IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NO. 6399 OF 2016

GUJARAT URJA VIKAS NIGAM LIMITED                   ...  APPELLANT (S)

VERSUS

SOLAR SEMICONDUCTOR POWER COMPANY (INDIA) PRIVATE LIMITED AND OTHERS                                                        ... RESPONDENT (S)

J U D G M E N T

KURIAN, J.

1. The principal question which arises in this case is whether

the  Gujarat  Electricity  Regulatory  Commission  (the

Commission), in exercise of its inherent powers, could have

extended the control period for the 1st respondent Company

(Respondent no. 1).  The control period is the period during

which a particular tariff order operates.  

2. In  order  to  address  the  issue,  certain  provisions  of  the

Electricity Act,  2003 (hereinafter referred to as “the Act”)

are required to be noticed.  Part  VII  of  the Act deals with

tariff.  Sections 61, 62 and 64 of the Act are of particular

relevance. :-

“61.  Tariff  regulations.—The  Appropriate Commission shall, subject to the provisions of this

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REPORTABLE

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 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 (54 of 1948), the Electricity Regulatory Commissions Act, 1998 (14 of 1998) and the enactments specified in the Schedule

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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 the 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

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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  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.

        xxx xxx xxx

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

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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 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, continue  to  be  in  force  for  such  period  as  may  be specified in the tariff order.”

(Emphasis supplied)

3. A State Commission is constituted under Section 82 of the

Act. The Section to the extent relevant reads as follows:

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“82. Constitution of State Commission.-(1) Every  State  Government  shall,  within  six  months from the appointed date, by notification, constitute for the purposes of this Act,  a Commission for  the State  to  be  known  as  the  (name  of  the  State) Electricity Regulatory Commission:”

4. Section 86 of the Act provides for the functions of the State

Commission.  To the extent relevant, the Section reads as

follows:

“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  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

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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.”

(Emphasis Supplied)

5. Section 92 of the Act provides for the proceedings of the

Appropriate Commission.  

“92. Proceedings of Appropriate Commission.- (1) The Appropriate Commission shall  meet at the head office or any other place at such time as the Chairperson may direct, and shall observe such rules of procedure in regard to the transaction of business at  its  meetings  (including  the  quorum  at  its meetings) as it may specify.”

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(Emphasis Supplied)

6. Section  94  deals  with  the  powers  of  the  Appropriate

Commission and reads as follows:

 “94. Powers of Appropriate Commission.- (1) The  Appropriate  Commission  shall,  for  the purposes of any inquiry or proceedings under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) in respect of the following matters, namely:-

(a)  summoning and enforcing  the  attendance of any person and examining him on oath;

(b) discovery and production of any document or other material object producible as evidence;

(c) receiving evidence on affidavits;

(d) requisitioning of any public record;

(e)  issuing  commission  for  the  examination  of witnesses;

(f) reviewing its decisions, directions and orders;

(g) any other matter which may be prescribed.

(2)  The  Appropriate  Commission  shall  have  the powers  to  pass  such  interim  order  in  any proceeding,  hearing  or  matter  before  the Appropriate Commission, as that Commission may consider appropriate.

(3)  The  Appropriate  Commission  may  authorise any  person,  as  it  deems  fit,  to  represent  the interest  of  the  consumers  in  the  proceedings before it.”

                                                             (Emphasis

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supplied)

7. Section  95  states  that  the  proceedings  before  the

Appropriate  Commission  shall  be  deemed  to  be  judicial

proceedings  and  the  Appropriate  Commission  shall  be

deemed to be a civil court. To         quote :- “95. Proceedings  before  Commission.-  All proceedings  before  the  Appropriate  Commission shall  be  deemed to  be judicial  proceedings  within the meaning of Sections 193 and 228 of the Indian Penal  Code  (45  of  1860)   and  Appropriate Commission shall be deemed to be a civil court for the purposes of Sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974).”

8. Section 181 of the Act provides for the power of the State

Commission to make regulations. To the extent relevant, the

Section reads as follows:  

“181.  Powers  of  State  Commissions  to  make regulations.-(1)  The  State  Commissions  may,  by notification, make regulations consistent with this Act and the rules generally to carry out the provisions of this Act.

(2)  In  particular and  without  prejudice  to  the generality of the power contained in subsection (1), such regulations  may provide for  all  or  any of  the following matters, namely:-

xxx xxx xxx

(zl) rules  of  procedure  for  transaction  of business  under  sub-section (1)  of  section 92;”

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xxx xxx xxx

(zp) any other matter which is to be, or may be, specified.”

(Emphasis Supplied)

9. As per Notification No. 2 of 2004 published on 25.08.2004,

the Gujarat Electricity Regulatory Commission has notified

the Gujarat Electricity Regulatory Commission (Conduct of

Business)  Regulations. Regulations  80  to  82  provide  for

saving of inherent power of the Commission, which read as

follows:                                  

“80. Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission.

81. Nothing  in  these  Regulations  shall  bar  the Commission  from adopting  in  conformity  with the provisions of the Acts, a procedure, which is at variance with any of the provisions of these Regulations, if  the Commission, in view of the special  circumstances of  a  matter  or  class  of matters  and  for  reasons  to  be  recorded  in writing,  deems  it  necessary  or  expedient  for dealing with such a matter or class of matters.

82. Nothing in these Regulations shall, expressly or impliedly, bar the Commission to deal with any matter or exercise any power under the Acts for which  no  Regulations  have  been  framed,  and the  Commission  may  deal  with  such  matters, powers and functions in a manner it thinks fit.”

(Emphasis Supplied)

10. The Regulation 85 of the Conduct of Business Regulations

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reads as follows:  “85. Subject to the provisions of the Acts, the time

prescribed by these Regulations or by order of the  Commission  for  doing  any  act  may  be extended (whether it has already expired or not) or abridged for sufficient reason by order of the Commission.”  

(Emphasis Supplied)

11. In the context of this case, certain provisions of the Power

Purchase Agreement (hereinafter referred to as “the PPA”)

dated  30.4.2010  between  the  parties  are  also  relevant.

Article 5 of the PPA deals with “Rates and Charges”. Article

5.2 reads as follows :-

“5.2.GUVNL  shall  pay  the  fixed  tariff  mentioned hereunder  for  the  period  of  25  years  for  all  the Scheduled Energy/Energy injected as certified in the monthly SEA by SLDC.  The tariff is determined by Hon’ble   Commission  vide  Tariff  Order  for  Solar based power project dated 29.1.2010 (  sic  ).

Tariff for Photovoltaic project:    Rs.15/KWh for First 12

Years and thereafter   Rs. 5/KWh from 13th  Year to 25th Years

Above  tariff  shall  apply  for  solar  projects commissioned on or before 31  st   December 2011. In case,  commissioning  of  Solar  Power  Project  is delayed beyond 31  st    December 2011, GUVNL shall pay the tariff as determined by Hon’ble GERC for Solar  Projects  effective  on  the  date  of commissioning  of  solar  power  project  or  above mentioned tariff, which ever is   lower  .”

(Emphasis Supplied)

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The tariff order dated 29.01.2010 is in exercise of powers

under Sections 61(h), 62(1)(a), 86(1)(e) and all  other powers

enabling it in this behalf.  

12. Article  8  of  the  PPA  pertains  to  force  majeure  events.  It

provides for events which constitute force majeure:    

“ARTICLE 8 FORCE MAJEURE

8.1 Force Majeure Events (a) Neither Party shall be responsible or liable for or deemed in  breach hereof  because of  any delay or failure  in  the  performance  of  its  obligations hereunder (except for obligations to pay money due prior  to  occurrence  of  Force  Majeure  events  under this Agreement) or failure to meet milestone dates due to any event or circumstance (a “Force Majeure Event”) beyond the reasonable control of the Party experiencing  such  delay  or  failure,  including  the occurrence of any the following: (i) acts of God; (ii)  typhoons,  floods,  lightening,  cyclone,  hurricane, drought,  famine,  epidemic,  plague or  other  natural calamities; (iii)  acts  of  war  (whether  declared  or  undeclared), invasion or civil unrest; (iv)  any  requirement,  actions  or  omission  to  act pursuant to any judgment or order of any court or judicial authority in India (provided such requirement, or action or omission to act is not due to the breach by the Power Producer or GUVNL of any Law or any of their respective obligations under this Agreement); (v)  inability  despite  complying  with  all  legal requirements to obtain, renew or maintain required licenses or Legal Approvals; (vi)   earthquakes,  explosions,  accidents,  landslides; fire; (vii)  expropriation  and/or  compulsory  acquisition  of the  Project  in  whole  or  in  part  by  Government

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Instrumentality; (viii)  chemical  or  radioactive  contamination  or ionising radiation; or  (ix)  damage  to  or  breakdown  of  transmission facilities of GETCO/ DISCOMs; (x)  Exceptionally adverse weather  conditions which are in excess of the statistical  measure of the last hundred (100) years.

xxx xxx xxx

   8.2 Available Relief for a Force Majeure Event No  party  shall  be  liable  for  (sic)  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.  For  avoidance  of  doubt,  neither Party’s obligation to make payments of money due and  payable  prior  to  occurrence  of  Force  Majeure events under this Agreement shall be suspended or excused due to the occurrence of  a  Force Majeure Event in respect of such Party.”  

13. There  were  also  certain  communications  between  the

parties which are required to be noted. On 19.04.2011 the

first respondent communicated its intention to change the

location. The relevant portion of the letter reads as follows :-

“….. Originally the PPA was signed  with an intention to  develop  the  20  MW Solar  PV  Project  at  Village Ajawada,  Taluka-  Tharad,  District  Banaskantha, Gujarat. But due to some unforeseen events we were unable to procure the Project land at Ajawada village and identified  THREE other Locations to procure the Land and we had informed   the some to your office vide our monthly Progress Reports.

Now, we are happy to inform you that we have already acquired 60 acres of Land required for  the commissioning  of  first  two  phases  of  5  MW  at Shivlakha  Village,  Tal-Bhachau,  Dist.Kutch  and enclosing  herewith  the  details  and  copies  of  the

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documents of the Land procurement. We have (sic) also made advance Payments for another 105 acres in the same Location and will be completing the Land Registration before the end of this month.  

xxx xxx xxx

d) We  have  already  informed  the  details  of Land procurement to GETCO for the necessary survey and  commencement  of  power  evacuation  process. Hence we kindly request you to amend the PPA with respect to the change of Location. We hereby submit the  Copies  of  the  documents  as  proof  of  Land Procurement…”

14. A  Supplemental  Power  Purchase  Agreement  (hereinafter

referred to as “the SPPA”) was entered into by the parties on

10.05.2011.  Clauses  2.3  and  2.4  of  the  SPPA  read  as

follows :- “2.3.   Since  M/s.  SSCPCIPL  have  changed  the location  of  the  Solar  Power  Project  after  lapse  of significant  time,  non-availability  of  Transmission system  shall  not  be  considered  as  a  ground  for non-levy of Liquidated Damages. M/s. SSCPCIPL shall pay  Liquidated  Damages  even  in  case  of non-availability  of  transmission  system  for evacuation  of  power  by  Schedule  Commercial Operation Date.

2.4.  All other terms and conditions including tariff of Power  Purchase  Agreement  dated  30  th   April  2010 between  GUVNL  and  M/s.  SSCPCIPL  shall  remain unchanged shall apply mutatis mutandis.”

(Emphasis Supplied)

15. It is also necessary to understand how this matter reached

this  Court.  Close  to  the  scheduled  commercial  operation

date, Respondent No. 1 requested the Commission for an

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extension of the control period. The petition to the relevant

extent reads as follows.  

“12.  While  the  Petitioner  is  making  best  efforts  to overcome the delays as much as possible, it would not  be  feasible  to  complete  the  project  within  the time  stipulated.  The  Petitioner  has  done  its  due diligence  and  with  its  commitment  to  expedite various activities, the Petitioner is optimistic that the project is likely to be completed by the end of April 2012. The Petitioner has also issued a representation to the Department of Energy and Petrochemicals  on November 30, 2011 and to GUVNL pointing out the various  above  mentioned  reasons  for  delay.  The Petitioner in the said letters has sought extension of time till force majeure issues are resolved…

PRAYER 13.  In  view  of  the  above,  it  is  therefore  most respectfully submitted that the Hon’ble Commission may graciously be pleased to:

(i) Extend the ‘Control Period’ till April 30, 2012 as defined by  this  Hon’ble  Commission  in  its  Order  dated  29  th January, 2010;

(ii) Pass  such  other  and  further  orders,  as  this  Hon’ble Commission  deems  fit  and  proper  in  the  facts  and circumstances of the case.”

(Emphasis Supplied)

16. The  Commission  by  order  dated  27.01.2012  refused  to

extend the control period.  To quote :-

“14.3 Article 5.2 of the PPA provides, inter alia, that “….Above  tariff  shall  apply  for  power  projects commissioned on  or  before  31  December  2011.  In case,  commissioning  of  Solar  Power  Projects  is delayed beyond 31 December 2011, GUVNL shall pay the tariff as determined by Hon’ble GERC for Solar Projects  effective  on  the  day  of  commissioning  of Solar  Power  Projects  or  above  mentioned  tariff, whichever is lower”. This means that if the project is

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not  commissioned  within  the  stipulated  period  the existing tariff or the new tariff whichever is lower will apply. The petitioners have consciously agreed to this provision  by  signing  the  PPA. The  Commission  has already circulated on 1 November 2011 a discussion paper for determining tariff for Solar Projects for the second  control  period  which  is  to  start  from  29 January 2012. The tariff suggested is lower than the current tariff.  The petitioners have sought extension of  the  control  period  in  order  to  prevent  the application of a lower tariff in the event of not being able to commission the projects within the stipulated period.  The  reasons  given  by  them  are  project specific. The situations of various projects are widely different.  In  some  cases,  the  projects  are  at  an advanced stage. In some other cases the projects are at an initial stage, and in some cases, even the order for equipment is yet to be issued. Some of them have asked for one month and some others have asked as long as six  months.  The petitioners have not  been able to show that there has been a problem which is industry-wide and spread over the whole State or a major part of the State, necessitating an extension of the control period.  On the other hand, a number of projects have been commissioned or are likely to be commissioned  within  the  control  period  indicating that  the  issues  raised  by  the  petitioners  are  not industry-  wide.  If  some  developers  could  not complete the projects, it is not adequate justification why the tariff order should be modified for extending the  control  period  to  give  relief  to  some  project developers.   This  becomes  more  anomalous especially when a discussion paper has already been issued,  and  public  hearing  has  already  been completed for  issue of the tariff order for  the next control period. Further, the issues which have been raised  can,  if  they  so  desire  be  addressed  by  the parties concerned only within the framework and the terms and conditions of Power Purchase Agreement. If they invoke Force Majeure conditions, it is for them to  establish  the  existence  of  such  conditions, following the procedure prescribed in the PPA. There cannot be a general order for addressing such issues which  are  specific  to  some  individual  project

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developers,  especially  when  several  others  have successfully implemented their projects.  16. In view of the above analysis, we decide that the petitioners have not succeeded in making out a case for invoking the inherent power of the Commission to  extend  the  control  period  determined  by  the Commission  in  its  Order  No.  2  of  2010  dated  29 January  2010.  Though  they  have  put  forward  a number of reasons for the relief they have sought, none of the petitioners including the Association of Solar Power Developers, which has filed a separate petition, has indicated any ground whatsoever which is  of  universal  application  either  in  the  State  of Gujarat  or  a  major  part  thereof  by  which  all  the projects  are  affected  by  such  factors.  Several projects have been or are likely to be commissioned during  the  control  period  itself.  The  reasons indicated  by  the  petitioners  appear  to  be  in  the manner  of  indirectly   invoking  the  Force  Majeure clause  specified  in  the  PPA,  which  cannot  be addressed  by  a  general  order.  Hence,  all  the petitions are dismissed.”

(Emphasis Supplied)

17. By its order dated 22.02.2012, the Commission, finding that

the  reasons put  forward by Respondent  No.  1  herein  are

similar to those dealt with by the Commission in its order

dated 27.01.2012, dismissed the petition.

18. In appeal, the Appellate Tribunal for Electricity (hereinafter

referred to as “the Appellate Tribunal”) in the order dated

02.01.2013 dealt with this issue at paragraphs-24 to 27.

“24. The reasoning of the Commission that extending the  control  period  would  mean  amendment  of  the Tariff Order is not at all possible to concede to. The Commission,  it  will  be  noticed  from the  impugned

17

order, was conscious that individual petitions referred to individual project specific problems and issues and some prayed for one month extension, while some prayed  for  six  months  extension.  The  Commission came  to  the  conclusion  that  unless  there  would happen  a  state-wide  and  large  scale  ramifications then only there could be a case for issue of a general order  to  extend  the  control  period.  Yet,  the Commission  said  at  the  same  breath  that  it  has inherent power to extend the control  period and it was made available when GETCO was at default. The basic  premise  that  unless  there  is  wide  and  large scale ramifications across the State in respect of the renewable  sources  of  energy  there  cannot  be extension of control period by general order is, to say the least, not a legal approach and such an approach would defeat the very spirit of the law. The GUVNL and  the  Govt.  of  Gujarat  accepted  the  proposition that inherent power can be exercised to a genuine problem. In paragraph 10.7 of the order impugned, the  Commission  has  observed  “Even  if  we  do  not take into cognizance the above cited decisions of the TNERC,  the  provisions  of  Regulation  80  of  the Commission’s  Regulations,  Section  151 of  the  Civil Procedure Code and related decisions of the Hon'ble Supreme  Court  make  it  abundantly  clear  that  the Commission has inherent power to issue any order, to meet the end of  justice,  if  it  is  not inconsistent with the relevant provisions of  the Regulations/Act. This power is not limited to only procedural matters.” This observation makes it clear that Commission was dealing  with  the  petitions  by  virtue  of  the  power expressly  given  to  the  Commission  by  their  own Regulations to exercise inherent power. The petitions of  the  two  appellants  were  not  the  ones  under section 86 (1) (b) of the Electricity Act, 2003. Now, it is not logical to argue that unless there is state-wide large scale  ramifications inherent  power cannot  be exercised.  The  relevant  Regulation  of  the Commission is exactly identical in language and spirit with  section  151  of  the  CPC.  This  provision  of inherent power does not by itself confer any power but only indicates that there is a power to make an appropriate order  as  may be necessary  to  achieve

18

justice and prevent the abuse of the process of law. It has been held by the Hon'ble Supreme Court in Raj Bahadur Ras Raja Vs. Seth Hiralal, AIR 1962 SC 527, that the inherent power is not a power given to the Court, it inheres in the Court itself so that by virtue of exercise of such power, justice is rendered. In Ramji Dayawala  Vs.  Invest  Import  (1981)  1  SCC  80,  the Hon'ble  Supreme  Court  held  that  the  discretion vested  in  the  Court  is  dependent  on  various circumstances which the Court has to consider and there is no limitation for application of the inherent power. Therefore, each case has to be decided on its own merit and simply because of the fact that some of the grounds were common to all the petitions the treatment of the alleged common grounds has to be common. While saying so, we are not oblivious of the legal  proposition  that  inherent  power  cannot  be exercised when prohibited or excluded by the statute itself  and  when  there  are  specific  provisions  to address the remedy. That is to say, inherent power can be exercised  only  for  the  ends of  justice.  The very exercise  of  inherent  power  or  non-exercise  of inherent  power  depends  upon  consideration  of specific facts. 25. The argument of the GUVNL and for that matter of the Commission that extension of control period would  be  prejudicial  to  the  PPA  is  again  not acceptable. Firstly, PPA is not subordinate to the Tariff Order although it is based on that.  The provision in the PPA that unless projects are commissioned within the  specified  period  tariff  as  per  the  Tariff  Order dated  29.1.2010  would  not  be  available  does  not conflict with exercise of inherent power. If situations having wide scale ramifications warrant exercise of inherent power for extension of control period then also  a  certain  PPA  may  have  some consequences. Liquidated damages are available to the GUVNL only when defaults occur on the part of the developer; but when  a  situation  is  seen  where  circumstances regardless of whether wide scale ramifications across the State happen or do not happen went beyond the control of a developer then exercise of the inherent power  which  the  Commission  does  have  in  their statute may be exercised but each case has to be

19

decided  on  its  own  merit.  The  existence  of force-majeure condition definitely  comes within the framework  of  the  Power  Purchase  Agreement  but exercise  of  inherent  power  is  always  case-specific and it cannot be equated with force-majeure. Again extension of control period cannot by any stretch of imagination  would  amount  to  amendment  of  the Tariff Order. Amendment of the Tariff Order by virtue of section 62 (4) of the Electricity Act, 2003 was not prayed for. Since in every venture there is allocation of  risk,  it  cannot  be  said  that  even  if  a  certain developer experiences hurdles beyond his control, he has to abide by such hurdles. When fact in each case is hotly contested by a counter fact or denial, justice demands that each fact has to be separately dealt with and decided. It is the Commission which is alone competent to scrutinise the merits and demerits of each  fact  in  each  of  the  two  Appeals.  It  is  the Commission  that  has  the  infrastructure  and capability  to  examine  and  find  as  to  whether expenditures  were  made  and  committed  ahead  of the date of commissioning of the project so that no unfair advantage is claimed by any developer on the ground of prospective reduction of the capital cost. If the  particulars  of  expenditure  if  already  made  or committed during the control period are scrutinised and the grounds are scrutinised in the perspective of each individual case then possibly it would be clear to the Commission as to whether and in which case a developer comes with clean hands or not.

26. In the result, it is of absolute necessity that the Commission needs to examine the case of each of the  two  appellants  in  their  respective  merits  and decide afresh.  The basic premise that extension of control period is possible only when there are wide scale ramifications is pregnant with flaws.  

27.  The  Appeals  succeed  in  view  of  the observations  as  above and are  thus  allowed. We  remand  the  matters  back  to  the Commission  for  rehearing  on  merit  of  each individual  case  and for  decision  according to law. No cost.”

20

(Emphasis Supplied)

19. The  above  decision  of  the  Appellate  Tribunal  dated

02.01.2013 was challenged before this Court in Civil Appeal

No.2315  of  2013  with  Civil  Appeal  No.  2542  of  2013.

However,  by  Order  dated  01.04.2013,  the  appeal  was

dismissed  in  limine  but this  Court  made it  clear  that  the

Commission  shall  decide  the  whole  issue  without  being

influenced  by  the  observations  made  by  the  Appellate

Tribunal in accordance with law. The Order reads as follows:

“We  have  heard  the  learned  counsel  for  the parties.

We are not inclined to interfere with the order passed by the Appellate Tribunal for Electricity. The civil appeals are, accordingly, dismissed.

We, however, make it clear that the Commission shall decide the whole issue without being influenced by the observations made by the Appellate Tribunal for Electricity in accordance with law.”

20. Once the  matters  were  remanded to  the Commission for

rehearing  on  merits  of  each  case,  the  Commission  vide

order dated 05.04.2014 allowed the petition for extension of

the control period. To quote :-

“11.26. Considering the above observations, we are of  the  view  that  the  delay  which  occurred  in commissioning  of  the  power  plant  was  due  to  the

21

reasons  beyond  the  control  of  the  petitioner. Moreover,  the  petitioner  had  initiated  construction activities of the Solar Power Project and completed the  same  which  was  recognized  by  the  Chief Electrical Inspector in its letter dated 17.2.2012 and 13.03.2012 stating that the 8.64 MW Solar Power PV Project of the petitioner was ready on 1.02.2012 and 1.48 MW Solar PV Power Project of the petitioner was ready for energisation on 21.02.2012. Therefore, it is a clear case in which the petitioner was unable to commission the above capacity of  the power plant due to reasons beyond its control. The prayer of the petitioner to extend the control period of order No.2 of 2010 dated 29.1.2010 upto 30  th   April, 2012 is valid and the same is allowed to provide the justice to the petitioner whose project was delayed.  

xxx              xxx                   xxx

11.28. We observe that the Article 8 of the PPA sets out the force majeure conditions which may restrain the project developer from completing the project in time and consequences of such delay. On the other hand,  the  order  dated  29.01.2010  determines  the generic  tariff  payable  to  the  solar  projects commissioned during the control period of order.  In the present case, the petitioner has not raised any dispute  and  only  seeks  extension  of  the  control period. As such, the matter cannot be raised under Section 86 (1)(f).

11.29.Moreover, the Force Majeure clause agreed in the PPA is  a contractual  arrangement between the parties, whereas the control period specified in the statutory generic tariff order by the Commission is a time  frame  in  which  the  project  is  required  to  be commissioned to become eligible to receive the tariff determined by the Commission.  While deciding the control  period  the  Commission  takes  into  account normative  conditions  which  may  prevail  during execution of the project.

11.30. The Commission has inherent powers to pass an  appropriate  order  to  provide  the  justice  to  the

22

affected  person.  In  the  present  case,  the  delay occurred  in  commissioning  of  the  project  by  the petitioner  due  to  various  reasons  namely  (i)  Non availability of land for a longer time due to changes in Government Policy/Law , and (ii) Non availability of evacuation facility by GETCO. The above facts reflect that the delay in commissioning of the project was partially  due  to  change  in  government  rules regarding land acquisition and partially due to failure of  GETCO  in  providing  transmission  line  within stipulated period.  Both these reasons were beyond the control of the petitioner, though these may not form  part  of  force  majeure  events.  As  such,  we decide that  the present  petition could  not  be filed under Section 86 (1) (f) of the Act.”

(Emphasis Supplied)

21. The Appellate Tribunal at paragraphs-10.11 and 10.12 of the

impugned judgment held that even under Regulation 85 of

the Conduct of Business Regulations, the Commission was

within  its  power  to  extend  time  and  the  same  can  be

exercised even in an individual case. To quote :

“10.11 We  have  gone  through  the  Conduct  of Business  Regulations,  2004  and  the provisions  provided  under  Section  86  of the Electricity Act, 2003 and find that the learned  State  Commission  has  rightly passed  the  impugned  order  under  its inherent powers. We are unable to accept the  contention  of  the  Appellant  that  the State Commission cannot exercise inherent power  for  the  purpose  of  extending  the control  period.  We  may  clarify  that  the control period of the tariff order is fixed by the  State  Commission  itself  and,  hence, the State Commission has inherent powers to  extend the control  period  of  the  tariff

23

order.  There is  no restriction or  fetter  on the powers of the State Commission in the Electricity Act, 2003 or under the Conduct of Business Regulations, 2004 to pass such order as the State Commission may deem fit and appropriate in the interest of justice and  discharge  its  functions  under  the Electricity  Act,  2003.  The  Conduct  of Business  Regulations,  2004  provide inherent powers to the State Commission to pass any order it deem fit and proper to meet  the  ends  of  justice  or  to  prevent abuse  of  the  process  of  the  court.  The State  Commission  has  liberty  to  exercise its  inherent  powers  if  the  exercise  of inherent power is not in any way in conflict with what has been expressly provided in the  Civil  Procedure  Code  or  against  the intentions of the legislature which means that  the  inherent  power  is  not  to  be exercised  in  a  manner  which  will  be contrary to or different from the procedure expressly provided in the Code.

10.12 Regulation 85 of the Conduct of Business Regulations,  2004  dealing  with  Extension or  abridgement  of  time  prescribed  fairly provide  that  subject  to  the  provisions  of the  Acts,  the  time  prescribed  by  these Regulations or by order of the Commission for  doing  any  act  may  be  extended (whether it has already expired or not) or abridged for sufficient reason by order of the Commission.”

(Emphasis Supplied)

22. Thus,  the  Appellate  Tribunal  while  approving  the  views

taken by the Commission held that the Commission was

legally justified in exercising its inherent power to extend

the control period.  

24

23. Now that the factual matrix of the case is laid out, we shall

proceed  with  our  analysis  of  the  same  from  the  legal

perspective.

24. At the outset,  it  is  important to carefully note what the

Supreme Court held while dismissing Civil Appeal No. 2315

of 2013.  No doubt, this Court declined to interfere with

the  order  passed  by  the  Appellate  Tribunal.  This  Court

dismissed  the  appeal  in  limine,  at  the  admission  stage

without discussing any legal issues for the reason that the

Appellate  Tribunal  had  only  remitted  the  matter  to  the

Commission.  This  Court  has  not  made any authoritative

ruling on the availability and exercise of inherent powers

by the Commission. Nor is there a stamp of approval of the

Appellate Tribunal’s order. It was for this reason that this

Court  clarified  that  the  Commission  should  take  an

independent  decision  uninfluenced  by  the  observations

made by the Appellate Tribunal and that decision should

be in accordance with law. Therefore, the decision of this

Court  is  only  on  non-interference  with  the  order  of

Appellate Tribunal to remit the matter to the Commission

for a hearing on case-to-case basis and this Court did not

25

make any observations with respect to the merits of the

matter. In other words, it is not an order agreeing with or

upholding the views of  the Appellate  Tribunal.  It  is  also

crucially  relevant   to  note  that  even  according   to  the

Appellate Tribunal, as stated in paragraph 27 of the order

dated 02.01.2013, it had only made “observations” and in

view of those observations, the appeals were allowed by

remitting  the  matters   to  the  Commission.  This  Court

clearly  held  that  the “whole issue”  should  be examined

“without  being  influenced by  the  observations  made by

Appellate Tribunal for Electricity”.

25.  The question before us is whether the Commission has

the power to extend the control period provided under the

tariff order. That question is no more res integra. There are

two recent judgments of this Court which are relevant in

this context.  In  Gujarat Urja Vikas Nigam Limited v.

EMCO  Limited  and  another  1,  this  Court  at

Paragraphs-39 and 40, has specifically held as follows:

“39. Apart from that both Respondent 2 and the Appellate  Tribunal  failed  to  notice  and  the  first respondent  conveniently  ignored  one  crucial condition of the PPA contained in the last sentence of Para 5.2 of the PPA:

1 (2016) 11 SCC 182

26

“In  case,  commissioning  of  solar  power project  is  delayed  beyond  31-12-2011,  GUVNL shall pay the tariff as determined by the Hon’ble GERC for  solar  projects  effective  on  the  date  of commissioning  of  solar  power  project  or abovementioned tariff, whichever is lower.”

The said stipulation clearly envisaged a situation where  notwithstanding  the  contract  between  the parties  (the  PPA),  there  is  a  possibility  of  the  first respondent  not  being  able  to  commence  the generation  of  electricity  within  the  “control  period” stipulated in  the First  Tariff Order.  It  also visualised that  for  the  subsequent  control  period,  the  tariffs payable  to  a  Projects/power  producers  (similarly situated as the first respondent) could be different. In recognition  of  the  said  two factors,  the  PPA clearly stipulated  that  in  such  a  situation,  the  first respondent would be entitled only for lower of the two tariffs.  Unfortunately,  the  said  stipulation  is  totally overlooked  by  the  second  respondent  and  the Appellate Tribunal. There is no whisper about the said stipulation in either of the orders.

40. The  first  respondent  has  created  enough confusion.  While  on  one  hand the  first  respondent asserted a right to seek determination of a separate tariff independent of the tariff fixed under the First Tariff Order in view of the stipulation contained in the First Tariff Order that “for a project that does not get such benefit, the Commission would, on a petition in that respect, determine a separate tariff taking into account all the relevant facts” did not seek a relief before  the  second  respondent  to  determine  a separate tariff but claimed the benefit of the Second Tariff Order. Assuming for the sake of argument that the petition filed by the first respondent (1270/2012) is to be treated as an application for determination of separate tariff which would be identical with the tariff fixed under the Second Tariff Order, whether the first respondent  would  be  entitled  for  such  a  relief depends,  if  at  all  he  is  entitled  to  seek  such  a determination, on a consideration of “all the relevant

27

facts”  but  not  by  virtue  of  the  operation  of  the Second Tariff Order.”

(Emphasis supplied)

This  decision  with  its  pointed  reference  to  application  of

“lower of the two tariffs” squarely applies to this case.

26. However,  while  addressing  another  grey  area  as  to

whether  the Commission has the power to amend tariff

despite the terms of the PPA, this Court in  Gujarat Urja

Vikas Nigam Limited v. Tarini Infrastructure Limited

and  others  2, after  analyzing  scheme  of  the  Act,  has

answered the question in affirmative.

27. The  scheme  of  the  Act  has  been  analyzed  at

paragraphs-12 and 16, which read as follows:

“12. While Section 61 of the Act lays down the principles  for  determination of  tariff,  Section  62 of the Act deals with different kinds of tariffs/charges to be fixed. Section 64 enumerates the manner in which determination of tariff is required to be made by the Commission.  On the  other  hand,  Section  86 which deals with the functions of the Commission reiterates determination  of  tariff  to  be  one  of  the  primary functions  of  the  Commission  which  determination includes, as noticed above, a regulatory power with regard  to  purchase  and  procurement  of  electricity from generating companies by entering into PPA(s). The  power  of  tariff  determination/fixation undoubtedly is statutory and that has been the view of this Court expressed in paras 36 and 64 of  A.P. TRANSCO v.  Sai  Renewable Power  (P)  Ltd. This,  of course, is subject to determination of price of power in open access (Section 42) or in the case of open

2  (2016) 8 SCC 743

28

bidding (Section 63). In the present case, admittedly, the tariff incorporated in PPA between the generating company  and  the  distribution  licensee  is  the  tariff fixed by the State Regulatory Commission in exercise of its statutory powers. In such a situation it is not possible  to  hold  that  the  tariff  agreed  by  and between  the  parties,  though  finds  mention  in  a contractual context, is the result of an act of volition of  the  parties  which  can,  in  no  case,  be  altered except  by  mutual  consent.  Rather,  it  is  a determination  made  in  the  exercise  of  statutory powers  which  got  incorporated  in  a  mutual agreement between the two parties involved.

xxx     xxx                          xxx              

16. When  the  tariff  order  itself  is  subject  to periodic review it is difficult to see how incorporation of  a  particular  tariff  prevailing  on  the  date  of commissioning  of  the  power  project  can  be understood to bind the power producer for the entire duration  of  the  plant  life (20  years)  as  has  been envisaged  by  Clause  4.6  of  PPA  in  the  case  of Junagadh.  That  apart,  modification  of  the  tariff  on account  of  air-cooled  condensers  and  denying  the same on  account  of  claimed inadequate pricing of biogas fuel is itself contradictory.”

(Emphasis supplied)

28. There is also a pointed reference to the decision of this

Court in  EMCO (supra) at paragraph-21, which reads as

follows:  

“21. In  Gujarat Urja Vikas Nigam Ltd. v.  EMCO Ltd. the  power  purchaser  sought  the  benefit  of  a second  tariff  order  made  effective  to  projects commissioned after  29-1-2012 (the power purchaser had  commissioned  its  project  on  2-3-2012)  though

29

under  PPA  it  was  to  be  governed  by  the  first  tariff order of January 2010.  Under the first tariff order for such  projects  which  were  not  commissioned  on  or before the date fixed under the said order,  namely, 31-11-2011 the tariff payable was to be determined by the  Gujarat  Electricity  Regulatory  Commission.  The power  producer  in  the  above  case  did  not  seek determination of a separate tariff but what was sought was a declaration that the second tariff order dated 27-1-2012 applicable to PPA(s) after 29-1-2012 would be applicable. It is in this context that this Court had taken the view that the power producer would not be relieved of its contractual obligations under PPA.”

(Emphasis supplied)

29. Having referred to the above decisions, we shall now make

an independent endeavor to analyze the present case in

the context  of  factual  matrix  and the relevant statutory

provisions.  An  amendment  to  tariff  by  the  Regulatory

Commission  is  permitted  under  Section  62(4)  read  with

Section  64(6)  of  the  Act.   Section  86(1)(a)  clothes  the

Commission  with  the  power  to  determine the  tariff  and

under Section 86(1)(b), it is for the Commission to regulate

the price at which electricity is to be procured from the

generating  companies.  Section  86  (1)(e)  deals  with

promoting co-generation and generation of electricity from

renewable sources of energy . Therefore, there cannot be

any  quarrel  with  regard  to  the  power  conferred  on  the

Commission  with  regard  to  fixation  of  tariff  for  the

30

electricity  procured  from  the  generating  companies  or

amendment thereof in the given circumstances.

30. Part  X  of  the  Act  from  Sections  76  to  109  deals  with

“Regulatory Commissions” providing for their constitution,

powers  and  functions.  Section  92  read  with  Section  94

provides for the proceedings and power of the Commission

while exercising its functions and powers.  Under Section

92, the proceedings of the Commission are to be governed

by  what  is  specified  in  the  appropriate  Regulation  with

regard to the transaction of business at its meetings. It is

that Regulation which is referred to under Section 181 (zl)

“rules  of  procedure  for  transaction  of  business  under

sub-section  (1)  of  Section  92”.  Under  Section  181(zp)

other matters also can be specified. Section 2(62) defines

“specified”  as  “specified  by  regulations  made  by  the

Appropriate Commission or the Authority, as the case may

be, under this Act”.

31. Section 94 provides that the Appropriate Commission shall

be  vested  with  certain  powers  as  are  vested  in  a  civil

court, only in six specified areas. Under Section 94(1)(g),

the Commission has the powers of a civil court  in respect

of  “any  other  matter  which  may  be  prescribed”.  Under

31

Section 2(52) “prescribed means prescribed by rules made

by the Appropriate Government under this Act”.

32. Regulations  80  to  82  are  instances  of  such  powers

specified by the Commission. Regulation 80 has provided

for the inherent power of the Commission to the extent of

making such orders as may be necessary for the ends of

justice  or  to  prevent  the  abuse  of  the  process  of  the

Commission. It has to be borne in mind that such inherent

powers  are  to  be  exercised  notwithstanding  only  the

restrictions  on  the  Commission  under  the  Conduct  of

Business Regulations, meaning thereby that there cannot

be any restrictions in the Conduct of Business Regulations

on exercise of inherent powers by the Commission. But the

specified inherent powers are not as pervasive a power as

available to a court under Section 151 of the Code of Civil

Procedure, 1908:

“151.  Saving  of  inherent  powers  of  court.- Nothing  in  this  Code  shall  be  deemed  to  limit  or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice, or to prevent abuse of the process of the court.”

 However,  the Commission is enjoined with powers to issue

appropriate  orders  in  the  interest  of  justice  and  for  preventing

abuse of process of the Commission, to the extent not otherwise

32

provided for under the Act or Rules. In other words, the inherent

power  of  the Commission  is  available  to  it  for  exercise  only  in

those areas where the Act or Rules are silent.   

33. Under  Regulation  81,  the  Commission  is  competent  to

adopt a procedure which is  at variance with any of the

other provisions of the Regulations in case the Commission

is of the view that such an exercise is warranted in view of

the special circumstances and such special circumstances

are to be recorded in writing.  However,  it  is  specifically

provided  under  Section  181  that  there  cannot  be  a

Regulation which is not in conformity with the provisions of

the Act or Rules.   

34. Under Regulation 82, the Commission has powers to deal

with any matter or exercise any power under the Act for

which no Regulations are framed meaning thereby where

something  is  expressly  provided  in  the  Act,  the

Commission has to deal with it only in accordance with the

manner prescribed in the Act. The only leeway available to

the  Commission  is  only  when  the  Regulations  on

proceedings are silent on a specific issue. In other words,

in  case  a  specific  subject  or  exercise  of  power  by  the

Commission  on  a  specific  issue  is  otherwise  provided

33

under the Act or Rules, the same has to be exercised by

the Commission only taking recourse to that power and in

no other manner. To illustrate further, there cannot be any

exercise of the inherent power for dealing with any matter

which is otherwise specifically provided under the Act. The

exercise of power which has the effect of amending the

PPA by varying the tariff can only be done as per statutory

provisions and not under the inherent power referred to in

Regulations 80 to 82. In other words there cannot be any

exercise of inherent power by the Commission on an issue

which is otherwise dealt with or provided for in the Act or

Rules.

35. This  Court  should  be  specially  careful  in  dealing  with

matters of exercise of inherent powers when the interest

of consumers is at stake. The interest of consumers, as an

objective,  can  be  clearly  ascertained  from the  Act.  The

Preamble  of  the  Act  mentions  “protecting  interest  of

consumers” and Section 61(d) requires that the interests

of  the  consumers  are  to  be  safeguarded  when  the

Appropriate  Commission  specifies  the  terms  and

conditions  for  determination  of  tariff.  Under  Section  64

read with Section 62, determination of tariff is to be made

34

only  after  considering  all  suggestions  and  objections

received from the public.  Hence,  the generic  tariff once

determined under the statute with notice to the public can

be  amended  only  by  following  the  same  procedure.

Therefore, the approach of this Court ought to be cautious

and  guarded  when  the  decision  has  its  bearing  on  the

consumers.  

36. Regulation 85 provides for  extension of time. It  may be

seen  that  the  same  is  available  only  in  two  specified

situations  –  (i)  for  extension  of  time  prescribed  by  the

Regulations and (ii)  extension of time prescribed by the

Commission  in  its  order  for  doing  any  act.  The  control

period  is  not  something  prescribed  by  the  Commission

under  the  Conduct  of  Business  Regulations.  The control

period is also not an order by the Commission for doing

any  act.  Commissioning  of  a  project  is  the  act  to  be

performed in terms of the obligation under the PPA and

that is between the producer and the purchaser, viz., the

respondent  no.1  and  appellant.  Hence,  the  Commission

cannot extend the time stipulated under the PPA for doing

any act contemplated under the agreement in exercise of

its powers under Regulation 85. Therefore, there cannot be

35

a  extension  of  the  control  period  under  the  inherent

powers of the Commission.     

37. The  Commission  being  a  creature  of  statute  cannot

assume  to  itself  any  powers  which  are  not  otherwise

conferred  on  it.  In  other  words,  under  the  guise  of

exercising its inherent power, as we have already noticed

above, the Commission cannot take recourse to exercise of

a  power,  procedure  for  which  is  otherwise  specifically

provided under the Act.

38. Extension of control period has been specifically held to be

outside the purview of the power of the Commission as per

EMCO (supra).  This  appeal  is  hence,  allowed.   The

impugned orders are set aside. However, we make it clear

that this judgment or orders of the Appellate Tribunal or

Commission shall not stand in the way of the Respondent

no.1 taking recourse to the liberty available to them for

re-determining of tariff if otherwise permissible under law

and in which case it will be open to the parties to take all

available contentions before the Commission.  

39. There shall be no order as to costs.

.......................J.         (KURIAN JOSEPH)

36

.......................J.         (R. BANUMATHI)

New Delhi; October 25, 2017.   

37

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APEPAL NO. 6399 OF 2016

GUJARAT URJA VIKAS NIGAM LIMITED             .........Appellant VERSUS

SOLAR SEMICONDUCTOR POWER COMPANY  (INDIA) PRIVATE LIMITED AND OTHERS            ...Respondents

J U D G M E N T

R. BANUMATHI, J.

I have gone through the judgment of His Lordship Justice Kurian

Joseph.  His Lordship's judgment though comprehensive, having regard

to  the  importance  of  the  questions  raised,  I  prefer  to  give  my  own

reasonings for my concurrence.

2. An appeal under Section 125 of the Electricity Act, 2003 would be

maintainable only on the grounds specified in Section 100 of the Civil

Procedure Code i.e. only on substantial question of law.  In the present

case, the following substantial questions of law arise for determination:-

• Whether  the  State  Commission  has  inherent  powers  to

extend the control period of Tariff Order dated 29.01.2010

beyond the control period thereby adversely affecting the

sanctity of PPA which was entered into by the parties by

consensus-ad-idem? • Whether  the  State  Commission  can  invoke  Regulations

80-82 of Conduct of Business Regulations-inherent powers

38

of  the  Commission  to  grant  substantive  relief  to  the

generating company like respondent No.1 and thereby alter

the terms of  the  contract  arrived  at  between the  parties

consensus-ad-idem?

3. Brief  facts  are  that  the  appellant  and  parent  company  of

respondent  No.1  executed  Power  Purchase  Agreement  (PPA)  on

30.04.2010 for sale and purchase of electricity from 20 MW Solar PV

Power  project  to  be  established  by  the  parent  company  of  the  first

respondent. In the initial stage itself, there was a delay from 30.04.2010

to 27.10.2010 firstly on account of transfer of Solar Power project in the

name  of  parent  company  to  a  Special  Purpose  Vehicle  (SPV)  i.e.

respondent  No.1  and  an  amendment  of  PPA in  favour  of  the  SPV.

Secondly,  on  account  of  first  respondent’s  decision  to  change  their

location of the Solar Power project from District Banaskantha to District

Kutchh, there was delay from 19.04.2011 to 10.05.2011 i.e. till the date

of  execution  of  the  Supplemental  Agreement.   The  Supplemental

Agreement dated 10.05.2011 itself was entered into after the Scheduled

Commercial Operation Date of the first plant i.e. 10.03.2011.

4. Article 5.2 of PPA specifically provided that the tariff determined in

the Tariff Order dated 29.01.2010, would be applicable only if the project

is commissioned by the specific date i.e. on or before 31.12.2011 and in

case, delay is  occasioned in  commencement  of  the project,  the tariff

mentioned  in  the  PPA and  the  new  tariff  determined  by  the  State

39

Commission, whichever is lower, shall be applicable.  Article 5.2 of the

PPA reads as under:-  

“GUVNL shall pay the fixed tariff mentioned hereunder for the period of 25 years for all the Scheduled Energy/Energy injected as certified in the  monthly  SEA  by  SLDC.  The  tariff  is  determined  by  Hon’ble Commission  vide  Tariff  Order  for  Solar  based  power  project  dated 29.01.2010. Tariff for Photovoltaic project: Rs.15/KWh for First 12 years

and  thereafter  Rs.5/  KWh from 13th Year to 25th Year.

Above tariff shall apply for solar projects commissioned on or before 31st December 2011. In case, commissioning of Solar Power Project is delayed beyond 31st December 2011, GUVNL shall  pay the tariff  as determined by Hon’ble GERC for Solar Projects effective on the date of commissioning  of  solar  power  project  or  above  mentioned  tariff, whichever is lower.”

Under the Supplemental Agreement dated 10.05.2011, respondent No.1

agreed to oblige all the terms and conditions of the PPA including the

deadlines for  completing the project.  The agreement  also recognized

that  all  other  terms  and  conditions  including  tariff  shall  remain

unchanged  (clause  2.4).  Clause  2.3  of  the  Supplemental  Agreement

specifically  provided  that  since  respondent  No.1  had  changed  the

location after lapse of significant time, respondent No.1 shall  pay the

liquidated  damages  even  in  case  of  non-availability  of  transmission

system for evacuation. Because of change of location, GETCO had to

replan the entire transmission line to be constructed.  By executing the

Supplemental  Agreement  and  also  by  paying  liquidated  damages,

respondent  No.1  acknowledged  that  GETCO  would  require  time  to

establish the evacuation facilities with reference to the new location i.e.

District Kutchh.

40

STATUTORY  POWER  OF  THE  STATE  ELECTRICITY  REGULATORY COMMISSION TO DETERMINE THE TARIFF

5. The State Electricity Regulatory Commission is a body corporate

constituted  in  terms  of  Section  82  of  the  Act,  vested  with  certain

important functions and powers specified under Sections 86 and 94 of

the Act respectively. The body functions to achieve the purpose of the

Electricity Act, 2003 viz.  ‘…taking measures conducive to development

of electricity industry, promoting competition therein, protecting interests

of  consumers and  supply  of  electricity  to  all  areas,  rationalization  of

electricity tariff…’.    

6. Determination  of  tariff  is  one  of  the  important  functions  of  the

Commission, apart from other important functions specified in the Act.

Under Section 61, the Appropriate Commission is obligated to specify

the terms and conditions for determination of tariff, and in doing so, it

shall be guided by the factors enumerated therein in clauses (a) to (i).  In

terms of Section 62 of the Act, the Appropriate Commission is authorized

to determine the tariff for supply of electricity by generating company to

a  distribution  licensee.  However,  in  case  of  shortage  of  supply  of

electricity, the Appropriate Commission may fix only the minimum and

maximum  ceiling  of  tariff  for  a  period  not  exceeding  one  year.  The

Appropriate Commission is  also authorized to determine the tariff  for

transmission, wheeling and retail sale of electricity.  While doing so, the

Appropriate  Commission  cannot  show  undue  preference  to  any

41

consumer of electricity. The Act also provides that the tariff or any part

thereof shall not be amended ordinarily more frequently than once in any

financial year.

7. Section 64 prescribes the procedure for issuing Tariff Order which

includes  receiving  the  application  for  determination  of  tariff,  its

publication, considering all suggestions and objections received from the

public and issuing a consequent Tariff Order or rejecting the application

if it is not in accordance with the provisions of the Act and the rules and

regulations made there-under or the provisions of any other law for the

time being force.

8. Respondent  No.2,  Gujarat  Electricity  Regulatory  Commission

(hereinafter  referred  to  as  ‘the  State  Commission’)  determined  the

promotional tariff for solar power projects that may be based in the State

of Gujarat during the control period of two years from the date of the

order  i.e.  29.01.2010  till  28.01.2012.   The  State  Commission  had

adopted the capital cost of Solar Photovoltaic Power Project at Rs.16.50

crores  per  MW  and  taking  note  of  other  aspects,  the  Commission

determined the tariff for Solar Power Project at Rs.12.54 per unit.  The

Commission had consciously fixed the control period for its order dated

29.01.2010 as two years, considering that the gestation period for Solar

PV projects is  six months and that  for  the Solar  Thermal  Projects is

18-24  months.  Based  on  this  Tariff  Order  dated  29.01.2010  for  1st

42

respondent's Solar PV Power Project, tariff rate was fixed at Rs.15 per

kWh for the initial twelve years starting from the commercial operation of

the project  and Rs.5 per kWh from the thirteenth year to twenty fifth

year.  9. The Commission had published a Discussion Paper on 01.11.2011

for public view inviting comments from stakeholders and members of the

State Advisory Committee on the draft order for the next Tariff Order.  All

the stakeholders had sent their views on the said draft. After considering

the said views of the stakeholders, in exercise of the powers conferred

under Sections 61(h), 62(1)(a) and 86(1)(e) of Electricity Act, 2003 and

considering National Tariff Policy and the power procurement from New

and Renewable Source of Energy Regulation 2008, Tariff Order 2012 for

solar power and others was issued.  As per Tariff Order 2012, the rates

fixed for Solar PV projects are as under:-

Period 29 Jan.’12 to  31 Mar.’13

1 Apr.’13 to  31 Mar.’14

1 Apr.’14 to  31 Mar.’15

For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized  Tariff  for  25 years

Rs. 9.28 per kWh Rs. 8.63 per kWh Rs. 8.03 per kWh

For first 12 years Rs. 9.98 per kWh Rs. 9.13 per kWh Rs. 8.35 per kWh For subsequent 13 years Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized  Tariff  for  25 years

Rs. 11.14 per kWh Rs.  10.36  per kWh

Rs. 9.63 per kWh

The  above  tariffs  as  per  Tariff  Order  2012  is  to  be  in  force  from

29.01.2012  to  31.03.2015.   The  above  said  tariff  is  fixed  by  the

Commission, on the basis of well founded parameters, such as, capital

cost of the project, income tax, return on equity etc.  Be it noted, in the

43

present case, the first respondent obtained the Chief Electrical Inspector

Certificate, which is the statutory mandate as per Section 162 of the Act

only on 13.03.2012, nearly two months after the expiry of the Tariff Order

(2010).

WHETHER  THE  STATE  COMMISSION  HAS  INHERENT  POWERS  TO EXTEND THE CONTROL PERIOD OF TARIFF ORDER DATED 29.01.2010 BEYOND THE CONTROL PERIOD IN RESPECT OF ONE PPA:

10. Section  181  of  the  Electricity  Act,  2003  empowers  the  State

Commission to make regulations consistent with the Act and the Rules

to carry out the provisions of the said Act and, inter alia, provide for the

matters indicated thereon.  In exercise of the powers conferred under

Section 181 of the Electricity Act, 2003 and under Section 127 of Gujarat

Electricity Industry (Re-organization and Regulation) Act, 2003 and all

powers  enabling  it  in  that  behalf,  the  Gujarat  Electricity  Regulatory

Commission framed the Conduct of Business Regulation. Regulations

80 to 82 deal with inherent powers of the Commission, which read as

under:- “Saving of inherent power of the Commission

80. Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission.

81. Nothing in these Regulations shall bar the Commission from adopting in conformity  with  the  provisions  of  the  Acts,  a  procedure,  which  is  at variance  with  any  of  the  provisions  of  these  Regulations,  if  the Commission, in view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems it necessary or expedient for dealing with such a matter or class of matters.

82. Nothing  in  these  Regulations  shall,  expressly  or  impliedly,  bar  the Commission to deal with any matter or exercise any power under the Acts for which no Regulations have been framed, and the Commission may

44

deal with such matters, powers and functions in a manner it thinks fit.”  

The State Commission and the Appellate Tribunal held that under the

Conduct of Business Regulations, 2004 and Section 86 of the Electricity

Act, 2003, the State Commission has inherent jurisdiction to extend the

control period of the Tariff Order 2010 and the tariff rate thereon beyond

28.01.2012.  The Appellate Tribunal further held that the control period

of the Tariff Order was fixed by the State Commission itself and hence,

the State Commission has inherent powers to extend the control period

of the Tariff Order.

11. Main contention urged by the first respondent is that the question

of law arising - whether the State Commission has the inherent power or

authority to extend the control period as fixed by it in its generic Tariff

Order dated 29.01.2010 arose in the first round of litigation between the

parties and in the earlier round of litigation, the State Commission held

that  the Commission had no power to extend the control  period in a

specific  case  and  the  power  was  only  to  extend  the  control  period

generally.  It was contended that in the appeal filed by respondent No.1,

the Appellate Tribunal for Electricity vide its judgment dated 02.01.2013

set aside the judgment of the Commission holding that the Commission

has the inherent power to extend the control period in individual cases. It

was, therefore, urged by the first respondent that the question of law that

the Commission has inherent power to extend the control  period has

45

thus become final  between the parties and the same now cannot be

reopened.

12. In the earlier round of litigation, the State Commission had rejected

the request of respondent No.1 to extend the time of control period of

Tariff  Order  (2010)  beyond  28.01.2012.   On  appeal,  the  Appellate

Tribunal (vide order dated 02.01.2013) had set aside the order of the

State Commission and remanded the matter to the State Commission to

decide the matter afresh. In the appeal preferred by GUVNL before the

Supreme  Court,  this  Court  dismissed  the  appeal  by  an  order  dated

01.04.2013.   However,  this  Court  made  it clear  that  the  State

Commission shall decide the whole issue without being influenced by

the  observations  made  by  the  Appellate  Tribunal  for  Electricity  in

accordance with law.              

13. Learned Senior  Counsel for  the appellant,  Mr. V. Giri  submitted

that the Supreme Court specifically directed the Commission to decide

the whole issue in accordance with law without being influenced by the

observations made by the Tribunal.  As rightly contended by GUVNL, the

whole issue was,  therefore,  kept open before the State Commission.

Further, if the law was already settled by the Appellate Tribunal, there

was no requirement  for  this  Court  to  direct  the State Commission to

consider the 'issue in accordance with law'.  In my view, there is no merit

in the contention that the question of law on the Commission's inherent

46

jurisdiction to extend the control  period has been settled inter-se the

parties in the earlier round of litigation. Rival contentions of the parties

on this question have to be considered now.

14. Under  Regulations  80  to  82,  the  inherent  powers  of  the  State

Commission are saved.  Under Regulation 80, which is akin to Section

151  CPC,  the  power  of  the  State  Commission  is  only  intended  to

regulate  the  conduct  of  the Commission,  that  is,  to  regulate  its  own

procedure. That power cannot travel beyond its own procedure so as to

alter  the  terms  and  conditions  of  the  PPA entered  into  between  the

parties to grant substantive relief to the first respondent by extending the

control period of Tariff Order (2010) beyond 28.01.2012.

15. By a reading of Regulation 80, it is clear that inherent powers of

the  State  Commission  are  saved  to  make  such  orders  as  may  be

necessary:- (i) to secure the ends of justice; and (ii) to prevent abuse of

process of the Commission.  The inherent powers being very wide and

incapable of definition, its limits should be carefully guarded.  Inherent

powers preserved under Regulation 80 (which is akin to Section 151 of

the  Code)  are  with  respect  to  the  procedure  to  be  followed  by  the

Commission in deciding the cause before it.  The inherent powers under

Section  151  CPC  are  procedural  in  nature  and  cannot  affect  the

substantive right of the parties. The inherent powers are not substantive

provision that confers the right upon the party to get any substantive

47

relief.  These inherent powers are not  over substantive rights which a

litigant possesses.   

16. The  inherent  power  is  not  a  provision  of  law  to  grant  any

substantive relief.  But it is only a procedural provision to make orders to

secure the ends of justice and to prevent abuse of process of the Court.

It cannot be used to create or recognize substantive rights of the parties.

In Vinod Seth v. Devinder Bajaj and Another (2010) 8 SCC 1, it was

held as under:-

“28. As the provisions of the Code are not exhaustive, Section 151 is intended  to  apply  where  the  Code  does  not  cover  any  particular procedural  aspect,  and  interests  of  justice  require  the  exercise  of power to cover a particular situation. Section 151 is not a provision of law conferring power  to  grant  any kind  of  substantive  relief.  It  is  a procedural provision saving the inherent power of the court to make such orders as may be necessary for the ends of justice and to prevent abuse of the process of the court. It cannot be invoked with reference to a matter which is covered by a specific provision in the Code. It cannot be exercised in conflict with the general scheme and intent of the Code. It cannot be used either to create or recognise rights, or to create liabilities and obligations not contemplated by any law.

29. Considering the scope of Section 151, in Padam Sen v. State of U.P.  AIR 1961 SC 218 this Court observed: (AIR p. 219, paras 8-9)

“8. … The inherent powers of the court are in addition to the powers specifically conferred on the court by the Code.  They  are  complementary  to  those  powers  and therefore it must be held that the court is free to exercise them for the purposes mentioned in Section 151 of the Code when the exercise of those powers is not in any way in conflict with what has been expressly provided in the Code or against the intentions of the legislature. …

9.  … The inherent powers saved by Section 151 of the Code are with respect to the procedure to be followed by  the  Court  in  deciding  the  cause  before  it.  These powers are not powers over the substantive rights which any  litigant  possesses.  Specific  powers  have  to  be conferred on the courts  for passing such orders which would affect such rights of a party.”

30. In  Manohar Lal Chopra v.  Seth Hiralal AIR 1962 SC 527 this Court held: (AIR p. 533, para 21)

“21. … that the inherent powers are not in any way

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controlled  by the  provisions  of  the  Code  as  has  been specifically stated in Section 151 itself. But those powers are not to be exercised when their exercise may be in conflict  with  what  had  been  expressly  provided  in  the Code or against the intentions of the legislature.”

31. In  Ram Chand and Sons Sugar Mills (P)  Ltd. v.  Kanhayalal Bhargava AIR 1966 SC 1899 this Court  reiterated that  the inherent power of the court is in addition to and complementary to the powers expressly  conferred  under  the  Code  but  that  power  will  not  be exercised if its exercise is inconsistent with, or comes into conflict with any of the powers expressly or by necessary implication conferred by the other provisions of the Code. Section 151 however is not intended to create a new procedure or any new right or obligation.”

Same view was reiterated in  Ram Prakash Agarwal and Another v.

Gopi Krishan (dead through LRs.) and Others (2013) 11 SCC 296.

17. In the case at hand, rights and obligations of the parties flow from

the terms and conditions of the Power Purchase Agreement (PPA).  PPA

is a contract entered between the GUVNL and the first respondent with

clear understanding of the terms of the contract.  A contract,  being a

creation of both the parties, is to be interpreted by having due regard to

the actual  terms settled between the parties.   As per  the terms and

conditions of the PPA, to have the benefit of the tariff rate at Rs.15/- per

unit for twelve years, the first respondent should commission the Solar

PV  Power  project  before  31.12.2011.  It  is  a  complex  fiscal  decision

consciously  taken  by the  parties.   In  the  contract  involving  rights  of

GUVNL  and  ultimately  the  rights  of  the  consumers  to  whom  the

electricity is supplied, Commission cannot invoke its inherent jurisdiction

to substantially alter the terms of the contract between the parties so as

to prejudice the interest of GUVNL and ultimately the consumers.

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18. As pointed out earlier, the Appellate Tribunal has taken the view

that  the  control  period  of  the  Tariff  Order  was  fixed  by  the  State

Commission itself and hence the State Commission has inherent power

to extend the control period of the Tariff Order.  It may be that the tariff

rate as per  Tariff  Order  (2010)  as determined by the Committee has

been incorporated in clause 5.2 of the PPA.  But that does not in any

manner  confer  power  upon  the  State  Commission  to  exercise  its

inherent jurisdiction to extend the control period to the advantage of the

project proponent-first respondent and to the disadvantage of GUVNL

who are governed by the terms and conditions of the contract. It is not

within the powers of the Commission to exercise its inherent jurisdiction

to extend the control period to the advantage of any party and to the

disadvantage of  the other  would  amount  to  varying the terms of  the

contract between the parties.   

19. Mr.  Giri,  learned  Senior  Counsel  for  the  appellant  submitted  in

terms of clause 2.4 of the Supplemental Agreement dated 10.05.2011

that  all  the  terms  and  conditions  including  tariff  fixed  in  PPA dated

30.04.2010  shall  remain  unchanged,  it  must  be  performed  by

respondent No.1 in the same fashion as had been acknowledged by

him.  Mr.  Giri  further  submitted  that  in  terms  of  clause  2.3  of  the

Supplemental  Agreement  that  respondent  No.  1  has  agreed  that  no

changes  in  respect  of  respondent  No.  1's  liability  to  pay  liquidated

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damages  shall  be  entertained  on  account  of  delay  in  procuring

transmission system or otherwise and respondent No. 1 actually paid an

amount of Rs. 23.25 lacs to GUVNL on 14.07.2011 thereby indicating

that respondent No. 1 had acceded to the terms and conditions of the

PPA and  that  the  project  was  not  commissioned  by  its  Scheduled

Commercial Operation Date other than the reasons mentioned in clause

5.3 of the agreement. It was further argued that if the commissioning of

the  first  respondent's  project  had  been  delayed  due  to  the  reasons

beyond its control, respondent No. 1 would have invoked force majeure

clause  and  by  paying  liquidated  damages  for  the  delay  in

commissioning,  respondent  No.  1 did not  consider any of  the events

beyond its control.  It was, therefore, urged that when respondent No. 1

had  consciously  accepted  the  terms  of  the  PPA,  respondent  No.  1

cannot be allowed to revert back from the terms of the PPA and the

Commission cannot substitute its views by invoking inherent powers of

the  State  Commission.   Since  we  are  giving  liberty  to  the  first

respondent  to  approach the Commission,  we are  not  expressing our

views on the above contention.  The appellant is at liberty to raise all

these  contentions  before  the  Commission  and  this  contention  is  left

open.   

20. Yet another contention raised by the appellant is that the project of

respondent No.1 was commissioned/ready for commissioning only after

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the cut-off date and the power project was ready for commissioning only

after 17.02.2012 and 13.03.2012 when the Certificate of Chief Electrical

Inspector was granted. It is, therefore, contended by the appellant that

the certificate of Chief Electrical Inspector is a statutory requirement and

without the approval of the Chief Electrical Inspector, respondent No.1

could not have energized the electrical installations.  This contention is

also left open.

21. As pointed out earlier, the State Commission has determined tariff

for solar power producers vide order dated 29.01.2010 and tariff for next

control period vide order dated 27.01.2012.  The order dated 29.01.2010

is applicable for projects commissioned from 29.01.2010 to 28.01.2012

and the order dated 27.01.2012 is applicable for projects commissioned

from  29.01.2012  to  31.03.2015.  As  pointed  out  earlier,  the  tariff  is

determined by the State Commission under Section 62. The choice of

entering  into  contract/PPA based  on  such  tariff  is  with  the  Power

Producer  and  the  Distribution  Licensee.  As  rightly  contended  by the

learned  Senior  Counsel  for  the  appellant,  the  State  Commission  in

exercise  of  its  power  under  Section  62  of  the  Act,  may conceivably

re-determine the tariff, it cannot force either the generating company or

the licensee to enter into a contract based on such tariff nor can it vary

the terms of the contract invoking inherent jurisdiction.   

SANCTITY OF POWER PURCHASE AGREEMENT

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22. It is contended that Section 86(1)(b) of the Act empowers the State

Commission  to  regulate  the price  of  sale  and purchase  of  electricity

between the generating companies and distribution licensees and the

terms and conditions of the PPA cannot be set to be inviolable.  Merely

because in PPA, tariff rate as per Tariff Order (2010) is incorporated that

does not empower the Commission to vary the terms of the contract to

the disadvantage of the consumers whose interest the Commission is

bound to safeguard. Sanctity of PPA entered into between the parties by

mutual consent cannot be allowed to be breached by a decision of the

State Commission to extend the earlier control period beyond its expiry

date, to the advantage of the generating company-respondent No. 1 and

disadvantage of the appellant.  Terms of PPA are binding on both the

parties equally.

23. In  Gujarat  Urja  Vikas  Nigam Limited  v.  EMCO  Limited  and

Another (2016) 11 SCC 182, facts were similar and the question of law

raised  was  whether  by  passing  the  terms  and  conditions  of  PPA,

respondent can assail the sanctity of PPA.  This Court held that Power

Producer cannot go against the terms of the PPA and that as per the

terms of the PPA, in case, the first respondent is not able to commence

the generation of electricity within the 'control period' the first respondent

will be entitled only for lower of the tariffs.   

24. The  first  respondent  placed  reliance  upon  Gujarat  Urja  Vikas

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Nigam Limited v. Tarini Infrastructure Limited and Others  (2016) 8

SCC 743.  In the said case, this Court was faced with the substantial

question  of  law  viz.  whether  the  tariff  fixed  under  a  PPA (Power

Purchase Agreement) is sacrosanct and inviolable and beyond review

and correction by the State Electricity Regulatory Commission. In that

case, respondent No.1 thereon-power producer had entered into a PPA

with the appellant therein-distribution licensee for sale of electricity from

the generating stations to the extent  of  the contracted quantity for  a

period of 35 years at Rs. 3.29 per KWH subject to escalation of 3% per

annum  till  date  of  commercial  operation.  However,  later  the  power

producer  found  that  the  place  from  where  the  power  was  to  be

evacuated was at a distance of 23 kms. as opposed to a distance of 4

kms, envisaged in the concession agreement entered into between the

Respondent-power  producer  and  Narmada  Water  Resources

Department (Respondent No.2 therein). On this ground respondent had

sought revision of tariff by State Electricity Commission.  This Court held

that  Section 86(1)(b)  of  Act  empowers State Commission to regulate

price of sale and purchase of electricity between generating companies

and distribution licensees through agreements for power, produced for

distribution  and  supply  and  that  the  state  commission  has  power  to

re-determine the tariff  rate when the tariff  rate mentioned in the PPA

between  generating  company  and  distribution  licensee  was  fixed  by

54

State  Regulatory  Commission  in  exercise  of  its  statutory  powers.

Relevant portion of the paras (17) and (18) of the judgment, read as

under:-

“17. As  already noticed,  Section  86(1)(b)  of  the  Act  empowers  the State  Commission  to  regulate  the  price  of  sale  and  purchase  of electricity  between  the  generating  companies  and  distribution licensees through agreements for power produced for distribution and supply. As held by this Court in V.S. Rice & Oil Mills v. State of A.P. AIR 1964 SC 1781, K. Ramanathan v. State of T.N. (1985) 2 SCC 116 and D.K. Trivedi & Sons v. State of Gujarat 1986 Supp. SCC 20  the power of regulation is indeed of wide import...

18. All  the above would suggest that in view of Section 86(1)(b) the Court must lean in favour of flexibility and not read inviolability in terms of  PPA insofar  as  the  tariff  stipulated  therein  as  approved  by  the Commission  is  concerned.  It  would  be  a  sound  principle  of interpretation to confer such a power if public interest dictated by the surrounding events and circumstances require a review of the tariff. The facts of the present case, as elaborately noted at the threshold of the present opinion, would suggest that the Court must lean in favour of such a view also having due regard to the provisions of Sections 14 and 21 of the General Clauses Act, 1898...."

In the facts and circumstances of that case and that the tariff rate of

Rs.3.29/-  per  KWH was subject  to escalation and subject  to periodic

review.  Evacuation was changed from a distance of 4 kms. to 23 kms.

from its switch yard.  On account of the same, respondent No.1 therein

had incurred an additional cost of  about Rs.10 crores which was not

envisaged in the Concession Agreement.  In  such facts  and changed

circumstances, this Court thought it apposite to take a lenient view and

allow the State Commission to re-determine the tariff rate.  

25. In  exercise  of  its  statutory  power,  under  Section  62  of  the

Electricity Act, the Commission has fixed the tariff rate. The word ‘tariff’

has  not  been  defined  in  the  Act.   Tariff  means  a  schedule  of

55

standard/prices or  charges provided to the category or  categories for

procurement by licensee from generating company, wholesale or bulk or

retail/various categories  of  consumers.  After  taking into  consideration

the factors in Section 61(1)(a) to (i), the State Commission determined

the tariff  rate for various categories including Solar Power PV project

and the same is applied uniformly throughout the State.  When the said

tariff rate as determined by the Tariff Order (2010) is incorporated in the

PPA between the parties, it is a matter of contract between the parties.

In my view, respondent No.1 is bound by the terms and conditions of

PPA entered into between respondent No.1 and the appellant by mutual

consent and that the State Commission was not right in exercising its

inherent jurisdiction by extending the first control period beyond its due

date and thereby substituting its view in the PPA, which is essentially a

matter of contract between the parties.

26. Section  94  of  the  Electricity  Act  deals  with  the  powers  of  the

Commission as far as the conduct of the proceedings. Under Section

94(1)(f), the Commission has the power to review its own decision.  The

power of review under Section 94 (1)(f) is akin to that under Order XLVII

Rule  1  CPC.   At  the  instance  of  affected  parties  or  the  generating

companies or the Commission on its own motion may review its own

decision only if such order was made under:               (i) mistake or error

of fact apparent on the face of the record;           (ii) discovery of new

56

and important matter which was not within the applicant’s knowledge at

the time when the order was made; or       (iii) any other sufficient reason

to meet the ends of justice.  Contention of the appellant is that grounds

were made out  by the first  respondent  for  review of  first  Tariff  Order

which  was  applicable  till  28.01.2012.   In  support  of  this  contention,

reliance  was  placed  upon  S.  Nagaraj  and  Others  v.  State  of

Karnataka and Another 1993 Supp. (4) SCC 595, wherein this Court

has  aptly  described  the  object  of  ‘power  to  review’  and  the

circumstances under which the court shall exercise the power of review.

This contention is also left open.

27. Learned Senior Counsel Mr. Jayant Bhushan for the respondent

submitted  that  if  the  tariff  as  per  order  dated  27.01.2012 is  applied,

respondent No.1 would be forced to shut down due to non-recovery of

costs.  Drawing our attention to the capital cost of Solor PV projects, the

learned  Senior  Counsel  Mr.  Giri  submitted  that  such  contention  is

contrary to the own admission of the first respondent.  Contending that

India's solor power installations have grown and cost tag of solor power

has  been  reduced  remarkably,  learned  Senior  Counsel  Mr.  Giri

submitted that even on equity, the first  respondent cannot claim tariff

rate as per Tariff Order (2010). It  was contended that under the Tariff

Order dated 29.01.2010 the capital cost was finalized at Rs.16.50 crores

per MW and tariff rate was fixed at Rs.12.54 per kWh and for power

57

project of 20 MW of respondent No.1, the total cost would be around

Rs.330  crores.  Drawing  our  attention  to  the  Tariff  Order  dated

27.01.2012, it was submitted that as per Tariff Order (2012), the capital

cost  was finalized at  Rs.10 crores per  MW and for  a 20 MW power

project, this would amount to a total cost of about Rs.200 crores.  It was

urged that  the cost  of  solar  PV projects which was in range in 2011

between Rs.10.00 crores and Rs.11.00 crores per MW is expected to

further come down in future. In the counter affidavit filed by respondent

No.1 before this Court, it is stated that the first respondent has invested

about Rs.200 crores in the project.  The learned Senior Counsel for the

appellant  Mr.  Giri  contended  that  even  as  per  the  admission  of

respondent No.1, it has incurred total cost of Rs.200 crores i.e. Rs.10.00

crores per MW which is relatable to the Tariff Order dated 27.01.2012

and not the previous Tariff Order dated 29.01.2010 and having incurred

capital expenditure of Rs.200 crores, the first respondent cannot claim

higher tariff rate as per the Tariff Order 2010 based on capital cost of

Rs.330  crores  and  if  the  contention  of  respondent  No.1  is  to  be

accepted, it would only enable respondent No.1 to make undue gains at

the cost of the consumers in the State. It was urged that extension of

control period of the Tariff Order (2010)  qua the first respondent would

cause huge loss to GUVNL and loss to GUVNL means that this loss is to

be  passed  on  to  the  consumers  in  the  form  of  increased  tariff  and

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therefore it  was contended that the Commission ought to have taken

note of all  the stakeholders namely the appellant and the consumers

and not merely the claim of respondent No. 1. Since liberty is granted to

the first respondent to approach the Commission, we are not inclined to

go into the merits of this contention urged by GUVNL.  Liberty is granted

to GUVNL to urge the above contentions before the Commission and the

Commission to consider the same on its own merits.   

28.  Conclusions:- (i)  When  the  1st respondent  commissioned  its

project  beyond  13.03.2012,  Commission  cannot  exercise  its  inherent

jurisdiction and vary the terms to extend the control period of Tariff Order

dated 29.01.2010 in so far as the 1st respondent of the contract-Power

Purchase Agreement (PPA) between GUVNL and the first respondent;

(ii) the earlier order passed by this Court in C.A. No.2315 of 2013 (dated

01.04.2013) has not conclusively decided the substantial question of law

inter-se the  parties−that  is  exercise  of  inherent  jurisdiction  by  the

Commission to vary the terms of PPA by extending the control period

beyond the stipulated time. On the above reasonings, I agree with the

conclusion of my esteemed brother Justice Kurian Joseph.

..............................J.                   [R. BANUMATHI]  

New Delhi; October 25, 2017

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ITEM NO.1501               COURT NO.5               SECTION XVII                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal  No(s).  6399/2016 GUJARAT URJA VIKAS NIGAM LTD                       Appellant(s)                                 VERSUS SOLAR SEMICONDUCTOR POWER COMPANY (INDIA ) PVT LTD &  ORS.Respondent(s) Date : 25-10-2017 This appeal was called on for Judgment today.   For Appellant(s) Ms. Hemantika Wahi, AOR

Ms. Puja Singh, Adv.  Ms. Jesal, Adv.  Ms. Shubham Arya, Adv.  

                   For Respondent(s) Mr. G. Ramakrishna Prasad, AOR

Mr. Suyodhan Byrapaneni, Adv.  Mohd. Wasay Khan, Adv.  Ms. Filza Moonis, Adv.  

Hon'ble Mr. Justice Kurian Joseph pronounced the reportable Judgment  of  the  Bench  comprising  His  Lordship  and  Hon'ble  Mrs. Justice R. Banumathi.

While agreeing with the conclusions in the Judgment pronounced by Hon'ble Sh. Kurian Joseph, J., Hon'ble Mrs. Justice R. Banumathi also pronounced the reportable Judgment with concurrent opinion.   

The concluding part of the Judgment pronounced by Hon'ble Mr. Justice Kurian Joseph is as follows :-

“Extension  of  control  period  has  been specifically held to be outside the purview of the power of the Commission as per EMCO (supra). This appeal is hence, allowed.  The impugned orders are set aside. However, we make it clear that this judgment or orders of the Appellate Tribunal or Commission shall not stand in the

60

way of the Respondent no.1 taking recourse to the liberty available to them for re-determining of tariff if otherwise permissible under law and in which case it will be open to the parties to take  all  available  contentions  before  the Commission.”

Pending Interlocutory Applications, if any, stand disposed of.    

(JAYANT KUMAR ARORA)                              (RENU DIWAN)    COURT MASTER                                ASSISTANT REGISTRAR

(Two signed reportable Judgments are placed on the file)

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