Case Note & Summary
The dispute arose from a Power Purchase Agreement dated 30.05.1996 between Gujarat Electricity Board, the predecessor-in-interest of Gujarat Urja Vikas Nigam Limited, and Essar Power Limited for purchase of electricity from EPL's plant at Hazira. EPL had a total installed capacity of 515 MW, of which 300 MW was allocated to GEB and 215 MW to Essar Steel Limited, EPL's sister company, in the proportion 58.25:41.75 rounded to 58:42. GEB alleged that EPL supplied more power to ESL than its allocated share from GEB's allocated capacity, leading to a demand for recovery. GEB initially computed a recovery of ₹64 Crores for diversion from 1998 to September 2004, but later stated that this was not a final settlement and electricity duty would also be chargeable. After GUVNL came into existence, it filed a claim before the Gujarat Electricity Regulatory Commission under Section 86(1)(f) of the Electricity Act, 2003, seeking adjustment of tariff for wrongful allocation and deemed generation incentive. GERC's order dated 18.02.2009 partly allowed GUVNL's claims, holding that EPL was obligated to declare capacity from its entire generating station and that supply had to be made in proportion to allocated capacity; claims prior to 14.09.2002 were barred by limitation except the ₹64 Crores settlement; and for subsequent periods, diversion in excess of proportionate principle was to be treated as supply by GUVNL to ESL with compensation. Both parties appealed to APTEL, which by judgment dated 22.02.2010 reversed in part, holding that EPL was not required to declare entire plant capacity and GUVNL was not entitled to compensation. GUVNL appealed to the Supreme Court. Civil Appeal No. 3454 of 2010 on limitation was dismissed on 02.09.2011, while Civil Appeal No. 3455 of 2010 was allowed on 09.08.2016, reported as Gujarat Urja Vikas Nigam Limited v. Essar Power Limited, (2016) 9 SCC 103, setting aside APTEL and restoring GERC's order dated 18.02.2009. GERC then decided Petition No. 972 of 2009 on 27.12.2019, which was challenged by both sides in appeals before APTEL. APTEL's common judgment dated 21.03.2025 in Appeal Nos. 138 of 2021 and 201 of 2023 is the subject of the present appeals under Section 125 of the Electricity Act. The core legal issue was the correct interpretation of the earlier Supreme Court decision, as both parties claimed it favoured their position. The Court emphasized that the earlier decision must be read as a whole, not by picking disjointed paragraphs. The excerpt does not include the final operative order, but the Court was analyzing the proportionate allocation principle and its impact on fixed charges reimbursement. Arguments included GUVNL's contention that EPL diverted its allocated share and that the proportionate principle could not be abandoned, while EPL relied on the earlier decision and contested GUVNL's claims. The final decision is not included in the provided judgment excerpt.
Headnote
A) Electricity Law - Statutory Appeal - Maintainability - Electricity Act, 2003, Section 125 - The Supreme Court considered appeals filed under Section 125 against APTEL's common judgment; because both parties placed rival interpretations on the earlier Supreme Court decision, a substantial legal question arose, making the appeals maintainable. Held that maintainability stands settled due to the existence of a substantial question of law (Para 11). B) Judicial Precedent - Interpretation of Prior Ruling - Whole Judgment Reading - Electricity Act, 2003, Section 125 - The Court held that the earlier decision in Gujarat Urja Vikas Nigam Limited v. Essar Power Limited, (2016) 9 SCC 103 must be read as a whole and in its entirety, not by disjointed reading of specific paragraphs or sentences, to glean its findings and ratio decidendi (Para 12). C) Contract Interpretation - Power Purchase Agreement - Proportionate Allocation Principle - Electricity Act, 2003, Section 86(1)(f) - GERC had held that the entire 515 MW capacity was allocated between GUVNL (300 MW) and ESL (215 MW) on a proportionate basis; if the proportionate principle was acceptable for recovery of fixed charges, it could not be abandoned for allocation of supply; EPL could not violate proportionate allocation for the benefit of any one party. Held that this finding must be kept in mind for the claim of reimbursement of fixed charges (Paras 14-15). D) Electricity Law - Regulatory Claim - Limitation - Electricity Act, 2003, Section 86(1)(f) - GERC held that GUVNL's claims prior to 14.09.2002 for adjustment of deemed generation incentive and diversion of allocated electricity were barred by limitation, except the settlement of ₹64 Crores for diversion from 1998 to September 2004; the Supreme Court's dismissal of Civil Appeal No. 3454 of 2010 confirmed the limitation finding. Held that claims for periods beyond three years before filing were time-barred (Paras 8-10).
Issue of Consideration
Whether the Appellate Tribunal for Electricity correctly interpreted the terms of the Power Purchase Agreement dated 30.05.1996 and the earlier Supreme Court decision in Gujarat Urja Vikas Nigam Limited v. Essar Power Limited, (2016) 9 SCC 103 regarding proportionate allocation and reimbursement of fixed charges.
Law Points
- Appeal under Section 125 maintainable if substantial question of law
- power purchase agreement terms binding
- proportionate allocation principle applies when fixed charges paid in proportion
- previous Supreme Court decision must be read as a whole
- limitation for regulatory claims under Section 86(1)(f)
