Saturday, 25 March 2017

What is basic concept of alteration of contract as mentioned in S 62 of contract Act?

Section 62. Effect of novation, rescission, and
alteration of contract.
If the parties to a contract agree to substitute a new
contract for it, or to rescind or alter it, the original contract
need not be performed.
Section 63. Promisee may dispense with or remit
performance of promise.- Every promisee may
dispense with or remit, wholly or in part, the performance
of the promise made to him, or may extend the time for
such performance, or may accept instead of it any
satisfaction which he thinks fit.”
14. Under Section 62, apart from novation of a contract and
rescission of a contract, alteration of a contract is mentioned.
Alteration is understood here, in the facts of the present case, in the
sense of amendment. It is settled law that an amendment to a
contract being in the nature of a modification of the terms of the
contract must be read in and become a part of the original contract in
order to amount to an alteration under Section 62 of the Indian
Contract Act. This is clear from Juggilal Kamlapat v. N.V.

Internationale Crediet-En-Handels Vereeninging ‘Rotterdam’, AIR
1955 Cal 65 in paragraph 15 of which it is stated:-
“The effect of the alterations or modifications is that there
is a new arrangement; in the language of Viscount
Haldane in Morris v. Baron & Co. (1) (1918 Appeal Cases,
1 at 17), “a new contract containing as an entirety the old
terms together with and as modified by the new terms
incorporated.” The modifications are read into and
become part and parcel of the original contract. The
original terms also continue to be part of the contract and
are not rescinded and/or superseded except in so far as
they are inconsistent with the modifications. Those of the
original terms which cannot make sense when read with
the alterations must be rejected. In my view the arbitration
clause in this case is in no way inconsistent with the
subsequent modifications and continues to subsist.” [para
15]
15. No such thing having occurred on the present facts, it is clear
that there is in fact no amendment by written agreement to the PPA.
To this extent, learned counsel for Sasan are correct.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.5881-5882 OF 2016
ALL INDIA POWER ENGINEER
FEDERATION & ORS. 
V
SASAN POWER LTD. & ORS. ETC.
DATED: December 08, 2016.
Citation:(2017) 1 SCC 487
1. These appeals have been argued over a number of days, but
ultimately the points raised in them lie within a narrow compass.
2. On 19.1.2005, the Central Government, in exercise of powers
under Section 63 of the Electricity Act, 2003 issued guidelines for a

tariff based competitive bid process to be initiated by distribution
licensees /procurers for procurement of power from generating
companies. The electricity to be procured by such procurers is for the
purpose of distribution and retail supply to consumers generally. On
10.2.2006, in pursuance of these guidelines, procurers in different
States, namely, appellants 1 to 3 and respondents 5 to 15 (in Civil
Appeal Nos.5239-5240 of 2016) nominated Power Finance
Corporation Limited, a Government of India undertaking as the Nodal
Agency to complete a competitive bid process for development of an
ultra mega power project based on linked coalmines using super
critical technology of units of 660 mega watts (MW) each, plus or
minus 20%, in Sasan District, Singrauli, Madhya Pradesh. On
10.2.2006, Sasan Power Limited was incorporated as a special
purpose vehicle by Power Finance Corporation in order to implement
the aforesaid purpose. On 1.8.2007, based on the competitive
bidding process held by Power Finance Corporation, Reliance Power
Limited, having quoted the lowest amount, was selected as the
successful bidder, and a letter of intent was issued to Reliance Power
Ltd. The quoted tariff, year by year, for a period of 25 years, which
was accepted and incorporated as Schedule 11 in the Power
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Purchase Agreement dated 7.8.2007 (PPA) had tariffs at an
extremely depressed rate for the first two years, after which the tariffs
were fixed at a significantly higher rate. On the very day that the PPA
was executed between Sasan Power Limited and the procurers for
generation and sale of electricity, 100% share holding of the special
purpose vehicle was acquired by Reliance Power Limited. The PPA
contains detailed clauses with respect to generation of power and the
tariffs payable for the period of 25 years. Apart from other provisions,
we are really concerned with Article 6 read with Schedule 5 which
provides for pre-conditions to be satisfied for declaration of a
generating unit as Commercial Operation Date, “COD”, namely
readiness to commence commercial operations. This happens only
when a performance test, by operating the generating unit at 95% of
the contracted capacity as existing on the Effective Date on a
continuous running basis for 72 hours, has been certified by an
independent engineer, by giving a final test certificate to the aforesaid
effect. The PPA also contains various other clauses which will be set
out during the course of this judgment.
3. The bone of contention in these matters is whether the COD for
Unit No.3, which was the first Unit to be commissioned, had been
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achieved on 31.3.2013. If it had, then under Schedule 11 to the
PPA, the entire first year would get exhausted in one day, i.e., 31st
March being the end of the contract year, for which tariff payable
would be at the rate of 69 paise per unit. If not, then it is only on and
from the commencement of COD that such year would begin, which,
according to the appellants before us, would only begin on 16.8.2013
when a final test certificate in accordance with Article 6 of the PPA
was given by the independent engineer to the effect that 95% of the
contracted capacity had been achieved for a continuous period of 72
hours. We are informed that if the COD is said to be on 31.3.2013,
as has been held by the Appellate Tribunal, the consumers would
have to pay a sum of over ₹1000 crores, being the differential tariff
that would apply.
4. The date for commissioning the first unit was fixed under the
PPA as 7th May, 2013. However, under Schedule 11 thereof, this date
was preponed to 27th November, 2012. As Sasan kept postponing
this date, it appears that the commissioning tests for generating Unit
No.3 commenced from 20.3.2013. Various emails were exchanged
from 27.3.2013 to 30.3.2013 between Sasan and the Western Region
Load Dispatch Centre (hereinafter referred to as “the WRLDC”), a
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statutory authority under the Electricity Act, 2003. It is the case of
Sasan that though they were ready to deliver electricity on 31.3.2013
at 95% of the contracted capacity of 620 MW of the unit, they could
not do so as WRLDC did not give them the necessary green signal to
go ahead. They relied heavily upon the independent engineer’s test
certificate dated 30.3.2013 to show that a COD took place on the
following day, which we will consider in some detail later. At this
stage, suffice it to say that a petition was filed by WRLDC before the
Central Electricity Regulatory Commission (CERC) on 25.4.2013, in
which it was prayed:-
“1. Kindly look into the veracity of the certificate issued by
the Independent Engineer in view of deliberate
suppression and misrepresentation of the facts and issue
suitable directions to respondent no.2 to desist from such
act.
2. Kindly look into the matter of Respondent No. 1
including into intentional mis-declaration of parameters
related to commercial mechanism in vogue and has
purported to declare the part (de-rated) capacity of
101.38 MW as commercial on the grounds of load
restriction by WRLDC and issued suitable directions in
the matter.
3. Issue specific guidelines with respect to declaration
of COD of the generators who are not governed by the
CERC (Terms and Conditions of Tariff) Regulations, 2009
to be in line with CERC regulations so that the same can
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be implemented in a dispute free manner and eliminate
any possibility of gaming by generator.
4. Hon’ble Commission may give any further directions
as deemed fit in the circumstances of the case.”
5. This petition was allowed by the CERC by its order dated
8.8.2014, by which it first set out five issues as follows:-
(a) Whether the petition filed by WRLDC is
maintainable?
(b) Whether the Certificate issued by IE is in
accordance with the PPA and if not, whether IE has made
deliberate suppression or misrepresentation of facts while
issuing the certificate?
(c) Whether COD of the station as declared by SPL is
in accordance with the PPA?
(d) Whether the Respondent No.1 has indulged in
mis-declaration of parameters relating to commercial
mechanism in vogue?
(e) Guidelines with regard to the commercial operation
of a generating station which is not regulated by the tariff
regulations of the Commission.”
6. The CERC answered issues (a), (b), (c), and (e) in the
affirmative, and issue (d) in the negative. Ultimately the Commission
arrived at the conclusion that COD had not been achieved on
31.3.2013 but had only been achieved later, on 16th August of the
same year. This finding was set aside by the Appellate Tribunal by its
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judgment dated 31.3.2016, in which the Appellate Tribunal found that
though COD had not been achieved on 31.3.2013 in accordance with
the PPA, but that the procurers under the PPA had waived their right
to demand performance at 95%, and that the performance of Unit
No.3, which was only roughly 17% of its contracted capacity, was
accepted by all the procurers, and that therefore there was a waiver
of this essential condition, which would then entitle the generator to
treat 31.3.2013 as the date on which commercial operation of Unit
No.3 commenced. It is the correctness of this judgment which has
been assailed by the various appellants before us.
7. Mr. Jayant Bhushan, learned senior counsel, Mr. Gopal Jain,
learned senior counsel, Mr. M.G. Ramachandran, learned counsel,
Mr. Purusha Indra Kavrar, learned AAG, and Mr. Alok Shankar,
learned counsel appearing for the appellants have relied heavily on
Article 6.3.1 read with Schedule 5 of the PPA, and stated that this is
an Article which does not merely reflect the individual rights and
liabilities of the generator and procurers of electricity but would also
sound in public interest inasmuch as the declaration of COD would
have effect on the tariff that is payable by consumers generally.
They, therefore, argued that Article 6.3.1 cannot be waived as a
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matter of law. They also argued that it cannot also be waived as a
matter of fact inasmuch as when the PPA expressly allowed a certain
provision to be waived, it expressly stated so. In this regard, Articles
3.1.2, 4.4.2(b) 10.1(c), 10.2(c) were pointed out by them. Referring to
Article 18.3 of the PPA, it was argued that the said Article is not a
substantive provision for waiver, but only a provision dealing with the
manner in which waiver is to be exercised, and has reference only to
the aforesaid Articles. Further, even assuming that there was a
waiver, such waiver took place as late as 15.4.2013 when the last
communication from Uttarakhand Power was received. There was,
therefore, no waiver of the aforesaid condition on 31.3.2013. They
also argued that as a matter of fact the emails exchanged between
the parties would show that the lead procurer and all the other
procurers had in fact never consented to 31.3.2013 as being the COD
for the purpose of the PPA. They also argued that really speaking
any such alleged waiver was not a waiver at all, but an amendment to
the PPA which would require the Commission’s consent under Article
18.1, inasmuch as it would affect the tariff payable by consumers.
They also argued that it is clear from a reading of a chart which
showed generation from March to August, 2013 that Sasan was not
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able to achieve anywhere near 95% of contracted capacity until 16th
August which is when the COD took place on facts. They also
pointed out that, for example, in the month of July, there was no
supply of power at all by Sasan Power. Ultimately, it was stated that
the Independent Engineer’s certificate dated 30.3.2013 was a
document made only to favour Sasan, so that Sasan could swallow
one entire year of tariff in one day, so that the consumer would have
to pay the higher tariff for what is in reality the first year, but is now
being treated as the second year of generation and supply.
8. As against this, Shri Chidambaram and Shri Sibal, learned
senior counsel appearing on behalf of Sasan Power Ltd., have
argued that as against 69 and 70 paise per unit for electricity supplied
under the PPA, the procurers were in fact procuring electricity at
much higher rates. It was the procurers themselves, therefore, who
kept telling Sasan to supply power as soon as possible. For this, they
relied, in particular, on the minutes of a meeting dated 27.2.2013
between the procurers and Sasan, in which the procurers
unequivocally stated that any time upto 31.3.2013, the power
generation should begin from Unit No.3. This was because the
moment such power generation began, whether it was 69 paise or 70
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paise for the second year, the aforesaid tariff was much, much lower
than what the procurers would have to pay otherwise. It was their
argument that it was only at the behest of the procurers themselves
that the COD was declared on 31.3.2013. They further argued that
on a correct reading of emails and letters exchanged between the
parties, the lead procurer and all other procurers had actually and
unequivocally waived the requirement of 95% of contracted capacity
demand and that the Appellate Tribunal was right in this behalf.
Countering the arguments of the appellant, they referred to and relied
upon Section 63 of the Indian Contract Act, 1872 to buttress their
submission that waiver is a right granted by the Contract Act and
does not depend upon the PPA. Therefore, whatever the
construction of Article 18.3 of the PPA, it is clear that the Contract Act
itself gives them this right which the procurers themselves have
exercised in accordance with law, for the very good reason that they
wanted the supply of cheap energy at any cost, even at the cost of
being at 17% instead of 95% of contracted demand. It was also their
case that they were ready to supply electricity on 31st March at 95%
of the contracted demand, but unfortunately WRLDC prevented them
from doing so, and that the independent engineer’s certificate had
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been wrongly castigated by CERC, as was correctly held by the
Appellate Tribunal. The independent engineer laid bare the facts
correctly and therefore did not give a false or wrong certificate as was
found by CERC. They also met an argument raised by the appellant
that Haryana at least had waived its right without prejudice to its other
rights and contentions. This was met by stating that Haryana
accounted only for roughly 12% of the total electricity demanded by
all the procurers and that as per a clause in the PPA, if the lead
procurer and the other procurers constitute 65% or more, they can
bind all the other procurers.
9. In order to appreciate the rival submissions, it is necessary to
refer to the relevant provisions of the PPA, which reads as follows:-
“1. Definitions
The terms used in this Agreement, unless as
defined below or repugnant to the context, shall have the
same meaning as assigned to them by the Electricity Act,
2003 and the rules or regulations framed thereunder,
including those issued/framed by Appropriate
Commission (as defined hereunder), as amended or
re-enacted from time to time.
The following terms when used in this Agreement shall
have the respective meanings, as specified below:
“Commercial
Operation “Date” or
Means, in relation to a Unit,
the date one day after the
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“COD” date when each of the
Procurers receives a Final
Test Certificate of the
Independent Engineer as
per the provisions of Article
6.3.1 and in relation to the
Power Station shall mean
the date by which such
Final Test Certificates as
per Article 6.3.1 are
received by the Procurers
for all the Units;
“Commissioning”
or
“commissioned
with its
grammatical
variations
Means, in relation to a Unit,
that the Unit or in relation to
the Power Station all the
Units of the Power Station
have passed the
Commissioning Tests
successfully;
“Commissioning
Tests” or
“Commissioning
Test”
Means the Tests provided in
Schedule 5 herein;
“Commissioned
Unit”
Means the Unit in respect of
which COD has occurred;
“Contract Year” Means the period beginning
on the date of this
Agreement and ending on
the immediately succeeding
March 31 and thereafter
each period of 12 months
beginning on April 1 and
ending on March 31
provided that:
In the financial year in
which Scheduled COD of
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the first Unit would have
occurred, a Contract Year
shall end on the date
immediately before the
Scheduled COD of the first
Unit and a new Contract
Year shall begin once
again from the Scheduled
Commercial Operation
Date of the first Unit and
end on immediately
succeeding March 31 and
provided further that
(ii) (ii) The last Contract Year of
this Agreement shall end
on the last day of the term
of this Agreement;
“Contracted
Capacity”
Means (i) for the first Unit,
620.4 MW; (ii) for the
second Unit, 620.4 MW; (iii)
for the third Unit, 620.4 MW;
(iv) for the fourth Unit, 620.4
MW; (v) for the fifth Unit,
620.4 MW and (vi) for the
sixth Unit 620.4 MW rated
net capacity at the
Interconnection Point, and
in relation to the Power
Station as a whole means
3722.4 MW rated net
capacity at the
Interconnection Point, or
such rated capacities as
may be determined in
accordance with Article
6.3.4 or Article 8.2 of this
Agreement;
“Effective Date” Means the date of signing
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of this Agreement by last of
all the Parties;
“Declared
Capacity”
In relation to a Unit or the
Power Station at any time
means the net capacity of
the Unit or the Power
Station at the relevant time
(expressed in MW at the
Interconnection Point) as
declared by the Seller in
accordance with the Grid
Code and dispatching
procedures as per the
Availability Based Tariff;
“Final Test
Certificate”
Means
(a)A certificate of the
Independent Engineer
certifying and
accepting the results
of a Commissioning
Test/s in accordance
with Article 6.3.1 of
this Agreement; or
(b)A certificate of the
Independent Engineer
certifying the result of
a Repeat
Performance Tests in
accordance with
Article 8.2.1 of this
Agreement;
“Grid Code” or
“IEGC”
Means any set of
regulations or codes issued
by CERC as amended and
revised from time to time
and legally binding on the
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Sellers’ and Procedures’
governing the operation of
the Grid System or any
succeeding set of
regulations or code;
“Independent
Engineer”
Means an independent
consulting engineering firm
or group appointed jointly
by all the Procurers (jointly)
and the Seller, to carry out
the functions in accordance
with Article 4.7.1 and Article
6, Article 12 and Article 8
herein.
“Lead Procurer” Shall have the meaning
scribed thereto in Article
2.5;
“Performance
Test”
Means the test carried out
in accordance with Article
1.1 of Schedule 5 of this
Agreement;
“Scheduled
COD” or
“Scheduled
Commercial
Operation Date”
Means (i) for the first Unit,
May 7, 2013; (ii) for the
second Unit, December 7,
2013; (iii) for the third Unit,
July 7, 2014; (iv) for the
fourth Unit, February 7,
2015; (v) for the fifth Unit,
September 7, 2015 and (vi)
for the sixth Unit, April 7,
2016 or such other dates
from time to time specified
in accordance with the
provisions of this
Agreement;
“Scheduled Means in relation to a Unit,
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Synchronization
Date”
the date, which shall be
maximum of one hundred
and eighty (180) days prior
to the Schedule COD of the
respective Unit;
“Tariff” Means the tariff as
computed in accordance
with Schedule 7;
“Tested
Capacity”
In relation to a Unit, or the
Power Station as a whole (if
all the Units of the Power
Station have been
commissioned) means the
results of the most recent
Performance Test or Repeat
Performance Test carried
out in relation to the Power
Station in accordance with
Article 6, Article 8 and
Schedule 5 of this
Agreement;
“Unit” Means one steam
generator, steam turbine,
generator and associated
auxiliaries of the Power
Station based on
Supercritical Technology;
6: Synchronization, Commissioning and Commercial
Operation
6.1 Synchronisation
6.1.1 The Seller shall give the Procurers and RLDC at
least sixty (60) days advance preliminary written notice
and at least thirty (30) days advance final written notice,
of the date on which it intends to synchronize a Unit to the
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Grid System, Provided that no Unit shall be synchronized
prior to 36 months from NTP.
6.1.2 Subject to Article 6.1.1, a Unit may be synchronized
by the Seller to the Grid System when it meets all
connection conditions prescribed in any Grid Code then in
effect and otherwise meets all other Indian legal
requirements for synchronization to the Grid System.
6.2 Commissioning
6.2.1 The Seller shall be responsible for ensuring that
each Unit is Commissioned in accordance with Schedule
5 at its own cost, risk and expense.
6.2.2 The Seller shall give all the Procurers and the
Independent Engineer not less than ten (10) days prior
written notice of Commissioning Test of each Unit.
6.2.3 The Seller (individually), the Procurers (jointly) and
the Independent Engineer (individually) shall each
designate qualified and authorized representatives to
witness and monitor Commissioning Test of each Unit.
6.2.4 Testing and measuring procedures applied during
each Commissioning Test shall be in accordance with the
codes, practices and procedures mentioned in Schedule
5 of this Agreement.
6.2.5 Within five (5) days of a Commissioning Test, the
Seller shall provide the Procurers (jointly) and the
Independent Engineer with copies of the detailed
Commissioning Test results. Within five (5) days of
receipt of the Commissioning Test results, the
Independent Engineer shall provide to the Procurers and
the Seller in writing, his findings from the evaluation of
Commissioning Test results, either in the form of Final
Test Certificate certifying the matters specified in Article
6.3.1 or the reasons for non-issuance of Final Test
Certificate.
6.3 Commercial Operation
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6.3.1 A Unit shall be Commissioned on the day after the
date when all the Procurers receive a Final Test
Certificate of the Independent Engineer stating that:
a) the Commissioning Tests have been carried out in
accordance with Schedule 5 and are acceptable to him;
and
b) the results of the Performance Test show that the
Unit’s Tested Capacity, is not less than ninety five (95)
percent of its Contracted Capacity as existing on the
Effective Date.
6.3.2 If a Unit fails a Commissioning Test, the Seller may
retake the relevant test, within a reasonable period after
the end of the previous test, with three (3) day’s prior
written notice to the Procurers and the Independent
Engineer. Provided however, the Procurers shall have a
right to require deferment of any such re-tests for a period
not exceeding fifteen (15) days, without incurring any
liability for such deferment, if the Procurers are unable to
provide evacuation of power to be generated, due to
reasons outside the reasonable control of the Procurers
or due to inadequate demand in the Grid.
6.3.3 The Seller may retake the Performance Test by
giving at least fifteen (15) days advance notice in writing
to the Procurers, up to eight (8) times, during a period of
one hundred and eighty (180) days (“Initial Performance
Retest Period”) from a Unit’s COD in order to demonstrate
an increased Tested Capacity over and above as
provided in Article 6.3.1 (b). Provided however, the
Procurers shall have a right to require deferment of any
such re-tests for a period not exceeding fifteen (15) days,
without incurring any liability for such deferment, if the
Procurers are unable to provide evacuation of power to
be generated, due to reasons outside the reasonable
control of the Procurers or due to inadequate demand in
the Grid.
6.3.4 (i) If a Unit’s Tested Capacity after the most
recent Performance Test mentioned in Article 6.3.3 has
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been conducted, is less than its Contracted Capacity as
existing on the Effective Date, the Unit shall be de-rated
with the following consequences in each case with effect
from the date of completion of such most recent test:
a) the Unit’s Contracted Capacity shall be reduced to
its Tested Capacity, as existing at the most recent
Performance Test referred to in Article 6.3.3 and Quoted
Capacity Charges shall be paid with respect to such
reduced Contracted Capacity;
b) The Quoted Non Escalable Capacity Charge (in
Rs./kwh) shall be reduced by the following in the event
Tested Capacity is less than ninety five (95%) per cent of
its Contracted Capacity as existing on the Effective Date:
Rs.0.25/kwh x [1 – {(Tested Capacity of all Commissioned
Units + Contracted Capacity of all Units not
Commissioned at the Effective Date)/ Contracted
Capacity of all Units at the Effective Date})
c) the Seller shall not be permitted to declare the
Available Capacity of the Unit at a level greater than its
Tested Capacity;
d) the Availability Factor of the derated Unit shall be
calculated by reference to the reduced Contracted
Capacity; and
e) the Capital Cost and each element of the Capital
Structure Schedule shall be reduced in proportion to the
reduction in the Contracted Capacity of the Power Station
as a result of that de-rating (taking into account the
Contracted Capacity of any Unit which has yet to be
Commissioned).
(ii) If at the end of Initial Performance Retest Period or
the date of the eighth Performance Test mentioned in
Article 6.3.3, whichever is earlier, the Tested Capacity is
less than the Contracted Capacity (as existing on the date
of this Agreement), the consequences mentioned in
Article 8.2.2 shall apply for a period of one year. Provided
that such consequences shall apply with respect to the
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Tested Capacity existing at the end of Initial Performance
Retest Period or the date of the eighth Performance Test
mentioned in Article 6.3.3, whichever is earlier.
6.3.5 If a Unit’s Tested Capacity as at the end of the Initial
Performance Retest Period or the date of the eighth
Performance Test mentioned in Article 6.3.3, whichever is
earlier, is found to be more than it’s Contracted Capacity
as existing on the Effective Date, the Tested Capacity
shall be deemed to be the Unit’s Contracted Capacity if
any Procurer/s agrees and intimates the same to the
Seller within thirty (30) days of receipt of the results of the
last Performance Test to purchase such excess Tested
Capacity and also provide to the Seller additional Letter of
Credit and Collateral Arrangement (if applicable) for
payments in respect of such excess Tested Capacity
agreed to be purchased by such Procurer/s. In case the
Procurer/s decide not to purchase such excess Tested
Capacity, the Seller shall be free to sell such excess
Tested Capacity to any third party and the Unit’s
Contracted Capacity shall remain unchanged,
notwithstanding that the Tested Capacity exceeded the
Contracted Capacity.
Provided that in all the above events, the Seller shall be
liable to obtain/maintain all the necessary consents
(including Initial Consents), permits and approvals
including those required under the environmental laws for
generation of such excess Tested Capacity.
6.4 Costs Incurred.
The Seller expressly agrees that all costs incurred
by him in synchronizing, connecting, Commissioning
and/or Testing or Retesting a Unit shall be solely and
completely to his account and the Procurer’s or Procurers’
liability shall not exceed the amount of the Energy
Charges payable for such power output, as set out in
Schedule 7.
18: Miscellaneous Provisions
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18.1 Amendment
The Agreement may only be amended or supplemented
by a written agreement between the Parties and after duly
obtaining the approval of the Appropriate Commission,
where necessary.
18.3. No Waiver
A valid waiver by a Party shall be in writing and executed
by an authorized representative of that Party. Neither the
failure by any Party to insist on the performance of the
terms, conditions, and provisions of this Agreement nor
time or other indulgence granted by any Party to the other
Parties shall act as a waiver of such breach or
acceptance of any variation or the relinquishment of any
such right or any other right under this Agreement, which
shall remain in full force and effect.
Schedule 5: Commissioning and Testing
1.1 Performance Test
i. (a) The Performance Test shall be conducted
under any and all ambient conditions (temperature,
humidity etc.) and any and all Fuel qualities that may exist
during the time of the Performance Test and no
corrections in final gross and net output of the Unit will be
allowed as a result of prevailing ambient conditions or
Fuel quality.
(b) The correction curves will only be used if the Grid
System operation during the Performance Test exceeds
Electrical System Limits.
(c) The Performance Test shall be deemed to have
demonstrated the Contracted Capacity of the Unit under
all designed conditions and therefore no adjustments
shall be made on account of fuel quality or ambient
conditions.
(d) The Seller shall perform in respect of each Unit a
Performance Test, which such Unit shall be deemed to

have passed if it operates continuously for seventy two
consecutive hours at or above ninety five (95) percent of
its Contracted Capacity as existing on the Effective Date
and within the Electrical System Limits and the Functional
Specifications.
ii. For the purposes of any Performance Test pursuant
to this sub-article 1.1, the Electrical System Limits to be
achieved shall be as follows:
(a) Voltage
The Unit must operate within the voltage levels
described in the Functional Specification for the duration
of the Performance Test. If, during the Performance Test,
voltage tests cannot be performed due to Grid System,
data supplied from tests of the generator step-up
transformers and generators supplied by the
manufacturers shall be used to establish the ability of the
Unit to operate within the specified voltage limits.
(b) Grid System Frequency
The Unit shall operate within the Grid System
frequency levels described in the Functional Specification
for the duration of the Performance Test.
(c) Power Factor
The Unit shall operate within the power factor range
described in the Functional Specification for the duration
of the Performance Test. If, during the Performance Test,
power factor tests cannot be performed due to the Grid
System, data supplied from tests of the generators and
the generator step-up transformers supplied by the
manufacturers shall be used to establish the ability of the
Unit to operate within the specified power factor range.
(d) Fuel quality and cooling water temperature
22Page 23
The Unit must operate to its Contracted Capacity
with Fuel quality and water temperature available at the
time of Testing and no adjustment shall be allowed for any
variation in these parameters.
iii. As a part of the Performance Test, the Seller shall
demonstrate that the Unit meets the Functional
Specifications for Ramping rate as mentioned in Schedule
4. For this purpose, representative samples of ramp rates
shall be taken, by ramping up or down the gross turbine
load while maintaining the required temperature and
temperature differences associated with each ramp rate
within the turbine while maintaining all other operational
parameters within equipment limits.
iv. Further, as a part of the Performance Test, the Unit
shall be tested for compliance with parameters of
Supercritical Technology.
1.2 Testing and Measurement procedures applied
during Performance Test shall be in accordance with
codes, practices or procedures as generally/normally
applied for the Performance Tests.
1.3 The Seller shall comply with the prevalent Laws,
rules and regulations as applicable to the provisions
contained in this Schedule from time to time.
Schedule 11: Quoted Tariff
Contra
ct Year
Commence
ment Date of
Contract Year
End Date of
Contract
Year
Quoted
NonEscalable

Capacity
Charges
(Rs.1kwh)
Quoted
Escalable
Capacity
Charges
(Rs. 1kwh)
Quoted
NonIndexed

Energy
Charges
(Rs.1kwh)
Quoted
Indexed
Energy
Charges
(Rs.1kwh)
1 27 Nov 2012 31 May 2013 0.21 0.001 0.575 0.001
2 1-Apr-2013 31-Mar-2014 0.125 Same as
Above
0.575 Same as
Above
3 1-Apr-2014 31-Mar-2015 0.163 Same as
Above
1.148 Same as
Above
4 1-Apr-2015 31-Mar-2016 0.171 Same as
Above
1.148 Same as
Above
23Page 24
5 1-Apr-2016 31-Mar-2017 0.169 Same as
Above
1.148 Same as
Above
6 1-Apr-2017 31-Mar-2018 0.169 Same as
Above
1.148 Same as
Above
7 1-Apr-2018 31-Mar-2019 0.169 Same as
Above
1.148 Same as
Above
8 1-Apr-2019 31-Mar-2020 0.168 Same as
Above
1.148 Same as
Above
9 1-Apr-2020 31-Mar-2021 0.167 Same as
Above
1.148 Same as
Above
10 1-Apr-2021 31-Mar-2022 0.166 Same as
Above
1.147 Same as
Above
11 1-Apr-2022 31-Mar-2023 0.165 Same as
Above
1.147 Same as
Above
12 1-Apr-2023 31-Mar-2024 0.164 Same as
Above
1.147 Same as
Above
13 1-Apr-2024 31-Mar-2025 0.164 Same as
Above
1.147 Same as
Above
14 1-Apr-2025 31-Mar-2026 0.163 Same as
Above
1.147 Same as
Above
15 1-Apr-2026 31-Mar-2027 0.162 Same as
Above
1.146 Same as
Above
16 1-Apr-2027 31-Mar-2028 0.161 Same as
Above
1.146 Same as
Above
17 1-Apr-2028 31-Mar-2029 0.160 Same as
Above
1.146 Same as
Above
18 1-Apr-2029 31-Mar-2030 0.160 Same as
Above
1.146 Same as
Above
19 1-Apr-2030 31-Mar-2031 0.159 Same as
Above
1.145 Same as
Above
20 1-Apr-2031 31-Mar-2032 0.158 Same as
Above
1.145 Same as
Above
21 1-Apr-2032 31-Mar-2033 0.157 Same as
Above
1.145 Same as
Above
22 1-Apr-2033 31-Mar-2034 0.136 Same as
Above
1.145 Same as
Above
23 1-Apr-2034 31-Mar-2035 0.126 Same as
Above
1.144 Same as
Above
24 1-Apr-2035 31-Mar-2036 0.126 Same as
Above
1.144 Same as
Above
25 1-Apr-2036 31-Mar-2037 0.137 Same as
Above
1.144 Same as
Above
26 1-Apr-2037 25th
anniversary of
the Scheduled
COD of the
first Unit
0.169 Same as
Above
1.143 Same as
Above
10. It is also necessary to set out the relevant provisions of the
Electricity Act, 2003. Sections 28, 29, 61, 62 and 63 of the Electricity
Act, 2003 read as under:-
24Page 25
“Section 28. Functions of Regional Load Despatch
Centre:
(1) The Regional Load Despatch Centre shall be the apex
body to ensure integrated operation of the power system
in the concerned region.
(2) The Regional Load Despatch Centre shall comply with
such principles, guidelines and methodologies in respect
of the wheeling and optimum scheduling and despatch of
electricity as the Central Commission may specify in the
Grid Code.
(3) The Regional Load Despatch Centre shall –
(a) be responsible for optimum scheduling and despatch
of electricity within the region, in accordance with the
contracts entered into with the licensees or the generating
companies operating in the region;
(b) monitor grid operations;
(c) keep accounts of quantity of electricity transmitted
through the regional grid;
(d) exercise supervision and control over the inter-State
transmission system; and
(e) be responsible for carrying out real time operations for
grid control and despatch of electricity within the region
through secure and economic operation of the regional
grid in accordance with the Grid Standards and the Grid
Code.
(4) The Regional Load Despatch Centre may levy and
collect such fee and charges from the generating
companies or licensees engaged in inter-State
transmission of electricity as may be specified by the
Central Commission.
25Page 26
Section 29. Compliance of directions: --- (1) The
Regional Load Despatch Centre may give such directions
and exercise such supervision and control as may be
required for ensuring stability of grid operations and for
achieving the maximum economy and efficiency in the
operation of the power system in the region under its
control.
(2) Every licensee, generating company, generating
station, sub-station and any other person connected with
the operation of the power system shall comply with the
directions issued by the Regional Load Despatch Centres
under subsection (1).
(3) All directions issued by the Regional Load Despatch
Centres to any transmission licensee of State
transmission lines or any other licensee of the State or
generating company (other than those connected to inter
State transmission system) or sub-station in the State
shall be issued through the State Load Despatch Centre
and the State Load Despatch Centres shall ensure that
such directions are duly complied with the licensee or
generating company or sub-station.
(4) The Regional Power Committee in the region may,
from time to time, agree on matters concerning the
stability and smooth operation of the integrated grid and
economy and efficiency in the operation of the power
system in that region.
(5) If any dispute arises with reference to the quality of
electricity or safe, secure and integrated operation of the
regional grid or in relation to any direction given under
sub-section (1), it shall be referred to the Central
Commission for decision : Provided that pending the
decision of the Central Commission, the directions of the
26Page 27
Regional Load Despatch Centre shall be complied with by
the State Load Despatch Centre or the licensee or the
generating company, as the case may be.
(6) If any licensee, generating company or any other
person fails to comply with the directions issued under
sub-section (2) or sub-section (3), he shall be liable to a
penalty not exceeding rupees fifteen lacs.
Section 61. Tariff regulations: The Appropriate
Commission shall, subject to the provisions of this Act,
specify the terms and conditions for the determination of
tariff, and in doing so, shall be guided by the following,
namely:-
(a) the principles and methodologies specified by the
Central Commission for determination of the tariff
applicable to generating companies and transmission
licensees;
(b) the generation, transmission, distribution and supply of
electricity are conducted on commercial principles;
(c) the factors which would encourage competition,
efficiency, economical use of the resources, good
performance and optimum investments;
(d) safeguarding of consumers' interest and at the same
time, recovery of the cost of electricity in a reasonable
manner;
(e) the principles rewarding efficiency in performance;
(f) multi year tariff principles;
(g) that the tariff progressively reflects the cost of supply
of electricity and also, reduces cross-subsidies in the
manner specified by the Appropriate Commission;
27Page 28
(h) the promotion of co-generation and generation of
electricity from renewable sources of energy;
(i) the National Electricity Policy and tariff policy:
Provided that the terms and conditions for determination
of tariff under the Electricity (Supply) Act, 1948, the
Electricity Regulatory Commission Act, 1998 and the
enactments specified in the Schedule as they stood
immediately before the appointed date, shall continue to
apply for a period of one year or until the terms and
conditions for tariff are specified under this section,
whichever is earlier.
Section 62. Determination of tariff: (1) The Appropriate
Commission shall determine the tariff in accordance with
the provisions of this Act for –
(a) supply of electricity by a generating company to a
distribution licensee: Provided that the Appropriate
Commission may, in case of shortage of supply of
electricity, fix the minimum and maximum ceiling of tariff
for sale or purchase of electricity in pursuance of an
agreement, entered into between a generating company
and a licensee or between licensees, for a period not
exceeding one year to ensure reasonable prices of
electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the
same area by two or more distribution licensees, the
Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling of
tariff for retail sale of electricity.

(2) The Appropriate Commission may require a licensee
or a generating company to furnish separate details, as
may be specified in respect of generation, transmission
and distribution for determination of tariff.
(3) The Appropriate Commission shall not, while
determining the tariff under this Act, show undue
preference to any consumer of electricity but may
differentiate according to the consumer's load factor,
power factor, voltage, total consumption of electricity
during any specified period or the time at which the
supply is required or the geographical position of any
area, the nature of supply and the purpose for which the
supply is required.
(4) No tariff or part of any tariff may ordinarily be
amended, more frequently than once in any financial year,
except in respect of any changes expressly permitted
under the terms of any fuel surcharge formula as may be
specified.
(5) The Commission may require a licensee or a
generating company to comply with such procedures as
may be specified for calculating the expected revenues
from the tariff and charges which he or it is permitted to
recover. (6) If any licensee or a generating company
recovers a price or charge exceeding the tariff determined
under this section, the excess amount shall be
recoverable by the person who has paid such price or
charge along with interest equivalent to the bank rate
without prejudice to any other liability incurred by the
licensee.
Section 63. Determination of tariff by bidding
process: Notwithstanding anything contained in section
62, the Appropriate Commission shall adopt the tariff if

such tariff has been determined through transparent
process of bidding in accordance with the guidelines
issued by the Central Government.”
11. Since counsel for the opposing parties have made wide ranging
arguments on the effect of Article 18 and waiver as a legal concept, it
is important first to find out as to which pigeonhole the facts of the
present case fit – whether the emails exchanged by the parties would
amount to an “amendment” governed by Article 18.1, or whether it
would amount to a “waiver” governed by Article 18.3.
12. A perusal of the emails exchanged between the parties would
show that the parties did not intend to amend by a written agreement
any of the provisions of the PPA. Whereas an amendment of the
PPA under Article 18.1 would be bilateral, a waiver of a provision of
the PPA would be unilateral under Article 18.3.
13. In order to better understand, conceptually, the difference
between amendment and waiver, it is necessary to advert to Sections
1, 62 and 63 of the Indian Contract Act, 1872.
“Section 1.Short title.-This Act may be called the Indian
Contract Act, 1872.

Extent, Commencements.-It extends to the whole of India
except the State of Jammu and Kashmir; and it shall
come into force on the first day of September, 1872.
Nothing herein contained shall affect the provisions of any
Statute, Act or Regulation not hereby expressly repealed,
nor any usage or custom of trade, nor any incident of any
contract, not inconsistent with the provisions of this Act.
Section 62. Effect of novation, rescission, and
alteration of contract.
If the parties to a contract agree to substitute a new
contract for it, or to rescind or alter it, the original contract
need not be performed.
Section 63. Promisee may dispense with or remit
performance of promise.- Every promisee may
dispense with or remit, wholly or in part, the performance
of the promise made to him, or may extend the time for
such performance, or may accept instead of it any
satisfaction which he thinks fit.”
14. Under Section 62, apart from novation of a contract and
rescission of a contract, alteration of a contract is mentioned.
Alteration is understood here, in the facts of the present case, in the
sense of amendment. It is settled law that an amendment to a
contract being in the nature of a modification of the terms of the
contract must be read in and become a part of the original contract in
order to amount to an alteration under Section 62 of the Indian
Contract Act. This is clear from Juggilal Kamlapat v. N.V.

Internationale Crediet-En-Handels Vereeninging ‘Rotterdam’, AIR
1955 Cal 65 in paragraph 15 of which it is stated:-
“The effect of the alterations or modifications is that there
is a new arrangement; in the language of Viscount
Haldane in Morris v. Baron & Co. (1) (1918 Appeal Cases,
1 at 17), “a new contract containing as an entirety the old
terms together with and as modified by the new terms
incorporated.” The modifications are read into and
become part and parcel of the original contract. The
original terms also continue to be part of the contract and
are not rescinded and/or superseded except in so far as
they are inconsistent with the modifications. Those of the
original terms which cannot make sense when read with
the alterations must be rejected. In my view the arbitration
clause in this case is in no way inconsistent with the
subsequent modifications and continues to subsist.” [para
15]
15. No such thing having occurred on the present facts, it is clear
that there is in fact no amendment by written agreement to the PPA.
To this extent, learned counsel for Sasan are correct.
16. The relevant section therefore that would apply on the facts of
the present case is Section 63. At this stage, it is important to advert
to an argument made by counsel for the appellants that Article 18.3
only refers to waivers that can expressly be made under various
provisions of the agreement and not to Article 6 which, according to
learned counsel, cannot be waived under the PPA. Assuming that

such argument is correct, and that Article 18.3 refers only to the mode
of carrying out a waiver under the PPA, yet it is clear that Section 63
would operate on the facts of this case. This is for the reason that,
when read with Section 1 of the Contract Act, it becomes clear that
the PPA is subject to Section 63 of the Contract Act, which would
allow a promisee to dispense with or remit, wholly or in part, the
performance of the promise made to him, and accept instead of it any
satisfaction which he thinks fit. This is made clear in an interesting
judgment by Chief Justice Stone in Official Assignee of Bombay v.
Madholal Sindhu, ILR 1948 (2) Bom 1. The learned Chief Justice
after setting out the facts had this to say on the effect of Section 1 of
the Contract Act:
“The Indian Contract Act of 1872 applies to all contracts in
India and with regard to a pawn is a codification of the
English common law. Speaking of the common law right
to sell Mr. Justice Story in his commentaries on the Law
of Bailments, eighth edition, says at p. 262:—
“Another right resulting, by the common law, from the
contract of pledge is the right to sell the pledge, where
there has been a default in the pledge in complying with
his engagement, but a sale before default would be a
conversion. Such a right does not divest the general
property of the pawner but still leave in him (as we shall
presently see) a right of redemption.”
And at p. 263:—

“The common law of England, existing in the time of
Glanville, seems to have required a judicial process to
justify the sale, or at least to destroy the right of
redemption. But the law as at present established leaves
an election to the pawnee. He may file a bill in equity
against the pawner for a foreclosure and sale; or, he may
proceed to sell ex mero motu, upon giving notice of his
intention to the pledger.”
The terms of an instrument of pledge, such as there is in
this case, giving an unqualified power of sale, are
inconsistent with the provisions of s. 176 of the Indian
Contract Act, and, therefore, by virtue of s. 1 of that Act
must give place to the express provisions of the Act:
See Chitguppi & Co. v. Vinaya Kashinath [(1920) 45 Bom.
157, S.C.22 Bom L.R. 959] .
The group of sections in the Indian Contract Act dealing
with bailment commence with s. 148, and it is to be
observed that in the ss. 152, 163, 171 and 174 the power
is given to contract out of the Act. In the former section
the words are “in the absence of any special contract” and
in the three latter sections the expression used is “in the
absence of any contract to contrary”. In my opinion,
therefore, except in these four sections, the provisions of
the Act with regard to bailment are mandatory: see The
Co-operative Hindustan Bank, Ltd. v. Surendranath
De [(1931) 59 Cal. 667.].”
17. It is thus clear that if on facts there is a waiver of a provision of
the PPA by one of the parties to the PPA, then Section 63 of the
Contract Act will operate in order to give effect to such waiver.

18. At this juncture, it is important to understand what exactly is
meant by waiver. In Jagad Bandhu Chatterjee v. Nilima Rani,
(1969) 3 SCC 445, this Court held:
“In India the general principle with regard to waiver
of contractual obligation is to be found in Section 63
of the Indian Contract Act. Under that section it is
open to a promisee to dispense with or remit, wholly
or in part, the performance of the promise made to
him or he can accept instead of it any satisfaction
which he thinks fit. Under the Indian law neither
consideration nor an agreement would be
necessary to constitute waiver. This Court has
already laid down in Waman Shriniwas
Kini v. Ratilal Bhagwandas & Co.[1959 Supp 2 SCR
217, 226] that waiver is the abandonment of a right
which normally everybody is at liberty to waive. “A
waiver is nothing unless it amounts to a release. It
signifies nothing more than an intention not to insist
upon the right”. It is well-known that in the law of
pre-emption the general principle which can be said
to have been uniformly adopted by the Indian courts
is that acquiescence in the sale by any positive act
amounting to relinquishment of a pre-emptive right
has the effect of the forfeiture of such a right. So far
as the law of pre-emption is concerned the principle
of waiver is based mainly on Mohammedan
Jurisprudence. The contention that the waiver of the
appellant's right under Section 26-F of the Bengal
Tenancy Act must be founded on contract or
agreement cannot be acceded to and must be
rejected.” [para 5]

19. In P. Dasa Muni Reddy v. P. Appa Rao, (1974) 2 SCC 725,
this Court held:
“Waiver is an intentional relinquishment of a known
right or advantage, benefit, claim or privilege which
except for such waiver the party would have
enjoyed. Waiver can also be a voluntary surrender
of a right. The doctrine of waiver has been applied
in cases where landlords claimed forfeiture of lease
or tenancy because of breach of some condition in
the contract of tenancy. The doctrine which the
courts of law will recognise is a rule of judicial policy
that a person will not be allowed to take inconsistent
position to gain advantage through the aid of courts.
Waiver sometimes partakes of the nature of an
election. Waiver is consensual in nature. It implies a
meeting of the minds. It is a matter of mutual
intention. The doctrine does not depend on
misrepresentation. Waiver actually requires two
parties, one party waiving and another receiving the
benefit of waiver. There can be waiver so intended
by one party and so understood by the other. The
essential element of waiver is that there must be a
voluntary and intentional relinquishment of a right.
The voluntary choice is the essence of waiver.
There should exist an opportunity for choice
between the relinquishment and an enforcement of
the right in question. It cannot be held that there has
been a waiver of valuable rights where the
circumstances show that what was done was
involuntary. There can be no waiver of a
non-existent right. Similarly, one cannot waive that
which is not one's as a right at the time of waiver.
Some mistake or misapprehension as to some facts
which constitute the underlying assumption without
which parties would not have made the contract
may be sufficient to justify the court in saying that
there was no consent.” [para 13]

20. Regard being had to the aforesaid decisions, it is clear that
when waiver is spoken of in the realm of contract, Section 63 of the
Indian Contract Act governs. But it is important to note that waiver is
an intentional relinquishment of a known right, and that, therefore,
unless there is a clear intention to relinquish a right that is fully known
to a party, a party cannot be said to waive it. But the matter does not
end here. It is also clear that if any element of public interest is
involved and a waiver takes place by one of the parties to an
agreement, such waiver will not be given effect to if it is contrary to
such public interest. This is clear from a reading of the following
authorities.
21. In Lachoo Mal v. Radhey Shyam, (1971) 1 SCC 619, it was
held:-
“The general principle is that everyone has a right to
waive and to agree to waive the advantage of a law or
rule made solely for the benefit and protection of the
individual in his private capacity which may be dispensed
with without infringing any public right or public policy.
Thus the maxim which sanctions the non-observance of
the statutory provision is cuilibet licet renuntiare juri pro
se introducto. (See Maxwell on Interpretation of Statutes,
Eleventh Edn., pp. 375 and 376). If there is any express
prohibition against contracting out of a statute in it then no
question can arise of anyone entering into a contract
which is so prohibited but where there is no such

prohibition it will have to be seen whether an Act is
intended to have a more extensive operation as a matter
of public policy.” [para 6]
22. In Indira Bai v. Nand Kishore, (1990) 4 SCC 668, it was held:-
“The test to determine the nature of interest,
namely, private or public is whether the right which
is renunciated is the right of party alone or of the
public also in the sense that the general welfare of
the society is involved. If the answer is latter then it
may be difficult to put estoppel as a defence. But if it
is right of party alone then it is capable of being
abnegated either in writing or by conduct.” [para 5]
23. In Krishna Bahadur v. Purna Theatre, (2004) 8 SCC 229, it
was held:
“The principle of waiver although is akin to the
principle of estoppel; the difference between the
two, however, is that whereas estoppel is not a
cause of action; it is a rule of evidence; waiver is
contractual and may constitute a cause of action; it
is an agreement between the parties and a party
fully knowing of its rights has agreed not to assert a
right for a consideration.
A right can be waived by the party for whose benefit
certain requirements or conditions had been
provided for by a statute subject to the condition
that no public interest is involved therein. Whenever
waiver is pleaded it is for the party pleading the
same to show that an agreement waiving the right in
consideration of some compromise came into being.
Statutory right, however, may also be waived by his
conduct.” [para 9]

24. It is thus clear that if there is any element of public interest
involved, the court steps in to thwart any waiver which may be
contrary to such public interest.
25. On the facts of this case, it is clear that the moment electricity
tariff gets affected, the consumer interest comes in and public interest
gets affected. This is in fact statutorily recognized by the Electricity
Act in Sections 61 to 63 thereof. Under Section 61, the appropriate
commission, when it specifies terms and conditions for determination
of tariff, is to be guided inter alia by the safeguarding of the consumer
interest and the recovery of the cost of electricity in a reasonable
manner. For this purpose, factors that encourage competition,
efficiency and good performance are also to be heeded. Under
Section 62 of the Act, the appropriate commission is to determine
such tariff in accordance with the principles contained in Section 61.
The present case, however, is covered by Section 63, which begins
with a non obstante clause stating that notwithstanding anything
contained in Section 62, the appropriate commission shall adopt the
tariff if such tariff has been determined through a transparent process
of bidding in accordance with the guidelines issued by the Central
39Page 40
Government. The guidelines dated 19.1.2005 issued by the Central
Government under Section 63 make it clear that such guidelines are
framed with the following objectives in mind:
“These guidelines have been framed under the above
provisions of section 63 of the Act. The specific
objectives of these guidelines are as follows:
1) Promote competitive procurement of electricity by
distribution licensees;
2) Facilitate transparency and fairness in procurement
processes;
3) Facilitate reduction of information asymmetries for
various bidders;
4) Protect consumer interests by facilitating
competitive conditions in procurement of electricity;
5) Enhance standardization and reduce ambiguity and
hence time for materialization of projects;
6) Provide flexibility to suppliers on internal operations
while ensuring certainty on availability of power and
tariffs for buyers.
Clause 2.3 of the said guidelines reads as follows:
“2.3. Unless explicitly specified in these guidelines, the
provisions of these guidelines shall be binding on the
procurer. The process to be adopted in event of any
deviation proposed from these guidelines is specified later
in these guidelines under para 5.16.”
40Page 41
26. Paragraph 4 of the aforesaid guidelines relates to tariff structure
and paragraph 4.11 in particular, which relates to energy charges, is
as follows:-
“4.11 Where applicable, the energy charges
payable during the operation of the contract shall be
related on the base energy charges specified in the
bid with suitable provision for escalation. In case
the bidder provides firm energy charge rates for
each of the years of the contract term, the same
shall be permitted in the tariffs.”
27. Para 5.4 then speaks of a model power purchase agreement
proposed to be entered into with the seller of electricity as follows:-
“(ii) Model PPA proposed to be entered into with
the seller of electricity. The PPA shall include
necessary details on:
• Risk allocation between parties;
• Technical requirements on minimum load
conditions;
• Assured offtake levels;
• Force majeure clauses as per industry standards;
• Lead times for scheduling of power;
• Default conditions and cure thereof, and penalties;
• Payment security proposed to be offered by the
procurer.”
28. Paragraph 5.16 then goes on to state:-
41Page 42
“Deviation from process defined in the
guidelines
5.16 In case there is any deviation from these
guidelines, the same shall be with the prior approval
of the Appropriate Commission. The Appropriate
Commission shall decide on the modifications to the
bid documents within a reasonable time not
exceeding 90 days.”
29. A perusal of the CERC tariff adoption order in the present case
dated 17.10.2007 makes it clear that the tariff is adopted by the
Commission only because the competitive bidding process which has
been undertaken is in accordance with the guidelines so issued.
30. All this would make it clear that even if a waiver is claimed of
some of the provisions of the PPA, such waiver, if it affects tariffs that
are ultimately payable by the consumer, would necessarily affect
public interest and would have to pass muster of the Commission
under Sections 61 to 63 of the Electricity Act. This is for the reason
that what is adopted by the Commission under Section 63 is only a
tariff obtained by competitive bidding in conformity with guidelines
issued. If at any subsequent point of time such tariff is increased,
which increase is outside the four corners of the PPA, even in cases
covered by Section 63, the legislative intent and the language of
42Page 43
Sections 61 and 62 make it clear that the Commission alone can
accept such amended tariff as it would impact consumer interest and
therefore public interest.
31. But on the facts of these cases, it is argued by learned counsel
for Sasan that in point of fact the tariff laid down in Schedule 11 of the
PPA has not been sought to be changed. All that has happened is
that, as a result of COD being declared on 31.3.2013, the very tariff
laid down in Schedule 11 becomes applicable, but for year one being
treated as one day and year two commencing from 1.4.2013.
Counsel for Sasan may be right in saying this, but the substance of
the matter is that a consumer would have to pay substantially more
by way of tariff under the PPA if year one is gobbled up in one day, as
year two’s tariff is one paisa more than year one and year three’s
tariff is substantially more than year two. In short, instead of getting
two years or part thereof exceeding one year at a substantially lower
tariff, the consumer now gets only one year and one day at the lower
tariff rates. This may also by itself not lead to the parties having to go
to the Commission as this is envisaged by the PPA. But it is clear
that if a waiver is to be accepted on the facts of this case, it would
clearly impact the public interest, in that consumers would have to
43Page 44
pay substantially more for electricity consumed by them. This being
the case, on facts it may not be necessary to go to the Commission
as had Sasan in fact met the parameters of Schedule 5 on 30th
March, then as per Schedule 11, year one would in fact have been
only for one day. However, any waiver of the requirement of
Schedule 5 would definitely impact the generation of electricity at the
mandated percentage of contracted capacity as also the amounts
payable by consumers, and would therefore affect the public interest.
This being the case, this is not a case covered by the judgments cited
on behalf of Sasan, in particular the judgment of this Court in
Commissioner of Customs, Bombay v. Virgo Steels Bombay,
(2002) 4 SCC 316, in which it has been held that even the mandatory
requirement of a statute can be waived by the party concerned,
provided it is intended only for his benefit. This case would fall within
the parameters of the other judgments referred to above, and would
therefore be governed by judgments which state that any waiver of
the requirements of Article 6.3 and Schedule 5 would ultimately
impact consumer interest and therefore the public interest. Such
waiver therefore cannot be allowed to pass muster on the facts of the
present case.

32. Since the result of this case also depends upon the correct
reading of Article 6 read with Schedule 5 of the PPA, and whether
there has been waiver in fact in the sense of being the intentional
relinquishment of a known right by the procurers or on their behalf, it
is necessary to advert to the scheme of Article 6, the independent
engineer’s certificate, and various meetings, emails, and letters
exchanged between the parties. Article 6 deals with synchronization,
commissioning, and commercial operations. In the first step to be
taken by the seller, the unit producing electricity has to be
synchronized to the grid system. It is only after synchronization takes
place that the unit is to be commissioned. What is important is that at
the commissioning stage, the parameters mentioned in Schedule 5
are to be met. The most important parameter mentioned in Schedule
5, when the performance test is to be taken for the purpose of
commissioning, is that a unit shall be deemed to have passed such
test only if it operates continuously for 72 consecutive hours at or
about 95% of its contracted capacity as existing on the effective date
and within the electrical system limits and functional specifications.
Further, as a part of the performance test, the seller must
demonstrate that the unit meets functional specifications for ramping
45Page 46
rate separately mentioned in Schedule 4 of the PPA. It is only when
such test is passed that a unit can be said to be commissioned under
the PPA. This then is to be certified by the independent engineer
jointly appointed by the parties under Article 6.3.1, in the form of a
final test certificate, which states that (a) the commission tests have
been carried in accordance with Schedule 5 and are acceptable to
him, and (b) the result of the performance test shows that the unit’s
tested capacity is not less than 95% of the contracted demand as
existing on the effective date.
33. If the Schedule 5 parameters are not met, it is incumbent on the
independent engineer to then state reasons for the non-issuance of
the final test certificate. Once this is done, under Article 6.3.2, the
seller may retake the relevant test within a reasonable period after
the end of the previous test so as to comply with the basic
requirements of Schedule 5. It is only after this that a unit can be
said to be a “commissioned unit” as defined, which means that it is a
unit in respect of which COD has occurred. COD or commercial
operation date is also separately defined as meaning, in relation to a
unit, the date one day after the date when each of the procurers
receives a final test certificate of the independent engineer as per
46Page 47
Article 6.3.1. It is thus clear that the scheme of Article 6 is that a unit
cannot be said to have a commercial operation date unless and until
it is first synchronized with the grid and commissioned after meeting
the parameters mentioned in Schedule 5 of the PPA.
34. Article 6.3.3 refers to performance tests of a unit during the
period of the PPA. If under Article 6.3.3 after COD has been
achieved in a unit, an increased tested capacity over and above that
provided in 6.3.1 (b) is achieved in a subsequent performance test,
certain consequences follow. Equally, if after COD has been
obtained in a unit, and the most recent performance test mentioned
during the working of the PPA has been conducted, and it is found
that in such test a figure less than contracted capacity is achieved,
the unit shall be de-rated with certain consequences which are
mentioned in Article 6.3.4 read with Article 8.2.2. The scheme of
Article 6 therefore read as a whole appears to be that COD cannot be
achieved until the parameters mentioned in Schedule 5 are achieved
and there is a final test certificate to that effect. The subsequent
clauses, Article 6.3.3 and Article 6.3.4 only kick in after COD is
obtained in a unit, leading to either increased capacity or to de-rated
capacity with consequences which follow under the PPA.
47Page 48
35. The meetings, emails, and letters between the parties have
now to be examined. The first important meeting that is necessary for
us to advert to is the meeting of 27.2.2013. The meeting was
Chaired by the Managing Director of the lead procurer i.e. M.P. Power
Management Company Limited. It was attended by all the other
procurers, and officials of Sasan. What is emphasized on behalf of
Sasan is that the revised COD of the Sasan units was accepted by all
the procurers under article 4.5.1 of the PPA to be – (first unit) by
31.3.2013. The procurers asked Sasan for the estimated date for
synchronization and COD of the first unit. Sasan indicated that
synchronization is expected in the first week of March, 2013, and the
COD before 31.3.2013. What is important about this meeting is that
the procurers were no doubt interested in getting electricity from
Sasan as soon as possible, but obviously only in accordance with
article 6.3.1 read with the 5th Schedule. This would only mean that
the meeting would disclose that the anxiety of the procurers to get
electricity at cheap rates would be in accordance with the PPA and
not against it. In other words, if a final test certificate had been given
to the effect that 95% of contracted capacity could have been
48Page 49
delivered by Unit No.3 on or before 31.3.2013, the procurers were
anxious to avail of it, and not otherwise.
36. It is unnecessary for us to burden this judgment with the emails
that passed between Sasan and WRLDC between 27.3.2013 and
30.3.2013. It is enough for us to state that Sasan contends that it
was ready to deliver at 95% of the contracted demand but for
WRLDC, and WRLDC states that Sasan was never obstructed by
WRLDC, and in fact was not capable of delivering electricity at 95%
of the contracted demand at the relevant time. WRLDC appears to
be correct in this for the simple reason that if we see the performance
of Sasan for the period 1st April to 16th August, 2013, it is clear that
various tests were undertaken, but 95% of contract capacity for a
continuous period of 72 hours had only been achieved in June even
according to Sasan.
37. In any event, the performance test certificate issued on
30.3.2013 leaves much to be desired. Since the Commission has
castigated this certificate and the Appellate Tribunal has absolved the
Independent Engineer completely, it is necessary to set out this
certificate in full.
49Page 50
“Lahmeyer International (India) Pvt. Ltd.
Corporate Office & Correspondence address:
Intec House, 37 Institutional Area, Sector 44, Gurgaon-122002 , National Capital
Region (INDIA)
CERTIFICATE OF INDEPENDENT ENGINEER (IE)
Test Certificate of Performance Test for the Commercial Operation Declaration of
the First Unit (Unit-3 of 660 MW) of SASAN ULTRA MEGA POWER PROJECT
(6x660 MW)
This Certificate is issued by IE with reference to article 6.3.1 of PPA executed on
7
th August 2007 between Sasan Power Limited (SPL, the Seller) and the Power
Procurers. Based on the Performance Test witnessed by IE from 27th March
2013 to 30th March 2013 and review of the detailed Performance Test results
provided by the Seller, it is certified that:
1. The Unit was synchronized with the grid at 15.18 hrs on 27th March 2013 after
receiving the permission of WRLDC.
2. The Seller (SPL) had submitted the power injection schedule to WRLDC at 15.35
hours on 27th March 2013 for raising the load gradually to 100% of the
Contracted Capacity of 620.4 MW(ex bus) by 2000 hrs. on 27th March 2013 for
demonstrating continuous operation at that load for continuous 72 (seventy two)
consecutive hours. However, WRLDC, did not permit the Seller to operate the
Unit beyond 100 MW (ex bus) till the morning of 28th March 2013 due to the
following reasons:
a) The demand in the grid was low due to the Holiday on account of Holi Festival.
b) All the Units in the grid were operating at their technical minimum capacity.
3. The Seller was continuously keeping in touch with WRLDC till 21.40 hours on
29th March 2013 for seeking permission to raise the load. At 22.19 hrs on 29th
March 2013 WRLDC permitted the seller to raise the load. Accordingly, Seller
raised the load to around 150 MW (ex bus).
4. At 07.13 hours on 30th March 2013, WRLDC asked the seller to submit its revised
power injection schedule for raising the load. At this point of time, the Unit had
already completed continuous operation of 50 (fifty) consecutive hours at a low
load of about 100 MW (ex-bus) and another 9 (nine) consecutive hours
immediately thereafter at 150 MW. Seller informed WRLDC at 14.18 hrs that it
would increase the load from 20.00 hours to reach full load. As such, in line with
WRLDC instructions and grid conditions. Seller maintained load of around 100
MW (ex bus) for around 50 hours and maintained load of around 150 MW (ex
bus) for remaining 22 hours as per WRLDC instructions and grid conditions.
5. The Commissioning Test has been carried out in accordance with Schedule 5 of
PPA and the results of the Performance Test are acceptable to IE. The results of
50Page 51
the Performance Test show that the Unit’s Tested Capacity is not less than
101.38 MW (ex bus), the maximum permitted load by WRLDC for injection into
the grid. During the above stated period of continuous 72 (seventy two)
consecutive hours, the performance of the unit was found to conform to the
Electrical Limits of the Functional Specifications in accordance with Schedule 4
of PPA.
The salient details of the Performance Test are as follows:
Minimum Hourly Net
Generation of the Unit during
72 Hours Test (MW)
101.38 mw FROM 0600 HRS
TO 0700 hrs on 28th March
2013
Maximum Hourly Net
Generation of the Unit during
72 Hours Test (MW)
161.01 MW from 1900 hrs to
2000 hrs on 30th March 2013.
Average Hourly Net
Generation of the Unit during
72 Hours Test (MW)
120.84 MW
Tested Capacity of the Unit
(MW)*
101.38 MW
Generator Terminal Voltage 21.66 KV to 21.83 KV
(Parameter as per OCM-22
KV)
Power factor 096 Max (lagging), 0.89 MIN
(lagging)
(*) Due to load restriction by WRLDC.
6. Since the Unit was operating below 50% of the rated load due to grid
restriction, the Unit could not be demonstrate the Ramping Rate above 50% of
the rated load in accordance with Schedule 4 of PPA. However, as per the
certificate provided by Original Equipment Manufacturer of Boiler, Turbine &
Generator, minimum ramp up and ramp down rate of 1% of Contracted Capacity
per minute can be achieved.
7. The Unit could not be tested for the following parameters of
Supercritical Technology at the steam turbine inlet as defined in PPA due to grid
restriction.
i) Main Steam Pressure: 247 kg/cm2 (abs)
ii) Main Steam Temperature: 535 deg C.
51Page 52
iii) Reheat Temperature: 565 deg C.
However, the Unit was found to operate with the following parameters at
the steam turbine inlet during one hour operation from 1200 hrs to 1300 hrs on
29th March 2013.
i) Main Steam Pressure: 77.36 Kg/cm2 (abs)
ii) Main Steam Temperature: 535.64 deg.C.
iii) Reheat Temperature: 575.04 deg C.
8. All the systems and equipment have been commissioned and are
operational with two coal mills which were taken into service. The balance mills
could not be taken into service due to the restrictions imposed by the grid. The
furnace was found to operate stably even at a low load of 101.38 MW (ex-bus)
and the parameters of Turbine shaft vibrations, Generator slot temperature and
Generator core temperature were found to be well within the equipment limits
recommended by OEM.
9. In view of the above, the Unit-3 is certified to have achieved Commercial
Operation, with a tested capacity of 101.38 MW (ex bus) since:
(a) Commissioning Test was carried out in accordance with Article 6 and
Schedule 5 of the PPA.
(B) Results of the test show that Unit-3 has met functional specifications
stipulated in Schedule 4 of the PPA.
For Lahmeyer International s(India)
Sd/-
R.K. Soni
Project Manager
Dated: 30th March 2013”
38. It will be seen from this certificate that the tested capacity of the
Unit was found to be only 101.38 MW as against 95% of 620 MW i.e.
587 MW. It was also stated that since the unit was operating below
50% of the rated load due to grid restriction, the unit could not
52Page 53
demonstrate ramping rate above 50% of rated load in accordance
with the Schedule 4 of the PPA.
39. Paragraph 9 of the certificate leaves much to be desired.
Obviously, if the tested capacity is 101.38 MW as against the
required 95% i.e. 587 MW, the test could not have been carried out
in accordance with article 6 read with schedule 5, and that despite the
fact that ramping up and down could not be achieved, functional
specifications stipulated in Schedule 4 of the PPA were said to have
been met. We are constrained, therefore, to agree with CERC which
in its order dated 8.8.2014 has castigated this certificate. What article
6.3.1 requires is first and foremost a final test certificate of the
Independent Engineer. The certificate dated 30.3.2013 given by the
Independent Engineer is not a final test certificate. Indeed, it is only
in August that a final test certificate was given in accordance with
Article 6.3.1 of the PPA by the very same independent engineer.
Obviously the commissioning tests could not have been carried out in
accordance with Schedule 5, which requires in clause 1.1 (i) (d)
that the seller shall perform, in respect of each unit, a performance
test, by which such unit shall be deemed to have passed only if it
operates continuously for 72 consecutive hours, at or above 95% of

its contracted capacity as existing on the effective date. Also, part of
the same schedule requires that as a part of the performance test,
the seller shall demonstrate that the unit meets the functional
specifications for ramping rate as mentioned in Schedule 4, which
was again conspicuous by its absence. According to the Independent
Engineer, “… the Unit 3 is certified to have achieved Commercial
Operation, with a tested capacity 101.38 MW” after carrying out the
commissioning test in accordance with Article 6 and Schedule 5 of
the PPA. In the certificate dated 30.3.2013 he has stated that on
witnessing the performance test from 27.03.2013 to 30.03.2013, the
tested capacity of the Unit is 101.38 MW. However, it is clearly
recorded that Unit was operated beyond 100 MW only from the
morning of 28.03.2013. In the chart on the performance test, the
Independent Engineer has noted that 101.38 MW is operated only
from 06.00 a.m. on 28.03.2013. Under Article 6 read with Schedule 5
… “Unit shall be deemed to have passed if it operates
continuously for 72 consecutive hours at or above 95% of its
contracted capacity as existing on the Effective Date.” Even
according to the Independent Engineer, 101.38 MW was injected only
at 06.00 a.m. on 28.03.2013. Such a tested capacity of 101.38 MW

for 72 hours continuously could therefore have been certified only at
06.00 a.m. on 31.03.2013. If that be so, the Commercial Operation
Date would have been only one day after the date when the test
certificate of the Independent Engineer has been received by the
procurers. For this reason also, the test certificate is by no means in
accordance with Article 6.3.1 of the PPA read with Schedule 5
thereof.
40. It is now important to examine the correspondence between the
parties in order to ascertain whether the Appellate Tribunal is correct
in stating that waiver had in fact taken place. At this stage, it is
important to advert to an email dated 31.3.2013 sent by the lead
procurer to Sasan. This email categorically states as follows:
“With reference to the letter no. GEIE
12086/12-13/001/RKS dt. 30th March 2013 relating
to the Test Certificate of the Independent Engineer
towards the Performance Test for declaration of
COD of Unit-3 of 660 MW of UMPP Sasan Project.
It is to inform that as per clause 6.3.1 (a) and (b) of
the PPA, Commissioning Test should have been
carried out in accordance with Schedule 5 of PPA
and that the result of the test should not have been
less than ninety five (95) percent of its Contracted
Capacity. The test result is not as per the aforesaid
clause and, therefore, is not acceptable to us. If the
Seller is agreeable to consider the performance test

under clause 6.3.4 for a de-rated capacity of 101.38
MW, the same could be agreed by us.”
41. However, Sasan relies heavily upon an email sent on 2.4.2013
by the lead procurer to Sasan. This email reads as follows:
“To
 The Chief Executive Officer
M/s. Sasan Power Ltd.,
Dhirubhai Ambani Knowledge City,
1 Block, 2nd Floor, North Wing,
Thane, Belapur Road, Koparkhairane,
Navi Mumbai,
Maharashtra 400 710
Sub: Independent Engineer’s letter dated 30th March 2013
Ref: Independent Engineer’s letter dated 30th March 2013
Dear Sir,
Please refer the Independent Engineer’s letter dated 30th
March 2013 pertaining to “Test Certificate of Performance Test
for the Commercial Operation Declaration of the First Unit
(Unit-3 of 660 MW) of SASAN ULTRA MEGA POWER
PROJECT (6x660 MW)” and e-mail dated 31.3.2013 of 12.39
AM sent by Western Region Load Despatch Centre regarding
scheduling of power from Unit No.3 of Sasan UMPP. As lead
procurer, the Performance Test, as certified by the independent
Engineer for a capacity of 101.38 MW (ex-bus), is acceptable to
us under Clause 6.3.4 of the PPA. You may kindly go for
Performance Test under notice to us for increasing the capacity
beyond certification by the Independent Engineer in accordance
with Clause 6.3.3 of the PPA.
As provided in Article 6.3.4 of the PPA, in the period
between this performance test and the next performance test,
the unit’s contracted capacity and available capacity would be
considered as 101.38 MW (ex-bus) and its availability factor

shall be calculated by reference to 101.38 MW. The charges
payable for power shall be as laid down in Article 6.3.4 of the
PPA. In case the unit is in position to produce beyond 101.38
MW, the additional quantity would be scheduled in favour of the
Procurers under proviso to Article 11.1 of the PPA, until the next
Performance Test is conducted under Article 6.3.3.
Thanking you,
Yours faithfully,
Sd/-
Executive Director (IPC)”
42. The two emails read together would show that the lead procurer
made it clear that declaration of COD of unit 3 is not accepted by
them as the test was not performed as per Article 6.3.1. However, in
its anxiety to procure electricity, what was stated in the second email
was that the capacity of 101.38 MW was acceptable only under
Article 6.3.4 of the PPA, meaning thereby that this ought to be treated
as de-rated capacity, which should be paid for as provided. And
any quantity produced over and above 101.38 MW would be
treated as infirm power under Article 11.1 proviso, and paid for as
such.
43. Shri Sibal argued that the moment Article 6.3.4 of the PPA is
attracted, this would necessarily mean that the Appellants have
57Page 58
waived the requirement of 95% of the contracted capacity as existing
on the effective date mentioned in Article 6.3.1(b). According to him,
this would mean that scheduled power would have to be supplied,
which in turn can only be done if there is waiver of the aforesaid
requirement. It is difficult to agree. The case of the appellants has
throughout been, starting from 12th April, 2013, onwards, that it has
never consented to Schedule 5 of the PPA and Article 6.3.1(b)
parameters being lowered. It is true that Article 6.3.4 would not apply
for the reason that it would come into effect only after the last recent
performance test mentioned in Article 6.3.3 has been conducted. And
for Article 6.3.3 to apply, a performance test must first indicate that
from a unit’s COD an increased tested capacity over and above that
provided in Article 6.3.1(b) must first occur. Admittedly on facts this
has not happened. What is important to note therefore is that the
appellants desperately wanted power at a cheaper rate, and were
willing to go to any extent to get such power, including invoking
clause 6.3.4, which would not apply, and stating that anything over
and above 101.38 MW ought to be treated as infirm power. It is clear
under the Regulations, however, that infirm power can never be
supplied to the appellants themselves but can only be supplied to the

grid. This being the case, the question that is still posed is whether
the two emails read together would amount to a waiver of the right
mentioned in clause 6.3.1. Waiver is, as has been pointed out above,
an intentional relinquishment of a known right. Waiver must be
spelled out with crystal clarity for there must be a clear intention to
give up a known right. There is no such clear intention that can be
spelled out on a reading of the two emails. All that can be spelled out
is that the first email of 31.3.2013 categorically states that the test
result is not as per Article 6.3.1, and is not acceptable. The last
sentence of this very email then refers to clause 6.3.4 and to a
de-rated capacity of 101.38 MW. Thereafter, the email of 2nd April,
2013 expands on the aforesaid last sentence of the earlier email by
referring to Article 6.3.4 and Article 11 proviso. This is akin to a
‘without prejudice’ acceptance of de-rated power, being a
non-acceptance of the test certificate dated 30.3.2013 coupled with a
desperate attempt to somehow get whatever power is available. But
this does not amount to a clear and unequivocal intention to
relinquish a known right.
44. It is not necessary to burden this judgment with various other
acceptance emails of the other discoms inasmuch as they are all in

terms of the email sent by the lead procurer. Haryana discom has
sent an email dated 12.4.2013 in which, even while accepting
derated power, it has accepted the same without prejudice to its
rights.
45. In contrast to the aforesaid emails, the acceptance emails of
BYPL and BRPL, both Reliance Group Companies, may now be
quoted:-
“Dear Sir
From Sasan UMPP Delhi has allocation of 450 mw as per
MOP out of which BRPL share is 43.58 out of Delhi
allocation. We accept the COD of 1st unit of 660 mw as
declared by SPL. May please schedule Full quantum of
BRPL with immediate effect and confirm.
Regards.
Sanjay Srivastav.
Assistant VP BRPL. 9312147045
Sanjay Srivastav (As V.P.)”
46. This acceptance email is in stark contrast with the acceptance
email of the lead procurer, in that it unequivocally accepts COD of the
first Unit of 660 MW as declared by Sasan. It is therefore clear that
on facts in this case there is no waiver and the Appellate Tribunal in
coming to an opposite conclusion, is clearly erroneous.

47. Interestingly enough, the Appellate Tribunal, in the impugned
judgment dated 31.3.2016, contradicts itself when it states in one
portion as follows:-
“e) We have carefully gone through the ratio of the law
laid down by Hon’ble Supreme Court in Waman
Shriniwas and in Krishan Lal’s case, wherein in the
latter case the Hon’ble Supreme Court cited an illustration
in paragraph 21 thereof. The words of the Hon’ble
Supreme Court are “to illustrate this principle, it has been
stated that if the statutory condition be imposed simply for
the security or the benefit of the parties to the action
themselves, such condition will not be considered as
indispensable and either party may waive it.” In the
present case, the requirement of achieving 95% of the
contracted capacity for declaration of COD was not one
for the private benefit of the seller and procurers. The
said requirement and the appointment of an independent
expert to oversee the commissioning process was built
into the statutory contract i.e. PPA itself for a specific
purpose, as a requirement of general policy, to ensure
that generators do not declare their units to be
commercially available without even demonstrating the
capability of such units to achieve at least 95% of the
contracted capacity.”
And then goes on to state:
“We further find that in the present case, there is no
question of any public interest or public policy or morals
or statutory regulations being violated. The WRLDC, who
was a petitioner before the Central Commission, in its
Petition clearly and equivocally states that there are no
guidelines in respect of declaration of COD of the
generators who are not governed by CERF (Tariff
Regulations) 2009 and in the Petition, WRLDC prays to

the Central Commission for issuing regulations and
guidelines in that behalf.”
48. We thus find that the Appellate Tribunal is wholly incorrect in
accepting the case of waiver put forward by learned counsel for
Sasan, and is equally incorrect in absolving the independent engineer
for the test certificate given by him on 30.3.2013. We, therefore, set
aside the Appellate Tribunal’s judgment, and reinstate the judgment
dated 8.8.2014 of the Central Electricity Regulatory Commission.
49. Shri Sibal’s last argument is that there is no substantial
question of law so as to attract Section 125 of the Electricity Act, 2003
in these appeals. We are afraid that we cannot agree. One
substantial question of law is whether, when public interest is
involved, waiver can at all take place of a right in favour of the
generator of electricity under a PPA if the right also has an
impact on consumer interest. This substantial question of law has
been answered by us in the course of the judgment. We have also
pointed out that the Appellate Tribunal’s finding that the Independent
Engineer’s test certificate can pass muster and that there is a waiver
on facts is not a possible conclusion, and such finding is, therefore,
perverse and hence set aside. That apart, we have also pointed out

the contradictory nature of the judgment of the Appellate Tribunal,
when it points out that the requirement of Article 6.3.1 is not merely
for the private benefit of the procurers of electricity, but is as a matter
of general policy; and then later on in the judgment finds that no
question of public interest or public policy arises in the present case.
In these circumstances, this plea must also be turned down. In the
result, the appeals are allowed but with no order as to costs.
………………………….J.
(Kurian Joseph)
………………………….J.
(R.F. Nariman)
New Delhi;
December 08, 2016.

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