Case Details Maharashtra State Electricity Distribution Company Limited vs Ratnagiri Gas and Power Private Limited & Ors.

Court

Supreme Court of India

Date

9 November 2023

Case No.

Civil Appeal No. 1922 of 2023

Result

Dismissed

Bench

D.Y. Chandrachud, J.B. Pardiwala, Manoj Misra

Citation

[2023] 14 S.C.R. 761 : 2023 INSC 993

Issue for consideration

Whether the Central Electricity Regulatory Commission-CERC and Appellate Tribunal for Electricity-APTEL were justified in affixing liability to pay fixed charges on the appellant. Electricity Act, 2003 – s. 79 – Payment of fixed capacity charges – Fixation of liability – Power Purchase Agreement between the appellant and first respondent whereby the appellant would purchase power from the first respondent – First respondent was supposed to receive the contracted quantity of gas supply from RIL, however after there was a decline in the supply – In order to make up for the shortfall, the first respondent entered into a Gas Supply Agreement-GSA with GAIL for the supply of Recycled Liquid Natural Gas, and conveyed the same to the appellant and requested the appellant to schedule its energy requirements – Appellant refused to schedule power at the rates stipulated and stated that it stood absolved of the liability to pay capacity charges in accordance with the PPA – Petition u/s. 79 by the first respondent for non-payment of fixed charges – CERC held the appellant liable to pay fixed capacity charges under the PPA – APTEL upheld the order – Correctness:

Headnote

Held: Commercial document cannot be interpreted in a manner that is at odds with the original purpose and intendment of the parties to the document – Deviation from the plain terms of the contract is warranted only when it serves business efficacy better – According to the principles governing the interpretation of contracts, the PPA is required to be read as a whole – Primary fuels include LNG/Natural gas and/or RLNG, and the appellant’s agreement is required in case liquid fuels are to be employed – A bare reading of the clause indicates that the requirement to seek such an agreement does not attach to the first part of the clause which envisages RLNG as a primary fuel – An arrangement involving a transition from one primary fuel to another primary fuel is permissible by the clause, even without the appellant’s agreement – Requirement of an agreement, mandated for an arrangement involving liquid fuel cannot be read into the plain text of the former part of Clause 4.3 – Capacity declaration based on RLNG could be done unilaterally, unencumbered by the requirement of the appellant’s consent in the latter half or the prior approval requirement under Clause 5.9 of the PPA – Thus, the CERC and APTEL correctly held that the GSA/GTA with GAIL is permissible by the terms of the contract and the consent or approval of the appellant is irrelevant. [Para 28-29, 32, 35-36]

LIST OF CITATIONS AND OTHER REFERENCES

Transmission Corporation of Andhra Pradesh Ltd v. GMR Vemagiri Power Generation Limited (2018) 3 SCC 716 – referred to. OTHER CASE DETAILS INCLUDING IMPUGNED

ORDER AND APPEARANCES

JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT DR. DHANANJAYA Y CHANDRACHUD, CJI Contents Factual Background .......................................................................4* CERC Order dated 30 July 2023 and APTEL Judgement and Final Order dated 22 April 2015..............................................................6* Submissions....................................................................................9* Analysis and Conclusion ..............................................................13* Terms of the PPA ..........................................................

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