Recently, the Delhi High Court examined whether a wind energy generator facing claims of shortfall in power supply could seek interim protection under the Arbitration and Conciliation Act, 1996, or whether the exclusive referral powers of the Central Electricity Regulatory Commission under the Delhi Electricity Act, 2003, would take precedence. The case raised complex questions about the scope of statutory arbitration, the role of contractual clauses, and the limits of judicial intervention in disputes involving regulated entities. Read on to explore how the Court addressed these intricate issues.
Brief Facts:
The case arose from a Power Purchase Agreement (PPA) between a wind energy generator and a government-licensed renewable energy agency for the supply of wind power over a long-term period. The generator faced a demand for compensation on account of an alleged shortfall in minimum energy supply, while it attributed the shortfall to force majeure events under the PPA. Apprehending coercive recovery, it approached the court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection against the notice and deductions. The respondent objected to the petition’s maintainability, contending that jurisdiction lay exclusively with the Central Electricity Regulatory Commission (CERC) under Section 79(1)(f) of the Electricity Act, 2003. The court examined CERC’s adjudicatory powers and held that such disputes must be referred to the Commission, rendering the petition not maintainable.
Contentions of the Petitioner:
The Petitioner contended that the dispute was purely contractual and did not fall within the regulatory jurisdiction of the Appropriate Commission. It was argued that a mere reference to tariff-related clauses in the PPA does not convert a claim for damages arising from non-supply of power into a tariff or regulatory issue. The Petitioner distinguished between Sections 79(1)(f) and 86(1)(f) of the Electricity Act, asserting that the former applies only to disputes involving tariff determination, scheduling, or generation by central entities, which were not in question here. It was further submitted that Section 158 of the Electricity Act, being procedural, applies only where arbitration is mandated by statute and cannot override a contractual arbitration clause. The petitioner maintained that the Electricity Act does not prohibit arbitration in contractual matters and that it was entitled to invoke the agreed arbitral mechanism under the Arbitration and Conciliation Act, 1996.
Contentions of the Respondent:
The Respondent contended that under the PPA, disputes relating to non-supply of minimum energy and determination of compensation fall within the jurisdiction of the Appropriate Commission, as expressly provided in the relevant contractual clauses. It was submitted that Article 16.3.1 mandates adjudication of disputes involving tariff or claims affecting tariff by the Commission, rendering the arbitration clause inoperative. Emphasizing the term “involving” under Section 79(1)(f) of the Electricity Act, the Respondent argued that the present dispute directly pertains to regulatory functions. It was further submitted that Section 9 of the Arbitration and Conciliation Act, 1996 is inapplicable by virtue of Section 2(3), as the Electricity Act constitutes a special statute governing such disputes. The Respondent also relied on Section 158 of the Electricity Act, which provides for arbitration only when directed by the Commission, and Section 174, which gives the Electricity Act overriding effect over inconsistent laws, thereby excluding the application of the Arbitration and Conciliation Act.
Observation of the Court:
The Court observed that, “For examining the maintainability of the present petition, this Court has analysed the referral and adjudicatory powers of the CERC. This Court has found 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. 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.” The Court noted that the Respondent’s primary objection pertained to jurisdiction, stating, “The primary objection of the respondent pertains to the maintainability of the instant petition in light of Section 79(1)(f) of the Electricity Act.”
Discussing the scope of Section 9 of the Arbitration and Conciliation Act, 1996, the Court explained that, “A plain reading of Section 9 indicates that a party may seek interim measures before, during, or after arbitral proceedings but before the enforcement of an award under Section 36. Naturally, a petitioner seeking interim measures/protections under Section 9 must establish a right to invoke arbitration proceedings.” The Court clarified that, “A detailed examination thereof may not be necessary at this stage except to state that an objection pertaining to statutory bars/exclusions to proceeding under the Arbitration Act can be gone into by a Court acting under the jurisdiction conferred by Section 9 of the Arbitration Act.”
The Court observed that, for the purposes of providing a comprehensive analysis, the possibility of Section 94(2) of the Electricity Act acting as a statutory substitute to Section 9 of the Arbitration Act has also been explored. The Bench also took into consideration the need to guide the exercise of referral powers by CERC, observing that, “To provide guidance on considerations which ought to govern CERC’s referral for arbitration, a claimant’s right to seek a referral and the appropriateness of referring disputes for arbitration have also been examined.” Within this discussion, the Court analyzed both the right to seek referral and the appropriateness of referring parties for arbitration, balancing contractual autonomy with the regulatory framework.
The decision of the Court:
In light of the foregoing, the Court held that the petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, is not maintainable, as the exclusive authority to refer disputes involving generating companies or transmission licensees lies with the Central Electricity Regulatory Commission (CERC) under Section 79(1)(f) of the Electricity Act. Consequently, the petition is dismissed, with liberty granted to the petitioner to approach the Commission or pursue any other remedies available under law.
Case Title: Renew Wind Energy (AP2) Pvt. Ltd Vs. Solar Energy Corporation of India
Case No: O.M.P.(I) (COMM.) 213/2025
Coram: Hon’ble Mr. Justice Purushaindra Kumar Kaurav
Advocate for Petitioner: Sr. Adv. Jayant Mehta, Advs. Vishrov Mukherjee, Girik Bhalla, Sai Snigdha Nittala, Juhi Senguttuvan, Priyanka Vyas, Yashaswi Kant, Prayush Singh and Pallavi
Advocate for Respondent: Sr. Adv. M.G. Ramachandran, Advs. Anushree Bardhan, Srishti Khindaria, Somya Sahni, Ritika Singh and Aneesh Bajaj
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