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Electricity & Energy LawSupreme Court of India

Tata Power Company Ltd. v. Adani Electricity Mumbai Ltd. (formerly BSES/Reliance Energy Ltd.) and Ors.

Civil Appeal · 2019 INSC 616Decided 2 May 2019
Civil Appeal No. 415 of 2007
Justice Arun Mishra · Justice S. Abdul Nazeer

Background

Tata Power Company (TPC) generated electricity for Mumbai city, while BSES (later Reliance Energy, now Adani Electricity Mumbai Ltd.) distributed electricity to Mumbai's suburbs and bought bulk power from TPC. To cover TPC's own standby-capacity costs with the Maharashtra State Electricity Board, TPC sought to recover a share of these "standby charges" from BSES/REL. The Appellate Tribunal for Electricity (APTEL) had determined how these charges should be shared, and both TPC and BSES/REL filed cross-appeals before the Supreme Court challenging the apportionment.

Decision Breakdown

The Supreme Court accepted the majority view of the APTEL that the standby facility was provided out of TPC's own generating capacity and that roughly 90% of the time the energy was actually drawn by BSES/REL from TPC, so there was no justification for TPC's claim to a 50:50 sharing of standby charges. The Court also rejected TPC's argument that it had not "implemented" the APTEL order, noting the order had never been stayed and had already been given effect through tariffs charged to consumers, and found no violation of Article 14 of the Constitution since the amount ordered was consistent with the parties' own prior agreement and principles of business equilibrium. Both cross-appeals were held to be without merit and dismissed, with amounts secured by TPC's bank guarantee and court deposit directed to be paid to Adani Electricity Mumbai Ltd. (substituted as the respondent).

Lesson Learnt

In regulated-sector commercial disputes, an appellate tribunal's factual apportionment of costs (here, standby charges) will not be disturbed by the Supreme Court where it is backed by evidence of actual usage patterns and consistent with the parties' own prior commercial agreements, and a party cannot resist paying an unstayed tribunal order merely by claiming non-implementation when the benefit has already been passed on to consumers.

Tata Power Company Ltd. v. Adani Electricity Mumbai Ltd. (formerly BSES/Reliance Energy Ltd.) and Ors. – Legal Case Shots | LegalAware