An Unchallenged Regulatory Order Bars a Fresh Petition on the Same Tariff — Appeal No. 325 of 2026

Haryana Power Purchase Centre v. M/s Siwana Solar Power Projects Ltd. & Haryana Electricity Regulatory Commission decided on 18 September 2026 

Background

HPPC and Siwana executed a PPA in 2014 for a 5 MW solar plant. Clause 4.1 fixed the applicable tariff as the lowest of three options: the HERC (State Commission) generic tariff, the lowest tariff accepted in HPPC’s first long-term competitive bidding tender, or the lowest tariff in HAREDA’s first reverse-bidding tender. A tariff of Rs. 6.44/kWh was discovered. HERC, by order dated 20.01.2026, held Siwana bound by the PPA and directed year-to-year tariff corresponding to a levelized Rs. 6.44/kWh. That order was upheld by Appellate Tribunal for Electricity on 27.05.2019 in Appeal No. 150 of 2016.

Separately, PPAs with four other developers under the same tender were initially rejected by HERC and Appellate Tribunal by judgment dated 09.03.2018 in Appeal Nos. 278 and 307 of 2016 directed their approval at Rs. 5.68/kWh. The Hon’ble Supreme Court dismissed the developers’ appeals on 10.10.2023. HPPC thereafter paid Siwana at Rs. 5.68/kWh  and HERC by order dated 10.05.2019 permitted that rate as an interim arrangement.

Siwana’s Petition No. 26 of 2024, seeking implementation of Rs. 6.44/kWh was dismissed in limine by HERC on 12.11.2024 on the principles of res judicata. No appeal was filed against that order. Siwana then filed Petition No. 78 of 2025 and HERC by the impugned order dated 14.05.2026 granted Rs. 6.44/kWh from 1 April 2019, with differential tariff, interest at 9.15% per annum and late payment surcharge.

Findings

On res judicata. HERC’s order dated 12.11.2024 had held that the sum and substance of all of Siwana’s petitions was the grant of Rs. 6.44/kWh, that the issue had attained finality and that res judicata applied. That order went unchallenged. Comparing the prayers in Petition No. 26 of 2024 and Petition No. 78 of 2025, the Appellate Tribunal found them identical, the parties the same and the subject-matter the same. Applying Section 11 CPC and Syed Mohd. Salie Labbai v. Mohd. Hanifa, (1976) 4 SCC 780, Satyadhyan Ghosal v. Deorajin Debi, 1960 SCC OnLine SC 15, Sulochana Amma v. Narayanan Nair, (1994) 2 SCC 14, Swamy Atmananda v. Sri Ramakrishna Tapovanam, (2005) 10 SCC 51, Bhanu Kumar Jain v. Archana Kumar, (2005) 1 SCC 787 and M. Nagabhushana v. State of Karnataka, (2011) 3 SCC 408, the Appellate Tribunal held that the doctrine operates even where the earlier decision may be erroneous, the remedy lying in appeal or review and not in fresh litigation.

The “past dues versus prospective tariff” distinction drawn by HERC in the impugned order was held to be legally unsustainable. The impugned order was set aside.

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PSERC Holds Pre-Existing PPAs Without a Change in Law Clause Bind the Parties, Dismisses Solar Generators’ Claim for Pass-Through of RCM-GST on Land Lease Rentals

By a common order dated 19.08.2026, the Punjab State Electricity Regulatory Commission (“State Commission”) has dismissed the Petitions filed by Vector Green Sunshine Pvt. Ltd. (“VGSPL”) and Anr. against Punjab State Power Corporation Limited (“PSPCL”) and Punjab Energy Development Agency (“PEDA”), holding that the Petitioners’ claim for additional payments or tariff adjustment on account of change in law events, is contrary to the agreed terms of the PPAs and is accordingly not maintainable.

By way of Petition Nos. 22 of 2026 and 23 of 2026, the Petitioners had sought, inter alia, a direction to PSPCL to pass through the additional expenditure incurred on account of GST payable under RCM on rent paid for land taken on lease from unregistered lessors, along with carrying cost/interest either under Regulation 23 of the CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012 (“RE Tariff Regulations”), or as a Change in Law under the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021 (“CIL Rules”) or in the alternative, through exercise of the State Commission’s general regulatory powers.

Brief Background

The Petitioner was awarded Solar PV Power Projects by PEDA pursuant to a Request for Proposal (“RfP”) issued under the Government of Punjab’s NRSE Policy 2012 with the final tariff arrived at after adjustment of the discount offered by the Petitioners on the generic levelised tariffs determined by the State Commission under the RE Tariff Regulations.

Vide Notification dated 08.10.2024, MoF brought “service by way of renting any property other than residential dwelling” within the RCM. Consequent thereto, the Petitioners, having taken project land on lease from unregistered lessors, became liable to discharge GST at 18% under RCM on the lease rentals. The Petitioners issued Change in Law notices to PSPCL on 29.04.2025, which PSPCL disputed on the ground that the PPAs contained no Change in Law provision and that leasing, rather than purchasing, land was a commercial decision of the Petitioners.

1. Absence of a Change in Law clause in the PPAs

The Petitioners contended that since the PPAs contained no provision restricting or barring a Change in Law claim, they were entitled to relief. PSPCL’s case, on the other hand, was that the express tariff clause together with the absence of a Change in Law clause reflected the parties’ clear intention to freeze the tariff and allocate the risk of future statutory fiscal changes to the Petitioners.

Examining Article 2.1.1(ii) of the PPAs, which provides that “the tariff shall remain constant throughout the Tariff Period following the year of commissioning” and that “no additional payment shall on any account be payable by PSPCL” read with Article 29.1.0 (Entire Agreement) and Article 31.0.0 (No Party Deemed Drafter), the State Commission held that the PPAs stipulate that no additional payment is payable by PSPCL on any account. The State Commission accordingly held the Petitioners’ plea that the PPAs contain no restricting provision to be “misconceived and unsustainable” also noting that the model PPA containing this tariff provision formed part of the bidding documents.

2. Applicability of the CIL Rules, 2021 to pre-existing PPAs

The Petitioners argued that, in the absence of a Change in Law provision in the PPAs, the CIL Rules 2021, being statutory and having overriding effect would independently apply to the Notification dated 08.10.2024.

Relying on the Supreme Court’s judgment in Gujarat Urja Vikas Nigam Limited v. Renew WindEnergy (Rajkot) Private Limited (2023), which holds that where PPAs are “entered into in the exercise of equal bargaining power…within the framework of existing regulations…unless any later amendment expressly overrides existing contracts, the terms of such agreements bind the parties,” and as further explained by APTEL in M/s Rosa Power Supply Co. Ltd. v. UPPCL & UPERC (2025), the State Commission held that in the absence of any express provision in the CIL Rules stating that they would override existing PPAs, and given the specific stipulation in the present PPAs that no additional payment is payable by PSPCL, “the CIL Rules 2021 do not override the provisions of the PPAs in the present case and the existing PPAs shall remain fully applicable and binding upon the parties.”

3. Regulation 23 of the RE Tariff Regulations, 2012

The Petitioners contended that the pass-through of RCM-GST was allowable under Regulation 23 of the RE Tariff Regulations, which excludes taxes and duties from the tariff. PSPCL’s response was that Regulation 3 of the RE Tariff Regulations confines their application to tariffs determined under Section 62, whereas the Petitioners’ tariff was discovered by way of a discount offered on the generic tariff pursuant to a bidding process conducted by PEDA.

Referring to its own Suo-Motu Order dated 19.07.2012 in Petition No. 35 of 2012, the State Commission held that bidding on the basis of a discount to the generic ceiling tariff, as directed by the State Commission itself, squarely amounts to determination of tariff under Section 63, rejecting the Petitioners’ plea to the contrary. The State Commission further held, relying on the Statement of Objects and Reasons to the RE Tariff Regulations, that Regulation 23 does not extend to taxes such as excise duty, sales tax and other levies that already form part of the normative capital cost, of which land is an enumerated component and observed that since the Petitioners had themselves justified leasing land as being more economical and instrumental to bidding a lower tariff, permitting a subsequent claim for the consequential GST liability “would tantamount to vitiating the entire competitive process” to the detriment of other bidders who structured their bids differently.

4. Exercise of the State Commission’s general regulatory power

As an alternate prayer, the Petitioners sought exercise of the State Commission’s general regulatory power under Section 86 of the Electricity Act, 2003 read with Regulations 69 and 71 of the PSERC (Conduct of Business) Regulations, 2005, contending that the absence of any provision addressing a post-bid Change in Law event made this a fit case for such intervention.

The Sztate Commission held that Section 86(1)(e) of the Electricity Act does not envisage grant of enhanced tariff and that the “difficulty” contemplated under the power to remove difficulty is one arising in giving effect to the Regulations and not one arising from application of the Regulations, as held by APTEL in Ratnagiri Gas and Power Private Ltd. Distinguishing the Supreme Court’s ruling in PGCIL v. Madhya Pradesh Power Transmission Company Ltd. & Ors.(2025) as applicable only to a situation involving an “unprecedented event not covered by any guidelines, regulations or contractual provisions”, the State Commission held that the present case, by contrast, concerned PPAs that explicitly and unequivocally provided that no additional payment would be payable by PSPCL. Relying on the Supreme Court’s decision in Gujarat Urja Vikas Nigam Limited v. Solar Semiconductor Power Company (India) Private Limited and Others (2017), the State Commission held that its regulatory powers “cannot travel beyond its own procedure so as to alter the terms and conditions of the PPA” and cannot be invoked “to substantially alter the terms of the contract between the parties so as to prejudice the interest of the consumers ultimately.”

The State Commission accordingly dismissed the Petitioners’ claim seeking additional payments or tariff adjustment on account of the Central Notification dated 08.10.2024 as being contrary to the agreed terms of the PPAs.

 

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APTEL Sets Aside APERC’s Deduction of Variable Charges for Monthly Availability Shortfall: Energy Charges Cannot Be Penalised

The Appellate Tribunal for Electricity (“Appellate Tribunal”) in its judgment dated 03.07.2026, has ruled in favour of Hinduja National Power Corporation Limited (“HNPCL”), setting aside the order dated 30.12.2025 passed by the Andhra Pradesh Electricity Regulatory Commission (“APERC”), to the extent it directed deductions from HNPCL’s variable charges on account of shortfall in monthly plant availability.

By allowing Appeal No. 27 of 2026, the Appellate Tribunal has held that under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024, the APERC Regulations of 2008, and the Power Purchase Agreement (“PPA”) dated 16.07.2024 executed between the parties, only fixed/capacity charges are linked to plant availability, while energy charges are strictly linked to the scheduled energy actually supplied and cannot be reduced or penalised for a shortfall in monthly availability.

1. No Statutory or Contractual Basis for Deducting Variable Charges

APERC by way of the Impugned Order had directed the DISCOMs to apply graded deductions from the Variable Cost – 5paise per unit where the shortfall in actual monthly availability was up to 5% below the normative/target level, 10paise where the shortfall was between 5% and 15%, and 15paise where the shortfall exceeded 15%, with liberty to HNPCL to seek release of the withheld amounts by establishing that the underperformance was attributable to uncontrollable factors.

HNPCL contended that neither the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024 (adopted by APERC), nor the APERC Regulations, 2008, nor the PPA provide for any reduction in energy charges on account of a shortfall in availability, and that the deductions were consequently without statutory or contractual authority. HNCPL contended that Rs. 12.26 Crore had already been withheld from HNPCL’s bills for the months of December 2025 to February 2026.

2. Fixed Charges, Not Energy Charges, are Linked to Availability

Examining Regulation 15 and 16 read with Chapter 11 of the CERC Regulations, 2024, Clause 1.2.2 and 1.2.3 of Schedule-F of the PPA, and Regulations 11 to 13 of the APERC Regulations, 2008, the Appellate Tribunal held that the governing framework, whether under the CERC Regulations, the APERC Regulations, or the PPA executed between the parties expressly and unambiguously stipulates that monthly fixed charges are linked to the Plant Availability Factor for the month vis-à-vis the normative annual plant availability, whereas energy charges are linked solely to the fuel cost/energy charge rate applied to the quantum of energy actually supplied during the month, irrespective of the plant availability achieved in that month.

The Appellate Tribunal held that once the Regulations stipulate the manner of recovery of fixed cost and computation of energy charge, APERC has no jurisdiction to interfere with or modify that scheme by way of adjudication or in a tariff order, any departure can only be effected by way of a formal amendment to the Regulations, and not otherwise.

3. APERC cannot invoke Casus Omissus to fill a regulatory gap that does not exist

APERCS had contended that while the PPA and Regulations focus on annual normative availability, they do not preclude monthly adjustments, and that APERC, as a statutory body, is empowered and obligated to fill contractual and regulatory gaps to ensure reliable supply.

The Appellate Tribunal rejected this submission, holding that both the CERC and APERC Regulations clearly stipulate the methodology for recovery of energy charges for a given month, and once such methodology is prescribed, the Commission is bound to apply it in its entirety. The doctrine of casus omissus was held to have no application, since the Regulations are complete in themselves and leave no vacuum for the Commission to legislate by way of adjudication.

4. Parity with other generators cannot justify an unlawful deduction

APERC had sought to justify the deductions by referring to similar reductions applied to other Intra-State generators such as APGENCO. The Appellate Tribunal held that the application of a similar reduction to other generators is of no relevance, since those orders were not under challenge and the Appellate Tribunal was not bound to extend the same treatment to HNPCL merely because it had been applied elsewhere. The doctrine of “negative equality” or parity cannot be invoked to perpetuate an illegality or justify a deviation from the Regulations, and each appeal must be adjudicated on the basis of the statutory framework and the specific impugned order under consideration.

Accordingly, the Appellate Tribunal set aside the Impugned Order on this issue and directed that recovery of energy charges be enforced strictly in accordance with the applicable CERC Regulations and the PPA, with the Respondents directed to refund the amount deducted/withheld from HNPCL’s energy bills along with applicable carrying cost within four weeks from the date of the judgment.

5. Part load compensation, remanded for quantification only

HNPCL had also claimed Part Load Compensation (“PLC”) in terms of Clause 1.2.5 of Schedule-F of the PPA read with Regulation 6.3B of the CERC [Indian Electricity Grid Code(IEGC)] (Fourth Amendment) Regulations, 2016, on which the Impugned Order contained no discussion, analysis or finding, despite APERC having recorded HNPCL’s claim. The DISCOMs admitted that the Revised Consolidated PPA explicitly provides for part load compensation, but contended that no separate determination was required as PLC for the previous Control Period had been claimed as part of the True-Up process on an actual basis.

Finding no dispute with regard to HNPCL’s entitlement to Part Load Compensation, and noting that the controversy, if any, was confined only to quantification and reconciliation, the Appellate Tribunal held that HNPCL is entitled to Part Load Compensation in terms of the PPA and Regulation 6.3B of the IEGC (Fourth Amendment), 2016, and remanded the matter to APERC for determination and finalisation of the amount payable towards PLC.

The judgment reaffirms that in a statutory tariff regime, the mechanism prescribed under the Regulations and the PPA for recovery of fixed and energy charges must be followed strictly. It further clarifies that the doctrine of casus omissus cannot be invoked to fill a gap where none exists, and that parity with the treatment accorded to unrelated generators cannot be used to sustain an otherwise unlawful deduction.

Judgement Link:

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APTEL upholds that Delay in Securing Long-Term Access (LTA) is not a valid Force Majeure and therefore, Scheduled Delivery Date under PPA cannot be unilaterally extended

In a judgment dated 03.07.2026 in Appeal No.183 of 2020, the Appellate Tribunal for Electricity (Appellate Tribunal) has dismissed the appeal filed by Maruti Clean Coal and Power Limited (MCCPL), thereby upholding the Order dated 27.11.2019 passed by the Central Electricity Regulatory Commission (Central Commission). The Appellate Tribunal has ruled in favour of the Rajasthan Discoms — Jaipur Vidyut Vitran Nigam Limited, Ajmer Vidyut Vitran Nigam Limited and Jodhpur Vidyut Vitran Nigam Limited and Rajasthan Urja Vikas Nigam Limited (RUVNL), rejecting MCCPL’s claim that the Scheduled Delivery Date (SDD) of 30.11.2016 fixed under the Power Purchase Agreement (PPA) stood revised to 01.04.2017, and that the first contract year for tariff purposes ought to be reckoned from the later date.

1. Delay of Two Years in seeking Long-Term Access cannot be termed as Force Majeure

MCCPL had attributed its inability to supply the full Aggregate Contracted Capacity of 250 MW by the SDD on the non-operationalization of Long-Term Access (LTA)/Medium-Term Open Access (MTOA), and sought to characterise this as a Force Majeure event under the PPA. The Appellate Tribunal rejected this contention. It noted that after submitting a LTA revision request, MCCPL “just adopted a wait and watch approach” and neither sent any reminder to PGCIL/CTU nor made any other effort to ensure that LTA for the full 250 MW was granted expeditiously, following up only on 13.08.2015, after its plant had already achieved Commercial Operation Date. The fresh LTA application, mandated because the change in target region exceeded 100 MW under the Connectivity Regulations, 2009, was filed over two years after the PPA was signed.

The Appellate Tribunal found no merit in MCCPL’s plea that this delay was attributable to “legal uncertainty and procedural ambiguity” on account of the methodology for calculating relinquishement charges pending before the Central Commission. It held that the fifth proviso to Regulation 12(1) of the Connectivity Regulations, 2009 “clearly provided that a fresh LTA application would be required” for a change exceeding 100 MW or a change of region, and the order on relinquishement charges passed by the Central Commission “only elaborates and explains” what the proviso already provided, without effecting any change in the regulatory position. Since Force Majeure grants relief only where the triggering event “could not have been avoided if the affected party had taken reasonable care or complied with prudent utility practices,” the Appellate Tribunal held that MCCPL “neither took reasonable care nor acted prudently” in pursuing its LTA request.

2. Commencement of supply “Upto” Aggregate Contracted Capacity does not require the entire quantum of electricity flowing

MCCPL’s case was that the SDD stood fulfilled only when the entire 250 MW commenced flowing, and that part supply of 45 MW alone on 30.11.2016 could not amount to commencement of supply under the PPA. The Appellate Tribunal disagreed, construing Article 4.1.1 and Article 4.2.1(b) together. It held that the expression “upto the Aggregated Contracted Capacity” indicates that “the seller may commence supply of power of any quantum, the maximum limit being the aggregated contracted capacity,” and that it was “not mandatory for the power generator i.e. the seller to supply the entire aggregated contracted capacity of power by the Scheduled Delivery Date i.e. 30.11.2016 in order to constitute commencement of supply of power.”

The Apellate Tribunal noted that MCCPL had itself served the advance preliminary notice (26.09.2016) and final written notice (27.10.2016) under Article 4.1.2 for commencement of supply “w.e.f 30.11.2016 i.e scheduled delivery date,” raised monthly invoices at the tariff payable for the first contract year, which were duly paid, and never conveyed to the Discoms that the SDD should be treated as suspended, split into phases, or held in abeyance pending availability of transmission capacity for the balance 205 MW. On this basis, the AppellateTribunal held that the supply of 45 MW from 30.11.2016 itself constituted “commencement of supply” under Article 4.1.1, and that the first Contract Year commenced from that date.

3. No Force Majeure event affected CTU, LTA was, in Fact, Operationalized ahead of Schedule

The Appellate Tribunal also rejected MCCPL’s reliance on Article 9.2.2, which deems a Force Majeure event affecting CTU/STU to be a Force Majeure event affecting the Seller. It observed that the 23rd Meeting of WR Constituents had recorded that the Champa-Kurukshetra HVDC Phase-I and Phase-II lines, and the Jabalpur-Orai line, were expected to be commissioned only in November 2016/March 2018 and April 2018 respectively, yet MCCPL’s LTA was in fact operationalized on 31.03.2017, “almost one year earlier” than the timeline earlier communicated by PGCIL. In these circumstances, the Appellate Tribunal held, “it cannot be said that there was any force majeure event affecting the PGCIL/CTU for providing transmission access to the appellant.”

4. Deliberate delay in Furnishing the Letter of Credit

The Appellate Tribunal found that even after the Champa-Kurukshetra line achieved Commercial Operation on 24.03.2017 and PGCIL/CTU called upon MCCPL on the same date to furnish a Letter of Credit (LC), MCCPL offered “no justification” for the delay in submitting the LC until 31.03.2017, resulting in commencement of the balance 205 MW supply only from 01.04.2017. The Appellate Tribunal held that this appeared to be a deliberate delay with an “ulterior motive,” observing that had supply commenced on any date between 24.03.2017 and 01.04.2017, the first contract year “would have been merely of a few days,” which MCCPL avoided so as to secure the higher first-contract-year tariff of Rs.1.633/kWh (as against Rs.1.558/kWh for the second Contract Year) for a full twelve-month period. The Appellate Tribunal termed such conduct “not acceptable.”

Conclusion

Holding that neither the delay in operationalization of LTA nor the timing of supply of the balance 205 MW was covered by Force Majeure under the PPA, and that commencement of supply of 45 MW on 30.11.2016 itself marked the beginning of the first contract year, the Appellate Tribunal answered both issues framed for its consideration against MCCPL. Finding no error or infirmity in the Impugned Order, the Appellate Tribunal dismissed Appeal No.183 of 2020, reaffirming that Scheduled Delivery Dates fixed under a PPA cannot be unilaterally shifted by a generator based on its own commercial convenience, and that claims of Force Majeure must be tested strictly against the diligence or lack thereof shown by the party invoking it.

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The Anatomy of a PPA Dispute in India: From Notice to Remedy

Understanding Power Purchase Agreement Disputes in India

The power sector in India has evolved quite a bit lately, and Power Purchase Agreements (PPAs) form the backbone of electricity generation and distribution. These contracts define how electricity generators, whether renewable or conventional, sell power to distribution companies (DISCOMs), ensuring commercial certainty and grid stability. However, as tariffs evolve, renewable targets expand, and regulatory frameworks tighten, power purchase agreement disputes in India have grown both in number and complexity.

A typical PPA dispute resolution in India can arise from multiple fault lines, including delays in project commissioning, disputes over tariff adjustments, curtailment of power by DISCOMs, or claims under the “Change in Law” clause. Each such disagreement can spiral into full-fledged regulatory litigation spanning multiple forums—from State Electricity Regulatory Commissions (SERCs) to the Appellate Tribunal for Electricity (APTEL), and sometimes even the Supreme Court.

This article breaks down the litigation lifecycle of a PPA dispute in India—from the moment a notice is issued, through the maze of jurisdictional forums, to the final remedies available to aggrieved parties.

 

What Triggers PPA Disputes in India?

Disputes under Power Purchase Agreements (PPAs) usually stem from mismatched expectations between generators and distribution licensees (DISCOMs), or from regulatory and operational challenges that disrupt project timelines and commercial viability. 

Below are the most common triggers in PPA disputes in India:

1.Tariff Disputes

Tariff determination is one of the most litigated aspects of any electricity regulatory dispute in India. 

Generators often lock in tariffs through competitive bidding or under cost-plus mechanisms approved by the State Electricity Regulatory Commission (SERC). Conflicts arise when:

• A DISCOM refuses to honour an agreed tariff, citing “unviable rates” or “change in circumstances.”
  
• The generator seeks tariff revision under the Change in Law clause due to new taxes, duties, or policy changes.
  
• Retrospective tariff reductions or renegotiations are attempted by state utilities, often seen in renewable energy PPAs (notably in Andhra Pradesh and Gujarat cases).

2.Commissioning Delays (COD) and Construction Hurdles

The Commercial Operation Date (COD) determines when the project is deemed ready to supply power. Delays in achieving COD, whether due to force majeure, delay in grid connectivity, or financing issues, often lead to disputes. 

DISCOMs may impose Liquidated Damages (LDs) or encash Performance Bank Guarantees (PBGs), while developers may argue that delays were beyond their control, such as late evacuation approvals or right-of-way obstructions.

3.Curtailment of Power and Grid Backdowns

Curtailment refers to situations where DISCOMs refuse to schedule or offtake power even though it is available for supply. 

While PPAs often guarantee “must-run” status for renewable plants, especially solar and wind, state load dispatch centres (SLDCs) sometimes curtail generation citing “grid security.” 

Developers argue this amounts to a breach of PPA unless backed by valid technical grounds.

4.Change in Law and Policy Transitions

One of the most contentious areas in PPA dispute resolution in India involves the Change in Law clause. Introduction of new taxes (like GST), safeguard duties on solar modules, or changes in transmission regulations can significantly affect project economics.

Developers typically seek pass-through of these costs, while DISCOMs resist on procedural or interpretational grounds, leading to regulatory litigation.

Contractual Preconditions Before Litigation

Before a power purchase agreement dispute in India matures into a regulatory or arbitral proceeding, parties must navigate several contractual preconditions embedded in the PPA itself.

These clauses serve as both a compliance checklist and a procedural gatekeeper.

1.Conditions Precedent (CPs)

Most PPAs stipulate a list of Conditions Precedent (CPs) that the developer must fulfil before the agreement becomes fully operational. These may include:

• Achieving financial closure
  
• Securing land and statutory approvals
  
• Executing grid connectivity and transmission agreements
  

If CPs are not satisfied within the stipulated period, DISCOMs may terminate the PPA or encash the developer’s Performance Bank Guarantee (PBG). However, delays often stem from state authorities’ slow approvals—raising questions of equity and fairness. 

2.Commercial Operation Date (COD)

The Commercial Operation Date marks the official commencement of power supply obligations. 

Disputes arise when DISCOMs allege the project was not “ready for dispatch,” while developers argue that grid non-readiness delayed synchronization. Evidence such as grid inspection reports, testing certificates, and SLDC communication logs play a vital role in proving whether COD was legitimately achieved.

3.Liquidated Damages (LDs) and Performance Bank Guarantees (PBGs)

LDs are pre-agreed penalties for delay or non-performance, while PBGs act as financial security. DISCOMs often encash PBGs citing commissioning delays or breach of PPA. 

Developers typically challenge such encashments as arbitrary or contrary to force majeure provisions. Regulatory bodies like CERC and SERCs have repeatedly held that LDs and PBGs cannot be enforced if delays stemmed from events beyond the developer’s control or if the utility itself contributed to the delay.

4.Notice and Cure Periods

Before initiating a formal claim or termination, PPAs generally require issuance of notice and allow a cure period for rectification. A failure to issue or properly serve notice can invalidate later proceedings.

These preconditions form the procedural foundation of every PPA dispute resolution in India. Observing them meticulously can prevent premature litigation and strengthen the developer’s case before the SERC or APTEL.

Forums & Hierarchy

The appropriate forum is critical in a power purchase agreement dispute in India, as jurisdiction determines both procedural timelines and the nature of available remedies. PPAs often contain arbitration clauses, but statutory disputes under electricity law can sometimes override contractual choices.

1.State Electricity Regulatory Commissions (SERCs)

SERCs are the first point of contact for most PPA disputes, particularly those involving:

• Tariff disagreements
  
• Claims for damages due to curtailment
  
• Enforcement of PPA obligations under the Electricity Act, 2003
  

SERCs have quasi-judicial powers to issue orders binding both generators and DISCOMs. Filing before a SERC is generally mandatory for disputes relating to regulated tariffs or grid operations, unless the PPA explicitly carves out arbitration for such claims.

2.Appellate Tribunal for Electricity (APTEL)

Aggrieved parties can appeal SERC orders to APTEL, which serves as the national-level appellate authority. Key characteristics include:

• National jurisdiction, addressing cross-state disputes
  
• Power to award damages, direct specific performance, or remand cases to SERCs
  
• Precedents set in APTEL PPA cases (e.g., Andhra Pradesh Solar PPA disputes) often guide future litigation
  

APTEL appeals are particularly common when SERC orders are perceived as inconsistent, delayed, or procedurally flawed.

3.Writ Jurisdiction

When parties believe statutory bodies have exceeded powers or violated fundamental rights, writ petitions under Article 226/32 of the Constitution may be filed in High Courts or the Supreme Court. These are exceptional remedies, usually pursued to secure:

• Stay of PPA termination
  
• Interim injunctions preventing encashment of PBGs
  
• Clarification on regulatory interpretation

4.Arbitration Carve-Outs

Some PPAs include arbitration clauses for commercial disputes. However, Indian courts have clarified that statutory obligations under the Electricity Act cannot be completely ousted by arbitration. Typically:

• Purely contractual claims (e.g., late payment penalties, indemnities) can go to arbitration
  
• Regulatory claims, tariff revision, or change-in-law disputes remain under SERC/APTEL jurisdiction
  

Evidence Strategy

In any power purchase agreement dispute in India, the strength of the case often hinges on meticulous evidence collection and presentation. Regulators and tribunals closely examine whether obligations were met, whether delays were excusable, and whether losses claimed are substantiated.

1.Grid Readiness and Evacuation Delays

One of the most frequent points of contention is whether the generator was ready to supply power and whether the DISCOM facilitated evacuation. Evidence includes:

• Grid synchronization certificates from the State Load Dispatch Center (SLDC)
  
• Communication logs for connectivity approvals
  
• Dispatch schedules showing actual versus scheduled generation
  

2.Metering and Energy Accounting Records

Accurate metering is critical to prove both delivery and shortfall of electricity. Documentation that regulators scrutinize includes:

• Meter calibration certificates
  
• Monthly energy accounting reports
  
• SLDC and DISCOM dispatch reconciliations
  

3.Force-Majeure Proof

Force majeure clauses protect generators from liability for events beyond their control. Commonly invoked scenarios are:

• Natural disasters (floods, cyclones)
  
• Grid failures beyond developer control
  
• Regulatory or policy delays
  

4.Documentary Trail of Notices and Communications

Every notice, email, or response related to contractual obligations, cure periods, or dispute escalation is crucial. A well-maintained documentary trail can:

• Prove that statutory and contractual preconditions were followed
  
• Demonstrate proactive mitigation efforts by the developer
  
• Strengthen claims before SERCs or APTEL
  

Conclusion

A power purchase agreement dispute in India is rarely a straightforward contract case—it sits at the intersection of regulatory oversight, commercial obligations, and public policy. Understanding the contractual framework, following procedural prerequisites, choosing the right forum, and building a sound evidentiary record are critical to securing relief.

For both developers and DISCOMs, proactive compliance and timely dispute management are the only sustainable strategies in India’s maturing power market.

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Supreme Court Verdict: Deemed Export Benefits under Foreign Trade Policy not available to Immoveable Assets, in particular, Thermal Power Plants

Supreme Court Upholds PSPCL’s Stand that Deemed Export benefits under the Foreign Trade Policy, 2004-09 and 2009-14 are only available to movable goods, and not to immovable assets such as coal-based thermal power plants and thereby, rejected the claim of Talwandi Sabo Power Limited and Nabha Power Limited contending withdrawal of Deemed Exports Benefits as Change in Law under the Power Purchase Agreement.

The Hon’ble Supreme Court of India, in its judgment dated 19 August 2025 in Nabha Power Limited v. Punjab State Power Corporation Limited & Ors. (Civil Appeal Nos. 8694 & 8739 of 2017), has delivered a landmark ruling upholding the position consistently taken by PSPCL before the State Commission, Appellate Tribunal, and the Apex Court.

PSPCL’s Contentions Before the Courts

Throughout the proceedings, PSPCL consistently advanced the following positions:

1. Inapplicability of Deemed Export Benefits to Thermal Power Plants which do not manufacture goods in India

o PSPCL argued that the Foreign Trade Policy (FTP) 2009-2014 extended deemed export benefits only to movable goods, and not to immovable assets such as coal-based thermal power plants assembled on-site.

o It was submitted that the legislative framework under the FTP and the Central Excise Act clearly distinguished between movable “goods” and immovable infrastructure. A generating station, embedded to the earth, could not be treated as “manufactured goods.”

2. FTP Benefits were Never Available to NPL/TSPL

o PSPCL highlighted that at the time of bid submission and execution of the Power Purchase Agreement (PPA), no deemed export benefits under Para 8.3 of the FTP were available to the project of Nabha Power Limited (NPL) or Talwandi Sabo Power Limited (TSPL).

3. Withdrawal of Benefits Not a “Change in Law”

o PSPCL had submitted that only statutory enactments or duly notified delegated legislation constitute “Change in Law” under Article 13 of the PPA.

o Administrative circulars, public notices, or press releases, lacking statutory force, could not trigger contractual relief. PSPCL stressed that DGFT’s policy notices were administrative/clarificatory in nature and did not qualify as “law.”

Hon’ble Supreme Court’s Findings

The Hon’ble Supreme Court upheld PSPCL’s contentions and the Appellate Tribunal’s Order, holding that:

• Press Releases or Cabinet communications do not constitute “law” under the Power Purchase Agreement (PPA). Only duly notified statutory instruments published in the Official Gazette qualify for consideration as “Change in Law.” The Hon’ble Court has reiterated the stance taken by the 3 Judge Bench in CA 8694 of 2017.
• Deemed export benefits of the Foreign Trade Policy (2009-2014) were never available to coal-based thermal power projects constructed in-situ, as such projects constitute immovable property and not “goods” as envisaged under the FTP.
• Withdrawal of such benefits by DGFT through policy circulars or notices cannot be construed as a “Change in Law” event under Article 13 of the PPA.

This judgment marks a significant affirmation of PSPCL’s consistent stand before the Punjab State Electricity Regulatory Commission (PSERC), the Appellate Tribunal for Electricity (APTEL), and the Hon’ble Supreme Court.

The ruling safeguards the interests of electricity consumers in Punjab by ensuring that the benefits accruing to the Thermal Power plants on account of grant of Mega Power status shall be fully passed on to the consumers of Punjab. This decision is a significant victory for PSPCL and the electricity consumers of Punjab, ensuring that the sanctity of competitive bidding including the Change in law provisions can accrue in favour of the Procurers as well when there is a negative change in law (reduction in cost after bidding) and tariff discipline is preserved.

 

 

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