TRANSMISSION CORPN. OF A.P. LTD. & ANR. v. SAi RENEWABLE POVVER PVT. LTD. & ORS.

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A authority. Section 3 of the Act requires the State Govt. to establish by notification a Commission to be known as Andhra Pradesh Electricity Regulatory Commission. This was done by notification dated 3rd April, 1999. As already noticed, section 11 detailed the functions of the Regulatory Commission and primarily it had advisory as well as regulatory functions. In terms 8 of Section 11 (1 )(c) it was required to issue licenses in accordance with the provisions of the Act and determine the conditions to be included in the license. However, 11 (1 )(e) gave it much wider power and duty LO regulate the purchase, distribution, supply and utilization of electricity, the quality of service, the tariff and charges payable keeping in view both the interest of the consumer as well as the consideration that the supply and distribution cannot be maintained unless the charges for the electricity supplied are adequately levied and duly collected. In terms of Section ·11 (1 )(I) it was to undertake all incidental or ancillary things to the functions assigned to it under the provisions of the Act. Section 12 of the Act vests the State Govt. with the power to issue policy directions on matters concerning electricity in the State including the overall planning and co-ordination. All policy directions shall be issued by the E State Govt. consistent with the objects sought to be achieved by this Act and, accordingly, shall not adversely affect or interfere with the functions and powers of the Regulatory Commission including, but not limited to, determination of the structure of tariffs for supply of electricity to various classes of consumers. The State Govt. is further expected to consult the Regulatory Commission in regard to the proposed legislation or rules concerning any policy direction and shall duly take into account the recommendation by the Regulatory Commission on all such matters. Thus the scheme of these provisions is to grant supremacy to the Regulatory Commission and the State is not expected to take any policy decision or planning which would adversely affect the functioning of the Regulatory Commission or interfere with its functions. This provision also clearly implies that fixation of tariff is the function of the H Regulatory Commission and the State Govt. has a minimum

TRANSMISSION CORPN. OF A.P. LTD v. SAi RENEWABLE 693. POWER PVT. LTD. [SWATANTER KUMAR, J.]

role in that regard. Chapter VII of this Act deals with tariff. In A terms of Section 26(2), the Regulatory Commission, in addition to its power of issuing licence, is entitled to fix terms and conditions for determination of the licensee's revenue and tariffs by regulations which are to be duly published. The expression 'tariff' has not been defined in any of the Acts, with which we B are concerned in the present appeals, despite the fact that the expression 'tariff' has been used repeatedly in both the Acts. Under the Electricity Act, 2003 'tariff' has neither been defined nor explained in any of the provisions of the Act. Explanation (b) to Section 26 of the Reform Act, 1998 states-what is meant c by 'tariff'. This provision states that 'tariff' means a schedule of standard price or charges or specified services which are applicable to all such specified services provided to the type or types of customers specified in the 'tariff' notification. This is an explanation to Section 26 which deals with licenses, D revenues and tariffs. In other words, this explanation may not be of greater help to the Court in dealing with the case of generating companies. Similarly, the expression 'purchase price' has neither been defined nor explained in any of the afore-stated Acts. E

28Copy pinpoint28. Therefore, in the absence of any specific definition in any of these Acts we will have to depend upon the meaning attached to these expressions under the !iJeneral law or in common parlance. The expression 'tariff' has been explained in the Law Lexicon with legal Maxims, Latin terms and Words F & Phrases (Second Edition 1997) as "determination, ascertainment, a table of rates of export and import duties, in which sense the word has been adopted in English and other European languages and as defined by the law dictionaries the word 'tariff' is a cartel of commerce; a book of rates; a table G or catalogue, drawn usually in alphabetical order, containing the names of several kind of merchandise, with the duties or customs to be paid for the same as settled by the authority or agreed between the several princes and States that hold commerce together." H

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29Copy pinpoint29. It has also been explained as a schedule, system, or scheme of duties imposed by the Government of a country upon goods imported or exported; published volume of rate schedules and general terms and conditions under which a product or service will be supplied; a document approved by s the responsible regulatory agency listing the terms and conditions including a schedule of prices, under which utility services will be provided. The expression 'purchase price' has to be given its limited meaning, i.e. the price paid for purchasing a good and in the context of the present case, price c at which generated electricity will be sold to the specified agencies. The term 'purchase price' indicated in the PPAs, as such, would be a matter within the realm of contract but this is subject to the changes which are contractually and/or even statutorily permissible. Purchase price ultimately would form part of the tariff, as tariff relatable to a licensee or a consumer 0 would have essentially taken into account, the purchase price. The purchase price may not include tariff but tariff would always or is expected to include purchase price.

30Copy pinpoint30. The Regulatory Commission is vested with very vast E powers and functions. Section 11 of the Reform Act, 1998 declares fixation of tariff as one of the primary functions of the Regulatory Commission in general more particularly, to the specified consumers under Section 26 of the Reform Act, 1998. While under the Electricity Act, 2003, Sections 61 and 62 read '= with Section 86 (1 )(a)(b) deal with fixation of tariffs in relation to production, distribution and sale of generated power to the end consumer. These provisions clearly demonstrate that the Regulatory Commission is vested with the function for determining the tariff for generation, supply, transmission and billing of electricity etc., as well as regulation of electricity purchase and procurement process of distribution licensees, including price at which electricity shall be procured from the generating companies. With these specific powers in the statute book itself, it cannot be said that procurement of power from the generating companies will not fall within the ambit of

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POWER PVT LTD. [SWATANTER KUMAR, J.] powers and functions of the Regulatory Commission. It, as already noted, is a common body performing functions, duties and exercising powers under all these three Acts. This Court had the occasion to deal with somewhat similar issues in the case of PTC India Ltd. v. Central Electricity Regulatory Commission [(2010) 4 SCC 603]. The Court was, amongst others, dealing with the provisions of Sections 61 to 63 of the Electricity Act, 2003 and regulation making power of the Regulatory Commission. The Court was concerned with other issues as well including the powers of the Tribunal in relation to judicial review etc. but it will be of assistance to us to notice c that the Court referred to different kinds of delegated legislations under the provisions of Electricity Act, 2003 and with regard to the power of the Regulatory Commission and the scope of the term 'tariff the Court held as under:

"23. Section 52 of the 2003 Act deals with trading of electricity activity. Under Section 52(1 ), the appropriate Commission may specify the technical requirement, capital adequacy requirement and creditworthiness for being an electricity trader. Under Section 52(2), every trader is required to discharge its duties, in relation to supply and trading in electricity, as may be specified by the appropriate Commission.

24. The standards of performance of licensee(s) may be specified by the appropriate Commission under Section F 57 of the Act.

25. The 2003 Act contains separate provisions for the performance of dual functions by the Commission. Section 61 is the enabling provision for framing of regulations by the Central Commission; the determination of terms and G conditions of tariff has been left to the domain of the Regulatory Commissions under Section 61 of the Act whereas actual tariff determination by the Regulatory Commissions is covered by Section 62 of the Act. This aspect is very important for deciding the present case. H

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A Specifying the terms and conditions for determination of tariff is an exercise which is different and distinct from actual tariff determination in accordance with the · provisions of the Act for supply of electricity by a generating company to a distribution licensee or for B transmission of electricity or for wheeling of electricity or for retail sale of electricity.

26. The term "tariff' is not defined in the 2003 Act. The term "tariff' includes within its ambit not only the fixation of rates but also the rules and regulations relating to it. If one reads c Section 61 with Section 62 of the 2003 Act, it becomes clear that the appropriate Commission shall determine the actual tariff in accordance with the provisions of the Act, including the terms and conditions which may be specified by the appropriate Commission under Section 61 of the said Act. Under the 2003 Act, if one reads Section 62 with Section 64, it becomes clear that although tariff fixation like price fixation is legislative in character, the same under the Act is made appealable vide Section 111. These provisions, namely, Section 61, 62 and 64 indicate the dual nature of functions performed by the Regulatory Commissions viz. decision-making and specifying terms and conditions for tariff determination.

27. Section 66 confers substantial powers on the appropriate Commission to develop the relevant market in accordance with the principles of competition, fair participation as well as protection of consumers' interests. Under Sections 111 (1) and 111 (6) respectively, the Tribunal has appellate and revisional powers. In addition, there are powers given to the Tribunal under Section 121 G of the 2003 Act to issue orders, instructions or directions, as it may deem fit, to the appropriate Commission for the performance of statutory functions under the 2003 Act."

31Copy pinpoint31. Similarly, another Bench of this Court in the case of H

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POWER PVT. LTD. [SWATANTER KUMAR, J.]

Tata Power Company Ltd. v. Reliance Energy Ltd., [2009 (7) A SCALE 513], was primarily, concerned with the role of the generating companies and their right to make choice to sell power to any person or licensee and while referring to the concept of open access, the Court in para 59 of the judgment referred to the issues arising in the case which read as under: B

"Although before us a large number of contentions had been raised, the core questions, which arise for our consideration, are:-

(A) Whether recourse to Section 23 of the Act can be taken for issuance of any direction to the generating company?

(B) Whether the Commission while applying the provisions of Section 86(1 )(b) of the Act could also take recourse to Sections 23 and 60 thereof?

(C) Whether equitable allocation of power generated by a generating company is permissible?"

32Copy pinpoint32. In the present case we are, primarily, concerned with the answers given by the Court to questions (A) and (B) framed therein, the discussion on the subject and finally the relevant conclusions drawn by the Court in para 140 to 142. The Court elaborately discussed the matter including the fact that some generating c9mpanies had entered into PPAs while other had not. The Court, amongst others, declare the following conclusions (of which we refer only the relevant portions):

''7) if regulatory clause is sought to be applied in relation to allocation of power, the same would defeat the de- G licensing provisions. Generating companies have the freedom to enter into contract and in particular long term contracts with a distribution company subject to the regulatory provisions contained in the 2003 Act.

8) PPA for a long term is essential for increasing and H

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A decreasing the capacity of generation of electricity by the generating company, which purpose by the 2003 Act must be allowed to achieve.

13) Section 86(1 )(b) of the 2003 Act clearly shows that the generating company indirectly comes within the purview of B regulatory jurisdiction as and when directions are issued to the distributing companies by the appropriate Commission but the s::ime would not mean that while exercising the said jurisdiction, the Commission will bring within its umbrage the generating company also for the c purpose of issuance separate direction."

33Copy pinpoint33. In addition to the statutory provisions and the judgments afore referred, we must notice that all the PPAs entered into by the generating companies with the appropriate body, as well as the orders issued by the State in GO Ms. Nos. 93 and 112, in turn, had provided for review of tariff and the conditions. The Tribunal appears to have fallen in error of law in coming to the conclusion that the Regulatory Commission had no powers either in law or otherwise of reviewing the tariff and so called incentives. Every document on record refers to the power of the authority/Commission to take a review on all aspects including that of the tariff. One of the relevant consideration for determining the question in controversy is to examine whether the matter falls within the statutory or contractual domain. From F various provisions and the documents on record it is clear that Regulatory Commission is vested with the power to revise tariff and conditions in relation to procurement of power from generating companies. It is also clear from the record that in terms of the contract between the parties, the APTRANSCO G had reserved the right to revise tariff etc. with the approval of the Regulatory Commission.

34Copy pinpoint34. With some emphasis, the parties had argued the question relating to 'estoppel' and 'legitimate expectation' with reference to the facts of the present case. The contention is H

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raised that by the GOs issued by the State Government as well A as the letters of the ministry a representation was made by the Government to the generating companies and they, having altered their positions, have a right to compel the State Government and the Regulatory Commission to abide by those terms for ever and it is their legitimate expectation thatState B is required to comply with those conditions and no other.

35Copy pinpoint35. For proper analysis of the submissions made by the parties, it is necessary for us to examine on what premises the appellants had claimed and the Tribunal has accepted the plea of estoppel. Admittedly, this all begins with the letter dated 7th C September, 1993 issued by the Government of India, Ministry of Non-Conventional Energy Sources, New Delhi to the Chief Secretary of the respective States. In this letter, the new strategy action plan of the Ministry in relation to generation of grid quality power from non-conventional energy sources was mentioned in some elaboration and the Ministry had referred to the fact that it had drawn certain guidelines and also indicated the minimum buy-back price of Rs. 2.25 per unit which was proposed by the Ministry and it was based upon the average cost of generation, as noticed by the authorities, at the relevant point of time. These guidelines were to constitute an attractive package to encourage private sector and the respective States were required to examine and alter or amend the same as conducive to a particular State. Hereafter, a letter dated 25th November, 1994 was again issued by the Ministry to the F Managing Director of the Non-Conventional Energy Development Corporation, Andhra Pradesh annexing the guidelines which were subject to be amended. These guidelines itself showed that Electricity Board, which was the competent authority at that relevant point of time, to announce G a 'base purchase price' every year for electrical energy purchased by the Board from the non-conventional energy based projects. These guidelines contemplated that the base price shall be escalated at a minimum rate of 5% every year. Clause 2 of the Guidelines stipulated that the promoter or a H

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A developer shall be entitled to receive the base price set out in the PPA for all electrical energy delivered for the duration of the PPA. The rate shall be equal to the base price in the year of signing of PPA, escalated at the rate of 5% per year for a period of ten years from the date of signing. Thereafter new 8 purchase price will be fixed as per the tariff prevalent in the State at the relevant time. Thereafter, the Andhra Pradesh Government has issued GO Ms. No. 93 dated 18th November, 1997 referring to certain incentives required to be given to the projects. These incentives only referred to the power purchase C price, escalation of 5% with base year 1997-98, wheeling charges, third party sales allowed to a limited extent. These, again, were the guidelines which, in fact, we have referred to in great detail above and were primarily intended to guide the States in taking the respective decisions in that behalf. Again D vide GO. Ms. No. 112 dated 22nd December, 1998 referring to the extension of all these uniform incentives, certain amendments were carried out to GO Ms. No. 93 dated 18th November, 1997. Clause 2 of this order referred that the operation of the incentive scheme shall be watched for a period of three years and at the end of three years the Electricity Board E shall come up with suitable proposals for review for further continuance of the incentives in that form, or to be modified suitably. Keeping these guidelines in mind, the State of Andhra Pradesh vide GO Ms. No. 93 dated 18th November, 1997, while referring to the guidelines issued by the Government of F India for promotional and fiscal incentives, noticed the various representations which were received from Non-conventional Energy Developers for extension of benefits as afore-referred in relation to all non-conventional energy resources uniformly. Thereafter, the parties took up the matter for annual G consideration, which exercise was undertaken by them in terms of the guidelines issued by the State and the Central Government. State of Andhra Pradesh reiterated the incentives and directed that the same would continue for a period of three years in terms of GO Ms. No. 93, whereafter it will be reviewed. H The incentives relied upon, on the basis of the guidelines and

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POWER PVT. LTD. [SWATANTER KUMAR, J.] the issued Government orders are primarily, related to fixation of purchase price of the generated power from Non- Conventional developer/generators and sale of such energy to third parties. In the meanwhile, Regulatory Commission had been established under the provisions of the Reform Act, 1998. This Regulatory Commission was to take over all the functions of the said Electricity Board as well as other authorities for generation, distribution and other matters relating to electricity in the State. This resulted in initiation of suo motu proceedings by the Regulatory Commission for determination and fixation of tariff, which after hearing the parties finally passed the order c dated 20th June, 2001. This order as we have already noticed was accepted by all the parties and has not been questioned till date. This order provided for certain variations in the incentives, which as already noticed, are related to the fixation of tariff or purchase price and as stipulated, the Commission D considered all objections at some length and ordered that power generated by Non-conventional Energy Developers is not permitted to be sold to third parties and price was kept at Rs. 2.25 per unit price with 5% escalation per annum with 1994- 95 as the base year. The parties had entered into agreements E i.e. PPAs at different times after passing of this order between June, 2001 to August, 2001 and even thereafter. Thus, at that time, the entire matter between the parties was controlled by the PPAs which fully contemplated that all the delivered energy at the interconnection point for sale to TRANSCO will be purchased at the tariff provided under Article 2.2 which in turn F confirmed the order of 20th June, 2001 in that regard and it was stated that the matter will be reviewed in April, 2004 and it could also be reviewed after 10 years from the date of commissioning of the project. This PPA as well as the order passed by the Regulatory Commission in the year 2001 G remained in force without being questioned in any manner whatsoever before any competent forum and in any case, not to any benefit of respondents. Then came the order dated 20th March, 2004 passed by the Regulatory Commission again, by H

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A initiating suo motu proceedings. In this order, the Commission had retained the basic unit price of 2.25 as on 1st April, 1994 and the escalation index of 5% per annum which was to be simple and not compounded every year. In other words, on 1st April, 2001 the price was 3.37/kwh in relation to Wind Power B Purchasers. Except varying this price, the order of 2004, in turn, had reiterated the contents of the order of 2001 which, as already noticed, has attained finality. Another factor which we may notice is that in its order dated 7th July, 2004, while clarifying its order dated 20th March 2004, the Commission has c clearly observed:

"12. It is relevant to clarify that by the order dated 20-03- 2004, the Commission is not mandating in any manner those NCE developers who have not accepted the earlier order dated 20-06-2001 passed by the Commission, D while their challenge to the order is pending the decision by the High Court. However, such of the NCE developers who had accepted the earlier order dated 20-06-2001 and have been selling electricity generated by them to APTRANSCO cannot challenge the jurisdiction of the E Commission to review the terms as per the stipulation contained in the order dated 20-6-2001."

36Copy pinpoint36. On the basis of this factual matrix, the respondents claimed that the State Government and the Regulatory F Commission both were bound to continue the incentives as were provided to them in furtherance to the letters and orders of Central as well as the State Governments discussed above. They have a legitimate right to expect that these incentives were to be· continued indefinitely in the same manner and the G authorities concerned are estopped from altering the rates and/ or imposing the condition of no sale to third parties. We are unable to find any merit in this contention. In our view, the Tribunal has erred in law in treating these inter-se letters and guidelines between the Government of India, State Government and the Commission/the State Electricity Board as unequivocal H

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POWER PVT. LTD. [SWATANTER KUMAR, J.]

commitments to the respondent/purchasers/generators/ A developers so as to bind the State for all times to come. For the principle of estoppel to be attracted, there has to be a definite and unambiguous representation to a party which then should act thereupon and then alone the consequences in law can follow. In the present case, the policy guidelines issued by B the Central Government were the proposals sent to the State Government, which the State Government accepted to consider, amend or alter as per their needs and conditions and then make efforts to achieve the objects of encouraging Non- conventional Energy Generator and Purchasers to enter into this c field. These are the matters, which will squarely fall within the competence of the Regulatory Commission/the State Electricity Board at the relevant points of time. Besides that, there was no definite and clear promise made by the authorities to the developers that would invoke the principle of promissory 0 estoppel. Undoubtedly, to encourage participation in the field of generation of energy through non-conventional methods, some incentives were provided but these ·incentives under the guidelines as well as under the PPAs signed between the parties from time to time were subject to review. In any case, the matter was completely put at rest by the order of 20th June, 2001 and the PPAs voluntarily signed by the parties at that time, which had also provided such stipulations. If such stipulations were not acceptable to the parties they ought to have raised objections at that time or at least within a reasonable time thereafter. The agreements have not only been signed by the parties but they have been fully acted upon for a substantial period. We have already referred to various statutory provisions where the Regulatory Commission is entitled to determine the tariff. In this situation we are unable to agree with the view taken by the Tribunal that Regulatory Commission had no jurisdiction and that fixation of tariff does not include purchase price for buy back of the generated power.

37Copy pinpoint37. The principle of promissory estoppel, even if, it was applicable as such, the Government can still show that equity H

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A lies in favour of the Government and can discharge the heavy burden placed on it. In such circumstances, the principle of promissory estoppel would not be enforced against the Government as it is primarily a principle of equity. Once the ingredients of promissory estoppel are satisfied then it could B be enforced against the authorities including the State with very few extra ordinary exceptions to such enforcement. In the United States the doctrine of Promissory Estoppel displayed remarkable vigor and vitality but it is still developing and expanding. In India, the law is more or less settled that where c the Government makes a promise knowing or intending that it would be acted upon by the promissory and in fact the promissory has acted in reliance of it, the Government may be held to be bound by such promise. It is a settled canon of law that doctrine of promissory estoppel is not really based on principle of estoppel but is a doctrine evolved by equity in order 0 to prevent injustice. There is no reason why it should be given only a limited application by way of defence. It can also be the basis of a cause of action. Even if we assume that there was a kind of unequivocal promise or representation to the respondents, the reviews have taken place only after the period specified under the guidelines and/or in the PPAs was over. This is a matter which, primarily, falls in the realm of contract and the parties would be governed by the agreements that they have signed. Once these agreements are singed and are enforceable in law then the contractual obligations cannot be frustrated by the aid of promissory estoppel.

38Copy pinpoint38. Following the judgment of this Court in the case of Union of India v. Mis. Inda-Afghan Agencies Ltd. ((1968) 2 SCR 366], this Court in the case of Century Spinning and G Manufacturing Company Ltd. v. The Ulhasnagar Municipal Council ((1970) 1 SCC 582] held that if the promise is made in regard to a present or existing fact, the principle of estoppel can be enforced against the Government. But a promise in relation to a future transaction or act may not fall within the ambit H of promissory estoppel. This law was further discussed with

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POWER PVT. LTD. [SWATANTER KUMAR, J.] some elaboration by the Court in the case of Motila/ Padampat A Sugar Mills. Co. Ltd. v. State of Uttar Pradesh [(1979) 2 SCC 409], where the Court after considering the position of law in England and United States and comparing the same to the Indian Law, laid down the basic concept of promissory estoppel that would determine its enforceability. In the case of Pawan B Alloys v. UPSEB [(1997) 7 SCC 251], the Court, though had enforced the principle of promissory estoppel against the Board, but certain basic facts of that case needs to be noticed by us. The appellants in that case had neither expressly nor impliedly stated that it has the power to withdraw the incentives c and rebate at a time prior to the expiry of three years for which it was granted. Secondly, none of the private parties had voluntarily or even by remotest choice agreed to give up the benefits given to them by clear representation held out by the Board. As is obvious, the power of the Board to increase the 0 general tariff was accepted, but the incentive of rebate was de horse the tariff and thus, promissory estoppel was enforceable against the Board.

39Copy pinpoint39. Another very important dictum of the Court in this judgment was that the power of the Board to fix general tariff as well as discharge of other related functions was held to be quasi-judicial in character. This power of the Board is exercised under the statute as a power-cum-duty and is independent of granting or declining any rebate. In the present case the order dated 20th June, 2001 was fully accepted by the parties without any reservation. After the lapse of more than reasonable time of their own accord they voluntarily signed the PPA which contained a specific stipulation prohibiting sale of generated power by them to third parties. The agreement also had renewal clause empowering TRANSCO/APTRANSCO/Board to revise the tariff. Thus, the documents executed by these parties and their conduct of acting upon such agreements over a long period, in our view, bind them to the rights and obligations stated in the contract. The parties can hardly deny the facts as they existed at the relevant time, just because it may not be H

706 SUPREME COURT REPORTS [2010] 8 S.S.?

A convenient now to adhere to those terms. Conditions of a contract cannot be altered/avoided on presumptions or assumptions or the parties having a second thought that a term of contract may not be beneficial to them at a subsequent stage. They would have to abide by the existing facts, 8 correctness of which, they can hardly deny. Such conduct, would be hit by a/legans contraria non est audiendus.

40Copy pinpoint40. Lastly, we may refer to a more recent judgment of this Court. In the case of Kusumam Hotels (P) Ltd. v. Kera/a Seb [(2008) 13 SCC 213], where the Court discussed in some C elaboration the different judgments of this Court on the subject and then declined to enforce the principle of promissory estoppel as there was no foundational facts and also indicated that the Government can alter, amend or rescind its policy decision in public interest, the Court held as under: D "27. Yet again in UP. Power Corpn. Ltd. v. Sant Steels & Alloys (P) Ltd., it was held: (SCC p.800, para 27)

"27. In this background, in view of various decisions noticed above, it will appear that the Court's approach in the matter of invoking the principle of promissory estoppel depends on the facts of each case. But the general principle that emerges is that once a representation has been made by one party and the other party acts on that representation and makes investment and thereafter the other party resiles, such act cannot be stated to be fair and reasonable. When the State Government makes a representation and invites the entrepreneurs by showing various benefits for encouraging to make investment by way of industrial development of the backward areas or the hill areas, and thereafter the entrepreneurs on the representations so made bona fide make investment and thereafter if the State Government resiles from such benefits, then it certainly is an act of unfairness and H

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POWER PVT. LTD. [SWATANTER KUMAR, J.) arbitrariness. Consideration of public interest and the fact that there cannot be any estoppel against a statute are exceptions."

xxx xxx xxx

36. The law which emerges from the above discussion is that the doctrine of promissory estoppel would not be applicable as no foundational fact therefor has been laid down in a case of this nature. The State, however, would be entitled to alter, amend or rescind its policy decision. Such a policy decision, if taken in public interest, should c be given effect to. In certain situations, it may have an impact from a retrospective effect but the same by itself would not be sufficient to be struck down on the ground of unreasonableness if the source of power is referable to a statute or statutory provisions. In our constitutional scheme, however, the statute and/or any direction issued thereunder must be presumed to be prospective unless the retrospectivity is indicated either expressly or by necessary implication. It is a principle of the rule of law. A presumption can be raised that a statute or statutory rule has prospective operation only."

41Copy pinpoint41. In our country, the law of promissory estoppel has attained certainty. It is only an Unambiguous and definite promise,. which is otherwise enforceable in law upon which, the parties· have acted, comes within the ambit and scope of enforcement of this principle and binding on the parties for their promise and representation. It will be difficult for the Court to hold that the guidelines can take the colour of a definite promise which in the letters of the Central Government itself were proposals to the State Government. Besides that, if for the sake of argument, we treat the State letters/circulars as promise or representations to the private parties like the respondents, even then, they led to the execution of a definite contract between the parties which will purely fall in the domain of contractual law. H

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A These contracts specifically provided for review and when reviewed in the year 2001 parties not only accepted the order but executed contracts (PPAs) in furtherance of it. In these circumstances, we are unable to accept the argument that the State or the Regulatory Commission or erstwhile State s Electricity Board were bound to allow same tariff and permit third party sales for an indefinite period. To this extent, authorities, in any case, would not be bound by the principle of estoppel.

42Copy pinpoint42. Now, we will proceed to examine the merits or C otherwise of the findings recorded by the Tribunal that the PPAs executed by the parties, were result of some duress and thus, it will not vest the authorities with the power to review the tariff and other granted incentives. PPAs were executed prior and subsequent to the issuance of the order dated 20th June, 2001. D Different persons executed the contracts at different times in full awareness of the terms and conditions of such PPA. To frustrate a contract on the ground of duress or coercion, there has to be definite pleadings which have to be substantiated normally by leading cogent and proper evidence. However, in the case where summary procedure is adopted like the present one, at least some documentary evidence or affidavit ought to have been filed raising this plea of duress specifically. From the record before us, nothing was brought to our notice to state the plea of duress and to prove the alleged facts which constituted duress, so as to vitiate and/or even partially reduce, the effect of the PPAs. On the one hand, the Tribunal appears to have doubted the binding nature of the contracts stating that it contained unilateral conditions introduced by virtue of Order and approval of the Regulatory Commission", while on the other hand, in para 53 of the Order, it proceeded on the presumption that PPAs are final and binding and still drew the conclusion that the Regulatory Commission could not revise the tariff. Even in the order, no facts have been pointed out which, in the opinion of the Tribunal, constituted duress within the meaning of the Contract Act so as to render the contract voidable.

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Another aspect of the entire controversy is that none of the generators had challenged the agreements and in fact, except in arguments before the Tribunal no case was made out for the purposes of vitality of the contract or any part thereof. On the contrary, all the generators under all the branches of Non- Conventional Energies, have accepted the contract and proceeded on the basis that the said contracts are binding and still the Regulatory Commission does not have any power or jurisdiction to revise the tariff or deal with the concessions. If the contracts are a result of duress and cannot be given effect, the results could be disastrous for both the sides. If a contract c suffers from the defect of undue influence or duress, as the case may be then the consequences in law should follow. It is a settled canon of law that when the consent to agreement is caused by undue influence the agreement is a contract voidable at the option of the parties whose consent was so caused. Even D if such party had received any benefit under the terms of the contract the Court could still pass orders as to the voidability or otherwise of the contract but upon such terms and conditions as the Court may deem just. Undue influence or duress is said to be subtle of the fraud whereby mysteries burden over the mind of a victim by insidious approaches. Firstly, there are no facts on record, much less, supported by any documentary or any other evidence to sustain the plea that the contracts (PPAs) are a result of undue influence or duress by the State or its agencies upon the generators. Secondly, the generators have already taken benefit of that contract which was based on the policy of the State as well as the order of the Regulatory Commission. Having attained those benefits, it will hardly be of any help to the appellants, particularly, in the facts and circumstances of the case, to substantiate, justify or argue the plea of duress. G

43Copy pinpoint43. In the case of Bir/a Jute Manufacturing Co. v. State of M.P. [(2002) 9 SCC 667], the Supreme Court was concerned with a case where validity of undertaking given under duress was the plea taken by the appellant. This pleading H

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A on the same ments and noticing the material, like the present case, the Court held as under:

"2. Learned counsel, appearing for the appellant urged that the undertaking given by the appellant Company was under duress and, therefore, it is not an undertaking in the eyes B of law and the appellant is not liable to pay the water charges under such circumstances. There is no material before us to come to this conclusion that the undertaking given by the appellant was t•rider duress. On the contrary we find that the appellant had given the solemn c undertaking voluntarily. We, therefore, find no merit in the appeal."

44Copy pinpoint44. The Tribunal in paras 45-47 of its order has used the expression "out of compulsion some of the developers entered D into Power Purchase Agreement with APTRANSCO accepting the terms and conditions set out in order dated 20th June, 2001". We are afraid that there is hardly any material on record to substantiate such a finding. What was the compulsion and what were the facts which persuaded the Tribunal to take such E a view are conspicuous by their very absence. A compulsion leading to execution of a contract is a matter entirely based upon facts. It is difficult for this Court, originally, to infer duress or compulsion in absence of specific pleadings and materials in that behalf. It may also be noticed at the cost of repetition that the order dated 20th June, 2001 was never questioned by any ofthe parties to any favourable results. Even in these proceedings there is no challenge to the said order which, admittedly, has been acted upon and has attained finality. The power generators/Non-Conventional Energy developers have executed the PPAs without any protest and, in fact, did nothing to challenge such agreements or any part thereof, till passing of the impugned order of 2004. There were some proceedings, without questioning the validity and effectiveness of the order dated 20th June, 2001, carried out by some of the generators before the Andhra Pradesh High Court. Certain interim H

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POWER PVT. LTD. [SWATANTER KUMAR, J.]

directions were passed in those proceedings, as already A noticed, but finally all proceedings culminated into dismissal of the Writ Petitions and/or reference back to the Regulatory Commission for grant of a hearing as per the directions contained in the order of the High Court. B

45Copy pinpoint45. Another important aspect of the case is that the learned counsel appearing for the respondents, particularly, in Appeal No. 2926 of 2006 had stated that they are not arguing in support of the plea of estoppel and duress as decided by the Tribunal in their favour. They had mainly concentrated their submissions C on jurisdiction of the Regulatory Commission with respect to withdrawal of incentives and fixation of tariff. These are the contracts which have been executed prior and after the issuance of the order dated 20th June, 2001 and have been acted upon by the parties without any reservation. In view of the fact that no challenge was made to the order dated 20th June, D 2001, execution of PPAs and the conduct of the respondents over the long period and particularly, while keeping in mind the statutory provisions we are unable to sustain the plea of duress in favour of the respondents. E

46Copy pinpoint46. The main emphasis of the judgment of the Tribunal is that the Government had framed the policy under which, incentives were given and as such, the Regulatory Commission had no power and authority to fix tariffs or amend or alter the policy decision of the State. We have already held that in law F and in face of the contract between the parties the Regulatory Commission is the Authority to fix the tariff which includes within its ambit the purchase price of the Non-conventional Energy under the policy of the State. It appears that the Tribunal has taken a narrower view of the jurisdiction vested in the Regulatory G Commission which is discharging its statutory functions under all the three Acts in accordance with law. In terms of Section 12 of the Reform Act, 1998, which has been referred to by the Tribunal, the power of the Government had been stated. The power available to the Government to issue policy directions H

p. 712 Copy page pinpoint

A has two restrictions. Firstly, the policy direction has to be on the matters related to electricity in State including overall planning and coordination. Secondly, all such policy directions have to be issued by the State Government in consonance with the object sought to be achieved by this Act and accordingly B shall not adversely affect or interfere with the functions and powers of the Regulatory Commission including, but not limited to, determination of the structure of tariff for supply of electricity to the consumers. Powers vested in the Regulatory Commission to frame regulations under Section 54 also intend c that regulations are to be framed with an object to ensure proper performance of its functions under the Act. In other words, both the State and the Regulatory Commission, are supposed to exercise their respective powers only for the purposes of furthering the cause of the Act. The Commission discharging its statutory functions within the ambit of Sections 11, 12 and 0 26 of the Reform Act, 1998 as well as Sections 61, 62 and 86(1 )(b) of the Electricity Act, 2003 renders advisory functions to the State. All these provisions, examined and analyzed cumulatively, do not support the approach adopted by the Tribunal that the functions of the Regulatory Commission in fixing tariff/purchase price was contrary to or distinctive of the said policy. This cannot be supported either on the basis of the statutory provisions of the various Acts as well as with reference to the various documents on record including the order dated 20th June, 2001 and the PPAs signed by the parties at different stages. We are also unable to contribute to the view of the Tribunal that the Regulatory Commission has acted in contradiction or conflict with the State policy. The State was certainly not intending to provide incentives and concessions with assurance of buy-back to enable the Non-Conventional G Energy developers/generators to sell generated powers to third parties. It must be kept in mind that the policy of the Government of India as well as the State of Andhra Pradesh was for encouraging the developers/generators of Non-conventional Energy to generate electricity for the benefit of public at large H

p. 713 Copy page pinpoint

POWER PVT. LTD. [SWATANTER KUMAR, J.] with buy back of power being one of the basic features of this policy. Such parameters are obviously subject to change in larger public interest. All these issues, in fact, loose much significanee because of the fact that parties have, by and large, entered into the field of contract simpliciter and their rights are controlled by the contracts executed between them. There is no challenge to these contracts and, therefore, it may be hardly permissible for the Court to go behind these contracts and permit questioning of the statutory jurisdiction vested in the Regulatory Commission.

47Copy pinpoint47. In the case of BSES Ltd. v. Tata Power Co. Ltd. [(2004) c 1 SCC 195], the Court clearly held that after creation of the Regulatory Commissions under the provisions of the Electricity Regulatory Commission Act, 1998, the Commission has clear power and jurisdiction to fix tariff. The Court should not adopt an interpretation which should neither be strict nor narrower so D as to oust the jurisdiction of the Regulatory Commission, as it would defeat the very object of enacting the said Act. The reliance placed by the respondents upon the judgment of this Court in the case of Andhra Pradesh Electricity Regulatory Commission v. R. V. K. Energy Private Limited [(2008) 17 SCC E 769] is, again, of not much help to them. In that case also, the Court had upheld the exercise of statutory power by the Regulatory Commission. Of course, the Court held that the regulatory power u/s 11 (1 )(e) of the Reform Act, 1998 does not ordinarily extend to prohibition or positive direction for entire F supply to APTRANSCO alone. Such prohibition may be resorted to in exceptional situations. It reiterated the principle that the Government policy as well as the Regulatory Commission should act in consonance with the object of the Aci. G

48Copy pinpoint48. The appellants have referred and relied upon the policy directions and guidelines framed by the Central Government while the respondents have relied upon these documents as well as the circulars issued by the State of Andhra Pradesh. 1-i

p. 714 Copy page pinpoint

A The respondents have raised the plea of estoppel against the Regulatory Commission on the basis of the averment that the State had framed policies, which the Regulatory Commission instead of implementing, has acted contrary thereto. There is no doubt that before the formation of the Regulatory B Commission it was the State Electricity Board which was performing all the functions in relation to generation as well as distribution of electricity. The Board was directly under the control of the State and the State, in exercise of its general executive powers, had framed policies to encourage Non- e conventional Energy developers and producers to come into the field of generation of electricity and had issued the Government orders which we have discussed in some detail above. Strange enough, the State of Andhra Pradesh was neither impleaded a~ a party to the proceedings before the Regulatory Commission nor before the Tribunal. In fact, the 0 Tribunal has referred to various acts and deeds of the State and consequences thereof, but did not consider it appropriate to implead the State Government as a party to the proceedings. We are of the considered view that presence of the State Government before the Tribunal could have certainly been appropriate, inasmuch as the State would have placed before the Appellate Authority and the Regulatory authorities, its views in regard to revision of incentives as well as the purchase price. We are also constrained to observe that the State of Andhra Pradesh was a necessary, in any case, a proper party in these proceedings. This itself would be a ground for this Court to remit the matter to the Competent Authority, in addition to the other reasons recorded in this judgment.

49Copy pinpoint49. In the present case, the restriction with regard to third party sales was not only creation of a directive issued or approval granted by the Regulatory Commission, but was actually in furtherance to the contract entered into between the parties. Rights and liabilities arising from a binding contract cannot be escaped on the basis of some presumptions or inferences in relation to the facts leading to the execution of the

p. 715 Copy page pinpoint

POWER PVT. LTD. [SWATANTER KUMAR, J.] contract between the parties. The jurisdiction of the Regulatory A Commission, in the facts of the case, arises not only from the statutory provisions under the different Acts but also in terms of the contract executed between the parties which has binding force. Lastly, but with great emphasis, it was argued on behalf of the respondents that enforcement of the purchase price at B the rate determined by the Regulatory Commission along with complete prohibition on the right of the Non-conventional Energy Generator/Developers to sell generated power to t~e third parties would compel them to shut down their projects. The rates are so unfair that it would result in extinguishment of the power c generating units from the State of Andhra Pradesh on the one hand, while on the other, it is bound to prejudicially affect the larger public interest. According to the respondents they have invested large sums of money in developing these generating units and it will be unfair to compel their closure, particularly, when for all these years they have supplied electricity generated by them solely to APTRANSCO or its predecessors.

50Copy pinpoint50. We find some substance in this submission and are of the view that it is a matter of some concern, even for the State Government. All these projects, admittedly, were established in furtherance to the scheme and the guidelines provided by the Central Government which, in turn, were adopted with some modification by the State Government. The State Electricity Board implemented the said scheme and initially had permitted sale of generated electricity to third parties, however, subsequently and after formation of the Regulatory Commission which, in turn, took over the functions of the State Electricity Board, the incentives were modified and certain restrictions were placed. The reasons for these restrictions have been stated in the affidavit filed on behalf of the appellants which, as already noticed by us, is not a matter to be examined by this Court in exercise of its extra-ordinary jurisdiction. These matters, essentially, must be examined by expert bodies particularly, when such bodies are constituted under the provisions of a special statute. H

p. 716 Copy page pinpoint

51Copy pinpoint51. The basic policy of both the Central as well as the State Government was to encourage private sector participation in generation, transmission and distribution of electricity on the one hand and to further the objective of distancing the regulatory responsibilities of the Regulatory Commission from the B Government and of harmonizing and rationalizing the provisions of the existing laws relating to electricity in India, on the other hand. The object and reasons of Electricity Act, 2003 as well as the Reform Act, 1998 are definite indicators of such legislative intent. The basic objects of these enactments were c that the said Regulatory Commission may permit open access in distribution of energy as well as to decentralize management of power distribution through different bodies. The Reform Act, 1998 stated in its objects and reasons that the set-up of power sector in force, at that time, was virtually integrated and functional priorities were getting distorted due to resource- 0 cru nch. This has resulted in inadequate investment in transmission and distribution which has adversely affected the quality and reliability of supply. The two corporations proposed thereunder were to be constituted to perform various functions and to ensure efficiency and social object of ensuring a fair deal to the customer. These objects and reasons clearly postulated the need for introduction of private sector into the field of generation and distribution of energy in the State. Efficiency in performance and economic utilization of resources to ensure satisfactory supply to the public at large is the paramount concern of the State as well as the Regulatory Commission. The policy decisions of these constituents are to be in conformity with the object of the Act. Thus, it is necessary that the Regulatory Commission, in view of this object, take practical decisions which would help in ensuring existence of these units rather than their extinguishment as alleged.

52Copy pinpoint52. In view of our above detailed discussion, we dispose of these appeals with the following order:

(a) The order of the Tribunal dated 2nd June, H

TRANSMISSION CORPN. OFAP LTD v. SAi RENEWABLE717 POWER PVT. LTD. [SWATANTER KUMAR, J.] 2006 is hereby set aside. A

(b) We hold that the Andhra Pradesh Electricity Regulatory Commission has the jurisdiction to determine tariff which takes within its ambit the 'purchase price' for procurement of 8 the electricity generated by the Non- conventional energy developers/ generators, in the facts and circumstances of these cases.

(c) We hereby remand the matters to the Andhra C Pradesh Electricity Regulatory Commission with a direction that it shall hear the Non- conventional energy generators afresh and fix/ determine the tariff for purchase of electricity in accordance with law, D expeditiously.

(d) It shall also re-examine that in addition to the above or in the alternative, whether it would be in the larger interest of the public and the E State, to permit sale of generated electricity to third parties, if otherwise feasible.

(e) The Andhra Pradesh Electricity Regulatory Commission shall consider and pronounce upon all the objections that may be raised by the parties appearing before it, except objections in relation to its jurisdiction, plea of estoppel and legitimate expectancy against the State and/or APTRANSCO and 'the plea in regard to PPAs being result of duress as these issues stand concluded by this judgment.

(f) We make it clear that the order dated 2oth June, 2001 passed by the Andhra Pradesh H

718 SUPREME COURT REPORTS [2010J 8 S.C.R.

A Electricity Regulatory Commission has attained finality and was not challenged in any proceedings so far. This judgment shall not, therefore, be in detriment to that order which will ope.rate independently and in accordance B with law.

(g) We also hereby direct that State of Andhra Pradesh shall be added as a party respondent in the proceedings and the Andhra Pradesh Electricity Regulatory c Commission shall grant hearing to the State during pendency of proceeding before it.

53Copy pinpoint53. In the facts and circumstances of the case parties are left to bear their own costs. D K.K.T. AppealR disposed of.