Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-005700-005700 – 2014 |
| Diary Number | 32833/2013 |
| Judge Name | HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Bench |
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| Precedent Value | Binding authority |
| Overrules / Affirms |
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| Type of Law | Regulatory law – Electricity Act, 2003 and grid‐synchronization tariffs |
| Questions of Law |
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| Ratio Decidendi |
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| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
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Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | Other High Courts, regulatory commissions |
| Distinguishes | State of Himachal Pradesh v. JSW Hydro Energy Ltd. (2025) SCC OnLine SC 1460 |
| Follows |
|
What’s New / What Lawyers Should Note
- Confirms that any PPA amended after 10.06.2004 must be approved and aligned with CERC (2004) and TNERC (2005) Regulations under Sections 61 & 178, 86 of the Electricity Act, 2003.
- Clarifies that COD under regulations applies per generating unit; project‐level COD clauses cannot override unit synchronization dates.
- Holds continuous supply by a synchronized open‐cycle gas turbine from its unit COD qualifies as firm power, attracting fixed charges despite a later combined‐cycle COD in PPA.
- Rejects waiver/estoppel arguments based on pre-COD correspondence when regulatory definitions of COD and firm/infirm power differ from PPA.
Summary of Legal Reasoning
- Regulatory Hierarchy: The Electricity Act, 2003 (Sections 61–63, 86, 178) empowers CERC/TNERC to specify tariff terms; old 1948 Act regulations saved only to 10.06.2004.
- PPA Approval & Alignment: An amended PPA (25.08.2004) without TNERC approval under Section 86(1)(b) yields to CERC (2004) & TNERC (2005) Regulations per precedents (Tata Power, KKK Hydro, PTC).
- COD Definitions: CERC/TNERC treat COD per unit (Reg 14(xx), 15) and distinguish infirm (pre‐unit COD) vs. firm power (post‐unit COD).
- Application: Gas turbine open‐cycle unit synchronized on 29.10.2005 met unit COD, supplied continuously → firm power; PPA’s project‐level COD (01.07.2006) is subordinate.
- Contractual Estoppel Rejected: Pre‐COD letters did not override regulatory COD definitions or entitlement to fixed charges once unit COD achieved.
Arguments by the Parties
Petitioner (Tamil Nadu Generation & Distribution Co. Ltd.)
- PPA’s sole COD clause (01.07.2006) governs; pre-COD supply is infirm power.
- Correspondence admitted variable-charge treatment until project COD.
- No conflict between PPA clause and CERC/TNERC regulations; PPA terms enforceable without regulatory approval unless expressly conflicting.
- Regulatory approval not prerequisite to contract enforcement; waiver/estoppel bars respondent.
- Higher fixed charges would burden public interest.
Respondent (M/s Penna Electricity Ltd.)
- Amended PPA not approved under Section 86(1)(b) → non-binding if conflicting with regulations.
- 30.03.1992 notification (1948 Act), CERC (2004) & TNERC (2005) require separate CODs per unit based on grid synchronization.
- Gas turbine unit synchronized 29.10.2005, delivered continuous 30 MW → firm power.
- State Commission correctly aligned PPA with Central/State regulations.
Factual Background
- Original PPA dated 29.04.1998 (diesel‐engine technology) later amended on 25.08.2004 to combined‐cycle gas turbine technology and tariff adjustment.
- Amended PPA defined a single “Date of Commercial Operation” upon 47.52 MW project capacity test (combined cycle).
- The open‐cycle gas turbine unit was synchronized with the grid on 29.10.2005 and supplied power continuously until 30.06.2006.
- Appellant paid only variable charges, classifying supply as “infirm power”; respondent claimed entitlement to firm power fixed charges.
- TNERC and APTEL held for respondent; SC appeal challenged classification and regulatory alignment.
Statutory Analysis
- Electricity (Supply) Act, 1948 §43A: two-part tariff (fixed & variable) for thermal stations; COD defined as synchronization date (notification 30.03.1992).
- Electricity Act, 2003 §§61–63: empowers CERC/TNERC to specify tariff terms, saves old notifications until 10.06.2004. §86(1)(b): PPA approval mandatory.
- CERC (Terms & Conditions of Tariff) Regulations, 2004: Reg 14(xx)/(xxi)/(xxiv) define unit, COD per unit/station, infirm power; Reg 15 sets fixed & variable charges components.
- TNERC (Tariff) Regulations, 2005: guided by CERC Regulations under Reg 4, identical COD/unit definitions.
Alert Indicators
- ✔ Precedent Followed – Affirms existing regulatory supremacy and PPA alignment principles under Electricity Act, 2003.