Content Provider | Supreme Court of India |
---|---|
e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Contract – Power Purchase Agreement (PPA) |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Indian Contract Act, 1872 (9 of 1872) |
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 | Contract – Power Purchase Agreement (PPA) – Interpretationof – Predecessor of the appellant, the Andhra Pradesh StateElectricity Board, in 1995 invited bids for establishing short gestationgas/Naphtha/fuel oil based power stations – Respondent was asuccessful bidder and had set up a power generation plant –Pursuant to the same, a PPA was executed between the parties on31.03.1997 under which Naphtha was the primary fuel and gas analternate fuel – In 2003, PPA was amended making gas the primaryfuel and Naphtha an alternate fuel – The PPA underwent furtheramendment in 2007, restricting the term ‘fuel’ to ‘natural gas only’– Respondent had sought permission to use Regasified LiquefiedNatural Gas (RLNG) as fuel for generating power as RLNG is aform of natural gas – Whether the word ‘fuel’ as used in clause ofthe PPA means ‘natural gas only’ or includes RLNG – Held: In theevent of any ambiguity arising, the terms of the contract will haveto be interpreted by taking into consideration all surrounding factsand circumstances, including correspondence exchanged, to arriveat the real intendment of the parties, and not what one of the partiesmay contend subsequently to have been the intendment or say asincluded afterwards – The respondent’s let ters to appel lantspecifically requested for permission to use RLNG to supplementshortfall in gas, requesting to acknowledge its usage – Appellant inits reply explicitly stated that under the agreement no other fuelexcept natural gas could be used and that RLNG was nevercontemplated in the definition of fuel declining to accept the spotsupply agreement for RLNG supplies, citing the cost of power perunit from the same (RLNG) more costly in comparison to per unitcost from natural gas – Therefore, the intention of the parties underthe agreement, as amended from time to time, was to generate power from fuel reasonably priced, so as to ultimately make available powerto the consumers at reasonable rates – The choice of fuel as naturalgas only has, therefore, to be understood as being confined tonatural gas only in its natural form – The respondent was well awarethat RLNG was never intended to be included in the definition ofnatural gas as understood by parties, notwithstanding that it maybe a variant of natural gas – Petroleum and Natural Gas RegulatoryBoard Act, 2006 – s.2(za)(i).Deeds and Documents – Commercial Document –Interpretation of – Held: A commercial document cannot beinterpreted in a manner to arrive at a complete variance with whatmay originally have been the intendment of the parties – Such asituation can only be contemplated when the implied term can beconsidered necessary to lend efficacy to the terms of the contract –If the contract is capable of interpretation on its plain meaningwith regard to the true intention of the parties it will not be prudentto read implied terms on the understanding of a party, or by thecourt, with regard to business efficacy. |
Judge | Hon'ble Mr. Justice Navin Sinha |
Neutral Citation | 2018 INSC 162 |
Petitioner | Transmission Corporation Of Andhra Pradeshltd. And Others |
Respondent | M/s Gmr Vemagiri Power Generation Ltd. And Another |
SCR | [2018] 10 S.C.R. 390 |
Judgement Date | 2018-02-16 |
Case Number | 8747 |
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