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MERC restrains DPC from activating escrow account

The Maharashtra Electricity Regulatory Commission on Tuesday restrained Enron-promoted Dabhol Power Company from activating the escrow account.

The commission also passed a temporary injunction asking DPC not to pursue its arbitration proceedings till the final hearing and disposal of the petition filed by MSEB.

At the hearing at the MERC this afternoon, Maharashtra advocate general Goolam Vahanvati, appearing on behalf of MSEB, referred to DPC's letter of May 25 and said the state power utility has decided 'to stop buying power from the Enron-promoted company as it considered the PPA void'.

Vahanvati argued that the commission was set up by Parliament in 1998 and had been vested with powers for adjudicating disputes and differences between licensees and utilities and refer the matter for arbitration.

"If the PPA was signed before the setting up of the commission, there was no provision in the Electricity Regulatory Commission Act that states displacement of such PPAs," he added.

The commission is a special body which can adjudicate any private dispute resolution even if it was concerned with the validity of the PPA, the AG clarified.

Vahanvati also argued that since DPC was a registered company in India, all its arbitration proceedings should be held here and nowhere else.

"This is a matter of public policy. DPC has to respect the law of the Indian land and abide by it. Just because they are foreigners, it does not mean the arbitration proceedings should be held abroad," Vahanvati said.

Citing a Supreme Court case of Natraj Studios versus Navarang Studios, the AG tried to establish that MERC had the jurisdiction over deciding the matter.

Earlier, defiant DPC lawyers led by senior counsel Atul Setalvad said the energy major had doubts over MERC's jurisdiction to decide the fate of several on-going disputes between US energy major and MSEB and sought two weeks time to prepare for replying the petition.

When MERC chairman P Subrahmanyam asked DPC lawyers to explain its stand on MERC, Setalvad said "prima facie it appears that the commission did not have the jurisdiction to settle the dispute".

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