NDLI: Indsil Hydro Power & Manganese Ltd. Vs. State of Kerala & Ors Etc

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Judicial review Scope of interference Electricity Contractual matters Administrative Law
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Electricity : Pursuant to the policy decision of State Government to allow the private agencies to set up hydel schemes, the appellant was allowed to set up a Hydro Electric Project – MoU was executed between the appellant and the KSEB – In terms of the MoU, the appellant would operate the unit for 30 years from the date of commissioning i.e. the date from which the power generated by the appellant is fed into the KSEB grid – The MoU contemplated that the transmission line required for transferring power from the power house to the nearest grid sub-station upto a length of 4 Kms. would be built by KSEB at the cost of the appellant and rest of the transmission line was to be constructed by the KSEB at its own cost – Delay in construction of transmission line led to institution of writ petition by appellant before High Court wherein appellant claimed power free of cost in terms of clause 9 and 10 of the agreement and sought direction for expeditious construction of transmission line – Pursuant to interim order, the Chief Electrical Inspector filed a report to the effect that the installation of transformers was completed by the appellant on 21 August 2000 but the sanction for energization of 110 KV was not issued since the transmission lines were not ready – High Court directed the State Government to deal with the representations submitted by the appellant – Pursuant to order of High Court, State Government passed order on 7 February 2001 opining inter alia that appellant was not entitled to the benefit of the pre 1992 tariff concession till the completion of the transmission line by KSEB; that the delay in the construction of the transmission lines was not deliberate and was due to factors beyond control; that the tariff concessions were provided to new industries which is a distinct issue from captive power generation and hence the plea for a tariff concession could not be acceded to; and having regard to the grievance of the appellant that it had been unable to evacuate the power which it was positioned to generate for its captive unit, KSEB ought to adhere to the time schedule which it had undertaken to fulfill and complete the construction of the transmission lines by 28 February 2001 without fail – High Court dismissed the writ petition eventually holding that there was no intentional delay in construction of the transmission lines on the part of KSEB; that the tariff concession was made available only to new industries; and that the agreement between the parties did not disclose any specified time limit for the provision of transmission lines – On appeal, held: The agreement stipulated that the date of commissioning would be construed as the date from which the power generated by the units set up by the appellant was fed into KSEB grid – Though the contract did not specify the exact length of the transmission line, clause 9 made it clear that for a length of 4 kms, construction would be at the cost and expense of the appellant while the balance would be constructed by KSEB at its own cost – Clause 3 postulated that commercial operations would begin within a period of 30 months – Thus, the only reasonable construction of the contract would be that the obligations which were to be performed by KSEB, namely, the construction of the transmission line must necessarily be completed within the same period – Otherwise imposing an obligation upon the appellant to commence commercial operations within 30 months would have no meaning – Therefore, High Court was not correct in holding that the contract did not stipulate any timelines for the completion of the work of constructing the transmission line – Clause 12 of the agreement contemplated a situation where the KSEB grid is not in a position to absorb the energy generated from the project for any reason including the breakdown of transmission lines or any other reason beyond the control of KSEB – In that event, clause 12 provided the generation from the project to be restricted to the extent of generation for captive consumption as directed by KSEB – These provisions indicated that the contract was not entirely silent in regard to a situation involving the inability of KSEB’s grid to absorb the energy generated from the project for any reason – The report of the Chief Electrical inspector made it clear that it was as a result of the delay which took place in the construction of the transmission line that the actual injection of power into the grid could not take place – This clearly showed that the appellant had duly fulfilled its obligation of setting up Phase I and Phase II of its units and the only reason why it was unable to inject power into the grid was because the setting up of the transmission lines by KSEB could not take place – Thus, the basis on which State Government took a decision on 7 February 2001 and High Court affirmed it by its impugned judgment would need to be re-visited – Appellant was not entitled to the grant of deemed generation status as a matter of right – Similarly, the concessional power tariff applicable for a period of five years from 1994 to 1999 was extended until 20 August 2000 – This is undoubtedly a matter of policy and the High Court was justified in coming to the conclusion that it was not open to the Court to foist a particular measure of policy on the State – State Government to reassess the matter in proper perspective within the available framework of law and its own policy. Administrative Law: Contractual matters – Judicial review – Scope of interference – Held: It is now a settled principle of law that the exercise of writ jurisdiction under Art.226 is not excluded in matters pertaining to contract – The States and its agencies are duty bound to act in a manner which is fair and transparent – They cannot act arbitrarily in dealings with private parties – This must particularly be the governing principle where the State as a measure of encouraging industrialisation invites the participation of private industries to respond to the policy initiative of the State – Electricity. Deeds and documents: Interpretation of commercial documents – In construing a commercial document, the contract must be read and understood in its entirety so as to attribute to it a business meaning which was within the understanding of the contracting parties – Electricity.
Judge	Hon'ble Dr. Justice D.Y. Chandrachud
Neutral Citation	2019 INSC 829
Petitioner	Indsil Hydro Power & Manganese Ltd.
Respondent	State Of Kerala & Ors Etc
SCR	[2019] 10 S.C.R. 647
Judgement Date	2019-07-30
Case Number	5943

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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