Except for a few days in September 2021, the power supply to the three DISCOMs had stopped due to a substantial rise in imported coal prices.
The Central Electricity Regulatory Commission (CERC) passed an interim order in favor of DISCOMs in Maharashtra, Punjab, and Haryana.
It directed Tata Power to provide the contracted capacity as per their Power Purchase Agreement (PPA).
The bench comprising of IS Jha, Arun Goyal, and Pravas Kumar Singh opined that the petitioners had presented a prima facie case for immediate relief in the form of instructions to Tata Power to produce and supply the agreed-upon capacity according to the terms of the PPA.
“Since the Petitioners have entered into the PPA for stable and assured supply of power for a period of 25 years at a competitive rate, it will cause them irreparable injury in case of non-supply of power causing inconvenience to the public at large”, the tribunal said.
The judges on the bench mentioned that in order to decide if interim relief should be granted in favor of the petitioners, it was essential to analyze their rights under the PPA. They also considered whether not providing interim relief would lead to a breach of those rights.
“The balance of convenience is also in favour of the Petitioners. The Petitioners have entered into PPA for a period of 25 years for ensuring stable supply of power to meet the needs of their consumers and also carry the liability to pay the capacity charges irrespective of whether they schedule the power or not”.
The power supply to the three DISCOMs was interrupted, except for a few days in September 2021, due to a remarkable surge in the imported coal price.
Punjab State Power Corporation Limited contended that it had to purchase power from alternate sources at a considerably higher rate because power was not provided according to the PPA’s terms.
The respondents, on the other hand, claimed that a determinable contract cannot be enforced under the Specific Relief Act. They also stated that the PPA does not require specific performance, but only offers compensation for non-supply.
After considering these arguments, the tribunal concluded that the PPA cannot be considered determinable because neither party had the right to terminate it at their will.
“The courts have time and again laid down that the only test for ascertaining a determinable contract is whether either of the parties can terminate the contract at their own whims and fancies without providing any reason whatsoever.”
Consequently, the PPA was found to be enforceable.
As a result, the tribunal concluded that the petitioners could not be deprived of their right to the contracted capacity due to the increase in the price of imported coal. The respondents were given instructions after it was determined that they had a strong prima facie case.
