“9. While interpreting contracts, it is a settled principle of law that due regard has to be made to the intention of the parties at the time of executing the contract. In the present case, the state government put to the notice of the Petitioner that an agreement to supply power at only variable cost be executed, and that the said State Government would get a policy/statutory backing since under the provisions of the Electricity Act, 2003, a distribution licensee cannot procure power only at variable cost. It is stated that as per Sections 61, 62 and 86(1)(b) of the Act, the distribution licensees are mandated to procure power by payment of cost of generation, which includes variable as well as fixed costs. The only reason why the Petitioner agreed to sign the PPA at variable cost, was because the said Petitioner was made to believe that suitable changes in the statutory scheme would be effected by the Central Government, at the instant of the State Government, thereby taking away the ability of a generating company to claim full tariff as per regulations. Based upon the said representation, and the fact that the Petitioner had to make an investment decision, the said Petitioner agreed to supply power at variable cost only on account of the above representation of the State Government.
