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

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1844 OF 2020

SOUTHERN POWER DISTRIBUTION POWER COMPANY LIMITED OF ANDHRA PRADESH (APSPDCL) & ANR. ...APPELLANT(S)

VERSUS

M/S HINDUJA NATIONAL POWER CORPORATION LIMITED & ANR. .... RESPONDENT(S)

JUDGMENT

B.R. GAVAI, J.

1. The present appeal filed by the appellants –

Distribution Companies (hereinafter referred to as “the

appellants ­ DISCOMS”) challenges the judgment and order

dated 7th January, 2020, passed by the Appellate Tribunal for

Electricity, New Delhi (hereinafter referred to as “the APTEL”)

in Appeal No. 41 of 2018, thereby allowing the appeal filed by

the respondent No.1 – M/s Hinduja National Power 2

Corporation Limited (hereinafter referred to as “HNPCL”). By

the impugned judgment and order, the APTEL has directed

the Andhra Pradesh Electricity Regulatory Commission

(hereinafter referred to as “the State Commission”) to dispose

of O.P. No.21 of 2015 filed by HNPCL for determination of

capital cost and O.P. No.19 of 2016 filed by the appellants –

DISCOMS for approval of amended and restated Power

Purchase Agreement (hereinafter referred to as “PPA”)

(Continuation Agreement) on merits.

2. The facts, in brief, giving rise to the present appeal

are as under:

3. The erstwhile Andhra Pradesh State Electricity Board

(hereinafter referred to as “APSEB”) entered into a

Memorandum of Understanding (hereinafter referred to as

“MoU”) with HNPCL on 17th July, 1992. As per the said MoU,

APSEB transferred all the licenses, approvals, clearance and

permits, fuel linkage, water required for establishment of the

power project at Visakhapatnam in the erstwhile State of 3

Andhra Pradesh, to HNPCL to generate and supply the

electricity to APSEB.

4. An initial PPA was entered into between APSEB and

HNPCL on 9th December, 1994. On 25th July, 1996, the

Central Electricity Regulatory Commission (CERC) granted a

Techno Economic Clearance for the power project for an

estimated cost of Rs.4628.11 crores (Rs. 4.45 crores per MW).

5. Owing to certain change in conditions, the parties

agreed to amend the initial PPA. Accordingly, an Amended

and Restated PPA dated 15th April, 1998, was entered into

between APSEB and HNPCL. Between the years 1998 and

2007, the Amended and Restated PPA, for sale of power by

HNPCL to APSEB, was not implemented. Subsequently, in

the year 2007, HNPCL approached the Government of Andhra

Pradesh to revive the power project mainly structuring it as a

merchant plant, offering 25% of the power generated to the

State and balance 75% power to third parties. However, it

appears that there were negotiations between the parties, and

the State Government had offered to purchase 100% power 4

generated from the plant of HNPCL and that HNPCL had

agreed to it. The same would be clearly evident from the

material placed on record, to which we will be referring

hereinafter.

6. The material placed on record would reveal that in

the year 2011­2012, the Central Power Distribution Company

of Andhra Pradesh Limited (hereinafter referred to as

“APCPDCL”) for and on behalf of four Distribution Companies

of Andhra Pradesh (hereinafter referred to as “APDISCOMS”)

had initiated the process for procurement of power under

Case­1 long term bidding route, to meet the base load

requirements of APDISCOMS from the years 2014­2015

onwards. In the said bidding process, HNPCL participated

and had successfully emerged as the second lowest bidder (L­

2 bidder). After the completion of the bidding process,

APCPDCL had filed O.P. No.55 of 2013 before the State

Commission for approval of the tariffs emerged in the said

bidding process. However, the State Level Expert Committee

for evaluation of Case­1 bidding (hereinafter to as “Bid 5

Evaluation Committee”) in its meeting dated 28 th September,

2012, had noted that, the State Government had informed

that the entire capacity of HNPCL was encumbered to the

State of A.P./APDISCOMS and was not available for

consideration under the tender. Accordingly, the Bid

Evaluation Committee had discarded HNPCL from the

bidding process.

7. In the meanwhile, there was a correspondence

between HNPCL and the State Government in the year 2012,

with regard to the steps to be taken for the development of

the project and requesting State support for scheduled

commissioning of the project. In this regard, HNPCL

addressed a letter dated 6th August, 2012 to the then Hon’ble

Chief Minister of the erstwhile State of Andhra Pradesh,

thereby conveying its intention to develop the project and

seeking State’s support. Vide communication dated 26 th

December, 2012, the State Government addressed a letter to

HNPCL accepting its proposal and agreeing to purchase 100%

power from the project of HNPCL as per the Amended and 6

Restated PPA. Vide communication dated 14 th January,

2013, HNPCL agreed to supply 100% power to the State­

Distribution Companies at the tariff to be determined by the

State Commission.

8. The HNPCL vide communication dated 16 th May,

2013, addressed to the appellants – DISCOMS, inter alia,

provided therein the details with regard to the estimated

capital cost of the power project to the tune of Rs.6098 crores

as against Rs.5545 crores that was given in June, 2010. The

appellants – DISCOMS vide communication dated 17 th May,

2013, expressed their reservations about the capital cost

furnished by HNPCL and reserved their rights to contest the

same before the State Commission.

9. On the same day, i.e., 17th May, 2013, a

Memorandum of Agreement (hereinafter referred to as “MoA”)

was entered into between the APDISCOMS and HNPCL,

thereby deciding to continue the Amended and Restated PPA

dated 15th April, 1998, on the terms and conditions set out

therein. In pursuance of the aforesaid MoA, a Fuel Supply 7

Agreement (“FSA” for short) dated 26 th August, 2013, came to

be entered between HNPCL and Mahanadi Coalfield Limited

for coal supply for the said project.

10. On 12th March, 2014, a petition being O.P. No.21 of

2015, came to be filed by HNPCL before the State

Commission for determination of capital cost for the project

and for determination of the tariff for such generation and

sale of electricity by HNPCL to APDISCOMS.

11. Thereafter, on 2nd June, 2014, the Andhra Pradesh

State Reorganisation Act, 2014, (hereinafter referred to as

“Reorganisation Act”) came into effect vide which the

erstwhile State of Andhra Pradesh was bifurcated into two

States, i.e., the State of Andhra Pradesh and the State of

Telangana.

12. On 28th July, 2015, HNPCL filed an Addendum

Application in O.P. No.21 of 2015, thereby enhancing the

capital cost of the project to Rs.8,087 crore. This capital cost

was disputed by the APDISCOMS.

8

13. On 11th January, 2016, the first unit of the Power

project (520 MW) was declared Commercial Operation Date

(COD) by HNPCL. Vide interim order dated 1 st March, 2016,

the State Commission fixed the provisional tariff at the rate of

Rs.3.61 per unit for supply of electricity by HNPCL to the

APDISCOMS.

14. On 30th March, 2016, HNPCL filed I.A. No.5 of 2016

in O.P. No.21 of 2015, for payment of variable charges and

fixed charges at Rs.1.80 per unit and Rs.2.16 per unit

aggregating to Rs.3.96 per unit at 80% availability.

15. On 28th April, 2016, distinct Power Distribution

Corporations were created including the appellants –

DISCOMS i.e. Southern Power Distribution Power Company

Limited of Andhra Pradesh (“APSPDCL”) and Eastern Power

Distribution Company of Andhra Pradesh (“APEPDCL”). These

corporations succeeded the APSEB, which had entered into

the Amended and Restated PPA dated 15 th April, 1998 with

HNPCL. As such, the Continuation Agreement to the 9

Amended and Restated PPA was entered into between the

appellants – DISCOMS and HNPCL on 28th April, 2016.

16. On 11th May, 2016, the appellants – DISCOMS filed a

petition being O.P. No.19 of 2016 before the State

Commission for approval of the Continuation Agreement

dated 28th April, 2016, read with the Amended and Restated

PPA dated 15th April, 1998.

17. The State Government vide order dated 1 st June,

2016, accorded approval for purchase of 100% power from

HNPCL.

18. On 3rd July, 2016, the second unit of the HNPCL (520

MW) came to be declared COD by HNPCL.

19. Vide order dated 6th August, 2016, the State

Commission re­determined the provisional tariff at the rate of

Rs.3.82 per unit, payable by the appellants – DISCOMS for

the power supplied by HNPCL.

20. On 15th May, 2017, the State Commission after

hearing the parties on merits, reserved the judgment in both 10

the petitions, i.e., in O.P. No.19 of 2016 and O.P. No.21 of

2015.

21. It is further to be noted that in the appeal arising out

of interlocutory proceedings, the APTEL vide order dated 1 st

June, 2017, directed the State Commission to dispose of O.P.

No.19 of 2016 and O.P. No.21 of 2015 on or before 14 th

August, 2017. The said period came to be extended from

time to time, the last of such extension was granted till 31 st

January, 2018, vide order dated 10 th January, 2018.

22. Thereafter, on 4th January, 2018, the appellants –

DISCOMS filed two Interlocutory Applications, viz., (i) I.A.

No.1 of 2018 in O.P. No.19 of 2016 for withdrawal of O.P.

No.19 of 2016 together with initial PPA; and (ii) I.A. No.2 of

2018 in O.P. No.21 of 2015 for disposal of O.P. No.21 of

2015.

23. Vide order dated 31st January, 2018, the State

Commission allowed withdrawal of O.P. No.19 of 2016 filed

by the appellants – DISCOMS seeking approval of PPA and 11

consequentially dismissed O.P. No.21 of 2015 filed by HNPCL

seeking determination of tariff.

24. Aggrieved by the same, an appeal being Appeal No.41

of 2018, came to be filed by HNPCL before the APTEL. The

said appeal came to be admitted by the APTEL vide order

dated 26th February, 2018. The APTEL vide order dated 16 th

March, 2018, passed in I.A. No.211 of 2018 in the said

appeal, as an ad hoc arrangement, directed the parties to

maintain status quo as prevalent prior to 31 st January, 2018.

This was without prejudice to the rights and contentions of

the parties in the main appeal, i.e., Appeal No.41 of 2018.

25. It is also to be noted that the order dated 16 th March,

2018, passed by the APTEL in I.A. No.211 of 2018 in Appeal

No.41 of 2018, came to be challenged by the appellants –

DISCOMS before the High Court of Andhra Pradesh by filing

Writ Petition being Writ Petition No.10814 of 2018. Another

writ petition being Writ Petition No.13689 of 2018 came to be

filed by the appellants – DISCOMS challenging the order of

the APTEL dated 26th February, 2018, admitting the appeal 12

filed by HNPCL. The said writ petitions came to be dismissed

by the High Court of Andhra Pradesh vide order dated 2 nd

May, 2018.

26. In the meantime, on 16th April, 2018, HNPCL had

filed an Execution Petition being Execution Petition No.3 of

2018 before the APTEL seeking execution of the order dated

16th March, 2018, passed by the APTEL in I.A. No.211 of

2018 in Appeal No.41 of 2018. Certain directions were

passed by the APTEL in the said Execution Petition vide order

dated 31st May, 2018.

27. The appellants – DISCOMS had also challenged the

order dated 16th March, 2018, passed by the APTEL, by way

of Civil Appeal No.5772 of 2018 before this Court. This Court

vide order dated 4th June, 2018, refused to interfere with the

said order, since it was an interim order. However, this Court

directed the appeal to be decided expeditiously without taking

into consideration the observations, in the order impugned

before it, as conclusive.

13

28. Vide impugned judgment and order dated 7th

January, 2020, the APTEL allowed the appeal filed by HNPCL

and directed the State Commission to dispose of O.P. No.21

of 2015 and O.P. No.19 of 2016. Being aggrieved thereby, the

appellants – DISCOMS have approached this Court by way of

the present appeal.

29. On 14th July, 2020, this Court passed the following

order in the present appeal:

“The appeal is admitted.

Until further orders, the impugned order passed by the Appellate Tribunal for Electricity New Delhi in Appeal No. 41/2019 shall remain stayed.

List for hearing after four weeks.”

30. An application being I.A. No.67061 of 2020 for

modification of the said order dated 14th July, 2020, came to

be filed by HNPCL. This Court vide order dated 21 st August,

2020, modified the order as under:

“Heard.

14 By order dated 14.07.2020, we directed the stay of impugned order passed by the Appellate Tribunal for Electricity, New Delhi, in Appeal No.41/2019.

We clarify that there shall be no stay of the order dated 16.03.2018 passed by the Appellate Tribunal for Electricity, New Delhi, providing for interim measure. Order accordingly.

The instant interlocutory application stands disposed of accordingly”

31. It appears from the record that during the

intervening period, certain Interlocutory Applications have

been filed from both the sides, wherein, the appellants –

DISCOMS are seeking vacation of the interim order dated 21 st

August, 2020, whereas HNPCL is seeking implementation of

the order dated 21st August, 2020. The record would show

that the matter has been adjourned from time to time and

was finally heard by this Court on 20th January, 2022.

32. We have heard Shri C.S. Vaidyanathan, learned

Senior Counsel appearing on behalf of the appellants –

DISCOMS and Dr. Abhishek Manu Singhvi and Shri M.G. 15

Ramachandran, learned Senior Counsel appearing on behalf

of HNPCL.

33. Shri C.S. Vaidyanathan, learned Senior Counsel

appearing on behalf of the appellants – DISCOMS, submitted

that the APTEL has grossly erred in holding that the

appellants – DISCOMS were not entitled to apply for

withdrawal of O.P. No.19 of 2016, filed for grant of approval

of the PPA. It is submitted that unless there was prohibition

in law, the appellants were very much within their right to

apply for withdrawal of the O.P. filed by them. In this regard,

Shri Vaidyanathan relied on the following authorities:

(i) Boal Quay Wharfingers Ltd. v. King’s Lynn

Conservancy Board1 and

(ii) Hulas Rai Baij Nath v. Firm K.B. Bass and

Co.2

34. Shri Vaidyanathan further submitted that the PPA

was not a valid document until it was approved by the State

Commission under Section 86(1)(b) of The Electricity Act,

1 (1971) 1 WLR 1558 [Court of Appeal, England) 2 (1967) 3 SCR 886 16

2003 (hereinafter referred to as “the Act of 2003”). He further

submitted that under Section 21 of The Andhra Pradesh

Electricity Reform Act, 1998 (hereinafter referred to as “the

Reform Act”), any agreement relating to generating,

transmitting, distribution or supply of energy without the

previous consent in writing of the Commission was void ab

initio. He submitted that by the impugned judgment, the

APTEL has, in effect, granted HNPCL a decree of specific

performance of a contract, which is void ab initio. He further

submitted that MoA dated 17th May, 2013 and the

Continuation Agreement dated 28th April, 2016 were

themselves contrary to the National Tariff Policy issued under

Section 3 of the Act of 2003 and Regulation 5.2(b) of the

Andhra Pradesh Electricity Regulatory Commission (Terms

and conditions for determination of tariff for supply of

electricity by a generating company to a distribution licensee

and purchase of electricity by distribution licensees)

Regulation, 2008 (Regulation No.1 of 2008) (hereinafter

referred to as ‘the Tariff Regulations’) issued by the State 17

Commission. As such, the direction by the APTEL, to

continue to get the electricity supply from HNPCL, being

contrary to the statutory provision, would not be tenable in

law.

35. Shri Vaidyanathan submitted that the present

project does not fall under any of the categories mentioned in

Regulation 5.2 of the Tariff Regulations, which aspect has not

been taken into consideration by the APTEL.

36. Shri Vaidyanathan further submitted that the finding

of the APTEL, that HNPCL had made huge investments on the

basis of the assurance given by the appellants – DISCOMS

that they will purchase 100% power from it, is itself

erroneous. He submitted that the initial project of HNPCL

was lying in cold storage from 1996 to 2007. He submitted

that in the year 2007, HNPCL had attempted to revive the

project as a Merchant­power plant. He submitted that the

project of HNPCL had also attained financial closure in the

year 2010. He further submitted that before the acceptance of

the proposal of HNPCL by the State Government, HNPCL had 18

already completed upto 93% of the project. It is therefore,

submitted that the finding that huge investments made by

HNPCL were on the basis of the representation by the State

Government is totally erroneous. In any case, he submits,

that the appellants – DISCOMS are independent authorities

and not bound by the decision of the State. He submitted

that under the scheme of the Act of 2003, the appellants –

DISCOMS cannot purchase the power without the prior

approval of the State Commission. He submits that the State

has no role to play in the said matter. It is submitted that, in

any case, the appellants – DISCOMS could not be bound by

the representation made by the State Government.

37. Shri Vaidyanathan further submits that since the re­

initiation of the project in the year 2007 by HNPCL is as a

Merchant­power plant, it can very well sell the power to the

third parties in the market. He submitted that however, the

appellants – DISCOMS cannot be compelled to purchase the

power from HNPCL, which will be at a very high price. He

submitted that the capital cost of the project, which was 19

initially estimated at Rs.4628.11 crores has now gone up to

Rs.8087 crores, which will have a direct effect on the

purchase price of the electricity by the appellants –

DISCOMS. He therefore submits that if the appellants –

DISCOMS are directed to purchase the electricity at such a

high price, the loss would be ultimately to the consumers and

as such, the direction given by the APTEL is also against the

public interest.

38. Per contra, Dr. Abhishek Manu Singhvi and Shri

M.G. Ramachandran, learned Senior Counsel appearing on

behalf of HNPCL submitted that the order passed by the

APTEL is such, which does not at all harm the appellants –

DISCOMS. Dr. Singhvi submitted that by the impugned

order, the APTEL has only directed the State Commission to

dispose of O.P. No.21 of 2015 filed by HNPCL for

determination of capital cost and O.P. No.19 of 2016 filed by

the appellants – DISCOMS for approval of Amended and

Restated PPA on merits.

20

39. Dr. Singhvi submits that the APTEL has given sound

and elaborate reasons and as such, no interference is

warranted in the present appeal.

40. Shri M.G. Ramachandran, learned Senior Counsel,

submitted that when withdrawal of an application is sought,

which has the effect of frustrating the contract and defeating

the defendant’s right, the appellants cannot be said to have

the right to withdraw the proceedings. He relied on the

following authorities in support of this proposition.

(i) Madhu Jajoo v. State of Rajasthan3 (ii) Kiran Girhotra & Ors. v. Raj Kumar & Ors.4

(iii) M. Radhakrisna Murthy v. Government of

A.P. & Ors.5

(iv) Smt. Ajita Debi v. Musst. Hossenara Begum6

(v) Mathuralal v. Chiranji Lal7

(vi) The Registrar, Manonmaniam Sundaranar

University v. Suhura Beevi8

41. Shri Ramachandran has further submitted that a

right of withdrawal is not an absolute right and that once the 3 AIR 1999 Raj 1 4 (2009) 164 DLT 483 5 (2001) 3 ALD 330 (DB) 6 AIR 1977 Cal 59 7 AIR 1962 Raj 109 8 AIR 1995 Mad 42 21

judgment is reserved there cannot be any further application

seeking withdrawal. In support of this proposition, he relied

on the following authorities:

(i) Arjun Singh v. Mohindra Kumar9

(ii) Bharati Behera v. Jhili Prava Behera10

(iii) Rabia Bi Qasim v. Countrywide Consumer

Financial Services Limited11

(iv) Pujya Sindhi Panchayat v. Prof. C.L.

Mishra12

(v) Yash Mehra v. Arundhati Mehra13

(vi) Dharani Sugars and Chemicals Limited v.

TMN Engineering Industry14

42. Dr. Singhvi, learned Senior Counsel, further

submitted that, as a matter of fact, HNPCL desired to start

the project as a Merchant­power plant. It is however, on the

insistence of the State of Andhra Pradesh that HNPCL was

compelled to supply 100% of power generated to the State. He

further submitted that it is evident from the record that

HNPCL had participated in the competitive bidding process

9 AIR 1964 SC 993 10 W.P. No.26254 of 2013 decided by Orissa High Court on 18.04.2014 11 ILR 2004 KAR 2215 12 AIR 2002 Rajasthan 274 (DB) 13 (2006) 132 DLT 166 14 CRP PD No.3309 to 3312 of 2011 and MP No.1 of 2011 decided by the Madras High Court on 30.08.2017 22

conducted by the APCPDCL. It was the decision of the Bid

Evaluation Committee, to not consider the bid submitted by

HNPCL on the premise that the entire generation capacity of

HNPCL’s project was already encumbered to the State of

Andhra Pradesh under the Amended and Restated PPA of

1998. He further submitted that not only this but the entire

communication placed on record would show that it was the

State Government, which had expressed its interest to

purchase 100% power from HNPCL’s project as per the

Amended and Restated PPA dated 15th April, 1998.

43. He further submitted that on the reorganisation of

the erstwhile State of Andhra Pradesh and its bifurcation into

two States, i.e., the State of Andhra Pradesh and the State of

Telangana; though the State of Telangana had demanded

54% of the power from HNPCL’s project, the Government of

Andhra Pradesh insisted HNPCL to supply 100% of the power

to the State of Andhra Pradesh. He therefore submits that the

APTEL has rightly, on appreciation of the material placed on

record, held that it was on the representation of the State 23

Government that the HNPCL had made huge investments for

the project. He submitted that the contention of the

appellants – DISCOMS, that if the power generated by the

HNPCL is purchased by them, it will be at a very heavy cost,

is totally erroneous. He submitted that, as a matter of fact,

when as per the interim orders passed by the APTEL and this

Court, the appellants – DISCOMS could have purchased the

power from HNPCL at the rate of Rs.3.82 per unit, the

appellants – DISCOMS are purchasing the power at a much

higher rate from the generators, which were ranked much

below HNPCL in the merit order. He further submits that the

conduct of the appellants – DISCOMS is totally mala fide.

When under the interim orders of this Court as well as of the

APTEL, they were bound to purchase the power at much

lesser price than compared to the rate at which they are

purchasing, they continued to purchase power at much

higher price. He therefore submits that such an act, apart

from being violative of the order of this Court, is contrary to

the public interest.

24

44. Dr. Singhvi further submits that on account of mala

fide attitude of the appellants – DISCOMS, it is not only

HNPCL, but also the public at large, who are the sufferers.

He submits that huge investment of thousands of crores of

rupees is lying idle. He further submits that apart from

generating employment for more than 1000 people, the

generation project, which is fully operational, would also

provide electricity in the State of Andhra Pradesh. He

submitted that the contention of the appellants – DISCOMS

that they had decided to withdraw the application on account

of huge capital cost and the power being available in excess is

also factually incorrect. He submits that recently the

appellants have entered into an MoU with SEMBCORP

Energy India in December, 2021 for generation of 625 MW of

electricity. He submits that insofar as the price at which the

electricity would be purchased by the appellants – DISCOMS

from the generation unit of HNPCL would be determined by

the State Commission, which will have to take into

consideration various aspects while approving the capital cost 25

of the project as well as while doing the exercise of

determination of tariff. The learned Senior Counsel therefore

submits that no interference is warranted in the present

appeal.

45. The facts in the present case are not much in

dispute. It is not in dispute that on 17 th July, 1992, an MoU

came to be entered between APSEB and HNPCL, vide which

APSEB had transferred all the licences, approvals, clearance

and permits, fuel linkage, water required for the project to

HNPCL. It is also not in dispute that on 9 th December, 1994,

an initial PPA came to be entered between HNPCL and

APSEB. On 25th July, 1996, the CERC granted a Techno

Economic Clearance for the power project for an estimated

cost of Rs.4628.11 crores (Rs.4.45 crores per MW). It is also

not in dispute that APSEB and HNPCL mutually agreed to

amend 1994 PPA and accordingly, an Amended and Restated

PPA came to be executed on 15 th April, 1998. It is also not in

dispute that from 1996 till 2007, the project remained in cold

storage. In the year 2007, the promoters of HNPCL 26

approached the then Hon’ble Chief Minister of the erstwhile

State of Andhra Pradesh. It appears that certain discussions

took place between the then Hon’ble Chief Minister of

erstwhile State of Andhra Pradesh and the promoters of

HNPCL. On 5th January, 2007, Mr. G.P. Hinduja addressed a

communication to the then Hon’ble Chief Minister of the

erstwhile State of Andhra Pradesh. It will be relevant to refer

to the following excerpt from the said communication, which

reads thus:

“As per our discussion I am summarizing herein below our proposal for your ready reference:

1. Vizag Power project will be mainly structured as a Merchant plant and implemented in a period manner with an initial capacity of 1040 MW and increasing upto 400 MW in a phased manner.

2. GoAP will sign a MoU with the Project Sponsors to provide:

- Title deeds for 1122.38 acres of land against balance payment of Rs.16.48 cr.

- Transfer of remaining land of 1921.34 acres against payment of an amount of Rs. 67.63 cr.

27 - Infrastructure support including for construction, power and water.

- Recommend to GoI mega status for the project.

- Revive the Coal supply and Transportation Agreements.

- Facilitate environment clearance from MOEF.

- Sanction of all other applicable State Approvals.

3. GoAP will have the first right of refusal, in the MoU, to purchase 25% of the power at regulated tariff.”

46. It could thus be seen that when HNPCL proposed to

revive the project in the year 2007, it was mainly structured

as a Merchant plant, wherein the Government of Andhra

Pradesh was to have the first right of refusal, to purchase

25% of the power at regulated tariff.

47. It is also not in dispute that APCPDCL on behalf of all

the four APDISCOMS (viz., Central Power Distribution

Company of Andhra Pradesh Limited, Southern Power

Distribution Company of Andhra Pradesh Limited, Northern

Power Distribution Company of Andhra Pradesh Limited and

Eastern Power Distribution Company of Andhra Pradesh

Limited) had conducted bidding process for procurement of 28

power of 2000 MW +/­ 20% under Case­1 to meet the base

load requirements of APDISCOMS from the year 2014­2015

onwards. It is also not in dispute that in the said bidding

process, HNPCL had also submitted its bid and successfully

emerged as L­2 bidder. After completion of the bidding

process, APCPDCL had applied for approval of the tariff at

which the power was to be purchased from the successful

bidders in the said process. It will be relevant to refer to

paragraph 4(u) of the order dated 13th August, 2013, passed

by the State Commission in O.P. No. 55 of 2013, filed by

APCPDCL on behalf of all the four APDISCOMS, which reads

thus:

“u) In the minutes of meeting held on 28th September 2012, the Bid Evaluation Committee noted that "The Principal Secretary, Energy informed the Evaluation Committee that the entire capacity of Hinduja National Power Corporation Limited (HNPCL) is encumbered to the state of A.P. /DISCOMs of A.P. and hence not available for consideration under this tender. Hence, HNPCL must be taken out of the bid process and APERC must be informed 29

accordingly. Hence the Committee took the note of it and decided to separate HNPCL from the bid process”

48. It could thus be seen that though HNPCL had

successfully emerged as the L­2 bidder in the open bidding

process, it was at the instance of the State of Andhra Pradesh

that the Bid Evaluation Committee had discarded the bid of

HNPCL, on the ground that the entire capacity of HNPCL was

encumbered to the State of Andhra Pradesh/APDISCOMS.

49. It will also be relevant to refer to the following excerpt

from the letter dated 26th December, 2012, addressed by the

Principal Secretary to Government, Energy Department, to

HNPCL:

“This Is to Invite your attention to the above cited letter intimating the implementation of the coal fired power project (1040 MW) by you at Visakhapatnam and supply of power therefrom. In this regard, HNPCL has sought certain support so as to achieve scheduled commissioning of the Project commencing in July 2013. On this matter I am to clarify that Government of Andhra Pradesh reiterates its 30

Interest in purchasing 100% power (through APDISCOMs) from the said project, as already contemplated in the restated PPA entered into between APSEB and HNPCL in 1998 based on the MOU in 1992 on the broad conditions mentioned in the PPA signed in 1998, except to the extent they may stand modified due to Impact of change in laws/rules and regulatory standards guiding such power projects post 1998.

2. In this background, the Government of Andhra Pradesh hereby agrees to facilitate the implementation of the power project to achieve the timeline for schedule commissioning. The Government has also decided to direct the APDlSCOMs as the successor entities of APSEB to enter into a continuation Agreement to the PPA of 1998 With HNPCL to this effect.” [emphasis supplied]

50. A perusal of the said letter dated 26th December,

2012, would reveal that the Government of Andhra Pradesh

has reiterated its interest in purchasing 100% of power

(through APDISCOMS) from the said project, as already

contemplated in the restated PPA entered into between 31

APSEB and HNPCL in 1998 based on the MoU of 1992. No

doubt that it mentions that the same shall be except to the

extent they may stand modified due to impact of change in

laws/rules and regulatory standards guiding such power

projects post 1998. The said letter would also reveal that the

Government had decided to direct the APDISCOMS as the

successor entities of APSEB to enter into a continuation

agreement to the PPA of 1998 with HNPCL to the said effect.

It will also be relevant to note that in the said letter it is

observed that the State Government will take necessary steps

within three months for execution of PPA and provision of

Transmission System for Start­up Power and Power

Evacuation. In the said letter, the State had also agreed for

providing assistance in obtaining statutory

clearances/approvals from State/local authorities within the

timeline for scheduled commissioning of Project.

51. In response to the aforesaid letter, HNPCL addressed

a communication dated 14th January, 2013, to the State

Government, thereby expressing its concurrence to the 32

proposal given by the Government of Andhra Pradesh of

procuring entire power from the Project. Vide the said letter

dated 14th January, 2013, HNPCL requested the State

Government to provide all the necessary support required for

taking the requisite approvals from the State Commission for

tariff determination based on the actual project cost.

52. A further communication dated 16th May, 2013, was

addressed by HNPCL to the appellants ­ DISCOMS. By the

said letter, HNPCL had estimated the project cost to the tune

of Rs.6098 crores. The said project cost was worked out on

the basis of the order passed by the CERC dated 4 th June,

2012, providing a Benchmark Capital Cost (Hard cost) model

for Thermal Power Stations with Coal as Fuel for tariff

determined by the Commission under Section 62 of the Act of

2003.

53. The appellants – DISCOMS vide communication

dated 17th May, 2013, recorded that the documents of capital

cost of the Project were received without prejudice to the

rights of APDISCOMS to contest the cost of the project on 33

every component before the State Commission at appropriate

stage and that the receiving of the capital cost document did

not constitute that the APDISCOMS had agreed/accepted the

same without demur.

54. On the same day, i.e., 17th May, 2013, an MoA for

continuation of the Amended and Restated PPA dated 15 th

April, 1998, came to be executed between APDISCOMS and

HNPCL. It will be relevant to refer to clauses E and F of the

said MoA dated 17th May, 2013, which read thus:

“E. HNPCL shall agree that the entire capacity of the project and all the units of the power station shall at all times be for the exclusive benefit of the DISCOMs and the DISCOMs shall have the exclusive right as well as obligation to purchase the entire capacity from the project. HNPCL shall not grant to any third party or allow any third party to obtain any entitlement to the Available Capacity and/or scheduled energy. In case DISCOMs do not avail power up to the Available Capacity provided by HNPCL, DISCOMs shall pay to HNPCL the capacity charges for such unavailed Available Capacity.

Notwithstanding the above, in case DISCOMS do not avail power up to the Available Capacity provided by HNPCL, 34

HNPCL shall have the option to sell such Available Capacity not availed by DISCOMS to any third party or require the payment of capacity charges from DISCOMS towards such unavailed Available Capacity not sold to third parties. DISCOMs shall not be required to pay capacity charges for such capacity sold to third parties. F. Transmission line/system for start­up power and power evacuation from the Project will be provided by DISCOMs through APTRANSCO in time so as to ensure availability of power evacuation facility at the time of COD of Unit 1. DISCOMs assure that power evacuation shall be done through APTRANSCO without any delay.”

55. It could thus be seen that in the MoA dated 17th May,

2013, it was agreed that the entire capacity of the project and

all the units of the power station shall at all times be for the

exclusive benefit of the DISCOMS and the DISCOMS were to

have the exclusive right as well as the obligation to purchase

the entire capacity from the project. Vide the said MoA,

HNPCL was restrained from granting to any third party or

allowing any third party to obtain any entitlement to the

available capacity and/or scheduled energy. It was further 35

agreed that in case DISCOMS do not avail power up to the

Available Capacity provided by HNPCL, the DISCOMS were to

pay HNPCL, the capacity charges for such un­availed

Available Capacity. No doubt, that in case the DISCOMS

failed to avail power up­to the Available Capacity provided by

HNPCL, an option was available to HNPCL to sell such

Available Capacity, not availed by DISCOMS, to any third

party. It was also agreed that the DISCOMS were not required

to pay capacity charges for such capacity sold to third

parties. As per the said MoA, the Transmission line/system

for start­up power and power evacuation from the project was

to be provided by DISCOMS through Transmission

Corporation of Andhra Pradesh (APTRANSCO) in time so as to

ensure availability of power evacuation facility at the time of

COD of Unit­1. It is also not in dispute that in pursuance of

the execution of the said MoA, HNPCL entered into an FSA

with Mahanadi Coalfield Limited for supply of coal for the

project.

36

56. Pursuant to the execution of the said MoA, an

application being O.P. No.21 of 2015 came to be filed by

HNPCL before the State Commission on 12 th March, 2014, for

determination of Capital Cost of the coal fired power station

of 1040 MW (2 x 520 MW) capacity in the district of

Visakhapatnam.

57. Pursuant to these events, the Reorganisation Act

came into effect on 2nd June, 2014, thereby bifurcating the

erstwhile State of Andhra Pradesh into the State of Andhra

Pradesh and the State of Telangana. It is the contention of

HNPCL that after the bifurcation of the erstwhile State of

Andhra Pradesh, though the State of Telangana demanded

54% of the power from the project, the Government of Andhra

Pradesh insisted HNPCL to supply 100% of the power to the

State of Andhra Pradesh.

58. It is not in dispute that HNPCL filed an Addendum

Application in O.P. No.21 of 2015 on 28 th July, 2015, thereby

showing the capital cost of the project to have increased to

Rs.8087 crores.

37

59. When O.P. No.21 of 2015, was listed before the State

Commission on 26th September, 2015, the State Commission

passed the following order:

“Sri P. Shiva Rao, learned Standing Counsel for the respondents filed counter on behalf for the respondents and sought for further time to respond to the further material filed by the petitioner by way of addendum before the Commission. Sri P. Shiva Rao, learned Standing Counsel for the respondents also represented that they are filing an application to dispense with the earlier Consultant as the respondents appointed their own Consultant. Hence, for further response of the respondents and rejoinder of the petitioner to the counter filed by tile respondents and for further hearing on the question of Consultant including on the application for dispensing with the earlier Consultant. Posted to 03­10­2015 at 11 AM. Both the learned counsel also represented that there is no issue of jurisdiction involved in the matter.”

60. It is also not in dispute that the first unit of the

power project of HNPCL (520 MW) was declared COD on 11 th

January, 2016.

38

61. Further, it is not in dispute that the State

Commission by an order dated 1 st March, 2016, directed the

appellants – DISCOMS to pay an interim tariff at the rate of

Rs.3.61 per unit to HNPCL. By the said order, the State

Commission also clarified that such interim tariff was without

prejudice to the rights and contentions of both parties in the

main petition, i.e., O.P. No.21 of 2015.

62. After the bifurcation of the erstwhile State of Andhra

Pradesh into the State of Andhra Pradesh and the State of

Telangana, on 28th April, 2016, a Continuation Agreement

came to be signed between the appellants – DISCOMS and

HNPCL. A perusal of the recital in the said Continuation

Agreement dated 28th April, 2016 would reveal that the

Government of Andhra Pradesh represented by the erstwhile

APSEB had expressed the desire to establish a coal­based

Thermal Power Project at Visakhapatnam and had selected

the consortium of Ashok Leyland Limited, a company

incorporated in India and Mission Energy Company, a

California, USA corporation, to set up a joint venture for 39

establishing a thermal power station. The said Continuation

Agreement dated 28th April, 2016, also refers to the MoU of

1992 (dated 17th July, 1992), PPA of 1994 (dated 9th

December, 1994), the Amended and Restated PPA of 1998

(dated 15th April, 1998), the correspondence between the

State of Andhra Pradesh and HNPCL, and MoA between the

erstwhile State of Andhra Pradesh and HNPCL dated 17 th

May, 2013. It will be relevant to refer to the following part of

the Continuation Agreement dated 28th April, 2016:

“3) The Parties acknowledge and agree that the Procurers have replaced the APSEB in all respects with regard to the 1998 PPA and shall execute such other or further documents and/or take such steps, as are necessary and/or incidental, in order to give full and complete effect to such transfer of contracts, deeds, agreements and other instruments of whatever nature to the Procurers.

4) The Procurers hereby agree that they are jointly and separately liable for all obligations under the Agreement.

5) Subject to Clause 3 hereof and pending the execution of such other or further documents as envisaged under Clause 3 hereof, the Parties 40

hereto are entering into this Continuation Agreement to the 1998 PPA and confirm, agree to the following:

(a) The 1998 PPA shall stand amended as mentioned hereunder and as indicated in the Annexure attached hereto, which Annexure shall constitute an integral part of this Continuation Agreement.

(b) The 1998 PPA and the MoA shall stand modified or amended to the extent provided herein. All other terms and conditions of the 1998 PPA including the obligations of the Parties as stated thereunder shall continue to be binding on the Parties. This Continuation Agreement and the 1998 PPA shall together constitute one and the same agreement and the provisions of this Continuation Agreement shall form an Integral part of the 1998 PPA. However, notwithstanding the foregoing, should any provisions of this Continuation Agreement be at variance or in conflict with any of the provisions of the 1998 PPA or the MoA, the provisions of this Continuation Agreement shall prevail.”

63. It could thus clearly be seen that the appellants –

DISCOMS have clearly represented that they had replaced the 41

APSEB in all respects with regard to the 1998 PPA and had

agreed to execute all further documents and take such steps

as are necessary in order to give full and complete effect to

such transfer of contracts, deeds, agreements, etc. The

appellants – DISCOMS have also clearly agreed that the 1998

PPA (i.e. the Amended and Restated PPA dated 15 th April,

1998) shall stand amended as mentioned in the said

Continuation Agreement dated 28th April, 2016. It has been

specifically averred that the Continuation Agreement and the

1998 PPA shall together constitute one and the same

agreement.

64. Immediately after the said Continuation Agreement

was entered into between the appellants – DISCOMS and

HNPCL, the appellants – DISCOMS filed an application being

O.P. No.19 of 2016 under Section 86(1)(b) of the Act of 2003

for grant of approval of PPA. The said application contained

the entire history narrated herein above leading up to the

execution of the Continuation Agreement dated 28 th April,

2016. The prayer clause in the said application reads thus: 42

“PRAYER

32. Therefore, it is prayed that the Hon’ble Commission may be pleased to grant approval/consent for the initialed Continuation Agreement to the PPA dated 15.04.1998 together with Amended & Restated PPA dated 15.04.1998 of HNPCL.”

65. The State Government vide order dated 1st June,

2016, accorded approval for purchase of 100% power from

HNPCL. On 3rd July, 2016, the second unit of HNPCL (520

MW) was declared COD. Vide order dated 6 th August, 2016,

the State Commission, after hearing the counsel for the

parties, directed the appellants – DISCOMS to pay an interim

tariff at the rate of Rs.3.82 per unit to HNPCL from 1 st

August, 2016 for the power received by them. This was to

operate until further orders passed by the State Commission.

66. It is also not in dispute that after elaborate hearing in

both the petitions i.e. O.P. No.21 of 2015 and O.P. No.19 of

2016, the State Commission reserved the matters for orders

on 15th May, 2017. It is also not in dispute that in an appeal

between the parties arising out of interlocutory proceedings, 43

the APTEL had directed the State Commission to decide O.P.

No.19 of 2016 and O.P. No.21 of 2015 expeditiously and on

or before 14th August, 2017. The said period came to be

extended from time to time, the last of such extension was

granted till 31st January, 2018, vide order dated 10 th January,

2018.

67. At this juncture, the appellants – DISCOMS filed two

Interlocutory Applications on 4th January, 2018, viz., (i) I.A.

No.1 of 2018 in O.P. No.19 of 2016 for withdrawal of O.P.

No.19 of 2016 together with initial PPA; and (ii) I.A. No.2 of

2018 in O.P. No.21 of 2015 for disposal of O.P. No.21 of

2015.

68. Vide order dated 31st January, 2018, passed by the

State Commission, which was impugned before the APTEL,

the State Commission allowed withdrawal of O.P. No.19 of

2016 filed by the appellants ­ DISCOMS and consequently

dismissed O.P. No.21 of 2015 filed by HNPCL.

69. As discussed herein above, being aggrieved, HNPCL

filed Appeal No.41 of 2018 before the APTEL, which came to 44

be admitted by the APTEL on 26 th February, 2018. It is also

not in dispute that the APTEL passed an interim order dated

16th March, 2018 in I.A. No.211 of 2018 in Appeal No.41 of

2018, on an ad hoc arrangement basis, thereby directing the

parties to maintain status quo as prevalent prior to 31 st

January, 2018. It is also not in dispute that both the orders

passed by the APTEL, i.e., order dated 16 th March, 2018

directing maintenance of status quo as prevalent prior to 31 st

January, 2018 and order dated 26 th February, 2018,

admitting Appeal No.41 of 2018, were assailed before the

High Court of Andhra Pradesh by way of Writ Petitions being

Writ Petition No. 10814 of 2018 and Writ Petition No.13689 of

2018 respectively. However, the same were dismissed by the

High Court of Andhra Pradesh by order dated 2 nd May, 2018.

70. It is also not in dispute that in the meantime,

Execution Petition No. 3 of 2018 was filed by HNPCL before

the APTEL seeking execution of order dated 16 th March, 2018,

passed by the APTEL in I.A. No.211 of 2018 in Appeal No.41

of 2018.

45

71. The appellants – DISCOMS had also approached this

Court by way of Civil Appeal No.5772 of 2018, challenging the

interim order passed by the APTEL dated 16 th March, 2018.

However, this Court refused to interfere with the said order

and directed the APTEL to decide the appeal pending before it

expeditiously without taking into consideration the

observation in the impugned order as conclusive.

72. Vide the impugned judgment and order dated 7th

January, 2020, the Appeal No.41 of 2018, filed by HNPCL has

been allowed by the APTEL, the correctness of which is under

challenge in the present proceedings.

73. It could thus clearly be seen that though HNPCL had

initially proposed to revive its project in the year 2007 as a

Merchant­power plant and had proposed to give the

Government of Andhra Pradesh first right of refusal, in the

MoU, to purchase 25% of the power at regulated tariff, it was

at the instance of the State of Andhra Pradesh that it had

agreed to supply 100% power to the State through

APDISCOMS. It could clearly be seen from the record that 46

though HNPCL had participated in the bidding process

conducted by the APCPDCL in the year 2011­2012 and

though HNPCL had successfully emerged as L­2 bidder in the

said bidding process, it was on account of the decision of the

Bid Evaluation Committee, that HNPCL was discarded from

the bidding process since the entire generation capacity of

HNPCL was encumbered to the State of Andhra

Pradesh/APDISCOMS. The minutes of the meeting dated 28 th

September, 2012 of the Bid Evaluation Committee, as has

been noticed in the order of the State Commission dated 13 th

August, 2013, clarify this position.

74. It is the State of Andhra Pradesh, which had

expressed its interest in purchasing 100% power from

HNPCL, as could be seen from the various documents placed

on record. The communication addressed by the Principal

Secretary to the Government of Andhra Pradesh, Energy

Department, to HNPCL dated 26th December, 2012, clearly

reiterates the intention of the Government of Andhra Pradesh

in purchasing 100% power (through DISCOMS) from the 47

project of HNPCL. The said communication would also show

that the State has assured to take all necessary steps for

commissioning the project at the earliest including execution

of PPA and for making provision of Transmission system for

start­up power and power evacuation. The said

communication would clearly show that the parties had

agreed to abide by the conditions mentioned in the Amended

and Restated PPA dated 15th April, 1998, except to the extent

they may stand modified due to impact of change in

laws/rules and regulated standards guiding such power

projects post 1998.

75. No doubt, that the documents placed on record

would show that though HNPCL had given its estimation of

project cost on the basis of the guidelines issued by the

CERC, the same was received by the appellants – DISCOMS

without prejudice to their rights to contest the same on every

component before the State Commission. The documents

placed on record would clearly show that the State of Andhra

Pradesh has, on more than one occasion, expressed that it 48

was interested in buying 100% power from the project of

HNPCL. The MoA signed between the appellants – DISCOMS

and HNPCL dated 17th May, 2013, would clearly show that it

was agreed between the parties that the entire capacity of

HNPCL project and all the units of the power stations shall,

at all times, be for the exclusive benefit of the DISCOMS and

the DISCOMS were to have the exclusive right as well as

obligation to purchase the entire capacity from the project.

Not only this, but after the Reorganisation Act came into

effect and the erstwhile State of Andhra Pradesh was

bifurcated into the State of Andhra Pradesh and the State of

Telangana, the State of Andhra Pradesh, on more than one

occasion, reiterated its stand of procuring 100% power from

the project of HNPCL. Perusal of the orders of the State

Commission dated 26th September, 2015 and 6th August,

2016, would clearly reveal that the appellants – DISCOMS

also stood by the position that the 100% power generated in

the power plant of HNPCL was to be purchased by them. Not

only this, but after the bifurcation of the erstwhile State of 49

Andhra Pradesh, the appellants – DISCOMS entered into a

Continuation Agreement dated 28th April, 2016, reiterating

their stand.

76. After the Continuation Agreement was entered into

on 28th April, 2016, the appellants – DISCOMS filed O.P.

No.19 of 2016 for approval of the Continuation Agreement

with the Amended and Restated PPA of 1998 on 11 th May,

2016. The State Government again on 1st June, 2016,

accorded its approval for purchase of 100% power generated

by HNPCL. It could thus be seen that right from the year

2012 till January, 2018, it was the consistent stand of the

State of Andhra Pradesh as well as the appellants – DISCOMS

and its predecessors that the appellants ­ DISCOMS were to

purchase 100% power generated by HNPCL.

77. It is also not in dispute that in pursuance of the

MoA, executed on 17th May, 2013, HNPCL had also entered

into FSA dated 26th August, 2013 with Mahanadi Coalfield

Limited for supply of coal for the project. 50

78. It is thus clear that the consistent stand of the

appellants ­ DISCOMS from the year 2012, for the first time,

changed on 4th January, 2018, when they filed Interlocutory

Applications before the State Commission for withdrawal of

O.P. No.19 of 2016 and disposal of O.P. No.21 of 2015.

79. As already observed hereinabove, in the open bidding

process, conducted in the year 2011­2012, HNPCL emerged

as the successful L­2 bidder. It is however on account of the

stand taken by the Bid Evaluation Committee, that it was

discarded from the bidding process. As such, the stand of

the appellants – DISCOMS, that the revival of the project of

HNPCL was as a Merchant­power plant and therefore, the

appellants – DISCOMS cannot be compelled to purchase

power from it, is self­contradictory. On one hand, HNPCL

was discarded from the open bidding process, though it was

the successful L­2 bidder, on the ground that 100% power

generated by HNPCL is encumbered to the State of Andhra

Pradesh/APDISCOMS whereas, on the other hand, it is now

sought to be urged that the appellants – DISCOMS cannot be 51

compelled to purchase the power from HNPCL, since it was a

merchant­power plant. We have no hesitation to hold that

the APTEL has rightly held that, on account of the assurance

given by the State of Andhra Pradesh/APDISCOMS, HNPCL

had altered its position and as such, it was not permissible

for the appellants – DISCOMS to withdraw O.P. No.19 of

2016. The grounds, which are sought to be urged in I.A. No.1

of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P.

No.21 of 2015, were very much available when the appellants

– DISCOMS had entered into MoA on 17 th May, 2013 and the

Continuation Agreement dated 28th April, 2016. It is difficult

to appreciate how it is permissible for the appellants –

DISCOMS to withdraw the application for grant of approval of

PPA on the ground that it could procure the power only

through the competitive bidding process, when in the facts of

the present case, it was the State of Andhra Pradesh, which

had discarded HNPCL from the open bidding process of 2011­

2012, though it had successfully emerged as L­2 bidder in

the said bidding process.

52

80. Various authorities have been cited at the Bar in

support of the proposition that withdrawal of an application

could not be permissible when such a withdrawal amounts to

frustration of a contract and thereby defeats the rights of the

defendant and that the right of withdrawal is not absolute. In

this respect, we will refer to the observations made by this

Court in the case of Arjun Singh v. Mohindra Kumar &

Ors.15. Though the issue involved in the said case is distinct

than the issue involved in the present case, we find that it

will be apposite to seek guidance from the observations made

by this Court, while construing the provisions of Order IX and

Order XX of the Code of Civil Procedure, 1908 (CPC). The

relevant extract reads thus:

“ ….In the present context when once the hearing starts, the Code contem­ plates only two stages in the trial of the suit: (1) where the hearing is adjourned or (2) where the hearing is completed. Where, the hearing is completed the parties have no further rights or priv­ ileges in the matter and it is only for the convenience of the Court that Or­

15 (1964) 5 SCR 946 53

der XX. Rule 1 permits judgment to be delivered after interval after the hearing is completed. It would, there­ fore, follow that after the stage con­ templated by Order IX. Rule 7 is passed the next stage is only the passing of a decree which on the terms of Order IX. Rule 6 the Court is competent to pass. And then follows the remedy of the party to have that de­ cree set aside by application under Or­ der IX. Rule 13. There is thus no hia­ tus between the two stages of reser­ vation of judgment and pronouncing the judgment so as to make it neces­ sary for the Court to afford to the party the remedy of getting orders passed on the lines of Order IX. Rule

7. We are, therefore, of the opinion that the Civil Judge was not competent to en­ tertain the application dated May 31, 1958 purporting to be under Order IX.

Rule 7 and that consequently the rea­ sons given in the order passed would not be res judicata to bar the hearing of the petition undo Order IX. Rule 13 filed by the appellant.” [emphasis supplied]

81. It can be seen that this Court has held that CPC

contemplates two stages of the trial in the suit: (1) where the

hearing is adjourned; and (2) where the hearing is completed. 54

It has been held that where the hearing is completed, the

parties have no further rights or privileges in the matter and

it is only for the convenience of the Court that Order XX rule

1 permits judgment to be delivered after an interval after the

hearing is completed. It has been held that there is no hiatus

between the two stages of reservation of judgment and

pronouncing the judgment so as to make it necessary for the

Court to afford to the party the remedy of getting orders

passed on the lines of Order IX rule 7.

82. The other judgments of various High Courts relied

upon by Shri Ramachandran, follow the line laid down by

this Court in Arjun Singh (supra).

83. Insofar as the reliance placed by Shri Vaidyanathan,

learned Senior Counsel, on the judgment of Court of Appeal

in the case of Boal Quay Wharfingers Ltd. (supra) is

concerned, the said case arose out of an application made by

the appellant therein to the Licensing Authority for grant of a

license. It was not an application in a quasi­judicial

proceeding where the withdrawal of an application would 55

adversely affect the rights of the other party. In the said case,

it has been observed that if a person applies for a license,

there is no prohibition as to why he is not entitled to

withdraw his application, unless, of course, there is some

provision in law, which would prevent him from doing so.

The proceedings in the aforesaid case did not arise from a lis

between the two parties, but arose out of an application made

by a party to a licensing authority under the Docks and

Harbours Act, 1966.

84. Insofar as the reliance placed on the judgment of this

Court in the case of Hulas Rai Baij Nath (supra) is

concerned, the respondent therein had instituted a suit for

rendition of accounts against the appellant­firm, alleging that

the appellant­firm was the commission agent of the

respondent and that the accounts between respondent as the

principal and appellant as the agent were not settled. The

claim of the respondent was resisted by the appellant therein,

stating that the claim of the respondent was fully settled and

that the suit was not fit to proceed in accordance with law. 56

In the said suit, after a considerable amount of evidence had

been recorded, an application was presented on behalf of the

respondent­plaintiff for withdrawal of the suit. The same was

objected to. The trial court overruled the objection of the

appellant­defendant, holding that the plaintiff had a right to

withdraw the suit and that right could be exercised at any

time before judgment. The defendant could only claim an

order for costs in his favour. The suit was therefore

dismissed awarding costs of the suit to the appellant­

defendant. The appellant­defendant filed revision in the High

Court. The High Court dismissed the revision. Being

aggrieved, the appellant­defendant had approached the Apex

Court. In this factual background, this Court observed thus:

“2. The short question that, in these cir­ cumstances, falls for decision is whether the respondent was entitled to withdraw from the suit and have it dismissed by the application dated 5th May, 1953 at the stage when issues had been framed and some evidence had been recorded, but no preliminary decree for rendition of ac­ counts had yet been passed. The language of order 23 Rule 1 sub­rule (1) CPC, gives an unqualified right to a plaintiff to with­ 57

draw from a suit and, if no permission to file a fresh suit is sought under sub­rule (2) of that Rule, the plaintiff becomes liable for such costs as the Court may award and becomes precluded from instituting any fresh suit in respect of that subject­matter under sub­rule (3) of that Rule. There is no provision in the Code of Civil Procedure which requires the Court to refuse permis­ sion to withdraw the suit in such circum­ stances and to compel the plaintiff to pro­ ceed with it. It is, of course, possible that different considerations may arise where a set­off may have been claimed under order 8 CPC, or a counter claim may have been filed, if permissible by the procedural law applicable to the proceedings governing the suit. In the present case, the pleadings in paras 8 and 11 of the written statement mentioned above, clearly did not amount to a claim for set­off. Further, there could be no counter­claim, because no provision is shown under which a counter­claim could have been filed in the trial court in such a suit. There is also the circumstance that the application for withdrawal was moved at a stage when no preliminary de­ cree had been passed for rendition of ac­ count and, in fact, the appellant was still contending that there could be no rendi­ tion of accounts in the suit, because ac­ counts had already been settled. Even in para 11, the only claim put forward was that, in case the Court found it necessary to direct rendition of accounts and any amount is found due to the appellant, a decree may be passed in favour of the ap­ pellant for that amount. In this paragraph 58

also, the right claimed by the appellant was a contingent right which did not exist at the time when the written statement was filed.”

85. It could thus be seen that the facts in the aforesaid

case are totally different from the facts in the present case.

This Court in the aforesaid case held that there is no

provision in the CPC, which requires the Court to refuse

permission to withdraw the suit and compel the plaintiff to

proceed with it. However, this Court itself has clarified that

different considerations could arise where a set­off may have

been claimed under order VIII of CPC, or a counter claim may

have been filed, if permissible by the procedural law

applicable to the proceedings governing the suit. It was

found that from the pleadings in the written statement, it

could be clearly seen that there is no claim for set­off. It was

further found that there could be no counter­claim, since no

provision was shown under which a counter­claim could have

been filed in the trial court in such a suit. It was further

found that the right claimed by the appellant was a 59

contingent one and did not exist at the time at which the

written statement was filed.

86. The facts in the present case are totally different,

wherein, after execution of various agreements, an

application being O.P. No.19 of 2016 came to be filed for

grant of approval of PPA. Not only this, but the said O.P.

No.19 of 2016 was clubbed along with O.P. No.21 of 2015,

which was filed for determination of capital cost of the project

as well as for determination of tariff. It can further be seen

that in the aforesaid case, an application for withdrawal of

the suit was filed at the stage of leading of evidence. It is not

as if the application was filed after the suit was closed for

judgment.

87. In any case, we are of the considered view that the

conduct of the appellants – DISCOMS, in the present case,

would disentitle them to withdraw the application.

88. Another argument, that on account of increase of the

capital cost of the project, the appellants – DISCOMS would

be required to purchase power at much higher rate, also does 60

not hold water. The State Commission while determining the

tariff would be guided by various factors as are required to be

taken into consideration in view of the provisions of Section

61 of the Act of 2003. In any event, the appellants –

DISCOMS have themselves reserved their right to contest the

correctness of the cost on every component at an appropriate

stage before the State Commission. As already stated

hereinabove, the State Commission, while approving the cost

of the project and determining the tariff at which the

electricity would be purchased by the APDISCOMS from

HNPCL, would be required to look into various factors as are

stated in Section 61 of the Act of 2003, so also under the

Regulations notified for that purpose. While doing so, the

State Commission would be required to take into

consideration the various aspects as well as submissions to

be made by the appellants – DISCOMS and HNPCL. Merely

because, the cost of the project is estimated by HNPCL at a

particular amount, the State Commission is not bound to

accept the same. The State Commission would only approve 61

the cost as it would feel appropriate, as guided by the

provisions under Section 61 of the Act of 2003 and the

Regulations. In that view of the matter, the argument in this

regard also, is without substance.

89. The appellants – DISCOMS have heavily relied on the

judgment of this Court in the case of Tata Power Company

Limited v. Reliance Energy Limited and others 16, and

particularly, on paragraph 106 thereof, which reads thus:

“106. The scheme of the Act, namely, the generation of electricity is outside the licensing purview and subject to ful­ filment of the conditions laid down un­ der Section 42 of the Act a generating company may also supply directly to consumer wherefor no licence would be required, must be given due considera­ tion. The said provision has to be read with Regulation 24. In regard to the grant of approval of PPA the procedures laid down in Regulation 24 are required to be followed.”

90. No doubt, that this Court has held that a generating

company may also supply directly to consumer wherefor no

licence would be required, however, this Court itself observed

16 (2009) 16 SCC 659 62

that the said provision has to be read with Regulation 24 and

with regard to the grant of approval of PPA, the procedures

laid down in Regulation 24 are required to be followed.

91. It will also be relevant to refer to paragraph 119 of

the said judgment.

“119. The 2003 Act even permits the generating company to supply electricity to a consumer directly. For the said pur­ pose what is necessary is to comply with the provisions of the Act, the Rules and the Regulations. Section 14 of the Act categorically provides for grant of licence to any person who is transmitting elec­ tricity or distributing supply or under­ taking trading therein, indisputably, however, the generator of an electrical energy, although is not subject to the grant of licence but while supplying elec­ trical energy to a distributing agency, in turn would be subject to approval and directions of the Commission.”

92. It can thus clearly be seen that this Court has held

that though the Act of 2003 permits the generating company

to supply electricity to a consumer directly, and that the

generator of an electrical energy is not subject to the grant of

license, but while supplying electrical energy to a distributing 63

agency, in turn, it would be subject to approval and

directions of the Commission.

93. We are, therefore, of the view that the said judgment

is of no assistance to the case sought to be advanced by the

appellants – DISCOMS. On the contrary, we find that the

view that is being taken by us is fortified by the following

observations of this Court in the case of Tata Power

Company Limited (supra):

“87. …. The agreement of distribution (PPA) being subject to approval, indis­ putably the Commission would have the public interest in mind. It has power to approve an MoU which subserves the public interest. It, while granting such approval may also take into considera­ tion the question as to whether the terms to be agreed are fair and just.

*** *** ***

111. Section 86(1)(b) provides for regula­ tion of electricity purchase and procure­ ment process of distribution licensees. In respect of generation its function is to determine the tariff for generation as also in relation to supply, transmission and wheeling of electricity. Clause (b) of 64

sub­section (1) of Section 86 provides to regulate electricity purchase and pro­ curement process of distribution li­ censees including the price at which the electricity shall be procured from the generating companies or licensees or from other sources through agreements.

As a part of the regulation it can also ad­ judicate upon disputes between the li­ censees and generating companies in re­ gard to the implementation, application or interpretation of the provisions of the said agreement.”

94. It is thus trite that, while considering grant of

approval to the PPA, the State Commission will have to keep

in mind the public interest. It will have to consider, as to

whether the PPA, which is subject to approval, sub­serves the

public interest. It will also be required to take into

consideration, as to whether the terms agreed are fair and

just while granting approval. While exercising power under

Section 86(1)(b) of the Act of 2003, the Commission will have

to regulate the price at which the electricity would be

procured from the generating companies. Undoubtedly, while

doing so, the Commission will be guided by the factors 65

mentioned in Section 61 of the Act of 2003 and the

Regulations concerning the same. Under Section 86(1)(f) of

the Act of 2003, the Commission is also empowered to

adjudicate upon the disputes between the licensees and

generating companies, and to refer any such dispute for

arbitration.

95. Another argument made on the basis of Section 21 of

the Reform Act is also not tenable. Much reliance is placed

on sub­section (5) of Section 21 of the said Act, which reads

thus:

“(5) Any agreement relating to any transaction of the nature described in sub sections (1), (2), (3) or (4) unless made with or subject to such consent as aforesaid, shall be void.”

96. It could thus be seen that any of the agreements

mentioned in sub­sections (1), (2), (3) or (4) of Section 21

would be void unless they are made with the consent of the

Commission or subject to such consent. Undisputedly,

understanding this legal position, O.P. No.19 of 2016 came to

be filed by the appellants – DISCOMS, so as to obtain 66

approval of the State Commission for the PPA entered into by

them with HNPCL.

97. Insofar as the reliance placed on the provision of

Regulation 5.2 of the Tariff Regulations is concerned, the

same deals with approach to determination of tariff. It could

be seen that, whereas Regulation 5.1 of the Tariff Regulations

provides that where tariff has been determined through

transparent process of bidding in accordance with the

guidelines issued by the Central Government, the

Commission shall adopt such tariff in accordance with the

provisions of the Act; Regulation 5.2 of the Tariff Regulations

provides that the provisions specified in Part­II of the said

Regulation shall apply in determining tariff based on capital

cost for supply to a Distribution Licensee. Part­II of the Tariff

Regulations deals with ‘Filing Details’ and ‘Tariff

Determination’. Regulation 9 requires that each application

where tariff is to be determined based on capital cost shall

include various details duly accompanied by supporting data

and documentary and other evidence regarding Fixed Costs, 67

Variable Costs and Norms of operation, etc. Regulation 10 of

the Tariff Regulations requires the tariff to be determined in

accordance with the norms specified under the said

Regulations, guided by the principles and methodologies

specified in CERC (Terms and Conditions of Tariff)

Regulations, 2004, as amended from time to time. The

Regulations contain detailed guidelines, as to what shall be

the component of tariff and as to how the capital cost and

tariff is to be determined.

98. We find that such an argument at the behest of a

party, which has discarded HNPCL from the bidding process,

though it had emerged as the successful L­2 bidder, does not

hold water and we have no hesitation to say that the

appellants – DISCOMS’ approach is of approbate and

reprobate.

99. In any event, we find that the State Commission has

totally erred in dismissing O.P. No.21 of 2015 filed by HNPCL.

Perusal of Section 64 of the Act of 2003 would reveal that

even a Generating Company is entitled to make an 68

application for determination of tariff under Section 62 of the

Act of 2003. As such, irrespective of the question, as to

whether an application for withdrawal of O.P. No.19 of 2016

filed by the appellants ­ DISCOMS could have been

entertained, the State Commission was wholly unjustified in

dismissing O.P. No.21 of 2015 filed by HNPCL. In any case,

we have held that in the facts of the present case and,

particularly, taking into consideration the conduct of the

appellants – DISCOMS, the APTEL has rightly held that the

appellants – DISCOMS could not have been permitted to

withdraw O.P. No.19 of 2016.

100. Undisputedly, the appellants – DISCOMS are

instrumentalities of the State and as such, a State within the

meaning of Article 12 of the Constitution of India. Every

action of a State is required to be guided by the touch­stone

of non­arbitrariness, reasonableness and rationality. Every

action of a State is equally required to be guided by public

interest. Every holder of a public office is a trustee, whose

highest duty is to the people of the country. The Public 69

Authority is therefore required to exercise the powers only for

the public good.

101. We may gainfully refer to the following observations

of this Court in the case of Kumari Shrilekha Vidyarthi

and others v. State of U.P. and others17:

“27. Unlike a private party whose acts un­ informed by reason and influenced by per­ sonal predilections in contractual matters may result in adverse consequences to it alone without affecting the public interest, any such act of the State or a public body even in this field would adversely affect the public interest. Every holder of a public of­ fice by virtue of which he acts on behalf of the State or public body is ultimately ac­ countable to the people in whom the sovereignty vests. As such, all powers so vested in him are meant to be exercised for public good and promoting the public inter­ est. This is equally true of all actions even in the field of contract. Thus, every holder of a public office is a trustee whose highest duty is to the people of the country and, therefore, every act of the holder of a public office, irrespective of the label classifying that act, is in discharge of public duty meant ultimately for public good. With the diversification of State activity in a Welfare State requiring the State to discharge its

17 (1991) 1 SCC 212 70

wide ranging functions even through its several instrumentalities, which requires entering into contracts also, it would be unreal and not pragmatic, apart from being unjustified to exclude contractual matters from the sphere of State actions required to be non­arbitrary and justified on the touch­ stone of Article 14.

28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ulti­ mate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial re­ view to test its validity on the anvil of Arti­ cle 14.”

102. It will also be apposite to refer to the following

observations of this Court in the case of Food Corporation

of India v. M/s Kamdhenu Cattle Feed Industries18:

“7. In contractual sphere as in all other State actions, the State and all its instru­

18 (1993) 1 SCC 71 71

mentalities have to conform to Article 14 of the Constitution of which non­arbi­ trariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a pro­ cedure which is ‘fairplay in action’. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary compo­ nent of the decision­making process in all State actions. To satisfy this requirement of non­arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legit­ imate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The deci­ sion so made would be exposed to chal­ lenge on the ground of arbitrariness. Rule of law does not completely eliminate dis­ cretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.

8. The mere reasonable or legitimate ex­ pectation of a citizen, in such a situation, may not by itself be a distinct enforceable 72

right, but failure to consider and give due weight to it may render the decision arbi­ trary, and this is how the requirement of due consideration of a legitimate expecta­ tion forms part of the principle of non­ar­ bitrariness, a necessary concomitant of the rule of law. Every legitimate expecta­ tion is a relevant factor requiring due consideration in a fair decision­making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expec­ tation of the claimant. A bona fide deci­ sion of the public authority reached in this manner would satisfy the require­ ment of non­arbitrariness and withstand judicial scrutiny. The doctrine of legiti­ mate expectation gets assimilated in the rule of law and operates in our legal sys­ tem in this manner and to this extent.”

103. Recently, this Court in the case of Indian Oil

Corporation Limited and others v. Shashi Prabha

Shukla and another19, after referring to earlier judgments of

this Court on the present issue has observed thus:

19 (2018) 12 SCC 85 73

“33. Jurisprudentially thus, as could be gleaned from the above legal enuncia­ tions, a public authority in its dealings has to be fair, objective, non­arbitrary, transparent and non­discriminatory. The discretion vested in such an authority, which is a concomitant of its power is coupled with duty and can never be un­ regulated or unbridled. Any decision or action contrary to these functional pre­ cepts would be at the pain of invalidation thereof. The State and its instrumentali­ ties, be it a public authority, either as an individual or a collective has to essen­ tially abide by this inalienable and non­ negotiable prescriptions and cannot act in breach of the trust reposed by the polity and on extraneous considerations.

In exercise of uncontrolled discretion and power, it cannot resort to any act to frit­ ter, squander and emasculate any public property, be it by way of State largesse or contracts, etc. Such outrages would clearly be unconstitutional and extinctive of the rule of law which forms the bedrock of the constitutional order.”

104. In the present case, though initially, HNPCL had

revived its project in the year 2007 as a Merchant­power

plant and offered 25% of electricity to the State, it was the

State, which offered to purchase 100% power from HNPCL.

HNPCL agreed for the said offer of the State Government. It 74

is clear from the record and, particularly, the letter dated 26 th

December, 2012, that the State had given various

facilities/concessions to HNPCL for execution of its power

project. The documents on record would reveal that the State

has also allotted thousands of acres of land for the project to

HNPCL. It is not in dispute that in pursuance of the MoA of

2013 (dated 17th May, 2013) and the Continuation Agreement

of 2016 (dated 28th April, 2016), the entire project has been

erected and is operational. Not only this, but from the year

2016 till 14th July, 2020, the power has been purchased by

the appellants – DISCOMS from HNPCL. It could thus be

seen that after investment of huge resources including the

land belonging to the State, the project is complete and has

become operational. The question, at this juncture, would

be, whether to discard such a project is in the public interest

or against it. At the cost of repetition, it may be reiterated,

that the determination of the capital cost of the project and

the rate of tariff at which the power has to be purchased

would always be subject to regulatory control of the State 75

Commission. What has been done by the APTEL is only

directing the State Commission to determine the same.

105. The record would clearly reveal that from the year

2012 onwards till 4th January, 2018, it was the consistent

stand of the State of Andhra Pradesh as well as the

APDISCOMS that it would be purchasing 100% power

generated from the project of HNPCL. Not only an application

being O.P. No.21 of 2015 was filed by HNPCL for

determination of capital cost, but also O.P. No.19 of 2016 was

filed by the appellants – DISCOMS for grant of approval to the

Continuation Agreement dated 28th April, 2016 with the

Amended and Restated PPA of 1998. The matters were heard

finally on 15th May, 2017 and closed for orders. For some

unknown reasons, exclusively within the knowledge of the

appellants – DISCOMS, things turned topsy­turvy between

15th May, 2017 and 4th January, 2018, on which date, the

appellants – DISCOMS did a somersault and filed

applications for withdrawal of O.P. No.19 of 2016 and

disposal of O.P. No.21 of 2015. As already discussed 76

hereinabove, every decision of the State is required to be

guided by public interest and the power is to be exercised for

public good. For reasons unknown, the appellants –

DISCOMS took a decision to resile from their earlier stand,

due to which, not only the huge investment made by HNPCL

would go in waste, but also valuable resources of the public

including thousands of acres of land would go in waste. As

already discussed hereinabove, the reasons/grounds, which

are sought to be given in I.A. No. 1 of 2018 in O.P. No.19 of

2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015, filed on 4 th

January, 2018, were very much available between 2011 till

15th May, 2017. It is not as if something new has emerged

between 15th May, 2017 and 4th January, 2018, which would

have entitled the appellants – DISCOMS to resile from their

earlier stand. We have no hesitation to hold that the

appellants – DISCOMS could not be permitted to change the

decision at their whims and fancies and, particularly, when it

is adversarial to the public interest and public good. The 77

record would clearly show that the change in decision is

arbitrary, irrational and unreasonable.

106. We may also gainfully refer to the following

observations of this Court in the case of Kalabharati

Advertising v. Hemant Vimalnath Narichania and

others20:

“25. The State is under obligation to act fairly without ill will or malice— in fact or in law. “Legal malice” or “malice in law” means something done without lawful ex­ cuse. It is an act done wrongfully and wil­ fully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite. It is a deliberate act in disregard to the rights of others. Where malice is attributed to the State, it can never be a case of personal ill will or spite on the part of the State. It is an act which is taken with an oblique or indirect object. It means exercise of statutory power for “purposes foreign to those for which it is in law intended”. It means conscious violation of the law to the prej­ udice of another, a depraved inclination on the part of the authority to disregard the rights of others, which intent is mani­ fested by its injurious acts. (Vide ADM, Jabalpur v. Shivakant Shukla [(1976) 2

20 (2010) 9 SCC 437 78

SCC 521 : AIR 1976 SC 1207] , S.R. Venkataraman v. Union of India [(1979) 2 SCC 491 : 1979 SCC (L&S) 216 : AIR 1979 SC 49] , State of A.P. v. Goverdhan­ lal Pitti [(2003) 4 SCC 739 : AIR 2003 SC 1941] , BPL Ltd. v. S.P. Gururaja [(2003) 8 SCC 567] and W.B. SEB v. Dilip Kumar Ray [(2007) 14 SCC 568 : (2009) 1 SCC (L&S) 860] .)

26. Passing an order for an unauthorised purpose constitutes malice in law.

(Vide Punjab SEB Ltd. v. Zora Singh [(2005) 6 SCC 776] and Union of In­ dia v. V. Ramakrishnan [(2005) 8 SCC 394 : 2005 SCC (L&S) 1150] .)”

107. We have no hesitation to hold that I.A. No.1 of 2018

in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of

2015 filed by the appellants – DISCOMS, are acts, which have

been done wrongfully and wilfully without reasonable and

probable cause. It may not necessarily be an act done out of

ill feeling and spite. However, the act is one, affecting public

interest and public good, without there being any rational or

reasonable basis for the same.

108. Though serious allegations of mala fide have been

made by HNPCL, we do not find it necessary to go in those 79

allegations. However, in our view, the present case would

squarely fit in the realm of ‘legal malice’ or ‘malice in law’.

109. In any case, we find that the judgment impugned

before us cannot be said to be of such a nature, which can be

said to be prejudicial to the interests of any of the parties.

What has been done by the APTEL is only to direct the State

Commission to dispose of O.P. No.21 of 2015 filed for

determination of capital cost and O.P. No.19 of 2016 filed for

approval of Amended and Restated PPA (Continuation

Agreement) on merits. On remand, the State Commission

would be bound to take into consideration all the relevant

factors and the contentions to be raised by both the parties

before deciding the said O.Ps.

110. We therefore find no reason to interfere with the

impugned judgment. However, before parting with the

judgment, it is necessary to place on record the conduct of

the appellants – DISCOMS. Though vide order dated 14 th

July, 2020, this Court had stayed the impugned judgment

passed by the APTEL, vide order dated 21 st August, 2020, this 80

Court had clarified that there shall be no stay of the order

dated 16th March, 2018 passed by the APTEL. It is not in

dispute that in pursuance of the interim order dated 16 th

March, 2018, passed by the APTEL, the appellants –

DISCOMS were purchasing the power at the rate of Rs.3.82

per unit from HNPCL till 14th July, 2020. It is thus clear that

in view of the order passed by this Court on 21 st August,

2020, the appellants – DISCOMS were required to continue to

purchase the power from HNPCL at the rate of Rs.3.82 per

unit. Undisputedly, this has not been done. The reason

given for the same is that the appellants ­ DISCOMS had

already filed an application for vacation of the order dated

21st August, 2020. By merely filing an application, the

appellants – DISCOMS could not have avoided abiding with

the order of the APTEL dated 16th March, 2018, as

maintained by this Court vide order dated 21 st August, 2020.

It is brought to our notice that though the appellants –

DISCOMS could have purchased the power from HNPCL at

the rate of Rs.3.82 per unit in view of the orders passed by 81

the APTEL and by this Court, they have chosen to purchase

the power at higher rate from various generators including

KSK Mahanadi from whom the power is being purchased at

the rate of Rs.4.33 per unit.

111. We ask a question to ourselves, as to whether public

interest, which is so vociferously pressed into service in the

present matter by the appellants – DISCOMS, lies in

purchasing the power at the rate of Rs.3.82 per unit from

HNPCL or by purchasing it at the rate of Rs.4.33 per unit

from KSK Mahanadi. We strongly deprecate such a conduct

of the appellants – DISCOMS, which are instrumentalities of

the State. The appellants – DISCOMS, rather than acting in

public interest, have acted contrary to public interest. For

defying the orders passed by this Court, we could very well

have initiated the action against the officials of the appellants

– DISCOMS for having committed contempt of this Court, but

we refrain ourselves from doing so.

82

112. In the result, the present appeal is dismissed with

costs, quantified at Rs.5,00,000/­ (Rupees Five lakh only).

Pending I.As., if any, shall stand disposed of.

113. Taking into consideration that the issue before the

State Commission is pending since long, we direct the State

Commission to decide O.P. No.21 of 2015 and O.P. No.19 of

2016, as expeditiously as possible, and in any case, within a

period of six months from the date of this judgment.

114. Needless to say that till O.P. No.21 of 2015 and O.P.

No.19 of 2016 are decided by the State Commission, the

appellants – DISCOMS shall forthwith start purchasing the

power from HNPCL at the rate of Rs.3.82 per unit as per the

orders passed by the APTEL dated 16 th March, 2018 and by

this Court dated 21st August, 2020.

…............................J. [L. NAGESWARA RAO]

...............................J. [B.R. GAVAI]

NEW DELHI;

FEBRUARY 02, 2022