Infosys faces a partial setback in its dispute with Tamil Nadu Generation and Distribution Corporation (Tangedco) over electricity bill payment. The
Madras High Court
declined to stay a single judge's order directing Infosys to pay R 6.72 crore to Tangedco, and has asked the software giant to make an interim payment of Rs 2.5 crore within two weeks.
The Madras High Court bench, comprising Acting Chief Justice R Mahadevan and Justice Mohammed Shaffiq, sided with Tangedco's arguments on the applicability of tariffs. While the full case is yet to be decided, the court direction to Infosys to make an interim payment of Rs 2.5 crore within two weeks puts pressure on Infosys and indicates that the court may lean towards upholding TNERC's tariff classifications.
The final verdict will likely determine the total amount Infosys owes Tangedco and may set a precedent for similar disputes regarding electricity tariffs for
IT companies
with mixed use campuses.
What is the Infosys vs Tangedco dispute about
The crux of the dispute lies in the applicable electricity tariff for Infosys' unit at Mahindra World City near Chengalpet, in Chennai. Infosys argues that their unit should be classified under industrial tariff, which offers lower rates. However, Tangedco maintains that a portion of the electricity consumption falls under different categories due to the presence of BPO activities and commercial establishments on the campus.
Infosys reportedly admitted to having BPO operations on its campus. Tangedco claims that for these activities, a higher "Tariff III" fixed by the Tamil Nadu Electricity Regulatory Commission (TNERC) should apply for the period 2009-2010.
Tangedco argues that the presence of commercial establishments like food courts, banks, and clubs operating under separate trade names within the Infosys campus disqualifies them from industrial tariff benefits. TNERC's 2017 tariff regulations supposedly prohibit this.
Infosys' Arguments and Counter-Arguments by Tangedco
Infosys, represented by senior advocate Vijay Narayan, challenged the claims. They argued that:
Tangedco's dues are barred by Section 56(2) of the Electricity Act, meaning the charges for BPO usage cannot be recovered.
The amenities mentioned (food courts etc.) are meant for employee welfare and hence should qualify for concessional industrial tariff.
Tangedco's senior counsel, P Wilson, countered these arguments stating:
* TNERC has the statutory authority to fix electricity tariffs, and these rates are legally binding.
* The limitation period for recovering dues is two years from the time they are recorded, which applies in this case.
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