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Electricity & Energy LawSupreme Court of India

Gujarat Urja Vikas Nigam Limited v. EMCO Limited & Anr.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1220 of 2015)Decided 2 Feb 2016
Civil Appeal No. 1220 of 2015
Justice J. Chelameswar · Justice Abhay Manohar Sapre

Background

The Gujarat Electricity Regulatory Commission had fixed a tariff (Rs. 15/kWh for the first 12 years, then Rs. 5/kWh) for solar power projects commissioned by 31 December 2011 under a "1st Tariff Order," and a Power Purchase Agreement between Gujarat Urja Vikas Nigam (the distribution utility) and EMCO Limited (a solar power producer) incorporated this tariff. A later "2nd Tariff Order" fixed a different (higher) tariff for projects commissioned after 29 January 2012, and EMCO, whose project was delayed and relocated under a supplemental agreement, claimed entitlement to the benefit of this second, more favourable order instead of the tariff fixed in its own PPA.

Decision Breakdown

The Supreme Court held that the order of the appellate forum (the impugned order under appeal) wrongly allowed EMCO to claim the benefit of the 2nd Tariff Order merely by invoking it, without EMCO ever having filed its own petition before the Commission seeking determination of a separate tariff "taking into account all the relevant facts," as the 1st Tariff Order itself required for projects not covered by its terms. Since EMCO's existing PPA already fixed the applicable tariff and EMCO had not properly sought a fresh tariff determination, the Court set aside both the impugned appellate order and the underlying regulatory order it upheld, and rejected the respondents' objection that the appeal raised no substantial question of law. The appeal was allowed with costs of Rs. 2 lakhs payable by EMCO.

Lesson Learnt

A party to a fixed-tariff power purchase agreement cannot simply claim the benefit of a later, more favourable tariff order without following the proper procedure, filing its own petition before the regulator and establishing entitlement based on the specific facts, rather than assuming automatic entitlement.

Gujarat Urja Vikas Nigam Limited v. EMCO Limited & Anr. – Legal Case Shots | LegalAware