Infosys Petition Rejected By Madras High Court In Rs 6.73 Crore TANGEDCO Case

The Madras High Court on Thursday dismissed a petition filed by IT major Infosys Limited, challenging an order passed by state-run discom TANGEDCO, demanding the company to pay over Rs six crore as shortfall amount. Justice G K Ilanthiraiyan dismissed the petition filed by Infosys Limited, which also sought to direct TANGEDCO to charge only Industrial Tariff.

Tamil Nadu Generation and Distribution Corporation had passed an order asking Infosys to pay Rs 6,72,95,384 as shortfall amount.

The judge said on perusal of the license agreement filed by TANGEDCO between the petitioner and its service providers revealed the latter were not paying any rent for the premises which was provided to them and also for the electricity and water charges for their portion.

However, the petitioner collected license fee from its service providers. Though the service providers of the petitioner were not paying any rent or electricity charges and water charges for their portion, which was provided to them to run their business, they were running their business to the petitioner's employees with profit. No service provider was running their respective business on subsidized rate to the employees of the petitioner, the judge added.

Further, all the service providers were running their business in their brand name which was very familiar to the general public. For example, no bank would operate on a subsidized rate such as for low interest. No food provider would sell the food without any profit, that too, all the food providers were running their business in their own brand name, the judge added.

He pointed out that out of total load of 9550 KVA availed by the petitioner, its service providers used electricity for commercial purpose to the extent of 386 KW.

The judge said perusal of audit enquiry report dated May 20, 2009 revealed the petitioner was engaged in the activities of software development and also information technology enabled services as certified by MEPZ, Chennai.

Based on the Board circular dated February 2, 2008, all the companies engaged in the activities of ITES should be billed under the commercial tariff. No separate means was adopted to ascertain the activity of the company and as such the bills were rendered under HT Tariff I Industry based on the certificate issued by Madras Export Processing Zone, Chennai.

Hence, in as much as the certificate provides proof of the petitioner being engaged in both software development and ITES, within the same premises, it was appropriate to adopt higher tariff which was the norms.

Therefore, TANGEDCO ought to have adopted a commercial tariff for the petitioner, the judge added.

The judge said non-adoption of the same has resulted in loss of revenue to the extent of Rs 4,50,18,325. Further, on perusal of subsequent demand, it was clearly mentioned about the amount due from the petitioner for the amount calculated under the commercial tariff in respect of these service providers, the judge added.