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Gujarat Urja Vikas Nigam Limited v. Green Infra Corporate Wind Private Limited and Others

Civil Appeal · 2025 INSC 922Decided 4 Aug 2025
Civil Appeal Nos. 14098-14101 of 2015
Justice Sanjay Kumar · Justice Satish Chandra Sharma

Background

Gujarat Urja Vikas Nigam Limited (GUVNL), a state power distribution utility, had signed Power Purchase Agreements with four wind-energy companies at a fixed tariff of ₹3.56 per unit: a rate the state electricity regulator (GERC) had set specifically for projects that availed "accelerated depreciation" tax benefits. The four companies, which had not actually availed that tax benefit, later asked GERC to fix a separate, higher tariff for them on a case-by-case basis, as GERC's own order allowed. GERC and the Appellate Tribunal for Electricity ruled in the companies' favour, and GUVNL appealed to the Supreme Court, arguing the companies were bound by the tariff they had signed up to in their contracts.

Decision Breakdown

The Supreme Court dismissed GUVNL's appeals. It held that the ₹3.56 tariff was, by GERC's own order, only ever meant to apply to projects availing accelerated depreciation, so it simply did not apply to these four companies, regardless of what the contract said, since the price of power under the Electricity Act is fixed by statutory regulatory order, not private agreement. GUVNL had never obtained any written commitment from the companies that they would in fact claim accelerated depreciation, so it could not later insist they were bound by that inapplicable rate. The Court also stressed that GUVNL, as an arm of the State, was obligated to further the government's policy of promoting renewable energy rather than act purely in its own commercial interest.

Lesson Learnt

A tariff mentioned in a power purchase agreement with a state utility is not automatically binding if it was conditioned on a specific regulatory criterion (here, a tax-depreciation choice) that the generator did not actually meet: the underlying regulatory order controls, and a state instrumentality cannot exploit contractual language to defeat that.

Official source (sci.gov.in)View Judgment (PDF)

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