GUJARAT URJA VIKAS NIGAM LIMITED & Ors. v. RENEW WIND ENERGY (RAJKOT) PRIVATE LIMITED

which cannot be lost sight of is that all the respondent’s WPDs were registered, under the REC Regulations, based on the state commission’s tariff order, of 2010. It is undisputed, that to register under the REC Regulations 2010, an entity (such as WPDs) had to be (a) accredited, with a State Agency [(defined by Regulation 2 (n) of the REC Regulations as an agency “designated by the State Commission to act as the agency for accreditation and recommending the renewable energy projects for registration”) and an entity “not having any power purchase agreement for the capacity related to such generation to sell electricity at a preferential tariff determined by the Appropriate Commission]. Furthermore, the state commission, in its tariff order, dated 30.01.2010 (which was operative for three years, with the control period beginning from 10.08.2009) while determining the preferential tariff, had observed that it would apply for 25 years.

In the present case, the PPA was entered into by the parties on 29.03.2102, within the control period stipulated in the tariff order of 2010. The change in the REC Regulations 2010, whereby the Explanation to Regulation 5 was amended resulted in a change. The pre-existing clause that the power would be “at a price not exceeding pooled cost of the power purchase” was altered to “at the pooled cost of power purchase”. This change, was through the Second Amendment (to the REC Regulations), carried out on 10.07.2013. It is a matter of record, that for the period between 29.03.2102 and 10.07.2013 - and indeed, after the Second Amendment, no difficulty was experienced in the pricing mechanism agreed by the parties, under the PPA. It was on 10.12.2013 that the respondent WPD approached the state commission for re- determination of tariff. Clearly, this was an opportunistic attempt to derive advantage from the change, brought about by the Second Amendment, and seek to have it applied to an existing contract, which cannot be countenanced.

In view of these reasons, it is held that the reasoning of APTEL, and the State Commission cannot be upheld. [Paras 55-59][707-G; 708-A-H; 709-B-H; 710- A-B, E-G] Transmission Corporation of Andhra Pradesh Ltd v Sai Renewable Power Private Limited (2010) 8 SCR 636; Gujarat Urja v. Solar Power Company India Pvt. Ltd. [2017] 14 SCR 115; Bangalore Electricity Supply Co. A B C D E F G H 676 SUPREME COURT REPORTS [2023] 7 S.C.R. Ltd. vs. Konark Power Projects Ltd. & Ors. (2016) 13 SCC 515 – referred to.

Applicability of the Second Amendment to pre-existing contracts- the general law In the present case, the PPAs were entered into in the exercise of equal bargaining power, after due negotiation by the parties, and within the framework of existing regulations: both central and state. Therefore, unless any later amendment expressly overrides existing contracts, the terms of such agreements bind the parties. Thus, agreements such as the PPAs in the present case, entered into, voluntarily by the parties, before the Second Amendment, were not affected, by its terms. The findings to the contrary in the impugned order, are set aside. [Paras 63, 66][714-C; 715-G; 716-A] PTC India Ltd. v. CERC [2010] 3 SCR 609 – distinguished. Purbanchal Cables & Conductors (P) Ltd. v. Assam State Electricity Board & Ors. [2012] 6 SCR 905; Commissioner of Income Tax v Vatika Township (P) Ltd. [2014] 12 SCR 1037 – relied on.

Were the respondents coerced into entering into PPAs APTEL, in the most cavalier fashion, virtually rubber stamped the State Commission’s findings on coercion, in regard to the entering into the PPA by the parties. There was no shred of evidence, nor any particularity of pleadings, beyond a bare allegation of coercion, alleged against Gujarat Urja. It is incomprehensible how such an allegation could have been entertained and incorporated as a finding, given that the respondents are established companies, who enter into negotiations and have the support of experts, including legal advisers, when contracts are finalized. The findings regarding coercion are, therefore, wholly untenable. The casual approach of APTEL, in not reasoning how such findings could be rendered, cannot be countenanced. As a judicial tribunal, dealing with contracts and bargains, which are entered into by parties with equal bargaining power, APTEL is not expected to casually render A B C D E F G H GUJARAT URJA VIKAS NIGAM LIMITED v.

The current civil appeals,1 under Section 125 of the Electricity Act, 2003, (hereafter, “the Act”) challenge orders of the Appellate Tribunal for Electricity (hereafter, “APTEL”), dated 06.12.2018 (“first impugned order”)2 and order dated 24.07.2020 (“second impugned order”)3. The APTEL had, by those orders, rejected the appeals preferred by the present appellant, and the review petition, as well. Resultantly, 1 Civil Appeals Nos. 3480 and 3481 of 2020 2 in Appeal No 209/2015 3 in Review Petition No 03/2019 B C D E F G H GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 679 the order of the Gujarat Electricity Regulatory Commission (hereafter “the State Commission”), dated 01.07.20154 was affirmed. A

The first appellant – Gujarat Urja Vikas Nigam Limited (hereafter “Gujarat Urja”) had approached this court previously challenging the order of APTEL, which was disposed of by this court5 granting liberty to it, to seek review/rectification. Gujarat Urja then preferred a review petition, which was rejected by APTEL, by the second impugned order. When this appeal was taken up for hearing, on 14.10.2020, this court had issued notice and stayed the impugned order of APTEL. Background

3. Gujarat Urja procures power in bulk on behalf of distribution licensees in the state of Gujarat; it is an authorized licensee within the meaning of the term under the Act. The second, third, fourth and fifth appellants are distribution licensees in the State of Gujarat. The first respondent, Renew Wind Energy (Rajkot) Pvt Ltd (hereafter “RWE”) is a wind generator which had set up 25.2 MW Wind Turbine Generators at District Rajkot, Gujarat under the Renewable Energy Certification scheme notified by the Central Electricity Regulatory Commission (hereafter, “Central Commission”). The second respondent is the Wind Independent Power Producers Association (hereafter “Association”). The Respondent No 3, Gujarat Electricity Regulatory Commission (hereinafter “the State Commission”) is the regulatory commission under the Act, for the State of Gujarat. The fourth respondent, Wish Wind Infrastructure LLP (“Wish Wind” hereafter) is a wind generator. B C D E

4. By Section 86 of the Act6 , State Commissions discharge several functions- which include the determination of tariff “for generation, F 4 in petition No 1363/2013 5 Civil Appeal No 1253/2019 by order dated 15.02.2019 6 The relevant extract of Section 86 is as follows:

86. Functions of State Commission.-(1) The State Commission shall discharge the following functions, namely:- (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: …… (b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State; G H 680 SUPREME COURT REPORTS [2023] 7 S.C.R. A B C D E F G H supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State

.

The tariff determination process should accord with Sections 62 and 64 of the Act. Section 62, requires “the Appropriate Commission” (in this case, the State Commission) to determine tariffs in accordance with the provisions of the Act for – among other purposes, retail supply of electricity. The State Commissions are also empowered to frame regulations, under Section 181 of the Act. That power includes the formulation of the “terms and conditions for determination of tariff Under Section 61”.7Additionally, the tariff order can be modified or imposed with conditions under Section 64(3). The State Commission is guided by the principles specified in Section 61 of the Act while formulation of the tariff regulations. This court has held that state commissions as expert bodies have to strike a balance between various competing concerns and interests while framing such regulations.8 The Gujarat State Commission, for a Multi-Year period (also called the “control period”), frames Regulations for determination of tariff.

The state commission then determines the Multi-Year Tariff Order based on the data available. Furthermore, Section 64 (6) prescribes that tariff orders “shall continue to be in force for such period as may be specified in the Tariff Order unless amended or revoked”. If any party is aggrieved by any (c) facilitate intra-State transmission and wheeling of electricity; ….. (e) promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee; …. [..]” 7 Clause 181(2)(zd) of the Act. 8 Kerala State Electricity Board & Anr v. Principal Sir Syed Institute for Technical Studies, 2020 7 SCR 885:

[..]

While fixing tariff, the Commission cannot show undue preference to any consumer of electricity. The Commission, however, is vested with the power to prescribe differential rates according to the consumers’ load factor, power factor, voltage, total consumption of electricity during any specified period of time at which supply is required. So far as fixing different rates for these two categories of the educational institutions, these factors did not come into play. The other permissible differentiating factors are geographical position of any area, the nature of supply and the purpose for which the supply is required. As regards this set of differentiating factors, the tariff advantage for government run and aided educational institutions do not appear to be based on geographical position or nature of supply. The Commission however has justified the classification of the aforesaid two sets of tariffs on the basis of purpose for which supply is required by the consumers.

GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 681 conditions of a given Tariff Order, it can seek its amendment or revocation. Orders are also appealable under Section 111 to APTEL, and thereafter to this court under Section 125 of the Act. Tariff Orders under Section 64 of the Act are quasi-judicial in nature and ipso facto binding on the parties unless amended or modified through law.

On 29.01.2010, the Central Electricity Regulatory Commission (Terms and Conditions for Recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010 (hereafter “REC Regulations 2010”) were framed by the Central Commission for the development of a power market for non-conventional sources of energy by the issuance of tradable and saleable credit certificates (hereafter “RECs”). Regulation 5 of the said REC Regulations 2010 provides for the required eligibility for the renewable generators for participating in the RE Certificates:

5. Eligibility and Registration for Certificates: (1) A generating company engaged in generation of electricity from renewable energy sources shall be eligible to apply for registration for issuance of and dealing in Certificates if it fulfills the following conditions: a. it has obtained accreditation from the State Agency; b. it does not have any power purchase agreement for the capacity related to such generation to sell electricity at a preferential tariff determined by the Appropriate Commission; c. it sells the electricity generated either (i) to the distribution licensee of the area in which the eligible entity is located, at a price not exceeding the pooled cost of power purchase of such distribution licensee, or (ii) to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. Explanation. - for the purpose of these regulations ‘Pooled Cost of Purchase’ means the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self generation, if any, in the previous year A B C D E F G H 682 SUPREME COURT REPORTS [2023] 7 S.C.R. from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.

The objective of the REC Regulations 2010 was to separate the physical electrical component and the environmental (renewable) component of the energy for issuance of RECs. This was an alternate mechanism developed for the sale of renewable energy at a preferential tariff to any licensee or directly to any consumer. The REC Regulations 2010 aimed at selling the renewable component through the RE Certificates containing promotional benefits of renewable energy while the physical electrical component was sold as any other conventional electricity. The REC Regulations 2010 also provided that generators based on the REC mechanism had the option to sell physical energy to the distribution licensee at a “price not exceeding the Average Pooled Power Purchase Cost” (hereinafter as “APPC”) of the distribution licensee9. This was to ensure that generators did not benefit twice over, by selling RECs and also selling physical energy at higher promotional tariffs or taking concessional benefits from the concerned distribution licensee.

7. Under the REC Regulations 2010, distribution licensees were not obliged to purchase the physical component of electricity from renewable energy generators set up under the REC mechanism since such REC based generators had alternative options with regard to the physical component of electricity, namely, (i) sale of electricity power exchanges (ii) wheeling of power for sale to third parties at mutually agreed rates or (iii) wheeling of power for their own consumption. In the case of the sale of the physical component of electricity, the price for the electrical component could not exceed average pooled cost of the distribution licensees. The regulations also provided that the generators (of renewable energy) were not eligible for any benefits including banking facilities, exemption from payment of cross subsidy surcharge etc. amongst other things. The stated promotional benefits were applicable only in terms of trading and selling of the RE Certificates.

The REC Regulations 2010 provided for floor price and forbearance price i.e. minimum price and maximum price respectively at which RECs could be traded in the power exchange. Those prices 9 Regulation 5(1)(c) of REC Regulations 2010. A B C D E F G H GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 683 i.e. floor price and the forbearance prices were to be determined by the central commission for the entire country. A

In the present case, the State Commission by its order10 determined the tariff for procurement of power by distribution licensees from wind energy generators and also ruled on other commercial issues for wind energy generators set up under a preferential tariff mechanism. The order provided for a preferential levelized tariff of 3.56 per kWh for the supply of energy to the distribution licensee for meeting it’s Renewable Power Purchase Obligation (RPO). The “control period” of the Order [dated 30.1.2010] was for the period 11.08.2009 to 10.08.201211. The order, inter alia, also provided the following promotional benefits for wind generators set up for third party sale under a preferential mechanism: (a) Exemption from cross subsidy charges for the sale of wind energy to open access users in the State. (b) Payment for excess (over and above that set off against monthly consumption in the 15 minutes time block) would be treated as a sale to the distribution licensee concerned at a rate of 85% of the preferential tariff determined by commission for such renewable energy sources.

On 17.04.2010, the State Commission notified Gujarat Electricity Regulatory Commission (Procurement of Energy from Renewable Sources) Regulations, 2010 (hereafter “State Regulations”). The State Regulations provided for the percentage of total consumption that distribution licensees were to purchase from RPOs and further recognized that RPO could be fulfilled by the purchase of such RECs. Further, obligated entities could fulfil their renewable purchase obligation through two sources: 10 Dated 30.01.2010 in Order No 1/2010 11 The relevant provision of the Order reads as follows:

2.2 Control period The Commission had, vide its Order No.2 of 2006 dated 11th August,2006, determined the Wind Energy Tariff for a period of three years, i.e. upto 10th August,2009. The draft for the present order was published on 17.05.2009 and it was proposed to be effective from 1st July, 2009.However, some of the objectors suggested that the present order be made effective from the end of previous control period. Since the previous control period expired on 10th August, 2009, the Commission decides that the control period for this order will be 3 (three) years w.e.f. 11th August, 2009.

B C D E F G H 684 SUPREME COURT REPORTS [2023] 7 S.C.R. A B C D E F G H (a) Purchase of renewable energy directly (at preferential tariff determined by State Commission); and (b) Purchase of RECs at a market price between Floor Price and Forbearance price determined by Central Commission

A Power Purchase Agreement (hereafter “PPA”) in terms of the REC Regulations 2010, was entered into between the Gujarat Urja and the wind power developers (hereafter, “WPDs”) including respondent RWE on 29.03.2012. The agreement provided for a ceiling on tariff at 2.64 per unit for 25 years. In addition to the tariff, WPDs were eligible for the issue of RECs for each unit of electricity generated and supplied by them to the appellants. The alternate route available for the WPDs (such as RWE, Wish Wind etc.) at the time of entering into the PPA was to sell electricity at a promotional tariff of 3.56 per unit - as determined by the State Commission. By choosing the option, the WPDs were 2.64 per unit plus tradable RECs whose price was ensured tariff at determined on the basis of the “weighted average pooled price”

Distribution licensees were enabled to adjust such quantum of power purchased towards RPO specified under Section 86(1)(e) of the Act. Thus, the interests of both segments of the industry were taken care of.

12. The State Commission by its order dated 08.08.201213 determined the tariff at which the power could be procured by the distribution licensees and others from wind power projects commissioned in the control period from 11.08.2012 to 31.03.2016.

On 11.07.2013, Central Commission amended the REC Regulations 2010 (hereafter “Second Amendment”) and replaced “at a price not exceeding pooled cost of the power purchase “with” at the pooled cost of power purchase” 14 along with the relevant statement 12 See Explanation to Regulation 5 of the REC Regulations 2010 which defines average pooled price as follows:

the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self-generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.

13 in Order No. 2/2012 14 The relevant amendment to Regulation 5 (c), reads as follows: “(2) In sub-clause (c) of clause (1) of Regulation 5 of the Principal Regulations, the words “at price not exceeding the pooled cost of the power purchase of such distribution licensee” shall be substituted with the words “at the pooled cost of power purchase of such distribution licensee as determined by the Appropriate Commission”.” GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 685 of reasons for the said amendment. It was clarified in the amendment that PPAs already executed prior to this amendment at a tariff lower than APCC would not be affected. The first two respondents were aggrieved by the order of the Central Commission. They filed a petition15 before the State Commission arguing that the terms of the PPA had to be changed in view of the change in the REC regulations. This petition was allowed by the State Commission directing that the order of the Central Commission was general and was therefore applicable to all similarly situated wind power generators. Aggrieved by the order of the State Commission, Gujarat Urja had preferred an appeal16 before APTEL. This appeal was rejected by APTEL by order dated 06.12.2018. The appellants preferred review petition against APTEL’s order rejecting their appeal against State Commission’s order; that too was dismissed by APTEL vide order dated 24.07.2020. Arguments of the Appellant

The learned senior counsel for the appellant, Mr. C.A. Sundaram submitted that governing regulations for the PPAs in question were the CERC Regulations 2010. Therefore, the State Commission had no jurisdiction to decide the tariff contrary to the agreement. Further, counsel argued that Central Commission itself has clarified by the Second Amendment that in respect of PPAs entered into prior to 11.07.2013, tariffs mutually agreed upon between the parties would be valid for the entire duration of the PPA (i.e. 25 years) and they could not be substituted or re-determined by the State Commission. It was further argued that had the appellants known about the APPC on year-on-year basis at the time of signing the agreement, they would not have adopted the REC mechanism but instead would have availed a different method whereby prices were fixed and appellants would have been entitled to RPO benefits as well.

Reliance was placed on this court’s judgment in Gujarat Urja Vikas Nigam Limited v. Solar Semi-Conductors Power Limited Company (India) Private Limited17 to argue that if the State Commission re-determines the tariff amongst the parties, then the aggrieved party cannot be compelled to continue the said agreement or enter into a new agreement on such increased tariff. 15 Petition No. 1363 of 2013 16 Appeal No. 209/2015 17 (2017) 14 SCR 115 A B C D E F G H 686 SUPREME COURT REPORTS [2023] 7 S.C.R.

The appellants further submitted that State Commission had no jurisdiction to reopen the PPA as the same was entered into in terms of the REC Regulations 2010 that was framed by the Central Commission and was within its exclusive jurisdiction. Moreover, it was argued that the appellants would fail in their duty towards their consumers if they cannot negotiate for a lower tariff or if they agree to purchase power at a higher tariff despite the availability of power at a lower tariff. In such an event, the higher cost of procurement of power so imposed would be ultimately passed on to the consumers which would be contrary to a specified public interest, under the Act.

The learned senior counsel argued that the definition of the “APPC” cannot be relied upon in the present case18 and the PPA in question provided for a tariff. There was consequently no bar in any law or regulations for the parties to agree to such tariff and in fact, REC Regulations 2010 itself recognized that the PPA can be “at a price not exceeding the pooled purchase cost”. Likewise, for the sale of such power to customers or the licensees, reference is made to “mutually agreed price” and therefore reference to “mutually agreed price” can mean that price can also be a fixed price and need not mean that it has to be dynamic and varying every year.

It was argued that the interpretation placed by APTEL is not founded on any express provision in the regulations, or anything arising out of necessary implication. The change in regulations, unless made specifically operable for a prior period, cannot be construed to be retrospective. Thus, contracts concluded prior to the entered into prior to the amendment [in 2013] cannot be governed by amended provisions. Doing so would not only be contrary to the express terms of the amended regulations but would also be contrary to the terms of the PPA which do not accommodate or provide for such change in regulations.

The appellants further urged that the PPA was consciously entered into by the respondents on 29.03.2012, which was before the 18 APPC as clause 1.1 of the PPA is defined as: “Average Power Purchase Cost” means the weighted average pooled price at which the distribution licensee has. Purchased the electricity including cost of self- generation, if any, in the previous year from all the energy suppliers long-term and short-term; but excluding those based on renewable energy sources, as the case may be. Further, for this agreement, Average Power Purchase Cost for the term of the agreement shall be as per Article No. 5.2 A B C D E F G H GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 687 state commission’s tariff order dated 08.08.2012. The PPAs were signed by the respondents before 11.07.2013, (when the amendment was made to the REC regulations) voluntarily without any reservation. The terms of the PPA were binding and enforceable, unaffected by the Second Amendment, which applied prospectively. Learned counsel relied on the clarification by the CERC in the Statement of Reasons published in this regard.19

It is argued that the National Action Plan on Climate Change and the Union Ministry of Power resolution dated 28-01-2016 and Tariff Policy underline the necessity of the co-generation of renewable sources of energy, progressively, so that it reaches a greater proportion. The policy aims at increasing investment, and ensuring that viable units generating renewable energy are set up.

It was argued that the PPA was a commercial transaction, freely entered into between the parties. Neither the appellants nor the first Respondent was obliged to enter into the PPA nor agree to any specific terms or conditions. In case the terms were not acceptable, both parties had the freedom to reject the transaction and seek to sell or buy power through other alternative available options as provided under the REC Regulations 2010. Further at the time of signing the PPA, and even thereafter till the filing of the Petition before the State Commission in the month of December 2013 (i.e. more than one and half years after the execution of the PPA), the first respondent did not raise any objections or protest on being allegedly coerced or placed under duress to agree to the terms and conditions of the PPA. The terms of the PPA were fully in compliance with the provisions of the REC Regulations 2010 as the restriction in those regulations was for the price not to exceed the Pooled Power Purchase Cost. The price agreed to between the appellant and Respondent No. 1 was 2.64/- per unit or Pooled Power Purchase Cost of the subsequent year, whichever was lower. 19 Dated 10.07.2013, which inter alia, stated that

Some of the stakeholders have suggested to clarify as to whether the PPAs executed at price lower than APPC would become ineligible under REC Mechanism. It is felt that the tariff for electricity component lower or higher than APPC may lead to avoidable loss or profit to RE generator. The Commission would like to clarify that the intention is not to debar the projects that have executed PPA at tariff lower than APPC. This amendment will apply prospectively and as such will not affect the

already executed PPAs at lower than APPC.” A B C D E F G H 688 SUPREME COURT REPORTS [2023] 7 S.C.R. A B C D E F G H

The appellants argue that till 11.07.2013 none of the WPDs/ respondents raised any issue on the tariff of 2.64/kWh for the entire duration of the PPA. It was only on 10.12.2013, the first two respondents filed Petition No.1363/ 2013 before the State Commission claiming that the tariff should be the APPC cost year-on-year basis instead of a fixed 2.64/kWh. This was contrary to the decision by CERC on the application of Second Amendment only prospectively -which is, for PPAs entered on or after 11.07.2013. The state commission by its order (dated 01.07.2015) allowed the respondent’s petition and further directed that the order is generic in nature and applicable to all similarly placed WPDs- which was affirmed by the first impugned order. The appellants argue that the governing Regulations for PPAs adopting the REC Mechanism are 2010 REC Regulations and the state commission cannot decide on tariff contrary to the same. When the Central Commission clarified that for PPAs entered into prior to 11.07.2013, the tariff mutually agreed is valid for the entire duration of the PPA (25 years), the state commission and APTEL fell into error in substituting a new tariff at the instance of the WPDs/Respondents. It is pointed out that Rule 820 of the Electricity Rules, 2005, notified by the Central Government, is binding, and specifically provides that tariff determined by the Central Commission (CERC) shall not be subject to re-determination by the GERC/State Commission.

Learned senior counsel argued that if at the time of signing the PPAs WPDs-Respondents had sought for tariff at APPC on year- on-year basis, the appellants would not have entered into PPAs under the REC mechanism route and would have only adopted the alternate route where the price was fixed and in addition, the appellants would have been entitled to RPO benefits. This is also clear as the appellants did not sign any PPAs after the Second Amendment for procuring power under the REC mechanism. The appellants urge that the Impugned Order is contrary to the decision of this court in Gujarat Urja Vikas Nigam 20 Rule 8 reads as follows:

8. Tariffs of generating companies under section 79. –The tariff determined by the Central Commission for generating companies under clause (a) or (b) of subsection (1) of section 79 of the Act shall not be subject to redetermination by the State Commission in exercise of functions under clauses (a) or (b) of sub section (1) of section 86 of the Act and subject to the above the State Commission may determine whether a Distribution Licensee in the State should enter into Power Purchase Agreement or procurement process with such generating companies based ,on the tariff determined by the Central Commission.

GUJARAT URJA VIKAS NIGAM LIMITED v. RENEW WIND ENERGY (RAJKOT) PVT. LTD. [S. RAVINDRA BHAT, J.] 689 Limited v Solar Semi-Conductors Power Company (Pvt) Ltd (Supra) holding that if the state commission re-determines the tariff, it cannot force the appellants to continue the PPAs or enter into a contract based on such increased tariff. Furthermore, it is argued that the principle that WPDs having validly executed the PPAs cannot seek a modification to the tariff terms and conditions contained in the PPAs under a prevalent dispensation for an increase in the tariff or for any other terms and conditions: counsel referred to Transmission Corporation of Andhra Pradesh Ltd v Sai Renewable Power Private Limited (hereafter “Transmission Corporation of Andhra Pradesh Ltd”)21; Gujarat Urja Vikas Nigam Limited v EMCO Limited (hereafter “Emco Ltd”)22; and Gujarat Urja Vikas Nigam Limited v ACME Solar Technologies (Gujarat) Pvt Ltd & Others23 in support of the above contention.

Mr. Sundaram argued – for the appellants that the plea of coercion or duress or unequal bargaining etc, raised by the WPDs was patently erroneous for the following reasons: (a) the petition before the state commission was filed only by the first two Respondents; therefore, it cannot be a ground for alleging coercion against all WPDs; (b) the allegations by the said two Respondents were vague and unsubstantiated, and an afterthought as no such plea was raised till December 2013, i.e., till after the amended CERC Regulations; and (c) as held by this Court such plea of coercion had to be specifically pleaded and proved. In this regard, reliance was placed on Transmission Corporation of Andhra Pradesh Ltd (Supra).

It is further argued that there is no Regulation of the state or central commissions prohibiting a term being incorporated in PPA which permits an option to either party to switch from REC mechanism to Preferential Tariff Mechanism. The impugned order had not considered judgments referred to by the appellants on clauses granting power to one party to cancel the contract. In this regard, reliance is placed on Central Bank of India v Hartford Fire Insurance Co. Ltd24; and Her Highness Maharani Shantidevi P Gaikwad v Savjibai Haribai Patel & Ors25.