This judgment will also decide connected petitions mentioned at Anncxure 'A' to this judgment.
2. This litigation raises two issues of related nature. These issues have, in the past, come up before this Court and also before the Supreme Court of Pakistan and emanates from a judgment finally passed by the Supreme Court in C.P Nos. 159-L to 214-L of 2018 ("the Judgment"). A review petition was also filed against this judgment and which too was dismissed through an order dated 16.8.2019 passed in C.R Nos.49-L to 99-L of 2019. The order passed in review petitions is the most relevant order for our:purposes and is set out below:.
"2. We have heard the learned counsel for the parties at great length. No ground for review is made out. These review petitions are dismissed with a clarification that the judgment under review deals only with industrial consumers utilizing gas supplied to them with or without cogeneration of power . However , it does not apply to or over the case of those industrial consumers who had originally obtained license s/connections for captive power generation."
3. The first thing that comes out starkly from a reading of the order set out above is that the review petitions were dismissed and only a clarification regarding judgment under review was provides by the Supreme Court. It was clarified that the judgment under review dealt with only industrial consumers utilizing gas supply to them with or without co-generation of power . In the same vein, a further clarification was issued to the effect that the judgment did not apply to those industrial consumers who had originally obtained licenses / connections for captive power generation. It is admitted on all hands and is common ground that the parties are all industrial consumers utilizing gas supplied to them with or without co-generation of power and none of them have ever obtained licenses for captive power generation.
4. In the judgment, the historical facts as well as the factual background of the litigation before the Supreme Court was brought forth in paragraph 3. It was noted that since 2013 the present petitioners had been paying tariff as industrial consumers under a notification dated 01.01.2013. Later another notification dated 23.08.2013 brought about a distinction between industrial and captive power generation and the tariff under the latter category was enhanced to Rs.571.28 per MMBTU . Relying upon the definition given in Regulation 2(K) of the National Electric Power Regulation Authority Licensing (Application and Modification Procedure ) Regulations, 1999 in respect of the captive power plant, the Supreme Court went on to hold as under: "Third, the term "captive power" is common to both NEPRA and OGRA as both the Regulators tend to regulate this category in one form or the other . This inter elatedness of the two statutes in the -context of "captive power" makes the cross contextual reference to Regulation 2(k) of the Regulations, permissible: In other words, addition of a captive power for self consumption to the industrial process of the respondent consumer does not alter the category or the tariff of the industrial consumer , unless and until the "captive power plant" assumes its own commercial identity and sells electricity to a third, party duly licensed by NEPRA .
14. On the basis of the record before us; we conclude that respondent consumers with a contract for supply of natural gas for industrial use and having in-house electricity generation' facility for self consumption (with or without cogeneration) fall in the category of industrial consumers and are subject to the corresponding tariff unless the generation facility is a Captive Power Plant as per NEPRA Regulations. For the above reasons, we find no reason to interfere with the judgment of the High Court, which is, therefore, upheld and these appeals are dismissed."
5. In a nub, the Supreme Court held that addition of captive power for self-consum ption to the industrial process of the consumers before the Supreme Court (the present petitioners) does not alter the category or the tariff from being an industrial consumer to captive power plant unless the captive power plant assumes "its commercial identity and sells electricity to a third party duly licensed by NEPRA". Thus, at the heart of the holding by the Supreme Court was the fact that in order to transform an industrial consumer to a captive power plant consumer , the sine qua non was a license issued by NEPRA to carry out that particular commercial activity and to sell electricity to a distribution company . In the opinion of the Supreme Court, if this was not the case then the rate applicable to an industrial consumer ought to apply and a consumer cannot be burdened with a higher tariff considering it as a captive power plant.
6. The controversy in these petitions has its provenance in the clarification issued by the Supreme Court while deciding the review petitions and which order has been reproduced above. As adumbrated there are two parts of the challenge. The first relates to a determination of the arrears and the question of determination of the fact of actual collection was otherwise of GIDC by the petitioner-companies. The controversy has come to a rest in two sets of petitions. Firstly , it was decided by a learned Single Judge of this Court in a set of petitions inter alia W.P.
No. 26838 which was decided by disposing of all the petitions with a direction to SNGPL to constitute a Committee taking into consideration that gas infrastructure development cess has not been charged and collected from the consumers. Pending such determination, the recovery of GIDC pursuant to Section 8(2) of GIDC Act, 2015 was ordered to be, stayed. On an attempt by SNGPL to recover that amount without the determination ordered by this Court, a further order was made by this Court in W.P No. 42232 of 2020 in the order dated 17.06.2021 (Tariq Class Industry v. Federation of Pakistan and others) reiterating the earlier order passed by a learned Single Judge of this Court and it was once again directed that that order ought to be complied with and remitting the bills to the industrial consumers was a contravention of the earlier order passed by this Court. The gas bills were struck down and the impugned demand raised in the bills was held to be ultra vires.
7. As explicated, taking advantage of the clarification issued by the Supreme Court in the review petitions, SNGPL has once again generated gas bills which have been remitted to the present petitioners raising a demand for payment of GIDC at the rate applicable to captive power plant. SNGPL contends that while disposing of the review petitions the Supreme Court made it clear that the judgment under review did not cover the cases of those industrial consumers who had originally obtained licenses/connections for captive power generation. The learned counsel for SNGPL submits that the clarification ensnared within its ambit both industrial consumers who had obtained licenses or connections and since the present petitioners had obtained connections which were used for captive power generation, therefore, the effect of judgment of the Supreme Court and its ratio does not apply to the present consumers. This argument of SNGPL is a play on words and a fallacy . The judgment squarely dealt with the issue while stating that: "Other than the definitional issue, we have noticed that the installation in house facility of electricity generation for self consumption (with or without co-ge neration) in an industrial unit is at best a part of the mechanical and industrial process of the respondent cons umer , which helps improve its efficiency and profitability . With the single category and single meter requirement of the tariff structure, multiple usage of natural gas within the industrial unit (for the industry and the captive self-consumption) is an internal arrangement of the consumer; therefore, only core business of the consumer is to be recognized for the purpose of categorization."
8. To reiterate, the review petitions were dismissed and the purpose and sweep of the order passed by the Supreme Court while disposing of review petitions cannot be distorted. It was to bring forth the clarification regarding those cases where the industr ial consumers had obtained licenses for captive power generation. The entirety of the reasoning on which the judgment as well as the order on review petitions is based has to be seen and simply because the mention of the word "connections" was made while disposing of the review petitions will not detract from the ratio decidendi which permeates the judgment of the Supreme Court. The key words are "industrial consumers who had originally obtained licenses/ connections for captive power generation". Thus whether it is a license or connection, it must have been for the purposes of captive power generation. On the contrary , petitioners here and before the Supreme Court operated an in-house generation facility or co-generation (explained in paragraph 2 of the judgment) and so their connections were not solely for captive power generation.
Thus the argument in this Court, mounted by SNGPL, must fall on barren ground. The case set up by SNGPL would have the unpalatable effect of upsetting the original judgment of the Supreme Court and to efface the benefit which accrued to the present consumers by that holding. Clearly SNGPL has unnecessarily embroiled the petitioners in another vortex of litigation which has no basis and the construction being sought to put on the order passed in review petitions is a figment of imagination of SNGPL. Under similar circumstances the Sindh High Court has decreed the suit filed by the consu mer who brought that suit to challenge similar notices for payment of demand raised by SNGPL based on the same premises. It was held by the Sindh High Court that: "From the aforementioned, clause, it is apparent that the very Supply Agreements are not in consonance with the concept of `Captive Power' as envisaged, under the NEPRA Regulations, nor was it contended that the gas connections had been obtain in relation to licenses issued by NEPRA to the Plaintiffs for that category . As such, the connections of the Plaintiffs cannot be said to have originally been obtained for the purpose of `captive power generation' and do not fall within the clarification made vide Civil Review Petition No. 44-L to 99-L of 2019, which is only to that extent and therefore appears to exclude the benefit of the underlying judgment only to those consumers who had. originally obtained, connections that properly fall within the scope of 'captive power', but then nonetheless subsequently claim, shelter under the lower `industrial' tariff on the ground that they had since ceased, sale of their surplus power , hence ought, to benefited accordingly .
However , under the given framework of these Suits, no intention to sell surplus power can be discerned on the part of the Plaintiffs, either at the time of their contracting with $SGCL in terms of the Supply Agreements or thereafter , and it is apparent that their in-house power -generation in accordance with those Agreements does not meet the test of what constitutes a 'Captive Power Plant' for purpose of the NEPRA Regulations so as to attract the tariff for 'Captive Power'. Furthermore, no allegation as to any breach of the aforementioned condition set out in the Supply Agreements has been advanced, and in fact it was conceded by learned, counsel for SSGCL that all of the Plaintiffs had remained and continued, to be complaint in that respect. A fortiori, the plaintiffs could not then have been migrated, by SSGCL from, the industrial tariff under which they were being charged in terms of the Notification dated 01.01.2013 to the higher tariff for 'Captive Power' subsequently introduced by OGRA in, terms of the Notification dated 23.08.2013.
9. In conclusion the Sindh High Court held the plaintif f to fall within the category of industrial consumers rather than captive power plant and to be made subject to industrial tarif f.
10. In view of the above, these petitions are allowed and the impugned demands raised are hereby set aside. The petitioners shall remain liable for the tarif f applicable to Industrial Consumers.