M. P. POWER MANAGEMENT COMPANY LIMITED, JABALPUR versus M/S. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED & OTHERS

Citation: [2022] 5 S.C.R. 1 · Decided: 16-11-2022 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Dismissed

Cited by 5 judgment(s) · cites 15 · see the full citation network in Lexace

Judgment (excerpt)

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[2022] 5 S.C.R. 1
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M. P. POWER MANAGEMENT COMPANY LIMITED,
JABALPUR
v.
M/S. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE
LIMITED & OTHERS
(C.A. No. 8515-8516 of 2022)
NOVEMBER 16, 2022
[K. M. JOSPEH AND HRISHIKESH ROY, JJ.]
Electricity Laws – Electricity Act, 2003 – ss.63 and 62 –
Contract – Non-statutory contract – Power Purchase Agreement
(PPA) entered into by the appellant and the first respondent, if a
statutory contract – Held: The PPA was not made either in purported
compliance with the statutory dictate, either in the form of parent
enactment or a subordinate legislation – The terms and conditions
of the PPA were not transplanted into the PPA from any statutory
provision – That tariff was arrived at in accordance with the
transparent process of bidding, which was in tune with the guidelines
u/s.63, may not be sufficient to make the PPA a Statutory Contract –
A contract containing prescribed terms and conditions being
mandatory under the Statute, results in the contract becoming a
Statutory Contract – If this test is applied, one fails to see how
reference to the bidding guidelines, under which the bids were made
and finally the PPA was entered into, can be treated as tantamounting
to saying that the PPA contains prescribed statutory terms and
conditions as an indispensable part of a Statute – The expression
‘terms and conditions’, which are statutory in nature, must be
understood as those statutory terms and conditions, which provide
for rights and obligations of the contracting parties – Such reference
is conspicuous by its absence in the PPA – It may not be appropriate
to describe the PPA as a Statutory Contract.
Contract – Administrative action – Judicial Review – Scope
of judicial review of action by the State in a matter arising from a
non-statutory contract – Held: The mere fact that relief is sought
under a contract which is not statutory, will not entitle the
respondent-State in a case by itself to ward-off scrutiny of its action
or inaction under the contract if the complaining party is able to
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SUPREME COURT REPORTS
[2022] 5 S.C.R.
establish that the action/inaction is per se arbitrary – Even if it is a
non-statutory contract, there is no absolute bar in dealing with a
cause of action based on acts or omission by the State or its
instrumentalities even during the course of the working of a contract.
Administrative Law – Arbitrariness in State action – When an
act is to be treated as arbitrary – Held: The court must carefully
attend to the facts and the circumstances of the case – It should
find out whether the impugned decision is based on any principle –
If not, it may unerringly point to arbitrariness – If there is absence
of good faith and the action is actuated with an oblique motive, it
could be characterised as being arbitrary – A total non-application
of mind without due regard to the rights of the parties and public
interest may be a clear indicator of arbitrary action – A wholly
unreasonable decision which is little different from a perverse
decision under the Wednesbury doctrine would qualify as an
arbitrary decision under Art.14 – Ordinarily visiting a party with
the consequences of its breach under a contract may not be an
arbitrary decision – Constitution of India – Art. 14.
Dismissing the appeals, the Court
HELD:1. The writ jurisdiction is a public law remedy. A
matter, which lies entirely within a private realm of affairs of public
body, may not lend itself for being dealt with under the writ
jurisdiction of the Court. [Para 54][50-G]
2. The principle laid down in Bareilly Development Authority
that in the case of a non-statutory contract the rights are governed
only by the terms of the contract and the decisions, which are
purported to be followed, including Radhakrishna Agarwal, may
not continue to hold good, in the light of what has been laid down
in ABL and as followed in the recent judgment in Sudhir Kumar
Singh. [Para 54][50-G; 51-A]
3. The mere fact that relief is sought under a contract which
is not statutory, will not entitle the respondent-State in a case by
itself to ward-off scrutiny of its action or inaction under the
contract, if the complaining party is able to establish that the
action/ inaction is, per se, arbitrary. [Para 54][51-B]
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4. An action will lie, undoubtedly, when the State purports
to award any largesse and, undoubtedly, this relates to the stage
prior to the contract being entered into. This scrutiny, no doubt

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