M/S ADANI POWER (MUNDRA) LTD. versus GUJARAT ELECTRICITY REGULATORY COMMISSION AND ORS. on 2 July 2019

[2019] 8 S.C.R. 1017

M/S ADANI POWER (MUNDRA) LTD.

v.

GUJARAT ELECTRICITY REGULATORY COMMISSION ANDORS.

(Civil Appeal No.11133 of 2011)

JULY 02, 2019

[ARUN MISHRA, B. R. GAVAI AND SURYA KANT, JJ.]

Electricity Act, 2003 – ss. 86 (1) (F), 95 – RespondentNo. 2-Procurer initiated the process of bidding for supply of poweron long term basis, by issuing Request for Qualification – Threeseparate bids were invited – Appellant was selected as a successfulbidder in respect of bid no. 2 for supplying 1000 MW power at therate of Rs. 2.35 per Kwh – Consequently, Power Purchase Agreement(PPA) came to be entered into between the procurer and the appellant– Appellant contended that the bid submitted by it was on the basisof the assurance given by Gujarat Mineral DevelopmentCorporation (GMDC) to supply coal – It was also contended that,the GMDC was not abiding by the said assurance – There was adispute between the appellant and the GMDC with regard to certainterms and conditions of the Fuel Supply Agreement (FSA) and assuch FSA could not be finalized – Various communications wereexchanged between the Government of Gujarat, appellant andGMDC to find out a solution – Finally, appellant by a communicationdated 28.12.2009, issued notice to the procurer, terminating thePPA with effect from 04.01.2010 – Procurer filed petition u/ss.86(1)(F), 95 of the Act, 2003 before Commission – The Commissionheld that the termination was illegal and directed the appellant tosupply the power to the procurer at the rate determined in the PPA– Aggrieved, appellant filed appeal before the Appellate Tribunal,which was dismissed – On appeal, held: Appellate Tribunal depictedan erroneous approach – It is settled that to harmonize is not todestroy any statutory provision or render it otiose – A harmoniousreading of Art. 3.4.2 and Art. 3.1.2 of the PPA indicated that in theevent of non-compliance of any of the conditions as stipulated inArt. 3.1.2 within the period prescribed thereunder, either of theparties, i.e., the seller or the procurer have the right to terminate

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Athe contract – Further, Appellate Tribunal was totally incorrect inholding that the provisions u/Art. 3.4.2 of the PPA can be invokedonly when there is an agreement between the parties that there is aviolation of any of the conditions specified in Art. 3.1.2 of the PPA– If such a view of the Appellate Tribunal is accepted, it will amountto inserting a totally new condition in Art. 3.4.2 of the PPA andBwould amount to re-writing the contract between the parties; it wouldviolate the provisions of Art. 3.4.2 of the PPA – And it will make theprovisions of Art. 3.4.2 a dead letter and render them otiose – Also,it cannot said to be a condition which is necessary to give businessefficacy to the contract – Besides, Appellate Tribunal erred in holdingCthat the bid of the appellant was not on the basis of the commitmentby the GMDC to supply indigenous coal – As it is clear from variouscommunication between Government of Gujarat, Procurer andGMDC that the bid of the appellant was on the basis of thecommitment by the GMDC to supply the indigenous coal – Thus, the termination of PPA by appellant was legal and valid –DInterpretation of Statutes – Harmonious Construction.

Conclusion

Electricity Act, 2003 – s.62 – Determination of compensatorytariff by Central Electricity Regulatory Commission (CERC) –Respondent No.2-procurer initiated the process of bidding for supplyof power – Appellant was selected as a successful bidder forEsupplying 1000 MW power at rate of Rs. 2.35 per kwh – Appellantcontended that the bid submitted by it was on basis of the assurancegiven by Gujarat Mineral Development Corporation (GMDC) tosupply coal – It was also contended that GMDC did not abide bythe said assurance – Appellant terminated the PPA – Procurer filedFpetition u/ss.86(1)(f) & 95 of the Act before the Commission – TheCommission and the Appellate Tribunal held that the terminationwas illegal and directed the appellant to supply the power to theprocurer at the rate determined by PPA – On appeal, held:Termination by appellant was valid and legal – Appellant suppliedelectricity to the procurer in accordance with the decision of theGCommission and the Appellate Tribunal – In order to do economicjustice, on the principle of business efficacy, the appellant entitledfor adjustment of cost of the project and also entitled to the intereston the expenditure incurred by it for completion of project –Therefore, parties relegated to the CERC for determination of the H

compensatory tariff payable to the appellant from the date oftermination of the PPA – CERC (Terms and Conditions of Tariff)Regulations 2009.

Doctrines/Principles – Principle of Business Efficacy –Discussed.

Allowing the appeal, the Court

HELD: 1. The observations of the Appellate Tribunaldepicted a totally erroneous approach. A harmonious reading ofArticle 3.4.2 and Article 3.1.2 of Power Purchase Agreement(PPA) clearly indicates that in the event of non-compliance of anyof the conditions as stipulated in Article 3.1.2 within the periodprescribed thereunder, either of the parties, i.e., the seller orthe procurer have the right to terminate the contract. However,in either of the events, it is the seller’s liability to pay theliquidated damages at the rate of Rs. 10 lakhs per Mega Watt.[Para 25] [1047-B-C]

2. This Court is of the considered view that the finding ofthe Appellate Tribunal that the provisions under Article 3.4.2 ofthe PPA can be invoked only when there is an agreement betweenthe parties that there is violation of any of the conditions specifiedin Article 3.1.2 of the PPA is totally incorrect. If such an argumentis accepted, it will amount to inserting a totally new condition inArticle 3.4.2 of the PPA and would amount to re-writing thecontract between the parties; it would do total violence to theprovisions of Article 3.4.2 of the PPA. It cannot be said to be acondition which is either reasonable or equitable; it also cannotbe said to be a condition which is necessary to give businessefficacy to the contract; it also cannot be said to be a test whichjustifies the Officious Bystander Test; it also cannot be said tobe a condition which is capable of the clear expression; it is alsonot a condition which does not contradict any expressed terms ofthe contract. On the contrary, is a condition which would totallychange the tenor of Article 3.4.2 of the PPA. We are, therefore,of the considered view that the Appellate Tribunal has grosslyerred in coming to the conclusion that Article 3.4.2 of the PPAcould be invoked only in the event that there is an agreement A

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Awith regard to violation of any of the conditions in Article 3.1.2.[Para 26] [1047-D-F]

3. This Court finds, that both the Commission and theAppellate Tribunal have grossly erred in arriving at finding thattermination can be effected under Article 3.4.2 only if there is anBagreement with regard to non-compliance of condition underArticle 3.4.2 by both the parties. If the finding of the AppellateTribunal is accepted, it will be amounting to makingprovisions of Article 3.4.2 a dead letter and rendering them otiose.[Para 31] [1051-F-G]

4. In the present case, the perusal of various Articles wouldreveal that provisions under Article 14 are general in nature.The provision under Article 3.4.2 is specific, only to be invokedin the case of non-compliance with any of the conditions asprovided under Article 3.1.2. As such, the special provision madein Article 3.4.2 will exclude the applicability of general provisions C

Dcontained in Article 14 of the contract. [Para 34] [1051-F]

5. In the brief summary of the Project given in the said biddocument, it has been specifically mentioned by the appellantthat the bid was submitted on the basis of indigenous coal supplycommitted by the Gujarat Mineral Development CorporationE(GMDC). The bid documents also form part of the PPA betweenthe parties. [Para 37] [1052-C]

6. It could thus be clearly seen that even the Governmentof Gujarat has also clearly indicated that the bid submitted by theappellant in the competitive bid was on the basis of theFcommitment for supply of coal from Morga-II mines by theGMDC. It has, therefore, requested the Managing Director,GMDC to give 50 per cent of coal from Morga block to theappellant. The State Government had, therefore, requested thatthe Managing Director of the GMDC to go for coal allotmentGfrom Morga block. It could thus be seen that, even the procurerwas aware that the bid of the appellant was on the basis of thecommitment by the GMDC to supply the indigenous coal.[Paras 39 and 41] [1053-B, C, F-G]

7. In that view thereof, after the GMDC resiling from itscommitment and refusing to enter into Fuel Supply Agreement(FSA) with the appellant, the appellant was justified in invokingArticle 3.4.2 of the PPA, in view of non-compliance of ConditionNo. (ii) in Article 3.1.2 since it had failed to produce the FuelSupply Agreement. [Para 43] [1054-E]

8. In the light of the aforesaid finding, this Court fails tounderstand as to how the Appellate Tribunal has come to a findingthat the bid of the appellant was not on the basis of the commitmentby the GMDC to supply indigenous coal. This Court is of theconsidered view that the Appellate Tribunal has erred both onfacts and in law. This Court is of the considered view that theappellant was entitled in law as well as on facts to invoke Article3.4.2 of the PPA and terminate the agreement. [Para 44][1054-H; 1055-A]

9. Now, the question would arise as to at what rate theappellant is entitled to compensatory tariff from the date of supplyof power. Undisputedly, even after the PPA was validly terminated,the appellant continued to take the project to its logical end. Aftercommissioning of the project, it has started supplying electricityto the procurer in accordance with the decision of the Commissionand the Appellate Tribunal. The appellant must have incurredhuge expenditure on the same. In order to do economic justice,on the principle of business efficacy, the appellant would beentitled for adjustment of cost of the project and would also beentitled to the interest on the expenditure incurred by it forcompletion of the project. The expenditure towards running ofthe project after obtaining the coal from the open market wouldalso be required to be taken into consideration. The appellantwould also be entitled to the interest on the delay of paymentafter it receives payment upon determination of the rate whichwould be determined by the Central Electricity RegulatoryCommission (CERC). [Para 49] [1056-D-G]

10. Section 62 of the Electricity Act, 2003, provides entiremechanism for determination of the tariff by the CERC. It willalso be relevant to note that the CERC (Terms and Conditionsof Tariff) Regulations 2009 also consider various factors which A

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Aare required to be taken into consideration by the CERC whiledetermining the compensatory tariff. This Court finds that it willbe appropriate to relegate the parties to CERC for determinationof the compensatory tariff payable to the appellant from the dateof termination of the PPA. After such determination, the procurerwould be entitled to adjust the amount if already paid in accordanceBwith affidavit dated 23.11.2015, from the amount so determinedby the CERC. [Para 50] [1056-G-H; 1057-A]

Calcutta Gas Company (Proprietary) Ltd. v. State of WestBengal and others AIR 1962 SC 1044 : [1962] Suppl.SCR 1 – followed.C

Rajasthan State Industrial Development and InvestmentCorporation and Anr. v. Diamond & Gem DevelopmentCorporation Ltd. & Anr. (2013) 5 SCC 470 : [2013]4 SCR 331 ; Bharat Aluminium Company v. KaiserAluminium Technical Services INC (2016) 4 SCC 126 :D[2016] 1 SCR 364 ; Nabha Power Ltd. (NPL) v. PunjabState Power Corporation Ltd. (PSPCL) and Anr. (2018)11 SCC 508 ; Sultana Begum v. Prem Chand Jain AIR1997 SC 1006 : [1996] 9 Suppl. SCR 707 ; AnwarHasan Khan v. Mohammed Shafi and others AIR 2001ESC 2984 ; J.K. Cotton Spinning and Weaving Mills Co.Ltd. v. State of Uttar Pradesh, AIR 1961 SC 1170 :[1961] SCR 185 ; Maharashtra State Board ofSecondary and Higher Secondary Education and Ors.v. Paritosh Bhupeshkumar Sheth and Ors. (1984) 4SCC 27 : [1985] 1 SCR 29 – relied on.

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Indian Oil Corporation v. Amritsar Gas Services Ltd.,(1991) 1 SCC 533 : [1990] 3 Suppl. SCR 196 ; HerHighness Maharani Shanti Devi Gaekwad v. SavjiHaribhai Patel & Ors. (2001) 5 SCC 101 : [2001] 2 SCR 590 ; Vermagiri v. Transco, 2007 SCC onlineGAPTEL 107 – referred to.

Attorney General of Belize v. Belize Telecom Ltd., (2009)1 WLR 1988 (PC) – referred to.

M/S ADANI POWER (MUNDRA) LTD. v. GUJARATELECTRICITY REGULATORY COMMISSION

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11133of 2011.

From the Judgment and Order dated 07.09.2011 of the AppellateTribunal for Electricity in Appeal No. 184 of 2010.

Gopal Jain, Sr. Adv., Ashish Prasad, Ms. Mukta Dutta, AvinashTripathi, Mahfooz A. Nazki, Praveen Kumar, Advs. for the Appellant.

M. G. Ramachandran, Sr. Adv., Ms. Ranjeetha Ramachandran,Ms. Vishakha, Ms. Puja Singh for Mrs. Hemantika Wahi, Ms. SwatiBhardwaj, M/S. Parekh & Co., Prashant Bhushan, Advs. for theRespondents.

The Judgment of the Court was delivered by

B. R. GAVAI, J.

1. The appellant has approached this Court being aggrieved bythe judgment and order passed by the Appellate Tribunal for Electricity(“the Appellate Tribunal” for short) in Appeal No. 184 of 2010 dated07.09.2011 thereby dismissing the appeal filed by the present appellantand confirming the judgment and order passed by the Gujarat ElectricityRegulatory Commission (“the Commission” for short) dated 31.08.2010.

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A2. The facts in brief giving rise to the present appeal are as under.Respondent No. 2, namely, Gujarat Urja Vikas Nigam Ltd.(hereinafter referred to as “the procurer”) is a holding company engagedin the business of bulk purchases from the power generators and supplyto the distribution companies in the State of Gujarat. On 01.02.2006, theBprocurer initiated the process of bidding for supply of power on longterm basis, by issuing a Request For Qualification (“RFQ” for short).Three separate bids for purchase of power in accordance with theprovisions of Section 63 of the Electricity Act, 2003 were invited. Eachof the three bids envisaged purchase of power to the maximum extentof 2000 Mega Watt (“MW” for short). The RFQ was followed byCRequest For Proposal (“RFP” for short) on 24.11.2006. The presentmatter concerns bid No. 2 in respect of which the appellant was selectedas a successful bidder.

3. On being successful in the bidding process, the procurer issueda Letter of Intent (“LOI” for short) in respect of bid no. 2, to the appellantDon 11.01.2007 for supplying 1000 MW power at the rate of Rs. 2.35 perKwh. Consequently, the Power Purchase Agreement (“PPA” for short)came to be entered into between the procurer and the appellant, forpurchase and sale of 1000 MW power from the appellant’s power projectat Korba, Chhatisgarh, at the delivery point at Nani Khakhar in the StateEof Gujarat. Similarly, on 06.02.2007 another PPA came to be executedby the procurer with the appellant in respect of bid No. 1, which projectwas to be executed by using imported coal. The rate determined wasRs. 2.89 per unit in respect of bid No. 1.

4. On 12.02.2007, the appellant informed the procurer that it wouldFsupply power against bid No. 2, from Mundra Power Project in Gujaratinstead of Chhatisgarh Project. Accordingly, a supplemental PPA wasentered into between the appellant and the procurer on 18.04.2007, tooff take the contracted capacity of 1000 MW against bid No. 2, fromMundra Power Project.

G5. The appellant contended that, the bid submitted by it in respectof bid No. 2 was on the basis of the assurance given by Gujarat MineralDevelopment Corporation (“GMDC” for short) to supply 4 million tonnesof coal. It also contended that, the GMDC was not abiding by the saidassurance. So it addressed a communication to the Government of Gujaraton 21.05.2007 to find out a solution. Since the Fuel Supply AgreementH

(“FSA” for short) could not be executed, as contemplated between theappellant and the GMDC; the appellant informed the procurer that theFSA between it and the GMDC had not yet been finalized. Again, acommunication came to be addressed by the appellant on 01.05.2008 tothe Government of Gujarat, requesting it to impress upon the GMDC toadhere to its assurance and supply the coal from the coal blocks allocatedto the GMDC. The procurer, thereafter, in the month of June, 2008,addressed a communication to the appellants stating that, since it hadnot complied with certain conditions stipulated in the PPA and as such, itshould furnish an additional performance bank guarantee. The appellantaddressed another communication to the procurer on 17.01.2009,reiterating its inability to supply the power to the procurer in the absenceof FSA with GMDC. It also informed that it had no other option exceptto terminate the PPA. On 27.02.2009, the Government of Gujarat wroteto the GMDC, asking it to supply coal to the appellant from Naini block.

6. It appears that there was a dispute between the appellant andthe GMDC with regard to certain terms and conditions of the FSA andas such the FSA could not be finalized. The record would further reveal,that there was a long correspondence between the Government ofGujarat, the GMDC, the procurer and the appellant with regard to thecommitment by the GMDC to supply coal to the appellant in respect ofbid No. 2 and non-adherence by the GMDC to abide by the saidcommitment. The appellant addressed a communication dated 15.11.2008specifically informing the procurer that the bid was on the basis of theassurance by the GMDC to supply coal. It also informed the procurerthat though it was in a position to comply with all other conditionssubsequent but they are unable to execute the FSA since the GMDChad not cooperated in the matter. Another communication was addressedby the appellant on 17.01.2009 reiterating that in the absence of FSAwith the GMDC, the appellant will not be in a position to supply contractedcapacity of power to GUVNL/the procurer in the absence of FSA withthe GMDC. It further informed that the appellant shall have no otheroption than to terminate the PPA unless the coal supply comes from theGMDC from Morga-II coal block. However, it appears that, thereafter,there was an attempt to amicably settle the matter between the appellant,the procurer, the GMDC as well as the Government of Gujarat. Assuch, the appellant addressed communication dated 28.04.2009 keepingits notices dated 15.11.2008 and 17.01.2009 in abeyance till the matter AB

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Awas resolved between the appellant and the GMDC/Government ofGujarat. It, however, appears that the said attempts were not fruitful.

Finally, the appellant by a communication dated 28.12.2009, issuednotice to the procurer, terminating the PPA with effect from 04.01.2010.The procurer addressed a communication to the Government of GujaratBon 30.12.2009, requesting the Government to impress upon the appellantto withdraw its termination notice dated 28.12.2009 and also impressupon the GMDC for resolution of FSA with the appellant. The procureralso addressed a communication to the appellant on 05.01.2010,requesting it to keep the notice of termination dated 28.12.2009 inabeyance. On 06.01.2010, the appellant addressed another communicationCto the procurer, informing it that since the period of termination has alreadyexpired, the PPA stands terminated with effect from 4.01.2010. Theappellant also deposited an amount of Rs. 25 crores with the procurertowards liquidated damages in addition to the performance bankguarantee of Rs. 75 crores, which was already with the procurer. OnD13.01.2010 the procurer sent a letter to the appellant, returning the amountof Rs. 25 crores and calling upon it to withdraw the termination notice.However, the appellant asserted that termination was valid.

7. The procurer, thereafter, filed a petition under Sections 86(1)(f)and 95 of the Electricity Act, 2003, for adjudication of the dispute betweenEthe procurer and the appellant on 01.02.2010 before the Commission.The Commission by its judgment dated 31.08.2010 allowed the petitionof the procurer, holding that the termination of the PPA was illegal anddirected the appellant herein to supply the power to the procurer at therate determined in the PPA. Being aggrieved, the appellant approachedthe Appellate Tribunal for Electricity. By the judgment and order impugnedFdated 07.09.2011, the Appellate Tribunal dismissed the appeal. Hence,the present appeal.

8. We have heard Mr. Gopal Jain, learned senior counsel for theappellant, and Mr. M.G. Ramachandran, learned senior counsel for therespondent(s).G

9. The main contention raised on behalf of the appellant is that thebid which was submitted by the appellant in respect of bid No. 2 was onthe basis of the commitment given to it by the GMDC that it will supplythe coal. It is submitted that the PPA executed between the appellantand the procurer was on the premise that the GMDC would abide by its H

commitment. It is also submitted that since the GMDC had failed toabide by its commitment and had not executed the FSA with the appellant,there was a non-compliance with the conditions stipulated in Article 3.1.2of the PPA and therefore the appellant was entitled to terminate theagreement, by giving 7 days notice in writing in accordance with theprovisions of Article 3.4.2 of the PPA. So the only liability of the appellantwas to pay the liquidated damages at the rate of Rs. 10 lakhs per MegaWatt of the contracted capacity, which is worked out to Rs. 100 croresfor 1000 MW.

10. It is the submission of Mr. Jain, learned senior counsel, thatthe Commission and the Appellate Tribunal have grossly erred in holdingthat unless there was an agreement between the parties to the effectthat there was non-compliance with the conditions mentioned in Article3.1.2 of the PPA, the appellant was not entitled to invoke the provisionsof Article 3.4.2 of the PPA. Mr. Jain further submitted that since thecontract also provided for liquidated damages, the Commission as wellthe Appellate Tribunal, ought not to have given a direction for specificperformance. Reliance in this respect is placed on the judgments of thisCourt in the case of Indian Oil Corporation vs. Amritsar Gas ServicesLtd., (1991) 1 SCC 533 and Her Highness Maharani Shanti DeviGaekwad vs. Savji Haribhai Patel & Ors. (2001) 5 SCC 101.

11. Mr. Jain further submitted that the Appellate Tribunal by theimpugned judgment has varied the terms of the contract executed betweenthe parties, which is not permissible in law. Reliance in this respect isplaced on the judgments of this Court in the case of Vermagiri vs.Transco, 2007 SCC On Line APTEL 107 and Gujarat Urja Vikas NigamLtd. vs. Solar Semiconductor Power Company, (2017) 16 SCC 498.

12. Per contra, Mr. Ramachandran, learned senior counselappearing on behalf of the procurer, would submit that the PPA whichwas entered into between the parties, was not executed on the basis ofcommitment by the GMDC. He submits that the procurer is not concernedwith the issue as to from where the appellant would arrange for itssupply of coal. The PPA between the appellant and the procurer is onlyin respect of supply of power. It is submitted that on the GMDC’s failureto adhere to its commitment to supply indigenous coal, it was theresponsibility of the appellant to make arrangement for an alternativesource and to enter into FSA with any other coal supplier. It is submittedthat as a matter of fact, the appellant is importing the coal from other AB

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Anations and using it for generation of power, both for the plant under bidNo. 1 and the plant under bid No. 2. Shri Ramachandran, learned seniorcounsel, further submits that, by not making arrangements for fuel supply,it is the appellant who had committed default and, therefore, a party indefault cannot be permitted to terminate the agreement. Reliance in thisrespect is placed on various judgments of English Courts as well as thisBCourt. Reliance is also placed on various judgments of this Court, insupport of the proposition that in spite of the provision of liquidateddamages in the PPA, the courts are not powerless to direct a specificperformance of the contract.

13. Shri Ramachandran further submitted that the contract isCrequired to be read as a whole and the provisions of the contract cannotbe read in isolation. He, therefore, submits that the Commission as wellas the Appellate Tribunal has rightly held that Article 3.4.2 and Article14.1 and Article 14.2 have to be read together. Thus, no fault could befound with the reasoning given by the Commission as well as the AppellateDTribunal. Learned senior counsel, therefore, submits that the appeal hasno merit and deserves to be dismissed.

14. For appraising the rival submissions it would be necessary torefer to certain clauses of the PPA:

The relevant part of Article 3 reads thus:E“3. Article 3: CONDITIONS SUBSEQUENT TO BESATISFIED BY THE SELLER AND THEPROCURER

3.1Satisfaction of conditions subsequent by the SellerF3.1.1xxx 3.1.2The seller agrees and undertakes to duly perform andcomplete the following activities within (i) Twelve (12)Months from the Effective Date or (ii) Fourteen (14)Months from the date of issue of Letter of Intent,Gwhichever is later, unless such completion is affecteddue to the Procurer’s failure to comply with its obligationsunder this Agreement or by any Force Majeure event orif any of the activities is specifically waived in writingby the Procurer :

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ii.the Seller shall have executed Fuel Supply Agreementand provided the copies of the same to the Procurer.”

The relevant part of Article 3.4 reads thus:

“3.4 Consequences of non-fulfilment of conditions underArticle 3.1

3.4.1 xxx

3.4.2Subject to Article 3.4.3, if:

(i) fulfilment of any of the conditions specified in Article3.1.2 is delayed beyond the period of three (3) Monthsand the Seller fails to furnish any additional PerformanceGuarantee to the Procurer in accordance with Article3.4.1 hereof; or

(ii) the Seller furnishes additional Performance Guaranteeto the Procurer in accordance with Article 3.4.1 hereofbut fails to fulfil the conditions specified in Article 3.1.2for a period of eight (8) months beyond the periodspecified therein, the procurer or the Seller shall havethe right to terminate this Agreement by giving a noticeto the Seller/ Procurer in writing of at least seven (7)days.

If the Procurer or the Seller elects to terminate thisAgreement in the event specified in the precedingparagraph of this Article 3.4.2, the Seller shall be liableto pay to the Procurer an amount equivalent to RupeesRs. 10.00 lakhs per MW of the Contracted Capacity asliquidated damages. The Procurer shall be entitled torecover this amount of damages by invoking thePerformance Guarantee to the extent of an amountequivalent to Rupees 10.00 lakhs per MW of theContracted Capacity and shall then return the balancePerformance Guarantee, if any, to the Seller. If theProcurer is unable to recover the said amount or anypart thereof from the Performance Guarantee the A

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1030SUPREME COURT REPORTS

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amount not recovered from the Performance Guarantee,if any, shall be payable by the Seller to the Procurerwithin ten (10) days from the end of eight (8) Monthsperiod from the due date of completion of conditionssubsequent. It is clarified for removal of doubt that thisArticle shall survive the termination of this Agreement.

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3.4.3In case of inability to the Seller to fulfil the conditionsspecified in Article 3.1.2 due to any Force Majeure event,the time period for fulfilment of the Condition Subsequentas mentioned in Article 3.1.2, shall be extended for theperiod of such Force Majeure event, subject to amaximum extension period of ten (10) Months,continuous or non-continuous in aggregate. Thereafter,this Agreement may be terminated by the Procurer orthe Seller by giving a notice of at least seven (7) days, inwriting to the Other Party.”

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Since both the Commission and the Appellate Tribunal havereferred to Article 14, we also reproduce the same.

“14. ARTICLE 14 : EVENTS OF DEFAULT ANDTERMINATION

14.1Seller Event of DefaultE

The occurrence and continuation of any of the following events,unless any such event occurs as a result of a Force MajeureEvent or a breach by Procurer of their obligations under thisAgreement, shall constitute a Seller Event of Default:

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i)the failure to Commission any Unit by the date fallingtwelve (12) Months after its Scheduled CommercialOperation Date, or

ii)after the commencement of construction of the Project,the abandonment by the Seller or the Seller’sConstruction Contractors of the construction of theProject for a continuous period of two (2) Months andsuch default is not rectified within thirty (30) days fromthe receipt of first notice from the Procurer in this regard,or G

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iii)if at any time following a Unit being Commissioned andduring its retest, as per Article 8, such Unit’s TestedCapacity is less than ninety two (92) per cent of itsRated Capacity, as existing on the Effective Date, andsuch Tested Capacity remain below ninety two (92)percent even for a period of three (3) Months thereafterand also the Seller is unable to make available the fullContracted Capacity at the Delivery Point from theTested Capacity of the Unit(s) of the Power Station; or

iv)after Commercial Operation Date of ContractedCapacity, the Seller fails to achieve Average Availabilityof sixty five per cent (65%), for a period of twelve (12)consecutive Months or within a non-consecutive periodof twelve (12) Months within any continuous aggregateperiod of thirty six (36) Months, or

v)the Seller fails to make any payment (a) of an amountexceeding Rupees One (1) Crore required to be madeto Procurer under this Agreement, within three (3)Months after the Due Date of an undisputed invoice /demand raised by the Procurer on the Seller or (b) ofan amount upto Rupees One (1) Crore required to bemade to Procurer under this Agreement within six (6)Months after the Due Date of an undisputed invoice /demand, or

vi)any of the representations and warranties made by theSeller in Schedule 10 of this Agreement; being found tobe untrue or inaccurate. Further, in addition to the above,any of the undertakings submitted by the Seller at thetime of submission of the Bid being found to be breachedor inaccurate, including but not limited to undertakingsfrom its parent company/affiliates related to theminimum equity obligation; Provided however, prior toconsidering any event specified under this sub-articleto be an Event of Default, the Procurer shall give anotice to the Seller in writing of at least thirty (30) days,or A

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Avii)if the Seller :

a) assigns or purports to assign any of its assets orrights in violation of this Agreement; or

b) transfers or novates any of its rights and / orobligations under this agreement, in violation of thisAgreement; or B

viii)if (a) the Seller becomes voluntarily or involuntarily thesubject of any bankruptcy or insolvency or winding upproceedings and such proceedings remain uncontestedfor a period of thirty (30) days, or (b) any winding up orCbankruptcy or insolvency order is passed against theSeller, or (c) the Seller goes into liquidation or dissolutionor has a receiver or any similar officer appointed overall or substantially all of its assets or official liquidator isappointed to manage its affairs, pursuant to Law, exceptDwhere such dissolution or liquidation of the Seller is forthe purpose of a merger, consolidation or reorganizationand where the resulting entity has the financial standingto perform its obligations under this Agreement andcreditworthiness similar to the Seller and expresslyassumes all obligations of the Seller under thisEAgreement and is in a position to perform them; or C

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ix)the Seller repudiates this Agreement and does not rectifysuch breach even within a period of thirty (30) daysfrom a notice from the Procurer in this regard; or

x)except where due to Procurer’s failure to comply withFits material obligations, the Seller is in breach of any ofits material obligations pursuant to this Agreement or ofany of the RFP Documents where the Procurer andSeller are parties, and such material breach is notrectified by the Seller within thirty (30) days of receiptGof first notice in this regard given by the Procurer to theSeller;

xi)the Seller fails to complete/fulfill the activities /conditionsspecified in Article 3.1.2, beyond a period of 8 Monthsfrom the specified period in Article 3.1.2 and the right H

of termination under Article 3.4.2 is invoked by theProcurer; or A

xii)any direct or indirect change in the shareholding of theSeller in contravention of the terms of the Bid RFPDocuments; or B

xiii)The Seller fails to provide additional bank guarantee tothe Procurer in accordance with Article 3.4.1 of thisAgreement, or

xiv)Occurrence of any other event that is specified in thisAgreement to be a material breach / default of the Seller.

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14.2Procurer Event of Default

The occurrence and the continuation of any of the followingevents, unless any such event occurs as a result of a ForceMajeure Event or a breach by the Seller of its obligations underthis Agreement, shall constitute the Event of Default on thepart of the Procurer:

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i)the Procurer fails to pay (with respect to a Monthly Billor a Supplementary Bill) an amount exceeding 15% ofthe most recent undisputed Monthly Bill for a period ofninety (90) days after the Due Date and the Seller isEunable to recover the amount outstanding to the Sellerthrough the Collateral Arrangement and Letter of Credit;or

ii)the Procurer repudiates this Agreement and does notrectify such breach even within a period of thirty (30)days from a notice from the Seller in this regard; or F

iii)except where due to any Seller’s failure to comply withits obligations, the Procurer is in material breach of anyof its obligations pursuant to this Agreement or of anyof the RFP Documents where the Procurer and theGSeller are Parties, and such material breach is notrectified by the Procurer within thirty (30) days ofreceipt of notice in this regard from the Seller to theProcurer; or 1034SUPREME COURT REPORTS

Aiv)any representation and warranties made by any of theProcurer in Schedule 9 of this Agreement being foundto be untrue or inaccurate. Provided however, prior toconsidering any event specified under this sub-articleto be an Event of Default, the Seller shall give a noticeto the concerned Procurer in writing of at least thirtyB(30) days; or

v)if (a) the Procurer becomes voluntarily or involuntarilythe subject of any bankruptcy or insolvency or windingup proceedings and such proceedings remainuncontested for a period of thirty (30) days, or (b) anyCwinding up or bankruptcy or insolvency order is passedagainst the Procurer, or (c) the Procurer goes intoliquidation or dissolution or has a receiver or any similarofficer appointed over all or substantially all of its assetsor official liquidator is appointed to manage its affairs,Dpursuant to Law, except where such dissolution orliquidation of the Procurer is for the purpose of a merger,consolidation or reorganization and where the resultingentity has the financial standing to perform its obligationsunder this Agreement and has creditworthiness similarto the Procurer and expressly assumes all obligationsEof the Procurer under this Agreement and is in a positionto perform them; or;

vi)occurrence of any other event which is specified in thisAgreement to be a material breach or default of theProcurer.

F14.3Procedure for cases of Seller Event of Default

14.3.1 Upon the occurrence and continuation of any SellerEvent of Default under Article 14.1, the Procurershall have the right to deliver to the Seller aProcurer Preliminary Default Notice, which shallspecify in reasonable detail, the circumstancesgiving rise to the issue of such notice.

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14.3.2 Following the issue of Procurer PreliminaryDefault Notice, the Consultation Period of ninety H

(90) days or such longer period as the Partiesmay agree, shall apply.

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14.3.3 During the Consultation Period, the Parties shall,save as otherwise provided in this Agreement,continue to perform their respective obligationsunder this Agreement.

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(a) in case the Contracted Capacity from a PowerStation is less than 50% of the installedcapacity of such Power Station, the Procurermay terminate this Agreement. Provided suchseller shall have the liability to make paymentsfor Capacity Charges based on NormativeAvailability to the Procurer for the period three(3) years from the eighth day after the expiryof the Consultation Period. Provided furtherthat at the end of the three year period, thisAgreement shall automatically terminate andthereafter, the Seller shall have no furtherCapacity Charge liability towards theProcurer. Provided further, the Procurer shallhave the right to terminate this Agreementeven before the expiry of such three yearperiod provided on such termination, the futureCapacity Charge liability of the Seller shallcease immediately.

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(b) in case the Contracted Capacity from a PowerStation is more than or equal to 50% of theGinstalled capacity of such Power Station, theLenders may exercise or the Procurer mayrequire the Lenders to exercise theirsubstitution rights and other rights provided tothem, if any, under Financing Agreements andthe Procurer would have no objection to theH

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Lenders exercising their rights if it is inconsonance with provisions of Schedule 14.Alternatively, in case the Lenders do notexercise their rights as mentioned hereinabove, the Capacity Charge of the Seller shallbe reduced by 20% for the period of SellerEvent of Default and the Procurer mayterminate this Agreement and the provisionsof Article 14.3.4 (a) shall apply mutatismutandis.

14.4 Termination for Procurer Events of Default 14.4.1 Upon the occurrence and continuation of anyProcurer Event of Default pursuant to Article 14.2(i), the seller shall follow the remedies providedunder Article 11.5.2.

14.4.2 Without in any manner affecting the rights of theSeller under Article 14.4.1, on the occurrence ofany Procurer Event of Default specified in Article14.2 the Seller shall have the right to deliver tothe Procurer a Seller Preliminary Default Notice,which notice shall specify in reasonable detail thecircumstances giving rise to its issue.

14.4.3 Following the issue of a Seller Preliminary DefaultNotice, the Consultation Period of ninety (90) daysor such longer period as the Parties may agree,shall apply.

14.4.4 During the Consultation Period, the Parties shallcontinue to perform their respective obligationsunder this Agreement.

14.4.5. (i) After a period of seven (7) days following theexpiry of the Consultation Period and unless theParties shall have otherwise agreed to the contraryor the Procurer Event of Default giving rise tothe Consultation Period shall have been remedied,the Seller shall be free to sell the ContractedCapacity and associated Available Capacity to any

third party of his choice. Provided the Procurershall have the liability to make payments forCapacity Charges based on Normative Availabilityto the Seller for the period three (3) years fromthe eighth day after the expiry of the ConsultationPeriod. Provided further that in such three yearperiod, in case the Seller is able to sell electricityto any third party at a net price at the DeliveryPoint which is in excess of the Energy Charges,then such excess realization will reduce theCapacity Charge payments due from the Procurer.For the avoidance of doubt, the above excessadjustment would be applied on a cumulative basisfor the three-year period. During such period, theSeller shall use its best effort to sell the ContractedCapacity and associated Available Capacitygenerated or capable of being generated to suchthird parties at the most reasonable terms availablein the market at such time, having due regard tothe circumstances at such time and the pricing ofelectricity in the market at such time. Providedfurther, the Seller shall ensure that sale of powerto the shareholders of the Seller or any direct orindirect affiliate of the Seller/shareholders of theSeller, is not at a price less than the Tariff, withoutobtaining the prior written consent of the Procurer.Such request for consent would be responded towithin a maximum period of three (3) days failingwhich it would be deemed that the Procurer hasgiven his consent. Provided further that at the endof the three-year period, this Agreement shallautomatically terminate and thereafter, theProcurer shall have no further Capacity Chargeliability towards the Seller. Provided further, theSeller shall have the right to terminate thisAgreement even before the expiry of such threeyear period provided on such termination, thefuture Capacity Charge liability of the Procurershall cease immediately.”

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A15. Before we proceed to consider the rival submissions, it will beappropriate to refer to certain judgments of this Court on the interpretationof clauses of the contract between the parties.

16. This Court in the case of Rajasthan State IndustrialDevelopment and Investment Corporation and Anr. vs. Diamond &BGem Development Corporation Ltd. & Anr. reported in (2013) 5 SCC470 observed thus:

“23. A party cannot claim anything more than what is coveredby the terms of contract, for the reason that contract is atransaction between the two parties and has been entered intowith open eyes and understanding the nature of contract. Thus,contract being a creature of an agreement between two or moreparties, has to be interpreted giving literal meaning unless, there issome ambiguity therein. The contract is to be interpreted givingthe actual meaning to the words contained in the contract and it isnot permissible for the court to make a new contract, howeverreasonable, if the parties have not made it themselves. It is to beinterpreted in such a way that its terms may not be varied. Thecontract has to be interpreted without any outside aid. The termsof the contract have to be construed strictly without altering thenature of the contract, as it may affect the interest of either of theparties adversely. [Vide United India Insurance Co. Ltd. v.Harchand Rai Chandan Lal, (2004) 8 SCC 644, and PolymatIndia (P) Ltd. v. National Insurance Co. Ltd., (2005) 9 SCC174.]

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24. In DLF Universal Ltd. v. Town and Country PlanningDeptt., (2010) 14 SCC 1, this Court held: (SCC pp. 14-15, paras13-15)

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“13. It is a settled principle in law that a contract is interpretedaccording to its purpose. The purpose of a contract is theinterests, objectives, values, policy that the contract is designedto actualise. It comprises the joint intent of the parties. Everysuch contract expresses the autonomy of the contractual parties’private will. It creates reasonable, legally protected expectationsbetween the parties and reliance on its results. Consistent withthe character of purposive interpretation, the court is requiredto determine the ultimate purpose of a contract primarily by G

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the joint intent of the parties at the time of the contract soformed. It is not the intent of a single party; it is the joint intentof both the parties and the joint intent of the parties is to bediscovered from the entirety of the contract and thecircumstances surrounding its formation.

14. As is stated in Anson’s Law of Contract :

‘a basic principle of the common law of contract is that theparties are free to determine for themselves what primaryobligations they will accept.... Today, the position is seen ina different light. Freedom of contract is generally regardedas a reasonable, social, ideal only to the extent that equalityof bargaining power between the contracting parties canbe assumed and no injury is done to the interests of thecommunity at large.’

15. The Court assumes:

‘that the parties to the contract are reasonable persons whoseek to achieve reasonable results, fairness and efficiency...In a contract between the joint intent of the parties and theintent of the reasonable person, joint intent trumps, and theJudge should interpret the contract accordingly.’ “

17. This Court in the case of Bharat Aluminium Company vs.Kaiser Aluminium Technical Services INC reported in (2016) 4 SCC126 observed thus:

“10. In the matter of interpretation, the court has to make differentapproaches depending upon the instrument falling for interpretation.Legislative drafting is made by experts and is subjected to scrutinyat different stages before it takes final shape of an Act, Rule orRegulation. There is another category of drafting by lawmen ordocument writers who are professionally qualified and experiencedin the field like drafting deeds, treaties, settlements in court, etc.And then there is the third category of documents made by laymenwho have no knowledge of law or expertise in the field. The legalquality or perfection of the document is comparatively low in thethird category, high in second and higher in first. No doubt, in theprocess of interpretation in the first category, the courts do makean attempt to gather the purpose of the legislation, its context andtext. In the second category also, the text as well as the purpose A

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Ais certainly important, and in the third category of the documentslike wills, it is simply intention alone of the executor that is relevant.In the case before us, being a contract executed between the twoparties, the court cannot adopt an approach for interpreting a statue.The terms of the contract will have to be understood in the waythe parties wanted and intended them to be. In that context,Bparticularly in agreements of arbitration, where party autonomy isthe ground norm, how the parties worked out the agreement, isone of the indicators to decipher the intention, apart from the plainor grammatical meaning of the expressions and the use of theexpressions at the proper places in the agreement.”

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18. Recently, this Court had an occasion to consider the issuewith regard to interpretation of certain clauses of PPA, in the case ofNabha Power Ltd. (NPL) vs. Punjab State Power Corporation Ltd.(PSPCL) and Anr. reported in 2018 (11) SCC 508. The Court referredto various English and Australian judgments as well as the judgments byDthis Court on the issue. We do not wish to burden this judgment with allthe English and Australian judgments reproduced in the said judgment.However, it will be relevant to refer to the following passage of thedecision of the Privy Council in the case of Attorney General of Belizevs. Belize Telecom Ltd., (2009) 1 WLR 1988 (PC): reproduced in NabhaPower Ltd.E

“17. The question of implication arises when the instrument doesnot expressly provide for what is to happen when some eventoccurs. The most usual inference in such a case is that nothing isto happen. If the parties had intended something to happen, theinstrument would have said so. Otherwise, the express provisionsFof the instrument are to continue to operate undisturbed. If theevent has caused loss to one or other of the parties, the loss lieswhere it falls.”

19. We may also gainfully reproduce certain judgments whichhave been reproduced in the case of Nabha Power Ltd. (supra).G

“46. There were, once again, parallel developments in India duringthis period in various High Courts but the views of this Court canbe found expression in Dhanrajamal Gobindram v. ShamjiKalidas and Co., (1961) 3 SCR 1020: AIR 1961 SC 1285(AIR pp. 1291 – 92, para 19)

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“19. .... Commercial documents are sometimes expressed inlanguage which does not, on its face, bear a clear meaning.The effort of courts is to give a meaning, if possible. This waslaid down by the House of Lords in Hillas & Co. v. ArcosLtd. {1932 All ER Rep 494 (HL)}, and the observations ofLord Wright have become classic, and have been quoted withapproval both by the Judicial Committee and the House of Lordsever since. The latest case of the House of Lords is AdamastosShipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. {1959AC 133 : (1958) 2 WLR 688 (HL)}. There, the clause was“This bill of lading”, whereas the document to which it referredwas a charter-party. Viscount Simonds summarised at AC p.158 all the rules applicable to construction of commercialdocuments, and laid down that effort should always be madeto construe commercial agreements broadly and one must notbe astute to find defects in them, or reject them asmeaningless.”

47. In Union of India v. D.N. Revri & Co.{(1976) 4 SCC 147},P.N. Bhagwati, J. (as he then was), speaking for the Bench oftwo Judges said in para 7 as under : (SCC p. 151)

“7. It must be remembered that a contract is a commercialdocument between the parties and it must be interpreted insuch a manner as to give efficacy to the contract rather thanto invalidate it. It would not be right while interpreting a contract,entered into between two lay parties, to apply strict rules ofconstruction which are ordinarily applicable to a conveyanceand other formal documents. The meaning of such a contractmust be gathered by adopting a common sense approach andit must not be allowed to be thwarted by a narrow, pedanticand legalistic interpretation. ...”

48. Lastly, in Satya Jain v. Anis Ahmed Rushdie {(2013) 8 SCC131}, Ranjan Gogoi, J., elucidated the well-established principlesof the classic test of business efficacy to achieve the result ofconsequences intended by the parties acting as prudentbusinessmen. It was opined as under: (SCC pp. 143-44, paras 33-35)

“33. The principle of business efficacy is normally invoked toread a term in an agreement or contract so as to achieve the AB

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result or the consequence intended by the parties acting asprudent businessmen. Business efficacy means the power toproduce intended results. The classic test of business efficacywas proposed by Bowen, L.J. in The Moorcock {(1889) LR14 PD 64 (CA)}. This test requires that a term can only beimplied if it is necessary to give business efficacy to the contractto avoid such a failure of consideration that the parties cannotas reasonable businessmen have intended. But only the mostlimited term should then be implied – the bare minimum toachieve this goal. If the contract makes business sense withoutthe term, the courts will not imply the same. The followingpassage from the opinion of Bowen, L.J. in The Moorcock{(1889) LR 14 PD 64 (CA)} sums up the position : (PD p. 68)

‘...... In business transactions such as this, what the lawdesires to effect by the implication is to give such businessefficacy to the transaction as must have been intended atall events by both parties who are businessmen; not to imposeon one side all the perils of the transaction, or to emancipateone side from all the chances of failure, but to make eachparty promise in law as much, at all events, as it must havebeen in the contemplation of both parties that he should beresponsible for in respect of those perils or chances.’

34. Though in an entirely different context, this Court in UnitedIndia Insurance Co. Ltd. v. Manubhai DharmasinhbhaiGajera {(2008) 10 SCC 404} had considered the circumstanceswhen reading an unexpressed term in an agreement would bejustified on the basis that such a term was always and obviouslyintended by and between the parties thereto. Certain observationsin this regard expressed by courts in some foreign jurisdictionswere noticed by this Court in para 51 of the Report. As the samemay have application to the present case it would be useful tonotice the said observations : (SCC p. 434)

‘51. ... “... ‘Prima facie that which in any contract is left to beimplied and need not be expressed is something so obviousthat it goes without saying; so that, if, while the parties weremaking their bargain, an officious bystander, were to suggestsome express provision for it in their agreement, they wouldtestily suppress him with a common “Oh, of course!” ’ Shirlaw M/S ADANI POWER (MUNDRA) LTD. v. GUJARATELECTRICITY REGULATORY COMMISSION [B. R. GAVAI, J.]

v. Southern Foundaries (1926) Ltd. {(1939) 2 KB 206 :(1939) 2 All ER 113 (CA)}, KB p. 227.”

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“...An unexpressed term can be implied if and only if the courtfinds that the parties must have intended that term to form partof their contract: it is not enough for the court to find that sucha term would have been adopted by the parties as reasonablemen if it had been suggested to them: it must have been a termthat went without saying, a term necessary to give businessefficacy to the contract, a term which, although tacit, formedpart of the contract which the parties made for themselves.”Trollope and Colls Ltd. v. North West Metropolitan Regl.Hospital Board {(1973) 1 WLR 601 : (1973) 2 All ER 260(HL)}, WLR p. 609 C-D : All ER p. 268 a-b.’ (emphasis inoriginal)

35. The business efficacy test, therefore, should be applied onlyin cases where the term that is sought to be read as implied issuch which could have been clearly intended by the parties at thetime of making of the agreement. ...”

After reproducing the paras from earlier judgment, this Courtthrough Sanjay Kishan Kaul, J. observed thus:

“49. We now proceed to apply the aforesaid principles whichhave evolved for interpreting the terms of a commercial contractin question. Parties indulging in commerce act in a commercialsense. It is this ground rule which is the basis of The Moorcock{(1889) LR 14 PD 64 (CA)} test of giving “business efficacy” tothe transaction, as must have been intended at all events by bothbusiness parties. The development of law saw the “five conditiontest” for an implied condition to be read into the contract includingthe “business efficacy” test. It also sought to incorporate “theOfficious Bystander Test” [Shirlaw v. Southern Foundries(1926) Ltd. {(1939) 2 KB 206 : (1939) 2 All ER 113 (CA)}].This test has been set out in B.P. Refinery (Westernport)Proprietary Ltd. v. Shire of Hastings {1977 UKPC 13 : (1977)180 CLR 266 (Aus)} requiring the requisite conditions to besatisfied : (1) reasonable and equitable; (2) necessary to givebusiness efficacy to the contract; (3) it goes without saying i.e.

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Athe Officious Bystander Test; (4) capable of clear expression;and (5) must not contradict any express term of the contract. Thesame penta-principles find reference also in InvestorsCompensation Scheme Ltd. v. West Bromwich Building Society{(1998) 1 WLR 896 : (1998) 1 All ER 98 (HL)} and AttorneyGeneral of Belize v. Belize Telecom Ltd. {(2009) 1 WLR 1988B(PC)}. Needless to say that the application of these principleswould not be to substitute this Court’s own view of the presumedunderstanding of commercial terms by the parties if the terms areexplicit in their expression. The explicit terms of a contract arealways the final word with regard to the intention of the parties.CThe multi-clause contract inter se the parties has, thus, to beunderstood and interpreted in a manner that any view, on a particularclause of the contract, should not do violence to another part ofthe contract.”

20. It could thus be seen that it is more than well settled that theDclauses in the agreement ought to be given the plain, literal andgrammatical meaning of the expression used in the same. No doubt, thatthe courts will also try to gather as to what intention the parties wantedto give them. As has been held by Ranjan Gogoi, J. (as His Lordshipthen was) the principle of business efficacy could be invoked only if bya plain literal interpretation of the term in the agreement or the contract,Eit is not possible to achieve the result or the consequence intended by theparties acting as prudent businessmen. This test requires that a term canonly be implied, if it is necessary to give business efficacy to the contract,to avoid such a failure of consideration that the parties cannot asreasonable businessmen have intended. If the contract makes businessFsense without the term, the courts will not imply the same. It is amplyclear that courts can imply a clause only if it is found that the plain andliteral meaning given to the expression used in the terms is not in aposition to make out the intention of the parties. Reading an unexpressedterm in an agreement would be justified on the basis that such a term was always and obviously intended by and between the parties thereto.GAn unexpressed term can be implied if and only if the court finds thatthe parties must have intended that term to form part of their contract. Itis not enough for the court to find that such a term would have beenadopted by the parties as reasonable men if it had been suggested tothem. It must have been a term that went without saying, a termHnecessary to give business efficacy to the contract, a term which,

although tacit, forms part of the contract. As held in the case of NabhaPower Ltd. (supra), for invoking the business efficacy test and carvingout an implied condition, not expressly found in the language of thecontract, the following five conditions will have to be satisfied:

(1) Reasonable and equitable;

(2) Necessary to give business efficacy to the contract;

(3) It goes without saying i.e. the Officious Bystander Test;

(4) Capable of clear expression; and

(5) Must not contradict any express term of the contract.

21. We have to examine the present case and the correctness orotherwise of the judgment and order passed by the Appellate Tribunalby applying the aforesaid tests.

22. We have hereinbefore reproduced Articles 3 and 4 of thePPA. Article 3 provides for conditions subsequent to be satisfied by theseller and the procurer. Clause (ii) of Article 3.1.2 requires the seller tohave executed FSA and provided the copies of the same to the procurerwithin 12 months from the effective date or 14 months from the date ofissue of Letter of Intent, whichever is later, unless such completion isaffected due to the procurer’s failure to comply with its obligations underthe PPA or by any force majeure event. Article 3.4 provides forconsequences of non-fulfilment of conditions under Article 3.1; sub-clauses (i) and (ii) of Article 3.4.2 specifically provide that if fulfilmentof any of the conditions specified in Article 3.1.2 is delayed beyond theperiod of 3 months and the seller fails to furnish any additionalperformance guarantee to the procurer or if the seller after furnishingadditional performance guarantee to the procurer fails to fulfil theconditions specified in Article 3.1.2 for a period of 8 months beyond theperiod specified therein, both the procurer or the seller shall have theright to terminate the agreement by giving a notice to the other party inwriting of at least 7 days. The only requirement is that in the event oftermination either by the procurer or the seller, the seller shall be liableto pay the procurer an amount equivalent to Rs. 10 lakhs per MW of thecontracted capacity as liquidated damages. It is thus clear that in theevent of non-compliance with any of the requirements as provided inArticle 3.1.2 within the period specified in the said Article, an option isavailable both to the seller or the procurer to terminate the PPA. The A

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Aonly requirement is that, in either of the situations, the liability would beonly on the seller to pay the liquidated damages at the rate of Rs. 10lakhs per MW.

23. The Appellate Tribunal has held that only in the event there isan agreement between the parties that any of the terms specified inBArticle 3.1.2 is violated, the provisions of Article 3.4.2 can be invoked.

24. It will be relevant to quote certain observations made in thejudgment of the Appellate Tribunal which are as follows:

“85. The perusal of Article 3.1.2 of the PPA would make it clearthat the Appellant undertook to perform the condition subsequentto the execution of the Power Purchase Agreement. The Seller’sright to terminate the Power Purchase Agreement as mentionedabove can only arises upon the Procurer’s default in complyingwith its obligation under Article 3.1.2.

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89. (iii)Article 3.4.2 provides a situation under which the PowerPurchase Agreement can be terminated either by the Procurer orby the Seller only when the events provided in Article 3.4.2 (i)and (ii) arise or occur. Although Article 3.4.2 appears to provide aright to both the parties to terminate the PPA on happening ofsuch events specified in Article 3.4.2 (i) and (ii), the same has tobe read and interpreted along with the other Articles of the PPA.Article 3.4.2 further provides that the Seller shall be liable to paythe Procurer an amount of Rs.10 Lakhs per MW as liquidateddamages if the Procurer or the Seller elects terminate theagreement on happening of events specified in the earlier part ofthe Article 3.4.2. From the reading of the said Article 3.4.2, it isclear that either party can terminate the PPA, if the eventsspecified in Article 3.4.2 (i) and (ii) occur and in case of suchtermination by either party, the Seller alone has the obligation topay liquidated damages.

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89(vi)..... If the seller fails to fulfill the conditions specified inArticle 3.1.2, the right to terminate under Article 3.4.2 is invokedby the Procurer. Similarly, the ability of either party to terminatethe PPA under Article 3.4.2 will arise only if both the parties accept H

happening of events specified under Article 3.4.2 (i) and (ii). Inother words, the termination by the Seller under Article 3.4.2 ispossible if both the parties agree to the happening of the eventscontemplated therein and the Seller is willing to pay the liquidateddamages if a dispute arises regarding the event of termination.”

25. The aforesaid observations of the Appellate Tribunal, in ourview, depict a totally erroneous approach. A harmonious reading of Article3.4.2 and Article 3.1.2 clearly indicates that in the event of non-complianceof any of the conditions as stipulated in Article 3.1.2 within the periodprescribed thereunder, either of the parties, i.e., the seller or the procurerhave the right to terminate the contract. However, in either of the events,it is the seller’s liability to pay the liquidated damages at the rate of Rs.10 lakhs per Mega Watt.

26. We are of the considered view that the finding of the AppellateTribunal that the provisions under Article 3.4.2 of the PPA can be invokedonly when there is an agreement between the parties that there is violationof any of the conditions specified in Article 3.1.2 of the PPA is totallyincorrect. If such an argument is accepted, it will amount to inserting atotally new condition in Article 3.4.2 of the PPA and would amount tore-writing the contract between the parties; it would do total violence tothe provisions of Article 3.4.2 of the PPA. It cannot be said to be acondition which is either reasonable or equitable; it also cannot be saidto be a condition which is necessary to give business efficacy to thecontract; it also cannot be said to be a test which justifies the OfficiousBystander Test; it also cannot be said to be a condition which is capableof the clear expression; it is also not a condition which does not contradictany expressed terms of the contract. On the contrary, is a conditionwhich would totally change the tenor of Article 3.4.2 of the PPA. Weare, therefore, of the considered view that the Appellate Tribunal hasgrossly erred in coming to the conclusion that Article 3.4.2 of the PPAcould be invoked only in the event that there is an agreement with regardto violation of any of the conditions in Article 3.1.2.

27. The Tribunal, while arriving at its finding, has held that agreementhas to be read as a whole and if it is read as whole and if Articles 3.4.2and 3.1.2 and Article 14 are harmoniously read, then the only conclusionthat can be drawn is that provisions of Article 3.4.2 can be invoked, onlyif there is an agreement between the parties, that the conditions specified A

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Ain Article 3.1.2 have not been complied with. Let us test the correctnessof this finding.

28. The Constitution Bench of this Court in the case of CalcuttaGas Company (Proprietary) Ltd. vs. State of West Bengal and othersreported in AIR 1962 SC 1044, while construing the entries in the List inBSchedule VII of the Constitution has observed thus:

“8 ….....The Rule of construction adopted by that decision forthe purpose of harmonizing the two apparently conflicting entriesin the two Lists would equally apply to an apparent conflictbetween two entries in the same List. Patanjali Sastri, J., as heCthen was, held in State of Bombay v. Narothamdas Jethabhai,1951 SCR 51 : (AIR 1951 SC69) that the words “administrationof justice” and “constitution and organization of all courts” in itemone of List II of the Seventh Schedule to the Government of IndiaAct, 1935 must be understood in a restricted sense excluding fromtheir scope “jurisdiction and powers of courts” specifically dealtDwith in item 2 of List II. In the words of the learned Judge, if sucha construction was not given “the wider construction of entry 1would deprive entry 2 of all its contents and reduce it to uselesslumber.” This rule of construction has not been dissented from inany of the subsequent decisions of this Court. It may, therefore,Ebe taken as a well settled rule of construction that every attemptshould be made to harmonize the apparently conflicting entriesnot only of different Lists but also of the same List and to rejectthat construction which will rob one of the entries of its entirecontent and make it nugatory.”

FThough the aforesaid observations are made while construing theentries in the List in Schedule VII and though while interpreting theclauses in the agreement the strict principle of interpretation would notbe applicable, the Court can borrow the said principle while interpretingthe same. It has been held by this Court that every attempt has to bemade to harmonize apparently conflicting entries not only of differentGLists but also of the same List and to reject that construction which willrob one of the entries of its entire content and make it nugatory.

29. Again, while interpreting the provisions of Section 47 and OrderXXI, Rule 2 of the CPC, this Court in the case of Sultana Begum vs.Prem Chand Jain reported in AIR 1997 SC 1006, has observed thus:H

M/S ADANI POWER (MUNDRA) LTD. v. GUJARATELECTRICITY REGULATORY COMMISSION [B. R. GAVAI, J.]

“12....... On a conspectus of the case law indicated above, thefollowing principles are clearly discernible:

A

(1) It is the duty of the Courts to avoid a head on clashbetween two Sections of the Act and to construe theprovisions which appear to be in conflict with eachother in such a manner as to harmonize them.B

(2) The provisions of one Section of a statute cannot beused to defeat the other provisions unless the Court, inspite of its efforts finds it impossible to effectreconciliation between them.

C

(3) It has to be borne in mind by all the Courts all the timethat when there are two conflicting provisions in anAct, which cannot be reconciled with each other, theyshould be so interpreted that, if possible, effect shouldbe given to both. This is the essence of the rule of“harmonious construction”.

D

(4) The Courts have also to keep in mind that aninterpretation which reduces one of the provisions asa “dead letter” or “useless lumber” is not harmoniousconstruction.

E

(5) To harmonize is not to destroy any statutory provisionor to render it otiose.”

(emphasis given)

It could thus be seen that this Court has clearly held that toharmonize is not to destroy any statutory provision or to render it otiose.This principle has been reiterated in the case of Anwar Hasan Khanvs. Mohammed Shafi and others reported in AIR 2001 SC 2984. Whileconsidering the provisions of U.P. Urban Buildings (Regulation of Letting,Rent and Eviction) Act, this Court observed thus :

F

“8. It is settled that for interpreting a particular provision of anGAct, the import and effect of the meaning of the words and phrasesused in the statute has to be gathered from the text, the nature ofsubject-matter and the purpose of intention of the statute. It iscardinal principle of construction of statute that effort should bemade in construing its provisions by avoiding the conflict andadopting a harmonious construction. The statute or rules madeH

H

Athereunder should be read as a whole and one provision should beconstrued with reference to the other provision to make theprovision consistent with the object sought to be achieved. Thewell-known principle of harmonious construction is that effectshould be given to all the provisions and a construction that reducesone of the provision to a “dead letter” is not harmoniousBconstruction.......”

30. Applying the aforesaid principles to various clauses of theagreement, an attempt has to be made to harmoniously read the provisionsof Articles 3.1.2, 3.4.2 and 14.1, 14.2, 14.3 and 14.4. An attempt hasalso to be made to give effect to all the provisions. If so read, it will beCclear that Article 14 deals with various eventualities in which procureror the seller can terminate the agreement. Article 14.1 provides fortermination in the event of various defaults committed by the seller. Article14.3 provides for procedure to be followed in cases of default by theseller. Article 14.2 provides various grounds with regard to default byDprocurer. The procedure for termination in cases of default by the procurerhas been provided in Article 14.4. Perusal of grounds stated in Articles14.1 and 14.2 would reveal that these are general in nature. Per contra,provisions of Article 3.4.2 would reveal that termination under this Articlecan be made only if there is non-compliance with any of the conditionsin Article 3.1.2. The power is available to both procurer and seller.EHowever, in either of the cases i.e. termination by seller or terminationby procurer, there is a specific provision of damages at the rate of Rs 10lakhs per MW, whereas consequences of the termination in Articles14.1 and 14.2 are totally different. As such, effect will have to be givento both the provisions, which are independent of each other.F

31. We find, that both the Commission and the Appellate Tribunalhave grossly erred in arriving at finding that termination can be effectedunder Article 3.4.2 only if there is an agreement with regard to non-compliance of condition under Article 3.4.2 by both the parties. If thefinding of the Appellate Tribunal is accepted, it will be amounting toGmaking provisions of Article 3.4.2 a dead letter and rendering them otiose.

32. We further find that the Commission as well as the AppellateTribunal has lost sight of one another important principle of law. ThisCourt in the case of J.K. Cotton Spinning and Weaving Mills Co.Ltd. vs. State of Uttar Pradesh, reported in AIR 1961 SC 1170, while H

construing the provisions of Clause 5(a) and Clause 23 of the U.P.Industrial Disputes Act and the U.P. Government Order issued underthe U.P. Industrial Disputes Act, has observed thus :

“(10) Applying this rule of construction that in cases of conflictbetween a specific provision and a general provision the specificprovision prevails over the general provision and the generalprovision applies only to such cases which are not covered by thespecial provision, we must hold that cl. 5(a) has no application ina case where a special provisions of cl. 23 are applicable.”

33. The said principle has been reiterated by this Court in itsjudgment in the case of Maharashtra State Board of Secondary andHigher Secondary Education and Ors. Vs. Paritosh BhupeshkumarSheth and Ors. reported in (1984) 4 SCC 27. Para 20 of the saidjudgment reads thus:

“20. We consider that the above approach made by the HighCourt is totally fallacious and is vitiated by its failure to follow thewell established doctrine of interpretation that the provisionscontained in a statutory enactment or in rules/regulations framedthereunder have to be so construed as to be in harmony with eachother and that where under a specific section or rule a particularsubject has received special treatment, such special provision willexclude the applicability of any general provision which mightotherwise cover the said topic.........”

34. In the present case, the perusal of various Articles wouldreveal that provisions under Article 14 are general in nature. The provisionunder Article 3.4.2 is specific, only to be invoked in the case of non-compliance with any of the conditions as provided under Article 3.1.2.As such, the special provision made in Article 3.4.2 will exclude theapplicability of general provisions contained in Article 14 of the contract.

35. After considering the legal position, let us examine some ofthe factual aspects of the matter. It would be relevant to note that in thebid dated 2.01.2007 submitted by the appellant, it is clearly mentionedthat the project is based on coal supply from the GMDC.

36. It will also be relevant to refer to Clause 1.2 of Annexure 3 tothe bid document which gives details of the proposed project. Clause1.2 reads as follows:

A

B

C

DE

F

G

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A“1.2 Fuel:

The lead member, Adani Enterprises Ltd. has tied up the indigenouscoal requirement of the Project with GMDC, who has beenallocated Morga II coal block in the State of Chhatisgarh. Furtherwith a view to ensure supply of fuel with optimum techno-Bcommercial parameters, we have also tied up supply of importedcoal with M/s Coal Orbis Trading GMBH, Germany and M/s KowaCompany Ltd. and accordingly executed separate MoUs withthem dated 9[th] Sept 2006 and 21[st] Dec 2006 respectively.”

37. In the brief summary of the Project given in the said bidCdocument, it has been specifically mentioned by the appellant that thebid was submitted on the basis of indigenous coal supply committed bythe GMDC. The bid documents also form part of the PPA between theparties.

38. It will be relevant to note that after the communication datedD15.11.2008 by the appellant to the procurer thereby conveying its intentionto terminate the PPA in the wake of pending FSA with the GMDC forsupply of power under bid No. 2, the Managing Director of Gujarat UrjaVikas Nigam Ltd., the procurer, had addressed a communication to thePrincipal Secretary, Energy and Petrochemicals Department, Governmentof Gujarat, requesting it to issue suitable directions since the issueEregarding allocation of coal from the mines allocated to the GMDC waswithin the purview of Government of Gujarat. Thereafter, on 27.02.2009the Deputy Secretary of the Industries and Mines Department,Government of Gujarat, addressed a communication to the ManagingDirector of the GMDC. It will be relevant to record the following part ofthe said letter.F

“(b) So far as Naini block is concerned, GMDC had already givena commitment for supply of coal from Morga-II mines to M/s.Adani Ltd., for a 1000 MW plant on the basis of which M/s.Adani submitted their bid in the competitive tariff bid to GUVNLGat Gujarat bus-bar. Considering this aspect and the full availabilityto the state, 50% block may be given M/s. Adani Ltd and remaining50% block may be given to Torrent Power Ltd., to exclusivelyprovide power for Gujarat’s need. M/s.Adani and M/s.TPL haveto sell power generated from Naini Block exclusively to GUVNL.No merchant sale is to be allowed to anyone else.

H

2. You are now, therefore requested to go for coal allotment fromMorga block with M/s. KSK by way of the detailed FSA and togive 50% coal from Naini block to M/s. Adani and remaining50% coal to M/s.Torrent Power Ltd., as mentioned above.”

39. It could thus be clearly seen that even the Government ofGujarat has also clearly indicated that the bid submitted by the appellantin the competitive bid was on the basis of the commitment for supply ofcoal from Morga-II mines by the GMDC. It has, therefore, requestedthe Managing Director, GMDC to give 50 per cent of coal from Morgablock to the appellant. The State Government had, therefore, requestedthat the Managing Director of the GMDC to go for coal allotment fromMorga block.

40. It will also be relevant to note that on 30.12.2009, the Executive(Finance) of the procurer has addressed a letter to the Principal Secretary,Energy and Petrochemicals Department, Government of Gujarat,referring to the letter issued by the appellant on 28.12.2009. After referringto Article 3.4.2 of the PPA, it is stated in the said communication asunder:

“In light of above circumstances Government of Gujarat isrequested to impress upon M/s.APL to withdraw the Notice ofTermination of PPA dated 2[nd] February, 2007, executed withGUVNL, for supply of 1000 MW under bid specification no.02/LTPP/2006 and also impress upon GMDC for prompt necessaryaction for execution of FSA with M/s. APL to ensure supply of1000 MW power to GUVNL at competitive rate to meet futuredemand of the state. Further Government of Gujarat is requestedto kindly issue suitable directives to GUVNL for further necessaryaction in the matter.”

41. It could thus be seen that, even the procurer was aware thatthe bid of the appellant was on the basis of the commitment by theGMDC to supply the indigenous coal.

42. In view of the aforesaid, it could be seen that the appellant aswell as the procurer and also the Government of Gujarat clearlyunderstood that the bid submitted by the appellant was on the basis ofthe commitment of the GMDC to supply indigenous coal to it. It will bepertinent to mention that the appellant had sent notices intimating itsintention to terminate the PPA on account of non-finalisation of FSA

A

B

C

D

E

F

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Awith the GMDC and also terminate the contract much prior tocommissioning of the project and commencement of power supply tothe procurer. Annexure III to the PPA would itself show that expectedcommercial date of operation is January, 2012, whereas termination isvide notice dated 28.12.2009. The materials placed on record wouldreveal that the appellant has supplied the power at the rate of Rs. 2.35Bper unit (as per bid) after the PPA was terminated by it, to abide by thedirections issued by the Commission. It may not be out of place to mentionthat the appellant was a successful bidder in respect of the two bids i.e.bid No. 1 and bid No. 2. Insofar as bid No. 2, which is the subject matterof the present proceedings, the bid of the appellant was accepted at theCrate of Rs. 2.35 per unit whereas in the same bidding process, bid of theappellant for bid No. 1 was accepted at the rate of Rs. 2.89 per unit.The said Project was to be executed on the basis of imported coal supply.It is thus clear that the parties were very much aware that bid of thepurchaser for bid No. 1 which was at a much lower price than the price for bid No. 2 was on account of the commitment to the appellant fromDthe GMDC that it would supply indigenous coal to it.

43. In that view of the matter, after the GMDC resiling from itscommitment and refusing to enter into FSA with the appellant, theappellant was justified in invoking Article 3.4.2 of the PPA, in view ofnon-compliance of Condition No. (ii) in Article 3.1.2 since it had failed toEproduce the Fuel Supply Agreement. It will also be relevant to refer toParagraph 70 of the judgment of the Appellate Tribunal. Paragraph 70reads as under:

“Admittedly, the Seller, the Appellant mentioned in the biddocuments that “Adani Enterprises Limited has tied-up indigenousFcoal requirements of the project with the Gujarat MineralDevelopment Corporation, who has been allocated Morga-II Blockin the State of Chhatisgarh”. The Appellant has also mentioned inthe bid documents that with a view to ensure the supply of fuel,they have tied-up supply of imported coal with two foreignGCompanies and accordingly executed separate Memorandum ofUnderstanding with them dated 9.9.2006 and 21.12.2006.”

44. In the light of the aforesaid finding, we fail to understand as tohow the Appellate Tribunal has come to a finding that the bid of theappellant was not on the basis of the commitment by the GMDC to H

supply indigenous coal. We are of the considered view that the AppellateTribunal has erred both on facts and in law. We are of the consideredview that the appellant was entitled in law as well as on facts to invokeArticle 3.4.2 of the PPA and terminate the agreement.

45. Having held that the termination was legal and valid the questionarises as to what relief is to be granted to the appellant. On the basis ofthe Order of the Commission and the Appellate Tribunal, the appellant iscontinuing supply of electricity to the respondent No. 2, the procurer,though it is the contention of the appellant that it has been sustaininglosses by doing so.

46. It will be relevant to refer to certain subsequent developments.The appellant had approached this Court by Interlocutory ApplicationNo. 4 of 2015 for the following reliefs:

“(a) to stay the operation of the impugned judgment dated7.9.2011 and suspend further supply of electricity in termsof the PPA during the pendency of this Appeal.

(b) in the alternative to prayer (a) above, during the pendencyof the accompanying Civil Appeal the Hon’ble Courtmay direct the Respondent(s) to pay the tariff as perCERC norms for tariff on cost plus basis; and also makethe payment from the date of the supply of power underthe PPA of the differential amount between the PPAtariff and the tariff as per CERC norms for tariff oncost plus basis on the such terms and condition as thisHon’ble court deems fit as just and proper.”

47. The said application came up for consideration before theBench consisting of J. Chelameswar, and Abhay Manohar Sapre, JJ. Itappears that in the said I.A. an affidavit dated 23.11.2015 came to befiled on behalf of the respondent No. 2, the procurer. It will be relevantto note the averments made in the affidavit quoted in the Order dated3.12.2015 passed by this Court.

“15. I submit that, without prejudice to the rights of the RespondentNo.2 to contest the present appeal, the answering Respondentwith the approval of Government of Gujarat has already shownits willingness to pay compensatory tariff prospectively (fromnext month of CERC order i.e. March 2014) subject to paras A

B

C

D

E

F

G

H

A12 and 13 above to resolve the issue by making suitableadjustments in tariff which till date is not implemented becauseof non acceptance by Appellant and other stakeholders.

16. I say that without prejudice to its rights in the present appealsthe Respondent No.2 is willing to implement the decisions ofBState Govt. for paying compensatory tariff prospectively (fromnext month of CERC order i.e. March 2014) to resolve theissue by making suitable adjustment in tariff on the directionsof the Hon’ble Court. ...”

48. This Court after hearing the parties observed that insofar asCthe question of permitting the supplier/procurer to pay the compensatorytariff, as indicated in its counter affidavit is concerned, it requires nopermission from this Court and it was for the supplier/procurer to take adecision in accordance with law.

49. Once we hold that termination is valid and legal, question wouldDarise as to at what rate the appellant is entitled to compensatory tarifffrom the date of supply of power. Undisputedly, even after the PPA wasvalidly terminated, the appellant continued to take the project to its logicalend. After commissioning of the project, it has started supplying electricityto the procurer in accordance with the decision of the Commission andthe Appellate Tribunal. The appellant must have incurred huge expenditureEon the same. In order to do economic justice, on the principle of businessefficacy, the appellant would be entitled for adjustment of cost of theproject and would also be entitled to the interest on the expenditureincurred by it for completion of the project. The expenditure towardsrunning of the project after obtaining the coal from the open marketFwould also be required to be taken into consideration. The appellantwould also be entitled to the interest on the delay of payment after itreceives payment upon determination of the rate which would bedetermined by the Central Electricity Regulatory Commission (“CERC”for short). However, we find that it will not be appropriate for us to gointo that exercise.G

50. Section 62 of the Electricity Act, 2003, provides entiremechanism for determination of the tariff by the CERC. It will also berelevant to note that the CERC (Terms and Conditions of Tariff)Regulations 2009 also consider various factors which are required to betaken into consideration by the CERC while determining theHcompensatory tariff. We find that it will be appropriate to relegate the

parties to CERC for determination of the compensatory tariff payable tothe appellant from the date of termination of the PPA. After suchdetermination, the procurer would be entitled to adjust the amount ifalready paid in accordance with affidavit dated 23.11.2015, from theamount so determined by the CERC.

A

51. Hence, the following order:

B

(i) The appeal is allowed.

(ii) The notice of termination of the PPA dated 28.12.2009is held to be legal and valid. It is also declared that thePPA stood validly terminated with effect fromC04.01.2010.

(iii) The appellant would be at liberty to approach the CERCfor determination of the compensatory tariff, includingvarious aspects mentioned in paragraph 49, payable to itfrom the date of supply of electricity by it to the procurer.The CERC is directed to decide the said issue in thelight of what has been observed by us hereinabove andin the light of the provisions of Section 62 of theElectricity Act so also the CERC (Terms and Conditionsof Tariff) Regulations, 2009 within a period of threemonths from the appellant’s approaching it.

DE

(iv) The procurer shall make the payment to the appellantas determined by the CERC within a period of threemonths from the date of its determination.

(v) The procurer would be entitled to adjust the amount ifalready paid by it in pursuance of its affidavit dated23.11.2015 from the amount so determined by thesupplier. The procurer shall be entitled to adjust thebalance amount recoverable by it from the appellanttowards liquidated damages of Rs. 100 Crore.

F

(vi) No order as to cost.

G

Ankit Gyan

H