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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

                 Civil Appeal Nos.5399-5400 of 2016

Energy Watchdog  …Appellant Versus

Central Electricity Regulatory  Commission and Ors. Etc.          …Respondents

WITH

Civil Appeal No.5347 of 2016 Prayas (Energy Group) …Appellant

Versus Central Electricity Regulatory  Commission and Ors.           …Respondents

AND Civil Appeal No.5348 of 2016

Prayas (Energy Group) …Appellant Versus

Central Electricity Regulatory  Commission and Ors.          …Respondents

AND Civil Appeal No.5364 of 2016

Punjab State Power Corpn. Ltd.          …Appellant Versus

Coastal Gujarat Power Ltd.  & Ors.          …Respondents AND

Civil Appeal No.5346 of 2016

Ajmer Vidyut Nigam Ltd. and Ors.        …Appellants Versus

Central Electricity Regulatory  Commission and Ors.       …Respondents

AND Civil Appeal Nos.5351-5352 of 2016

Maharashtra State Electricity Distribution   Company Ltd.            …Appellant

Versus Central Electricity Regulatory  Commission and Ors.       …Respondents

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AND Civil Appeal No.5415/2016

GRIDCO LTD.          …Appellant Versus

GMR – Kamalanga Energy Ltd. and Ors. …Respondents

AND Civil Appeal Nos.9635-9642 of 2016

M/S. Coastal Gujarat Power Ltd.          …Appellant Versus

Central Electricity Regulatory  Commission and Ors.         …Respondents

AND Civil Appeal No.9035 of 2014

M/S Coastal Gujarat Power Ltd.         …Appellant

Versus Central Electricity Regulatory  Commission and Ors.        …Respondents

J U D G M E N T R.F. NARIMAN, J.

1. The present appeals arise from a judgment of the Appellate Tribunal for

Electricity dated 7th April, 2016.  The facts necessary to appreciate the issues

which arise in the present case, which will cover all the cases before us, will be

taken only from Civil Appeal No.5348 of 2016, namely Prayas (Energy) Group

vs. Central Electricity Regulatory Commission.  

2. Section 63 of the Electricity Act, 2003 provides for procurement of power

and determination of tariff by a transparent competitive bidding process.  Once

this  is  done,  the  appropriate  Commission  is  to  “adopt”  the  tariff  which  is

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accepted  in  the  competitive  bid  subject  to  guidelines  that  are  made  by  the

Central Government.  On 19th January, 2005, the Central Government issued

detailed guidelines under this provision, which were amended from time to time.

On 1st February, 2006,  Gujarat  Urja Vikas Nigam Limited (GUVNL) issued a

public notice inviting proposals for supply of power on long term basis under

three different competitive bid processes.   The participating bidders were to

decide on the tariff and quote such tariff after competing against each other.

The bidders were entitled to quote escalable or  non-escalable tariff  or  partly

escalable and partly non-escalable tariff, as was considered appropriate by them

to cover their respective risks so as to obtain whatever returns are available to

them.  The best levelised tariff as per certain pre-disclosed criteria was to be

followed in order to arrive at the lowest tender.  

3. Haryana Utilities also initiated a separate competitive bidding process for

purchase of 2000 MW on a long term basis. This was done on 25 th May, 2006.

The participating bidders were also entitled to quote bids on the lines of the

GUVNL public notice.  Both the Gujarat Electricity Regulatory Commission and

the Haryana State Regulatory Commission approved the bid documents and the

process proposed by GUVNL and the Haryana Utilities, after which Requests for

Proposal  were  issued  by  both  of  them.   On  2nd/4th January,  2007,  Adani

Enterprises Consortium submitted its bid for generation and supply of 1000 MW

to  GUVNL,  quoting  a  levelised  tariff  of  Rs.2.3495/kWh  (Rs.1/kWh  as  the

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capacity charge and Rs.1.3495/kWh as non-escalable energy charge). In the

bid, the Consortium indicated that the lead member, Adani Enterprises, had an

arrangement for indigenous coal requirement of the project with Gujarat Mineral

Development Corporation, as the said Corporation had been allotted a certain

coal block in the State of Chhattisgarh.   Also, a Memorandum of Understanding

was entered into between Adani Enterprises Ltd. and a German Company for

supply of non-coking coal of 3 to 5 million tons (imported coal) on a long term

basis till  the year  2032.   A similar  Memorandum of  Understanding was also

entered into between Adani Enterprises and a Japanese agent for supply of 3 to

5 million  tons of  coal  again  on a  long term basis.   The two Memoranda of

Understanding were attached to the bid submitted by Adani Enterprises.

4. On 11th January, 2007, the Adani Enterprises Consortium was selected by

GUVNL as the successful bidder for supply of 1000 MW of power and a Letter of

Intent  was  issued in  its  favour.  On 2nd February, 2007,  a  Power  Purchase

Agreement was entered into between GUVNL and Adani Power and this was for

supply of power from a power project being set up at Korba in Chhattisgarh.

This  was  changed  to  a  Mundra  Project  in  Gujarat.   On  18 th April,  2007,  a

supplementary PPA was signed to this effect.

5. As  far  as  Haryana  is  concerned,  Adani  Power  submitted  their  bid  for

supply of 1425 MW of power to Haryana Utilities on 24 th November, 2007.    This

was at a levelised tariff of Rs.2.94/kWh from the Mundra Power Project.    The

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energy charges quoted were non-escalable.    Adani Power was declared as the

successful bidder in Haryana for supply of 1424 MW contracted capacity on 17 th

July, 2008 and a Letter of Intent was issued.  Two separate PPAs were executed

by Adani Power with two Haryana entities for supply of 712 MW of power to

each of them from the Mundra Power Project.  The Haryana State Commission

adopted the tariff under Section 63 of the Electricity Act on 31st July, 2008 (The

Gujarat State Commission had adopted the tariff under Section 63 for supply of

power to GUVNL on 20th December, 2007).  An important part of the case on

behalf of the respondents is that a change in law in Indonesia took place in 2010

and 2011, which aligned the export price of coal from Indonesia to international

market prices instead of the price that was prevalent for the last 40 years.This

being the case, in both the cases, Adani Power filed a petition before the Central

Electricity Regulatory Commission being Petition No.155 of  2012 on 5 th July,

2012 under Section 79 of the Electricity Act seeking relief on the score of the

impact  of  the  Indonesian  Regulation  to  either  discharge  them  from  the

performance of the PPA on account of frustration, or to evolve a mechanism to

restore the petitioners to the same economic condition prior to occurrence of the

change in law.   

6. On  16th October,  2012,  the  Central  Commission  held  that  the  Power

Purchase Agreements entered into by Adani in  both the cases constituted a

composite  scheme for  generation and sale of  electricity  as envisaged under

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Section 79(1)(b)  of  the Electricity Act.   This being so,  it  held that  it  was the

appropriate  Commission  under  the  Act  and  not  the  respective  State

Commissions, which had jurisdiction in the matter.   A review petition against this

order was dismissed on 16th January, 2013.   

7. On 2nd April, 2013, the Central Commission passed an order, whereby the

claim of Adani Power on the grounds of force majeure and/or change in law was

held not to be admissible.  However, the Commission held that in exercise of the

regulatory powers provided under Section 79 of the Act, the Central Commission

can provide redressal of grievances to generating companies, considering the

larger public interest, and hence constituted a committee to look into the alleged

difficulties faced by Adani and to find an acceptable solution thereto.   

8. On 16th August,  2013,  pursuant  to  the order  dated 2nd April,  2013,  the

Committee constituted by the Commission submitted a report.  Based on the

Committee’s report, on 21st February, 2014, the Central Commission proceeded

to grant compensatory tariff.  Appeals and cross-appeals were filed against this

order, including cross objections.  On 1st August, 2014, cross-objection filed by

Adani Power was rejected by the Appellate Tribunal as not maintainable.  On

31st October, 2014, the Appellate Tribunal rejected the prayer for condonation of

delay and consequently Appeal No. 10016 of 2014 was filed by Adani Power.

Against this order, Adani Power filed an appeal before the Supreme Court, and

this Court, in its order dated 31st March, 2015 held :

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“the Appellant (Adani Power) is entitled to argue any proposition of law, be it “force majeure” or “change in law” in support of the order  dated  21.2.2014 quantifying  the  compensatory  tariff,  the correctness  of  which  is  under  challenge  before  the  Appellate Tribunal  in  Appeal  No.98 of  2014 and Appeal  No.116 of  2014 preferred by the respondents, so long as such argument is based on  the  facts  which  are  already  pleaded  before  the  Central Commission.”   

9. Finally, the Appellate Tribunal  on 7th April,  2016,  passed the impugned

judgment in all the aforesaid cases before us.  The Tribunal held, agreeing with

the Commission, that generation and sale of power by Adani Power to GUVNL

and Haryana Utilities was a composite scheme within the meaning of Section

79(1) (b) of the Act  and that,  therefore,  the Central Commission would have

jurisdiction to proceed further in the matter.  The Appellate Tribunal considered

the Supreme Court order dated 31st March, 2015 and felt that the argument of

force  majeure  and  change  in  law  could  be  gone  into  by  it.   It  ultimately

concluded,  having  regard  to  the  law  on  frustration  contained  in  the  Indian

Contract Act, 1872 and the relevant provisions of the PPAs, that force majeure

was made out on the facts of these cases and reversed the Commission on this

score.  It also reversed the Commission on exercise of regulatory powers under

Section 79, stating that these powers could not be exercised once there was a

PPA entered into under Section 63 of the Act.  It also held that change in law

provisions do not apply to foreign law and, therefore, changes in Indonesian law

did not come within the scope of the provisions. Insofar as changes in Indian law

were concerned, it held that the Government Policies that were relied upon, do

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not constitute ‘law’.  Accordingly, the matter was remanded to the Commission to

find out the impact of the force majeure event to grant compensatory tariff. The

Commission by its order dated 6.12.2016 has arrived at a certain determination

as to compensatory tariff to be granted on account of force majeure.

10. We  have  heard  learned  counsel  for  the  parties.   On  behalf  of  the

appellants  Senior  Counsel  Shri  Ramachandran,  and  Shri  Prashant  Bhushan

have argued that the liberty given to Adani Power by the order dated 31st March,

2015 of this Court was only limited to support the quantification of compensatory

tariff granted by the Central Commission by its order dated 21st February, 2014.

Hence,  Adani  Power  is  not  entitled  to  raise  the issue  of  force  majeure and

change in law as a substantive issue, the force majeure claim and the change in

law claim having been rejected by the Central Commission in its earlier order;

and  there  being  no  valid  appeal  against  the  said  order,  force  majeure  and

change in law cannot be gone into. It is further argued, in the alternative, that in

any case, force majeure either under Section 56 of the Indian Contract Act, 1872

or under clauses 12.3 and 7 of the respective PPAs make it clear that it must be

an unforeseen event or circumstance that wholly or partly prevents the affected

party in the performance of its obligations under the agreement.  According to

learned  counsel,  Adani  voluntarily  decided  to  quote  energy  charges  as

non-escalable in order to be competitive and, therefore, get the award of the

contract.  It cannot now, in the guise of being affected by force majeure, convert

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this into an escalable tariff.   They  have further argued that the bid given by

Adani Enterprises was not premised on the import of coal from Indonesia only

and this being the case it was open to them to get coal from any source.  The

price of coal is the price of raw material and if prices go up, a contract does not

get frustrated merely because it  becomes commercially onerous, as the PPA

itself states in clause 12.4.  In any event, the fundamental basis of the PPAs

between  the  parties  was  not  premised  on  the  price  of  coal  imported  from

Indonesia.

11. On a true construction of the Act, learned counsel argued in support of the

Tribunal judgment that Section 63 of the Electricity Act is a standalone provision

and is notwithstanding anything contained in Section 62.  It is obvious that under

Section 62 read with Section 61 and 64, the Commission has to “determine”

tariff under the Act having regard to various factors, whereas under Section 63

of the Act, the Commission does not “determine” but only “adopts” tariff obtained

through a transparent process of competitive bidding.  This being the case, it is

clear that there is no residuary source of power contained in the Commission

either in Section 79 or otherwise to fix compensatory tariffs once the tariff is

adopted  under  Section  63.   If  at  all,  such  tariff  can  be  modified  only  in

accordance  with  the  guidelines  issued  by  the  Central  Government  and  not

otherwise.   They  also  argued  that  the  Central  Commission  itself  has  no

jurisdiction in view of the fact that on facts there is no composite scheme for the

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reason that  the  generation  and  sale  of  electricity  from the  power  project  of

Adani, under independent PPAs to Gujarat and Haryana Utilities, with different

tariffs, and from different generating units selected under different competitive

bidding  processes,  would  show  that  there  is  no  one  composite  scheme

containing uniform tariffs.  This being the case, the State Commissions alone

would have jurisdiction.  It was further argued that there is no change in law,

either for the very good reason stated by the Commission, viz. that change in

law applies to Indian and not Indonesian law, and further, a change in the tariff

policy in India will also not constitute change in law.  They, therefore, supported

the Tribunal judgment on this aspect.

12. Learned Senior counsel Shri Kapil Sibal, Shri Harish Salve, Dr. Abhishek

Manu Singhvi, and Shri C.S. Vaidyanathan, on behalf of the respondents, on the

other hand, countered each one of these submissions.    According   to   learned

counsel,   first   and   foremost   the   Central   Commission   alone would have

jurisdiction on the facts of these cases, inasmuch as Sections 79 and 86 form

part  of  one scheme.  It  was argued by them that  all  cases fall  within  either

Section 79 or Section 86.    It   is   clear   that   under   Section   86,   the   State

Commissions   have   only   to    deal with generation and sale of electricity

within the State.  When generation and sale takes place outside the State, as is

the case here, the State Commission would have no jurisdiction under Section

86, and consequently Section 79(1)(b) has to be read as part of a scheme in

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which the moment generation and sale of electricity is inter-State and not intra

State, the Central Commission alone would have jurisdiction.  Judged in this

light, the expression “composite scheme” would only mean that generation and

sale of electricity would be in more than one State.  For this they also relied on

the definition of “composite scheme” in the 2016 Central Government Policy.   

13. They further argued that the scheme of the Act shows that neither 61 nor

Section 79 are done away with when Section 63 applies.  Section 63 does not

use the expression “notwithstanding anything contained in this Act”.  It is clear,

therefore, that all these Sections have to be harmoniously construed.  Section

79 is without a doubt a repository of power to fix tariffs and/or modify fixation

even when Section 63 applies.  Indeed, Shri Sibal argued that if there were no

guidelines or  if  a  matter  arose de hors  the  guidelines,  then obviously  there

cannot be a gap in the law which remains unfilled.  The residuary power of the

Commission necessarily comes in under Section 79.   In any event, they also

argued  that  the  guidelines,  as  amended,  that  are  issued  by  the  Central

Government under Section 63 clearly take care of the present situation in that

any change in law that occurs and any dispute which relates to tariffs can both

be resolved before the Central Commission.

14. They also countered the submissions on force majeure by stating that the

fundamental basis of the contract was the fuel supply agreement that was to be

entered into, and pointed out various clauses in the PPAs to show that the fuel

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supply agreement and imported coal were both very important elements, both in

the bid and the PPAs.  Non-escalable tariffs do not lead to the conclusion that if

a source of coal becomes unavailable in a manner that completely undermines

the basis of the bid, the tariff cannot be adjusted.  If otherwise they fall within the

change in law provision and/or force majeure provision, the mere fact that a

non-escalable tariff has been quoted would make no difference.   A large part of

the argument was centered around the meaning of the expression “frustration”

in the Contract Act and the correct construction of clause 12 of the PPA.  A large

number  of  authorities,  both  English  and Indian,  were cited to  show that  the

contract had become commercially impracticable, and that they would have to

fold up operations, which would not be in public interest as the consumers would

then have to obtain electricity at rates much higher than were quoted by them.

According to them, a force majeure event in Clause 12 takes place the moment

performance is “hindered” and there can be no doubt that an astronomical rise

in prices of Indonesian coal, thanks to a change in law, has certainly hindered

performance.   They also argued that in any event the change in law clause is

very wide and since the PPA deals with imported coal, obviously change in law

would cover foreign law.   They also went on to add that when the PPA wanted

to restrict a particular clause to Indian law, it did so expressly.  They also stated

that it is significant that neither GUVNL nor Haryana Utilities had filed appeals in

the  present  case,  and  the  Government  had  in  several  policy  decisions  and

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statements made it clear that in cases like the present, where there is grave

unforeseen hardship on account of non-allocation of Indian coal, the rise in cost

should  be  adequately  compensated.   They,  therefore,  questioned  the  locus

standi of the consumer groups, who are the only appellants before us, stating

that on the estimation made by the respondents, the impact of increase in both

cases on tariff would be extremely minimal as opposed to the huge accumulated

losses suffered by these entities which would make them fold up.  Ultimately, it

was argued that  even the Central  Commission did  not  give them the entire

benefit of rise in price in coal, and consequently in the final analysis the relief

granted on the ground of force majeure by the Central Commission should not

be disturbed, and relief on the ground of change in law should, in addition, have

been given to them.

15. The learned Attorney General appearing on behalf of the Union of India,

submitted before us that he was not interested in the ultimate outcome of the

appeals  before  us.   He was only  appearing  in  order  to  apprise  us  that  the

electricity sector, having been privatized, has largely fulfilled the object sought to

be  achieved  by  the  2003  Act,  which  is  that  electricity  generation,  being

delicenced, should result in production of far greater electricity than was earlier

produced.  He urged us not to disturb the delicate balance sought to achieved

by the Act i.e. that producers or generators of electricity, in order that they set up

power  plants,  be entitled to  a  reasonable  margin  of  profit  and a  reasonable

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return on their capital, so that they are induced to set up more and more power

plants.  This must be consistent with competitiveness among them, which then

translates  itself  into  reasonable  tariffs  that  are  payable  by  consumers  of

electricity.  For this purpose, he relied strongly upon Section 3 of the Electricity

Act, which states that the Central Government, shall from time to time, prepare a

National  Electricity  Policy  and  a  tariff  policy  in  consultation  with  the  State

Governments, and the authority for development of the power system, based on

optimal utilization of natural resources.  According to him, the National Electricity

Policy  and  tariff  policy  that  are  issued from time to  time,  being  statutory  in

nature,  are binding on all  concerned.   This is,  in  fact,  further  recognized by

Section 61(i)  by which the appropriate  Commission,  in  specifying terms and

conditions for determination of tariffs, shall be guided by the National Electricity

Policy and tariff policy. The Central Government’s role can further be seen even

in Section 63, where guidelines that are binding on all are issued by the Central

Government in cases where there is a transparent process of bidding.  Further,

according to him, Section 79(4) also points in the same direction, stating that, in

discharge  of  its  functions,  the  Central  Commission  shall  be  guided  by  the

National Electricity Policy, National Electricity Plan, and tariff policy published

under Section 3. He also referred us to the Cabinet Committee for Economic

Affairs recognizing the overall shortfall in manufacture of domestic coal and the

new  coal  distribution  policy  issued  in  July,  2013  pursuant  to  the  Cabinet

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Committee  which,  according  to  him,  are  in  the  nature  of  binding  directions

making it clear that as  generators of electricity, who depend upon indigenous

coal, have been given less coal than was anticipated, should be allowed either

to import the coal themselves, or purchase imported coal from Coal India Ltd.,

with the difference in price being passed through to them.  He further referred to

and relied  upon the  revised  tariff  policy  of  28th January, 2016 for  the  same

purpose.  

Relevant provisions of the Electricity Act, 2003

16. The 2003 Act did away with three earlier statutes in which a completely

different regime for generating and supply of electricity was provided for, namely,

the  Indian  Electricity  Act,  1910,  the  Electricity  (Supply)  Act,  1928  and  the

Electricity  Regulatory  Commissions  Act,  1998.  The  Statement  of  Objects  of

Reasons for this Act reads as follows:

“The  Electricity  Supply  Industry  in  India  is  presently governed by three enactments namely, the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, the Electricity Regulatory Commissions Act, 1998.

1.1 The  Indian  Electricity  Act,  1910  created  the  basic framework for  electric supply industry in India which was then  in  its  infancy.  The  Act  envisaged  growth  of  the electricity industry through private licensees. Accordingly, it provided  for  licensees  who  could  supply  electricity  in  a specified  area.  It  created  the  legal  framework  for  laying down of  wires  and other  works  relating to  the supply  of electricity.

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1.2   The Electricity (Supply) Act, 1948 mandated the creation of a State Electricity Board. The State Electricity Board has the responsibility of arranging the supply of electricity in the State.  It  was felt  that  electrification  which  was limited  to cities needed to be extended rapidly and the State should step  in  to  shoulder  this  responsibility  through  the  State Electricity Boards. Accordingly the State Electricity Boards through  the  successive  Five  Year  Plans  undertook  rapid growth expansion by utilizing Plan funds.

1.3 Over a period of time, however, the performance of SEBs has deteriorated substantially on account of various factors. For instance,  though power  to  fix  tariffs  vests  with  the State Electricity Boards, they have generally been unable to take decisions  on  tariffs  in  a  professional  and  independent manner and tariff determination in practice has been done by the State Governments. Cross-subsidies have reached unsustainable levels. To address this issue and to provide for distancing of government from determination of tariffs, the Electricity Regulatory Commissions Act, was enacted in 1998.  It  created  the  Central  Electricity  Regulatory Commission and has an enabling provision through which the  State  Governments  can  create  a  State  Electricity Regulatory  Commission.  16  States  have  so  far notified/created  State  Electricity  Regulatory  Commissions either under the Central Act or under their own Reform Acts.

2. Starting with Orissa, some State Governments have been undertaking  reforms  through  their  own  Reform  Acts.   These reforms have involved unbundling of the State Electricity Boards into  separate  Generation,  Transmission  and  Distribution Companies  through  transfer  schemes  for  the  transfer  of  the assets  and  staff  into  successor  Companies.  Orissa,  Haryana, Andhra Pradesh, Karnataka, Rajasthan and Uttar Pradesh have passed their  Reform Acts and unbundled their  State Electricity Boards  into  separate  companies.  Delhi  and  Madhya  Pradesh have also enacted their Reforms Acts which, inter alia, envisage unbundling/corporatisation of SEBs.

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3. With the policy of encouraging private sector participation in generation,  transmission  and  distribution  and  the  objective  of distancing the regulatory responsibilities from the Government to the  Regulatory  Commissions,  the  need  for  harmonizing  and rationalizing the provisions in the Indian Electricity Act, 1910, the Electricity  (Supply)  Act,  1948  and  the  Electricity  Regulatory Commissions Act, 1998 in a new self-contained comprehensive legislation arose.  Accordingly, it  became necessary  to  enact  a new legislation for regulating the electricity supply industry in the country which would replace the existing laws, preserve its core features other than those relating to the mandatory existence of the State Electricity Board and the responsibilities of  the State Government  and  the  State  Electricity  Board  with  respect  to regulating  licensees.  There  is  also  need  to  provide  for  newer concepts like power trading and open access. There is also need to obviate the requirement of each State Government to pass its own  Reforms  Act.  The  Bill  has  progressive  features  and endeavours to strike the right balance given the current realities of the power sector in India. It gives the State enough flexibility to develop  their  power  sector  in  the  manner  they  consider appropriate.  The  Electricity  Bill,  2001  has  been  finalized  after extensive discussions and consultations with the States and all other stake holders and experts.

4. The main features of the Bill are as follows:-

(i) Generation is being delicensed and captive generation is being  freely  permitted.  Hydro  projects  would,  however, need approval of the State Government and clearance from the  Central  Electricity  Authority  which  would  go  into  the issues  of  dam  safety  and  optimal  utilization  of  water resources.

(ii) There would be a Transmission Utility at the Central as well as State level, which would be a Government company and have  the  responsibility  of  ensuring  that  the  transmission network is developed in a planned and coordinated manner to meet the requirements of the sector. The load dispatch function  could  be  kept  with  the  Transmission  Utility  or

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separated.  In  the  case  of  separation  the  load  dispatch function  would  have  to  remain  with  a  State  Government organization/company.

(iii) There is provision for private transmission    licensees.

(iv) There  would  be  open  access  in  transmission  from  the outset with provision for surcharge for taking care of current level of cross subsidy with the surcharge being gradually phased out.

(v)  Distribution licensees would be free to undertake generation and  generating  companies  would  be  free  to  take  up distribution licensees.

(vi) The State Electricity Regulatory Commissions may permit open access in distribution in phases with surcharge for –

(a) current level of cross subsidy to be gradually phased out along with cross subsidies; and

(b) obligation to supply.

(vii)  For  rural  and  remote  areas  stand  alone  systems  for generation and distribution would be permitted.

(viii)   For rural areas decentralized management of distribution through Panchayats,  Users Associations,  Cooperatives or Franchisees would be permitted.

(ix) Trading as a distinct activity is being recognized with the safeguard of the Regulatory Commissions being authorized to fix ceilings on trading margins, if necessary.

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(x) Where there is  direct  commercial  relationship  between a consumer and a generating company or a trader the price of power would not be regulated and only the transmission and wheeling charges with surcharge would be regulated.

(xi) There  is  provision  for  a  transfer  scheme  by  which company/companies  can  be  created  by  the  State Governments from the State Electricity Boards. The State Governments have the option of continuing with the State Electricity Boards which under the new scheme of things would be a distribution licensee and the State Transmission Utility which would also be owning generation assets. The service conditions of  the employees would as a result  of restructuring not be inferior.

(xii) An  Appellate  Tribunal  has  been  created  for  disposal  of appeals  against  the  decision  of  the  CERC  and  State Electricity Regulatory Commissions so that there is speedy disposal of such matters. The State Electricity Regulatory Commission is a mandatory requirement.

(xiii) Provisions  relating  to  theft  of  electricity  have  a  revenue focus.

5. The Bill seeks to replace the Indian Electricity Act, 1910, the Electricity  (Supply)  Act,  1948  and  the  Electricity  Regulatory Commissions Act, 1998.

6. The Bill seeks to achieve the above objects.”

17. In the present case, we are concerned with the following Sections:

“Section  3. National  Electricity  Policy  and  Plan. ---  (1)  The Central Government shall, from time to time, prepare the National Electricity Policy and tariff  policy, in consultation with the State Governments  and  the  Authority  for  development  of  the  power

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system based on optimal utilisation of resources such as coal, natural  gas,  nuclear  substances  or  materials,  hydro  and renewable sources of energy.  (2) The Central Government shall publish the National Electricity Policy and tariff policy from time to time.  (3)  The  Central  Government  may,  from  time  to  time  in consultation  with  the  State  Governments,  and  the  Authority, review or revise, the National Electricity Policy and tariff policy referred to in sub-section (1) .  (4)  The  Authority  shall  prepare  a  National  Electricity  Plan  in accordance with the National  Electricity  Policy and notify  such plan once in five years:  Provided that the Authority while preparing the National Electricity Plan shall  publish the draft  National  Electricity  Plan and invite suggestions and objections thereon from licensees,  generating companies and the public within such time as may be prescribed: Provided further that the Authority shall –  (a)  notify  the  plan  after  obtaining  the  approval  of  the  Central Government;  (b)  revise  the  plan  incorporating  therein  the  directions,  if  any, given by the Central Government while granting approval under clause (a).  (5)  The Authority  may review or  revise the National  Electricity Plan in accordance with the National Electricity Policy.  61. Tariff  Regulations. The  Appropriate  Commission  shall, subject  to  the  provisions  of  this  Act,  specify  the  terms  and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:-  (a)  the  principles  and  methodologies  specified  by  the  Central Commission  for  determination  of  the  tariff  applicable  to generating companies and transmission licensees;  (b)  the  generation,  transmission,  distribution  and  supply  of electricity are conducted on commercial principles;  (c)  the  factors  which  would  encourage  competition,  efficiency, economical  use  of  the  resources,  good  performance  and optimum investments;  (d)  safeguarding of  consumers'  interest  and at  the same time, recovery of the cost of electricity in a reasonable manner;  (e) the principles rewarding efficiency in performance;  (f) multi-year tariff principles;  (g)  that  the  tariff  progressively  reflects  the  cost  of  supply  of electricity  and  also  reduces  cross-subsidies  in  the  manner

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specified by the Appropriate Commission;  (h) the promotion of co-generation and generation of electricity from renewable sources of energy;  (i) the National Electricity Policy and tariff policy:  Provided that the terms and conditions for determination of tariff under the Electricity (Supply) Act, 1948, the Electricity Regulatory Commissions  Act,  1998  and  the  enactments  specified  in  the Schedule as they stood immediately before the appointed date, shall continue to apply for a period of one year or until the terms and  conditions  for  tariff  are  specified  under  this  section, whichever is earlier. 62. Determination  of  Tariff. (1)  The  Appropriate  Commission shall determine the tariff in accordance with provisions of this Act for  –  (a)  supply  of  electricity  by  a  generating  company  to  a distribution licensee:  Provided  that  the  Appropriate  Commission  may,  in  case  of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity;  (b) transmission of electricity ;  (c) wheeling of electricity;  (d) retail sale of electricity:  Provided that in case of distribution of electricity in the same area by  two  or  more  distribution  licensees,  the  Appropriate Commission may, for  promoting competition among distribution licensees,  fix  only  maximum  ceiling  of  tariff  for  retail  sale  of electricity.  (2)  The  Appropriate  Commission  may  require  a  licensee  or  a generating  company  to  furnish  separate  details,  as  may  be specified in respect of generation, transmission and distribution for determination of tariff.  (3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor,  power  factor,  voltage,  total  consumption  of  electricity during any specified period or  the time at  which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required.  (4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of

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any changes expressly  permitted  under  the  terms of  any  fuel surcharge formula as may be specified.  (5)  The  Commission  may  require  a  licensee  or  a  generating company to comply with such procedure as may be specified for calculating  the  expected  revenues  from the  tariff  and  charges which he or it is permitted to recover.  (6) If any licensee or a generating company recovers a price or charge  exceeding  the  tariff  determined under  this  section,  the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate  without  prejudice  to  any  other  liability  incurred  by  the licensee.  63. Determination  of  tariff  by  bidding  process. Notwithstanding anything contained in section 62, the Appropriate Commission  shall  adopt  the  tariff  if  such  tariff  has  been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government. 64. Procedure  for  tariff  order.  (1)  An  application  for determination  of  tariff  under  section  62  shall  be  made  by  a generating  company  or  licensee  in  such  manner  and accompanied by such fee, as may be determined by regulations.  (2) Every applicant shall publish the application, in such abridged form  and  manner,  as  may  be  specified  by  the  Appropriate Commission.  (3) The Appropriate Commission shall,  within one hundred and twenty days from receipt of an application under sub-section (1) and  after  considering  all  suggestions  and  objections  received from the public,-  (a)  issue  a  tariff  order  accepting  the  application  with  such modifications  or  such  conditions  as  may  be  specified  in  that order;  (b) reject the application for reasons to be recorded in writing if such application is not in accordance with the provisions of this Act  and  the  rules  and  regulations  made  thereunder  or  the provisions of any other law for the time being in force:  Provided  that  an  applicant  shall  be  given  a  reasonable opportunity of being heard before rejecting his application.  (4)  The  Appropriate  Commission  shall,  within  seven  days  of making the order, send a copy of  the order to the Appropriate Government, the Authority, and the concerned licensees and to the person concerned.  (5) Notwithstanding anything contained in Part X, the tariff for any

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inter-State supply, transmission or wheeling of electricity, as the case may be, involving the territories of two States may, upon application made to it by the parties intending to undertake such supply,  transmission  or  wheeling,  be  determined  under  this section by the State Commission having jurisdiction in respect of the  licensee  who  intends  to  distribute  electricity  and  make payment therefor.  (6) A tariff order shall, unless amended or revoked, shall continue to be in force for such period as may be specified in the tariff order. 79. Functions  of  Central  Commission. (1)  The  Central Commission shall discharge the following functions, namely:-  (a)  to  regulate  the  tariff  of  generating  companies  owned  or controlled by the Central Government;  (b) to regulate the tariff of generating companies other than those owned  or  controlled  by  the  Central  Government  specified  in clause (a), if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State;  (c) to regulate the inter-State transmission of electricity ;  (d) to determine tariff for inter-State transmission of electricity;  (e)  to  issue  licenses  to  persons  to  function  as  transmission licensee  and  electricity  trader  with  respect  to  their  inter-State operations;  (f) to adjudicate upon disputes involving generating companies or transmission  licensee  in  regard  to  matters  connected  with clauses (a) to (d) above and to refer any dispute for arbitration;  (g) to levy fees for the purposes of this Act;  (h) to specify Grid Code having regard to Grid Standards;  (i) to specify and enforce the standards with respect to quality, continuity and reliability of service by licensees;  (j) to fix the trading margin in the inter-State trading of electricity, if considered, necessary;  (k) to discharge such other functions as may be assigned under this Act. 86. Functions  of  State  Commission. –  (1)  The  State Commission shall discharge the following functions, namely, -  (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State:  Provided  that  where  open  access  has  been  permitted  to  a category of consumers under Section 42, the State Commission

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shall  determine  only  the  wheeling  charges  and  surcharge thereon, if any, for the said category of consumers;  (b)  regulate  electricity  purchase  and  procurement  process  of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other  sources  through  agreements  for  purchase  of  power  for distribution and supply within the State;  (c) facilitate intra-state transmission and wheeling of electricity;  (d)  issue  licences  to  persons  seeking  to  act  as  transmission licensees,  distribution  licensees  and  electricity  traders  with respect to their operations within the State;  (e)  promote  cogeneration  and  generation  of  electricity  from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also  specify,  for  purchase  of  electricity  from  such  sources,  a percentage of the total consumption of electricity in the area of a distribution licensee;  (f)  adjudicate  upon  the  disputes  between  the  licensees,  and generating companies and to refer any dispute for arbitration;  (g) levy fee for the purposes of this Act;  (h)  specify  State  Grid  Code  consistent  with  the  Grid  Code specified under clause (h) of sub-section (1) of section 79;  (i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees;  (j) fix the trading margin in the intra-State trading of electricity, if considered, necessary;   (k) discharge such other functions as may be assigned to it under this Act.”

18. The construction of Section 63, when read with the other provisions of this

Act, is what comes up for decision in the present appeals.  It may be noticed

that  Section  63  begins  with  a  non-obstante  clause,  but  it  is  a  non-obstante

clause covering only Section 62.  Secondly, unlike Section 62 read with Sections

61 and 64,  the  appropriate  Commission  does not  “determine”  tariff  but  only

“adopts” tariff already determined under Section 63.  Thirdly, such “adoption” is

only if such tariff has been determined through a transparent process of bidding,

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and, fourthly, this transparent process of bidding must be in accordance with the

guidelines issued by the Central Government.  What has been argued before us

is that Section 63 is a stand alone provision and has to be construed on its own

terms, and that, therefore, in the case of transparent bidding nothing can be

looked at except the bid itself which must accord with guidelines issued by the

Central  Government.   One  thing  is  immediately  clear,  that  the  appropriate

Commission does not act as a mere post office under Section 63.  It must adopt

the tariff which has been determined through a transparent process of bidding,

but  this  can  only  be  done  in  accordance with  the  guidelines  issued by  the

Central Government.   Guidelines have been issued under this Section on 19 th

January, 2005, which guidelines have been amended from time to time.  Clause

4, in particular, deals with tariff and the appropriate Commission certainly has

the jurisdiction to look into whether the tariff determined through the process of

bidding accords with clause 4.     

19. It  is  important  to  note  that  the  regulatory  powers  of  the  Central

Commission, so far as tariff is concerned, are specifically mentioned in Section

79(1).  This regulatory power is a general one, and it is very difficult to state that

when the Commission adopts tariff  under Section 63, it  functions de hors its

general   regulatory  power  under  Section  79(1)(b).   For  one  thing,  such

regulation takes place under the Central Government’s guidelines.  For another,

in a situation where there are no guidelines or in a situation which is not covered

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by the guidelines, can it be said that the Commission’s power to “regulate” tariff

is completely done away with?  According to us, this is not a correct way of

reading  the  aforesaid  statutory  provisions.   The  first  rule  of  statutory

interpretation is that the statute must be read as a whole.  As a concomitant of

that  rule,  it  is  also  clear  that  all  the  discordant  notes  struck  by  the  various

Sections  must  be  harmonized.   Considering  the  fact  that  the  non-obstante

clause advisedly restricts itself to Section 62, we see no good reason to put

Section 79 out of the way altogether.  The reason why Section 62 alone has

been put out of the way is that determination of tariff can take place in one of

two ways – either under Section 62, where the Commission itself determines the

tariff in accordance with the provisions of the Act, (after laying down the terms

and conditions  for  determination  of  tariff  mentioned in  Section  61)  or  under

Section 63 where the Commission adopts tariff that is already determined by a

transparent process of bidding.  In either case, the general regulatory power of

the Commission under Section 79(1)(b) is the source of the power to regulate,

which includes the power to determine or adopt tariff. In fact, Sections 62 and 63

deal with “determination” of tariff, which is part of “regulating” tariff.  Whereas

“determining”  tariff  for  inter-State  transmission  of  electricity  is  dealt  with  by

Section 79(1)(d), Section 79(1)(b) is a wider source of power to “regulate” tariff.

It  is  clear  that  in  a  situation  where  the  guidelines  issued  by  the  Central

Government under Section 63 cover the situation, the Central Commission is

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bound by  those guidelines and  must  exercise  its  regulatory  functions,  albeit

under Section 79(1)(b), only in accordance with those guidelines.   As has been

stated above, it is only in a situation where there are no guidelines framed at all

or where the guidelines do not deal with a given situation that the Commission’s

general regulatory powers under Section 79(1)(b) can then be used.

Jurisdiction of the Central Commission  

20. The  appellants  have  argued  before  us  that  the  expression  “composite

scheme” mentioned in Section 79(1) must necessarily be a scheme in which

there is uniformity of tariff under a PPA where there is generation and sale of

electricity in more than one State.  It is not enough that generation and sale of

electricity in more than one State be the subject matter of one or more PPAs, but

that  something  more  is  necessary, namely, that  there  must  be  a  composite

scheme for the same.

21. In order to appreciate and deal with this submission, it is necessary to set

out Section 2(5) of the Act which defines appropriate Government as follows:

“2. Definitions. In this Act, unless the context otherwise requires, (5) "Appropriate Government" means, -  (a) the Central Government, -  (i) in respect of a generating company wholly or partly owned by it;  (ii) in relation to any inter-State generation, transmission, trading or supply of electricity and with respect to any mines, oil-fields, railways,  national  highways,  airports,  telegraphs,  broadcasting stations  and  any  works  of  defence,  dockyard,  nuclear  power installations;

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(iii)  in  respect  of  the  National  Load  Despatch  Centre;  and Regional Load Despatch Centre;  (iv) in relation to any works or electric installation belonging to it or under its control ;  (b) in any other case, the State Government, having jurisdiction under this Act;”

Sections 25 and 30 also have some bearing and are set out as under :

“25. Inter-State, regional and inter-regional transmission. For the purposes of  this  Part,  the Central  Government  may, make region-wise demarcation of the country, and, from time to time, make such modifications therein as it may consider necessary for the efficient, economical and integrated transmission and supply of  electricity,  and  in  particular  to  facilitate  voluntary interconnections and co-ordination of facilities for the inter-State, regional  and  inter-regional  generation  and  transmission  of electricity. 30. Transmission within a State. The State Commission shall facilitate  and  promote  transmission,  wheeling  and inter-connection arrangements within its territorial jurisdiction for the  transmission  and  supply  of  electricity  by  economical  and efficient utilisation of the electricity.”

22. The scheme that emerges from these Sections is that whenever there is

inter-State generation or supply of electricity, it is the Central Government that is

involved, and whenever there is intra-State generation or supply of electricity,

the State Government or the State Commission is involved.   This is the precise

scheme of the entire Act, including Sections 79 and 86.  It  will  be seen that

Section  79(1)  itself  in  sub-sections  (c),  (d)  and  (e)  speaks  of  inter-State

transmission and inter-State operations.  This is to be contrasted with Section 86

which deals with functions of the State Commission which uses the expression

“within the State” in sub-clauses (a), (b), and (d), and “intra-state” in sub-clause

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(c).  This being the case, it is clear that the PPA, which deals with generation

and  supply  of  electricity,  will  either  have  to  be  governed  by  the  State

Commission or the Central Commission.  The State Commission’s jurisdiction is

only where generation and supply takes place within the State.  On the other

hand, the moment generation and sale takes place in more than one State, the

Central Commission becomes the appropriate Commission under the Act.  What

is important to remember is that if we were to accept the argument on behalf of

the appellant, and we were to hold in the Adani case that there is no composite

scheme for generation and sale, as argued by the appellant, it would be clear

that neither Commission would have jurisdiction, something which would lead to

absurdity.  Since generation and sale of electricity is in more than one State

obviously  Section  86  does  not  get  attracted.   This  being  the  case,  we  are

constrained to observe that the expression “composite scheme” does not mean

anything more than a scheme for generation and sale of electricity in more than

one State.

23. This also follows from the dictionary meaning [(Mc-Graw-Hill Dictionary of

Scientific and Technical Terms (6th Edition),            and P.Ramanatha Aiyar’s

Advanced Law Lexicon (3rd Edition)] of the expression “composite”:

(a) ‘Composite’  –  “A  re-recording  consisting  of  at  least  two elements.  A material  that results when two or more materials, each  having  its  own,  usually  different  characteristics,  are combined, giving useful properties for specific applications.  Also known as composite material.”

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(b) ‘Composite character’  – “A character  that  is  produced by two or more characters one on top of the other.” (c) ‘Composite unit” – “A unit made of diverse elements.”

The  aforesaid  dictionary  definitions  lead  to  the  conclusion  that  the

expression “composite” only means “consisting of at least two elements”.  In the

context of the present case, generation and sale being in more than one State,

this could be referred to as “composite”.

24. Even otherwise, the expression used in Section 79(1)(b) is that generating

companies  must  enter  into  or  otherwise  have  a  “composite  scheme”.   This

makes it  clear that the expression “composite scheme” does not have some

special meaning – it is enough that generating companies have, in any manner,

a scheme for generation and sale of electricity which must be in more than one

State.

25. We must also hasten to add that the appellant’s argument that there must

be commonality and uniformity in tariff for a “composite scheme” does not follow

from the Section.

26. Another important facet of dealing with this argument is that the tariff policy

dated 6th June, 2006 is the statutory policy which is enunciated under Section 3

of  the  Electricity  Act.    The  amendment  of  28 th January,  2016  throws

considerable  light  on  the  expression  “composite  scheme”,  which  has  been

defined for the first time as follows:

“5.11 (j) Composite Scheme: Sub-section  (b)  of  Section 79(1) of the Act provides that Central Commission shall regulate

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the  tariff  of  generating  company,  if  such  generating  company enters into or otherwise have a composite scheme for generation and sale of electricity in more than one State.  Explanation: The composite scheme as specified under section 791) of the Act shall mean a scheme by a generating company for  generation  and  sale  of  electricity  in  more  than  one  State, having signed long-term or medium-term PPA prior to the date of commercial operation of the project (the COD of the last unit of the project will be deemed to be the date of commercial operation of  the project)  for  sale  of  at  least  10% of  the capacity  of  the project to a distribution licensee outside the State in which such project is located.”  

27. That this definition is an important aid to the construction of Section 79(1)

(b) cannot be doubted and, according to us, correctly brings out the meaning of

this  expression  as  meaning  nothing  more  than  a  scheme  by  a  generating

company for generation and sale of electricity in more than one State.  Section

64(5)  has  been relied  upon  by  the  Appellant  as  an  indicator  that  the  State

Commission has jurisdiction even in cases where tariff for inter-State supply is

involved.  This provision begins with a non-obstante clause which would indicate

that  in  all  cases  involving  inter-State  supply,  transmission,  or  wheeling  of

electricity, the Central Commission alone has jurisdiction.   In fact this further

supports the case of  the Respondents.   Section 64(5) can only apply if,  the

jurisdiction otherwise being with the Central Commission alone, by application of

the parties concerned, jurisdiction is to be given to the State Commission having

jurisdiction  in  respect  of  the  licensee  who  intends  to  distribute  and  make

payment for electricity.  We, therefore, hold that the Central Commission had the

necessary jurisdiction to embark upon the issues raised in the present cases.

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Force Majeure

28. A large part of the argument turned on the finding of the Appellate Tribunal

that the rise in price of coal consequent to change in Indonesian law would be a

force majeure event which would entitle the respondents to claim compensatory

tariff.  Before embarking on the merits of this claim, we must first advert to the

argument of  the appellant  that  force majeure can only be argued for  a very

restricted purpose, as has been pointed out  in the Supreme Court  judgment

dated 31st March, 2015.

29. In order to appreciate this contention, it is first necessary to set out the

relevant portion of this judgment.  By the judgment dated 31st March, 2015, this

Court held:  

“13. By order dated 1-8-2014, the Appellate Tribunal dismissed the cross-objections of the appellant herein as not maintainable. On 16-9-2014, the appellant preferred Appeal No. DFR No. 2355 of  2014  before  the  Appellate  Tribunal  against  that  part  of  the order  dated  2-4-2013  which  went  against  the  appellant. Obviously, there was a delay in preferring that appeal. Therefore, the  appellant  filed  an  application  bearing  IA No.  380  of  2014 seeking condonation of delay in preferring the appeal which was rejected by the impugned order. Hence, the instant appeal.

14. The issue before this Court is limited. It is the correctness of the decision of the Appellate Tribunal in declining to condone the delay in preferring the appeal against the order dated 2-4-2013 of the Central Commission.

15. However,  elaborate  submissions  were  made  regarding  the scope of Order 41 Rule 22 of the Code of Civil Procedure, 1908 (for short “CPC”), and its applicability to an appeal under Section

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111 of the Act by the appellant relying upon earlier decisions of this  Court.  The respondents submitted that  such an enquiry  is wholly  uncalled  for  as  the  cross-objections  of  the  appellant  in Appeal No. 100 of 2013 stood rejected and became final.

16. Lastly, the learned counsel for the appellant  submitted that even if this Court comes to the conclusion that the appellant has not made out a case for condonation of delay in preferring an appeal  against  the  order  dated  2-4-2013  of  the  Central Commission,  the  appellant  is  entitled  to  argue  in  the  pending Appeals  Nos.  98 and 116 of  2014 both the grounds of  “force majeure” and “change of law” not for the purpose of seeking the relief of a declaration of the frustration of the contracts between the  appellants  and  the  respondents,  thereby  relieving  the appellant of his obligations arising out of the contracts, but only for the purpose of seeking the alternative relief of compensatory tariff. In other words, the appellant's submission is that the facts which formed the basis of  the submission of  the frustration of contracts are also relevant for supporting the conclusion of the National Commission that the appellant is entitled for the relief of compensatory tariff.

17. We agree with the respondents that we are not required to go into the question of the applicability of Order 41 Rule 22 in the instant appeal as the decision of the Appellate Tribunal to reject the cross-objections of the appellant by its order dated 1-8-2014 has become final and no appeal against the said order is pending before us.

18. We are also not required to go into the question whether the order  of  the  Central  Commission  dated  2-4-2013  by  which  it declined  to  grant  a  declaration  of  frustration  of  the  contracts either  on  the  ground  of  “force  majeure”  or  on  the  ground  of “change  of  law”  is  independently  appealable,  since  no  such appeal even if maintainable, is preferred by the appellant.

19. The  question  whether  the  appellant  made  out  a  case  for condonation of delay in preferring the appeal before the Appellate Tribunal, in our opinion, need not also be examined by us in view of the last submission made by the appellant. If the appellant is not desirous of seeking a declaration that the appellant is relieved of  the  obligation  to  perform  the  contracts  in  question,  the

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correctness of the decision of the Appellate Tribunal in rejecting the  application  to  condone  the  delay  in  preferring  the  appeal would become purely academic. We are of the opinion that so long as the appellant does not seek a declaration, such as the one  mentioned  above,  the  appellant  is  entitled  to  argue  any proposition of  law, be it  “force majeure”  or  “change of  law”  in support  of  the  order  dated  21-2-2014  quantifying  the compensatory tariff, the correctness of which is under challenge before  the  Appellate  Tribunal  in  Appeal  No.  98  of  2014  and Appeal No. 116 of 2014 preferred by the respondents, so long as such  an  argument  is  based  on  the  facts  which  are  already pleaded before the Central Commission.”

30. This Court dealt with an appeal arising out of an order of the Appellate

Tribunal dated 31st October, 2014, in which the Appellate Tribunal declined to

condone a delay of 481 days in preferring an appeal against an order dated 2 nd

April, 2013.

31. As has been stated by this Court, the issue before the Court was limited.

This Court held that the appellant is entitled to argue force majeure and change

in law in pending Appeals Nos.98 and 116 of 2014.  This was because what was

concluded by the Central Commission was force majeure and change of law for

the purpose of  seeking the relief  of  declaration of  frustration of  the contract

between the appellant and the respondents, thereby relieving the appellant of its

obligations arising out of the contract.  Since the appellant was not desirous of

seeking  a  declaration  that  the  appellant  is  relieved  of  the  obligation  of

performing  the  contract  in  question,  the  appellant  is  entitled  to  argue  force

majeure or change of law in support of the Commission’s order of 21st February,

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2014, which quantified compensatory tariff,  the correctness of which is under

challenge in Appeal Nos.98 and 116 of 2014.  This being the case, it is clear that

this Court did not give any truncated right to argue force majeure or change of

law.  This Court explicitly stated that both force majeure and change of law can

be argued in all its plenitude to support an order quantifying compensatory tariff

so long as the appellants do not claim that they are relieved of performance of

the  PPAs  altogether.   This  being  the  case,  we  are  of  the  view  that  the

preliminary  submission  of  the  appellant  before  us  is  without  any  force.

Accordingly, the Appellate Tribunal rightly went into force majeure and change of

law.   

32. “Force majeure” is governed by the Indian Contract Act, 1872.  In so far as

it is relatable to an express or implied clause in a contract, such as the PPAs

before us, it is governed by Chapter III dealing with the contingent contracts,

and more particularly, Section 32 thereof.  In so far as a force majeure event

occurs  de hors  the contract,  it  is  dealt  with  by a  rule  of  positive  law under

Section 56 of the Contract.   Sections 32 and 56 are set out herein:  

“32. Enforcement  of  Contracts  contingent  on  an  event happening -  Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.

56. Agreement to do impossible act -  An agreement to do an act impossible in itself is void.  

Contract  to  do  act  afterwards  becoming  impossible  or

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unlawful. A contract to do an act which, after the contract made, becomes  impossible  or,  by  reason  of  some  event  which  the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

Compensation  for  loss  through  non-performance  of  act known to be impossible or unlawful. Where one person has promised to  do something which he knew or, with  reasonable diligence,  might  have  known,  and  which the  promisee did  not know, to be impossible or  unlawful,  such promisor  must  make compensation to such promise for any loss which such promisee sustains through the non-performance of the promise.”

33. Prior to the decision in Taylor vs. Caldwell, (1861-73) All ER Rep 24, the

law  in  England  was  extremely  rigid.   A  contract  had  to  be  performed,

notwithstanding the fact that it had become impossible of performance, owing to

some unforeseen event, after it was made, which was not the fault of either of

the parties to the contract.  This rigidity of the common law in which the absolute

sanctity  of  contract  was  upheld  was loosened somewhat  by  the  decision  in

Taylor vs. Caldwell in which it was held that if some unforeseen event occurs

during the performance of a contract which makes it impossible of performance,

in the sense that the fundamental basis of the contract goes, it  need not be

further performed, as insisting upon such performance would be unjust.  

34. The law in India has been laid down in the seminal decision of Satyabrata

Ghose v. Mugneeram Bangur & Co., 1954 SCR 310.  The second paragraph

of Section 56 has been adverted to, and it was stated that this is exhaustive of

the law as it stands in India.  What was held was that the word “impossible” has

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not been used in the Section in the sense of physical or literal impossibility.   The

performance of an act may not be literally impossible but it may be impracticable

and useless from the point of view of the object and purpose of the parties.  If an

untoward event or change of circumstance totally upsets the very foundation

upon which the parties entered their agreement, it can be said that the promisor

finds it impossible to do the act which he had promised to do.  It was further held

that where the Court finds that the contract itself either impliedly or expressly

contains a term, according to which performance would stand discharged under

certain circumstances, the dissolution of the contract would take place under the

terms of the contract itself and such cases would be dealt with under Section 32

of the Act.  If, however, frustration is to take place de hors the contract, it will be

governed by Section 56.

35. In M/s Alopi Parshad & Sons Ltd. v. Union of India, 1960 (2) SCR 793,

this Court, after setting out Section 56 of the Contract Act, held that the Act does

not enable a party to a contract to ignore the express covenants thereof and to

claim payment of consideration, for performance of the contract at rates different

from the stipulated rates, on a vague plea of equity.  Parties to an executable

contract are often faced, in the course of carrying it out, with a turn of events

which they did not at all anticipate, for example, a wholly abnormal rise or fall in

prices which is an unexpected obstacle to execution.  This does not in itself get

rid of  the bargain they have made. It is only when a consideration of the terms

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of the contract,  in the light of the circumstances existing when it  was made,

showed that they never agreed to be bound in a fundamentally different situation

which had unexpectedly  emerged,  that  the contract  ceases to  bind.   It  was

further  held  that  the  performance  of  a  contract  is  never  discharged  merely

because it may become onerous to one of the parties.  

36. Similarly, in Naihati Jute Mills Ltd. v. Hyaliram Jagannath, 1968 (1) SCR

821, this Court went into the English law on frustration in some detail, and then

cited the celebrated judgment of Satyabrata Ghose v. Mugneeram Bangur &

Co.   Ultimately, this Court concluded that a contract is not frustrated merely

because the circumstances in which it was made are altered.  The Courts have

no general power to absolve a party from the performance of  its part  of the

contract merely because its performance has become onerous on account of an

unforeseen turn of events.   

37. It has also been held that applying the doctrine of frustration must always

be within narrow limits.  In an instructive English judgment namely, Tsakiroglou

& Co. Ltd. v. Noblee Thorl GmbH, 1961 (2) All ER 179, despite the closure of

the Suez canal, and despite the fact that the customary route for shipping the

goods was only through the Suez canal, it was held that the contract of sale of

groundnuts in that case was not frustrated, even though it  would have to be

performed  by  an  alternative  mode  of  performance  which  was  much  more

expensive,  namely, that  the ship would now have to go around the Cape of

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Good Hope, which is three times the distance from Hamburg to Port Sudan.

The freight for such journey was also double. Despite this, the House of Lords

held that even though the contract had become more onerous to perform, it was

not fundamentally altered.  Where performance is otherwise possible, it is clear

that a mere rise in freight price would not allow one of the parties to say that the

contract was discharged by impossibility of performance.

38. This view of the law has been echoed in ‘Chitty on Contracts’, 31st edition.

In paragraph 14-151 a rise in cost or expense has been stated not to frustrate a

contract. Similarly, in ‘Treitel on Frustration and Force Majeure’, 3 rd edition, the

learned author has opined, at paragraph 12-034, that the cases provide many

illustrations of  the principle  that  a  force majeure clause will  not  normally  be

construed  to  apply  where  the  contract  provides  for  an  alternative  mode  of

performance.  It is clear that a more onerous method of performance by itself

would not amount to an frustrating event.  The same learned author also states

that a mere rise in price rendering the contract more expensive to perform does

not constitute frustration.  (See paragraph 15-158)

39. Indeed, in England, in the celebrated  Sea Angel  case, 2013 (1) Lloyds

Law Report 569, the modern approach to frustration is well put, and the same

reads as under:

“111. In my judgment, the application of the doctrine of frustration requires a multi-factorial approach. Among the factors which have to be considered are the terms of the contract itself, its matrix or context, the parties’ knowledge, expectations, assumptions and

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contemplations,  in  particular  as  to  risk,  as  at  the  time  of  the contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties’ reasonable and objectively ascertainable calculations as to  the  possibilities  of  future  performance  in  the  new circumstances.  Since  the  subject  matter  of  the  doctrine  of frustration is contract, and contracts are about the allocation of risk, and since the allocation and assumption of risk is not simply a matter of express or implied provision but may also depend on less  easily  defined  matters  such  as  “the  contemplation  of  the parties”,  the application of  the doctrine can often be a difficult one.  In  such  circumstances,  the  test  of  “radically  different”  is important: it tells us that the doctrine is not to be lightly invoked; that mere incidence of expense or delay or onerousness is not sufficient; and that there has to be as it were a break in identity between the contract as provided for and contemplated and its performance in the new circumstances.”

40. It is clear from the above that the doctrine of frustration cannot apply to

these cases as the fundamental basis of the PPAs remains unaltered.  Nowhere

do the PPAs state that coal is to be procured only from Indonesia at a particular

price.  In fact,  it  is  clear on a reading of the PPA as a whole that  the price

payable for the supply of coal is entirely for the person who sets up the power

plant to bear.  The fact that the fuel supply agreement has to be appended to the

PPA is only to indicate that the raw material for the working of the plant is there

and is in order. It is clear that an unexpected rise in the price of coal will not

absolve the generating companies from performing their part of the contract for

the very good reason that when they submitted their bids, this was a risk they

knowingly took.   We are of  the view that  the mere fact  that the bid may be

non-escalable does not mean that the respondents are precluded from raising

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the plea of frustration, if otherwise it is available in law and  can be pleaded by

them.  But the fact that a non-escalable tariff has been paid for, for example, in

the Adani case, is a factor which may be taken into account only to show that

the risk of supplying electricity at the tariff indicated was upon the generating

company.   

41. Coming to the PPAs themselves, we find that the force majeure clause

contained in all of them is in a standard form and is as follows :

“12.3 Force Majeure ‘Force  Majeure’  means  any  event  or  circumstance  or

combination of events and circumstances including those stated below that  wholly  or  partly  prevents  or  unavoidably  delays  an Affected Party  in  the performance of  its  obligations under  this Agreement,  but  only  if  and  to  the  extent  that  such  events  or circumstances are not within the reasonable control, directly or indirectly, of the Affected Party and could not have been avoided if the Affected Party had taken reasonable care or complied with Prudent Utility Practices: i. Natural Force Majeure Events: act of God, including, but not limited to lightning, drought, fire and explosion (to the extent originating from a source external to the Site),  earthquake,  volcanic  eruption,  landslide,  food,  cyclone, typhoon,  tornado,  or  exceptionally  adverse  weather  conditions which  are  in  excess  of  the  statistical  measures  for  the  last hundred (100) years,  

ii. Non-Natural Force Majeure Events:

1 Direct Non-Natural Force Majeure Events a Nationalization  or  compulsory  acquisition  by  any

Indian Government Instrumentality or any material assets  or  rights  of  the  Seller  or  the  Seller’s contractors; or

b The  unlawful,  unreasonable  or  discriminatory revocation  of,  or  refusal  to  renew,  any  Consent required  by  the  Seller  or  any  of  the  Seller’s

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contractors to perform their  obligations under the Project Documents or any unlawful, unreasonable or discriminatory refusal to grant any other consent required  for  the  development/  operation  of  the Project, provided that an appropriate court of law declares the revocation or refusal to be unlawful, unreasonable  and  discriminatory  and  strikes  the same down; or

c Any other unlawful, unreasonable or discriminatory action  on  the  part  of  an  Indian  Government Instrumentality  which  is  directed  against  the Project, provided that an appropriate court of law declares the revocation or refusal to be unlawful, unreasonable  and  discriminatory  and  strikes  the same down.  

2 Indirect Non – Natural Force Majeure Events a Any act of war (whether declared or undeclared),

invasion,  armed conflict  or  act  of  foreign enemy, blockade,  embargo,  revolution,  riot,  insurrection, terrorist or military action; or

b Radio  active  contamination  or  ionising  radiation originating from a source in India or resulting from another Indirect Non Natural Force Majeure Event excluding  circumstances  where  the  source  or cause of contamination or radiation is brought or has  been  brought  into  or  near  the  site  by  the affected party or  those employed or engaged by the affected party; or

c Industry  wide  strikes  and  labor  disturbances having a nationwide impact in India.

12.7 Available Relief for a Force Majeure Event Subject to this Article 12:

a No  Party  shall  be  in  breach  of  its  obligations pursuant to this Agreement to the extent that the performance  of  its  obligations  was  prevented, hindered or delayed due to a Force Majeure Event;

b Every  Party  shall  be  entitled  to  claim  relief  in relation to a Force Majeure Event in regard to its obligations,  including  but  not  limited  to  those specified under Article 4.5.  

c For the avoidance of doubt, it  is clarified that no

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Tariff shall be paid by the Procurers for the part of Contracted Capacity affected by a Natural  Force Majeure Event affecting the Seller, for the duration of  such  Natural  Force  Majeure  Event.   For  the balance  part  of  the  Contracted  Capacity,  the Procurer shall pay the Tariff to the Seller, provided during  such  period  of  Natural  Force  Majeure Event,  the  balance  part  of  the  Power  Station  is declared  to  be  Available  for  scheduling  and dispatch as per  ABT for  supply  of  power by the Seller to the Procurers.  

d If the average Availability of the Power Station is reduced below sixty (60) percent for over two (2) consecutive  months  or  for  any  non  consecutive period  of  four  (4)  months  both  within  any continuous period of sixty (60) months, as a result of  an  Indirect  Non  Natural  Force  Majeure,  then, with effect from the end of that period and for so long as the daily average Availability of the Power Station continues to be reduced below sixty (60) percent  as  a  result  of  an  Indirect  Non  Natural Force  Majeure  of  any  kind,  the  Procurers  shall make payments for Debt Service, relatable to such Unit,  which  are  due  under  the  Financing Agreements,  subject  to  a  maximum  of  Capacity Charges  based  on  Normative  Availability,  and these amounts shall be paid from the date, being the later of a) the date of cessation of such Indirect Non  Natural  Force  Majeure  Event  and  b)  the completion of  sixty (60) days from the receipt  of the Financing Agreements by the Procurer(s) from the Seller, in the form of an increase in Capacity Charge.  Provided such Capacity Charge increase shall  be  determined  by  CERC  on  the  basis  of putting the Seller in the same economic position as the Seller would have been in case the Seller had been paid  Debt  Service  in  a  situation  when  the Indirect  Non  Natural  Force  Majeure  had  not occurred.  

Provided  that  the  Procurers  will  have  the  above  obligation  to make  payment  for  the  Debt  Service  only  (a)  after  the  Unit(s)

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affected by such Indirect Non Natural Force Majeure Event has been  Commissioned,  and  (b)  only  if  in  the  absence  of  such Indirect Non Natural Force Majeure Event, the Availability of such Commissioned Unit(s) would have resulted in Capacity Charges equal to Debt Services.

e)   If  the average Availability  of  the Power Station is  reduced below eighty (80) percent for over two (2) consecutive months or for any non consecutive period of four (4) months both within any continuous period of sixty (60) months, as a result of a Direct Non Natural  Force  Majeure,  then,  with  effect  from  the  end  of  that period and for  so long as the daily  average Availability  of  the Power Station continues to be reduced below eighty (80) percent as a result of a Direct Non Natural Force Majeure of any kind, the Seller may elect in a written notice to the Procurers, to deem the Availability of the Power Station to be eighty (80) percentage from the  end  of  such  period,  regardless  of  its  actual  Available Capacity.  In such a case, the Procurers shall be liable to make payment to the Seller  of Capacity Charges calculated on such deemed Normative Availability, after the cessation of the effects of Non Natural Direct Force Majeure in the form of an increase in Capacity Charge.  Provided such Capacity Charge increase shall be determined by CERC on the basis of putting the Seller in the same economic position as the Seller would have been in case the Seller had been paid Capacity Charges in a situation where the Direct Non Natural Force Majeure had not occurred.  

f For so long as the Seller is claiming relief due to any  Non  Natural  Force  Majeure  Event  (or Natural  Force  Majeure  Event  affecting  the Procurer/s) under this Agreement, the Procurers may from time to time on one (1) days notice inspect the Project and the Seller shall provide Procurer’s personnel with access to the Project to  carry  out  such  inspections,  subject  to  the Procurer’s  personnel  complying  with  all reasonable  safety  precautions  and  standards. Provided further the Procurers shall be entitled at  all  times  to  request  Repeat  Performance Test,  as  per  Article  8.1,  of  the  Unit(s) Commissioned  earlier  and  now  affected  by Direct  or  Indirect  Non  Natural  Force  Majeure Event (or Natural Force Majeure event affecting

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the Procurer/s), where such Testing is possible to be undertaken in spite of the Direct or Indirect Non Natural  Force  Majeure  Event  (or  Natural Force Majeure Event affecting the Procurer/s), and  the  Independent  Engineer  accepts  and issues  a  Final  Test  Certificate  certifying  such Unit(s)  being  capable  of  delivering  the Contracted Capacity  and being Available,  had there  been  no  such  Direct  or  Indirect  Non Natural Force Majeure Event (or Natural Force Majeure  Event  affecting  the  Procurer/s).   In case, the Available Capacity as established by the  said  Repeat  Performance  Test  (provided that  such  Repeat  Performance  Test,  the limitation  imposed  by  Article  8.1.1  shall  not apply) and Final Test Certificate issued by the Independent Engineer is less than the Available Capacity  corresponding  to  which  the  Seller would have been paid Capacity Charges equal to Debt Service in case of Indirect Non Natural Force Majeure Event (or Natural Force Majeure Event  affecting  the  Procurer/s),  then  the Procurers shall make pro-rata payment of Debt Service but only with respect to such reduced Availability.  For the avoidance of doubt, if Debt Service  would  have  been  payable  at  an Availability  of  60% and pursuant  to  a  Repeat Performance  Test  it  is  established  that  the Availability  would  have  been  40%,  then Procurers  shall  make  payment  equal  to  Debt Service multiplied by 40% and divided by 60%. Similarly, the payments in  case of  Direct  Non Natural  Force  Majeure  Event  (and  Natural Force Majeure Event  affecting  the Procurer/s) shall also be adjusted pro-rata for reduction in Available Capacity.  

(g)  In  case  of  a  Natural  Force  Majeure  Event  affecting  the Procurer/s which adversely affects the performance obligations of the Seller under this Agreement, the provisions of sub-proviso (d) and (f) shall apply.

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(h)  For the avoidance of doubt, it is specified that the charges payable under this Article 12 shall  be paid by the Procurers in proportion to their then existing Allocated Contracted Capacity.”  

42. It has strongly been contended by counsel for the respondents that, first

and foremost, the force majeure clause is not exhaustive, but is only inclusive.

Further, it may wholly or partly prevent an affected party from performance of

obligations  under  the  agreement.   Rise  in  the  price  of  Indonesian  coal,

according to them, was unforeseen inasmuch as the PPAs have been entered

into sometime in 2006 to 2008, and the rise in price took place only in 2010 and

2011.  Such rise in price is also not within their control at all  and, therefore,

clause 12.3 read with clause 12.7 would apply.  They further argued that the

force majeure clause in the present case went further and stated that so long as

performance of their obligation was “hindered” due to a force majeure event,

they can claim compensatory tariff.  

43. First and foremost, the respondents are correct in stating that the force

majeure clause does not exhaust the possibility of unforeseen events occurring

outside natural and/or non-natural events.  But the thrust of their argument was

really that so long as their performance is hindered by an unforeseen event, the

clause applies.  ‘Chitty on Contracts’, 31st edition at para 14-151 cites a number

of  judgments  for  the  proposition  that  the  expression  “hindered”  must  be

construed with regard to words which precede and follow it, and also with regard

to the nature and general terms of the contract.  Given the fact that the PPA

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must be read as a whole, and that clauses 12.3 and 12.7(a) are a part of the

same scheme of force majeure under the contract, it is clear that the expression

“hindered” in clause 12.7(a) really goes with the expression “partly prevents” in

clause  12.3.   Force  majeure  clauses  are  to  be  narrowly  construed,  and

obviously the expression “prevents” in clause 12.3 is spoken of also in clause

12.7(a).  When “prevent” is preceded by the expression “wholly or partly”, it is

reasonable to assume that the expression “prevented” in clause 12.7(a) goes

with the expression “wholly”  in clause 12.3 and the expression “hindered” in

clause 12.7(a) goes with the expression “partly”.   This being so, it is clear that

there must be something which partly prevents the performance of the obligation

under  the  agreement.   Also,  ‘Treitel  on  Frustration  and  Force  Majeure’,  3 rd

edition,  in  paragraph  15-158  cites  the  English  judgment  of  Tennants

(Lancashire) Ltd. v. G.S. Wilson and Co. Ltd., 1917 Appeal Cases 495 for the

proposition that a mere rise in price rendering the contract more expensive to

perform  will  not  constitute  “hindrance”.    This  is  echoed  in  the  celebrated

judgment of Peter Dixon & Sons Ltd. v. Henderson, Craig & Co. Ltd., 1919(2)

KB 778 in  which it  was held  that  the expression “hinders  the delivery”  in  a

contract would only be attracted if there was not merely a question of rise in

price, but a serious hindrance in performance of the contract as a whole.  At the

beginning of the First World War, British ships were no longer available, and

although foreign shipping could be obtained at an increased freight, such foreign

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ships were liable to be captured by the enemy and destroyed through mines or

sub-marines,  and  could  be  detained  by  British  or  allied  warships.   In  the

circumstances, the Tennants (Lancashire) Ltd. judgment was applied, and the

Court of Appeals held:  

   “Under the circumstances, can it be said that the sellers were not “hindered or prevented” within the meaning of the contract? It is not a question of price, merely an increase of freight. Tonnage had to be obtained to bring the pulp in Scandinavian ships, and although the difficulty in obtaining tonnage may be reflected in the increase of freight, it was not a mere matter of increase of freight; if  so,  there  were  standing  contracts  that  ought  to  have  been fulfilled.  Counsel  for  the  respondents  urged  that  certain shipowners, for reasons of their own, chose not to fulfil standing contracts. It was not only shipowners but pulp buyers and sellers. The whole trade was dislocated, by reason of the difficulty that had arisen in tonnage. It seems to me that the language of Lord Dunedin  in  Tennants,  Ld.  v. Wilson  & Co. is  applicable  to  the present  case:  “Where  I  think,  with  deference  to  the  learned judges, the majority of the Court below have gone wrong is that they have seemingly assumed that price was the only drawback. I do not think that price as price has anything to do with it. Price may be evidence, but it is only one of many kinds of evidence as to shortage. If the appellants had alleged nothing but advanced price they would have failed. But they have shown much more.” That  is  exactly  so  here.  Price,  as  price  only, would  not  have affected it. They were all standing contracts, but the position has so changed by reason of the war that buyers and sellers and the whole trade were hindered or prevented from carrying out those contracts.”  

44. As a matter of fact, clause 12.4 of the PPA, which deals with force majeure

exclusions, reads as follows :

“12.4 Force Majeure Exclusions Force Majeure shall  not  include (i)  any event  or  circumstance which is within the reasonable control of the parties and (ii) the following  conditions,  except  to  the  extent  that  they  are

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consequences of an event of Force Majeure: a. Unavailability,  late  delivery,  or  changes  in  cost  of  the  plant,

machinery,  equipment,  materials,  spare  parts,  fuel  or consumables for the Project;

b. Delay in the performance of  any contractor, sub-contractors or their agents excluding the conditions as mentioned in Article 12.2;

c. Non-performance resulting from normal wear and tear typically experienced in power generation materials and equipment;

d. Strikes or labour disturbance at the facilities of the Affected Party; e. Insufficiency  of  finances  or  funds  or  the  agreement  becoming

onerous to perform; and f. Non-performance  caused  by,  or  connected  with,  the  Affected

Party’s: i. Negligent or intentional acts, errors or omissions; ii. Failure to comply with an Indian Law; or iii. Breach of, or default under this Agreement or any Project

Documents.”

This  clause  makes  it  clear  that  changes  in  the  cost  of  fuel,  or  the

agreement  becoming  onerous  to  perform,  are  not  treated  as  force  majeure

events under the PPA itself.

45. We are, therefore, of the view that neither was the fundamental basis of

the contract dislodged nor was any frustrating event, except for a rise in the

price  of  coal,  excluded  by  clause  12.4,  pointed  out.    Alternative  modes  of

performance were available, albeit at a higher price. This does not lead to the

contract, as a whole, being frustrated. Consequently, we are of the view that

neither clause 12.3 nor 12.7, referable to Section 32 of the Contract Act, will

apply so as to enable the grant of compensatory tariff to the respondents. Dr.

Singhvi, however, argued that even if clause 12 is held inapplicable, the law laid

down on frustration under Section 56 will apply so as to give the respondents

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the necessary relief on the ground of force majeure.  Having once held that

clause 12.4  applies  as a  result  of  which rise  in  the price  of  fuel  cannot  be

regarded as a force majeure event contractually, it  is difficult  to appreciate a

submission that in the alternative Section 56 will apply.  As has been held in

particular, in  the  Satyabrata Ghose case,  when a contract  contains a force

majeure clause which on construction by the Court is held attracted to the facts

of  the case,  Section 56 can have no application.  On this  short  ground,  this

alternative submission stands disposed of.

Change in Law

46. It has been submitted on behalf of the counsel for the respondents, that

the guidelines of  19th January, 2005,  as  amended by  the  18th August,  2006

amendment,  make it  clear that  any change in law, either abroad or in India,

would result in the consequential rise in price of coal being given to the power

generators.   Since various provisions of  the guidelines as well  as the power

purchase agreements are referred to, we set them out herein:

Guidelines

“Clause 2.3.  2.3 Unless  explicitly  specified  in  these  guidelines,  the provisions of these guidelines shall be binding on the procurer. The process to be adopted in event of any deviation proposed from these guidelines is specified later in these guidelines under para 5.16.  Clause 4.3  4.3. Tariffs shall be designated in Indian Rupees only.  Foreign exchange  risks,  if  any,  shall  be  borne  by  the  supplier. Transmission charges in all cases shall be borne by the procurer.

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Provided  that  the  foreign  exchange  rate  variation  would  be permitted  in  the  payment  of  energy  charges  [in  the  manner stipulated  in  para  4.11  (iii)]  if  the  procurer  mandates  use  of imported fuel for coastal power station in case-2.  Clause 4.7. (unamended) Any change in tax on generation or sale of electricity as a result of any change in Law with respect to that applicable on the date of bid submission shall be adjusted separately.  Clause 4.7 (amended). Any change in law impacting cost or revenue from the business of  selling  electricity  to  the  procurer  with  respect  to  the  law applicable on the date which is 7 days before the last date for RFP bid submission shall be adjusted separately.  In case of any dispute regarding the impact of any change in law, the decision of the Appropriate Commission shall apply.  5.4. Standard documentation to be provided by the procurer in the RFQ shall include - (ii) Model PPA proposed to be entered into with the seller of electricity.  The PPA shall include necessary details on:

• Risk allocation between parties; • Technical requirements on minimum load conditions; • Assured offtake levels; • Force majeure clauses as per industry standards; • Lead times for scheduling of power; • Default conditions and cure thereof, and penalties; • Payment  security  proposed  to  be  offered  by  the

procurer.

Clause 5.6. Standard documentation to be provided by the procurer  in  the  RFP  shall  include  -  (ii)  PPA proposed  to  be entered with the selected bidder.  The model PPA proposed in the RFQ stage may be amended based on  the  inputs  received  from the  interested  parties,  and shall be provided to all parties responding to the RFP. No further amendments shall be carried out beyond the RFP stage; Clause 5.16 (old) Deviation from process defined in the guidelines Clause 5.16. In  case  there  is  any  deviation  from  these guidelines,  the  same  shall  be  subject  to  approval  by  the Appropriate  Commission.   The  Appropriate  Commission  shall approve or  require  modification to  the bid  documents  within  a

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reasonable time not exceeding 90 days.  Clause 5.17 (old) Arbitration Clause 5.17. The procurer will establish an Amicable Dispute Resolution (ADR) mechanism in accordance with the provisions of  the Indian Arbitration and Conciliation Act,  1996.   The ADR shall  be  mandatory  and  time-bound  to  minimize  disputes regarding the bid process and the documentation thereof.  If the ADR fails to resolve the dispute, the same will be subject to jurisdiction of the appropriate Regulatory Commission under the provisions of the Electricity Act, 2003.  Clause 5.16 (new) Deviation from process defined in the guidelines 5.16 In case there is  any deviation from these guidelines,  the same  shall  be  subject  to  approval  by  the  Appropriate Commission.  The  Appropriate  Commission  shall  approve  or require  modification to  the bid  documents  within  a  reasonable time not exceeding 90 days.  Clause 5.17 (new) Arbitration  Clause 5.17   Where any dispute arises claiming any change in or regarding determination of the tariff or any tariff related matters, or  which partly  or  wholly  could result  in  change in tariff,  such dispute shall be adjudicated by the Appropriate Commission.  All other disputes shall be resolved by arbitration under the Indian Arbitration and Conciliation Act, 1996.  Power purchase agreement “Bid Deadline”   shall mean the last date for submission of the Bid in response to the RFP, specified in Clause 2.8 of the RFP;

“Dispute”  means any dispute or difference of any kind between a Procurer and the Seller or between the Procurers (jointly) and the Seller,  in  connection  with  or  arising  out  of  this  Agreement including any issue on the interpretation and scope of the terms of this Agreement as provided in Article 17;

“Electricity Laws” means the Electricity Act, 2003 and the rules and regulations made thereunder from time to time along with amendments  thereto  and  replacements  thereof  and  any  other Law pertaining to electricity including regulations framed by the Appropriate Commission;

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“Fuel”  means primary fuel  used to generate electricity  namely, _______________”,

“Fuel Supply Agreements” means the agreement(s) entered into between  the  Seller  and  the  Fuel  Supplier  for  the  purchase, transportation and handling of the Fuel, required for the operation of the Power Station.  In case the transportation of the Fuel is not the responsibility of the Fuel Supplier, the term shall also include the  separate  agreement  between  the  Seller  and  the  Fuel Transporter  for  the  transportation  of  Fuel  in  addition  to  the agreement  between  the  Seller  and  the  Fuel  Supplier  for  the supply of the Fuel;

“Law”  means,  in  relation  to  this  Agreement,  all  laws including Electricity  Laws  in  force  in  India  and  any  statute,  ordinance, regulation, notification or code, rule, or any interpretation of any of  them  by  an  Indian  Government  Instrumentality  and  having force  of  law  and  shall  further  include  all  applicable  rules, regulations,  orders,  notifications  by  an  Indian  Governmental Instrumentality pursuant to or under any of them and shall include all  rules,  regulations,  decisions  and  orders  of  the  Appropriate Commission;

“Project Documents”  mean

a Construction Contracts; b Fuel  Supply  Agreements,  including  the  Fuel

Transportation Agreement, if any; c O&M contacts; d RFP and RFP Project Documents; and e Any other agreements designated in writing as

such, from time to time, jointly by the Procurers and the Seller;

13. ARTICLE 13: CHANGE IN LAW 13.1 Definitions In  this  Article  13,  the  following  terms  shall  have  the  following meanings: 13.1.1 “Change in Law” means the occurrence of any of the following events after the date, which is seven (7) days prior to the Bid Deadline: (i) the enactment, bringing into effect, adoption, promulgation,

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amendment, modification or repeal, of any Law or (ii) a change in interpretation of any Law by a competent Court of law, tribunal or Indian Governmental Instrumentality provided such Court of law, tribunal or Indian Governmental Instrumentality is final authority under law for such interpretation or (iii) change in any consents, approvals  or  licenses  available  or  obtained  for  the  Project, otherwise  than  for  default  of  the  Seller,  which  results  in  any change in any cost  of  or  revenue from the business of selling electricity by the Seller to the Procurers under the terms of this Agreement, or (iv) any change in the (a) Declared  value of Land for the Project or (b) the cost of implementation of resettlement and rehabilitation package of the land for the Project mentioned in  the  RFP  or  (c)  the  cost  of  implementing  Environmental Management Plan for the Power Station mentioned in the RFP, indicated under the RFP and the PPA; but  shall  not  include (i)  any change in any withholding tax on income or dividends distributed to the shareholders of the Seller, or (ii) change in respect of UI Charges or frequency intervals by an Appropriate Commission.  Provided that if Government of India does not extend the income tax holiday for power generation projects under Section 80 IA of the Income Tax Act, upto the Scheduled Commercial Operation Date of the Power Station, such non-extension shall be deemed to be a Change in Law.  13.1.2 “Competent Court” means: The Supreme Court  or  any High Court,  or  any tribunal  or  any similar judicial or quasi-judicial body in India that has jurisdiction to adjudicate upon issues relating to the Project. 13.2 Application  and  Principles  for  computing  impact  of Change in Law While determining the consequence of Change in Law under this Article 13, the Parties shall have due regard to the principle that the purpose of compensating the Party affected by such Change in  Law,  is  to  restore  through  Monthly  Tariff  Payments,  to  the extent contemplated in this Article 13, the affected Party to the same  economic  position  as  if  such  Change  in  Law  has  not occurred.  

a Construction Period

As  a  result  of  any  Change  in  Law,  the  impact  of increase/decrease of Capital Cost of the Project in the Tariff shall be governed by the formula given below:

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For  every  cumulative  increase/decrease  of  each  Rupees  Fifty crores (Rs.50 crores) in the Capital  Cost over the term of  this Agreement,  the  increase/decrease  in  Non  Escalable  Capacity Charges shall be an amount equal to zero point two six seven (0.267%) of the Non Escalable Capacity Charges.  Provided that the Seller provides to the Procurers documentary proof of such increase/decrease in Capital Cost for establishing the impact of such Change in Law.  In case of Dispute, Article 17 shall apply.  It  is  clarified  that  the above mentioned compensation shall  be payable to either Party, only with effect from the date on which the  total  increase/decrease  exceeds  amount  of  Rs.fifty  (50) crores. Operation Period As  a  result  of  Change  in  Law,  the  compensation  for  any increase/decrease  in  revenues  or  cost  to  the  Seller  shall  be determined  and  effective  from  such  date,  as  decided  by  the Central Electricity Regulatory Commission whose decision shall be  final  and  binding  on  both  the  Parties,  subject  to  rights  of appeal provided under applicable Law. Provided  that  the  above  mentioned  compensation  shall  be payable only if and for increase/decrease in revenues or cost to the Seller is in excess of an amount equivalent to 1% of Letter of Credit in aggregate for a Contract Year.  13.3 Notification of Change in Law 13.3.1  If the Seller is affected by a Change in Law in accordance with Article 13.2 and wishes to claim a Change in Law under this Article, it shall give notice to the Procurers of such Change in Law as soon as reasonably practicable after becoming aware of the same or should reasonably have known of the Change in Law.  13.3.2 Notwithstanding Article 13.3.1, the Seller shall be obliged to serve a notice to all the Procurers under this Article 13.3.2 if it is beneficially affected by a Change in Law.  Without prejudice to the  factor  of  materiality  or  other  provisions  contained  in  this Agreement,  the  obligation  to  inform  the  Procurers  contained herein shall be material.  Provided that in case the Seller has not provided such notice, the Procurers shall jointly have the right to issue such notice to the Seller.  13.3.3 Any notice served pursuant to this Article 13.3.2 shall provide, amongst other things, precise details of: (a) the Change in Law; and (b) the effects on the Seller of the matters referred to in Article 13.2.

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13.4 Tariff  Adjustment  Payment  on  account  of  Change  in Law 13.4.1 Subject to Article 13.2, the adjustment in Monthly Tariff Payment shall be effective from: (i) the  date  of  adoption,  promulgation,  amendment, re-enactment or repeal of the Law or Change in Law; or (ii) the date of order/judgment of the Competent Court or tribunal or Indian Governmental Instrumentality, if the Change in Law is on account of a change in interpretation of Law.  13.4.2 The payment  for  Changes in  Law shall  be  through Supplementary  Bill  as  mentioned in  Article  11.8.   However, in case of  any change in  Tariff  by  reason of  Change in Law, as determined  in  accordance  with  this  Agreement,  the  Monthly Invoice to be raised by the Seller after such change in Tariff shall appropriately reflect the changed Tariff.  17.3.1 Where any Dispute arises from a claim made by any Party  for  any  change  in  or  determination  of  the  Tariff  or  any matter related to Tariff or claims made by any Party which partly or wholly relate to any change in the Tariff or determination of any of such claims could result in change in the Tariff or (ii) relates to any matter agreed to be referred to the Appropriate Commission under Articles 4.7.1, 13.2, 18.1 or clause 10.1.3 of Schedule 17 hereof,  such Dispute shall  be submitted to adjudication by the Appropriate  Commission.   Appeal  against  the decisions of  the Appropriate Commission shall be made only as per the provisions of the Electricity Act, 2003, as amended from time to time. 18.1 Amendment

This Agreement may only be amended or supplemented by a written agreement between the Parties and after duly obtaining the approval of the Appropriate Commission, where necessary.”  

47. The respondents have argued before us that it is clear from the change

made in clause 4.7 of the guidelines read with clause 5.17 that any change in

law impacting cost or revenue from the business of selling electricity shall be

adjusted separately.  Learned counsel  for  the respondents have argued that

“any change in law” is not qualified and, therefore, would include foreign law.

According  to  them,  the  power  purchase  agreement  is  subservient  to  the

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guidelines and can never negate the terms of the guidelines.  Under clauses 4.7

and 5.1.7 of the guidelines, these guidelines are binding on all parties including

the  procurers  and  any  deviation  therefrom  has  to  be  approved  by  the

appropriate Commission.  Therefore, according to them, the PPA must be read

as including foreign laws as well.  On the other hand, our attention was invited to

the definition of “electricity laws” and it was argued that clause 13 would have to

be read in  the light  of  the PPA provisions and so read it  would not  include

changes in Indonesian law, being foreign and not Indian Law.

48. Both the guidelines and the model PPA, of which clause 13 is a part, have

been drafted by the Central Government itself.  It is, therefore, clear that the

PPA only fleshes out what is mentioned in clause 4.7 of the guidelines, and goes

on to explain what the expression “any change in law” means.  This being the

case, it is clear that the definition of “law” speaks of all laws including electricity

laws in force in India.  Electricity laws, as has been seen from the definition,

means the Electricity Act, rules and regulations made thereunder from time to

time, and any other law pertaining to electricity.  This being so, it is clear that the

expression “in force in India” in the definition of ‘law’ goes with “all laws”.  This is

for the reason that otherwise the said expression would become tautologous, as

electricity laws that are in force in India are already referred to in the definition of

“electricity laws” as contained in the PPA.  Once this is clear, at least textually it

is clear that “all laws” would have to be read with “in force in India” and would,

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therefore, refer only to Indian laws.  Even otherwise, from a reading of clause

13, it is clear that clause 13.1.1 is in four different parts.  The first part speaks of

enacted laws; the second speaks of interpretation of such laws by Courts or

other instrumentalities; the third speaks of changes in consents, approvals or

licences which result in change in cost of the business of selling electricity; and

the fourth refers to any change in the declared law of the land for the project,

cost  of  implementation  of  re-settlement  and  rehabilitation  or  cost  of

implementing the environmental management plan.  ‘Competent Court’ in clause

13.1.2 is defined as meaning only the judicial system of India.

49. First and foremost, the expression “any law” occurs in both sub-section (1)

and sub-section (2) of clause 13.1.1, which expression must be given the same

meaning in both sub-sections.  This being the case, as in sub-clause (2), this

expression would refer only to Indian law, the same meaning will  have to be

given  to  the  very  same  expression  in  sub-clause  (1).   Even  otherwise,

sub-clauses  (1)  and  (2)  form  part  of  the  same  contractual  scheme  in  that

sub-clause (1) refers to the enactment of laws, whereas sub-clause (2) relates

to interpretation of  those very laws by a competent  Court  of  law/Tribunal  or

Indian Government instrumentality.  ‘Competent Court’, as we have seen above,

speaks only of the Indian judicial system and, therefore, the enactments spoken

of in sub-clause (1) would necessarily refer only to Indian enactments.

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50. However,  we  were  referred  to  other  clauses  in  the  PPA,  for  example,

clauses 12.4(f)(ii), 4.1.1(a) and 17.1, all of which speak of Indian law.  It was,

therefore, argued that wherever the parties wanted to refer to Indian law, they

did so explicitly, and from this it  should be inferred that the expression “law”

would otherwise include all laws whether Indian or otherwise.

51. This argument is based on the Latin maxim expressio unius est exclusio

alterius.  This maxim has been referred to in a number of judgments of this

Court  in  which  it  has been described as  a  ‘useful  servant  but  a  dangerous

master’. (See for example CCE v. National Tobacco Co. of India Ltd., (1972) 2

SCC 560 at Para 30).    

From a reading of the above, it is clear that if otherwise the expression

“any law” in clause 13 when read with the definition of  “law” and “Electricity

Laws” leads unequivocally to the conclusion that it refers only to the law of India,

it would be unsafe to rely upon the other clauses of the agreement where Indian

law is specifically mentioned to negate this conclusion.   

52. It  was  also  argued,  placing  reliance  upon  the  fact  that  a  commercial

contract is to be interpreted in a manner which gives business efficacy to such

contract, that the subject matter of the PPA being “imported coal”, obviously the

expression “any law” would refer to laws governing coal that is imported from

other countries.  We are afraid, we cannot agree with this argument.  There are

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many  PPAs  entered  into  with  different  generators.   Some  generators  may

source fuel only from India.  Others, as is the case in the Adani Haryana matter,

would  source  fuel  to  the  extent  of  70%  from  India  and  30%  from  abroad,

whereas other generators, as in the case of Gujarat Adani and the Coastal case,

would source coal wholly from abroad.  The meaning of the expression “change

in law” in clause 13 cannot depend upon whether coal is sourced in a particular

PPA from outside India or within India.  The meaning will  have to remain the

same whether coal is sourced wholly in India, partly in India and partly from

outside,  or  wholly  from  outside.  This  being  the  case,  the  meaning  of  the

expression “any law” in clause 13 cannot possibly be interpreted in the manner

suggested by the respondents.  English judgments and authorities were cited for

the  proposition  that  if  performance of  a  contract  is  to  be  done in  a  foreign

country, what would be relevant would be foreign law.  This would be true as a

general statement of law, but for the reason given above, would not apply to the

PPAs in the present case.   

53. However, in so far as the applicability of clause 13 to a change in Indian

law is concerned, the respondents are on firm ground.  It will be seen that under

clause 13.1.1 if there is a change in any consent, approval or licence available

or obtained for the project, otherwise than for the default of the seller, which

results in any change in any cost of the business of selling electricity, then the

said seller will be governed under clause 13.1.1.   It is clear from a reading of

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the Resolution dated 21st June, 2013, which resulted in the letter of 31st July,

2013, issued by the Ministry of Power, that the earlier coal distribution policy

contained  in  the  letter  dated  18th March,  2007  stands  modified  as  the

Government has now approved a revised arrangement for supply of coal. It has

been  decided  that,  seeing  the  overall  domestic  availability  and  the  likely

requirement  of  power  projects,  the  power  projects  will  only  be  entitled  to  a

certain percentage of what was earlier allowable.  This being the case, on 31st

July, 2013, the following letter, which is set out in extenso states as follows :

FU-12/2011-IPC (Vol-III) Government of India

Ministry of Power

Shram Shakti Bhawan, New Delhi Dated 31st July, 2013

To, The Secretary, Central Electricity Regulatory Commission, Chanderlok Building, Janpath, New Delhi

Subject: Impact on tariff in the concluded PPAs due to shortage in domestic coal availability and consequent changes in NCDP. Ref.  CERC’s  D.O.  No.10/5/2013-Statutory  Advice/CERC  dated 20.05.13 Sir,

In  view  of  the  demand  for  coal  of  power  plants  that  were provided coal linkage by Govt. of India and CIL not signing any Fuel Supply  Agreement  (FSA)  after  March,  2009,  several  meetings  at different levels in the Government were held to review the situation. In February 2012, it was decided that FSAs will be signed for full quantity of coal mentioned in the Letter of Assurance (LOAs) for a period of 20 years with a trigger level of 80% for levy of disincentive and 90% for levy of incentive. Subsequently, MOC indicated that CIL will not be able to supply domestic coal at 80% level of ACQ and coal will have to be imported by CIL to bridge the gap.  The issue of

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increased  cost  of  power  due  to  import  of  coal/e-auction  and  its impact  on the tariff  of  concluded PPAs were also discussed and CERC’s advice sought. 2. After considering all aspects and the advice of CERC in this regard, Government has decided the following in June 2013: i) taking into account the overall domestic availability and actual requirements, FSAs to be signed for domestic coal component for the levy of disincentive at the quantity of 65%, 65%, 67% and 75% of Annual Contracted Quantity (ACQ) for the remaining four years of the 12th Plan. ii) to meet its balance FSA obligations, CIL may import coal and supply the same to the willing TPPs on cost plus basis. TPPs may also import coal themselves if they so opt. iii) higher cost of imported coal to be considered for pass through as per modalities suggested by CERC. 3. Ministry of Coal vide letter dated 26th July 2013 has notified the changes in the New Coal Distribution Policy (NCDP) as approved by the CCEA in relation to be coal supply for the next four years of the 12th Plan (copy enclosed). 4. As  per  decision  of  the  Government,  the  higher  cost  of import/market based e-auction coal be considered for being made a pass through on a case to case basis by CERC/SERC to the extent of  shortfall  in  the quantity  indicated in  the LoA/FSA and the CIL supply of domestic coal which would be minimum of 65%, 65%, 67% and 75% of LOA for the remaining four years of the 12th Plan for the already concluded PPAs based on tariff based competitive bidding. 5. The ERCs are advised to consider the request of  individual power producers in this regard as per due process on a case to case  basis  in  public  interest.   The  Appropriate  Commissions  are requested to  take immediate  steps for  the implementation of  the above decision of the Government. This issues with the approval of MOS(P)I/C. Encl: as above

Yours faithfully, Sd/-

(V.Apparao) Director

This is  further  reflected in  the revised tariff  policy dated 28 th January, 2016,

which in paragraph 1.1 states as under :

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1.1 In  compliance  with  Section  3  of  the  Electricity  Act  2003,  the Central Government notified the Tariff Policy on 6th January, 2006. Further  amendments  to  the  Tariff  Policy  were  notified  on  31st March, 2008, 20th January, 2011 and 8th July, 2011. In exercise of powers conferred under Section 3(3) of Electricity Act, 2003, the Central Government hereby notifies the revised Tariff Policy to be effective  from  the  date  of  publication  of  the  resolution  in  the Gazette of India.

Notwithstanding  anything  done  or  any  action  taken  or purported to have been done or taken under the provisions of  the  Tariff  Policy  notified  on  6th January,  2006  and amendments made thereunder, shall, in so far as it is not inconsistent with this Policy, be deemed to have been done or taken under provisions of this revised policy.  

Clause 6.1 states: 6.1 Procurement of Power As  stipulated  in  para  5.1,  power  procurement  for  future requirements should be through a transparent competitive bidding  mechanism  using  the  guidelines  issued  by  the Central  Government  from time to  time.  These guidelines provide for  procurement  of  electricity  separately  for  base load requirements and for  peak load requirements.   This would  facilitate  setting  up  of  generation  capacities specifically for meeting such requirements. However, some of the competitively bid projects as per the guidelines  dated  19th January,  2005  have  experienced difficulties in getting the required quantity of coal from Coal India Limited (CIL).  In case of reduced quantity of domestic coal  supplied  by  CIL,  vis-à-vis  the  assured  quantity  or quantity  indicated in  Letter  of  Assurance/FSA the cost  of imported/market based e-auction coal procured for making up the shortfall, shall be considered for being made a pass through  by  Appropriate  Commission  on  a  case  to  case basis, as per advisory issued by Ministry of Power vide OM NO.FU-12/2011-IPC (Vol-III) dated 31.7.2013.

Both  the  letter  dated  31st July,  2013  and  the  revised  tariff  policy  are

statutory documents being issued under Section 3 of the Act and have the force

of law.  This being so, it is clear that so far as the procurement of Indian coal is

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concerned,  to  the  extent  that  the  supply  from  Coal  India  and  other  Indian

sources is cut down, the PPA read with these documents provides in clause 13.2

that while determining the consequences of change in law, parties shall have

due regard to the principle that the purpose of compensating the party affected

by  such  change  in  law  is  to  restore,  through  monthly  tariff  payments,  the

affected  party  to  the  economic  position  as  if  such  change  in  law  has  not

occurred.   Further, for the operation period of the PPA, compensation for any

increase/decrease in cost to the seller shall be determined and be effective from

such date as decided by the Central Electricity Regulation Commission.  This

being the case, we are of the view that though change in Indonesian law would

not qualify as a change in law under the guidelines read with the PPA, change in

Indian law certainly would.  

54. However, Shri Ramachandran, learned senior counsel for the appellants,

argued that the policy dated 18th October, 2007 was announced even before the

effective date of the PPAs, and made it clear to all generators that coal may not

be given to the extent of the entire quantity allocated. We are afraid that we

cannot accede to this argument for the reason that the change in law has only

taken place only in 2013, which modifies the 2007 policy and to the extent that it

does so, relief is available under the PPA itself to persons who source supply of

coal from indigenous sources.  It is to this limited extent that change in law is

held in  favour  of  the respondents.   Certain other  minor  contentions that  are

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raised on behalf of both sides are not being addressed by us for the reason that

we find it unnecessary to go into the same.  The Appellate Tribunal’s judgment

and the Commission’s orders following the said judgment are set aside. The

Central Electricity Regulatory Commission will, as a result of this judgment, go

into the matter  afresh and determine what  relief  should be granted to those

power generators who fall within clause 13 of the PPA as has been held by us in

this judgment.

55. All the appeals are disposed of accordingly.

                                          …………………………………..J.  (PINAKI CHANDRA  GHOSE )

     …….…………………………… J.       (R.F. NARIMAN)

New Delhi; April 11, 2017