913
* Author
[2024] 1 S.C.R. 909 : 2024 INSC 23
Jaipur Vidyut Vitran Nigam Ltd. & Ors.
v.
MB Power (Madhya Pradesh) Limited & Ors.
(Civil Appeal No. 6503 of 2022)
08 January 2024
[B. R. Gavai* and Prashant Kumar Mishra, JJ.]
Issue for Consideration
State Commission held that the tariffs offered by the L-4 and L-5
bidders were not aligned to the prevailing market prices. In appeal
by L-5, APTEL held that the State Commission had to necessarily
adopt the tariff and had no power to consider whether the tariff was
aligned to market prices. Impugned judgment of the High Court
relying on the said judgment of the APTEL and the earlier orders
of this Court concluded that applying the test of “filling the bucket”,
the procurers were bound to take supply from the respondent No.1
at the rates quoted by it and it had a right to supply power since
there was a gap of 300 MW between the power procured by the
procurers and the ceiling of 906 MW determined by this Court. High
Court whether justified in issuing mandamus directing the appellants
to take supply of 200 MW power from the respondent No.1 at the
rates quoted by it. Power of the State Commission to go into the
question as to whether the prices quoted are market aligned or not
and to take into consideration the aspect of consumers’ interest.
Headnotes
Electricity Act, 2003 – ss.63, 86 – Rajasthan Rajya Vidyut
Prasaran Nigam Limited (RVPN) filed Petition before the State
Commission seeking approval for procurement of 1000 MW
of power by a competitive bidding process – RFP was issued
– Eventually, in consonance with the LoI, PPAs were signed
with the L-1, L-2 and L-3 bidders – State Commission held that
the quantum of only 500 MW power was liable to be approved
considering the demand in the State as recommended by the
EAC and it approved the tariff quoted by the L-1 to L-3 bidders
– Appeals filed by L-2 and L-3 bidders before APTEL, allowed
– Challenged by the appellants – Subsequently, Civil Appeals
were filed by L-5 bidder also– Disposing of the appeals, State
Commission was directed to go into the issue of approval for
adoption of tariff with regard to L-4 and L-5 bidders– Further,
910 [2024] 1 S.C.R.Digital Supreme Court Reports
vide order dtd.19.11.18, State Commission was directed to
go into the issue of adoption of tariff – State Commission
held that the tariffs offered by the L-4 and L-5 bidders were
not aligned to the prevailing market prices – Appeal filed by
L-5 bidder, allowed by APTEL – Writ petition was filed by the
respondent No.1 – Allowed by impugned judgment:
Held: Unlike s.62 r/w ss.61 and 64, under the provisions of s.63,
the appropriate Commission does not “determine” tariff but only
“adopts” tariff already determined u/s.63 – Such “adoption” is only
if such tariff has been determined through a transparent process
of bidding, and this transparent process of bidding must be in
accordance with the guidelines issued by the Central Governments
– s.86(1)(b) gives ample power to the State Commission to regulate
electricity purchase and procurement process of distribution
licensees – It also empowers the State Commission to regulate
the matters including the price at which electricity shall be procured
from the generating companies, etc. – Further, orders relied upon
by the APTEL, specifically the order dtd. 19.11.2018, clarified
that the State Commission was to decide the tariff u/s.63 having
regard to the law laid down both statutorily and by this Court – As
such, the State Commission was bound to take into consideration
the Bidding Guidelines notified by the Central Government, and
specifically clause 5.15 thereof – State Commission justified in
considering the Clause 5.15 of the Bidding Guidelines which
specifically permits to reject all price bids if the rates quoted are
not aligned to the prevailing market prices – APTEL grossly erred
in holding that the State Commission has no power to go into the
question, as to whether the prices quoted are market aligned or not
and also not to take into consideration the aspect of consumers’
interest – It cannot be read from the orders of this Court that the
State Commission was bound to accept the bids as quoted by
the bidders till the bucket was filled – No such direction can be
issued by this Court de hors the provisions of ss.63 and 86(1)(b)
and the Bidding Guidelines – Since the decision-making process
adopted by the Bid Evaluation Committee approved by the State
Commission, was in accordance with the law laid down by this
Court, the same ought not to have been interfered with by the
APTEL – High Court could not have issued a mandamus to the
instrumentalities of the State to enter into a contract harmful to the
public interest inasmuch as, if the power was to be procured by
the procurers at the rates quoted by the respondent No.1, which
was even higher than the rates quoted by the L-5 bidder, then the
[2024] 1 S.C.R. 911Jaipur Vidyut Vitran Nigam L t d . & O r s . v.
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State would have to bear financial burden in thousands of crore
rupees, which in turn would have passed on to the consumers
– Impugned judgment quashed and set aside – Cost imposed.
[Paras 67, 71, 73-75, 78, 83, 104, 105]
Electricity – Competitive Bidding Guidelines notified by the
Government of India u/s.63 – Respondent No.1 contended
that the procurer is bound to accept all the bids emerged in
a competitive bidding process once the bidding process was
found to be transparent and in compliance with the Bidding
Guidelines:
Held: If the contention is to be accepted it will do complete violence
to clause 5.15 of the Bidding Guidelines itself – If that view is
accepted, the DISCOMS will be compelled to purchase electricity
at a much higher rate as compared with other suppliers – The
said higher rate will be passed on to the consumers – As such,
accepting the contention of the respondent No.1 would result in
adversely affecting the interests of the consumers and, in turn,
would be against the larger public interest. [Para 77]
Electricity Act, 2003 – s.63 – General Clauses Act – s.13(2)
– “all”, “any” – Principle of literal interpretation – Principle
of purposive construction – “all” used in clause 5.15 of
the Bidding Guidelines r/ws.86(1)(b) – Competitive Bidding
Guidelines notified by the Government of India u/s.63 – It was
contended that the power under clause 5.15 of the Bidding
Guidelines can be exercised only when the bidding process
is found to be not in compliance with the Bidding Guidelines
and is not transparent in respect of all the bidders and not in
respect of some of the bidders is concerned:
Held: The contention is without substance – Words “all” or “any” will
have to be construed in their context taking into consideration the
scheme and purpose of the enactment – What is the meaning which
the legislature intended to give to a particular statutory provision
has to be decided by the Court on a consideration of the context
in which the word(s) appear(s) and in particular, the scheme and
object of the legislation – The word “all” used in clause 5.15 of
the Bidding Guidelines, read with the legislative policy for which
the Electricity Act was enacted and r/ws.86(1)(b), will have to be
construed to be the one including “any” – Applying the principle of
literal interpretation, the evaluation committee/BEC would be entitled
to reject only such of the price bids if it finds that the rates quoted
912 [2024] 1 S.C.R.Digital Supreme Court Reports
by the bidders are not aligned to the prevailing market prices – It
does not stipulate rejection of all the bids in the bidding process
– If the contention that clause 5.15 of the Bidding Guidelines will
come into play, which permits the Evaluation Committee to reject
“all” price bids and not “any” one of them is accepted, it will lead
to absurdity – The Court, while interpreting a particular provision,
will have to apply the principles of purposive construction – Such
an interpretation would result in defeating one of the main objects
of the enactment, i.e., protection of the consumer. [Paras 84, 87,
88 and 91]
Interpretation of Statutes – Principle of purposive construction
– Discussed.
Electricity Act, 2003 – ss.62, 63, 79(1)(b):
Held: The non-obstante clause advisedly restricts itself to s.62,
there is no reason to put s.79 out of the way altogether – Either
u/s.62, or 63, the general regulatory power of the Commission
u/s.79(1)(b) is the source of the power to regulate, which includes
the power to determine or adopt tariff – ss.62 and 63 deal with
“determination” of tariff, which is part of “regulating” tariff – In a
situation where the guidelines issued by the Central Government
u/s.63 cover the situation, the Central Commission is bound by
those guidelines and must exercise its regulatory functions, albeit
u/s.79(1)(b), only in accordance with those guidelines. [Para 68]
Alternate remedy – Electricity Act, 2003 – Constitution of
India – Article 226 – Judicial review – Scope:
Held: The Electricity Act is an exhaustive code on all matters
concerning electricity – Under the Electricity Act, all issues dealing
with electricity have to be considered by the authorities constituted
under the said Act – The State Electricity Commission and the
APTEL have ample powers to adjudicate in the matters with
regard to electricity – These Tribunals are tribunals consisting of
experts having vast experience in the field of electricity – In the
present case, the High Court erred in directly entertaining the writ
petition when the respondent No.1-the writ petitioner before the
High Court had an adequate alternate remedy of approaching the
State Electricity Commission – Although, availability of an alternate
remedy is not a complete bar in the exercise of the power of judicial
review by the High Courts but, recourse to such a remedy would
be permissible only if extraordinary and exceptional circumstances
are made out – While exercising its power of judicial review, the
[2024] 1 S.C.R. 913Jaipur Vidyut Vitran Nigam L t d . & O r s . v.
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Court can step in where a case of manifest unreasonableness or
arbitrariness is made out – There was not even an allegation with
regard to that effect – In such circumstances, recourse to a petition
under Article 226 of the Constitution of India in the availability of
efficacious alternate remedy under a statute which is a complete
code in itself was not justified. [Paras 93-95]
Contract – Award of contract, a commercial transaction –
Judicial Scrutiny – Scope:
Held: The award of a contract, whether by a private party or by
a public body or the State is essentially a commercial transaction
– In arriving at a commercial decision, considerations which are
paramount are commercial considerations – State can choose its
own method to arrive at a decision – It can fix its own terms of
invitation to tender and that is not open to judicial scrutiny – State
can enter into negotiations before finally deciding to accept one of
the offers made to it – Price need not always be the sole criterion
for awarding a contract – State may not accept the offer even
though it happens to be the highest or the lowest – However, the
State, its corporations, instrumentalities and agencies are bound
to adhere to the norms, standards and procedures laid down
by them and cannot depart from them arbitrarily – Though that
decision is not amenable to judicial review, the court can examine
the decision-making process and interfere if it is found vitiated by
mala fides, unreasonableness and arbitrariness – Only when the
Court comes to a conclusion that overwhelming public interest
requires interference, the court should intervene. [Para 102]
Case Law Cited
PTC India Limited v. Central Electricity Regulatory
Commission, Through Secretary [2010] 3 SCR 609 :
(2010) 4 SCC 603; Vivek Narayan Sharma and others
v. Union of India and others [2023] 1 SCR 1 : (2023)
3 SCC 1 – followed.
Energy Watchdog v. Central Electricity Regulatory
Commission and others [2017] 3 SCR 153 : (2017)
14 SCC 80; GMR Warora Energy Limited v. Central
Electricity Regulatory Commission (CERC) & Ors. [2023]
8 SCR 183 : 2023 SCC Online SC 464 – relied on.
R.Viswanathan and others v. Rukn-ul-Mulk Syed Abdul
Wajid since deceased and others [1963] 3 SCR 22 :
914 [2024] 1 S.C.R.Digital Supreme Court Reports
AIR 1963 SC 1; Deccan Paper Mills Company Limited
v. Regency Mahavir Properties & Ors. [2020] 13 SCR
427 : (2021) 4 SCC 786; Tata Power Company Limited
Transmission v. Maharashtra Electricity Regulatory
Commission & Ors. [2022] 19 S.C.R. 620 : 2022 SCC
Online 1615; Tata Cellular v. Union of India [1994]
2 Suppl. SCR 122 : (1994) 6 SCC 651; Rajasthan
Housing Board and another v. G.S. Investments and
another [2006] 7 Suppl. SCR 868 : (2007) 1 SCC 477;
Laxmikant and others v. Satyawan and others [1996] 3
SCR 532 : (1996) 4 SCC 208; Reliance Infrastructure
Limited v. State of Maharashtra and others [2019] 1 SCR
886 : (2019) 3 SCC 352; Radha Krishan Industries v.
State of Himachal Pradesh and others [2021] 3 SCR
406 : (2021) 6 SCC 771; South Indian Bank Ltd. and
others v. Naveen Mathew Philip and another [2023] 4
SCR 18 : 2023 SCC OnLine SC 435; Air India Ltd. v.
Cochin International Airport Ltd. and others [2000] 1
SCR 505 : (2000) 2 SCC 617 – referred to.
List of Acts
Electricity Act; RERC (Power Purchase & Procurement Process
of Distribution Licensee) Regulations 2004; Constitution of India;
General Clauses Act.
List Keywords
Electricity; State Electricity Regulatory Commission; Appellate
Tribunal for Electricity; Bid Evaluation Committee; Request for
Proposal; Power Purchase Agreement; Reduction of quantum of
power; Test of filling the bucket; Tariffs not aligned to the prevailing
market prices; Consumers’ interest; Competitive Bidding Guidelines/
Process; Approval for adoption of tariff; Determination of tariff
by bidding process; Functions of State Commission; Functions
of Central Electricity Regulatory Commission; Bid Evaluation
Committee; Mandamus; Contract harmful to the public interest;
Interpretation of Statutes; Principle of literal interpretation; Principle
of purposive construction; Determination of tariff, Regulating
tariff; Alternate remedy; Judicial review; Unreasonableness
or arbitrariness; Award of contract; Commercial transaction;
Commercial considerations; Judicial Scrutiny.
