NDLI: M/s Adani Power (mundra) Ltd. Vs. Gujarat Electricity Regulatory Commission and Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	ss. 86 (1) (F) 2003 Principle of Business Efficacy 95 Electricity Act Determination of compensatory tariff
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Electricity Act, 2003 (36 of 2003)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Electricity Act, 2003 – ss. 86 (1) (F), 95 – Respondent No. 2-Procurer initiated the process of bidding for supply of power on long term basis, by issuing Request for Qualification – Three separate bids were invited – Appellant was selected as a successful bidder in respect of bid no. 2 for supplying 1000 MW power at the rate of Rs. 2.35 per Kwh – Consequently, Power Purchase Agreement (PPA) came to be entered into between the procurer and the appellant – Appellant contended that the bid submitted by it was on the basis of the assurance given by Gujarat Mineral Development Corporation (GMDC) to supply coal – It was also contended that, the GMDC was not abiding by the said assurance – There was a dispute between the appellant and the GMDC with regard to certain terms and conditions of the Fuel Supply Agreement (FSA) and as such FSA could not be finalized – Various communications were exchanged between the Government of Gujarat, appellant and GMDC to find out a solution – Finally, appellant by a communication dated 28.12.2009, issued notice to the procurer, terminating the PPA with effect from 04.01.2010 – Procurer filed petition u/ss. 86(1)(F), 95 of the Act, 2003 before Commission – The Commission held that the termination was illegal and directed the appellant to supply the power to the procurer at the rate determined in the PPA – Aggrieved, appellant filed appeal before the Appellate Tribunal, which was dismissed – On appeal, held: Appellate Tribunal depicted an erroneous approach – It is settled that to harmonize is not to destroy any statutory provision or render it otiose – A harmonious reading of Art. 3.4.2 and Art. 3.1.2 of the PPA indicated that in the event of non-compliance of any of the conditions as stipulated in Art. 3.1.2 within the period prescribed thereunder, either of the parties, i.e., the seller or the procurer have the right to terminate the contract – Further, Appellate Tribunal was totally incorrect in holding that the provisions u/Art. 3.4.2 of the PPA can be invoked only when there is an agreement between the parties that there is a violation of any of the conditions specified in Art. 3.1.2 of the PPA – If such a view of the Appellate Tribunal is accepted, it will amount to inserting a totally new condition in Art. 3.4.2 of the PPA and would amount to re-writing the contract between the parties; it would violate the provisions of Art. 3.4.2 of the PPA – And it will make the provisions of Art. 3.4.2 a dead letter and render them otiose – Also, it cannot said to be a condition which is necessary to give business efficacy to the contract – Besides, Appellate Tribunal erred in holding that the bid of the appellant was not on the basis of the commitment by the GMDC to supply indigenous coal – As it is clear from various communication between Government of Gujarat, Procurer and GMDC that the bid of the appellant was on the basis of the commitment by the GMDC to supply the indigenous coal – Thus, the termination of PPA by appellant was legal and valid – Interpretation of Statutes – Harmonious Construction. Electricity Act, 2003 – s.62 – Determination of compensatory tariff by Central Electricity Regulatory Commission (CERC) – Respondent No.2-procurer initiated the process of bidding for supply of power – Appellant was selected as a successful bidder for supplying 1000 MW power at rate of Rs. 2.35 per kwh – Appellant contended that the bid submitted by it was on basis of the assurance given by Gujarat Mineral Development Corporation (GMDC) to supply coal – It was also contended that GMDC did not abide by the said assurance – Appellant terminated the PPA – Procurer filed petition u/ss.86(1)(f) & 95 of the Act before the Commission – The Commission and the Appellate Tribunal held that the termination was illegal and directed the appellant to supply the power to the procurer at the rate determined by PPA – On appeal, held: Termination by appellant was valid and legal – Appellant supplied electricity to the procurer in accordance with the decision of the Commission and the Appellate Tribunal – In order to do economic justice, on the principle of business efficacy, the appellant entitled for adjustment of cost of the project and also entitled to the interest on the expenditure incurred by it for completion of project – Therefore, parties relegated to the CERC for determination of the compensatory tariff payable to the appellant from the date of termination of the PPA – CERC (Terms and Conditions of Tariff) Regulations 2009.
Judge	Hon'ble Mr. Justice Bhushan Ramkrishna Gavai
Neutral Citation	2019 INSC 711
Petitioner	M/s Adani Power (mundra) Ltd.
Respondent	Gujarat Electricity Regulatory Commission And Ors.
SCR	[2019] 8 S.C.R. 1017
Judgement Date	2019-07-02
Case Number	11133

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