JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

I. Introduction:

1. Respondent no. 1, a generating company, installed and commissioned a 1045MW hydroelectric power project pursuant to a grant followed by an Implementation Agreement with the appellant-State of Himachal Pradesh. Under this Agreement, respondent no. 1 undertook to supply as consideration 18% of net generation free of cost¹[The obligation to supply free power is 12% of net generation from 12.09.2011 to 12.09.2023, and 18% thereafter till 12.09.2051.] to the appellant-State. At the commencement of the obligation to supply 18% free power, respondent no. 1 approached the High Court by way of a writ petition to align the Implementation Agreement with the CERC (Terms and Conditions of Tariff) Regulations, 2019²[Hereinafter “CERC Regulations, 2019”.], which provide for a maximum of 13% free power to the State Government, on the ground that contractual agreements, to the extent that they are inconsistent with the applicable regulations, shall stand overridden by their operation. Accepting the argument, the High Court entertained the writ petition and directed that the Implementation Agreement stood modified.

2. We have allowed the appeal by the State of Himachal Pradesh by interpreting the provisions of the ELECTRICITY ACT , 2003³[Hereinafter “ ELECTRICITY ACT ”.] and the CERC Regulations, 2019 in the context of the subsisting and continuing contractual relationship between the parties. We have held that the Central Electricity Regulatory Commission⁴[Hereinafter “CERC”.] shall give effect to the Regulations and provide a pass-through to the extent of 13% free power but the remaining part of the obligation is contractual in nature and will be governed by the provisions of the Implementation Agreement. On interpreting the cap under Note 3 of Regulation 55 of the CERC Regulations, 2019, we have held that it does not restrain or prohibit respondent no. 1 from supplying free power beyond 13% but it is only meant for the calculation and fixation of tariff. Further, considering the expertise and specialisation of the CERC as a statutory regulator and the wide- ranging jurisdiction it exercises under the ELECTRICITY ACT , as well as respondent no. 1’s conduct in not seeking relief against the appellant before the CERC, we have held that the present writ petition was not maintainable before the High Court as the interpretation of the Regulations falls within the exclusive domain of the regulator.

II. Facts:

3. The facts, to the extent necessary are as follows. By a Memorandum of Understanding⁵[Hereinafter “MoU”.] dated 28.08.1993, the appellant- State allotted the Karcham Wangtoo Hydroelectric Project for an installed capacity of 900 MW to one Jaiprakash Industries Limited⁶[Hereinafter “JIL”.], which is a power generating company and the predecessor of respondent no. 1. Under Clause 6 of the MoU, JIL agreed to supply 12% of the power generated to the appellant-State free of cost.

3.1 Pursuant to the MoU, the appellant entered into an Implementation Agreement with JIL for an enhanced capacity of 1000 MW. The relevant clauses of the Implementation Agreement are as follows:

i. Article 1.2 is the definitions clause that defines “Law” as any Act, rule, regulation, notification, order, or instruction having the force of Law enacted or issued by any competent legislature, government, or statutory authority in In