Allowed

All India Power Engineer Federation & Ors. v. Sasan Power Ltd. & Ors. etc.

Supreme Court8 Dec 20162016 INSC 1114 · [2016] 9 S.C.R. 9012016 INSC 1114

Case brief

AI extract

What is this about?

The Supreme Court held that the procurers did not waive the power plant's obligation to demonstrate 95% contracted capacity for the Commercial Operation Date (COD). The Court ruled that accepting a lower capacity would raise tariffs, impacting public interest. Thus, the Appellate Tribunal was set aside.

What did the court decide?

Appeals allowed; Appellate Tribunal judgement set aside; CERC order reinstated. No order as to costs.

What the court decided

All India Power Engineer Federation… — Contract and Commercial Disputes | Supreme Court (2016)

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[2016] 9 S.C.R. 901

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ALL INDIA POWER ENGINEER

FEDERATION & ORS.

SASAN POWER LTD. & ORS. ETC.

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(Civil Appeal Nos. 5881-5882 of2016) B

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DECEMBER 08, 2016

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[KURIAN JOSEPH AND R.F. NARIMAN, JJ.]

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ELECTRICITY ACT, 2003:

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ss. 61 to 63 - Commercial Operation Date (COD) - Determination of- Procurement of power from generating companies - Sasan Power Ltd. was incorporated as a special purpose vehicle by Power Finance corporation the nodal agency for procuring power - Power Purchase Agreement (PPA) dated 7.8.2007 executed between Sasan Power Ltd. and procurers of generation and sale of electricity - Article 6 r/w Schedule 5 provided for preconditions to be satisfied for declaration of 'COD' namely readiness to commence commercial operations - This happens only when the pe1formance test by operating the gene1·ating unit at 98% of the contracted capacity as existing on the effective date on a continuous running basis for 72 hours is certified by an independent engineer by giving a final test certificate to the said effect - The date for commissioning the first unit was fixed under the PPA as 7.5.2013 - However, under Schedule 11 thereof. this date was preponed to 27.11.2012 - As Sasan kept postponing this date, the commissioning tests for generating Unit No.3 commenced from 20.3.2013 - Various emails were exchanged from 27.3.2013 to 30.3.2013 between Sasan and WRLDC, a statutory authority under the Act of 2003 - It was the case of Sasan that though they were ready to deliver electricity on 31.3.2013 at 95% of the contracted capacity of 620 MW of the unit, they could not do so as WRLDC did not give them the necessary green signal to go ahead - They relied heavily upon the independent engineer's test certificate dated 30.3.2013 to show that a COD took place on the following day - Petition was filed by WRLDC before the CER Commission challenging the veracity of certificate issued by the independent engineer - Commission arrived at the conclusion that COD had not been achieved on 31.3.2013 but had only been

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A achieved tater on 16.8.2013 - Appellate Tribunal set aside the finding of Commission holding that though COD had not been achieved on 31.3.2013 in accordance with the PPA but that the procurers under the PPA had waived their right to demand performance at 95% and that the pe1formance of unit no.3 which was only roughly 17% of its contracted capacity was accepted by

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B all the procurers and that, therefore, there was a waiver of this essential condition which would then entitle the generator to treat 31.3.2013 as the-date on which commercial operation of unit no.3 commenced - Challenged - Held: A perusal of the emails exchanged between the parties show that the parties did not intend to amend

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c any of the provisions of the PPA - The two emails sent by the lead procurer to Sasan read together do not amount to waiver of the right mentioned in clause 6.3.1 - There is no .such clear intention that can be spelled out on a reading of the two emails - All that can be spelled out is that the first email of 31.3.2013 categorically stated that the test result is not as per Article 6.3.1, and is not acceptable

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D - The last sentence of this very email then refers to clause 6.3.4 and to a de-rated capacity of 101.38 MW - Thereafter, email of 2..1.2013 expands on the said last sentence of the earlier email by referring to Article 6.3.4 and Article 11 proviso - This is akin to a 'without prejudice' acceptance of de-rated power, being a non-acceptance

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E of the test certificate dated 30.3.2013 coupled with a desperate attempt to somef10w get whatever power is available - But this does not amount to a clear and unequivocal intention to relinquish a known right - There is no waiver - Appellate Tribunal is wholly incorrect in accepting the case of waiver and is equally incorrect in absolving the, independent engineer for the test cer.tificate given

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F by him on 30.3.2013.

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ss. 61 to 63 - Electricity tariff- Variation in - Effect on public interest - Held: The moment electricity tariff gets affected, the consumer interest comes in and public interest gets affected - Under s.61, the appropriate commission, when ·it specifies terms and G conditions for determination of tariff, is to be guided inter alia by the safeguarding of the consumer interest and the recovery of the cost of electricity in a reasonable manner.

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WAIVER:

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H Waiver of right - Held: Waiver is an intentional relinquishment

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC.

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903

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of a known right - Waiver must be ~pelled out with crystal clarity for there must be a clear intention to give up a known right - Therefore, unless there is a clear intention to relinquish a right that is fully known to a party, a party cannot be said to waive it.

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Waiver of provision of contract if any element of public interest is involved - Held: Such waiver will not be given effect to if it is contrary to such public interest - If there is any element of public interest involved, the court steps in to thwart any waiver which may be contrary to such public interest - Judicial review - Electricity Act, 2003.

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Contract Act, 1872: s.63 -Applicability of- Held: If on facts there is a waiver of a provision of the PPA by one of the parties to the PPA, then s.63 of the Contract Act will operate in order to give effect to such waiver - Waiver.

Allowing the appeals, t11e Co.urt

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HELD: 1. Waiver is an intentional relinquishment of a known right, and, therefore, unless there is a clear intention to relinquish a right that is fully known to a party, a party cannot be said to waive it. It is also clear that if any element of public interest is involved and a waiver takes place by one of the parties to an agreement, such waiver will not be given effect to if it is contrary to such public interest. [Para 20][935-G-H; 936-A]

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Jagad Bandhu Chatterjee v. Nilima Rani (1969) 3 SCC 445; P. Dasa Muni Reddy v. P. Appa Rao (1974) 2 SCC . 725 : 1975 (2) SCR 32; Lachoo Mal v. Radhey Shyam (1971) 1 sec 619; Jndira Bai V. Nand Kishore, (1990) 4 SCC 668; Krishna Bahadur v. Puma Theatre, (2004) 8 sec 229 - relied on.

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Under Section 62 of the Act, the appropriate commission is to determine such tariff in accordance with the principles contained in Section 61. The present case, however, is covered by Section 63, which begins with a 11011 obstm1te clause stating that notwithstanding anything ci;mtained in Section 62, the appropriate commission shall adopt the tariff if such tariff has been determined through a transparent process of bidding in accordance with the guidelines issued by t)le Central

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A Government. A perusal of the CERC tariff adoption order dated 17.10.2007 makes it clear that the tariff is adopted by the Commission only because the competitive bidding process which has been undertaken is in accordance with the guidelines so issued. All this would make it clear that even if a waiver is claimed of some of the provisions of the PPA, such waiver, if it affects B tariffs that are ultimately payable by the consumer, would necessarily affect public interest and would have to pass muster of the Commission under Sections 61 to 63 of the Electricity Act. This is for the reason that what is adopted by the Commission under Section 63 is only a tariff obtained by competitive bidding c in conformity with guidelines issned. If at any subsequent point of time such tariff is increased, which increase is outside the four corners of the PPA, even in cases covered by Section 63, the legislative intent and the language of Sections 61 and 62 make it clear that the Commission alone can accept such amended tariff as it would impact consumer interest and therefore public D interest. If COD is declared on 31.3.2013, the very tariff laid down in Schedule 11 becomes applicable, but for year one being treated as one day and year two commencing from 1.4.2013. The substance of the matter is that a consumer would have to pay substantially more by way of tariff under the PPA if year one is E gobbled up in one day, as year two's tariff is one paisa more than year one and year three's tariff is substantially more than year two. In short, instead of getting two years or part thereof exceeding one year at a substantially lower tariff, the consumer now gets only one year and one day at the lower tariff rates. This may also by itself not lead to the parties having to go to the F Commission as this is envisaged by the PPA. But if a waiver is to be accepted on the facts of this case, it would clearly impact the public interest, in that consumers would have to pay substantially more for electricity consumed by them. This being the case, on facts it may not be necessary to go to the Commission as had G Sasao in fact met the parameters of Schedule 5 on 30'" March, then as per Schedule 11, year one would in fact have been only for one day. However, any waiver of the requirement of Schedule 5 would definitely impact the generation of electricity at the mandated percentage of contracted capacity as also the amounts payable by ronsumers, and would therefore affect the public

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 905 SASAN POWER LTD. & ORS. ETC.

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interest. [Paras 25, 29, 30 and 31][937-E-F; 939-C-H; 940-A-C)

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Article 6 deals with synchronization, commissioning, and commercial operations. In the first step to be taken by the seller, the unit producing electricity has to be synchronized to the grid system. It is only after synchronization takes place that the unit is to be commissioned. At the commissioning stage, the parameters mentioned in Schedule 5 are to be met. The most important parameter mentioned _in Schedule 5, when the performance test is to be taken for the purpose of commissioning, is that a unit shall be deemed to have passed such test only if it operates continuously for 72 consecutive hours at or about 95% of its contracted capacity as existing on the effective date and within the electrical system limits and functional specifications. Further, as a part of the performance test, the seller must demonstrate that the unit meets functional specifications for ramping rate separately mentioned in Schedule 4 of the PPA. It is only when such test is passed that a unit can be said to be commissioned under the PPA. This then is to be certified by the independent engineer jointly appointed by the parties under Article 6.3.1, in the form of a final test certificate, which states - that (a) the commission tests have been carried out in accordance with Schedule 5 and are acceptable to him, and (b) the result of the performance test shows that the unit's tested capacity is not less than 95% of the contracted demand as existing on the effective date. [Para 32][940-F-H; 941-A-C)

If the Schedule 5 parameters are not met, it is incumbent on the independent engineer to then state reasons for the nonissuance of the final test certificate. Once this is done, under Article 6.3.2, the seller may retake the relevant test within a reasonable period after the end of the previous test so as to comply with the basic requirements of Schedule 5. It is only after this that a unit can be said to be a "commissioned unit" as defined, which means that it is a unit in respect of which COD has occurred. COD or commercial operation date is also separately defined as meaning, in relation to a unit, the date one day after the date when each of the procurers receives a final test certificate of the independent engineer as per Article 6.3.1. It is thus clear that the scheme of Article 6 is that a unit cannot

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A be said to have a commercial operation date unless and until it is first synchronized with the grid and commi.ssioned after meeting the parameters mentioned in Schedule 5 of the PPA. Article 6.3.3 refers to performance tests of a unit during the period of the PPA. If under Article 6.3.3 after COD has been achieved in a unit, an increased tested capacity over and above that provided

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B in 6.3.1 (b) is achieved in a subsequent performance test, certain consequences follow. Equally, if after COD has been obtained in a unit, and the most recent performance test mentioned during the working of the PPA has been conducted, and it is found that in such test a figure less than contracted capacity is achieved,

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c the unit shall be de-rated with certain consequences which are mentioned in Article 6.3.4 read with Article 8.2.2. The scheme of Article 6 therefore read as a whole appears to be that COD cannot be achieved until the parameters mentioned in Schedule 5 are achieved and there is a final test certificate to that effect. The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick

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D in after COD is obtained in a unit, leading to either increased capacity or to de-rated capacity with consequences which follow under the PPA.[Paras 33, 34l[941-C-H; 942-A)

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The examination of meetings, emails, and letters between

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the parties showed that the first important meeting of 27.2.2013

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E was Chaired by the Managing Director of the lead procurer. It was attended by all the other procurers, and officials of Sasan. What is emphasized on behalf of Sasan is that the revised COD of the Sasan units was accepted by all the procurers under article 4.5.1 of the PPA to be - (first unit) by 31.3.2013. The procurers

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F asked Sasao for the estimated date for synchronization and COD of the first unit. Sasan indicated that synchronization is expected in the first week of March, 2013, and the COD before 31.3.2013. What is important about this meeting is that the procurers were no doubt interested in getting electricity from Sasan as soon as possible, but obviously only in accordance with article 6.3.1 read

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G with the 5'" Schedule. This would only mean that the ·meeting would disclose that the anxiety of the procurers to get eledricity

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· at cheap rates would be in accordance with the PPA and not against it. In other words, if a final test certificate had been given to the effect that 95% of contracted capacity could have been delivered

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H by Unit No.3 on or before 31.3~2013, the procurers were anxious

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907

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC.

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to avail of it, and not otherwise.[Para 35][942-B-E]

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The examination of performance of Sasan for the period 1" April to l6¹ h August, 2013 shows that various tests were undertaken, but 95% of contract capacity for a continuous period of 72 hours had only been achieved in June even according to Sasan. It is apparent from the certificate issued on 30.3.2013 that the tested capacity of the Unit was found to be only 101.38 MW as against 95% of 620 MW i.e. 587 MW. It was also stated that since the unit was operating below 50% of the rated load due to grid restriction, the unit could not demonstrate ramping rate above 50% of rated load in accordance with the Schedule 4 of the PPA. If the tested capacity is 101.38 MW as against the required 95% i.e. 587 MW, the test could not have been carried out in accordance with article 6 read with schedule 5, and that despite the fact that ramping up and down could not be achieved, functional specifications stipulated in Schedule 4 of the PPA were said to have been met. CERC rightly castigated this certificate. What article 6.3.1 requires is first and foremost a final test certificate of the Independent Engineer. The certificate dated · 30.3.2013 given by the Independent Engineer is not a final test certificate. Indeed, it is only in August that a final test certificate was given in accordance with Article 6.3.1 of the PPA by the very same independent engineer. Obviously the commissioning tests could not have been carried out in accordance with Schedule 5, which requires in clause 1.1 (i)(d) that the seller shall perform, in respect of each unit, a performance test, by which such unit shall be deemed to have passed only if it operates continuously for 72 consecutive hours, at or above 95% of its contracted c,apacity as existing on the effective date. Also, part of the same schedule requires that as a part of the performance test, the seller shall demonstrate that the unit meets the functional specifications for ramping rate as mentioned in Schedule 4, which was again conspicuous by its absence. According to the Independent Engineer, " ... the Unit 3 is certified to have achieved Commercial Operation, with a tested capacity 101.3~ MW" after carrying out the commissioning test in accordance with Article 6 and Schedule 5 of the PPA. In his certificate, he has stated that on witnessing the performance test from 27.03.2013 to 30.03.2013, the tested

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[2016] 9 S.C.R.

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A capacity of the Unit is 101.38 MW. However, it is clearly recorded that Unit was operated beyond 100 MW only from the morning of 28.03.2013. In the chart on the performance test, the Independent Engineer has noted that 101.38 MW is operated only from 06.00 a.m. on 28.03.2013. Under Article 6 read with Schedule 5 .•. "Unit shall be deemed to have passed if it B operates continuously for 72 consecutive hours at or above 95% of its contracted capacity as existing on the Effective Date." Even according to thl' lmlq1l'ndcnt Engineer, 101.38 MW was injected only at 06.00 a.m. on 28.03.2013. Such a tested capacity of 101.38 MW for 72 hours continuously could therefore have been certified c only at 06.00 a.m. on 31.03.2013. If that be so, the COD would have been only one day after the date when the test certificate of the Independent Engineer has been received by the procurers. For this reason also, the test certificate is by no means in accordance with Article 6.3.1 of the PPA read with Schedule 5 D thereof. [Paras 36, 38 and 39)[942-G; 946-D-H; 947-A-F)

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The two emails sent by the lead procurer to Sasao read together would show that the lead procurer made it clear that declaration of COD of unit 3 is not accepted by them as the test was not performed as per Article 6.3.1. However, in its anxiety to procure electricity, what was stated in the second email was E that the capacity of 101.38 MW was acceptable only under Article 6.3.4 of the PPA, meaning thereby that this ought to be treated as de-rated capacity, which should be paid for as provided. And any quantity produced over and above 101.38 MW would be treated as infirm power under Article 11.1 proviso, and paid F for as such. Waiver is an intentional relinquishment of a known right. Waiver must be spelled out with crystal clarity for there must be a clear intention to give up a known right. There is no such clear intention that can be spelled out on a reading of the two emails. The first email categorically stated that the test result is not as per Article 6.3.1, and.is not acceptable. The last sentence G of this very email then refers to clause 6.3.4 and to a de-rated capacity of 101.38 MW. Thereafter, the email of 2"d April, 2013 expands on the said last sentence of the earlier email by referring to Article 6.3.4 and Article 11 proviso. This is akin to a 'without prejudice' acceptance of de-rated power, being a non-acceptance H of the test certificate dated 30.3.2013 coupled with a desperate

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD.

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909

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attempt to somehow get whatever power is available. But this does not amount to a clear and unequivocal intention to relinquish a known right. There is no waiver and the Appellate Tribunal in coming to an opposite conclusion, is clearly erroneous. [Paras 42, 43 and 46][949-E, F; 950-C-F; 951-CJ

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Commissioner of Customs, Bombay v. Virgo Steels B Bombay (2002) 4 SCC 316 - Distinguished.

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Juggilal Kamlapat v. N. V. Internationale Crediet-EnHandels Vereeninging 'Rotterdam AIR 1955 Cal 65; Official Assignee of Bombay v. Madho/al Sindhu ILR 1948 (2) Born 1 - referred to. C

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Case Law Reference

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AIR1955 Cal 65	referred to Para14
ILR1948 (2) Born 1	referred to Para16
(1969) 3sec445	relied on Para18 D
1975 (2)SCR32	relied on Para19
(1971) 1sec619	relied on Para21
(1990) 4sec668	relied on Para22
(2004) 8sec229	relied on Para23 E
(2002) 4sec316	distinguished Para31
CIVIL APPELLATE JU 5882 of2016.	RISDICTION: Civil Appeal Nos. 5881-

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From the Judgment and Order dated 31.03.2016 of the Appellate Tribunal for Electricity, New Delhi in Appeal Nos. 233 and 266of2014

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WITH

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C. A. Nos. 5239-5240, 5246, 5342-5343, 5879, 5355, 5365, 5367, 5956 of2016.

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Jayant Bhushan, Kapil Sibal, J. J. Bhatt, Chetan Sharma, Sanjay Sen, Sr. Advs., Purushaindra Kaurav, AAG., M. G. Ramachandran, K. V. Mohan, Ms. Ranj itha Ramachandran, Ms. Poorva Saigal, Ms. Anushree Bardhan, Shubham Arya, Nikunj Dayal, Pramod Dayal, Ms. Paya! Dayal, Anand Ganesan, Ms. Swapna Seshadri, Rajiv Kr.

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A Shrivastava, Ms. Gargi Shrivastava, Rakesh K. Sharma, Ms. Anuradha Mishra, G. Umapathy, Aditya Singh, Alok Shankar, Vikas Upadhyay, $akya Singh Choudhuri, Avijit Lala, Anand Shrivastava, Alok Shankar, Kush Chaturvedi, Mahesh Agarwal, Ms. Sadapurua Mukharjee, Navjot Singh, E. C. Agrawala, Rishabh Parikh, Saurabh Mishra, Dhan Raj, Matrugupta Mishra, Shikha Ohri, Hemant Singh, Ms. Divya Roy, Ms.

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B Swapna Seshadri, Sitesh Mukherjee, Gautam Chawla, Ms. Akansha Tyagi, Sandeep Devashish Das, Rahul Dhawan, Ms. Udita Singh, Advs. for the appearing parties.

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The Judgment of the Court was delivered by "-

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C R.F. NARIMAN, J. I. These appeals have been argued over a number of days, but ultimately the points raised in them lie within a narrow compass.

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On 19.1.2005, the Central Government, in exercise of powers under Section 63 of the Electricity Act, 2003 issued guidelines for a D tariff based competitive bid process to be initiated by distribution licensees /procurers for procurement of power from generating companies. The electricity to be procured by such procurers is for the purpose of distribution and retail supply to consumers generally. On I 0.2.2006, in pursuance of these guidelines, procurers in different States, namely, appellants I to 3 and respondents 5 to 15 (in Civil Appeal Nos.5239E 5240 of 2016.) nominated Power Finance Corporation Limited, a Government of India. undertaking as the Nodal Agency to complete a competitive bid process for development of an ultra mega power project based on linked coalmines using super critical technology ofunits of 660 mega watts (MW) each, plus or minus 20%, in Sasan District, Singrauli, F Madhya Pradesh. On 10.2.2006, Sasan Power Limited was incorporated as a special purpose vehicle by Power Finance Corporation in order to . implement the aforesaid purpose. On 1.8.2007, based _on the competitive bidding process held by Power Finance Corporation, Reliance Power Limited, having quoted the lowest amount, was selected as th~ successful bidder, and a letter of intent was issued to Reliance Power. Ltd. The G quoted tariff, year by year, for a period of25 years, which was accepted and incor.porated as Schedule 11 in the Power Purchase Agreement dated 7 .8.2007 (PPA) had tariffs at an extremely depressed rate for the first two years, after which the tariffs were fixed ata significantly higher rate. On the very day that the PPA was executed between Sasan Power H Limited and the procurers for generation and sale of electricity, 100%

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

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share holding of the.special purpose vehicle was acquired by Reliance Power Limited. The PPA contains detailed clauses with respect to generation of po_JVer and the tariffs payable for the period of 25 years. Apart from other provisions, we are really concerned with Article 6 read with Schedule 5 which provides for pre-conditions to be satisfied for declaration of a generating unit as Commercial Operation Date, "COD", namely readiness to commence commercial operations. This happens only when a perfonnance test, by operating the generating unit at 95% of the contracted capacity as existing on the Effective Date on a continuous running basis for 72 hours, has been certified by an independent engineer, by giving a final test certificate to the aforesaid effect. The PPA also contains various other clauses which will be set out during the course of this judgment.

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The bone of contention in these matters is whether the COD for Unit No.3, which was the first Unit to l;Je commissioned, had been achieved on 31.3.2013. If it had, then under Schedule 11 to the_ PPA, the entire first year would get exhausted in one day, i.e., 31" March being the end of the contract year, for which tariff payable would be at the rate of 69 paise per unit. If not, then it is only on and from the commencement of COD that such year would begin, which, according to the appellants before us, would only begin on 16.8.2013 when a final test certificate in accordance with Article 6 of the PPA was given by the independent engineer to the effect that 95% of the contracted capacity had been achieved for a continuous period of72 hours. We are infonned that if the COD is said to be on 31.3.2013, as has-been held by the Appellate Tribunal, the consumers would ~ave to pay a sum of over¹ • . I 000 crores, being the differential tariffthat would apply.

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The date for commissioning the first unit was fixed under the PPA as 7¹ h May, 2013. However, under Schedule 11 thereof, this date was preponed to 27'h November, 2012. As Sasan kept postponing this date, it appears that the commissioning tests for generating Unit No.3 commenced from 20.3.2013. Various emails were exchanged from 27.3.2013 to 30.3.2013 between Sasan and the Western Region Load Dispatch Centre (hereinafter referred to as "the WRLDC"), a statutory authority under the Electricity Act, 2003. It is the case of Sasan that though they were ready to deliver electricity on 31.3.2013 at 95% of the contracted capacity of 620 MW of the unit, they could not do so as WRLDC did not give them the necessary green signal to go ahead.

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[2016] 9 S.C.R.

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A They relied heavily upon the independent engineer's test certificate dated 30.3.2013 to show that a COD took place on the following day, which we will consider in some detail later. At this stage, suffice it to say that a petition was filed by WRLDC before the Central Electricity Regulatory Commission (CERC) on 25.4.2013, in which it was prayed:-

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B " I. Kindly look into the veracity of the certificate issued by the Independent Engineer in view of deliberate suppression and misrepresentation of the facts and issue suitable directions to respondent no.2 to desist from such act.

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Kindly look into the matter of Respondent No. I including c into intentional mis-declaration of parameters related to commercial mechanism in vogue and has purported to declare the part (de-rated) capacity of I 01.3 8 MW as commercial on the grounds of load restriction by WRLDC and issued suitable directions in the matter.

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D 3. Issue specific guidelines with respect to declaration of COD of the generators who are not governed by the CERC (Terms and Conditions of Tari ft) Regulations, 2009 to be in line with CERC regulations so that the same can be implemented in a dispute free manner and eliminate any possibility of gaming by generator.

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Hon 'ble Commission may give any further directions as deemed fit in the circumstances of the case."

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This petition was allowed by the CERC by its order dated 8.8.2014, by which it first set out five issues as follows:-

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(a) Whether the petition filed by WRLDC is maintainable?

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(b) Whether the Certificate issued by IE is in accordance with the PPA and if not, whether IE has made deliberate suppression or misrepresentation of facts while issuing the certificate?

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G ( c) Whether COD of the station as declared by SPL is in accordance with the PPA?

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(d) Whether the Respondent No.I has indulged in misdeclaration of parameters relating to commercial mechanism in vogue?

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

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(e) Guidelines with regard to the commercial operation of a generating station which is not regulated by the tariff regulations of the Commission."

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The CERC answered issues (a), (b), (c), and (e) in the affirmative, and issue ( d) in the negative. Ultimately the Commission arrive.d atthe conclusion that COD had not been achieved on 31.3.2013 but had only been achieved later, on l6¹ h August of the same year. This finding was set aside by the Appellate Tribunal by its judgment dated 31.3.2016, in which the Appellate Tribunal found that though COD had not been achieved on 31.3.2013 in accordance with the PPA, but that the procurers under the PPA had waived their right to demand performance at 95%, and that the performance of Unit No.3, which ·was only roughly 17% of its contracted capacity, was accepted by all the procurers, and that therefore there was a waiver of this essential condition, which would then entitle the generator to treat 31.3.2013 as the date on which commercial operation of Unit No.3 commenced. It is· the correctness of this judgment which has been assailed by the various appellants before us.

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Mr. Jayant Bhushan, learned senior counsel, Mr. Gopal Jain, learned senior counsel, Mr: M.G. Ramachandran, learned counsel, Mr. Purusha Indra Kavrar, learned AAG, and Mr. Alok Shankar, learned counsel appearing for the appellants have relied heavily on Article 6.3. l read with Schedule 5 of the PPA, and stated that this is an Article which does not merely reflect the individual rights and liabilities of the generator and procurers of electricity but would also sound in public interest inasmuch as the declaration of COD would have effect on the tariff that is payable by consumers generally. They, therefore, argued that Article 6.3 .1 cannot be waived as a matter of law. They also argued that it cannot also be waived as a matter of fact inasmuch as when the PPA expressly allowed a certain provision to be waived, it expressly stated so. In this regard, Articles 3.1.2, 4.4.2(b) 10.l(c), 10.2(c) were pointed out by them. Referring to Article 18.3 of the PPA, it was argued that the said Article is not a substantive provision for waiver, but only a provision dealing with the manner in which waiver is to be exercised, and has reference only to the aforesaid Articles. Further, even assuming that there was a waiver, such waiver took place as late as 15.4.2013 when the last communication from Uttarakhand Power was received. There was, therefore, no waiver of the aforesaid condition on 31.3:2013. They also

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A argued that as a matter of fact the emails exchanged between the parties would show that the lead procurer and all the other procurers had in fact never consented to 31.3.2013 as being the COD for the purpose of the PPA. They also argued that really speaking any such alleged waiver was not a waiver at all, but an amendment to the PPA which would require the Commission's consent under Article 18.1, inasmuch as it

¶166

B would affect the tariff payable by consumers. They also argued that it is clear from a reading of a chart which showed generation from March to August, 2013 that Sasan was not able to achieve anywhere near 95% of contracted capacity until l 6'h August which is when the COD took place on facts. They also pointed out.that, for example, in the month of

¶167

c July, there was no supply of power at all by Sasan Power. Ultimately, it was stated that the Independent Engineer's certificate dated 30.3.2013 was a document made only to favour Sasan, so that Sasan could swallow one entire year of tariff in one day, so that the consumer would have to pay the higher tariff for what is in reality the first year, but is now being treated as the second year of generation and supply.

¶168

¶169

As against this, Shri Chidambaram and Shri Sibal, learned senior counsel appearing on behalf of Sasan Power Ltd., have argued that as against 69 and 70 paise per unit for electricity supplied under the PPA, the procurers were in fact procuring electricity at much higher rates. It was the procurers themselves, therefore, who kept telling Sasan to supply E power as soon as possible. For this, they relied, in particular, on the minutes of a meeting dated 27.2.2013 between the procurers and Sasan, in which the procurers unequivocally stated that any time upto 31.3.2013, the power generation should begin from Unit No.3. This was because the moment such power generation began, whether it was 69 paise or F 70 paise for the second year, the aforesaid tariff was much, much lower than what the procurers would have to pay otherwise. It was their argument that it was only at the behest of the procurers themselves that the COD was declared on 31.3.2013. They further argued that on a correct reading of emails and lettc;s.exchanged between the parties, the lead proct_Jrer and ~II other procurers had actually and unequivocally G waived the requirement of95% of contracted capacity demand.and that the AppellateTribunal was right in this behalf. Countering the arguments of the appellant, they referred to and relied upon Section 63 of the !ndian Contract Act, 1872 to buttress their submission that waiver is a right granted by the Contract Act and does not depend upon the PPA.

¶170

¶171

915 -

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶173

Therefore, whatever the construction of Article 18.3 of the PPA, it is clear that the. Contract Act itself gives them this right which the procurers themselves have exercised in accordance with law, for the very good reason that they wanted the supply of cheap energy at any cost, even at the cost of being at 17% instead of 95% of contracted demand. It was also their case that they were ready to supply electricity on 31" March at 95% of the contracted demand, but unfortunately WRLDC prevented them from doing so, and that the independent engineer's certificate had been wrongly castigated by CERC, as was correctly held by the Appellate Tribunal. The independent engineer laid bare the facts correctly and therefore did not give a false or wrong certificate as was found by CERC. They also met an argument raised by the appellant that Haryana at least had waived its right without prejudice to its other rights and contentions. This was met by stating that Haryana accounted only for roughly 12% of the total electricity demanded by all the procurers and that as per a clause in the PPA, if the lead procurer and the other procurers constitute 65% or more, they can bind all the other procurers. '

¶174

In order to appreciate the rival submissions, it is necessary to refer to the relevant provisions of the PPA, which reads as follows:-

"l. Definitions

The terms used in this Agreement, unless as defined below or repugnant to the context, shall have the same meaning as assigned to them by the Electricity Act, 2003 and the rules or regulations framed thereunder, including those issued/framed by Appropriate Commission (as defined hereunder), as amended or re-enacted from time to time.

¶181

The following terms w~en used in this Agreement shall have the ·respective meanings, as specified below:

¶182

"Commercial Operation "Date" or "COD"	Means, in relation to a Unit, the date one day after the date when eachofthe Procurers receives a Final Test Certificateofthe Independent Engineer as per the provisionsofArticle6.3.1 and in relation to the Power Station shall mean the date by which such Final Test Certificates as per Article6.3.1are receivedbythe Procurers for all the Units;

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¶190

A	"Commissioning" "commissioned with grammatical variations	or its	Means, in relationtoa Unit, that the Unitorin relation to diePowerStation all the Unitsofthe Power Station have passed the Commissioning Tests successfully;
B	"Commissioning Tests" "Commissioning Test"	or	Means the Tests providedinSchedule 5 herein;
	"Commissioned Unit"		Means the Unit in respectofwhich coDhasOCCUJTed;
	"Contract Year"		Means the pe1iod beginning on the dateofthis Agreementandendingon the immediately succeeding March 3 I
c			and thereafter each periodofI 2 mondis beginning on April I and endingonMarch31providedthat: In tlc financial year inwhich ScheduledCODofthe first Unit would have occurred, a Contract Year
D E			shall end ontlx:date immediately before the ScheduledCODofthe first Unitanda new Coniract Year shall beginonceagain from die Scheduled Commercial 0 pera tion Dateofthe first Unit andendonimmediately succeeding March 3 Iandprovided further tliat (ii) The last Contract Yearofthis Agreement shallendon the last day ofdietcmiofthis Agreement;
F	"Contracted Capacity"		Means(1)forthe first Unit, 620.4 MW; (ii) for tlie second Unit, 620.4 MW; (iii)forthe tliird Unit, 620.4 MW; (iv) for the fou1th Unit,620.4 MW;(v)for the fifth Unit, 620.4MW and (vi) for the sixth Unit620.4MW
G H			rated net capacity at tl-e Interconnection Point,andin relation totlx:Power Stationasa whole means 3722.4MWratednetcapacity att:,~I ntcrconnection Point,orsuch rated capacities as may be detenni1-ed in accordance with Article 6.3.4or A1ticle 8.2ofthis Agreement;

¶191

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶192

917

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¶194

"Effective Date"	Means the dateofsigningofthis Agreement bylastofall the Parties;
"Declared Capacity''	In relation to a Unit or the Power Stationatany time means thenet capacityofthe Unit or the Power Station at the relevanttime(expressed in MWatthe Interconn:ction Point) as declared by the Seller 111 accordance with the Grid Code and dispatching proceduresasperthe AvailabilitvBased Tariff;	B
"Final Test Certificate"	Means (a) A certificateofthe Independent Engineer ce11ifying and accepting the resultsofa Commissioning Testis in accordance with Article 6.3. lofthis Agreement;or (b) A certificateoftreIndependent Engineer certifyingtheresultofa Repeat Pe1formance Tests 111 accordance with Article 8.2. lofthis Agreement;	c D
"GridCode"or"IEGC"	Means any setofregulationsorcodes issued by CERCasamendedand revised from time to time and legally binding on the Sellers' and Procedures' governing the operation oftheGrid Systemorany succeeding setofregulationsorcode;	E
· "Independent Enginee1" "''-	Means an independent consulting engineering firmorgroupappointed jointlybyall the Procurers (jointly) andtheSeller, to carryoutthe functions in accordance with Article 4.7.l and Article 6, Article12and A11icle8 herein.	F G
"Lead Procurer"	Shall have the meaning scribed theretoinArticle 2.5;
"Perfo1111anceTest"	Means the test carried out 111 accordance with Article l.l of Schedule 5ofthis Agreement;	H

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¶198

¶199

B	"Scheduled COD" or "Scheduled Commercial Operation Date"	Means (i) forthefirst Unit, May7, 2013; (ii) for the second Unit, December7,2013; (iii) forthethird Unit, July7,2014; (iv) for the fourth Unit, Febrnary 7, 2015; (v) forthefifth Unit, September7,2015 and (vi) for the sixth Unit, April7,2016orsuch other dates from time to time specified inaccordance with the provisionsof this Agreement;
c	"Scheduled Synchronization Date"	Meansinrelation to a Unit, the date, which shall be maximumofone hundred and eighty(I80) days prior to the Schedule CODofthe respective Unit;
	"Tariff'	Means the tariffascomputed 111 accordance withSchedule 7;
D E	"Tested Capacity"	Inrelation to a Unit, or the Power Stationasa whole(ifall the Unitsof the Power Station have been commissioned) means the resultsof the most recent Performance Test or Repeat Performance Test carried out in relation to the Power Station 111 accordance with Article 6, Article 8 and Schedule 5ofthisAgreement;
	Hu nit"	Means one steam generator, steam turbine, generator and associated auxiliariesofthe Power Station based on Supercritical Technology;

¶200

¶201

¶202

6: Synchronization, Commissioning and Commercial Operation

¶203

6.1 Synchronisation

¶204

L 1 The Seller shall give the Procurers and RLDC at least G sixty (60) days advance preliminary written notice and at least thirty (30) days advance final written notice, of the date on which it intends to synchronize a Unit to the Grid System, Provided that no Unit shall be synchronized prior to 36 months from NTP.

¶205

¶206

919

¶207

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶208

6.1.2 Subject to Article 6.1.1, a Unit may be synchronized by the Seller to the Grid System when it meets all connection conditions prescribed in any Grid Code then in effect and Qtherwise meets all other Indian legal requirements for synchronization to the Grid System. ·

¶209

6.2 Commissioning 6.2.1 The Seller shall be responsible for ensuring that each Unit is Commissioned in accordance with Schedule 5 at its own cost, risk and expense. 6.2.2 The Seller shall give all the Procurers and the Independent Engineer not less than ten (I 0) days prior written notice of Commissioning Test of each Unit. 6.2.3 The Seller (individually), the Procurers (jointly) and the Independent Engineer (individually) shall each designate qualified and authorized representatives to witness and monitor Commissioning Test of each Unit. 6.2.4 Testing and measuring procedures applied during each Commissioning Test shall be in accordance with the codes, practices and procedures mentioned in Schedule 5 of this Agreement.

6.2.5 Within five (5) days of a Commissioning Test, the Seller shall provide the Procurers (jointly) and the Independent Engineer with copies of the detailed Commissioning Test results. Within five (5) days ofreceipt of the Commissioning Test results, the Independent Engineer shall provide to the Procurers and the Seller in writing, his findings from the evaluation of Commissioning Test results, either in the form of Final Test Certificate certifying the matters specified in Article 6.3 .1 or the reasons for nonissuance of Final Test Certificate.

¶216

6.3 Commercial Operation

¶217

¶218

¶219

6.3.1 A Unit sl1all be Commissioned on the day after the date when all the Procurers receive a Final Test Certificate of the Independent Engineer stating that:

¶220

a) the Commissioning Tests have been carried out in

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¶225

A accordance with Schedule 5 and are acceptable to him; and

¶226

b) the results of the Performance Test show that the Unit's Tested Capacity, is not less than ninety five (95) percent of its Contracted Capacity as existing on the Effective Date. B 6.3 .2 If a Unit fails a Commissioning Test, the Seller may retake the relevant test, within a reasonable period after the end of the previous test, with three (3) day's prior written notice to the Procurers and the Independent Engineer. Provided however, the Procurers shall have a right to require c deferment of any such re-tests for a period not exceeding fifteen (15) days, without incurring any liability for such defennent, ifthe Procurers are unable to provide evacuation of power to be generated, due to reasons outside the reasonable control of the Procurers or due to inadequate demand in the Grid.

¶227

¶228

6.3 .3 The Seller may retake the Performance Test by giving at least fifteen ( 15) days advance notice in writing to the Procurers, up to eight (8) times, during a period of one hundred and eighty ( 180) days ("Initial Performance Retest Period") from a Unit's COD in order to demonstrate an E increased Tested Capacity over and above as provided in Article 6.3.1 (b ). Provided however, the Procurers shall have a ~ight to require deferment of any such re-tests for a period not exceeding fifteen (15) days, without incurring any liability for such deferment, ifthe Procurers are unable F to ptovide evacuation of power to be generated, due to reasons outside the reasonable control of the Procurers or due to inadequate demand in the Grid. 6.3.4 (i) If a Unit's Tested Capacity after the most recent Performance Test mentioned I in Article 6.3.3 has been G conducted, is less than its Contracted Capacity as existing on the Effective Date, the Unit shall be de-rated with the following consequences in each case with effect from the date of completion of such most recent test: a) the Unit's Contracted Capacity shall be reduced to its Tested Capacity, as existing at the most recent Performance

¶229

¶230

921

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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶232

Test referred to in Article 6.3.3 and Quoted Capacity Charges shall be paid with respect to such reduced Contracted Capacity;

¶233

b) The Quoted Non Escalable Capacity Charge (in Rs./ kwh) shall be reduced by the following in the event Tested Capacity is less than ninety five (95%) per cent of its Contracted Capacity as existing on the Effective Date: Rs.0.25/kwh x [I - {(Tested Capacity of all Commissioned Units+ Contracted Capacity of all Units not Commissioned at the Effective Date)/ Contracted Capacity of all Units at· the Effective Date}) c) the Seller shall not be permitted to declare the Available Capacity of the Unit at a level greater than its Tested Capacity; d) the Availability Factor of the derated Unit shall be calculated by reference to the reduced Contracted Capacity; and

¶234

e) the Capital Cost and each element of the Capital Structure Schedule shall be reduced in proportion to the reduction in the Contracted Capacity of the Power Station as a result of that de-rating (taking into account the Contracted Capacity of any Unit which has yet to be Commissioned). (ii) If at the end oflnitial Performance Retest Period or the date of the eighth Performance Test mentioned in A11icle 6.3.3, whichever is earlier, the Tested Capacity is less than the Contracted Capacity (as existing on the date of this Agreement), the consequences mentioned in A11icle 8.2.2 shall apply for a period of one year. Provided that such consequences shall apply with respect to the Tested Capacity existing at the end of Initial Performance Retest Period or the date of the eighth Performance Test mentioned in Article 6.3.3, whichever is earlier.

6.3.5 If a Unit's Tested Capacity as at the end of the Initial Performance Retest Period or the date of the eighth Performance Test mentioned in Article 6.3.3, whichever is earlier, is found to be more than it's Contracted Capacity

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¶247

A as existing on the Effective Date, the Tested Capacity shall be deemed to be the Unit's Contracted Capacity if any Procurer/s agrees and intimates the same to the Seller within thirty (30) days of receipt of the results of the last Performance Test to purchase such excess Tested Capacity and also provide to the Seller additional Letter of Credit B and Collateral Arrangement (ifapplicable) for payments in respect of such excess Tested Capacity agreed to be purchased by stich Procurer/s. In case the Procurer/s decide not to purchase such excess Tested Capacity, the Seller shall be free to sell such excess Tested Capacity to c any third party and the Unit's Contracted Capacity shall remain unchanged, notwithstanding that the Tested Capacity exceeded the Contracted Capacity. Provided that in all the above events, the Seller shall be liable to obtain/maintain all the necessary consents (including D Initial Consents), permits_ and approvals including those required under the environmental laws for generation of such excess Tested Capacity.

¶248

6.4 Costs Incurred.

¶249

The Seller expressly agrees that all costs incurred by him E in synchronizing, connecting, Commissioning and/or Testing or Retesting a Unit shall be solely and completely to his account and the Procurer's or Procurers' liability shall not exceed the amount of the Energy Charges payable for such power output, as set"out in Schedule 7.

¶250

F 18: Miscellaneous Provisions

¶251

l Amendment

¶252

The Agreement may only be amended or supplemented by a written agreement between the Pa11ies and after duly obtaining the approval of the Appropriate Commission, G where n~cessary.

¶253

18.3. No Waiver

¶254

A valid waiver by a Party shall be in writing and executed by an authorized representative of that Party. Neither the

¶255

¶256

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶257

923

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failure by any Party to insist on the performance of the terms, conditions, and provisions of this Agreement nor.time or other indulgence granted by any Party to the other Parties shall act as a waiver of such breach or accepta,nce of any variation or the relinquishment of any such right or any other right under this Agreement, which shall remain in full force and effect. · Schedule 5: Commissioning and Testing 1.1 Performance Test i. (a) The Performance Test shall be conducted under any and all ambient conditions (temperature, humidity .etc.) and any and all Fuel qualities that may exist during the time of the Performance Test and no corrections in final gross and net output of the Unit will be allowed as a result of prevailing ambient conditions or Fuel quality. (b) The correction curves will only be used ifthe Grid System operation during the Performance Test exceeds Electrical System Limits. (c) The Performance Test shall be deemed to have demonstrated the Contracted Capacity of the Unit under all designed conditions and therefore no adjustments shall be made on account of fuel quality or ambient conditions. (d) The Seller shall perform in respect of each Unit a Performance Test, which such Unit shall be deemed to have passed if it operates continuously for seventy two consecutive hours at or above ninety five (95) percent of its Contracted Capacity as existing on the Effective Date and within the Electrical System Limits and the Functional · Specifications.

¶259

ii. For the purposes of any Performance Test pursuant to this sub-article 1.1, the Electrical System Limits to be achieved shall be as follows:

¶260

¶261

¶262

c

(a) Voltage

The Unit must operate within the voltage levels described in the Functional Specification for the duration of the

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[2016] 9 S.C.R.

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¶273

A Performance Test. If, during the Performance Test, voltage tests cannot be perfonned due to Grid System, data supplied from tests of the generator step-up transformers and generators supplied by the manufacturers shall be used to establish the ability of the Unit to operate within the specified voltage limits.

¶274

¶275

(b) Grid System Frequency

¶276

The Unit shall operate within the Grid System frequency levels described in the Functional Specification for the duration of the Performance Test.

The Unit shall operate within the power factor range described in the Functional Specification for the duration of the Performance Test. If, during the Performance Test, power factor tests cannot be performed due to the Grid System, data supplied from tests of the generators and the generator step-up transformers supplied by the manufacturers shall be used to establish the ability of the Unit to operate within the specified power factor range.

¶281

(d) Fuel quality and cooling water temperature

¶282

¶283

The Unit must operate to its Contracted Capacity with Fuel quality and water temperature available at the t,ime of Testing and no adjustment shal11'be allowed for any variation in these parameters.

¶284

iii. As a part of the Performance Test, the Seller shall F demonstrate that the Unit meets the Functional Specifications for Ramping rate as mentioned in Schedule 4. For this purpose, representative samples of ramp rates shall be taken, by ramping up or down the gross turbine load while maintaining the required temperature and G temperature differences associated with each ramp rate within the turbine while maintaining all other operational parameters within equipment limits.

¶285

iv. Further, as a part of the Performance Test, the Unit shall be tested for compliance with parameters of

¶286

¶287

925

¶288

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.)

¶289

Supercritical Technology.

¶290

¶291

1.2 Testing and Measurement procedures applied during Performance Test shall be in accordance with codes, practices or pr9cedures as generally/normally applied for the Performance Tests.

¶292

1.3 The Seller shall comply with the prevalent Laws, rules and regulations as applicable to the provisions contained in this Schedule from time to time.

¶293

¶294

Schedule 11: Quoted Tariff

¶295

Contract Year	Comntence mentDateof ContractYear	EndDateof Contnct Year	Quoted :'\on· Escalable Capacity Charges (Rs.lkwh)	Quoted Estalable Capacity Charges (Rs.lkwh)	Quoted :'\on· lndmd Ener~· Charges (Rs.11,·wh)	Quoted Indexed Energy Charges (Rs.lkwh)	c
l	27Nor2012	31May2013	0.21	0.001	0575	0.001
2	1·Apr·2013	3l·ilfar·20l4	0.125	Sameas Abon	0.575	Sameas AboH	D
3	l·Apr-2014	31-Mar-2015	0.163	Sameas Above	1.148	Sameas Abore
4	Jl·Apr-2015 I	31-~lar-2016	0.171	Sameas Abo,·e	1.148	Sameas Above
5	1l·Apr-2016	31·!.far-2017	0.169	Sameas Abon	l.148	Sameas Abo1·e	E
6	Jl-Apr-2017 l	Jl-~!ar·2018	0.!69	Sameas ! Above	l.l4S	·Sameas Above
7	1l-Apr·lO!S	3l·~far-20!9	0.169	Sameas _A_bore	L14S	Sameas IAbote
8	1l·Apr·2019	3l-:.!ar-2020	0.168	San1eas Abon	l.148	ISameas Abore
9	Il·Apr-2020 I	31·~!ar·202l	0167	Sameas Abore	l.148	Sameas Abo»e	F
lO	jl·Apr-2021	31-~far-2022	0.166	Sameas Abon	l.147	Samns Above
ll	l·Apr-2022	31-:-.lar-2023	0.165	Sameas Above	U47	Sameas Above
12	l-Apr-2023	3l-Mar-2014	0164	Sameas Abon	1147	Sameas Abon	G
l3	l-Apr-2024	31-~lar-2025	0164	Sarneas Abon	1.147	Sarneas Abore
14	l-Apr-2025	31-Mar·2026	0.163	Sameas Above	l.l47	Sameas IAbore
15	1·Apr-2026	31-~lar-2027	0162	Sameas Abon	l.l46	Sameas Abo»e	H

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. A,.

16	l·Apr-2027	31-Mar-2028	0.161	Sameas Abol'e	Ll46	Sameas Above·
17	l·Apr-2028	3l-Mar-2029	0.160	Sameas Abore	1.146	Sameai Above
!8	l·Apr-2029	31-Mar-2030	0160	Sameas Above	L146	Samrn Above
!9	l·Apr·2030	31-Mar-2031	0.159	Samrn Above	1145	Sameas Abore
20	1·Apr-2031	3!-Mar-2032	0.158	Sameas Above	1.145	Samrn Abol'e
21	1-Apr-2032	3l·Mar·2033	0.157	Sameas Abore	1.145	Samrn Above
22	1-Apr-2033	31-Mar-2034	0.136	Sameas Abo1·e	l.145	Sameas Above
23	l·Apr-2034	31-Mar-2035	0.126	Sameas Above	1144	Sameas Above
).' •'	l-Apr-2035	31-Mar-2036	0.126	Sameas Above	1.144	Sameas Above
25	~~.~~l·Apr-2036	ll·Mar-2037	0.137	Sameas Above	l.144	Sameas Above
~6	l-Apr-2037	25<1 annirmaiyof theScheduled CODofthe firstUnit	0.169	Samrn Abol'e	l.143	S.unrn Above

¶308

I 0. It is also necessary to set out the relevant provisions of the Electricity Act, 2003. Sections 28, 29, 61, 62 and 63 of the Electricity F Act, 2003 read as under:-

¶309

"Section 28. Functions of Regional Load Despatch Centre:

¶310

(I) The Regional Load Despatch Centre shall be the apex body to ensure integrated operation of the power system in G the ccncemed region.

¶311

¶312

(2) The Regional Load Despatch Centre shall comply with such principles, guidelines and methodologies in respect of the wheeling and optimum ~cht><luling and despatch of electricity as the Central Commission may specify in the

¶313

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶314

927

¶315

Grid Code. (3) The Regional Load Despatch Centre shall -
(a) be responsible for optimum scheduling and despatchof electricity within the region,inaccordance with the contracts entered into with the licensees or the generating companies operatinginthe region;
(b) monitor grid operations;
( c) keep accountsofquantityofelectricity transmitted through the regional grid;
( d) exercise supervision and control over the inter-State transmission system; and
( e) be responsible for carrying out real time operations for grid control and despatchofelectricity within the region· through secure and economic operationofthe regional grid inaccordance with the Grid Standards and the Grid Code.
(4) The Regional Load Despatch Centre may levy and collect such fee and charges from the generating companies orlicensees engagedininter-State transmissionofelectricity as may be specified by the Central Commission.
Section 29. Complianceofdirections:- (I)The Regional Load Despatch Centre may give such directions and exercise such supervision and control as may be required for ensuring stabilityofgrid operations and for achieving the maximum economy and efficiencyinthe operationof the power systeminthe region under its control.
(2) Every licensee, generating company, generating station, sub-station and anyotherpersonconnectedwiththe operationofthe power system shall comply with the directions issued by the Regional Load Despatch Centres under subsection(I).
(3) Alt directions issued by the Regional Load Despatch Centres to any transmission licenseeofState transmission tinesoranyotherlicenseeofthe Stateorgenerating company(otherthanthoseconnectedtointerState

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SUPREME COURT REPORTS

[2016] 9 S.C.R.

transmission system) or sub-station in the State shall be . issued through the State Load Despatch Centre and the State Load Despatch Centres shall ensure that such directions are duly complied with the licensee or generating company or sub-station.

¶329

( 4) The Regional Power Committee in the region may, from time to time, agree on matters concerning the stability and smooth operation of the integrated grid and economy and efficiency in the operation of the power system in that region.

¶330

c (5) If any dispute arises with reference to the quality of electricity or safe, secure and integrated operation of the regional grid or in relation to any direction given under subsection ( 1 ), it shall be referred to the Central Commission for decision : Provided that pending the decision of the Central Commission, the directions of the Regional Load D ·Despatch Centre shall be complied with by the State Load Despatch Centre or the I icensee or the generating company, as the case may be.

¶331

¶332

¶333

(6) Ifany licensee, generating company or any other person fails to comply with the directions issued under sub-section (2) or sub-section (3), he shall be liable to a penalty not exceeding rupees fifteen lacs.

¶334

Section 61. Tariff regulations: The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:-

¶335

( a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees;

¶336

¶337

¶338

(b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles;

¶339

(c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments;

¶340

929

¶341

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶342

(d) safeguardingofconsumers' interest and at the same time, recoveryofthe costofelectricity in a reasonable manner;
( e) the principles rewarding efficiency in performance;
(t)multi year tariff principles;
(g) that the tariff progressively reflects the costofsupply ofelectricity and also, reduces cross-subsidies in the manner specified by the Appropriate Commission;
(h)thepromotionofco-generation and generationof electricity from renewable sourcesofenergy;
(i) the National Electricity Policy and tariff policy:
Provided that the terms and conditions for determinationof tariff under the Electricity (Supply)Act, 1948, the Electricity Regulatory Commission Act, 1998 and the enactments specified in the Schedule as they stood immediately before the appointed date, shall continue to apply for a periodof one year or until the terms and conditions for tariff are specified under this section, whicheve.r is earlier:
Section62.Determinationoftariff:(1)The Appropriate Commission shall determine the tariff in accordance with the provisionsofthis Actfor-
(a) supplyofelectricity by a generating company to a distributionlicensee:ProvidedthattheAppropriate Commissionmay,incaseofshortageofsupplyofelectricity, fix the minimum and maximum ceilingoftarifffor sale or purchaseofelectricityinpursuanceofan agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonableprice~ofelectricity;
(b) transmissionofelectricity;
( c) wheelingofelectricity;
( d) retail saleofelectricity:
Provided thatincaseofdistributionofelectricityinthe same area by two or more distribution licensees, the Appropriate

H ·

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[2016) 9 S.C.R.

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¶354

A Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale ofelectricity.

¶355

(2) The Appropriate Commission may require a licensee or a generating co1lipany to furnish separate details, as may B be specified in respect of generation, transmission and distribution for determination of tariff. (3) The Appropriate Commission shall not, while determining the tariff urider this Act, show undue preference to any consumer of electricity but may differentiate according to . c the consumer's load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. D ( 4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified. (5) The Commission may require a licensee or a generating E company to comply with such procedures as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who F has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the I icensee.

¶356

Section 63. Determination of tariff by bidding process: Notwithstanding anything contained in section 62, the G Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines is:;ued by the Central Government."

¶357

Since counsel for the opposing parties have made wide ranging

¶358

¶359

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 931 SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶360

arguments on the effect of A1iicle 18 and waiver as a legal concept, it is A important first to find out as to which pigeonhole the facts of the present case fit- whether the emails exchanged by the parties would amount to an "amendment" governed by Article 18.1, or whether it would amount to a "waiver" governed by A1iicle 18.3. 12. A perusal of the emails exchanged between the parties would B show that the parties did not intend to amend by a written agreement any of the provisions of the PPA. Whereas an amendment of the PPA under Article 18. I would be bilateral, a waiverofa provision of the PPA would be unilateral under Article 18.3: 13. In order to better understand, conceptually, the difference c between amendment and waiver, it is necessary to advert to Sections l, 62 and 63 of the Indian Contract Act, 1872. "Section I.Short title.-This Act may be called the Indian C "ntract Act, 1872. Extent, Commencements.-lt extends to the whole of India D except the State of Jammu and Kashmir; and it shall come into force on the first day of September, 1872. Nothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any E contract, not inconsistent with the provisions of this Act. Section 62. Effect of novation, rescission, and alteration of contract. If the pa11ies to a contract agree to substitute a new contract F for it, or to rescind or alter it, the original contract need not be performed. Section 63. Promisee may dispense with or remit performance of promise.- Every promisee may dispense with or remit, wholly or in part, the performance of the G promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which :ie thinks fit." 14. Under Section 62, apati from novation of a contract and rescission of a contract, alteration of a contract is mentioned. Alteration

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¶365

A is understood here, in the facts of the present case, in the sense of amendment. It is settled law that an amendment to a contract being in the nature of a modification of the terms oftha contract must be read in and become a part of the original contract in order to amount to an alteration under Section 62 of the Indian Contract Act. This iS' clear from Juggilal Kamlapat v. N. V. Internationale Crediet-En-Hande/s

¶366

B Vereeninging 'Rotterdam',AIR 1955 Cal 65 in paragraph 15 of which it is stated:-

¶367

"The effect of the alterations or modifications is that there is a new arrangement; in the language of Viscount Haldane in Morris v. Baron & Co. (I) (1918 Appeal Cases, I at

¶368

c 17), "a new contract containing as an entirety the old terms together with and as modified ,by the new terms incorporated." The modifications are read into and become part and parcel of the original contract. The original terms also continue to be part of the contract and are not rescinded

¶369

D and/or superseded except in so far as they are inconsistent with the modifications. Those of the original terms which cannot make sense when read with the alterations must be rejected. In my view the arbitration clause in this case is in no way inconsistent with the subsequent modifications and continues to subsist." [para 15)

¶370

¶371

No such thing having occurred on the present facts, it is clear tJ1at there is in fact no amendment by written agreement to the PPA. To this extent, learned counsel for Sasan are correct.

¶372

. 16. The relevant section therefore that would apply on the facts

¶373

F of the present case is Section 63. At this stage, it is important to advert to an argument made by counsel for the appellants that Article 18.3 only refers to waivers that can expressly be made under various provisions of the agreement and not to Article 6 which, according to learned counsel, cannot be waived under the PPA. Assuming that such argument is correct, and that Article 18.3 refers only to the mode of carrying out a

¶374

G waiver und!r the PPA, yet it is clear that Section 63 would operate on

¶375

~!he facts of this case. This is forthe reason that, when read with Section I of the Contract Act, it becomes clear that the PPA is subject to Section 63 of the Contract Act, which would allow a promisee to dispense with or remit, wholly or in part, the performance of the promise made to him,

¶376

H and accept instead of it any satisfaction which he thinks fit. This is

¶377

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.)

¶378

933

¶379

made clear in an interestingjudgment by Chief Justice Stone in Official Assignee of Bombay v. Madliolal Sindltu, ILR 1948 (2) Born 1. The learned Chief Justice after setting out the facts had this to say on the effect of Section I of the Contract Act:

¶380

"The Indian Contract Act of 1872 applies to all contracts in India and with regard to a pawn is a codification of the English common law. Speaking of the common law right to sell Mr. Justice Story in his commentaries on the Law of Bailments, eighth edition, says at p. 262:"Another right.resulting, by the common law, from the contract of pledge is the right to sell the pledge, where there has been a default in the pledge in complying with his engagement, but a sale before default would be a conversion. Such a right does not divest the general property of the pawner but still leave in him (as we shall presently see) a right of redemption." And at p. 263 :-

¶381

"The common law of England, existing in the time of Glanville, seems to have required a judicial process to justify the sale, or at least to destroy the right of redemption. But the law as at present established leaves an election to the pawnee. He may file a bill in equity against the pawner for a foreclosure and sale; or, he may proceed to sell ex mero motu, upon giving notice of his intention to the pledger."

¶382

The terms of an instrument of pledge, such as there is in this case, giving an unqualified power of sale, are inconsistent with the provisions of s. 176 of the Indian Contract Act, and, therefore, by virtue of s. I of that Act must give place to the express provisions of the Act: See Chitguppi & Co. v. Vinaya Kashinath [( 1920) 45 Born. 157, s.c.22 Born L.R. 959) . .

¶383

The group of sections in the Indian Contract Act dealing with bailment commence withs. 148, and it is to be observed that in the ss. 152, 163, 171and174 the power is given to contract out of the Act. In the former section the words are "in the absence of any special contract" and in the three latter sections the expression used is "in the absence of

B c D E F G H

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¶389

A any contract to contrary". In my op in ion, therefore, except in these four sections, the provisions of the Act with regard to bailment are mandatory: see The Co-operative Hindustan Bank, Ltd. v. Sure11dra11ath De [( 1931) 59 Cal. 667.]."

¶390

B 17. It is thus clear that if on facts there is a waiver of a provision of the PPA by one of the parties to the PPA, then Sectio11 63 of the Contract Act will operate in order to give effect to such waiver.

¶391

At this juncture, it is important to understand what exactly is meant by waiver. In Jagad Bmullm Chatterjee v. Nilima Rani, ( 1969) c 3 SCC 445, this Court held:

¶392

"In India the general principle with regard to waiver of contractual obligation is to be found in Section 63 of the Indian Contract Act. Under that section it is open to a promisee to dispense with or remit, wholly or in part, the D performance of the promise made to him or he can accept instead of it any satisfaction which he thinks fit. Under the Indian law neither consideration nor an agreement would be necessary to constitute waiver. This Com1 has already laid down in Waman Shrinill'as Kini v. Ratilal Bhagwandas & Co. [ 1959 Supp 2 SCR 21 7, 226] that E waiver is the abandonment of a right which normally eve1ybody is at liberty to waive. "A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right". It is well-known that in the law of pre-emption the general principle which can F be said to have been uniformly adopted by the Indian com1s is that acquiescence in the sale by any positive act amounting to relinquishment of a pre-emptive right has the effect of the forfeiture of such a right. So far as the law of pre-emption is concerned the principle of waiver is based mainly on Mohammedan Jurisprudence. The contention that G the waiver of the appellant's right under Section 26-F of the Bengal Tenancy Act must be founded on contract or agreement cannot be acceded to and must be rejected." [para 5] 19. In P. Dasa Muni Reddy v. P. Appa Rao, ( 1974) 2 SCC 725,

¶393

¶394

935

¶395

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶396

this Court held:

¶397

¶398

"Waiver is an intentional relinquishment of a known right or advantage, benefit, claim or privilege which except for such waiver the party would have enjoyed. Waiver can also be a voluntary surrender of a right. The doctrine of waiver has been applied in cases where landlords claimed forfeiture of lease or tenancy because of breach of some condition in the contract of tenancy. The doctrine which the courts of law will recognise is a rule of judicial policy that a person will not be allowed to take inconsistent position to gain advantage through the aid of courts. Waiver sometimes partakes of the nature of an election. Waiver is consensual in nature. It implies a meeting of the minds. It is a matter of mutual intention. The doctrine does not depend on misrepresentation. Waiver actually requires two parties, one party waiving and another receiving the benefit of waiver. There can be waiver so intended by one party and so understood by the other. The essential element of waiver is thatthere must· untaiy and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an oppo11unity for choice between the relinquishment and an enforcement of the right in question. It cannot be held that there has been a waiver of valuable rights where the circumstances show that what was done was involuntary. There can be no waiver of a non-existent right. Similarly, one cannot waive that which is not one's as a right at the time of waiver. Some mistake or. misapprehension as to some facts which constitute the.· underlying assumption without which pa11ies would not have made the contract may be sufficient to justify the court in saying that there was no consent." [para 13]

¶399

¶400

¶401

Regard being had to th_e aforesaid decisions, it is clear that when waiver is spoken of in tire "realm of contract, Section 63 of the · (i Indian Contract Act governs. But it is important to note that waiver. rs an intentional relinquishment of a known right, and that, therefoe, unless there is a clear intention to relinquish a right that is fully knon to a party, a party cannot be said to waive it: But the matter does not'end here. It is also clear that ifany element of public interest is involved and

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[2016] 9 S.C.R.

SUPREME COURT REPORTS

¶406

A a waiver takes place by one of the parties to an agreement, such waiver will not be given effect to if it is contrary to such public interest. This is clear from a reading of the following authorities.

¶407

In Lac/100 Mal v. Radliey Sliyam, ( 1971) 1 SCC 619, it was

¶408

held:B "The general principle is that everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with without infringing any public right or public policy. Thus the maxim c which sanctions the non-observance of the statutory provision is cuilibet licet renuntiarejuri prose introducto. (See Maxwell on Interpretation of Statutes, Eleventh Edn., pp. 3 75 and 376). If there is any express prohibition against contracting out of a statute in it then no question can arise of anyone entering into a contract which is so prohibited D but where there is no such prohibition it will have to be seen whether an Act is intended to have a more-extensive operation as a matter of public policy." [para 6]

¶409

In Indira Bai v. Nand Kislwre, (1990) 4 SCC 668, it was ·held:E "The test to determine the nature of interest, namely, private or public is whether the right which is renunciated is the right of party alone or of the public also in the sense that the general welfare of the society is involved. If the answer is latter then it may be difficult to put estoppel as a defence. F But if it is right of party alone then it is capable of being abnegated either in writing or by conduct." [para 5] 23. In Krishna Balwdur v. Puma Theatre, (2004) 8 SCC 229, it was held:

¶410

"The principle of waiver although is akin to the principle of G estoppel; the difference between the two, however, is that whereas estoppel is not a cause of action; it is a rule of evidence; waiver is contq1ctual and may constitute a cause of action; it is an agreement between the parties and a party fully knowing of its rights has agreed not to assert a right

¶411

¶412

937

¶413

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶414

for a consideration.

¶415

A right can be waived by the party for whose benefit certain requirements or conditions had been provided for by a statute subject to the condition that no public interest is involved therein. Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being. Statutory right, however, may also be waived by his conduct." [para 9]

¶416

It is thus clear that if there is any element of public interest involved, the court steps in to thwart any waiver which may be contrary to such public interest.

¶417

On the facts of this case, it is clear that the moment electricity tariff gets affected, the consumer interest comes in and public interest gets affected. This is in fact statutorily recognized by the Electricity Act in Sections 61 to 63 thereof. Under Section 61, the appropriate commission, when it specifies terms and conditions for determination of tariff, is to be guided inter alia by the safeguarding of the consumer interest and the recovery of the cost of electricity in a reasonable manner. Forth is purpose, factors that encourage competition, efficiency and good performance are also to be heeded. Under Section 62 of the Act, the appropriate commission is to determine such tariff in accordance with the principles contained in Section 61. The present case, however, is covered by Section 63, which begins with a 11011 obstante clause stating that notwithstanding anything contained in Section 62, the appropriate commission shall adoptthe tariff if such tariff has been determined through a transparent process of bidding in accordance with the guidelines issued by the Central Government. The guidelines dated 19.1.2005 issued by the Central Government under Section 63 make it clear that such guidelines are framed with the following objectives in mind:

¶418

"These guidelines have been framed under the above provisions of section 63 of the Act. The specific objectives of these guidelines are as follows:

I) Promote competitive procurement of electricity by distribution licensees;

¶427

1. Facilitate transpwency and fairness in procurement processes;

¶428

¶429

938

¶430

SUPREME COURT REPORTS

¶431

[2016] 9 S.C.R.

¶432

A 3) Facilitate reduction ofinformation asymmetries for various bidders;

¶433

1. Protect consumer interests by facilitating competitive conditions in procurement of electricity;

¶434

¶435

1. Enhance standardization and reduce ambiguity and hence time for materialization of projects;

¶436

1. Provide flexibility to suppliers on internal operations while ensuring certainty on availability of power and tariffs for buyers.

¶437

¶438

¶439

Clause 2.3 of the said guidelines reads as follows:

¶440

"2.3. Unless explicitly specified in these guidelines, the provisions of these guidelines shall be binding on the procurer. The process to be adopted in event of any deviation proposed from these guidelines is specified later in these guidelines under para 5.16."

¶441

Paragraph 4 of the aforesaid guidelines relates to tariff structure and paragraph 4.11 in particular, which relates to energy charges, is as follows:-

¶442

"4.11 Where applicable, the energy charges payable during

¶443

E the operation of the contract shall be related on the base energy charges specified in the bid with suitable provision for escalation. In case the bidder provides firm energy charge rates for each of the years of the contract term, the same shall be permitted in. the tariffs."

¶444

F 27. Para 5.4 then speaks of a inodel power purchase agreement proposed to be entered into with the seller of electricity as follows:-

¶445

"(ii) Model PPA proposed to be entered into with the seller of electricity. The PPA shall include necessary details on:

¶446

Risk allocation between paiiies;

¶447

¶448

Technical requirements on minimum load conditions;

¶449

Assured offtake levels;

¶450

Force majeure clauses as per industry standards;

¶451

¶452

Lead times for scheduling of power;

¶453

939

¶454

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶455

• Default conditions and cure thereof, and penalties; • Payment security proposed to be offered by the procurer." 28. Paragraph 5.16 then goes on to state:- "Deviation from process defined_ in the guidelines 5.16 In case there is any deviation from these guidelines, the same shall be with the prior approval of the Appropriate Commission. The Appropriate Commission shall decide on the modifications to the bid documents within a reasonable time not exceeding 90 days."

¶456

A perusal of the CERC tariff adoption order in the present case dated 17.10.2007 makes it clear that the tariff is adopted by the Commission only because the competitive bidding process which has been undertaken is in accordance with the guidelines so issued.

¶457

All this would make it clear that even if a waiver is claimed of some of the provisions of the PPA, such waiver, if it affects tariffs that are ultimately payable by the consumer, would necessarily affect public interest and would have to pass muster of the Commission under Sections 61 to 63 of the Electricity Act. This is for the reason that what is adopted by the Commission under Section 63 is only a tariff obtained by competitive bidding in conformity with guidelines issued. If at any subsequent point of time such tariff is increased, which increase is outside the four corners of the PPA, even in cases covered by Section 63, the legislative intent and the language of Sections 61 and 62 make it clear that the Commission alone can accept such amended tariff as it would impact consumer interest and therefore public interest.

¶458

But on the facts of these cases, it is argued by learned counsel for Sasan that in point of fact the tariff laid down in Schedule 11 of the PPA has not been sought to be changed. All that has happened is that, as a result of COD being declared on 31.3.2013, the very tariff laid down in Schedule 11 becomes applicable, but for year one being treated as one day and year two commencing from 1.4.2013. Counsel for Sasan may be right in saying this, but the substance of the matter is that a consumer would have to pay substantially more by way of tariff under the PPA if year one is gobbled up in one day, as year two's tariff is one paisa more than year one and year three's tariff is substantially more than year two. In short, instead of getting two years or part thereof exceeding one

940

[2016] 9 S.C.R.

SUPREME COURT REPORTS

¶470

A year at a substantially lower tariff, the consumer now gets only one year and one day at the lower tariff rates. This may also by itself not lead to the parties having to go to the Commission as this is envisaged by the PPA. But it is clear that if a waiver is to be accepted on the facts of this case, it would clearly impact the pub! ic interest, in that consumers would have to pay substantially more for electricity consumed by them. This

¶471

B being the case, on facts it may not be necessary to go to the Commission as had Sasan in fact met the parameters of Schedule 5 on 30'h March, then as per Schedule 11, year one would in fact have been only for one day. However, any waiver of the requirement ~f Schedule 5 would definitely impact the generation of electricity at the mandate.d percentage

¶472

c of contracted capacity as also the amounts payable by consumers, and would therefore affect the public interest. This being the case, this is not a case covered by the judgments cited on behalfofSasan, in particular the judgment of this Court in Commissioner of Customs, Bombay v. Virgo Steels Bombay, (2002) 4 SCC 316, in which it has been held that even the mandatory requirement of a statute can be waived by the

¶473

D party concerned, provided it is intended only for his benefit. This case would fall within the parameters of the other judgments referred to above, and would therefore be governed by judgments which state that any waiver of the requirements of Article 6.3 and Schedule 5 would ultimately impact consumer interest and therefore the public interest. Such waiver

¶474

E therefore cannot be allowed to pass muster on the facts of the present case.

¶475

Since the result of this case also depends upon the correct

¶476

reading of Article 6 read with Schedule 5 of the PPA, and whether there has been waiver in fact in the sense ofbeing the intentional relinquishment

¶477

F of a known right by the procurers or on their behalf, it is necessary to advert to the scheme of Article 6, the independent engineer's certificate, and various meetings, emails, and letters exchanged between the parties. Article 6 deals with synchronization, commissioning, and commercial operations. In the first step to be taken by the seller, the unit producing electricity has to be synchronized to the grid system. It is only after

¶478

G synchronization takes place that the unit is to be commissioned. What is important is that at the commissioning stage, the parameters mentioned in Schedule 5 are to be met. The most important parameter mentioned in Schedule 5, when the performance test is to be taken for the purpose ·of commissioning, is that a unit shall be deemed to have passed such test

•

941

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶483

only if it operates continuously for 72 consecutive hours at or about 95% of its contracted capacity as existing on the effective date and within the electrical system limits and functional specifications. Further, as a part of the performance test, the seller must demonstrate that the unit meets functional specifications for ramping rate separately mentioned in Schedule 4 of the PPA. It is only when such test is passed that a unit can be said to be commissioned under the PPA. This then is to be certified by the independent engineer jointly appointed by the parties under Article 6.3.1, in the form ofa final test certificate, which states that (a) the commission tests have been carried in accordance with Schedule 5 and are acceptable to him, and (b) the result of the performance test shows that the unit's tested capacity is not less than 95% of the contracted demand as existing on the effective date.

¶484

If the Schedule 5 parameters are not met, it is incumbent on the independent engineer to then state reasons for the non-issuance of the final test certificate. Once this is done, under Articfe 6.3 .2, the seller may retake the relevant test within a reasonable period after the end of the previous test so as to comply with the basic requirements of Schedule 5. It is only after this that a unit can be said to be a "commissioned unit" as defined, which means that it is a unit in respect of which COD has occurred. COD or commercial operation date is also separately defined as meaning, in relation to a unit, the date one day after the date when each of the procurers receives a final test certificate of the independent engineer as per Article 6.3.1. It is thus clear that the scheme of Article 6 is that a unit cannot be said to have a commercial operation date unless and until it is first synchronized with the grid and commissioned after meeting the parameters mentioned in Schedule 5 of the PPA.

¶485

Article 6.3.3 refers ·to performance tests of a unit during the period of the PPA. If under Article 6.3.3 after COD has been achieved in a unit, an increased tested capacity over and above that provided in 6.3. l (b) is achieved in a subsequent performance test, certain consequences follow. Equally, if after COD has been obtained in a unit, and the most recent performance test mentioned during the working of the PPA has been conducted, and it is found that in such test a figure less than contracted capacity is achieved, the unit shall be de-rated with certain consequences which are mentioned in Article 6.3.4 read with Article 8.2.2. The scheme of Article 6 therefore read as a whole appears to be that COD cannot be achieved until the parameters mentioned in

942

SUPREME COURT REPORTS

¶496

[2016] 9 S.C.R.

¶497

A Schedule 5 are achieved and there is a final test certificate to that effect. The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick in after COD is obtained in a unit, leading to either increased capacity or to derateC! capacity with consequences which follow under the PPA.

¶498

The meetings, emails, and letters between the parties have

¶499

B now to be examined. The first important 111eeting that is necessary for us to advert to is the meeting of27.2.2013. The meeting was Chaired by the Managing Director of the lead procurer i.e. M.P. Power Management Company Li111ited. It was attended by all the other procurers, and officials of Sasan. What is emphasized on behalf of Sasan is that the revised COD of the Sasan units was accepted by all

¶500

c the procurers under article 4.5.1 of the PPA to be - (first unit) by 31.3.2013. The procurers asked Sasan for the estimated date for synchronization and COD of the first unit. Sasan indicated that synchronization is expected in the first week of March, 2013, and the COD before 31.3.2013. What is i111portant about this meeting is that the

¶501

D procurers were no doubt interested in getting electricity from Sasan as soon as possible, but obviously only in accordance with article 6.3.1 read with the 5'" Schedule. This would only 111ean that the meeting would disclose that the anxiety of the procurers to get electricity at cheap rates would be in accordance with the PPA and not against it. In other words, if a final test certificate had been given to the effect that 95% of

¶502

E contracted capacity could have been delivered by Unit No.3 on or before 31.3.2013, the procurers were anxious to avai I of it, and not otherwise.

¶503

It is unnecessary for us to burden th is judgment with the e111ails

¶504

that passed between Sasan and WRLDC between 27.3.2013 and 30.3.2013. It is enough for us to state that Sasan contends that it was

¶505

F ready to deliver at 95% of the contracted demand but for WRLDC, and WRLDC states that Sasan was never obstructed by WRLDC, and in fact was not capable of delivering electricity at 95% of the contracted demand at the relevant time. WRLDC a;--~'ears to be correct in this for the simple reason that if we see the performance of Sasan for the period

¶506

G 1 "April to 16'" August, 2P 13, it is clear that various tests were undertaken, but 95% of contract capacity for a continuous period of 72 hours had only beei. ac!~ieved in June even according to Sasan.

¶507

3 7. ln any event, the performance test certificate issued on 30.3.2013 leaves much to be desired. Since the Commission has H castigated this certificate and the Appcl!ite Tribunal has absolved the

¶508

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 943 SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶509

Independent Engineer completely,itisnecessary to set outthiscertificate infull.	A
"LahmeyerInternational (India) Pvt. Ltd.
Corporate Office&Correspondence address:
lntec House, 37 Institutional Area, Sector 44, Gurgaon- 122002,National Capital Region (INDIA)	B
CERTIFICATE OF INDEPENDENT ENGINEER (IE)
Test CertificateofPerformance Test for the Commercial Operation Declarationofthe First Unit (Unit-3of660MW) ofSASAN ULTRA MEGA POWER PROJECT (6x660 MW)	C
ThisCertificateisissued byIEwith reference to article 6.3.1ofPPA executed on7'"August 2007 between Sasan PowerLimited (SPL, the Seller) and the Power Procurers. Based on the Performance Test witnessed byIEfrom27'h March 2013 to 30' 11March 2013 and reviewofthe detailed Performance Test results provided by the Seller, itiscertified that:	D
I. The Unit was synchronized with the grid at 15.18 hrs on 27'hMarch 2013 after receiving the permissionofWRLDC.	E
2.TheSeller (SPL) had submitted the power injection schedule to WRLDC at 15.35 hours on 27¹h March 2013 for raising the load gradually to 100%ofthe Contracted Capacityof620.4MW(ex bus) by 2000 hrs. on 27'¹¹March 2013 for demonstrating continuous operation at that load forcontinuous72(seventytwo)consecutivehours. However, WRLDC, did not permit the Seller to operate the Unit beyond l 00 MW (ex bus) till the morningof28'¹¹March 2013 due to the following reasons:	F
a)Thedemandinthe grid was low due to the Holiday on accountofHoliFestival.	G
b) All the Unitsinthe grid were operating at their technical minimum capacity.
3.TheSeller was continuously keepingintouch with

¶510

¶511

944

¶512

SUPREME COURT REPORTS

¶513

[2016] 9 S.C.R.

¶514

¶515

WRLDC till 21.40 hours on 29¹ h March 2013 for seeking permission to raise the load. At 22.19 hrs on 29¹ h March 2013 WRLDC permitted the seller to raise the load. Accordingly, Seller raised the load to around 150 MW (ex bus).

¶516

B 4. At 07 .13 hours on 30¹ h March 2013, WRLDC asked the seller to submit its revised power injection schedule for raising the load. At this point of time, the Unit had already completed continuous operation of 50 (fifty) consecutive hours at a low load of about 100 MW (ex-bus) and another 9 (nine) consecutive hours immediately thereafter at 150 c MW. Seller informed WRLDC at 14.18 hrs that it would increase the load from 20.00 hours to reach full load. As such, in line with WRLDC instructions and grid conditions. Seller maintained load of around 100 MW (ex bus) for around 50 hours and maintained load of around 150 MW D (ex bus) for remaining 22 hours as per WRLDC instructions and grid conditions.

¶517

The Commissioning Test has been carried out in accordance with Schedule 5 of PPA and the results of the Performance Test are acceptable to IE. The results of the E Performance Test show that the Unit's Tested Capacity is not less than 101.38 MW (ex bus), the maximum permitted load by WRLDC for injection into the grid. During the above stated period of continuous 72 (seventy two) consecutive hours, the performance of the unit was found to conform to the Electrical Limits of the Functional F Specifications in accordance with Schedule 4 of PPA.

¶518

The salient details of the Performance Test are as follows:

¶519

¶520

¶521

MinimumHourlyNetGeneration oftheUnitduring72HoursTest ·(M\V)	lOL1SmwFROM0600HRSTO 0700hrson28¹¹March2013
MaximumHourly_Ne.t_Generation oftheUnitduting72HoursTest (M\V')	161.01MWfrom1900hrsto 2000hrson30'¹March2013.
AnrageHourlyNetGenerationof rl1eUnitduring72HoursTest (M\V)	120.84MW

¶522

945

¶523

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶524

¶525

	10138MW
	21.66KVto21.83KV(Paramettt asperOCM-22K~
Poweractor	096Max(lagging),0.89MIN Qagin)	B
yWRLDC.

¶526

Since the Unit was operating below 50% of the rated load due to grid restriction, the Unit could not be demonstrate the Ramping Rate above 50% of the rated load in c accordance with Schedul~. 4 of PPA. However, as per the certificate provided by Original Equipment Manufacturer ofBoiler, Turbine {$l, Generator, minimum ramp up and ramp down rate of 1 % ,of Contracted Capacity per minute can be achieved. D 7. The Unit could not be tested forthe following parameters of Supercritical Technology at the steam turbine inlet as defined in PPA due to grid restriction. i)Main Stearn Pressure: 247 kg/cm2 (abs) ii) Main Steam Temperature: 535 deg C. E iii) Reheat Temperature: 565 deg C. However, the Unit was found to operate with the following parameters at the steam turbine inlet during one hour operation from 1200 hrs to 1300 hrs on 29'h March 2013. F i) Main Stearn Pressure: 7?:36 Kg/crn2 (abs)' ii) Main SteamTernperature: 535.64 deg.C. iii) Reheat Temperature: 575.04 deg C. 8. All the systems and equipment have been commissioned G and are operational with two coal mills which were taken into service. The balance mills could not be taken into service due to the restrictions imposed by the grid. The furnace was found to operate stably even at a low load of 101.38 MW (ex-bus) and the parameters of Turbine shaft

946

[2016] 9 S.C.R.

SUPREME COURT REPORTS

¶533

A vibrations, Generator slot temperature and Generator core temperature were found to be well within the equipment limits recommended by OEM.

¶534

In view of the above, the Unit-3 is certified to have achieved Commercial Operation, with a tested capacity of B 101.38 MW (ex bus) since:

¶535

(a) Commissioning Test was carried out in accordance with Article 6 and Schedule 5 of the PPA.

¶536

(B) Results of the test show that Unit-3 has met functional specifications stipulated in Schedule 4 of the PPA.

¶537

¶538

For Lahmeyer International s(India)

Sd/-

R.K. Soni

Project Manager

Dated: 30'h March 2013"

¶544

It will be seen from this certificate that the tested capacity of the Unit was found to be only I 01.38 MW as against 95% of 620 MW i.e. 587 MW. It was also stated that since the unit was operating below E 50% of the rated load due to grid restriction, the unit could not demonstrate ramping rate above 50% ofrated load in accordance with the Schedule 4 ofthe PPA.

¶545

Paragraph 9 of the certificate leaves much to be desired. Obviously, if the tested capacity is 1013 8 MW as against the required p 95% i.e. 587 MW, the test could not have been carrieqout in accordance with article 6 read with schedule 5, and that despite the fact that ramping up and down could not be achieved, functional specifications stipulated in Schedule 4 of the PPA were said to have been met. We are constrained, therefore, to agree with CERC which in its order dated 8.8.2014 has castigated this certificate. What article 6.3.1 requires is d first and foremost a final test certificate of the Independent Engineer. The certificate dated 30.3.2013 given by the Independent Engineer-is not a final test certificate. Indeed, it is only in August that a final test certificate was given in accordance with Article' 6.3.1 of the PPA by the very same independent engineer. Obviously the commissioning tests

¶546

¶547

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶548

947

¶549

could not have been carried out in accordance with Schedule 5, which requires in clause 1.1 (i) ( d) that the seller shall perform, in respect of each unit, a performance test, by which such unit shall be deemed to have passed only if it operates continuously for 72 consecutive hours, at or above 95% of its contracted capacity as existing on the effective date. Also, part of the same schedule requires that as a part of the performance test, the seller shall demonstrate that the unit meets the functional specifications for ramping rate as mentioned in Schedule 4, which was again conspicuous by its absence. According to the Independent Engineer, " ... the Unit 3 is certified to have achieved Commercial Operation, with a tested capacity I 0 I .3 8 MW" after carrying out the commissioning test in accordance with Article 6 and' Schedule 5 of the PPA. In the certificate dated 30.3.2013 he has stated that on witnessing the performance test from 27.03.2013 to 30.03.2013, the tested capacity of the Unit is 101.38 MW. However, it is clearly recorded that Unit was operated beyond I 00 MW only from the morning of28.03.2013. In the chart on the performance test, the Independent Engineer has noted that 101.38 MW is operated only from 06.00 a.m. on 28.03.2013. Under Article 6 read with Schedule 5 ... "Unit ·shall be deemed to have passed if it operates continuously for 72 consecutive hours at or above 95% of its contracted capacity as existing on the Effective lJate." Even according to the Independent Engineer, 101.38 MW was injecti;d only at 06.00 a.m. on 28.03.2013. Such a tested capacity of I 01.38 MW for 72 hours continuously could therefore have been certified only at 06.00 a.m. on 31.03.2013. If that be so; the Commercial Operation Date would have been only one day after the date when the test certificate of the Independent Engineer has been ~eceived by the procurers.· For this reason also, the test certificate is by no means in accor<:lance with Article 6.3.1 of the PPAread with Schedule 5 thereof.

¶550

It is now important to examine the correspondence between . the parties in order to ascertain whether the Appellate Tribunal is correct in stating that waiver had in fact taken place. At this stage, it is important to advert t9 an email dated 31.3.2013 sent by the lead procurer to Sasan. · This email categorically states as follows:

"With reference to the letter no. GEIE 12086/12-13/001/ RKS dt. 30'h March 2013relating to the Test Certificate of the Independent Engineer towards the Performance Test for declaration of COD of Unit-3 of 660 MW of UMPP

[20 I 6] 9 S;C.R.

948

SUPREME COURT REPORTS

¶563

A Sasan Project. It is to inform that as per clause 6.3. I (a) and (b) of the PPA, Commissioning Test should have been caJTied out in accordance with Schedule 5 of PPA and that the result of the test should not ha.ve been less than ninety .. · five (95) percen_t of its Contracted Capacity. The test result is not as per the aforesaid clause and, therefore, is not B acceptable to us. If the Seller is agreeable to consider the performance test under clause 6.3.4 for a de-rated capacity of 101.38 MW, the same could be agreed by us."

¶564

4 I. However, Sasan relies heavily u-pon an email sent on 2.4.20 I 3 by the lead procurer to Sasan. This email reads as follows: c

¶565

"To

¶566

The Chief Executive Officer Mis. Sasan Power Ltd., D DhirubhaiAmbani Knowledge City, 1 Block, 2nd Floor, North Wing, Thane, Belapur Road, Koparkhairane, Navi Mumbai, E Maharashtra 400 710 Sub: Independent Engineer's letter dated 3Q¹ h March20 J 3 Ref: Independent Engineer's letter dated 30¹ h March 2013 Dear Sir, F ~lease refer the Independent Engineer's letter dated 30¹ h March 2013 pertaining to "Test Ce11ificate of Performance Test for the Commercial Operation Declaration of the First Unit (Unit-3 of 660 MW) of SASAN ULTRA MEGA POWER PROJECT (6x660 MW)" and e-mail dated 3 1.3.2013 of 12.39 AM sent by Western Region Load G Despatch Centre regarding scheduling of power from Unit No.3 of Sasan UMPP. As lead procurer, the Performance Test, as certified by the independent Engineer for a capacity of 101.38 MW (ex-bus), is acceptable to us under Clause 6.3.4 of the PPA. You may kindly go for Performance H Test under notice to us for increasing the capacity beyond

¶567

949

¶568

ALL INDIA POWER ENGINEER FEDERATION & ORS. v. SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶569

certification by the Independent Engineer in accordance with Clause 6.3.3 of the PPA.

¶570

As provided In Article 6.3.4 of the PPA, irr the period between this perfonnance test and the next performance test, the unit's contracted capacity and available capacity would be considered as 101.38 MW (ex-bus) and its availability factor shall be calculated by reference to 101.38 MW. The charges payable for power shall be as laid down in Article 6.3 .4 of the PPA. Jn case the unit is in position to produce beyond 101.38 MW, the additional quantity would be scheduled in favour of the Procurers under proviso to Article 11. l of the PPA, until the next Performance Test is conducted under Article 6.3.3.

Thanking you,

Yours faithfully,

Sd/-

Executive Director (IPC)"

¶579

The two emails read together would show that the lead procurer made it clear that declaration of COD ofl!nit 3 is not accepted by them as the test was not performed as per Article 6.3.1. However, in its anxiety to procure electricity, what was stated in th_e second email was that the capacity of 101.38 MW was acceptable only under Article 6.3.4 of the PPA, meaning thereby that this ought to be treated as de-rated c;apacity, which should be paid for as provided. And any quantity produced over and above I 01.38 MW would be treated as infirm power under A11icle 11. l proviso, and paid for as such.

¶580

Shri Sibal argued that the moment Article 6.3 .4 of the PPA is attracted, this would necessarily mean that the Appellants have waived the requirement of 95% of the contracted capacity as existing on the effective date mentioned in Article 6.3 .1 (b ). According to him, this would mean that scheduled power would have lo be supplied, which in turn can only be done ifthere is waiver of the aforesaid requirement. It is difficult to agree. The case of the appellants has throughout been, starting from 12'" April, 2013, onwards, that it has never consented to Schedule 5 of the PPA and Article 6.3. l(b) parameters being lowered. It is true that Article 6.3.4 would not apply for the reason that it would come into

950

[2016] 9 S.C.R.

SUPREME COURT REPORTS

¶588

A effect only after the last recent performance test mentioned in Article 6.3.3 has been conducted. And for Article 6.3.3 to apply, a performance test must first indicate that from a unit's COD ·an increased tested capacity over and above that provided in Article 6.3. l (b) must first occur. Admittedly on facts this has not happened. What is important to note therefore is that the appellants desperately wanted power at a cheaper

¶589

B rate, and were willing to go to any extent to get such power, including invoking clause 6.3.4, which would not apply, and stating that anything over and above 101.38 MW ought to be treated as infirm power. It is clear under the Regulations, however, that infirm power can never be supplied to the appellants themselves but can only be supplied to the

¶590

c grid. This being the case, the question that is still posed is whether the two emails read together would amount to a waiver of the right mentioned in clause 6.3 .1. Waiver is, as has been pointed out above, an intentional relinquishment of a known right. Waiver must be spelled out with crystal clarity for there must be a clear intention to give up a known right. There is no such clear intention that can be spelled out on a reading of

¶591

D the two emails. All that can be spelled out is that the first email of 31.3.2013 categorically states that the test result is not as per Article 6.3.1, and is not acceptable. The last sentence of this very email then refers to clause 6.3.4 and to a de-rated capacity of 101.38 MW. Thereafter, the email of 2"d April, 2013 expands on the aforesaid last

¶592

E sentence of the earlier email by referring to Article 6.3.4 and Article 11 proviso. This is akin to a 'without prejudice' acceptance of de-rated power, being a non-acceptance of the test certificate dated 30.3.2013 coupled with a desperate attempt to somehow get whatever power is available. But this does not amount to a clear and unequivocal intention to relinquish a known right.

¶593

¶594

It is not necessary to burden this judgment with various other acceptance emails of the other discoms inasmuch as they are all in terms of the email sent by the lead procurer. Haryana discom has sent an email dated 12.4.2013 in which, even while accepting derated power, it has accepted the same without prejudice to its rights.

¶595

¶596

In contrast to the aforesaid emails, the acceptance emails of BYPL and BRPL, both Reliance Group Companies, may now be quoted:-

¶597

"Dear Sir

¶598

From Sasan UMPP Delhi has allocation of 450 mw as per

¶599

¶600

ALL INDIA POWER ENGINEER FEDERATION '& ORS. v. 951 SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

¶601

MOP out of which BRPL share is 43.58 out of Delhi A allocation. We accept the COD of I" unit of 660 mw as declared by SPL. May please schedule Full quantum of BRPL with immediate effect and confirm. Regards. B Sanjay Srivastav. Assistant VP BRPL. 9312147045 Sanjay Srivastav (As V.P.)" 46. This acceptance email is in stark contrast with the acceptance email of the lead procurer, in that it unequivocally accepts COD of the c first Unit of 660 MW as declared by Sasan. It is therefore clear that on facts in this case there is no waiver and the Appellate Tribunal in coming to an opposite conclusion, is clearly erroneous.

¶602

¶603

Interestingly enough, the Appellate Tribunal, in the impugned judgment dated 31.3.2016, contradicts itself when it states in one portion D as follows:"e) We have carefully gone through the ratio of the law laid down by Hon'ble Supreme Court in Wama11 Sltri11iwas and in Krislw11 La/'s case, wherein in the latter case the Hon'ble Supreme Court cited an illustration in paragraph E 21 thereof. The words of the Hon'ble Supreme Court are "to illustrate this principle, it has been stated that if the statutory condition be imposed simply for the security or the benefit of the parties to the action themselves, such condition will not be considered as indispensable F and either party may-waive it. " In the present case, the requirement of achieving 95% of the contracted capacity for declaration of COD was not one for the private benefit of the seller and procurers. The said requirement and the appointment of ·an independent expert to oversee the commissioning process was built into the statutory contract G i.e. PPA itself for a specific purpose, as a requirement of general policy, to ensure that generators do not declare their units to be commercially available without even demonstrating the capability of such units to achieve at least 95% of the contracted capacity."

952

. [2016] 9 S.C.R.

SUPREME COURT REPORTS

¶608

A And then goes on to state:

¶609

"We further find that in the present case, there is no question of any public interest or public polic:' or morals or statutory regulations being violated. The WRLDC, who wa.s a. petitioner before the Central Commission, in its Petition B clearly and equivocally states that there are no guidelines in respect of declaration of COD of the generators who are not governed by CERF (Tariff Regulations) 2009 and in the Petition, WRLDC prays to the Central Commission for issuing regulations and guidelines in that behalf."

¶610

c 48. We thus find that the Appellate Tribunal is wholly incorrect in accepting the case of waiver put forward by .learned counsel for Sasan, and is equally incorrect in absolving the independent engineer for the test certificate given by him on 30.3.2013. We, therefore, set aside the Appellate Tribunal's judgment, and reinstate the judgment dated 8.8.2014 of the Central Electricity Regulatory Commission.

¶611

¶612

Shri Sibal 's last argument is that there is no substantial question

¶613

of law so as to attract Section 125 of the Electricity Act, 2003 in these appeals. We are afraid that we cannot agn:e. One substantial question oflaw is whether, when public interest is involved, waiver can atall take place of a right in favour of the· generator of electricity under

¶614

E a PPA if the right also has an impact on consumer interest. This substantial question of law has' been answered by us in the course of the judgment. We have also pointed out that the Appellate Tribunal's finding that the Independent Engineer's test certificate can pass muster and that there is a waiver on facts is not a possible conclusion, and such

¶615

F finding is, therefore, perverse and hence set aside. That apart, we have also pointed out the contradictory nature of the judgment of the Appellate Tribunal, when it points out that the requirement of Article 6.3.1 is not merely for the private benefit of the procurers of electricity, but is as a matter of general policy; and then later on in the judgment finds that no question of public interest or public policy arises in the present case. In

¶616

G these circumstances, this plea must also be turned down. In the result, the appeals are allowed but with no order as to costs.

¶617

D~vika Gujral

¶618

Appeals allowed.

All India Power Engineer Federation & Ors. v. Sasan Power Ltd. & Ors. etc.

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All India Power Engineer Federation & Ors. v. Sasan Power Ltd. & Ors. etc.

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