Summary
The Supreme Court set aside the direction requiring Rajasthan’s electricity procurers to contract for 200 MW from MB Power. A competitive bidding process does not compel acceptance of tariffs that are not market aligned: the State Commission may scrutinise price and consumer interests. The writ petition also bypassed an effective statutory remedy and suffered from delay.
Issues
- Whether the State Commission adopting competitively discovered tariffs under Section 63 may examine market alignment and consumer interests.
- Whether the power to reject all price bids under the Bidding Guidelines permits rejection of particular bids that are not market aligned.
- Whether the earlier orders required procurement from lower-ranked bidders until 906 MW was filled.
- Whether the High Court should have entertained MB Power’s delayed writ petition despite the statutory remedy and directed execution of a power purchase agreement.
- Whether APTEL’s consequential stay of a fresh medium-term procurement could survive the setting aside of the High Court judgment.
Provisions considered
- Section 63, Electricity Act, 2003Adoption of tariff discovered through transparent bidding must comply with the Central Government’s guidelines. The Commission is not a mere post office and may examine market alignment under the applicable guidelines rather than automatically accepting every qualified bid. (¶¶ 39, 66, 67, 68, 73, 74, 75, 78, 79, 83)
- Section 86(1)(b), Electricity Act, 2003The State Commission’s power to regulate purchase and procurement includes the price paid by distribution licensees. Read with Section 63 and the Bidding Guidelines, it supports scrutiny of market alignment and consumer interests. (¶¶ 39, 70, 71, 79, 83, 87)
- Section 79(1)(b), Electricity Act, 2003Following Energy Watchdog, the Court explained that tariff adoption remains an exercise of regulatory power. Where Central Government guidelines cover the situation, that power must be exercised consistently with them; general regulatory powers operate where guidelines do not address the situation. (¶¶ 39, 66, 68, 69)
- Section 13(2), General Clauses Act, 1897The Court referred to the rule that singular and plural include each other, unless context indicates otherwise, when rejecting the contention that the reference to all price bids barred rejection of individual bids. It also relied on context, statutory purpose and the Electricity Act’s consumer-protection policy. (¶¶ 84, 85, 86, 87, 88, 89, 90, 91)
- Article 226, Constitution of IndiaThe High Court should have declined the writ in view of the effective electricity-regulatory remedy, absence of exceptional circumstances and unexplained delay. Judicial review of procurement must address unlawful decision-making and further public interest; the contract-award mandamus here disregarded consumer interests. (¶¶ 93, 94, 95, 96, 97, 98, 100, 101, 102, 103, 104, 105)
Held
- Section 63 distinguishes adoption of competitively discovered tariff from the Commission’s own tariff determination, but does not turn the Commission into a mere post office. Its regulatory powers must be read with the applicable Central Government guidelines. Section 86(1)(b) empowers the State Commission to regulate procurement prices, including examination of market alignment and consumer interests. (¶¶ 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 78, 79)
- The expression all price bids in clause 5.15 of the Bidding Guidelines includes individual bids whose quoted tariffs are not market aligned. The BEC may recommend acceptance of market-aligned bids and rejection of others. Requiring rejection of competitive bids merely because other bids are overpriced would defeat consumer protection and lead to an anomalous result. (¶¶ 84, 85, 86, 87, 88, 89, 90, 91)
- The earlier Supreme Court orders did not require acceptance of bids regardless of market alignment until the procurement capacity was filled. The order dated 19 November 2018 expressly required tariff consideration under Section 63 in accordance with statute and precedent, which included clause 5.15. MB Power’s bucket-filling argument could not override those requirements. (¶¶ 74, 76, 77, 83)
- The expert BEC had assessed comparative tariffs and found the L-4 and L-5 bids exorbitantly high, and the State Commission had given a reasoned decision declining adoption of the L-5 tariff. APTEL erred in treating market alignment and consumer interests as outside the Commission’s scrutiny and in interfering with that lawful decision-making process. Consumer and generator interests must be balanced. (¶¶ 80, 81, 82, 92, 104)
- The Electricity Act supplies an effective adjudicatory framework through expert statutory authorities. MB Power should have approached the State Commission rather than directly invoking Article 226. Alternative remedy does not eliminate writ jurisdiction, but no extraordinary circumstances or allegation of manifest unreasonableness or arbitrariness justified bypassing it here. (¶¶ 93, 94, 95, 96, 97, 98, 99)
- MB Power took no steps after its bid was returned and the January 2015 instruction not to extend its bid-bond guarantee, or after the April 2018 order, until December 2020. Although delay alone need not always defeat a writ petition, belated recourse requires justification; the High Court should also have declined the petition for delay and laches. (¶ 100)
- State contracting bodies must follow their prescribed norms fairly, and judicial intervention in procurement requires scrutiny of arbitrariness, mala fides or irrationality and regard to the larger public interest. Here the High Court’s mandamus to procure from MB Power at a tariff higher than the L-5 bid disregarded the substantial burden that would fall on consumers and could not stand. (¶¶ 101, 102, 103, 104, 105)
- APTEL’s stay of the separate 160 MW medium-term procurement rested on the High Court judgment. Once that judgment was set aside, the stay order also had to be set aside. (¶¶ 7, 108)
Result
All three appeals allowed. The Rajasthan High Court judgment dated 20 September 2021 directing procurement from MB Power was quashed. MB Power must pay Rs.5 lakh costs to the appellants in each of Civil Appeals Nos.6503 and 6502 of 2022. APTEL’s order dated 1 June 2023 staying the medium-term procurement was also quashed, without a separate costs order in Civil Appeal No.4612 of 2023. Pending applications disposed of.