Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Power Purchase Agreements (PPAs) are not invalid solely because they are not approved by the State Commission. Several judgments affirm that PPAs, once executed and in certain contexts, remain valid and enforceable even if not formally approved by the regulatory authority at the time of signing.
Main points and insights:
Validity of PPAs without prior approval: Multiple judgments clarify that PPAs executed in accordance with law, especially following proper bidding procedures, are valid and enforceable even if they lack explicit approval from the State Commission ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"]. For instance, the appellate tribunal held: The PPA is invalid as the same was not approved by the State Commission and therefore could not be enforced — but subsequent case law and orders have clarified that approval is a procedural requirement, not a jurisdictional one, and PPAs can still be valid if executed properly and in compliance with legal norms ["Gujarat Urja Vikas Nigam Limited VS Renew Wind Energy (Rajkot) Private Limited - Supreme Court"], ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"].
PPAs approved or not, their enforceability depends on compliance with law: The courts have recognized that PPAs, even if not approved, can be enforceable if they are executed following legal procedures, competitive bidding, and are consistent with applicable regulations ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"]. The Supreme Court has stated that the absence of prior approval does not automatically render a PPA invalid, especially if the agreement was entered into in accordance with law and the bidding process was transparent ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"].
Regulatory approval enhances validity but is not always a prerequisite for enforceability: Several judgments emphasize that while approval by the State Commission is desirable and often necessary for tariff fixation and certain contractual modifications, the core validity of the PPA depends on lawful execution and compliance with statutory procedures ["Gujarat Urja Vikas Nigam Limited VS Renew Wind Energy (Rajkot) Private Limited - Supreme Court"], ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"], ["Bangalore Electricity Supply Company Limited v. Konark Power Projects Limited and Another - Supreme Court"].
Analysis and conclusion:
References:- ["Gujarat Urja Vikas Nigam Limited VS Renew Wind Energy (Rajkot) Private Limited - Supreme Court"]- ["Bangalore Electricity Supply Company Limited v. Konark Power Projects Limited and Another - Supreme Court"]- ["VBC Ferro Alloys Limited. vs Karnataka Electricity Regulatory Commission & Ors. - Appellate Tribunal for Electricity"]
In the dynamic Indian energy sector, Power Purchase Agreements (PPAs) form the backbone of electricity procurement between generators and distributors. A common concern arises: show judgments where it was stated that Power purchase agreements are not invalid because the same are not approved by state commission. This question is pivotal for developers, utilities, and investors navigating regulatory landscapes under the Electricity Act, 2003.
This blog post delves into Supreme Court and appellate tribunal rulings, affirming that PPAs generally retain validity as binding contracts despite lacking prior state commission approval. While approval enhances enforceability, its absence does not automatically void the agreement. We'll examine key judgments, exceptions, and practical insights.
PPAs are commercial contracts outlining terms for electricity sale, including tariffs, volumes, and durations. Section 86 of the Electricity Act, 2003, empowers State Electricity Regulatory Commissions (SERCs) to regulate tariffs and approve such agreements to protect consumer interests and ensure grid stability.
However, courts have consistently held that PPAs, rooted in contract law principles, derive validity from mutual consent and execution—not solely regulatory nod. Non-approval may trigger disputes or limit enforceability in tariff fixation but does not render the PPA invalid per se.
Multiple Supreme Court judgments underscore this principle.
In a landmark ruling, the Supreme Court held that the approval by the Commission to PPA is essential for it to be enforceable, yet emphasized that valid reasons for non-approval (e.g., impact on thermal stations or consumer burden) do not invalidate the PPA itself. Tata Power Company Ltd. VS Reliance Energy Limited - 2009 0 Supreme(SC) 977 This distinction is crucial: enforceability requires approval, but contractual validity persists.
Similarly, another decision noted that the fixation of tariff is a statutory function and the approval by the Commission to PPA is essential for it to be enforceable. However, PPAs allowing tariff reviews imply validity unless declared otherwise, permitting procurement sans prior approval. Transmission Corporation of Andhra Pradesh Ltd. VS Sai Renewable Power Pvt. Ltd. - 2010 5 Supreme 388
Courts prioritize ad idem (meeting of minds). One judgment treated a government order as a power sale contract, incorporating all prior terms into the PPA without variation, affirming validity based on execution. Rithwik Energy Generation Pvt. Ltd. VS Bangalore Electricity Supply Co. Ltd. - 2018 0 Supreme(SC) 659
Tariff revision powers exist pre- and post-commission formation, but non-approval does not nullify executed PPAs. Binani Zinc Limited VS Kerala State Electricity Board - 2009 4 Supreme 284BSES LTD. VS Tata Power Co. LTD. - 2003 8 Supreme 108
These rulings align with contract law: PPAs are enforceable unless voided for fraud, coercion, or statutory violation—separate from approval issues.
While core judgments affirm validity, related cases highlight limitations, particularly for tariffs and amendments.
Tariff Modifications Need Approval: PPAs incorporating prices must be reviewed under Section 86(1)(b). Unapproved changes lack legal weight. KKK Hydro Power Limited VS Himachal Pradesh State Electricity Board Limited - 2025 Supreme(SC) 1284Tamil Nadu Generation And Distribution Corporation Ltd. VS Penna Electricity Limited - 2025 Supreme(SC) 2053
Supplementary Agreements: Unapproved post-2003 amendments are unenforceable if conflicting with regulations. For instance, enhanced tariffs via unapproved supplements were rejected. PTC INDIA LIMITED vs PUNJAB STATE ELECTRICITY REGULATORY COMMISSION & Ors - 2024 Supreme(Online)(APTEL) 4
Firm vs. Infirm Power Disputes: PPAs must align with regs; unapproved amendments post-Act cannot bind parties. Continuous supply pre-COD qualified as firm power, entitling fixed charges despite PPA terms. Tamil Nadu Generation And Distribution Corporation Ltd. VS Penna Electricity Limited - 2025 Supreme(SC) 2053
Short-Term Contracts and Policy: Some PPAs evade full scrutiny if under one year, but state-owned entities remain bound by directives. Gujarat Urja Vikas Nigam Limited. vs Gujarat Electricity Regulatory Commission & Ors. - 2015 Supreme(Online)(APTEL) 145RKM POWERGEN PRIVATE LIMITED vs CHHATTISGARH ELECTRICITY REGULATORY COMMISSION & Ors - 2024 Supreme(Online)(APTEL) 363
Pending Approvals: Courts decline mandamus for fuel ties sans approved PPAs but urge expeditious decisions, recognizing delays beyond control. Adhunik Power & Natural Resources Limited VS Jharkhand State Electricity Regulatory Commission - 2018 Supreme(Jhk) 837
Other sources note arbitrary actions or inapplicability where no tariff issue exists, reinforcing case-specific analysis. HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED vs KUNDAN HYDRO (LUNI) PRIVATE LIMITED AND ANOTHER - 2026 Supreme(Online)(HP) 323 In solar contexts, delayed model approvals extended timelines, but payments followed tariff orders. Pariyur Amman Spinning Mills (P) Ltd. VS Tamil Nadu Generation and Distribution Corporation Ltd. - 2021 Supreme(Mad) 2095
Though not mandatory for validity, SERC approval:- Streamlines tariff enforcement.- Mitigates disputes over revisions.- Ensures compliance with Sections 61-63 of the Electricity Act.
Judicial consensus, led by Supreme Court precedents, establishes that PPAs are not invalid merely for lacking state commission approval. They stand as binding contracts grounded in mutual agreement, with approval serving enforceability and tariff sanctity. Tata Power Company Ltd. VS Reliance Energy Limited - 2009 0 Supreme(SC) 977Transmission Corporation of Andhra Pradesh Ltd. VS Sai Renewable Power Pvt. Ltd. - 2010 5 Supreme 388Rithwik Energy Generation Pvt. Ltd. VS Bangalore Electricity Supply Co. Ltd. - 2018 0 Supreme(SC) 659BSES LTD. VS Tata Power Co. LTD. - 2003 8 Supreme 108Binani Zinc Limited VS Kerala State Electricity Board - 2009 4 Supreme 284
Key Takeaways:- Validity ≠ Enforceability; seek approvals proactively.- Exceptions apply to tariffs/amendments—align with Electricity Act.- Case-specific factors like fraud or policy override general rules.
This post provides general insights based on public judgments and is not legal advice. Consult qualified counsel for specific scenarios.
#PPAValidity #ElectricityLaw #PowerPurchaseAgreement
purchase cost, given that the amendment mandated that the power would be at the pooled power purchase cost, as opposed to the previous provision, which stated that the cost would not exceed the pooled power purchase cost. ... As a matter of fact, in the case of renewable power, the state commission had approved a model PPA. Further, the tariff terms and conditions to the extent d....
Consequently, there was no scope for the Commission to vary the tariff agreed between the parties under the approved power purchase agreement. ... 14. ... In fact, the proviso is more emphatic to the effect that the power purchase agreement, once approved by the Commission, such agreement should continue to remain for the period mentioned in the said agreement. ... The appellan....
The judgments relied upon are stated to be not applicable as there was no issue of tariff fixation and the action was totally and manifestly arbitrary as the petitioner was not a party to the Agreements. Earlier Agreements cannot be enforced to sell power at the rate of Rs.2.5 per MW. ... Functions of State Commission. ... A Supplementary Implementation Agreement for the LHEP 4.50 MW was stated to be executed by the Sta....
The price as well as the agreement, i.e., PPA, incorporating such price and providing for purchase of electricity at that price necessarily have to be reviewed and approved by the State Commission under this provision. ... Policy; (iii) the Commission, in order to promote co-generation or generation of electricity from renewable sources of energy, may, after recording reasons, by an order, review or modify such a power purchase agreement#HL....
Regulation 3(1)(d) defined “Short Term Buy- Short Term Sell contract” to mean a contract where the duration of the power purchase agreement and the power sale agreement is less than one year. ... II Hydro Electric Project to Punjab State Power Corporation Limited through PTC (India) Limited in terms of (a) Power Purchase Agreement between PTC India Limited and Everest Power Private Limited dated 2....
The price as well as the agreement, i.e., PPA, incorporating such price and providing for purchase of electricity at that price necessarily have to be reviewed and approved by the State Commission under this provision. ... Even Section 63 of the Act, 2003 does not dispense with the mandatory approval of the Power Purchase Agreement by the State Commission as provided u/s 86 of the ELECTRICITY AC....
... (d) For issuance of direction upon the Respondent No. 3 and 4 to keep the last date for submission of approved Power Purchase Agreement with the Coal Company in abeyance, till the amended Power Purchase Agreement is duly approved by the Jharkhand State Electricity Regulatory Commission ... without being prejudiced by their decision not to extend the time for submission of approved#HL....
Purchase Agreement (“PPA”) executed between the GUVNL and the Respondent no.2, a Solar Power Developer, is valid and enforceable. ... l) Clause 3 of the Share Purchase Agreement “SPA” would show that on 28.05.2010 when SPA was signed, the transfer of shares did not take place and the same was subject to various conditions to be fulfilled. ... The discrepancies pointed out by the GUVNL are of minor nature and not enough to show that....
public interest, have not been approved by the Commission. ... Therefore, it was not open for the parties to change or vary any term of the PPAs unless approved by the Commission. ... It was, therefore, stated by the 2nd respondent that being a state-owned company, it is bound by policies and directives of the state. 4. ... Therefore, the MoU cannot override the terms of PPAs which have been duly approved by the #....
not been approved by the Commission. ... It was, therefore, stated by the 2nd respondent that being a state-owned company, it is bound by policies and directives of the state. 4. ... Therefore, it was not open for the parties to change or vary any term of the PPAs unless approved by the Commission. ... Considering the above discussion, it is evident that the Commission has erred in holding that the 2nd respondent ....
TANGEDCO submitted the model energy purchase agreement and the same was approved by the commission only on 21.01.2015. Accordingly, the control period specified in Tariff Order No. 7 of 2014, was extended by an order dated 01.04.2015 and accordingly, the period was extended up to 31.03.2016. Therefore, the commission felt that the generator/licensee must be given some more time for execution of the agreements.
As they claim to be not bound by the said Purchase Agreement, they cannot claim that the plaintiff cannot file a suit against the defendants in view of the clauses of the same Purchase Agreement. It is their stand that they are not signatories to the Purchase Agreement dated 28.04.2011 and are not bound by the same. I need not dwell further into the present submission of the learned senior counsel for defendants No. 1 and 3 to 10, at this stage. Even otherwise, defendants No. 16 to 19 are not bound by the Purchase Agreement dated 28.04.2011 or the transaction between the pl....
We are also not in agreement with the finding of the State Commission that this is not a consumer dispute since the case pertains to a breach of contract. In the instant case, the State Commission instead of going into all these aspects erred in dismissing this case at the admission stage. In Synco Textiles Pvt. Ltd. v. Economic Transport Organisation & Ors.1this Commission had held that the mere fact that the default or deficiency on the part of the carrier may also amount to a breach of contract under the general law will not in any way affect the jurisdiction of the foru....
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