GUJARAT URJA VIKAS NIGAM LIMITED & ORS. versus RENEW WIND ENERGY (RAJKOT) PRIVATE LIMITED & ORS

Citation: [2023] 7 S.C.R. 670 · Decided: 13-04-2023 · Supreme Court of India · Bench: SANJAY KISHAN KAUL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 7 S.C.R.
   [2023] 7 S.C.R. 670
670
GUJARAT URJA VIKAS NIGAM LIMITED & ORS.
v.
RENEW WIND ENERGY (RAJKOT) PRIVATE LIMITED
& ORS.
(Civil Appeal Nos. 3480-3481 of 2020)
APRIL 13, 2023
[SANJAY KISHAN KAUL, S. RAVINDRA BHAT AND
M.M. SUNDRESH, JJ.]
Electricity Act, 2003 – Central Electricity Regulatory
Commission (Terms and Conditions for Recognition and issuance
of Renewable Energy Certificate for Renewable Energy Generation)
Regulations, 2010 – Power Purchase Agreement (PPA) in terms of
the REC Regulations 2010 was entered into between the parties, on
29.03.2012, within the control period stipulated in the tariff order
of 2010 – On 10.07.2013, Central Commission amended the REC
Regulations 2010 (‘Second Amendment’), Explanation to Regulation
5 was amended – The pre-existing clause that the power would be
“at a price not exceeding pooled cost of the power purchase” was
altered to “at the pooled cost of power purchase” – It was clarified
that PPAs executed prior to this amendment at a tariff lower than
APCC would not be affected – Respondents filed petition before
the State Commission arguing that the terms of the PPA had to be
changed in view of the change in the REC Regulations – Allowed –
Appellant filed appeal before APTEL, rejected – Review petition
also dismissed – Held: There was never any provision which
mandated prior approval by the State Commission, of PPAs entered
into by parties, in exercise of their free choice, in relation to
renewable energy sources – Findings of APTEL requiring approval
of the State Commission, unsustainable – Further, it is a matter of
record, that for the period between 29.03.2012 and 10.07.2013
and indeed, after the Second Amendment, no difficulty was
experienced in the pricing mechanism agreed by the parties under
the PPA – It was on 10.12.2013 that the respondent wind power
developer approached the State Commission for re-determination
of tariff – This was an opportunistic attempt to derive advantage
from the change, brought about by the Second Amendment, and
seek to have it applied to an existing contract, which cannot be
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countenanced – Thus, the reasoning of APTEL and the State
Commission cannot be upheld – PPAs entered into voluntarily by
the parties exercising equal bargaining power, before the Second
Amendment were not affected by its terms – Findings to the contrary
in the impugned order set aside – Furthermore, APTEL in the most
cavalier fashion virtually rubber stamped the State Commission’s
findings on coercion, in regard to the entering into the PPA by the
parties – There was no evidence or any pleadings beyond a bare
allegation of coercion against the appellant – Findings regarding
coercion are wholly untenable and therefore, set aside – Gujarat
Electricity Regulatory Commission (Procurement of Energy from
Renewable Sources) Regulations, 2010 – Regulation 4(1), 9(1).
Electricity Act, 2003– Central Electricity Regulatory
Commission (Terms and Conditions for Recognition and issuance
of Renewable Energy Certificate for Renewable Energy Generation)
Regulations, 2010 – Objective of – Discussed.
Electricity Act, 2003 – s.64 – Tariff Orders u/s.64 – Held: Are
quasi-judicial in nature and ipso facto binding on the parties unless
amended or modified through law.
Electricity – Power Purchase Agreements, if statutory contracts
– Held: Power Purchase Agreements are essentially not statutory
contract showever, certain terms contained in those contracts are
regulated by law, i.e. applicable regulations, under the Act – The
PPA between a generating company or, as in the instant case, a
wind generator, and a distribution licensee, such as the appellant,
is the outcome of a carefully considered decision, whereby the
parties after due deliberations and negotiations agree on terms
based on existing law and regulations.
Pleadings – Standard of – Allegation of coercion/duress/fraud
– Findings on, not to be rendered casually by APTEL – Held: It is
incomprehensible how an allegation of coercion w.r.t entering into
the PPA by the parties could have been entertained and incorporated
as a finding, given that the respondents are established companies
who enter into negotiations and have the support of experts,
including legal advisers, when contracts are finalized – Casual
approach of APTEL in not reasoning how such findings could be
rendered cannot be countenanced – As a judicial tribunal, dealing
GUJARAT URJA VIKAS NIGAM LIMITED 

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