2025 Supreme(Online)(APTEL) 10

APPELLATE TRIBUNAL FOR ELECTRICITY
Ramesh Ranganathan, Chairperson, Seema Gupta, Technical Member (Electricity)
Maharashtra State Electricity Distribution Company Limited – Appellant
Versus
Central Electricity Regulatory Commission – Respondent
APPEAL NO. 232 OF 2025 | IA NO. 1114 OF 2025 | IA NO. 1192 OF 2025

An issue finally decided by the Supreme Court cannot be re-agitated in a fresh proceeding before a lower tribunal, even if the party relies on a subsequent event that is based on grounds already rejected in the earlier litigation.

Headnote:(A) Electricity Act, 2003 - Sections 79(1)(f), 111, 111(3) - Code of Civil Procedure, 1908 - Section 11 (Explanations III, IV, V) - Limitation Act, 1963 - Constitution of India - Article 141 - The principle of res judicata, including constructive res judicata, applies to proceedings before regulatory commissions and appellate tribunals, barring re-agitation of issues that were directly and substantially in issue in earlier proceedings between the same parties, or which they might and ought to have raised. An order of a competent court, even if erroneous, is binding inter-parties and cannot be overturned in collateral proceedings. (Paras 68, 71, 76, 82, 87, 97)

(B) Electricity Act, 2003 - Power Purchase Agreement - Termination - Unilateral termination of a non-determinable contract by one party is impermissible in law, especially when the grounds for termination have been explicitly rejected by judicial pronouncements. Where a contract does not contain a termination clause and the party suffering the termination has been ready and willing to perform, the burden to establish the validity of the termination lies on the terminating party, not the other. A unilateral termination based on grounds that have been judicially invalidated does not extinguish obligations under the contract and amounts to a breach by repudiation. (Paras 100, 102, 103, 104, 105, 106)

(C) Electricity Act, 2003 - Constructive Res Judicata - Explanation IV to Section 11 CPC applies to appellate stages. A party which had the opportunity to raise a ground in a prior appeal but failed to do so is barred from raising it in subsequent proceedings. Filing a civil appeal and a review petition before the Supreme Court on the same issue, which were dismissed, also attracts Explanations III and V to Section 11 CPC, barring the same issue from being re-litigated in a fresh proceeding. (Paras 76, 80, 84, 86)

Facts of the case:
The Appellant, a distribution company (MSEDCL), filed an appeal against the order of the Central Electricity Regulatory Commission (CERC) which dismissed its petition (No. 276/MP/2024) as not maintainable. MSEDCL's petition sought to declare invoices raised by the Respondent, a generating company (RGPPL), as void, arguing that the Power Purchase Agreement (PPA) between them had been unilaterally terminated by MSEDCL in 2014. The CERC held that the issue of the PPA's termination was barred by the principles of res judicata and constructive res judicata, as it had been raised (either directly or could have been raised) in earlier litigation between the same parties—Petition No. 166/MP/2012, Appeal No. 261/2013, Civil Appeal No. 1922/2023, and Review Petition No. 1997/2023—which had all concluded against MSEDCL, definitively holding that RGPPL was entitled to capacity charges under the PPA even without MSEDCL's specific consent.

Findings of Court:
The Appellate Tribunal dismissed MSEDCL's appeal, upholding the CERC's order. It held that the core issue—whether MSEDCL was liable to pay capacity charges when RGPPL declared availability based on RLNG—had been finally decided against MSEDCL in the prior litigation, which included a definitive judgment from the Supreme Court. The Tribunal found that the unilateral termination of the PPA was impermissible as the PPA was non-determinable and the grounds for termination had been specifically rejected in the earlier judicial pronouncements. Furthermore, the claims regarding the validity of the termination and the adjustment of invoices were either barred by res judicata (including constructive res judicata) or were pending adjudication before the Supreme Court in a separate civil appeal.

Issues: (i) Whether Petition No. 276/MP/2024 filed by MSEDCL before the CERC was barred by the principles of res judicata given the prior litigation on the PPA's interpretation. (ii) Whether the unilateral termination of the PPA by MSEDCL was legally valid and could form the basis for a fresh cause of action.

Ratio Decidendi: The court reasoned that the very basis of the termination letter—MSEDCL's interpretation of Articles 4.3 and 5.9 of the PPA—had been conclusively and finally decided against it by the CERC, Appellate Tribunal, and Supreme Court. Therefore, the issue was res judicata. Even if the termination was a subsequent event, MSEDCL failed to amend its earlier appeal to include it, thus attracting constructive res judicata. Furthermore, the PPA being non-determinable, its unilateral termination without valid legal grounds was itself invalid, and MSEDCL could not use its own wrongful act to avoid contractual liabilities that had been affirmed by judicial decrees. Result : Appeal dismissed. All IAs dismissed. FULL JUDGMENT: The judgment provides a detailed analysis of the law of res judicata (Section 11 CPC), the nature of determinable contracts, and the binding effect of Supreme Court orders. It distinguishes the case from I.S. Sikandar v. K. Subramani and applies the principles from K.S. Manjunath and Others. The court has provided a comprehensive headnote with paragraph references, making it a valuable precedent for cases involving re-litigation of settled issues in electricity regulatory matters. The case is a significant authority on the application of res judicata in regulatory proceedings and on the conditions under which a contract can be unilaterally terminated, particularly in the context of long-term power purchase agreements governed by the Electricity Act, 2003.