CERC’s Power To Refer “Any Dispute” Under S.79(1)(f) Held Wider Than Its Adjudicatory Jurisdiction; Delhi High Court Upholds Arbitration Referral In Power-Sector Contract Dispute
Safiya Malik
The High Court of Delhi Single Bench of Justice Purushaindra Kumar Kaurav held that the Central Electricity Regulatory Commission is empowered to refer parties to arbitration in a manner that exceeds the scope of its adjudicatory jurisdiction. The Court stated that while CERC may adjudicate only those disputes that fall within Section 79(1)(a) to (d) of the Electricity Act, it may, in exercise of its referral authority under Section 79(1)(f), refer any dispute to arbitration, including matters it is not competent to decide itself. The case concerned a contractual disagreement between entities engaged in the power sector, in which one party sought recourse before the Commission. The Court ultimately clarified the extent of CERC’s powers and directed the parties to pursue the appropriate statutory mechanism.
The petitioner, a wind energy generating company, approached the High Court seeking interim protection under Section 9 of the Arbitration and Conciliation Act against deductions proposed by the respondent, a central government-owned procuring agency, relating to an alleged shortfall in contracted energy supply.
The petition originated from a Power Purchase Agreement under which energy supplied from a wind project was to be procured and sold onward to various distribution utilities. The petitioner asserted that the respondent’s intention to affect a deduction was unjustified and sought urgent relief. The petition set out details of the contractual arrangement, including the quantum of energy contracted, the timelines of commissioning, and subsequent correspondence exchanged between the parties during which the respondent communicated its intention to enforce what it considered a contractual liability.
The petitioner invoked the arbitration clause contained in the agreement and argued that the respondent’s conduct warranted interim protection pending constitution of an arbitral tribunal. The Court recorded that the petitioner relied upon orders of the Central Electricity Regulatory Commission (CERC) and judicial precedents to assert that the dispute was purely contractual and not within the adjudicatory domain of the Commission. It further noted the petitioner’s submission that the deductions proposed were contrary to the terms of the agreement and unsupported by any material demonstrating breach on its part.
The respondent raised a preliminary objection to maintainability, submitting that in view of Section 79(1)(f) of the Electricity Act, only the CERC could either adjudicate the dispute or decide whether it ought to be referred to arbitration. It argued that the petitioner could not bypass the statutory mechanism. Both sides placed reliance on various judicialjudgements concerning the scope of CERC’s adjudicatory and referral powers. The statutory framework of Section 79(1) and its interaction with arbitration clauses in power sector contracts was central to the dispute.
The Court recorded that the respondent’s objection required it to examine the scope of Section 79(1)(f) of the Electricity Act. It observed that the decision of the Appellate Tribunal for Electricity in Madhya Pradesh Power Management Company Ltd. v. Damodar Valley Corporation supported the view that the Commission may, where a valid arbitration agreement exists, refer a dispute to arbitration even if it cannot adjudicate it. The Court quoted the Tribunal’s holding that “the concept of arbitration is not alien to the disputes arising under various provisions of the Electricity Act, 2003” and that the Commission would be “bound to refer the dispute for arbitration” where the matter does not concern its regulatory functions.
It stated that accepting the petitioner’s contention would render Section 79(1) and Section 158 redundant, noting the Tribunal’s reasoning that Parliament did not intend to make all disputes under the Act immune to arbitration. The Court quoted: “Had it been the intention of the Parliament to make all the disputes under the Electricity Act immune to Arbitration, it would have made a specific provision in this regard… like Section 145.”
The Court recorded the reasoning of the Supreme Court in an earlier case, noting the finding that “the remedy for the appellant’s disputes lies before the CERC and/or the arbitral tribunal to which the CERC may refer any part of such disputes.”
It observed further that in PTC India Ltd. v. Jaiprakash Ventures Ltd., the Court held that under Section 79(1)(f), “it is the CERC which will decide which dispute… has to be referred to arbitration” and that this determination is “the prerogative of CERC.”
The Court stated that once a dispute falls outside the matters specified in Section 79(1)(a)-(d) and there exists an arbitration clause, “the CERC is bound to refer the same for arbitration.”
It addressed the petitioner’s argument that the CERC lacked jurisdiction even to determine whether the dispute was tariff-related, quoting the petitioner’s position that “if there is no jurisdiction to adjudicate the dispute, there is no question of CERC having jurisdiction to refer the matter to arbitration. The CERC would remain competent to refer a given dispute for arbitration, even if the same is found to not relate to tariff.”
It observed that the CERC’s earlier understanding of its jurisdiction, relied upon by the petitioner, was based on “an incorrect appreciation of the legislative intent” and therefore did not merit acceptance.
The Court directed as follows:
Section 79(1)(f) of the Electricity Act “vests two distinct powers with the CERC, them being, adjudicatory powers and referral powers. The CERC in exercise of its adjudicatory powers can only adjudicate upon disputes connected with Section 79(1)(a)-(d). However, while exercising its referral powers, it can refer ‘any’ dispute for arbitration”; further, “[t]he power of the CERC to refer a dispute involving generating companies or transmission licensee for arbitration prevails over the referral powers of a Court/authority other than the CERC, under Sections 8 or 11 of the Arbitration Act”; and “[t]he CERC has the exclusive power and prerogative under Section 79(1)(f) of the Electricity Act to refer disputes concerning generating companies or transmission licensee for arbitration.”
“The instant petition is, therefore, not maintainable and deserves to be dismissed. Ordered accordingly. The petitioner shall be at liberty to institute appropriate proceedings in accordance with law, if so advised.”
Advocates Representing the Parties
For the Petitioner: Mr. Jayant Mehta, Senior Advocate with Mr. Vishrov Mukherjee, Mr. Girik Bhalla, Ms. Sai Snigdha Nittala, Ms. Juhi Senguttuvan, Ms. Priyanka Vyas, Mr. Yashaswi Kant, Mr. Prayush Singh and Ms. Pallavi Arora, Advocates, instructed by Trilegal.
For the Respondent: Mr. M.G. Ramachandran, Senior Advocate with Ms. Anushree Bardhan, Ms. Srishti Khindaria, Ms. Somya Sahni, Ms. Ritika Singh and Mr. Aneesh Bajaj, Advocates.
Case Title: Renew Wind Energy (AP2) Pvt. Ltd. v. Solar Energy Corporation of India
Neutral Citation: 2025: DHC:9650
Case Number: O.M.P.(I)(COMM.) 213/2025
Bench: Justice Purushaindra Kumar Kaurav
