Doctrine of Privity – Whether the appellant can recover dues and other charges despite being a stranger to the internal tripartite agreement (ITA) dated 27.12.2019 among the respondents: Held: The respondents executed an ITA wherein they agreed to pool in the power to be generated from their respective generative stations at Bay and the entire cost of the terminal, including metering arrangements, were to be shared between them in proportion to their individual generating capacities – Separately, the appellant executed a Connection Agreement with only respondent no. 1, wherein respondent no. 1 acted as lead partner of the consortium of the respondents, had the liability to pay for cost of construction, additional charges, and O&M Charges to the appellant in relation to the Bay – Respondent no. 1 was to ensure the payment to be made to the appellant and thereafter seek reimbursement in case of nonpayment of the amount by the other generating companies within the time stipulated – Respondent no. 3 defaulted in its payment, the appellant raised a demand from the respondent no. 1 citing sole liability of the said respondent as per Connection Agreement dated 02.07.2021 – Since the appellant was not a party to the ITA which was executed by and between the respondent no. 1, 2 and 3, thus appellant could not have and cannot claim proportionate shares as per the installed capacity of the project from Respondent No. 02 and Respondent No. 03 – The right, to claim and seek recovery of the liability from Respondent No. 02 and Respondent No. 03 would be only with respondent no. 1 as per the ITA – Appellant is not privy to the ITA executed among the respondents, therefore does not have any right to claim for dues or liabilities from respondent no. 2 & 3 – As ITA does form part and parcel of the Connection Agreement executed between appellant and respondent no. 1, the exact wording only binds respondent no. 1 for the payment of concerned cost and charges – APTEL’s judgment is based upon wrong assumptions and misreading of the terms of agreement thereby ignoring the basic principle that a party not privity to the agreement or contract cannot be, unless the context otherwise makes it apparent, made liable for any term(s) and condition(s) unrelated to it.
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Gaurav Upadhyay, Hony. Associate Editor (Verified by: Abhinav Mukerji, Sr. Adv.). 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.