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Gujarat Urja Vikas Nigam Limited vs Essar Power Limited and another

Not available · 2025 INSC 1160Decided 25 Sept 2025
Not available
Justice Sanjay Kumar · Justice Alok Aradhe

Background

Gujarat Urja Vikas Nigam Limited (GUVNL), successor to the Gujarat Electricity Board, had a 1996 power purchase agreement with Essar Power Limited (EPL) for 300 MW of a 515 MW plant, with the remaining 215 MW going to EPL's sister company Essar Steel (ESL): an allocation ratio of roughly 58:42. A long-running dispute (since 2005) arose because EPL supplied more power to ESL than its allocated share, at GUVNL's expense. After multiple rounds of litigation before the Gujarat Electricity Regulatory Commission (GERC), the Appellate Tribunal for Electricity (APTEL), and an earlier Supreme Court decision (2016) that restored GERC's findings, GERC recomputed the amounts due in 2019, and both parties again appealed to APTEL, whose 2025 order was challenged in this fresh appeal.

Decision Breakdown

The Supreme Court held that GUVNL was entitled to two distinct types of relief for EPL's wrongful diversion of power to ESL: (1) "compensation" for the diverted electricity, computed using the HTP-1 Tariff Energy Charge methodology the parties had earlier agreed upon, and (2) separately, "reimbursement" of the fixed charges GUVNL had already paid for electricity it never actually received: a restitutionary claim distinct from compensation, which GERC and APTEL had wrongly conflated and denied. On the technical dispute over whether diversion should be computed hourly or half-hourly, the Court sided with GERC's half-hourly method, since EPL itself had requested and both parties had actually implemented half-hourly metering (per a 2005 Central Electricity Authority recommendation), and EPL could not later disown that practice merely because it favoured GUVNL's claim. The Court left certain quantum disputes (a Rs. 2.2 crore incentive discrepancy and deduction figures) for GERC to verify on remand, disposing of the appeals with parties bearing their own costs.

Lesson Learnt

Where a power generator diverts a distribution licensee's contractually allocated electricity to a third party, the licensee's entitlement to "reimbursement" of fixed charges already paid for undelivered power is legally separate from "compensation" for the wrongful diversion itself: the two are not interchangeable, and denying one on the basis of the other's computation methodology is an error; parties also cannot invoke a metering methodology when convenient and disown it when it is not.

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

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