Home Case Index All Cases Indian Laws Indian Laws + SC Indian Laws - 2018 (2) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 1976 - SUPREME COURTInterpretation of statute - Whether the word 'fuel' as used in Clause 1.1.27 of the Power Purchase Agreement (PPA) means "natural gas only" or includes Regasified Liquefied Natural Gas (RLNG) also? - HELD THAT:- A wrong question will inevitably lead to a wrong answer - The question for consideration presently is not if RLNG is a form of natural gas, but whether the parties intended to exclude any form of gaseous fuel from the ambit of the contract except for natural gas in its natural form from the domestic market, keeping the price of gas in mind, which would ultimately set the price per unit of electricity for the consumer. The PPA is a technical commercial document. It has been drafted by persons conversant with the business. RLNG and natural gas as used in the agreement are not synonymous or interchangeable. The principle of business efficacy will also have to be kept in mind for interpreting the contract. The terms of the agreement have to be read first to understand the true scope and meaning of the same with regard to the nature of the agreement that the parties had in mind. The Respondent's letters dated 07.08.2012 and 27.08.2012 become crucially relevant for the understanding that it was itself under no misapprehension that RLNG was never intended to be included within the definition of natural gas under the contract. In the former, the Respondent wrote, "We await the confirmation from your good office to take it up further for obtaining necessary consent, if any, in accordance with law for use of RLNG and the resultant tariff increase." The latter again requested for permission to use RLNG to supplement shortfall in gas from the KG-D6 Basin, requesting to acknowledge its usage. The contention of the Respondent that these were only intimations and not request for permission to use RLNG stands belied from the plain language used in them - The sporadic use of RLNG on one or two occasions under pressing circumstances, after due orders Under Section 11 of the Electricity Act, 2003, for short durations, cannot make the exception the norm to contend either that RLNG was included in the term fuel or that the Appellant had agreed to its use. The question of waiver by the Appellant or application of the principle of approbate and reprobate does not arise in the facts of the case. The present was a contract for purchase of power generated from fuel which was reasonably priced so as to keep in check the cost of power generated from the same, in the interest of the consumer. Undoubtedly, cost of fuel was a primary consideration in the mind of the Appellant - there can be no manner of doubt that the parties by their conduct and dealings right up to the institution of proceedings by the Respondent before the Commission were clear in their understanding that RLNG was not to be included within the term "Natural Gas" under the PPA. The definition of natural gas in Section 2(za)(i) of the PNGRB Act, has no relevance to the present controversy as the Act was enacted with the object to oversee and regulate refining, processing, distribution and marketing of petroleum products and natural gas - thus, the inevitable conclusion is that the intention of the parties under the agreement, as amended from time to time, was to generate power from fuel reasonably priced, so as to ultimately make available power to the consumers at reasonable rates. The choice of fuel as natural gas only has, therefore, to be understood as being confined to natural gas only in its natural form. The Respondent was well aware that RLNG was never intended to be included in the definition of natural gas as understood by the parties, notwithstanding that it may be a variant of natural gas. Appeal allowed.
|