GUJARAT URJA VIKAS NIGAM LIMITED versus ESSAR POWER LIMITED AND ANOTHER

Citation: [2025] 9 S.C.R. 1575 · Decided: 25-09-2025 · Supreme Court of India · Bench: SANJAY KUMAR · Disposal: Disposed off

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Judgment (excerpt)

[2025] 9 S.C.R. 1575 : 2025 INSC 1160
Gujarat Urja Vikas Nigam Limited 
v. 
Essar Power Limited and Another
(Civil Appeal No(s). 6581-6582 of 2025)
25 September 2025
[Sanjay Kumar* and Alok Aradhe, JJ.]
Issue for Consideration
Whether the appellant-GUVNL is entitled to reimbursement of 
the fixed charges, in relation to the diverted electricity from out 
of its allocated share by Essar Power Limited (EPL) to its sister 
company-Essar Steel Limited (ESL), in addition to the compensation 
payable for such wrongful diversion.
Headnotes†
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 
* Author
1576
[2025] 9 S.C.R.
Supreme Court Reports
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 
[2025] 9 S.C.R. 
1577
Gujarat Urja Vikas Nigam Limited v. 
Essar Power Limited and Another
parties 

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