Isabella Mariam

The High Court of Delhi, Single Bench of Justice Purushaindra Kumar Kaurav held that the Central Electricity Regulatory Commission (CERC) alone has the authority to refer disputes involving generating companies or transmission licensees for arbitration under Section 79(1)(f) of the Electricity Act, 2003, thereby rendering a petition under Section 9 of the Arbitration and Conciliation Act not maintainable. The dispute concerned a wind energy producer’s challenge against deductions by the Solar Energy Corporation of India over an alleged shortfall in power supply. In a significant observation, the Court also cautioned briefing lawyers and law firms to verify the status of case laws before relying on them, noting that citing decisions under review or appeal without disclosure may mislead the adjudicatory process and falls short of the fairness expected from officers of the Court.

The petitioner, a generating company operating a 300 MW wind power project in Kutch, Gujarat, entered into a Power Purchase Agreement (PPA) dated 23.05.2018 with the respondent, Solar Energy Corporation of India (SECI), for a 25-year supply of power. SECI, functioning as a Renewable Energy Implementing Agency under the Ministry of New and Renewable Energy, issued a notice on 02.05.2025 alleging non-fulfilment of the minimum energy requirement of 946.08 MUs for FY 2024–25 and demanded compensation under Article 4.4.1 of the PPA. The petitioner claimed that the shortfall, limited to 632 MUs, resulted from force majeure events under Article 4.4.3, and sought protection from unilateral deductions before arbitration proceedings commenced.

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The petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an injunction against SECI from deducting the claimed amount from future invoices. The respondent contested the maintainability of the petition, citing Section 79(1)(f) of the Electricity Act, 2003, asserting that only the Central Electricity Regulatory Commission (CERC) had authority to adjudicate or refer such disputes to arbitration. Both sides relied on various statutory provisions and judicial precedents to support their contentions.

The respondent’s counsel argued that disputes concerning tariff or energy shortfall were to be adjudicated by CERC and that the Electricity Act, by virtue of Sections 158 and 174, prevailed over the Arbitration Act. The petitioner contended that the dispute was contractual and did not involve tariff determination, arguing that the arbitration clause in the PPA entitled it to seek relief under the Arbitration Act. Evidence before the Court included the PPA, SECI’s notice dated 02.05.2025, and written submissions detailing the jurisdictional issue concerning CERC’s powers of adjudication and referral under the Electricity Act.

The Court observed that “the instant petition is not maintainable on the ground that CERC has the exclusive power of referring disputes involving generating companies or transmission licensee for arbitration.” It stated that “the referral power of the CERC under Section 79(1)(f) of the Electricity Act has been found to prevail over Section 11 and 8 of the Arbitration Act.”

While examining the statutory framework, the Court recorded that “Section 79(1)(f) is in two parts — the first part refers to the adjudicatory powers of the CERC and the second deals with the referral powers of the Commission.” The judgment further noted that “the power to refer disputes for arbitration under the second part of the provision is broader than the power to adjudicate disputes.”

The Court stated, “The CERC has the power to refer a dispute, which falls outside the scope of Section 79(1)(a)-(d), for arbitration when there exists an arbitration clause in the agreement involving generating companies or transmission licensee.” It recorded that “this power needs to be mandatorily exercised, and the party seeking the referral has, in such a situation, a right to be referred for arbitration.”

Addressing the conduct of briefing lawyers, the Court observed that “the instructing and briefing counsels/law firms are expected to diligently and sincerely verify authorities before they cite them in a Court.” It added, “Reliance upon a decision that is under review or appeal, without disclosing such pendency, amounts to lack of candour to the Court and may mislead the adjudicatory process.” The Court stated that “such conduct falls short of the standard of fairness and completeness that is expected from officers of the Court.”

The judgment also recorded that “the referral powers of the CERC under Section 79(1)(f) whereby it can refer disputes involving generating companies or transmission licensee for arbitration conflicts with the power of a Court/Authority under Sections 8 or 11 of the Arbitration Act.” The Court observed that “the provisions of the Electricity Act prevail over the Arbitration Act insofar as the latter is found to be in conflict, both implied and express.”

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It was further stated that “the CERC’s referral power is exclusive, and any other Court or authority is precluded from referring such disputes for arbitration.”

The Court ordered: “The instant petition is not maintainable in view of the statutory scheme under Section 79(1)(f) of the Electricity Act, 2003. It is hereby concluded that the CERC has the power to refer a dispute, which falls outside the scope of Section 79(1)(a)-(d), for arbitration when there exists an arbitration clause in the agreement involving generating companies or transmission licensee.”

“The referral powers of the CERC under Section 79(1)(f) whereby it can refer disputes involving generating companies or transmission licensee for arbitration conflicts with the power of a Court/Authority under Sections 8 or 11 of the Arbitration Act. The instant petition, accordingly, stands dismissed as not maintainable.”

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, Ms. Pallavi Arora, Advocates.

For the Respondent: Mr. M.G. Ramachandran, Senior Advocate with Ms. Anushree Bardhan, Ms. Srishti Khindaria, Ms. Somya Sahni, Ms. Ritika Singh, 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