LexTHE STATE OF HIMACHAL PRADESH & ANR. versus JSW HYDRO ENERGY LIMITED & ORS.
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[2025] 7 S.C.R. 1104 : 2025 INSC 857 The State of Himachal Pradesh & Anr. v. JSW Hydro Energy Limited & Ors. (Civil Appeal No. 12883 of 2024) 16 July 2025 [Pamidighantam Sri Narasimha* and Joymalya Bagchi, JJ.] Issue for Consideration The primary issues arising for consideration are: first, whether the CERC Regulations, 2019 bar respondent no. 1 from supplying free power to the appellant-State beyond 13%; and second, whether respondent no. 1 could have invoked the High Court’s writ jurisdiction for aligning the Implementation Agreement with the CERC Regulations, 2019. Headnotes† Electricity Act, 2003 – CERC (Terms and Conditions of Tariff) Regulations, 2019 – Regulations 44 and 55 – Note 3 of Regulation 55 – Respondent no.1, a generating company, installed and commissioned a hydroelectric power project pursuant to a grant followed by an Implementation Agreement with the appellant-State of Himachal Pradesh – Under this agreement, respondent no. 1 undertook to supply as consideration 18% of net generation free of cost (free power supply of 12% of net generation for 12 years and 18% thereafter for next 28 years) to the appellant-State – At the commencement of the obligation to supply 18% free power, respondent no. 1 approached the High Court by way of a writ petition to align the Implementation Agreement with the CERC (Terms and Conditions of Tariff) Regulations, 2019, which provide for a maximum of 13% free power to the State Government, on the ground that contractual agreements, to the extent that they are inconsistent with the applicable regulations, shall stand overridden by their operation – The High Court directed for modification of the Implementation Agreement – Correctness: Held: 1. The purpose and intendment of Note 3 of Regulation 55 is for the State Commission to determine tariff by assuming that * Author [2025] 7 S.C.R. 1105 The State of Himachal Pradesh & Anr. v. JSW Hydro Energy Limited & Ors. FEHS is 13%, whenever it is higher in actuality, while calculating the energy and capacity charges – Neither the language of Note 3 nor the context in which it appears in the CERC Regulations, 2019 supports respondent no. 1’s contention that the legal effect of this cap is to override its contractual obligations with the appellant- State – On the other hand, use of the term “shall be taken as 13% or actual, whichever is less” shows that the Regulations cover a situation where the obligation to supply free power is higher than 13%, and in such an eventuality, allow only a certain portion of free supply to be considered for tariff determination and payments by beneficiaries for the saleable capacity – Once the Regulation does not prohibit the supply of free power beyond 13%, respondent no. 1 cannot rely on it to wriggle out of its contractual obligations – The Regulatory Commissions, APTEL, and the Courts must enforce these contractual obligations and ensure that their interpretation of regulations does not allow the party to circumvent and breach its contractual undertakings when the same is not intended by the regulation itself. [Paras 19, 20] 2. This Court holds that CERC Regulations, 2019 do not prohibit respondent no. 1 from supplying free power beyond 13% to the appellant-State, and the Implementation Agreement does not stand overridden by the operation of these Regulations – Further, a writ petition before the High Court for aligning the Implementation Agreement with the CERC Regulations, 2019 and the CERC’s order dated 17.03.2022 is not maintainable – Once respondent no.1’s prayer for relief was rejected by the CERC and it specifically held only the PPA and PSAs to stand overridden, which finding was not further appealed, it would not be open for respondent no. 1 to seek modification of the Implementation Agreement by way of a writ petition before the High Court. [Para 40] Electricity Act, 2003 – Writ Jurisdiction of High Court – Whether the writ petition before the High Court for aligning the Implementation Agreement with the CERC Regulations, 2019 and the CERC’s order dated 17.03.2022 is maintainable: Held: Under the Electricity Act, the statutory regulator has been entrusted with discharging the function of tariff determination, including making regulations for the purpose and interpreting the same – Constitutional courts must enable the regulator to comprehensively regulate all aspects of the sector such that remedies are not fragmented a
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