Appellate Tribunal for Electricity: In an appeal filed by the Uttar Pradesh Power Corporation Ltd. (‘UPPCL’) against the order dated 4-5-2020 passed by the Uttar Pradesh Electricity Regulatory Commission (‘Commission’), wherein the Commission set aside the invoice raised by the appellant for Late Payment Surcharge (‘LPS’), the single-member bench of Virender Bhat, Judicial Member, held that the terms under the Power Purchase Agreement (‘PPA’) would remain binding on parties throughout the life of the PPA dehors the subsequent tariff regulations. Thus, the Tribunal set aside the order passed by the Commission and upheld the invoice raised by the appellant.
Background
The appellant owned and operated a power plant at Rosa in Uttar Pradesh and had entered a PPA with UPPCL. Clause 12.17 of the PPA, which is in line the UPERC (Terms and Conditions of Generation Tariff) Regulations, 2004 (‘2004 Regulations’), provided a period of 30 days from the date of raising bill/invoice for payment of dues, in failure of which LPS would be levied at the rate of 1.25 per cent per month on the outstanding amount of bills.
By the invoice dated 4-1-2019, the appellant had sought to levy LPS on UPPCL for non-payment of electricity dues to the tune of 129.77 crores. The said invoice was challenged before the Commission wherein UPPCL contended that Clause 12.17 of the PPA was in contravention of Regulation 41 of the UPERC (Terms and Conditions of Generation Tariff) Regulations, 2014 (‘2014 Regulations’) which provides a trigger period of 60 days after which LPS was leviable. The Commission opined that the invoice had been raised by the appellant in contravention to the 2014 Regulations and that the 2014 Regulations would override pre-existing contractual relationship between the parties. Accordingly, the Commission had set aside the invoice.
The appellant filed the instant appeal, assailing the impugned order on the following grounds:
- The petition before the Commission had been filed without following the dispute resolution mechanism under the PPA and therefore ought not have been entertained.
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The Commission had erred in holding that the 2014 Regulations would override the terms of the PPA and in setting aside the LPS invoice dated 4-1-2019 as being in contravention to the said Regulations.
Decision
With regards to issue of whether the dispute resolution mechanism envisaged in the PPA was invoked or not, the Tribunal noted that the Commission had erred in holding that the letters dated 28-3-2018, 7-6-2018 and 2-2-2019, sent by UPPCL to the appellant constituted an attempt to amicably resolve the dispute as mandated under Clause 12.14 of the PPA. The Tribunal noted that none of the letters sent by UPPCL indicated intent or willingness to amicably resolve the dispute but stated that the invoice raised by the appellant was not as per the 2014 Regulations. Thus, the Tribunal opined that the Commission ought not have entertained the petition at all and should have directed the parties to adhere to the dispute resolution process under the PPA before approaching the Commission for adjudication.
With regards to the question of applicability of 2014 Regulations, overriding Clause 12.17 of the PPA, the Tribunal noted that the PPA, at the time of its execution, was in conformity with the Regulations in force at that time, i.e., the 2004 Regulations. The Tribunal further stated that where there exist PPAs entered between the parties in exercise of equal bargaining power as well as after due negotiation and within the framework of existing regulations, unless the subsequent regulations expressly override the existing contracts, the terms of agreements continue to bind the parties.
In the instant case, the parties had entered PPA after due negotiations and in conformity with the 2004 Regulations applicable during that period. The 2014 Regulations nowhere specify that they are applicable to the existing PPAs. Additionally, the trigger period of 30 days for levy of LPSC as embodied in Clause 12.17 of the PPA, which was in consonance with Section 26 of the 2004 Regulations, applicable at that time, would bind the parties throughout the tenure of the PPA and would not get impacted by any change in the trigger period effected through subsequent tariff regulations issued by the Commission.
Thus, the Tribunal held that the invoice dated 4-1-2019, raised by the appellant in respect of the LPS was legally valid and payable by UPPCL.
[Rosa Power Supply Co. Ltd. v. Uttar Pradesh Power Co. Ltd., Appeal No. 107 of 2020, decided on 28-7-2025]
Advocates who appeared in this case:
For the Appellant: Sajan Poovayya ,Senior Advocate, Venkatesh, Nishtha Kumar, Somesh Srivastava, Vikas Maini, Suhael Buttan, Ashutosh Kumar Srivastava, Abhiprav Singh, Lasya Pamidi, Advocates
For the Respondent: Nalin Kohli (Senior Advocate), Shankh Sengupta, Abhishek Kumar, Nived Veerapaneni, Karan Arora, Shubham Mudgil, Kartikeya Yadav, Sujoy Sur, Vedant Kumar, Sumit Panwar, Advocates
