Central Electricity Regulatory Commission directs Tata Power to supply power to DISCOMs in terms of PPA

The Central Electricity Regulatory Commission (CERC) on Monday passed an interim order in favour of Maharashtra, Punjab and Haryana DISCOMs while directing Tata Power to supply the contracted capacity in terms of their Power Purchase Agreement (PPA) [Punjab State Power Corporation Limited v CGPL]..The bench comprising Members IS Jha, Arun Goyal, and Pravas Kumar Singh said that the petitioners had made out a case for the grant of interim relief in the form of directions to Tata Power to generate and supply the contracted capacity in accordance with PPA’s provisions. “Since the Petitioners have entered into the PPA for stable and assured supply of power for a period of 25 years at a competitive rate, it will cause them irreparable injury in case of non-supply of power causing inconvenience to the public at large”, the tribunal reasoned. .The bench opined that in order to decide whether there was a prima facie case for interim relief in favour of the petitioners, their rights under the PPA were to be considered as well as whether the refusal of interim relief would result in deprivation of those rights. “The balance of convenience is also in favour of the Petitioners. The Petitioners have entered into PPA for a period of 25 years for ensuring stable supply of power to meet the needs of their consumers and also carry the liability to pay the capacity charges irrespective of whether they schedule the power or not”, it was concluded. .The supply of power to the three DISCOMs had ceased since September 2021, except for a few days, due to an unprecedented increase in the cost of imported coal. It was submitted that due to the power not being available as decided under the PPA, the Punjab State Power Corporation Limited was forced to procure power from alternative sources at a much higher tariff. .The respondents however argued that as per the Specific Relief Act, a determinable contract cannot be enforced. Further, it was stated that the PPA does not provide for specific performance and only provides for compensation in the event of non-supply. .On examining these submissions, the tribunal opined that the PPA could not be considered to be determinable in nature as neither of the parties could terminate it at will. “The courts have time and again laid down that the only test for ascertaining a determinable contract is whether either of the parties can terminate the contract at their own whims and fancies without providing any reason whatsoever.”Therefore, the PPA was found enforceable. .With this, the tribunal concluded that the petitioners could not be deprived of their right to the contracted capacity on account of the increased cost of imported coal. Finding that they had a strong prima facie case in their favour, directions were issued to the respondents..The arguments on behalf of the DISCOMs were led by Senior Advocate Basava Prabhu Patil, AAG Chetan Sharma, and Advocate G Saikumar for MSEDCL; Senior Advocate MG Ramachandran appeared for PSPCL and HPPC.A team from DSK Legal assisted Senior Advocate Basava Prabhu Patil and AAG Chetan Sharma on behalf of MSEDCL in the matter. The DSK Legal team comprised Partner Samir Malik, Principal Associate Nikita Choukse and Senior Associate Akash Lamba..[Read Order]