Can the Electricity Act Displace Interim Reliefs Under Section 9 of the Arbitration Act?

Issue at hand

Recently, the Delhi High Court in Enerica Infra 3 (P) Ltd. v. NTPC Vidyut Vyapar Nigam Ltd.¹ (Enerica) declined to entertain a petition seeking stay on encashment of bank guarantees after the termination of a power purchase agreement (PPA) under Section 9, Arbitration and Conciliation Act, 1996 (Arbitration Act). The court held, inter alia, that 1) under Section 86(1)(f), Electricity Act, 2003 (Electricity Act), the dispute lies with the Central or State Electricity Regulatory Commission (CERC or SERC, collectively the “Commissions”); 2) the Commissions alone would decide whether the dispute should go to arbitration; and 3) its power to pass interim orders under Section 94(2), Electricity Act² was akin to Section 9, Arbitration Act³. The court followed its own judgment in Renew Wind Energy (AP2) (P) Ltd. v. Solar Energy Corpn. of India⁴, (Renew) holding that Section 94(2), Electricity Act is a statutory substitute for Section 9, Arbitration Act.

The intersection of the Electricity Act and the Arbitration Act and the arbitrability of electricity disputes

Both the Renew and Enerica judgments rest on the Supreme Court’s decision in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.⁵ (GUVNL), which dealt with the question of who appoints the arbitrator in a dispute between a licensee and a generating company: The competent court under Section 11, Arbitration Act or the Commission under Section 86(1)(f), Electricity Act. The Supreme Court read the word “and” in Section 86(1)(f) as “or” to conclude that the SERC may either adjudicate the dispute or refer it to arbitration. It held that the Electricity Act, being a special statute, would override Section 11, Arbitration Act, while all other provisions of the Arbitration Act would continue to apply unless the Electricity Act contains a conflicting provision. A three-Judge Bench of the Supreme Court has since reaffirmed this, noting that Section 174 gives the Electricity Act overriding effect only over provisions “inconsistent therewith”.⁶

While the GUVNL judgment settled as to who is competent to refer such a dispute to arbitration, it did not decide which disputes may be referred. The Appellate Tribunal for Electricity (Tribunal) answered that issue in M.P. Power Management Co. Ltd. v. Damodar Valley Corpn.⁷ (DVC). Considering a dispute over the termination of PPAs, the Tribunal held that 1) all matters that would have a bearing upon the tariff would constitute tariff disputes that must be adjudicated upon by the Commission; and 2) disputes related to termination or breach of contract that do not impact the tariff can be considered non-tariff disputes and must be referred to arbitration. The Supreme Court rejected a challenge to the DVC judgment.⁸

The issue and the DVC judgment again came up before the Tribunal in Gujarat Urja Vikas Nigam Ltd. v. Tata Power Co. Ltd.⁹ (Tata Power). Following the case of DVC, the Tribunal affirmed that 1) tariff and regulatory disputes are non-arbitrable even if an arbitration agreement exists, and 2) disputes connected with clauses (a) to (d) of Section 79(1) that neither relate to regulatory functions nor affect tariff can be adjudicated by CERC or referred to arbitration in the exercise of its discretionary jurisdiction. Interestingly, the Tata Power judgment, while holding that the DVC case is binding, departs from it in two respects. First, it allows the CERC to refer a dispute to arbitration only where the dispute relates to clauses (a) to (d) of Section 79(1), whereas the DVC judgment holds that non-tariff disputes between a generating company and a distribution licensee do not fall within Section 79(1)(f) at all. Second, it treats referral as discretionary (not mandatory), whereas the DVC judgment holds that the Commission is “bound to refer the dispute for arbitration”. The Tribunal rejected Tata Power’s review of the Tata Power judgment.¹⁰ A civil appeal against the Tata Power judgment is now pending before the Supreme Court.¹¹

Renew and Enerica judgments: Section 94(2), Electricity Act as a substitute for Section 9, Arbitration Act

In the Renew judgment, the respondent alleged that the petitioner had failed to meet the minimum energy requirement under the PPA for Financial Year 2024—2025. The petitioner attributed this to force majeure and sought, under Section 9, Arbitration Act, to restrain SECI from deducting amounts from its monthly energy invoices. On 3 November 2025, the Delhi High Court dismissed the petition, holding that CERC has the exclusive power under Section 79(1)(f), Electricity Act to refer such disputes to arbitration, and that Section 94(2), Electricity Act is a statutory substitute for Section 9, with a direction under it remaining in force until the Arbitral Tribunal is constituted.

In the Enerica judgment, the petitioner terminated the PPA and sought protection under Section 9, Arbitration Act against the respondents invoking the bank guarantees. While dismissing the petition, the High Court held that, reading Sections 86(1)(f) and 158, Electricity Act together with Section 94(2), the SERC can pass interim orders akin to those of a civil court under Section 9, Arbitration Act. In addition, there was an agreed Rs 25 crore limit on arbitration in the PPA. Section 94(2), Electricity Act was held to be an adequate substitute for Section 9, Arbitration Act.

In both cases, the court did not examine whether the dispute was arbitrable (that is, whether it was a tariff or non-tariff dispute). It held simply that Section 94(2), Electricity Act is the appropriate remedy and that the Commissions, and not the court under Section 9, Arbitration Act, are the appropriate fora for interim relief.

It is noteworthy that Section 9, Arbitration Act and Section 94(2), Electricity Act do not conflict, because they operate at different stages of a dispute. Section 9 is also available before, during and after arbitral proceedings, including before arbitration has commenced. Section 94(2) empowers the Commission to pass interim orders only “in any proceeding, hearing or matter before it”, which presupposes a pending lis.

Consider a PPA containing an arbitration clause. The generator terminates it, and the procurer disputes the termination and threatens to invoke the bank guarantee. On the test in the DVC judgment, this is a non-tariff and therefore arbitrable dispute. Yet under the Renew and Enerica judgments, the generator must first approach the Commission and is denied Section 9, Arbitration Act. This is problematic because:

1. Parliament made Section 9 available before the commencement of arbitration because of the urgent nature of reliefs in commercial transactions.

2. The Renew and Enerica judgments add another layer of litigation. The party must file a petition before the Commission, with an application for interim relief, and seek interim protection from the Commission until the arbitral proceedings commence.

3. This additional round of litigation may be futile since:

(a) The petition before the Commission would seek a reference of the non-tariff dispute to arbitration.

(b) The interim application in that very petition, however, would ask the Commission for relief by making out a prima facie case on the merits of the same dispute. This cuts against the settled position that interim relief is granted in aid of the final relief.¹² Here the only final relief that can be granted by the Commission is a reference to arbitration, and the Commission cannot grant relief on the merits of a dispute that it is bound to refer. There is therefore no final relief in aid of which an interim order can be passed.

(c) At the stage of granting interim relief, the court or forum must record its prima facie satisfaction that the proceeding before it is maintainable, as stated by the Supreme Court in Asma Lateef v. Shabbir Ahmad (Asma Lateef).¹³ When the Commission cannot adjudicate upon a non-tariff dispute, it may not be competent to evaluate whether a prima facie case with a likelihood of success and a balance of convenience has been made out in proceedings seeking a reference of the dispute to arbitration for the grant of interim relief.

Section 9 avoids all of this. The party gets its remedy from the court and does not go through a forum that may not be able to give it. The arbitration ought to commence within 90 days. It is important to note the approach of the court at the Section 9 stage. The court may examine, prima facie, whether the dispute is arbitrable (to see maintainability), which is the Asma Lateef principle at the interim stage. In Kuber Mart Global Hub (P) Ltd. v. Kuber Mart Industries (P) Ltd.¹⁴ the Delhi High Court addressed this in the context of rent control legislation. It held that the prima facie case must go beyond the formal existence of an arbitration agreement and must include an assessment of whether the disputes are, in law, capable of being resolved through arbitration. Where a dispute is ex facie non-arbitrable, or is barred from arbitration by operation of statute, the court cannot grant interim relief on the assumption that arbitral proceedings would validly ensue. The court also held that a party cannot bypass the exclusive forum of a self-contained statutory code by resorting to arbitration, or by seeking interim measures in aid of it.

The same test applies to power sector disputes. The Electricity Act reserves tariff matters for the Commissions, so a party that dresses up a tariff dispute as an arbitrable one must be turned away. A non-tariff dispute covered by an arbitration agreement does not bypass the Electricity Act, as the Act itself permits such disputes to go to arbitration.

Conclusion

The Electricity Act‘s primacy in electricity disputes does not require the wholesale exclusion of the Arbitration Act. The distinction is between the power to refer a dispute to arbitration and the power to preserve its subject matter pending arbitration. Treating Section 94(2) as a substitute for Section 9 conflates these distinct functions.

The preferable approach is to preserve both statutory schemes. A court approached under Section 9 should first examine whether the dispute is prima facie arbitrable. Where a non-tariff dispute is covered by an arbitration agreement, the court should consider interim protection on its merits, leaving the reference to arbitration to the competent Commission. This approach respects the Commission’s statutory role without making access to urgent judicial protection contingent on first commencing proceedings before it.

The broader legislative policy reinforces this conclusion. Having extended Section 9 to foreign-seated arbitrations, Parliament could scarcely have intended an arbitrable dispute seated in India to lose access to that protection merely because it arises in the electricity sector. The Renew and Enerica judgments therefore warrant reconsideration: The Commission’s control over the reference to arbitration should not become a barrier to preserving the subject matter of that arbitration.