# TRANSMISSION CORPN. OF A.P. LTD. & ANR v. SAi RENEWABLE POVVER PVT. LTD. & ORS

- **Citation:** [2010] 8 S.C.R. 636
- **Court:** Supreme Court of India
- **Decided:** 2010-07-08
- **Case number:** Civil Appeal No. 2926 of 2006
- **Bench:** Dr. B.S. Chauhan, Swatanter Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/transmission-corpn-of-a-p-ltd-anr-v-sai-renewable-povver-pvt-ltd-ors-27068
- **Pages:** 83

## Headnote

Electricity - Promotion of generation of grid quality power
from non-conventional sources -- Guidelines issued by
Central Government indicating the purchase price of such
electricity - State Government granting uniform incentives
to all the projects based on renewable sources of energy -
Order reviewing the tariff and imposing restriction on sale to
third party - Non-conventional energy developers/generators
D accepted and acted upon the order by entering into Power
Purchase Agreements -
Thereafter State Electricity
Regulatory Commission determining the purchase price for
procurement of such electricity and also imposing restriction
with regard to sale thereof to third party- Propriety of the order
E of the Regulatory Commission - Held: It is within the power
and jurisdiction of the Regulatory Commission to determine
the 'purchase price' and to impose restriction on sale to third
party - The Commission was not estopped from altering the
purchase rates or imposing restriction on the sale - The
F
incentives initially provided by the authorities under the
guidelines issued by the Central Government and the Power
Purchase Agreements were not for indefinite period, but were
subject to review - The contracts entered into by the parties
provided for review and the restriction for sale to third party -
Parties are bound by contractual obligation and such
G
obligation cannot be frustrated by aid of promissory estoppel
- Agreements cannot be said to be result of duress - Duress
not proved, so as to render the contract voidable - Conditions
of a contract cannot be altered/avoided on presumptions or
H
636
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 637
POWER PVT. LTD.
assumptions -
Determination of tariff is a function assigned
A
legislatively to Regulatory Commission - Supreme Court in
exercise of powers under Article 136 of the Constitution would
not sit as an appellate authority over the formation of opinion
and determination of tariff by the specialized bodies - Matters
remanded to the Regulatory Commission to fix/determine the
B
tariff for purchase of electricity -
Electricity Regulatory
Commission Act, 1998 - s. 17 - Andhra Pradesh Electricity
Reform Act, 1998 - s. 11 - Electricity Act, 2003 - ss. 61 and
62 r/w. s. 86(1)(a) and (b) - Contract - Promissory Estoppel
- Constitution of India, 1950 - Article 136.
c
Administrative Law:
Principle of promissory estoppel -
Nature and
applicability of - Discussed.
Principle of legitimate expectation - Applicability of
Judicial Review - Scope of, in policy matters.
Maxim -
'Al/egans contraria non est audiendus' -
D
Applicability of.
E
Words and Phrases -
'Tariff' and 'Purchase price' -
Meaning of
Ministry of Non-Conventional Energy Sources of
Central Government wrote letter dated 7.9.1993 to
F
different States informing that under new strategy and
action plan of the Ministry, special emphasis would be
given to generation of grici quality power from nonconventional sources. Guidelines drawn up by the
Ministry were also enclosed with the letter, whereby a
G
minimum buy back price of Rs. 2.25 per unit was
proposed. The transmission of electricity was required to
be undertaken by State Electricity Board.
In furtherance of the decision of the Central
H
638
SUPREME COURT REPORTS
(2010] 8 S.C.R.
A Government and the Guidelines, State of Andhra Pradesh
issued two different Government Orders dated 18.11.1997
and 22.11.1998 granting uniform incentives to all the
projects based on renewable sources of energy. The
Power Purchase Agreement (PPA) between the appellants Corporation (APTRANSCO) and non-conventional power
project developers were executed. The A.P. Regulatory
Commission passed an order on 20.6.2001 determining
the tariff as well as defining other rights and obligations
between the parties including that the generators of
c electricity were not permitted to make sale in favour of
third party. After passing of this order, developers
entered into PPAs and confirmed the acceptance and
impleme

## Text

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[2010] 8 S.C.R. 636
A
TRANSMISSION CORPN. OF A.P. LTD. & ANR.
B
c
v.
SAi RENEWABLE POVVER PVT. LTD. & ORS.
(Civil Appeal No. 2926 of 2006 etc.)
JULY 8, 2010
[DR. B.S. CHAUHAN AND SWATANTER KUMAR, JJ.]
Electricity - Promotion of generation of grid quality power
from non-conventional sources -- Guidelines issued by
Central Government indicating the purchase price of such
electricity - State Government granting uniform incentives
to all the projects based on renewable sources of energy -
Order reviewing the tariff and imposing restriction on sale to
third party - Non-conventional energy developers/generators
D accepted and acted upon the order by entering into Power
Purchase Agreements -
Thereafter State Electricity
Regulatory Commission determining the purchase price for
procurement of such electricity and also imposing restriction
with regard to sale thereof to third party- Propriety of the order
E of the Regulatory Commission - Held: It is within the power
and jurisdiction of the Regulatory Commission to determine
the 'purchase price' and to impose restriction on sale to third
party - The Commission was not estopped from altering the
purchase rates or imposing restriction on the sale - The
F
incentives initially provided by the authorities under the
guidelines issued by the Central Government and the Power
Purchase Agreements were not for indefinite period, but were
subject to review - The contracts entered into by the parties
provided for review and the restriction for sale to third party -
Parties are bound by contractual obligation and such
G
obligation cannot be frustrated by aid of promissory estoppel
- Agreements cannot be said to be result of duress - Duress
not proved, so as to render the contract voidable - Conditions
of a contract cannot be altered/avoided on presumptions or
H
636
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 637
POWER PVT. LTD.
assumptions -
Determination of tariff is a function assigned
A
legislatively to Regulatory Commission - Supreme Court in
exercise of powers under Article 136 of the Constitution would
not sit as an appellate authority over the formation of opinion
and determination of tariff by the specialized bodies - Matters
remanded to the Regulatory Commission to fix/determine the
B
tariff for purchase of electricity -
Electricity Regulatory
Commission Act, 1998 - s. 17 - Andhra Pradesh Electricity
Reform Act, 1998 - s. 11 - Electricity Act, 2003 - ss. 61 and
62 r/w. s. 86(1)(a) and (b) - Contract - Promissory Estoppel
- Constitution of India, 1950 - Article 136.
c
Administrative Law:
Principle of promissory estoppel -
Nature and
applicability of - Discussed.
Principle of legitimate expectation - Applicability of
Judicial Review - Scope of, in policy matters.
Maxim -
'Al/egans contraria non est audiendus' -
D
Applicability of.
E
Words and Phrases -
'Tariff' and 'Purchase price' -
Meaning of
Ministry of Non-Conventional Energy Sources of
Central Government wrote letter dated 7.9.1993 to
F
different States informing that under new strategy and
action plan of the Ministry, special emphasis would be
given to generation of grici quality power from nonconventional sources. Guidelines drawn up by the
Ministry were also enclosed with the letter, whereby a
G
minimum buy back price of Rs. 2.25 per unit was
proposed. The transmission of electricity was required to
be undertaken by State Electricity Board.
In furtherance of the decision of the Central
H
638
SUPREME COURT REPORTS
(2010] 8 S.C.R.
A Government and the Guidelines, State of Andhra Pradesh
issued two different Government Orders dated 18.11.1997
and 22.11.1998 granting uniform incentives to all the
projects based on renewable sources of energy. The
Power Purchase Agreement (PPA) between the appellants Corporation (APTRANSCO) and non-conventional power
project developers were executed. The A.P. Regulatory
Commission passed an order on 20.6.2001 determining
the tariff as well as defining other rights and obligations
between the parties including that the generators of
c electricity were not permitted to make sale in favour of
third party. After passing of this order, developers
entered into PPAs and confirmed the acceptance and
implementation of the order dated 20.6.2001. The PPAs
as well as the order dated 20.6.2001 specifically provided
0 for review/revision of purchase price. The order dated
20.6.2001 was never challenged.
Thereafter, pursuant to suo motu proceedings,
Andhra Pradesh Electricity Regulatory Commission
(which was constituted under Andhra Pradesh Electricity
E Reform Act, 1998) by its order dated 20.3.2004 fixed the
energy purchase rates at base unit price of Rs. 2.25 as
on 1.4.1994 and the escalation index of 5% p.a .. Thus, the
base price as on 1.4.2004 was 3.37 per kwh. The tariff was
frozen for five years. The Regulatory Commission also
F restricted the sale, procurement and distribution of
electricity by the developers to any other party except
APTRANSCO. This order was further clarified by order
dated 7.7.2004. The developers filed appeals against both
the orders. The Appellate Tribunal for Electricity held that
G there was some element of duress in execution of the
PPAs; that the PPA being a statutory document, the
Regulatory Commission had no authority to interfere with
the same; that the Regulatory Commission had neither
the power nor the jurisdiction to compel the developers
H
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 639
POWER PVT. LTD.
to sell the power generated by them to APTRANSCO and/ A
or DISCOM.
The instant appeals were filed against the orders of
the appellate tribunal. The questions, broadly, for
consideration before the Supreme Court pertained to the
8
issues as under:
(i)
Jurisdiction of the Regulatory Commission for
fixation of tariff and sale of generated
electricity to third party;
(ii)
Correctness of tariff fixation;
(iii)
Applicability of principle of estoppel and the
extent of its applicability;
(iv)
Applicability of plea of duress;
(v)
Effect of order dated 20.6.2001 in view of its
having attained finality and for the same not
being questioned in the instant proceedings.
c
D
Disposing of the appeals and remanding the matters E
to Andhra Pradesh Electricity Regulatory Commission,
the Court
HELD: 1.1. The Andhra Pradesh Electricity
Regulatory Commission has the jurisdiction to determine
F
tariff which takes within its ambit the 'purchase price' for
procurement of the electricity generated by the nonconventional energy developers/ generators, in the facts
and circumstances of the instant cases. (Para 52] [7178]
G
1.2. The Tribunal was not correct in holding that since
no independent notification was issued u/s. 17 of the
Regulatory Commission Act, 1998, therefore, the A.P.
Electricity Regulatory Commission could not exercise the
H
640
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A
powers vested in the Regulatory Commission under that
Act. The Regulatory Commission was constituted under
the Andhra Pradesh Electricity Reform Act, 1998 and an
appropriate notification in that behalf was issued. The
Electricity Regulatory Commission Act, 1998 stood
B repealed by the Electricity Act, 2003. The Electricity Act,
2003 specifically recognized and accepted the
Commissions constituted under the enactments specified
in the Schedule to the Act as appropriate Commission.
In entry 3 of the said Schedule, Reform Act, 1998 has
c been specifically noticed.
Thus, the Regulatory
Commission constituted under the Reform Act, 1998
became the appropriate Ccmmission under the Electricity
Act, 2003 as well. [Para 3] [665-F-H; 666-A-B]
1.3.
Fixation of tariff is, primarily, a function to be
D performed by the statutory authority in furtherance to the
provisions of the relevant laws.
Fixation of tariff is a
statutory function as specified under thQ provisions of
the Reform Act, 1998, Electricity Regulatory Commissions
Act, 1998 and the Electricity Act, 2003. These functions
E are required to be performed by the expert bodies as to
whom the job is assigned under the law. The Regulatory
Commission constituted by the notification dated
3.4.1999 would be the appropriate Commission under the
Reform Act, 1998, Electricity Regulatory Commissions
F
Act, 1998 and the Electricity Act, 2003 and is required to
perform the functions as contemplated u/ss. 11, 17 and
82 of the respective Acts. The functions assigned to the
Regulatory Commission are wide enough to specifically
impose an obligation on the Regulatory Commission to
G determine the tariff. [Para 17] [678-F-H; 679-A-F]
H
1.4. The Regulatory Commission is vested with very
vast powers and functions. Section 11 of the Reform Act,
1998 declares fixation of tariff as one of the primary
functions of the Regulatory Commission in general more
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 641
POWER PVT. LTD.
particularly, to the specified consumers u/s. 26 of the A
Reform Act, 1998. While under the Electricity Act, 2003,
Sections 61 and 62 r/w Section 86(1)(a) and (b) deal with
fixation of tariffs in relation to production, distribution and
sale of generated power to the end consumer. These
provisions clearly demonstrate that the Regulatory B
Commission is vested with the function for determining
the tariff for generation, supply, transmission and billing
of electricity etc., as well as regulation of electricity
purchase and procurement process of distribution
licensees, including price at which electricity shall be c
procured from the generating companies. With these
specific powers in the statute book itself, it cannot be said
that procurement of power from the generating
companies will not fall within the ambit of powers and
functions of the Regulatory Commission. It is a common D
body performing functions, duties and exercising powers
under all these three Acts. [Para 30] [694-F-H; 695-A]
PTC India Ltd.
v. Central Electricity Regulatory
Commission (201 O) 4 sec 603, relied on.
Tata Power Company Ltd. v. Reliance Energy Ltd. 2009
(7) SCALE 513, referred to.
'
E
1.5. All the Power Purchase Agreements (PPAs)
entered into by the generating companies with the
F
appropriate body, as well as the orders issued by the
State in GO Ms. Nos. 93 and 112, in turn, had provided
for review of tariff and the conditions. The Tribunal
appears to have fallen in error of law in coming to the
conclusion that the Regulatory Commission had no
powers either in law or otherwise of reviewing the tariff G
and so called incentives. From various provisions and
the documents on record it is clear that the Regulatory
Commission is vested with the power to revise tariff and
conditions in relation to procurement of power from
generating companies. It is also clear from the record that H
642
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A
in terms of the contract between the parties, the
APTRANSCO had reserved the right to revise tariff etc.
with the approval of the Regulatory Commission. [Para
33) [698-D-G]
8
1.6. The Tribunal has taken a narrower view of the
jurisdiction vested in the Regulatory Commission which
is discharging its statutory functions under all the three
Acts in accordance with law. The power available to the
Government to issue policy directions has two
C restrictions. Firstly, the policy direction has to be on the
matters related to electricity in the State including overall
planning and coordination. Secondly, all such policy
directions have to be issued by the State Government in
consonance with the object sought to be achieved by this
Act and accordingly shall not adversely affect or interfere
D with the functions and powers of the Regulatory
Commission including, but not limited to, determination
of the structure of tariff for supply of electricity to the
consumers.
Powers vested in the Regulatory
Commission to frame regulations under Section 54 also
E intend that regulations are to be framed with an object to
ensure proper performance of its functions under the Act.
Both the State and the Regulatory Commission are
supposed to exercise their respective powers only for the
purposes of furthering the cause of the Reform Act. The
F
Commission discharging its statutory functions within
the ambit of Sections 11, 12 and 26 of the Reform Act,
1998 as well as Sections 61, 62 and 86(1 )(b) of the
Electricity Act, 2003 renders advisory functions to the
State. [Para 46] [711-G-H; 712-A-D]
G
1.7. It is not correct to say that the Regulatory
Commission acted in contradiction or conflict with the
State policy. The State was certainly not intending to
provide incentives and concessions with assurance of
buy-back to enable the Non-Conventional Energy
H developers/generators to sell generated powers to third
TRANSMISSION CORPN. OF AP. LTD v. SAi RENEWABLE 643
POWER PVT. LTD.
parties. It must be kept in mind that the policy of the A
Government of India as well as the State of Andhra
Pradesh was for encouraging the developers/generators
of Non-conventional Energy to generate electricity for the
benefit of public at large with buy back of power being
one of the basic features of this policy. Such parameters B
are subject to change in larger public interest. All these
issues, in fact, loose much significance because of the
fact that parties have, by and large, entered into the field
of contract simpliciter and their rights are controlled by
the contracts executed between them. There is no c
challenge to ,these contracts and, therefore, it may be
hardly permissible for the Court to go behind these
contracts and permit questioning of the statutory
jurisdiction vested in the Regulatory Commission. [Para
46] [712-F-H; 713-A-B]
D
1.8. After creation of the Regulatory Commissions
under the provisions of the Electricity Regulatory
Commission Act, 1998, the Commission has clear power
and jurisdiction to fix tariff. The Court should not adopt
an interpretation which should neither be strict nor E
narrower so as to oust the jurisdiction of the Regulatory
Commission, as it would defeat the very object of
enacting the said Act. [Para 47] [713-C-D]
1.9. The basic policy of both the Central as well as
F
the State Government was to encourage private sector
participation in generation, transmission and distribution
of electricity on the one hand and to further the objective
of distancing the regulatory responsibilities of the
Regulatory Commission from the Government and of G
harmonizing and rationalizing the provisions of the
existing laws relating to electricity in India, on the other
hand. The object and reasons of Electricity Act, 2003 as
well as the Reform Act, 1998 are definite indicators of
such legislative intent. The objects and reasons clearly H
644
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A
postulated the need for introduction of private sector into
the field of generation and distribution of energy in the
State. Efficiency in performance and economic utilization
of resources to ensure satisfactory supply to the public
at large is the paramount concern of the State as well as
B the Regulatory Commission. The policy decisions of
these constituents are to be in conformity with the object
of the Act. Thus, it is necessary that the Regulatory
Commission, in view of this object, take practical
decisions which would heli- in ensuring existence of
c these units rather than their extinguishment as alleged.
[Para 51] [716-A-G]
1.10. The restriction with regard to third party sales
was not only creation of a directive issued or approval
granted by the Regulatory Commission, but was actually
D in furtherance of the contract entered into between the
parties. Rights and liabilities arising from a binding
contract cannot be escaped on the basis of some
presumptions or inferences in relation to the facts leading
to the execution of the contract between the parties. The
E jurisdiction of the Regulatory Commission, in the facts of
the case, arises not only from the statutory provisions
under the different Acts but also in terms of the contract
executed between the parties which has binding force.
[Para 49] [714-G-H; 715-A-B]
F
1.11. However, the grievance of the respondents that
enforcement of the purchase price at the rate determined
by the Regulatory Commission along with complete
prohibition on the right of the Non-conventional Energy
G Generator/Developers to sell generated power to the third
parties would compel them to shut down their projects,
is a matter of concern, even for the State Government. All
these projects, admittedly, were established in
furtherance of the scheme and the guidelines provided
H by the Central Government which, in turn, were adopted
TRANSMISSION CORPN. OF AP. LTD v. SAi RENEWABLE 645
POWER PVT. LTD.
with some modification by the State Government. The
A
State Electricity Board implemented the said scheme and
initially had permitted sale of generated electricity to third
parties, however, subsequently and after formation of the
Regulatory Commission which, in turn, took over the
functions of the State Electricity Board, the incentives
B
were modified and certain restrictions were placed. The
reasons for these restrictions have been stated in the
affidavit filed on behalf of the appellants which is not a
matter to be examined by this Court in exercise of its
extra-ordinary jurisdiction. These matters, essentially, c
must be examined by expert ~odies particularly, when
such bodies are constituted ~nder the provisions of a
special statute. [Paras 49 and 50] [715-B-C-E-H]
2.1. It is not correct to say that the developers have
legitimate right to expect that the incentives as provided
D
to them in furtherance of the letters and orders of the
Central as well as the State Government were to be
continued indefinitely and the authorities concerned
were estopped from altering the rates and I or imposing
the condition of no sale to third parties. For the principle
E
of estoppel to be attracted, there has to be a definite and
unambiguous representation to a party which then
should act thereupon and then alone the consequences
in law can follow. The Tribunal has erred in law in
treating the inter-se letters and guidelines between the
F
Government of India, State Government and the
Commission/the State Electricity Board as unequivocal
commitments to the respondent/purchasers/generators/
developers so as to bind the State for all times to come.
In the instant cases, the policy guidelines issued by the
G
Central Government were the proposals sent to the State
Government, which the State Government accepted to
'
consider, amend or alter as per their needs and
conditions and then make efforts to achieve the objects
of encouraging non-conventional energy generators and
H
646
SUPREME COURT REPORTS
[2010) 8 S.C.R.
A
purchasers to enter into this field. These are the matters,
which will squarely fall within the competence of the
Regulatory Commission/the State Electricity Board at the
relevant points of time. Besides that, there was no definite
and clear promi5-~ made by the authorities to the
s developers that would invoke t\e principle of promissory
estoppel:"Undoubtedly, to encourage participation in the
,
.
field of generation of energy through non-conventional
methods, some incentives were provided but these
incentives ,u_nder the guidelines as well as under the
c PPAs signed between the parties from time to time were
subject to review. In any case, the matter was completely
put at rest by the order of 20th June, 2001 and the PPAs
voluntarily signed by the parties at that time, which had
also provided such stipulations. If such stipulations were
0
not acceptable to the parties they ought to have raised
objections at that time or at least within a reasonable time
thereafter. The agreements have not only been signed
by the parties but they have been fully acted upon for a
substantial period. [Para 36] [702-F-H; 703-A-F]
E
2.2. The principle of promissory estoppel, even if, it
was applicable as such, the Government can still show
that equity lies in favour of the Government and can
discharge the heavy burden placed on it. In such
circumstances, the principle of promissory estoppel
F
would not be enforced against the Government as it is
primarily a principle of equity. [Para 37] [703-H; 704-A-B]
2.3. It is a settled canon of law that doctrine of
promissory estoppel is not really based on principle of
G estoppel but is a doctrine evolved by equity in order to
prevent injustice. There is no reason why it should be
given only a limited application by way of defence. It can
also be the basis of a cause of action. Once the
ingredients of promissory estoppel are satisfied then it
could be enforced against the authorities including the
H
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 647
POWER PVT. LTD.
State with very few extra ordinary exceptions to such A
enforcement. [Para 37] [704-A-B]
2.4. Even if it is assumed that there was a kind of
unequivocal promise or representation to the
respondents, the reviews have taken place only after the
8
period specified under the guidelines and/or in the PPAs
was over. This is a matter which, primarily, falls in the
rea!m of contract and the parties would be governed by
the agreements that they have signed. Once these
agreements are signed and are enforceable in law then
the contractual obligations cannot be frustrated by the aid C
of promissory estoppel. [Para 37] [704-D-F]
2.5. If the Promise is made in regard to a present or
existing facts, the principle of estoppel can be enforced
against the Government. But a promise in relation to a D
future transaction or act may not fall within the ambit of
promissory estoppel. [Para 38] [705-G]
Union of India v. Mis. Inda-Afghan Agencies Ltd. (1968)
2 SCR 366; Century Spinning and Manufacturing Company
Ltd. v. The Ulhasnagar Municipal Council (1970) 1 SCC 582;
E
Motilal Padampat Sugar Mills. Co. Ltd. v. State of Uttar
Pradesh (1979) 2 SCC 409, relied on.
2.6. In our country, the law of promissory estoppel
has attained certainty . It is only an unambiguous and
F
definite promise, which is otherwise enforceable in law
upon which, the parties have acted, comes within the
ambit and scope of enforcement of this principle and
binding on the parties for their promise and
representation. In the instant case, the guidelines cannot G
take the colour of a definite promise which in the letters
of the Central Government itself was proposals to the
State Government. Besides that, even if the State letters/
circulars are treated as promise or representations to the
private parties like the respondents even then, they lead
H
648
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A
to the execution of a definite contract between the parties
which will purely fall io the domain of contractual law.
These contracts specifically provided for review and
when reviewed in the year 2001 parties not only accepted
the order but executed contracts (PPAs) in furtherance
B of it. In these circumstances, it is not correct to say that
the State or the Regulatory Commission or erstwhile
State Electricity Board were bound to allow same tariff
and permit third party sales for an indefinite period. To
this extent, authorities, in any case, would not be bound
C by the principle of estoppel. [Para 41] [707-F-H; 708-A-B]
2.7. Besides, the State of Andhra Pradesh was neither
impleaded as a party to the proceedings before the
Regulatory Commission nor before the Tribunal. In fact,
the Tribunal has referred to various acts and deeds of the
D State and consequences thereof, but did not consider it
appropriate to implead the State Government as a party
to the proceedings.
The presence of the State
Government before the Tribunal could have certainly
been appropriate, inasmuch as the State would have
E placed before the Appellate Authority and the Regulatory
authorities, its views in regard to revision of incentives
as well as the purchase price. The State of Andhra
Pradesh was a necessary, in any case, a proper party in
F
these proceedings. [Para 48] [714-C-F]
BSES Ltd. v. Tata Power Co. Ltd. (2004) 1 SCC 195;
Andhra Pradesh Electricity Regulatory Commission v. R. V.K.
Energy Private Limited (2008) 17 SCC 769, relied on.
3.1. To frustrate a contract on the ground of duress
G or coercion, there has to be definite pleadings which
have to be substantiated normally by leading cogent and
proper evidence. However, in the case where summary
procedure is adopted like in the instant case, at least
some documentary evidence or affidavit ought to have
H been filed raising this plea of duress specifically. Nothing
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 649
POWER PVT. LTD.
was brought to the notice of the Court to state the plea
of duress and to prove the alleged facts which
constituted duress, so as to vitiate and/or even partially
reduce, the effect of the PPAs. On the one hand, the
Tribunal appears to have doubted the binding nature of
the contracts stating that it contained unilateral
conditions introduced by virtue of Order and approval of
the Regulatory Commission, while on the other hand, it
proceeded on the presumption that PPAs are final and
binding and still drew the conclusion that the Regulatory
Commission could not revise the tariff. Even in the order,
no facts have been pointed out which, in the opinion of
the Tribunal, constituted duress within the meaning of the
Contract Act so as to render the contract voidable. In the
instant case, it is significant to note that the PPAs were
executed prior and subsequent to the issuance of the
order dated 20th June, 2001. Different persons executed
the contracts at different times in full awareness of the
terms and conditions of such PPA. Therefore, the Tribunal
was not right in recording the findings that the PPAs
executed by the parties, were result of some duress and,
thus, it will not vest the authorities with the power to
review the tariff and other granted incentives. [Para 42]
[708-C-H]
3.2. Besides, none of the generators had challenged
A
B
c
0
E
the agreements and, in fact, except in arguments before
F
the Tribunal no case was made out for the purposes of
vitality of the contract or any part thereof. On the
contrary, all the generators under all the branches of nonconventional energies, have accepted the contract and
proceeded on the basis that the said contracts are
G
binding and still the Regulatory Commission does not
have any power or jurisdiction to revise the tariff or deal
with the concessions. Even otherwise, firstly, there are
no facts on record, much less, supported by any
documentary or any other evidence to sustain the plea
H
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(2010] 8 S.C.R.
A that the contracts (PPAs) are a result of undue influence
or duress by the State or its agencies upon the
generators. Secondly, the generators have already taken
benefit of that contract which was based on the policy
of the State as well as the order of the Regulatory
B Commission. Having attained those benefits, it will
hardly be of any help to the generators particularly, in the
facts and circumstances of the case, to substantiate,
justify or argue the plea of duress. [Para 42] [709-A-G]
C
Bir/a Jute Manufacturing Co. v. State of M.P. (2002) 9
sec 667, relied on.
3.3. The finding of the Tribunal that "out of
compulsion some of the developers entered into Power
Purchase Agreement with APTRANSCO accepting the
D terms and conditions set out in order dated 20th June,
2001" is not substantiated by any material on record.
What was the compulsion and what were the facts which
persuaded the Tribunal to take such a view are
conspicuous by their very absence. A compulsion
E leading to execution of a contract is a matter entirely
based upon facts. It is difficult for this Court, originally,
to infer duress or compulsion in absence of specific
pleadings and materials in that behalf. [Para 44] [710-DF]
F
4. In the instant case, the order dated 20th June, 2001
was fully accepted by the parties without any reservation.
After the lapse of more than reasonable time of their own
accord they voluntarily signed the PPA which contained
a specific stipulation prohibiting sale of generated power
G by them to third parties. The agreement also had renewal
clause empowering TRANSCO/APTRANSCO/ Board to
revise the tariff. Thus, the documents executed by these
parties and their conduct of acting upon such
agreements over a long period, bind them to the rights
H and obligations stated in the contract. The parties can
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 651
POWER PVT. LTD.
hardly deny the facts as they existed at the relevant time,
A
just because it may not be convenient now to adhere to
those terms. Conditions of a contract cannot be altered/
avoided on presumptions or assumptions or the parties
having a second thought that a term of contract may not
be beneficial to them at a subsequent stage. They would
B
have to abide by the existing facts, correctness of which,
they can hardly deny. Such conduct, would be hit by
allegans contraria non est audiendus. [Para 39] [705-F-H;
706-A-B]
Kusumam Hotels (P) Ltd. v. Kera/a Seb (2008) 13 SCC
C
213, relied on.
Pawan Alloys v. UPSEB (1997) 7 SCC 251, referred to.
5.1. The expression 'tariff' as explained in the Law
D
Lexicon* is a "determinatiorl,, ascertainment, a table of
rates of export and import duties, in which sense the word
has been adopted in English and other European
languages and as defined by the law dictionaries the
word 'tariff' is a cartel of commerce; a book of rates; a
E
table or catalogue, drawn usually in alphabetical order,
containing the names of several kind of merchandise,
with the duties or customs to b~ paid for the same as
settled by the authcyity or agreeti between the several
princes and States that hold com"1erce together." It has
also been explained as a scheduil:!, system, or scheme
F
of duties imposed by the Government of a country upon
goods imported or exported; published volume of rate
schedules and general terms and conditions under which
a product or service will be supplied; a document
approved by the responsible regulatory agency listing the
G
terms and conditions including a schedule of prices,
under which utility services will be provided. [ Paras 28
and 29] [693-F-H; 694-A-C]
*Law Lexicon with legal Maxims, L[atin terms and Words
H
652
SUPREME COURT REPORTS
[2010] 8 S.C.R.
A and Phrases (Second Edition 1997) - referred to.
5.2. The expression 'purchase price' has to be given
its limited meaning, i.e. the price paid for purchasing a
good and in the context of the instant case, price at which
8 generated electricity will be sold to the specified
agencies. The term 'purchase price' indicated in the
PPAs, as such, would be a matter within the realm of
contract but this is subject to the changes which are
contractually and/or even statutorily permissible.
Purchase price ultimately would form part of the tariff, as
C tariff relatable to a licensee or a consumer would have
essentially taken into account, the purchase price. The
purchase price may not include tariff but tariff would
always or is expected to include purchase price. [Para 29]
(694-B-D]
D
6. The order dated 20th June, 2001 passed by the
Andhra Pradesh Electricity Regulatory Commission has
attained finality and was not challenged in any
proceedings so far. This judgment shall not, therefore,
E be in detriment to that order which will operate
independently and in accordance with law. [Para 52] [717H; 718-A-B]
7.1 The specialized performance of functions that are
assigned to Regulatory Commission can hardly be
F assumed by any other authority and particularly, the
courts in exercise of their judicial discretion. The Tribunal
constituted under the provisions of the Electricity Act,
2003, again being a specialized body, is expected to
examine such issues, but this Court in exercise of its
G powers under Article 136 of the Constitution would not
sit as an appellate authority over the formation of opinion
and determination of tariff by the specialized bodies. This
question is itself open to be considered by the
appropriate authority at the appropriate stage.
H Determination of tariff is a function assigned legislatively
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 653
POWER PVT. LTD.
to a competent forum/authority. Whether it is by exercise
A
of legislative or subordinate legislative power or a policy
decision, if the Act so requires, but it generally falls in the
domain of legislative activity and the courts refrain from
adverting into this arena. It would be termed as illegal if
statutorily prescribed procedure is not followed or it is so
B
perverse and arbitrary that it hurts the judicial conscience
of the court making it necessary for the court to
intervene. Even in the instant case the scope of
jurisdiction is a very limited one. [Para 17, 18] [679-F-H;
680-A-B; D-E]
C
Association of Industrial Electricity Users v. State of
Andhra Pradesh (2002) 3 SCC 711; West Bengal Electricity
Regulatory Commission
v. CESC Ltd. (2002) 8 SCC 715,
relied on.
7.2. The matters are remanded to the Andhra Pradesh
Electricity Regulatory Commission with a direction that
D
it shall hear the Non-conventional energy generators
afresh and fix/ determine the tariff for purchase of
electricity in accordance with law, expeditiously. It shall
E
also re-examine that in addition to the above or in the
alternative, whether it would be in the larger interest of
the public and the State, to permit sale of generated
electricity to third parties, if otherwise feasible. The
Andhra Pradesh Electricity Regulatory Commission shall
F
consider and pronounce upon all the objections that may
be raised by the parties appearing before it, except
objections in relation to its jurisdiction, plea of estoppel
and legitimate expectancy against the State and/or
APTRANSCO and the plea in regard to PPAs being result
G
of duress as these issues stand concluded by this
judgment. It is directed that State of Andhra Pradesh shall
be added as a party respondent in the proceedings and
the Andhra Pradesh Electricity Regulatory Commission
shall grant hearing to the State during pendency of
proceeding before it. [Para 52] [717-C-H; 718-A-C]
H
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SUPREME COURT REPORTS
[2010] 8 S.C.R.
A
Case Law Reference:
(2002) 3 sec 111
Relied on.
Para 18
(2002) 8 sec 115
Relied on.
Para 19
B
(2010) 4 sec so3
Relied on.
Para 30
2009 (7) SCALE 513
Referred to.
Para 31
(1968) 2 SCR 366
Relied on.
Para 38
(1970) 1 sec 582
Relied on.
Para 38
c
(1979) 2 sec 409
Relied on.
Para 38
(1997) 1 sec 251
Referred to.
Para 38
(2008) 13 sec 213
Relied on.
Para 40
D
(2002) 9 sec 667
Relied on.
Para 43
(2004) 1 sec 195
Relied on.
Para 47
(2008) 11 sec 769
Relied on.
Para 47
E
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2926 of 2006.
From the Judgment and Order dated 02.06.2006 of the
Appellate Tribunal for Electricity, New Delhi in Appeals No. 1,
F 2, 5, 6, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20, 21, 22, 34, 47,
52, 58, 67 and 80 of 2005.
With
C.A. No. 5940/2006
G
C.A. No. 5941/2006
C.A. No. 5942/2006
C.A. No. 5943/2006
H
C.A. No. 5944/2006
TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 655
POWER PVT LTD.
C.A. No. 5945/2006
C.A. No. 5946/2006
C.A. No. 5947/2006
C.A. No. 5948/2006
C.A. No. 5949/2006
C.A. No. 5950/2006
C.A. No. 5951/2006
C.A. No. 5952/2006
C.A. No. 5953/2006
C.A. No. 5954/2006
C.A. No. 5955/2006
C.A. No. 5956/2006
C.A. No. 5957/2006
C.A. No. 5958/2006
C.A. No. 5959/2006
C.A. No. 5960/2006
C.A. No. 5961/2006
C.A. No. 3091/2006
C.A. No. 5962/2006
C.A. No. 5963/2006
C.A. No. 5964/2006
C.A. No. 3884/2006
C.A. No. 5966/2006
A
B
c
D
E
F
G
H
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SUPREME COURT REPORTS
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A
C.A. No. 5967/2006
C.A. No. 5968/2006
C.A. No. 5969/2006
8
C.A. No. 5970/2006
C.A. No. 5971/2006
C.A. No. 5972/2006
C.A. No. 5973/2006
c
C.A. No. 5974/2006
C.A. No. 5975/2006
C.A. No. 5976/2006
D
C.A. No. 5977/2006
C.A. No. 5978/2006
C.A. No. 5979/2006
E
C.A. No. 5980/2006
C.A. No. 5981/2006
C.A. No. 5982/2006
C.A. No. 5983/2006
F
C.A. No. 5984/2006
C.A. No. 5985/2006
C.A. No .. 5986/2006
G
C.A. No. 5987/2006
C.A. No. 3910/2006
C.A. No. 5988/2006
H
TRANSMISSION CORPN. OF AP. LTD v. SAi RENEWABLE 657
POWER PVT. LTD.
C.A. No. 5989/2006
C.A. No. 5990/2006
C.A. No. 5991/2006
C.A. No. 4106/2009
Gopal Subramanium S.G., L.N. Rao, Challa Kodandaram,
A
B
Raju Ramachandran, Shiva Rao P., A. Subba Rao, A.T. Rao,
K.V. Mohan, Suyodhan Byrapaneni, G Ramakrishna Prasad,
T.V. Ratnam, K Subba Rao, P. Ramesh Babu, T.V. George, Y
Vismai Rao, Y Raja Gopala Rao, K Parameshwar,
C
Khwairakpam Nobin Singh, Rohit Rao, Kamal Bhudhiraja,
Siddharth Bawa, (for Dua Associates), B Kanta Rao, Sudha
Gupta, M Srinivas R Rao, S Chandra Shekhar, B Gopal Reddy,
Manoj Kumar, R.V. Kameshwaran, Ravi Shastri, Vinita
Sasidharan, S. Udaya Kumar Sagar, Bina Madhavan, (for
D
Lawyers' Knit & Co.), Anil Kumat Tandale, V.G. Pragasam,
Anagha S. Desai, John Mathew Guntur Prabhakar, Rohit Rao
M., Ariban Guneshwar Sharma for the appearing parties.
The Judgment of the Court was delivered by
SWATANTER KUMAR, J. 1. Andhra Pradesh Electricity
Regulatory Commission (for short 'Regulatory Commission')
was created in furtherance to the provisions of the Andhra
Pradesh Electricity Reform Act, 1998 (hereinafter referred to
E
as the 'Reform Act, 1998') enacted by the State legislature
F
which received the assent of the President on 21st December,
1998 and became effective w.e.f. 1st February, 1999. The
Commission initiated suo motu proceedings for determination
of tariff applicable to the Non-Conventional Energy generation
projects of Andhra Pradesh, which was to take effect from 1st
G
April, 2004 onwards. After hearing the Non-Conventional Power
Project Developers, the Non-Conventional Energy
Development Corporation of Andhra Pradesh Ltd. and
Transmission Corporation of Andhra Pradesh Ltd. (for short
referred to as 'NEDCAP' and 'APTRANSCO' respectively), the
H
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[2010] 8 S.C.R.
A
Regulatory Commission, vide its detailed order dated 20th
March, 2004, arrived at certain conclusions and fixed the energy
purchnse rates at base unit price of Rs. 2.25 as on 1st
April,1994 and the escalation index of 5% p.a., but the
escalation would be simple and not to be compounded every
B year. In other words, the base price as on 1st April, 2004 will
be Rs.3.37 per kwh. As these projects have no variable
expenses and negligible increase in maintenance cost, the tariff
will be frozen for a period of five year, which however, is to be
reviewed thereafter. The Regulatory Commission also issued
c certain instructions to restrict and regulate various operations
and other aspects. It restricted the sale, procurement and
distribution of electricity by the Developers to any other party
except APTRANSCO. After passing of the order dated 20th
March, 2004 an application for review was filed by the
D Developers before the Regulatory Commission. The order was
clarified to some extent on this review application vide order
dated 7th July, 2004. Aggrieved from both these orders the
Developers filed independent appeals under Section 111 (1) of
the Electricity Act, 2003 collectively against the order dated 2oth
March, 2004 as modified by order dated 7th July, 2004. These
E appeals came up for hearing before the Appellate Tribunal for
Electricity (for short the 'Tribunal') which decided all these
appeals by a common order dated 2nd June, 2006. The
Tribunal granted certain relief to the appellants before it, who
are the respondents in the present appeals, holding that there
F was some element of duress in execution of the purchase price
agreements. The Power Purchase Agreement (for short 'PPA')
was a statutory document and the Regulatory Commission had
no authority to interfere with the same. It could not even be
altered by the Regulatory Commission. One of the most
G important finding recorded by the Tribunal was that the
Regulatory Commission has neither the power nor jurisdiction
to compel the Developers to sell the power generated by them
to APTRANSCO and/or DISCOM.