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:

1. Spectrum and Samalkot were not liable for acquisition or operational costs;
2. POWERGRID could not be saddled with costs it incurred under compelling circumstances;
3. 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

Read the order in detail: