Electricity Laws – Appellate Tribunal for Electricity (APTEL) and Central Electricity Regulatory Commission (CERC), if empowered to disregard the express words of a contract and create a new bargain – Held: In a case where the matter is governed by express terms of the contract, it may not be open to the Central Electricity Regulatory Commission even donning the garb of a regulatory body to go beyond the express terms of the contract – While it may be open for a regulation to extricate a party from its contractual obligations, in the course of its adjudicatory power it may not be open to the Commission by using the nomenclature regulation to usurp this power to disregard the terms of the contract – The Appellate Tribunal for Electricity cannot indeed make a new bargain for the parties – The Tribunal cannot rewrite a contract solemnly entered into – It cannot ink a new agreement – Such residuary powers to act which varies the written contract cannot be located in the power to regulate – The power cannot, at any rate, be exercised in the teeth of express provisions of the contract – In a matter where the parties have entered into a contract with express provisions, it cannot be said that the Tribunal would have power to disregard the express provisions of the contract on the score that as it turns out that with passage of time and even change in circumstances, it is found that the contract cannot be worked except at a loss for the contractor – Contract.
Electricity Act, 2003: s.79 – Power Plant Project – Special Purpose Vehicle – Power Purchase Agreement (PPA) – Compensation due to ‘change in law’ – Special purpose vehicle formed to set up an Ultra Mega Power Project – Power generated by the successful bidder was to be supplied through procurers/distribution licensees (appellant) – Petition u/s.79 of Electricity Act read with the statutory framework governing procurement of power through competitive bidding and Articles 13 and 17 of the PPA for compensation due to change in law ‘during the construction period’ – Held: The matter must be viewed from the prism of the specific provisions defining the change in law and the actual change in law – On facts, the PPA contemplates that if the seller is affected by change in law and wishes to claim change in law, it has to notify the procurers of the change in law as soon as is reasonably practicable after becoming aware of the same – There is no material made available indicating that the procurers have held out that they will be liable – It could not be a change in law as contemplated in the agreement as it was not a change in initial consent which was the only case which was argued in this regard – Parties were clear about how the change in law had to be compensated and methodology has been set out clearly – Therefore, any appeal made to the general part in Article 13.2 which speaks about the affected party being restored to the same economic condition as if such change in law had not occurred cannot result in departing from the specific formula which has been set in place – If a certain timelimit is crossed by the procurers in the performance of its obligations in this regard, the seller (the first respondent) has been given the right to repudiate the contract – It is not the case of the first respondent that it purported to repudiate the contract – On the other hand, it is the common case that the contract continued to be alive and it has survived subject to the claims which have been raised thereunder – This would mean that as the consequences of failure to perform the task having been provided in the contract in the manner provided, one should not ordinarily tarry further to ask as to whether this would provide the premise for a change in law as contemplated under Article 13.1.1 – Even in terms of the case built around Part II of Schedule 2 to the PPA under which the performing of the task mentioned in Article 3.1.2A within the time provided was to be treated as a deemed initial consent, the consequence of failure to do that have been expressly spelt out – At best or at worst, it could have empowered the first respondent to rescind the contract – The first respondent has not been able to demonstrate that there was a change in law. Doctrines / Principles – Principle of contra proferentem – Explained – Held: The principle of contra proferentem is ordinarily utilised in contracts of insurance and standard form contracts – The principle apparently in substance is that in case of any doubt in its terms, the doubt should be resolved against the party who drafted the contract.
PTC India Limited v. Central Electricity Regulatory Commission (2010) 4 SCC 603 : [2010] 3 SCR 609 – held inapplicable.
Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017) 14 SCC 80 : [2017]
3 SCR 153 and Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. v. Adani Power Limited & Ors. (2019) 5 SCC
325 : [2019] 4 SCR 487 – relied on.
Gujarat Urja Vikas Nigam Ltd. v. Essar Power (2008)
4 SCC 755 : [2008] 4 SCR 822; Skandia Insurance Co. Ltd. v. Kokilaben Chandravan & Ors. (1987) 2 SCC
654 : [1987] 2 SCR 752; DLF Universal Limited v. Director, Town and Country Planning Department, Haryana (2010) 14 SCC 1 : [2010] 15 SCR 85;
Sumitomo Heavy Industries v. Oil and Natural Gas Commission of India (2010) 11 SCC 296 : [2010] 9 SCR 176; Nabha Power Limited v. PSPCL (2018) 11 SCC 508 : [2017] 14 SCR 301; Prahlad & Ors. v. State of Maharashtra & Anr. (2010) 10 SCC 458 : [2010]
11 SCR 916; State of Punjab & Ors. v. Bakshish Singh (1998) 8 SCC 222 : [1998] 1 Suppl. SCR 478; Mahant Dhangir & Anr. v. Madan Mohan & Ors. (1987) (Supp) SCC 528 : [1988] 1 SCR 679; Uttar Pradesh Power Corporation Limited v. National Thermal Power
Corporation Limited and Others (2009) 6 SCC 235 : [2009] 3 SCR 1060; Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited and Others (2016) 8 SCC
743 : [2016] 5 SCR 990 and Manohar Lal Sharma v. Principal Secretary & Ors. (2014) 9 SCC 614 : [2014]
12 SCR 110 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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