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NON REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

I.A. NO.4 OF 2015 IN

CIVIL APPEAL  NO. 11133 OF 2011

M/S. ADANI POWER LTD. … APPLICANT/APPELLANT

Versus

GUJARAT ELECTRICITY REGULATORY COMMISSION & OTHERS … RESPONDENTS

O R D E R

Chelameswar, J.

1. This application is filed by the appellant in Civil Appeal  

No.11133/2011.  The prayer in the application is as follows:

“a) to  stay  the  operation  of  the  impugned  Judgment  dated  7.9.2011 and suspend further supply of electricity in terms of the  PPA during the pendency of this Appeal.

b) in the alternative to prayer (a) above, during the pendency  of the accompanying Civil Appeal the Hon’ble Court may direct  the Respondent(s) to pay the tariff as per CERC norms for tariff on  cost plus basis; and also make the payment from the date of the  supply of power under the PPA of the differential amount between  the PPA tariff and the tariff as per CERC norms for tariff on cost  

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plus basis on the such terms and condition as this Hon’ble court  deems fit as just and proper;”

However,  prayer  (a)  was  not  pressed  when  the  matter  was  

taken up for hearing.  A brief background of the appeal and  

the application is as follows.

2. The appellant company is a power generating company.  

The 2nd respondent herein is a company owned by the State of  

Gujarat  carrying  on  business  of  purchasing  power  in  bulk  

from power generating companies such as the appellant herein  

and supplying to various distributing companies in the State  

of Gujarat.   

3. The  appellant  and  the  2nd respondent  entered  into  a  

Power Purchase Agreement (hereinafter PPA, for short).  Under  

the  said  agreement,  the  appellant  is  obliged  to  sell  1000  

megawatt  of  power from the appellant’s  power project.   For  

various reasons, the details of which are not necessary at this  

stage,  the  appellant  issued  a  notice  of  termination  dated  

28.12.2009 of the above mentioned PPA w.e.f. 4.1.2010.

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4. After  some  correspondence,  the  2nd respondent  filed  a  

petition before the Gujarat Electricity Regulatory Commission  

(the 1st respondent herein) seeking adjudication of the dispute  

arising out of termination of the PPA by the appellant.

5. The  1st respondent,  by  its  order  dated  31.8.2010,  set  

aside the termination notice sent by the appellant and directed  

the appellant to supply power to the 2nd respondent as per the  

terms of the PPA.

6. Aggrieved  by  the  said  order,  the  appellant  carried  the  

matter in appeal before the Appellate Tribunal for Electricity  

unsuccessfully.   Hence,  the  appeal  No.11133/2011.   The  

appeal was admitted by an order dated 13.8.2012 and since  

pending.   Hence  the  instant  application  with  averments  as  

follows:

“7. If the relief sought for by the Appellant is not granted, there  is  a  serious  risk  of  Mundra  Power  Project  becoming  a  Non  Performing Asset causing an irreparable harm to the consumers as  well as the lenders of the Mundra Power Project.  Since the main  Civil  Appeal  is  pending  adjudication  for  final  hearing  and  the  Appellant  is  supplying  the  power  to  the  Respondent  No.2  –  GUVNL, the present application is being filed to compensate the  

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Appellant upto the actual cost of generation as per CERC norms  for determination of tariff.   The same is  in order to  sustain the  generation and supply of power pending the hearing of the main  Civil Appeal.

xxxx xxxx xxxx

9. It  is  submitted  that  whereas  the pendency of the present  appeal is piling huge losses upon the Appellant no prejudice would  be  occasioned  to  the  Respondents  if  the  present  Application  is  allowed on an undertaking by the Appellant to refund the amount  over and above the PPA tariff that will be paid, to the Respondent  No.2 or such other condition as this Hon’ble Court may deem fit.  Alternatively,  in view of the recurring losses, the  Appellant  be  permitted to suspend further supply of electricity in terms of the  PPA during the pendency of this Appeal.  This shall meet the ends  of justice.”

7. On  behalf  of  the  2nd respondent,  an  affidavit  dated  

23.11.2015 is filed.  The said affidavit,  while contesting the  

various  assertions  made  by  the  appellant  and  its  rights,  

stated:

15. I  submit  that,  without  prejudice  to  the  rights  of  the  Respondent  No.2  to  contest  the  present  appeal,  the  answering  Respondent  with  the  approval  of  Government  of  Gujarat  has  already  shown  its  willingness  to  pay  compensatory  tariff  prospectively (from next month of CERC order i.e. March 2014)  subject to paras 12 and 13 above to resolve the issue by making  suitable  adjustments  in tariff  which till  date  is  not  implemented  because of non acceptance by Appellant and other stakeholders.

16. I  say  that  without  prejudice  to  its  rights  in  the  present  appeals the Respondent No.2 is willing to implement the decisions  of State Govt. for paying compensatory tariff prospectively (from  next month of CERC order i.e. March 2014) to resolve the issue by  making  suitable  adjustment  in  tariff  on  the  directions  of  the  Hon’ble Court. xxxxxx”

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8. Shri  Prashant  Bhushan,  learned counsel  appearing for  

respondent No.4 opposed the prayers of the applicant alleging  

that the 2nd respondent is colluding with the appellant as there  

is  no  occasion  for  the  respondent  to  make  any  concession  

such  as  the  one  made  in  the  affidavit  filed  by  the  2nd  

respondent (the relevant portion of which are already extracted  

above).  More particularly, when the 2nd respondent succeeded  

before two fora below, the concession of the 2nd respondent to  

pay  compensatory  tariff  to  the  appellant  though said  to  be  

subject to the contentions of the respondent in the appeal is  

nothing  but  largesse  of  the  State  to  the  appellant  and  not  

consistent with public interest.  He further submitted that this  

Court may not affix a stamp of approval for such a decision of  

the  2nd respondent  by  passing  any  order  accepting  the  

concession made by the respondent.   He also submitted that  

the  payment  of  compensatory  tariff  to  the  appellant  would  

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ultimately result in compelling the consumers to pay higher  

price.

9. On  the  other  hand,  Shri  Harish  Salve,  learned  senior  

counsel  for  the appellant denied the allegations of  collusion  

between the appellant and the 2nd respondent.  He argued that  

the decision of the 2nd respondent is supported by a decision of  

the  State  of  Gujarat  on  an  assessment  of  the  subsequent  

developments.  He submitted that compelling the appellant to  

supply  energy  in  terms  of  the  PPA  is  bound  to  financially  

destroy the appellant company and therefore prayed that the  

2nd respondent be permitted to make the payment in terms of  

his concession.   

10. A PPA is a contract between the parties and the terms of  

any  contract  are  nothing  but  the  agreed  terms  of  the  

contracting parties.  It is also a settled principle of the law of  

contracts that parties to a contract can alter the terms of the  

contract  subsequent  to  the  formation  of  the  contract  by  

mutual consent.  

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11. However,  the rights of  the State and its agencies  and  

instrumentalities in the realm of contracts are circumscribed  

by  the  considerations  of  public  interest.   Apart  from such  

general principle, the rights and obligations of the parties to  

the  PPA  in  question  are  also  subject  to  certain  statutory  

prescriptions.   

12. The  questions  (i)  whether  the  appellant  is  entitled  to  

terminate the PPA and (ii) if so, on what terms and conditions  

are to be examined in the appeal.

13. Independent of such right, if any, of the appellant, if the  

parties to the PPA are agreeable to alter the terms of the PPA  

(as  indicated in  the  counter)  for  whatever  reasons,  whether  

such a variation is  consistent  with the requirements  of  the  

statutes  applicable  to  the  contract  is  a  separate  question.  

Whether such a variation is consistent with the larger public  

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interest  is  altogether  a  different  question.   An  ancillary  

question arises whether  such an issue can be  properly  the  

subject matter of the instant appeal.  All these matters require  

a detailed examination as and when the appeal is taken up for  

hearing.

14. Coming to the question whether the 2nd respondent be  

directed to pay the appellant compensatory tariff as indicated  

in its counter, we are of the opinion no direction can be given  

at this stage during the pendency of the appeal as the right of  

the appellant for such compensatory tariff appears to be one of  

the issues in the appeal.

15. In so far as the question of permitting the 2nd respondent  

to pay the compensatory tariff as indicated in its counter, we  

are  of  the  opinion  that  it  requires  no  permission from this  

Court.   It  is  upto the  2nd respondent  to  take  a  decision in  

accordance with law to the best of its understanding.  We may  

make it clear that if the 2nd respondent chooses to make such  

payment, the same shall be subject to the result of the appeal.

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16. The I.A. is disposed of as indicated above.

….………………………….J.                                                       (J. Chelameswar)

…….……………………….J.  (Abhay Manohar Sapre)

New Delhi; December 3, 2015  

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