Electricity – Proportionate principle of allocation – Reimbursement of fixed charges in relation to the diverted electricity – Predecessor-in-interest of GUVNL-Gujarat Electricity Board (GEB), entered into a PPA with EPL for purchase of the electricity generated by EPL – Total installed capacity of EPL’s plant was 515 MW and 300 MW thereof was to be supplied to GEB under the PPA – EPL entered into a separate PPA with its sister company-ESL, for sale and supply of the remaining 215 MW – However, in breach of the agreed proportionate shares in the electricity generated by it, EPL started supplying more power to its sister company-ESL, from out of the allocated share of GEB – In earlier rounds of litigation, issue of diversion of its allocated electricity along with the consequences thereof was raised by GUVNL in Gujarat Urja Vikas Nigam Limited v. Essar Power Limited [2016] 5 SCR 101 (relied on by both the parties herein) wherein interpreting the PPA to determine whether there was obligation to declare availability of power in a particular proportion, this Court inter alia held that EPL was under obligation as per PPA to declare weekly schedule of capacity available and that it shall not divert any power to its sister concern in a manner contrary to the proportionate principle; and that GERC was right in holding that once the entire capacity was allocated in two parts in a particular proportion, EPL was not right in selling power to its sister concern beyond the allocated capacity; APTEL’s judgment was set aside and GERC’s order was restored – As GERC had left the actual working out of the loss suffered by GUVNL to be worked out separately and, on that basis, GUVNL had already filed a petition, it was directed that the same could be revived and considered in the light of its findings – Petition was disposed of by GERC vide order dtd.27.12.2019 – GUVNL and EPL assailed GERC’s order before APTEL, which was disposed of by the impugned order dtd.21.03.2025 – Finding of GERC and the APTEL that GUVNL is not entitled to reimbursement of fixed charges, if, sustainable – GUVNL, if entitled to reimbursement of the fixed charges, in relation to the diverted electricity from out of its allocated share, in addition to the compensation payable for such wrongful diversion – Total amount that can be claimed by GUVNL for the electricity diverted by EPL to ESL from out of its allocated share, that is, 58% of the available electricity for the entire plant declared on a weekly basis: Held: 1.1 Disjointed reading of specific paragraphs or even sentences of Gujarat Urja Vikas Nigam Limited v. Essar Power Limited [2016] 5 SCR 101, out of context, would not be the proper approach to understand the import of the decision – It must be read as a whole and in its entirety to glean the findings and ratio decidendi laid down therein. [Paras 12, 14-16, 20-23]
1.2 In the light of para 9.13 in GERC’s order dated 18.02.2009 which was affirmed by this Court in the earlier round, it is not open to GUVNL to agitate its claim for compensation beyond what was determined as just and acceptable in the said para and was accepted and confirmed by this Court, while restoring the order of GERC. [Para 29]
1.3 The issue before this Court is as to the total amount that can be claimed by GUVNL for the electricity diverted by EPL to ESL from out of its allocated share, that is, 58% of the available electricity for the entire plant declared on a weekly basis – ‘Compensation’ could only be claimed by GUVNL for such wrongful diversion by EPL on the basis of HTP–1 Tariff Energy Charge, as this was what was found to be an appropriate method for computing compensation on the basis of the earlier settlement arrived at by and between the parties for the period April, 1998 to September, 2004 – However, neither GERC nor the APTEL took note of what was stated earlier by this Court and GERC with regard to ‘reimbursement’ of fixed charges. [Para 31]
1.4 The finding of GERC and the APTEL that GUVNL is not entitled to reimbursement of fixed charges is unsustainable – Once GUVNL did not receive the electricity for which such fixed charges had been computed and paid on a monthly basis, it was entitled to reimbursement thereof, not as compensation, but on the principle of restitution as such payment was not at all due from it – GUVNL was entitled to reimbursement of the fixed charges, in relation to the diverted electricity from out of its allocated share, in addition to the compensation payable for such wrongful diversion, computed on the basis of HTP-1 Tariff Energy Charge. [Para 38]
1.5 As regards the computation of the electricity diversion being made on hourly or half-hourly basis, the PPA dated 30.05.1996 executed by and between GEB and EPL provided u/Art.1 thereof that ‘Availability Period’ would mean ‘each of the 24 consecutive periods of 60 minutes in each day’ – Similarly, the PPA dated 29.06.1996 between EPL and ESL provided u/Art.1 that the ‘Availability Period’ would mean ‘each of the 24 consecutive periods of 60 minutes in each day’ – Therefore, there was no difference in the two PPAs as to the computation methodology. [Para 39]
1.6 Further, as the power diversion, for which GUVNL has to be paid compensation, is for the supply made by EPL to ESL, over and above its allocated share, and as it was at the behest of EPL itself that this half-hourly computation methodology was adopted, pursuant to the recommendation of the Central Electricity Authority (CEA), there is no reason why the very same methodology should not be used for computing the electricity diversion so as to quantify the compensation payable to GUVNL for the excess power supply made to ESL by EPL from out of GUVNL’s allocated share. [Para 40]
1.7 Order dtd.27.12.2019 passed by GERC and the judgment dtd.21.03.2025 passed by the APTEL modified to the extent indicated. [Para 42]
Words and Phrases – ‘compensation’ vis-à-vis ‘reimbursement’: Held: ‘Compensation’ imply the payment to be made to one party to make good the loss or damage suffered by it owing to a breach or violation of an obligation by the other – Reimbursement of fixed charges flowed from the provisions of the PPA itself and was not traceable only to the breach by EPL, in terms of the diverted capacity which fell to GUVNL’s share. [Para 35]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.