Proceedings U/S 62 & 63 Of Electricity Act Are Entirely Different: Supreme Court Dismisses Pleas Of HPPC & GRIDCO

The Supreme Court has dismissed the Appeals filed by Haryana Power Purchase Centre (HPPC) and GRID Corporation of Orissa Limited (GRIDCO), saying that the proceedings under Sections 62 and 63 of the Electricity Act, 2003 are entirely different.

The Appeals were preferred against the Judgment of the Appellate Tribunal for Electricity (APTEL), New Delhi, which dismissed the same and upheld the Order of the Central Electricity Regulatory Commission (CERC).

The two-Judge Bench comprising Chief Justice of India (CJI) B.R. Gavai and Justice K. Vinod Chandran observed, “It is further to be noted that the petitions filed by GKEL before the CERC were filed seeking compensation on account of Change in Law events affecting Haryana and Bihar PPAs which were concluded by following provisions prescribed under Section 63 of the 2003 Act. Section 63 of the 2003 Act provides for the determination of tariff by bidding process whereas under Section 62, the tariff is determined on Cost Plus basis. It can thus be seen that proceedings under Sections 62 and 63 of the 2003 Act are entirely different.”

The Bench said that none of the DISCOMS (Distribution Companies) can claim a priority for supply of power based either on the prior date of agreement or the recital as to the source of coal.

Senior Advocate M.G. Ramachandran appeared on behalf of the Appellants while Senior Advocates Abhishek Manu Singhvi, S.B. Upadhyay, Advocates Vishrov Mukherjee, Prerna Singh, and Raj Kumar Mehta appeared on behalf of the Respondents.

Factual Background

GMR Kamalanga Energy Ltd. (GKEL) set up a thermal power plant in Odisha with coal as the primary fuel. It entered into the Power Purchase Agreements (PPAs) with GRIDCO, Haryana Utilities, and Bihar Utilities. GKEL faced fuel supply challenges due to changes in coal linkage and policy, leading to increased costs. GKEL addressed a letter to the Government of Odisha requesting the State Government for a recommendation to the Ministry of Coal, Government of India for the allotment of long-term coal linkage in its favour. Accordingly, the Department of Energy, Government of Odisha vide letters pursued the matter with the Central Government. The Haryana Power Generation Corporation (HPGC) issued a request for proposal (RfP) on behalf of the Haryana Utilities for procurement of 2,000 MW power on a long-term basis. The said RfP envisaged the procurement of power by way of a tariff-based bidding process as provided for under Section 63 of the 2003 Act.

Subsequently, the Standing Linkage Committee in a meeting approved a firm coal linkage for a plant. Additionally, the Ministry of Coal intimated its decision and confirmed the allotment of the said coal blocks to the consortium. In the meanwhile, GKEL filed a Petition before the CERC and sought adjustment of tariff on account of events of Change in Law which affected the power project during the operation period in order to restore GKEL to the same economic position that it would have been in if the concerned events had never occurred. The CERC disposed of the same and directed the Haryana Utilities to pay the supplementary bills raised by GKEL along with late payment surcharge as per the provisions of the PPA executed between the parties within one month. Being aggrieved, the Haryana Utilities filed an Appeal before the APTEL and subsequently, GRIDCO filed an Appeal. The APTEL dismissed the same and upheld CERC’s Order. Hence, the case was before the Apex Court.

Reasoning

The Supreme Court in the above regard, noted, “Insofar as the appeal by GRIDCO is concerned, the main contention of GRIDCO is that the order dated 3rd February 2016 in Petition No. 79 and order dated 20th March 2018 in Petition No. 105 were passed without impleading GRIDCO. It will be relevant to note that the PPA with GRIDCO is under Section 62 of the 2003 Act whereas the PPAs with the Haryana Utilities and Bihar Utilities are under Section 63 of the 2003 Act. As such there was no occasion for GKEL to implead GRIDCO as a party to the said petitions.”

The Court remarked that the methodology adopted by the CERC for determining the tariff payable by GRIDCO to GKEL has been duly approved by the APTEL and in that view of the matter, GRIDCO was neither a necessary nor a proper party to the proceedings initiated by GKEL.

“While considering GRIDCO’s appeal, the learned APTEL found that the supply of coal from all modes of procurement has to be considered for the power plant as a whole and not for specific PPAs as prayed by the appellants. … In the foregoing paragraphs, while considering the appeal of Haryana Utilities, we have already upheld the concurrent findings of the CERC and the learned APTEL that the coal supply from all the sources has to be apportioned amongst all the three DISCOMS in proportion to the energy supplied to them”, it observed.

Accordingly, the Apex Court dismissed the Appeals and upheld the APTEL’s Judgment.

Cause Title- Haryana Power Purchase Centre (HPPC) and Others v. GMR Kamalanga Energy Limited and Others (Neutral Citation: 2025 INSC 1079)

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