LexKARNATAKA POWER TRANSMISSION CORPORATION LIMITED versus JSW ENERGY LIMITED (EARLIER KNOWN AS JINDAL THERMAL POWER COMPANY LIMITED & JINDAL TRACTABEL POWER COMPANY LIMITED) & ORS.
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A B C D E F G H 937 [2022] 12 S.C.R. 937 937 KARNATAKA POWER TRANSMISSION CORPORATION LIMITED v. JSW ENERGY LIMITED (EARLIER KNOWN AS JINDAL THERMAL POWER COMPANY LIMITED & JINDAL TRACTABEL POWER COMPANY LIMITED) & ORS. (Civil Appeal No. 8714 of 2022) NOVEMBER 22, 2022 [K. M. JOSEPH, ANIRUDDHA BOSE AND HRISHIKESH ROY, JJ.] Karnataka Electricity Reforms Act, 1999 – s.18, Explanation to s.19, s.25(3) r/w s.17(1) and proviso to s.27(2) – Power Purchase Agreement (PPA) – The Act came into force with effect from 01.06.1999 – Under s.27 of the Act, unless there was a ‘concluded contract’ as on 01.06.1999, the Karnataka Electricity Regulatory Commission was to regulate the tariff – Whether before the Act came into force, there was a concluded contract between the parties, and therefore such a contract could not be unsettled by the regulatory regime under the Act – Held: The parties contemplated a written Power Purchase Agreement (PPA) containing various details apart from the tariff rate and the tenure – The parties were not ad idem as regards the issues which were expressly left open for negotiations – The State Government (GoK) also contemplated ‘finalising’ a PPA – The word ‘finalising’ and the word ‘PPA’, both of which did not take place before 01.06.1999 resulted in a situation where a contract could not be said to be concluded even within the meaning of the proviso to s.27(2) of the Act – This is not even a case where parties were ad idem on all the essential aspects, which go into the formation of a complex contract as involved in the facts of this case – On facts, there was no concluded contract and what is more, a PPA was not a mere desire but an indispensable requirement to conclude the terms – It is clear as day light that all through the parties undoubtedly contemplated entering into a power purchase agreement – From the subject matter of the contract, the position of the parties, the implications of the working of the contract and more importantly, the intention of the parties, it was clear that there was a concluded contract upon negotiations and correspondence, culminating in the A B C D E F G H 938 SUPREME COURT REPORTS [2022] 12 S.C.R. Government Order 12.05.1999 – Even the GO dated 12.05.1999 expressly contemplated only a permission by the GoK to the KEB to finalise “a PPA” for the purchase of surplus power – The word “finalise” in the context of the PPA cannot be played down in the context of the previous correspondence at any rate – It was, in fact, also contemplated that the PPA which was to be finalised must after finalisation be submitted again to the government – GoK was thereafter to grant its approval – This cannot be overlooked. Contract Act, 1872 – s.10 – It is not essential to form a contract, that it should be in writing – Where a law stipulates that a contract be in writing in which case a contract must be reduced to writing. Contract Act, 1872 – ss.2 and 10 – Concluded contract – Held: In order that there must be a contract concluded, there must be a proposal made, which must be accepted – There must be consideration for the promise – The proposal must be accepted, which must be communicated – The acceptance must be unqualified – The parties can be said to have entered into a contract or a contract would be said to be concluded only when they are ad idem on all the essential terms of the contract – If the proposals containing the essential terms have been accepted, and the acceptance is communicated and, if the other conditions in s.2 are complied with, viz., that is there is consideration and the contract is enforceable in law, within the meaning of s.10, it would lead to the creation of a concluded contract. Karnataka Electricity Reforms Act, 1999 – proviso to s.27(2) – Concluded contract within meaning of the proviso to s.27(2) – Held: The proviso to s.27(2) when it uses the words ‘contracts concluded’, does not use the words ‘contracts concluded as regards tariffs’ – There are various other aspects about which the parties must be ad idem – The rate, the term and quantum are integrally interconnected with other terms – There cannot be concluded contract without parties being ad idem about those terms. Karnataka Electricity Reforms Act, 1999 – s.41 – Appeals against order of the Karnataka Electricity Regulatory Commission – Any person aggrieved by any decision or order of the Commission can file appeal to the High Court, on questions of law arising out of such order – Held: A Right of Appea
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