APTEL Reaffirms Statutory Primacy: Relinquishment Charges Upheld Despite Force Majeure
The dispute centred around the grant of Long-Term Access (‘LTA’) and the execution of a Bulk Power Transmission Agreement (‘BPTA’) between Aryan Renewable Energy Private Limited (‘Aryan Renewable’) and Central Transmission Utility (‘CTU’) for evacuation of power from Aryan Renewable’s proposed 1200 MW thermal power project at Amelia, Madhya Pradesh.
Background
Aryan Renewable proposed to set up a 1200 MW thermal power project in Madhya Pradesh and was granted LTA for the evacuation of power through the inter-State transmission system. Pursuant to the grant of LTA, a BPTA was executed, and the Appellant furnished a bank guarantee towards its transmission obligations.
Subsequently, the Central Water Commission declined to grant the No-Objection Certificate for water drawal, rendering the project non-implementable. Aryan Renewable contended that this constituted a force majeure event and that no unit of the generating station ever achieved commercial operation.
Thereafter, the bank guarantee submitted by Aryan Renewable were invoked, and the Central Electricity Regulation Commission (‘CERC’), vide the Impugned Order, held that Aryan Renewable remained liable to pay transmission and relinquishment charges under Regulation 18 of the Connectivity Regulations, 2009. Aggrieved, Aryan Renewable preferred an Appeal before the Hon’ble Appellate Tribunal.
Issues Framed by the Hon’ble Appellate Tribunal
- Whether Regulation 18 of the Connectivity Regulations, 2009 applies to a “zero-day failure” case, where LTA was never availed due to Force Majeure?
- Whether binding precedent by this Hon’ble Tribunal exists on the above
- Whether independently of precedent, the text of Regulation 18 contains a casus omissus regarding zero-use scenarios due to force majeure events, which is governed exclusively by the BPTA
- Whether Force Majeure under the BPTA overrides the statutory obligation to pay relinquishment charges under Regulation 18?
Analysis
Issue 1: Applicability of Regulation 18 to “zero-day failure”
1(a): Whether binding precedent exists
Aryan Renewable’s case primarily rests on Brahmani Thermal Power Private Limited v. CERC & Ors. passed by the Appellate Tribunal [Judgement dated 20.03.2025], where Regulation 18 was interpreted as—
(i) it applies solely to voluntary relinquishment of LTA “out of its wish”, having “no application” to compulsory exits due to unforeseeable force majeure events beyond control;
(ii) it presupposes actual stranded transmission capacity from such relinquishment, which is absent if lines are not commissioned or are utilised by others; and
(iii) LTA granted to generators activates only post-commercial operation, so no transmission charges liability arises where force majeure prevents project establishment altogether.
Aryan Renewable also relied on PEL Power Ltd. v. CERC and Himachal Sorang Power Pvt. Ltd. v. CERC, arguing that these decisions collectively constitute binding precedent excluding ‘zero-use’ cases from the scope of Regulation 18. The Hon’ble Appellate Tribunal rejected this submission. It noted that the judgments relied upon did not consider the full statutory framework of the Connectivity Regulations, 2009, particularly the interrelationship between Regulations 14, 15 and 18. The Hon’ble Appellate Tribunal held that the Brahmanijudgment impermissibly read additional words into Regulation 18 by restricting its application to voluntary relinquishment alone, contrary to settled principles of statutory interpretation. The Hon’ble Appellate Tribunal reiterated that a judgment is binding only for what it actually decides, and observations made without consideration of relevant statutory provisions do not qualify.
1(b): Whether the text of Regulation 18 contains a casus omissus
Independently, Aryan Renewable contended that Regulation 18 uses the phrase “have availed access rights” in both its categories, implying the provision applies only where access has been operationalised, and that a zero-use case therefore, falls outside its scope as a casus omissus.
The Hon’ble Appellate Tribunal rejected this contention. Through a harmonised reading of the definitions of ‘LTA’ and “long-term customer” under the Connectivity Regulations, 2009, the Hon’ble Appellate Tribunal held that the right to use the inter-State transmission system is conferred upon grant of LTA by the CTU, which is thereafter formalised through execution of the BPTA under Regulation 15. Regulation 14 was construed to distinguish between the grant of access and the date from which such access becomes operational.
The Hon’ble Appellate Tribunal held that where access is relinquished after grant but before commissioning, the period of utilisation is necessarily zero years, which squarely falls within Regulation 18(1)(b), applicable to customers who have not availed access rights for at least twelve years. Consequently, the zero-day failure scenario is not an omitted case under the Regulations, and the plea of casus omissus was found to be without merit.
2. Whether Force Majeure under the BPTA overrides the statutory obligation to pay relinquishment charges under Regulation 18
Aryan Renewable argued that Clause of the BPTA dealing with force majeure operates as an overriding provision absolving it from all liabilities, including relinquishment charges. TheHon’ble Appellate Tribunal rejected this submission by emphasising the primacy of statutory regulations over contractual arrangements.
The Hon’ble Appellate Tribunal relied on the Constitution Bench decision of the Hon’ble Supreme Court in PTC India Ltd. v. CERC to reiterate that regulations framed under Section 178 of the Electricity Act, 2003, have the force of subordinate legislation and override contractual provisions.
The Hon’ble Appellate Tribunal further held that Clause of the BPTA merely exempts parties from claims for loss or damage arising from force majeure and does not extend to statutory transmission or relinquishment charges, which form part of a pooled, non-discriminatory transmission framework. Transmission charges are not payable to CTU alone but are shared among Designated ISTS Customers under the Sharing Regulations, and therefore cannot be characterised as contractual damages.
In the absence of a force majeure exception in Regulation 18 itself, and given the statutory treatment of the Connectivity Regulations, the Hon’ble Appellate Tribunal concluded that Clauses of the BPTA cannot override the obligation to pay relinquishment charges under Regulation 18(1)(b). The appeal was therefore, dismissed as being devoid of merit.
Conclusion
The Hon’ble Appellate Tribunal judgment placed an emphasis on the statutory nature of the Connectivity Regulations 2009, making it clear that they were not to be superseded by the BPTA, and that there was no cassus omissus in Regulation 18 underlining the importance of construing the same in a harmonious matter.
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Hon’ble Supreme Court Upholds APTEL’s Restitution Findings In The Vemagiri Transmission Dispute; Dismisses REC’s Challenge
Introduction
On 10.10.2025, the Hon’ble Supreme Court of India dismissed Civil Appeal Nos. 11011–11013 of 2025 filed by REC Power Development and Consultancy Limited (REC), thereby affirming the judgment dated 27.05.2025 passed by the Hon’ble Appellate Tribunal for Electricity (APTEL).
The appeals concerned long-standing disputes surrounding the Vemagiri Transmission Project, developed under the Tariff-Based Competitive Bidding (TBCB) framework in terms of the Guidelines dated 17.04.2006. Central to the matter were issues of restitution, regulatory jurisdiction, and the extent to which a Bid Process Coordinator (BPC) could be held accountable for actions taken during the execution of the TBCB process.
R Associates represented Power Grid Corporation of India Limited (POWERGRID), the successful bidder for the transmission project, whose acquisition costs and subsequent expenses were under challenge.
The Hon’ble Supreme Court, affirming APTEL’s reasoning, declined to interfere with the detailed factual and legal findings, recognising that principles of fairness and restitution governed the dispute.
Background
The Vemagiri Transmission Project was initiated to evacuate power from the gas-based generation projects of Spectrum and Samalkot under a TBCB framework.
In 2012, REC, acting as BPC, insisted that POWERGRID proceed with acquisition of the Special Purpose Vehicle—Vemagiri Transmission System Limited (VTSL), despite the Ministry of Power’s notifications dated 14.03.2012 and 19.03.2012 indicating non-availability of domestic gas for the concerned generators.
Spectrum and Samalkot themselves had, in letters dated 30.03.2012 and 06.04.2012, sought cancellation or deferment of the Transmission Service Agreement (TSA). REC nevertheless required POWERGRID to acquire VTSL and pay the acquisition price of Rs. 18.27 crores.
Given this sequence, POWERGRID later sought restitution before the Central Electricity Regulatory Commission (CERC), leading to a series of proceedings culminating in APTEL’s judgment directing adjustment of costs and holding REC accountable for failing to defer acquisition despite clear grounds to do so.
APTEL held that:
- Spectrum and Samalkot were not liable for acquisition or operational costs;
- POWERGRID could not be saddled with costs it incurred under compelling circumstances;
- CERC must adjust these costs either by recovering the amount from REC or through other regulatory mechanisms.
REC challenged these findings before the Hon’ble Supreme Court.
Submission Made by the Parties
REC contended as under:
- CERC lacked jurisdiction over disputes involving BPC, as REC was only a pro forma party to the original proceedings.
- The acquisition was undertaken voluntarily by POWERGRID, despite indications regarding gas non-availability, and therefore no restitution could be claimed.
- APTEL erred in fastening liability upon REC when it was not a party to the TSA and had no role after initiating the bidding process.
POWERGRID’s key submissions were as under:
- REC, as BPC, failed in its statutory role:
Under Clause 2.4(e) of the Request for Proposal (RfP), REC had the express power to defer acquisition on account of material developments. Despite receiving letters from Spectrum and Ministry notifications regarding non-availability of gas, REC insisted on strict adherence to timelines and mandated payment of acquisition price. - POWERGRID acted without fault and under compelling circumstances:
POWERGRID highlighted that non-compliance would have resulted in encashment of its bid bond under Clause 2.7 of the RfP. As the selected bidder, POWERGRID had no discretion other than to fulfil bid terms.
- Certain Concurrent findings of CERC and APTEL:
Both authorities concurrently upheld that the acquisition price to be paid to POWERGRID is required to be reimbursed.
- CERC had jurisdiction over disputes involving a transmission licensee and BPC:
Relying on Section 79(1)(c) and (f) of the Act, POWERGRID submitted that disputes “in connection with” inter-State transmission, including those arising during bidding, acquisition, and TSA implementation, fall squarely within the Central Commission’s jurisdiction. Reference was also made to the wide interpretation of regulatory powers recognised in K. Ramanathan v. State of Tamil Nadu and Energy Watchdog v. CERC. - Restitution was the only equitable outcome:
POWERGRID urged that the economic position preceding compelled acquisition must be restored, especially when the project could not proceed due to reasons clearly beyond its control.
Analysis and Conclusion
The Hon’ble Supreme Court, after hearing all parties, declined to interfere with APTEL’s detailed factual findings and legal reasoning, observing that “…no grounds are made out to interfere with the impugned judgment/order passed by the Appellate Tribunal for Electricity, New Delhi, on principles of fairness as well as restitution.”
The Hon’ble Supreme Court has thereby affirmed:
- the correctness of APTEL’s restitution-based approach;
- the concurrent findings of CERC and APTEL that the concurrently upheld that the acquisition price to be paid to POWERGRID is required to be reimbursed.
- the power of CERC to adjudicate disputes involving BPCs when connected to inter-State transmission; and
- the accountability of the Bid Process Coordinator when its actions materially contribute to avoidable economic loss.
- By dismissing REC’s appeals, the Hon’ble Supreme Court has brought finality to more than a decade of litigation stemming from the aborted Vemagiri Transmission System. The decision reinforces jurisprudence on BPC obligations, regulatory oversight under Section 79, and the availability of restitutionary remedies within the TBCB framework.
Prepared By:
Reeha Singh
Represented by:
Shubham Arya, Poorva Saigal, Reeha Singh and Shirin Gupta
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