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Electricity & Energy LawSupreme Court of India

Tamil Nadu Generation and Distribution Corporation v. PPN Power Generation

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4126 of 2013)Decided 4 Apr 2014
Civil Appeal No. 4126 of 2013
Justice S.S. Nijjar · Justice A.K. Sikri

Background

Under a long-term power purchase agreement, the electricity buyer made partial monthly payments while deducting an early-payment rebate. The generating company adjusted receipts against older unpaid bills and claimed the balance and contractual interest. The State Electricity Commission ordered billing reconciliation and repayment of excess rebates, and the electricity appellate tribunal upheld that result.

Decision Breakdown

The Supreme Court dismissed the buyer's appeal and its additional applications. The Commission could decide the contractual payment dispute itself, and had exercised its choice reasonably rather than being compelled to send it to arbitration. Full payment within the contractual period was necessary for the early-payment rebate; partial payment did not qualify, and the approved adjustment against older bills and compound late-payment interest stood. The Court also rejected the delay objections on the facts and contractual framework then before it. Although it urged the State to consider judicial appointments for such adjudication, it did not invalidate the Commission's decision in this case.

Lesson Learnt

An early-payment discount depends on the conditions actually agreed, including whether the entire bill must be paid. A buyer cannot assume that disputing part of a bill permits unilateral deductions when the contract requires payment first and dispute resolution afterwards.

Tamil Nadu Generation and Distribution Corporation v. PPN Power Generation – Legal Case Shots | LegalAware