M/S ADANI POWER (MUNDRA) LTD. versus GUJARAT ELECTRICITY REGULATORY COMMISSION AND ORS.

Citation: [2019] 8 S.C.R. 1017 · Decided: 02-07-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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M/S ADANI POWER (MUNDRA) LTD.
v.
GUJARAT ELECTRICITY REGULATORY COMMISSION AND
ORS.
(Civil Appeal No.11133 of 2011)
JULY 02, 2019
[ARUN MISHRA, B. R. GAVAI AND SURYA KANT, JJ.]
Electricity Act, 2003 – ss. 86 (1) (F), 95 – Respondent
No. 2-Procurer initiated the process of bidding for supply of power
on long term basis, by issuing Request for Qualification – Three
separate bids were invited – Appellant was selected as a successful
bidder in respect of bid no. 2 for supplying 1000 MW power at the
rate of Rs. 2.35 per Kwh – Consequently, Power Purchase Agreement
(PPA) came to be entered into between the procurer and the appellant
– Appellant contended that the bid submitted by it was on the basis
of the assurance given by Gujarat Mineral Development
Corporation (GMDC) to supply coal – It was also contended that,
the GMDC was not abiding by the said assurance – There was a
dispute between the appellant and the GMDC with regard to certain
terms and conditions of the Fuel Supply Agreement (FSA) and as
such FSA could not be finalized – Various communications were
exchanged between the Government of Gujarat, appellant and
GMDC to find out a solution – Finally, appellant by a communication
dated 28.12.2009, issued notice to the procurer, terminating the
PPA with effect from 04.01.2010 – Procurer filed petition u/ss.
86(1)(F), 95 of the Act, 2003 before Commission – The Commission
held that the termination was illegal and directed the appellant to
supply the power to the procurer at the rate determined in the PPA
– Aggrieved, appellant filed appeal before the Appellate Tribunal,
which was dismissed – On appeal, held: Appellate Tribunal depicted
an  erroneous approach – It is settled that to harmonize is not to
destroy any statutory provision or render it otiose – A harmonious
reading of Art. 3.4.2 and Art. 3.1.2 of the PPA indicated that in the
event of non-compliance of any of the conditions as stipulated in
Art. 3.1.2 within the period prescribed thereunder, either of the
parties, i.e., the seller or the procurer have the right to terminate
   [2019] 8 S.C.R. 1017
1017
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SUPREME COURT REPORTS
[2019] 8 S.C.R.
the contract – Further, Appellate Tribunal was totally incorrect in
holding that the provisions u/Art. 3.4.2 of the PPA can be invoked
only when there is an agreement between the parties that there is a
violation of any of the conditions specified in Art. 3.1.2 of the PPA
– If such a view of the Appellate Tribunal is accepted, it will amount
to inserting a totally new condition in Art. 3.4.2 of the PPA and
would amount to re-writing the contract between the parties; it would
violate the provisions of Art. 3.4.2 of the PPA – And it will make the
provisions of Art. 3.4.2 a dead letter and render them otiose – Also,
it cannot said to be a condition which is necessary to give business
efficacy to the contract – Besides, Appellate Tribunal erred in holding
that the bid of the appellant was not on the basis of the commitment
by the GMDC to supply indigenous coal – As it is clear from various
communication between Government of Gujarat, Procurer and
GMDC that the bid of the appellant was on the basis of the
commitment by the GMDC to supply the indigenous coal – Thus,
the termination of PPA by appellant was legal and valid –
Interpretation of Statutes – Harmonious Construction.
Electricity Act, 2003 – s.62 – Determination of compensatory
tariff by Central Electricity Regulatory Commission (CERC) –
Respondent No.2-procurer initiated the process of bidding for supply
of power – Appellant was selected as a successful bidder for
supplying 1000 MW power at rate of Rs. 2.35 per kwh –  Appellant
contended that the bid submitted by it was on basis of the assurance
given by Gujarat Mineral Development Corporation (GMDC) to
supply coal – It was also contended that GMDC did not abide by
the said assurance – Appellant terminated the PPA – Procurer filed
petition u/ss.86(1)(f) & 95 of the Act before the Commission – The
Commission and the Appellate Tribunal held that the termination
was illegal and directed the appellant to supply the power  to the
procurer at the rate determined by PPA – On appeal, held:
Termination by appellant was valid and legal – Appellant supplied
electricity to the procurer in accordance with the decision of the
Commission and the Appellate Tribunal – In order to do economic
justice, on the principle of business efficacy, the appellant entitled
for adjustment of cost of the proj

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