GUJARAT URJA VIKAS NIGAM LTD. versus ESSAR POWER LIMITED

Citation: [2016] 5 S.C.R. 101 · Decided: 09-08-2016 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Appeal(s) allowed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2016) 5 S.C.R. IOI 
GUJARAT URJA VIKAS NIGAM LTD. 
v. 
ESSAR POWER LIMITED 
(Civil Appeal No. 3455 of20 I 0) 
AUGUST 09, 2016 
[ANIL R. DAVE AND ADARSH KUMAR GOEL, JJ.) 
Electricity Act, 2003: 
Power Purchase Agreement between appellant-licencee and 
respondent-generating company - Interpretation of to determine 
whether there is obligation to declare availability of power in a 
particular proportion - Held: Jn terms of the agreement, entire 
capacity has been allocated in two parts in ratio of 300:215 -
Respondent generating company is under obligation as per Schedule 
VJ to 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 - Commission was thus right in 
holding that once the entire capacity is allocated in two parts in a 
particular proportion, generating company is not right in selling 
power to its sister concern beyond the allocated capacity - As 
regards the compensation sought by appellant for wrongful 
a/location of electricity by respondent generating company to its 
sister concern in preference to the appel/ant-licencee, the 
Commission had left actual working out of the loss to be worked 
out separately and on that basis the appellant had already filed its 
claim which was pending consideration before the Commission -
The said proceeding can now be revived. 
Tribunals: Constitution of Tribunals - Questions relating to 
manner of appointment of members of Tribunal and duration of 
appointment; desirability of providing statutory appeals directly to 
Supreme Court from orders of Tribunals on issues not affecting 
national and public interest and other aspects of statutory framework 
in respect of Tribunals and related questions referred to Law 
Commission for examination. 
101 
A 
B 
' 
c 
D 
E 
F 
G 
H 
io2 
SUPREME COURT REPORTS 
[2016] 5 S.C.R. 
A 
Allowing the appeal and passing certain directions, the Court 
HELD: 1. The agreement clearly contemplates the proportion 
of allocation of a capacity. The EPL has to fuel and operate the 
generating station to meet the requirement of electric output that 
can be generated corresponding to the allocated capacity. The 
B . appellant has to pay annual fixed cost as determined in terms of 
clause 7.1.1 of Schedule VII of the Agreement. The Commission is 
thus, right in observing that once the entire capacity has been allocated 
in two parts in a particular proportion, the contention of the EPL 
that it could sell power to ESL beyond the allocated capacity could 
c 
D 
E 
F 
G 
H 
not be accepted. The EPL was under obligation as per Schedule VI to 
declare weekly schedule of the capacity available and the dispatch 
instructions were to be issued on the basis of the said declaration. It 
could not thus be said that the EPL had no obligation to declare the 
capacity and the obligation ofGUVNL to issue dispatch instructions 
was not dependent on declaration of the available capacity by the 
EPL. Contrary view of the Tribunal is clearly erroneous. The Tribunal 
erred in holding that there was no obligation to declare available 
capacity on proportionate basis. [Para 22) (129-C-EJ 
2. The main basis of the order of the Tribunal in rejecting the 
claim of the appellant is the finding that the respondent had no 
obligation to allocate available power in the ratio of 58 : 42 under the 
terms of the Agreement and in terms of correspondence between 
the parties. Apart from this, the Tribunal held that the appellant 
had claimed Rs.64 crores by way of full and final settlement and that 
the appellant was in default in not opening letter of credit and not 
paying Rs.519 crores. In doing so, the Tribunal ignored clear 
stipulation in the letter of the appellant dated 131h December, 2004 
that the amount of Rs.64 crores was not accepted by way of final 
settlement. Similarly, the Tribunal ignored the supplementary 
agreement between the parties dated l81h December, 2003 followed 
by letter dated 19'h December, 2003 under which amount ofRs.289.40 
crores was paid to-the respondent by way of settlement for the delayed 
payment charges and other heads. Thus, the Tribunal was not justified 
in observing that the appellant had defaulted in making payment of 
Rs.519 crores which was a breach of promise on the part of the 
appellant, thereby absolving the respondent ofits obligation to supply 
power as per the agreement. [Para 26) (131-A-D) 
GUJARAT URJA VIKAS NIGAM L

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