years.

The petitioner challenged the blacklisting primarily on the following grounds:

• CTU, being a nodal agency, lacked authority to blacklist.

• Blacklisting was barred under the Electricity Act, 2003, as the petitioner had a statutory right to open access.

• The firm had already been penalised through agreement termination and bank guarantee encashment; any further action amounted to double jeopardy.

• The alleged fraudulent documents did not offer any undue advantage, as there was no minimum land requirement at the relevant time.

• The mistakes were clerical and were neither deliberate nor material.

In response, CTU maintained that:

• Clause 9.2.2 did mandate a minimum land requirement of 50%.

• The petitioner admitted to duplicating land documents and mismatching endorsements.

• The blacklisting was a logical outcome of admitted misrepresentation and consistent with principles upheld by the Supreme Court.

Justice Rekha Borana extensively examined the petitioner's submissions, show cause notices, replies, and related materials.

The Court stated: "Admittedly, the above undertaking was given by the petitioner-firm while applying for Stage II connectivity." It referred to the specific clause wherein the petitioner had undertaken not to reuse land documents across applications.

Referring to the show cause notice dated 04.08.2022, the Court recorded: "Upon receipt of information about certain infirmities/anomalies... this examination inter alia revealed that SOLTOWN has duplicated and submitted the same land right related documents in more than one application."

On the petitioner’s response, the Court noted: *"A bare perusal of the above averments as made by the petitioner-firm in its replies... reflects that the fact of 04 land documents being wrongly uploaded... was admitted. Further, uploading of 09 land documents with different registration endorsement was also admitted, may be on the pretext of 'inadvertent error' or a 'clerical mistake'."

Addressing the claim of double jeopardy, the Court clarified: "Communication dated 31.08.2022 clearly reflects that the same was done by the CTU without prejudice to its rights..." and "CTU definitely, vide communication dated 31.08.2022, reserved its rights to act further regarding the infirmities."

On the issue of blacklisting power, the Court cited Patel Engineering Ltd. v. Union of India and Kulija Industries Ltd. v. BSNL, stating: "The authority of State to blacklist a person is a necessary concomitant to the executive power of the State... There need not be any statutory grant of such power."

The Court further observed: "A fair hearing to the party being blacklisted thus becomes an essential precondition..." and added, "The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court."

Noting that the petitioner was granted multiple opportunities to respond and a personal hearing, the Court concluded: "It is crystal clear that a fair opportunity of hearing was very well granted to the petitioner-firm by the respondent-CTU."

Regarding the proportionality of the penalty, the Court recorded: "The petitioner-firm annexed the same land documents with two different applications which was in total contravention to the conditions of the regulations... The above fraud being proved on record, the same definitely could not have been ignored by the respondent-CTU."

The Court concluded the observations with: "Fraud committed whenever and wherever, has to be taken care of and the same cannot be permitted to be given a go-bye."

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The Court issued the following conclusive directive:

"The action of the respondent-CTU therefore cannot be said to be arbitrary or against any provision of law. The same being totally in consonance with the settled position of law, the order impugned does not deserve any interference and the writ petition is hence, dismissed."

Further, the Court added: "Stay petition and pending applications, if any, stand disposed of."

Advocates Representing the Parties:
For the Petitioners: Mr. Vikas Balia, Senior Advocate assisted by Mr. Aditya Kumar Singh, Mr. Devendra Khatri, Ms. Anukriti Jain, Mr. Ashok Choudhary
For the Respondents: Mr. Alok Shankar, Mr. Falgun Buch with Mr. Gopal Kishan Chhangani

Case Title: M/s Soltown Infra Pvt. Ltd. & Ors. vs. Central Transmission Utility of India Ltd.

Neutral Citation: 2024: RJ-JD:38136

Case Number: S.B. Civil Writ Petition No. 9702/2024

Bench: Justice Rekha Borana