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SUPREME COURT OF INDIA
Rohinton Fali Nariman, Sanjay Kishan Kaul, JJ.
Nabha Power Limited (NPL) – Appellants
Versus
Punjab State Power Corporation Limited (PSPCL) & Anr. – Respondents
Civil Appeal No. 179 of 2017
Decided On : 05-10-2017
(1961) 3 SCR 1020; (1976) 4 SCC 147; (2013) 8 SCC 131 – Relied upon
(1889) 14 PD 64; (1939) 2 KB 206; [1918] 1 K.B. 592; (1976) Q.B. 319; (1976) 2 WLR 562; [1891] 2 Q.B. 488; (1976) 1 WLR 1187; [1977] UKPC 13; (1998) 1 All ER 98; (2009) 1 WLR 1988 – Referred
(b) Interpretation – Commercial contract – PPA – Nature of contract Class -2 requiring fuel specific procurement, having a pre-identified site – On basis of actual cost of coal – Schedule 7 – Monthly Energy Charges – Components : purchasing; transporting; and unloading the coal – Supply of coal "to and at the project" – Reddendo Singula Singulis – ‘Coal’ has to be washed as per clarification given by respondent – Actual cost of coal would therefore be weighted cost of purchasing, transporting and unloading washed coal – Clarification that appellant had to "arrange" washing of coal – Not implying bearing of cost of washing of coal by appellant. (Para 50, 59, 61)
(1969) 1 SCC 255 – Relied upon
(c) Interpretation – Commercial contract – PPA – Cost of coal – Only washed coal to be used – Therefore term ‘coal’ would mean ‘washed coal’. (Para 62)
(d) Interpretation – Commercial contract – PPA – Transportation cost – Railway siding reaching project site after certain time during which coal transported by road to project site – This cost sought to be excluded – Not justified – Transportation does not mean transportation only by railway. (Para 63, 64)
(e) Interpretation – Commercial contract – ‘To the project’ and 'at the site of the project' – Delivery of coal ‘to the project’ could only mean 'at the site of the project' – It cannot be at the mine site – Therefore GCV of coal to be determined at project site. (Para 67, 68)
Facts of the case:
The appellant is a power generating company while the respondent is the power purchaser. They entered into a PPA for this purpose.
In the course of the contractual obligations, various issues arose, some of which were resolved. However, in respect of the amounts payable to the appellant, the controversy commenced, and remained right from the first invoice. It is the case of the appellant, that the first respondent made deductions from the amount due and payable under the invoices.
The appellant filed petition under Section 86(1)(b) & (f) of the EA before the State Commission seeking relief on account of wrongful deduction of certain components of monthly tariff by the first respondent.
The State Commission dismissed this petition.
The appellant then filed Appeal before the Appellate Tribunal. The appeal was, however, rejected on most grounds except the non-payment of capacity charges allowed in favour of the appellant.
The dispute really is about the interpretation of the provisions of the PPA and is, thus, one of pure interpretation of the terms of the contract.
Finding of the Court:
The appellant is entitled to the washing cost of coal, the transportation from the mine site via washing of coal to the project site inclusive of cost of road transportation for the period where it was necessary. The Calorific Value of the coal would have to be taken at the project site. All other claims in appeal stand rejected.
Result: Appeal partly allowed.
JUDGMENT
Sanjay Kishan Kaul, J. -
Facts:
The Punjab State Electricity Board ('PSEB') in the year 2009 conducted an international competitive bidding for selection of developer through tariff based bidding process for procurement of power on long term basis from a power station to be set up at Village Nalash, Rajpura, District Patiala, Punjab. This power station was envisaged as a Case-2 bid project (Case-2, Scenario-4) criteria by PSEB in terms of the competitive bidding guidelines issued by the Government of India as per Section 63 of the Electricity Act, 2003 (hereinafter referred to as the 'EA').
2. The significance of the aforesaid is that Part-7 of the EA, which contains the provisions for tariff, provides for tariff regulations to be determined by the appropriate commission as per guiding principles set out in the Section of the EA. The tariff is determined under Section 62 of the EA. However in a scenario such as the present case, the determination is as per the provisions of Section 63 of the EA, which reads as under:
"Section 63. Determination of tariff by bidding process. - Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government."
3. In order to facilitate the implementation of the project the PSEB incorporated Nabha Power Limited ('NPL/Appellant') on 9.4.2007 as a special purpose vehicle ('SPV') for implementation of the project and the successful bidder was to acquire 100 per cent shareholding of the NPL and enter into a 25 year Power Purchase Agreement ('PPA') with PSEB.
4. It may be noticed for the purpose of completion of facts that the first respondent, Punjab State Power Corporation Limited, ('PSPCL') is the successor entity of the erstwhile PSEB subsequent to the unbundling of PSEB in accordance with the Punjab Power Sector Reforms Transfer Scheme, 2010, while the second respondent is the Punjab State Electricity Regulatory Commission ('PSERC').
5. On 10.6.2009, a Request for Qualification ('RFQ') and a Request for Proposal ('RFP') inviting proposals to supply 1200 MW of power from the Rajpura Thermal Power Project was issued. The RFQ specified that the following tasks had already been completed:
"i. 1078 acres of land had been acquired.
ii. Environmental clearance had been obtained.
iii. Fuel arrangements had been tied up in the form of LoA dated 11/18.12.2008.
iv. Water arrangement had been tied up."
While the RFP specifically provided that:
"i. The source of primary fuel (coal) would be coal from SECL since SECL had already issued the LoA.
ii. The Railways had given assurance for transportation of coal from SECL over a distance of 1600 km."
6. On the bidding document being issued on 16.9.2009, certain queries and clarifications were raised by the prospective bidders in terms of the bidding documents for which clarifications were issued. The significant clarifications qua the matter at hand, noticed even in the impugned order, are as under:
"i. SECL would supply Grade 'F' coal from Korba/Raigarh field, with GCV of 3900 Kcal/kg to 4260 Kcal/kg, Ash Content of 35% to 40%, total inherent moisture of 5% to 6%, Volatile matter of 24% to 32%, fixed carbon of 32% to 37% and Sulphur content of 0.05%.
ii. On a specific query of whether the coal to be supplied would be washed coal or unwashed coal, it was clarified that washing of coal was to be arranged by the successful bidder.
iii. In response to the queries raised by the bidders, clarifications on the model PPA were also issued on 17.09.2009. On the question of the costs associated with fuel supply, transportation and unloading being pass through, it was clarified that tariff payment will be in accordance with Schedule VII of the PPA."
7. On the bidding process being completed, M/s. L&T Power Dev
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