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2022 (11) TMI 1395 - SUPREME COURTTermination of Power Purchase Agreement (PPA), which was entered into by the Appellant and the first Respondent - statutory contract or not - scope of judicial review of action by the State in a matter arising from a contract - concept of public law in judicial review in a contractual matter - arbitration Clause in regard to the subject matter - case of the first Respondent is on par with Renew Energy or not - non-compliance of Article 9.1 of the PPA, namely, the effect of Appellant not issuing notice contemplated therein before issuing the impugned termination dated 07.07.2018? - challenge to award of largesse by the State or is it applicable across the Board irrespective of the stage when the matter arises in relation to a contract? WHETHER THE PPA IS A STATUTORY CONTRACT? - HELD THAT:- The court must carefully attend to the facts and the circumstances of the case. It should find out whether the impugned decision is based on any principle. If not, it may unerringly point to arbitrariness. If the act betrays caprice or the mere exhibition of the whim of the authority it would sufficiently bear the insignia of arbitrariness. In this regard supporting an order with a rationale which in the circumstances is found to be reasonable will go a long way to repel a challenge to state action. No doubt the reasons need not in every case be part of the order as such. If there is absence of good faith and the action is actuated with an oblique motive, it could be characterised as being arbitrary. A total non-application of mind without due regard to the rights of the parties and public interest may be a clear indicator of arbitrary action. A wholly unreasonable decision which is little different from a perverse decision under the Wednesbury doctrine would qualify as an arbitrary decision Under Article 14. Ordinarily visiting a party with the consequences of its breach under a contract may not be an arbitrary decision. WHETHER THERE IS AN ARBITRATION CLAUSE? - HELD THAT:- It may not be a case where the PPA provides for an arbitration Clause capable of determining the lis in question. The situation therefore contemplated in U.P. Roof [1996 (8) TMI 453 - SUPREME COURT] as laid down in ABL [2003 (12) TMI 584 - SUPREME COURT] does not exist. THE IMPACT OF THE JUDGMENT IN THE FIRST WRIT PETITION - HELD THAT:- The fifth Respondent is to be operated by the State Transmission Utility, which is defined in Section 2(67) as the Board (defined as the State Electricity Board) or the Government company specified by the State Government Under Section 39(1), unless it is operated by a Government company or any authority or corporation established or constituted by or under and State Act. It would, therefore, appear to us that if the fourth Respondent is the State Transmission Utility, it would be the Body to operate the fifth Respondent. The attempted disassociating of the fifth Respondent from the fourth Respondent, appears to us to be without justification. However, we leave the matter there. We may conclude nearly that all the requirements were met. There remained the metering requests and the aspects about furnishing data. They clearly appear to be matters which could have been remedied at any rate if a default notice was given. OVERWHELMING PUBLIC INTEREST - HELD THAT:- The concept of overwhelming public interest has essentially evolved in the context of cases relating to the award of contract by the State. It becomes an important consideration in the question as to whether then the State with whatever free play it has in its joints decides to award a contract, to hold up the matter or to interfere with the same should be accompanied by a careful consideration of the harm to public interest. We do not go on to say that consideration of public interest should not at all enter the mind of the court when it deals with a case involving repudiation of a claim under a contract or for that matter in the termination of the contract. However, there is a qualitative difference in the latter categories of cases. Once the State enters into the contract, rights are created - In this case, it is noteworthy that the rates were in fact settled on the basis of international competitive bidding and in which as many as 182 bidders participated and the rate offered by the first Respondent was undoubtedly the lowest. The fact that power has become cheaper in the market subsequently by itself should not result in non-suiting of the complaint of the first Respondent, if it is found that a case of clear arbitrariness has been established by the first Respondent. An inspection by the CEIG would necessarily have to be carried out in which the Appellant would have to be involved to facilitate the exercise. In the facts of this case, on being satisfied, the CEIG would necessarily have to grant the re-validation of the earlier Report. It would also involve an opportunity to the CEIG to look into the aspects which have been projected by the fist Respondent itself in its letter dated 16.09.2020. The report would indeed indicate the state of affairs about all the facets. As already noticed, even under the impugned judgment dated 27.02.2020, the first Respondent would have to submit necessary applications. We would think that essentially the Appellant's attempt was to secure a reduction in the rate. The rate of the first Respondent was found to be the lowest after a clearly keenly competitive international bidding, involving a large number of bidders. The view taken by the High Court upheld - appeal dismissed.
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