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Southern Power Distribution Power Company Limited of Andhra Pradesh (APSPDCL) & Another vs. M/S Hinduja National Power Corporation Limited & Another

Civil Appeal · 2022 INSC 136Decided 2 Feb 2022
Civil Appeal No. 1844 of 2020
L. Nageswara Rao · B.R. Gavai

Background

In the 1990s, the erstwhile Andhra Pradesh State Electricity Board entered into a Power Purchase Agreement (PPA) with Hinduja National Power Corporation Limited (HNPCL) for a power project at Visakhapatnam, later amended and restated in 1998, but the project remained stalled and unimplemented for nearly a decade. After the project revived and a Continuation Agreement was later executed, disputes arose over the capital cost and tariff, leading HNPCL to file a petition (O.P. No. 21/2015) before the Andhra Pradesh Electricity Regulatory Commission for determination of capital cost, while the distribution companies (DISCOMS) filed a competing petition (O.P. No. 19/2016) for approval of the amended PPA. In January 2018, the DISCOMS abruptly sought to withdraw their own petition seeking approval of the PPA, causing the State Commission to also dismiss HNPCL's tariff petition: a move HNPCL challenged before the Appellate Tribunal for Electricity (APTEL), which ultimately directed both petitions to be decided on merits, a decision the DISCOMS then challenged before the Supreme Court.

Decision Breakdown

The Supreme Court examined the sequence of events and found that the DISCOMS' sudden withdrawal of their own PPA-approval petition, after years of the matter being litigated and after interim arrangements had already fixed a supply rate, was a wrongful and wilful act done without reasonable or probable cause, holding that it fit within the legal concept of "malice in law" (an act harming public interest without any rational justification, even absent personal ill will). The Court held that the APTEL's direction, simply sending both petitions back to the State Commission to be decided properly on their merits, caused no prejudice to either side and did not warrant interference. Separately, the Court strongly criticised the DISCOMS' conduct in defying the Court's own interim order requiring them to keep purchasing power from HNPCL at Rs. 3.82 per unit, noting that instead they had bought costlier power (at Rs. 4.33 per unit) from another supplier, calling this contrary to the very public interest DISCOMS claimed to protect. The Court dismissed the appeal with Rs. 5 lakh costs, directed the State Commission to decide both pending petitions within six months, and ordered DISCOMS to resume purchasing power from HNPCL at the earlier rate in the interim.

Lesson Learnt

A party, especially a state instrumentality, cannot use procedural withdrawal tactics to defeat another party's legitimate claim after years of litigation, and courts will treat such wrongful conduct as "malice in law" even without proof of personal spite; public sector bodies invoking "public interest" to resist an order are expected to actually act in the public's interest, not contrary to it.

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

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