9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (4) TMI 1371 - SC - Indian LawsJurisdiction of State Commission to decide the tariff contrary to the agreement - altering Power Purchase Agreements (PPAs) - coercion to enter into PPA - HELD THAT - There was never any provision, which mandated prior approval by the state commission, of PPAs entered into, by parties, in exercise of their free choice, in relation to renewable energy sources. As a matter of fact, in the case of renewable power, the state commission had approved a model PPA. Further, the tariff terms and conditions to the extent decided are by the Central Commission and not by the State Commission. These are incorporated in the model PPA. Neither the commission, nor the contesting respondents, during the hearings in the present appeals, were able to point out any provision in the PPA in the present case, which conflicted with any provision of the model PPA, or any express regulation. Furthermore, it was not established how in the absence of any reference to the Multi Year Tariff Regulations, they were applicable to PPAs relating to renewable energy sources. Whether change in the REC Regulations obliged revision of the PPA in this case? - HELD THAT - An important factor which cannot be lost sight of is that all the respondent s WPDs were registered, under the REC Regulations, based on the state commission s tariff order, of 2010. It is undisputed, that to register under the REC Regulations 2010, an entity (such as WPDs) had to be (a) accredited, with a State Agency (defined by Regulation 2 (n) of the REC Regulations as an agency designated by the State Commission to act as the agency for accreditation and recommending the renewable energy projects for registration ) and an entity not having any power purchase agreement for the capacity related to such generation to sell electricity at a preferential tariff determined by the Appropriate Commission . In the present case, the PPA was entered into by the parties on 29.03.2102, within the control period stipulated in the tariff order of 2010. The change in the REC Regulations 2010, whereby the Explanation to Regulation 5 was amended resulted in a change. The pre-existing clause that the power would be at a price not exceeding pooled cost of the power purchase was altered to at the pooled cost of power purchase . This change, was through the Second Amendment (to the REC Regulations), carried out on 10.07.2013. It is a matter of record, that for the period between 29.03.2102 and 10.07.2013 - and indeed, after the Second Amendment, no difficulty was experienced in the pricing mechanism agreed by the parties, under the PPA. It was on 10.12.2013 that the respondent WPD approached the state commission for re-determination of tariff. Clearly, this was an opportunistic attempt to derive advantage from the change, brought about by the Second Amendment, and seek to have it applied to an existing contract, which cannot be countenanced. In view of these reasons, it is held that the reasoning of APTEL, and the State Commission cannot be upheld. Applicability of the Second Amendment to pre-existing contracts- the general law - HELD THAT - It is held that agreements, such as the PPAs in the present case, entered into, voluntarily by the parties, before the Second Amendment, were not affected, by its terms. The findings to the contrary in the impugned order, are set aside. Were the respondents coerced into entering into PPAs - HELD THAT - It is incomprehensible how such an allegation could have been entertained and incorporated as a finding, given that the respondents are established companies, who enter into negotiations and have the support of experts, including legal advisers, when contracts are finalized. The findings regarding coercion are, therefore, wholly untenable. This court is also of the opinion that the casual approach of APTEL, in not reasoning how such findings could be rendered, cannot be countenanced. As a judicial tribunal, dealing with contracts and bargains, which are entered into by parties with equal bargaining power, APTEL is not expected to casually render findings of coercion, or fraud, without proper pleadings or proof, or without probing into evidence. The findings of coercion are therefore, set aside. Thus, it is held that the concurrent findings and orders of the State Commission and APTEL cannot be sustained. They are accordingly set aside - appeal allowed.
Issues Involved:
1. Jurisdiction of the State Commission in altering Power Purchase Agreements (PPAs). 2. Applicability of amendments to the Renewable Energy Certificate (REC) Regulations on existing PPAs. 3. Allegations of coercion or duress in the execution of PPAs. 4. The enforceability of PPAs without prior approval from the State Commission. Issue-wise Detailed Analysis: 1. Jurisdiction of the State Commission in altering Power Purchase Agreements (PPAs): The appellants argued that the State Commission had no jurisdiction to alter the tariff agreed in the PPAs, which were governed by the Central Electricity Regulatory Commission (CERC) Regulations 2010. They contended that the Central Commission had clarified that tariffs agreed upon in PPAs prior to the amendment of REC Regulations in 2013 would remain valid for the entire duration of the PPA. The court held that the State Commission's role was to regulate the purchase and procurement process of distribution licensees, including the price, but it could not unilaterally alter the terms of a PPA that was lawfully entered into by the parties. 2. Applicability of amendments to the Renewable Energy Certificate (REC) Regulations on existing PPAs: The Second Amendment to the REC Regulations changed the pricing mechanism, but it was clarified that this amendment would apply prospectively and would not affect PPAs executed at a tariff lower than the Average Pooled Power Purchase Cost (APPC) prior to the amendment. The court held that amendments to laws or regulations are generally prospective unless expressly stated otherwise, and the Second Amendment did not retroactively affect existing contracts. Therefore, the terms of the existing PPAs, which were entered into before the amendment, remained binding on the parties. 3. Allegations of coercion or duress in the execution of PPAs: The respondents claimed that the PPAs were entered into under coercion or duress due to unequal bargaining power. However, the court found no substantial evidence or specific pleadings to support these allegations. It emphasized that mere allegations without detailed particulars and evidence are insufficient to establish coercion. The court referred to previous judgments, highlighting that claims of coercion must be substantiated by clear evidence, which was lacking in this case. 4. The enforceability of PPAs without prior approval from the State Commission: The respondents argued that the PPAs were unenforceable as they were not approved by the State Commission. The court rejected this argument, stating that there was no regulatory requirement for prior approval of PPAs related to renewable energy sources. It noted that the model PPA approved by the State Commission did not require such approval, and the terms of the PPA in question did not conflict with any express regulation or the model PPA. Therefore, the absence of prior approval did not affect the enforceability of the PPAs. Conclusion: The Supreme Court set aside the concurrent findings and orders of the State Commission and the Appellate Tribunal for Electricity (APTEL), holding that the PPAs were enforceable as per their original terms. The appeals were allowed, with costs awarded to the appellants. The court emphasized the sanctity of contracts freely entered into by parties and the prospective nature of regulatory amendments unless expressly stated otherwise.
|
