INDSIL HYDRO POWER & MANGANESE LTD. versus STATE OF KERALA & ORS ETC

Citation: [2019] 10 S.C.R. 647 · Decided: 30-07-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

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Judgment (excerpt)

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INDSIL HYDRO POWER & MANGANESE LTD.
v.
STATE OF KERALA & ORS ETC.
(Civil Appeal Nos. 5943-5945 of 2019)
JULY 30, 2019
[DR. DHANANJAYA Y CHANDRACHUD AND
INDIRA BANERJEE, JJ.]
Electricity : Pursuant to the policy decision of State
Government to allow the private agencies to set up hydel schemes,
the appellant was allowed to set up a Hydro Electric Project – MoU
was executed between the appellant and the KSEB – In terms of the
MoU, the appellant would operate the unit for 30 years from the
date of commissioning i.e. the date from which the power generated
by the appellant is fed into the KSEB grid – The MoU contemplated
that the transmission line required for transferring power from the
power house to the nearest grid sub-station upto a length of 4 Kms.
would be built by KSEB at the cost of the appellant and rest of the
transmission line was to be constructed by the  KSEB at its own cost
– Delay in construction of transmission line led to institution of writ
petition by appellant before High Court wherein appellant claimed
power free of cost in terms of clause 9 and 10 of the agreement and
sought direction for expeditious construction of transmission line –
Pursuant to interim order, the Chief Electrical Inspector filed a report
to the effect that the installation of transformers was completed by
the appellant on 21 August 2000 but the sanction for energization
of 110 KV was not issued since the transmission lines were not ready
– High Court directed the State Government to deal with the
representations submitted by the appellant – Pursuant to order of
High Court, State Government passed order on 7 February 2001
opining inter alia that appellant was not entitled to the benefit of
the pre 1992 tariff concession till the completion of the transmission
line by KSEB; that the delay in the construction of the transmission
lines was not deliberate and was due to factors beyond control;
that the tariff concessions were provided to new industries which is
a distinct issue from captive power generation and hence the plea
   [2019] 10 S.C.R. 647
647
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SUPREME COURT REPORTS
[2019] 10 S.C.R.
for a tariff concession could not be acceded to; and having regard
to the grievance of the appellant that it had been unable to evacuate
the power which it was positioned to generate for its captive unit,
KSEB ought to adhere to the time schedule which it had undertaken
to fulfill and complete the construction of the transmission lines by
28 February 2001 without fail – High Court dismissed the writ
petition eventually holding that there was no intentional delay in
construction of the transmission lines on the part of KSEB; that the
tariff concession was made available only to new industries; and
that the agreement between the parties did not disclose any specified
time limit for the provision of transmission lines – On appeal, held:
The agreement stipulated that the date of commissioning would be
construed as the date from which the power generated by the units
set up by the appellant was fed into KSEB grid – Though the contract
did not specify the exact length of the transmission line, clause 9
made it clear that for a length of 4 kms, construction would be at
the cost and expense of the appellant while the balance would be
constructed by KSEB at its own cost –  Clause 3 postulated that
commercial operations would begin within a period of 30 months –
Thus, the only reasonable construction of the contract would be
that the obligations which were to be performed by KSEB, namely,
the construction of the transmission line must necessarily be
completed within the same period – Otherwise imposing an
obligation upon the appellant to commence commercial operations
within 30 months would have no meaning – Therefore, High Court
was not correct in holding that the contract did not stipulate any
timelines for the completion of the work of constructing the
transmission line – Clause 12 of the agreement contemplated a
situation where the KSEB grid is not in a position to absorb the
energy generated from the project for any reason including the
breakdown of transmission lines or any other reason beyond the
control of KSEB – In that event, clause 12 provided the generation
from the project to be restricted to the extent of generation for captive
consumption as directed by KSEB – These provisions indicated that
the contract was not entirely silent in regard to a situation involving
the inability of KSEB’s grid to absorb t

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