ENERGY WATCHDOG versus CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS. ETC.

Citation: [2017] 3 S.C.R. 153 · Decided: 11-04-2017 · Supreme Court of India · Bench: PINAKI CHANDRA GHOSE · Disposal: Disposed off

Cited by 14 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

[2017] 3 S.C.R. 153 
ENERGY WATCHDOG 
CENTRAL ELECTRICITY REGULATORY COMMISSION AND 
ORS. ETC. 
(Civil Appeal Nos. 5399-5400of2016) 
APRIL 11, 2017 
[PINAKI CHANDRA GIIOSE AND R. K NAIUMAN, JJ.) 
Electricity Act, 2003 - ss. 63, 79 - Determination of tariff by 
bidding process - Supply of power from power project - Power 
Purchase Agreement (PPA) between State Government Utilities and 
power generating companies - State Commission adopted tariff 
u/s. 63 for supply of power to Slate Government Utilities - However, 
few years later, change in Indonesian law which increased the export 
price of coal from Indonesia to international market - .Petition by 
power generating companies before Ce171ral Electricity Regulatory 
Commission seeking relief due to change in Indonesian law -
Commission held that the claim of power generating companies on 
the grounds of force majeure and/or change in law not admissible, 
however, in exercise of regulatory power uls. 79 granted . 
compensatory tariff- Tribunal set aside the order of the Commission 
- On appeal, held: PPA makes it clear that changes in the cost of 
fuel, or the agreement becoming onerous to perform, are not treated 
as force majeure events under the PPA itself-As such force /1iajeure 
would not apply so as to enable the grant of co111pensatory tariff -
P PAs does not state that coal is to be procured only from Indonesia 
at a particular price - Price payable for the supply of coal is entirely 
for the person who sets up the power plant to bear - Unexpected 
rise in the price of coal would not absolve the generating co111panies 
from performing their part of the contract since this was a risk they 
knowingly took - Also, expression 'any law' in Cl.13 of P PA refers 
to law of India - In view thereof. though change in Indonesian law 
would not qualify as a change in law under the guidelines read 
with the PPA, change in Indian law certainly would - CERC to go 
into the matter afresh and determine the relief to be granted to those 
power generators who fall within Cl.13 of the P PA. 
s. 79 - Regulatory powers of Central Commission u/s. 79{l){b) 
153 
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154 
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SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
- Interpretation of - Held: General regulatory power of the 
Commission u/s. 79(1}(b) is the source of the power to regulate, 
which includes the power to determine or adopt tariff- I11 a situation 
where the guidelines issued by the Central Government u/s. 63 cover 
the situation. the Central Commission is bou11d by those guidelines 
and must exercise its regulatory functions, only in accordance with 
those guidelines - It is 011ly i11 a situation where there are no 
guidelines framed at all or where the guidelines do not deal with a 
given situation that the Commission '.I· ge11eral regulatory powers 
uls. 79(1J(b) ca11 then be used. 
Power Purchase Agreement - Clause of force majeure -
Application of 
Disposing of the appeals, the Court 
HELD: 1. The regulatory powers of the Central 
Commission, so far as tariff is concerned, are specifically 
mentioned in Section 79(1) of the Electricity Act, 2003. This 
regulatory power is a g~neral one, and it is very difficult to state 
that when the Commission adopts tariff under Section 63, it 
functions de hors its general regulatory power under Section 
79(1)(b). For one thing, ·such regulation takes place under the 
Central Government's guidelines. l<or another, in a situation 
where there are no guidelines or in a situation which is not 
covered by the guidelines, the Commission's power to "regulate" 
tariff is completely done away with, is not a correct way of reading 
the said statutory provisions. The first rule of statutory 
interpretation is that the. statute must be read as a whole. As a 
concomitant of that rule, it is also clear that all the discordant 
notes struck by the various Sections must be harmonized. 
Considering the fact that the non-obstante clause advisedly 
restricts itself to Section 62, there is no good reason to put Section 
79 out of the way altogether. The reason why Section 62 alone 
has been put out of the way is that determinatio~ of tariff can take 
place in one of two ways-either under Section 62, where the 
Commission itself determines the tariff in accordance with the 
provisions of the Act, (after laying down the terms and conditions 
for determination of tariff mentioned in Section 61) or under 
Section 63 where the Commission adopts tariff that is alrea

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