[Cites 13, Cited by 0]
Karnataka High Court
Power Company Of Karnataka Limited vs M/S Hassan Thermal Power Private ... on 10 March, 2026
-1-
WA No. 1969 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF MARCH, 2026
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT APPEAL NO. 1969 OF 2025 (GM-KEB)
BETWEEN:
1. POWER COMPANY OF KARNATAKA LIMITED
INDHANA BHAVAN, 4TH FLOOR
ANAND RAO CIRCLE
BANGALORE - 560 009
(REPRESENTED BY ITS ADDITIONAL
DIRECTOR PROJECTS)
...APPELLANT
(BY SRI SHASHIKIRAN SHETTY K., ADVOCATE GENERAL/
SENIOR ADVOCATE A/W
SMT. SUMANA NAGANAND, ADVOCATE)
AND:
1. M/S HASSAN THERMAL POWER PRIVATE LIMITED
Digitally
PREVIOUSLY KNOWN AS EURO INDIA POWER
signed by
AMBIKA H B CANARA PRIVATE LIMITED
A COMPANY REGISTERED UNDER SECTION 21
Location: OF THE COMPANIES ACT, 1956
High Court HAVING ITS ADMINISTRATIVE OFFICE AT S-327
of Karnataka
GREAT KAILASH-II, NEW DELHI -110 048
REPRESENTED BY ITS DIRECTOR
SMT. NALINI VIJAYKUMAR
W/O VIJAY KUMAR
AGED ABOUT 68 YEARS
2. STATE OF KARNATAKA
DEPARTMENT OF ENERGY
VIDHANA SOUDA,
BANGALORE - 560 001
-2-
WA No. 1969 of 2025
REPRESENTED BY ITS ADDITIONAL
CHIEF SECRETARY
...RESPONDENTS
(SRI R.K. NAROOLA, ADVOCATE;
MS. PRATIBHA SHARMA, ADVOCATE;
MS. DEEPA V., ADVOCATE FOR C/R-1 &
SRI K.S. HARISH, GOVERNMENT ADVOCATE FOR R-2)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 06.11.2025 PASSED BY THE LEARNED SINGLE
JUDGE IN W.P. No.19513/2025 (GM-KEB) AND CONSEQUENTLY
DISMISS THE WRIT PETITION.
THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY,
JUDGMENT WAS PRONOUNCED AS UNDER:
CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C.M. POONACHA
C.A.V. JUDGMENT
(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
Introduction
1. The appellant, Power Company of Karnataka Limited
[PCKL], is a nodal agency for all the electricity distribution
companies in the State of Karnataka for the procurement of power.
It has filed the present appeal impugning an order dated
06.11.2025 [the impugned order] passed by the learned Single
Judge in Writ Petition No.19513/2025 (GM-KEB).
2. Respondent No.1, M/s Hassan Thermal Power Private
Limited [HTPPL], is in the business of generating electricity. It had
filed the said petition seeking refund of the deposit [EMD] of
`1,00,00,000/- (Rupees one crore only) along with interest at the
rate of 12% per annum from 12.04.2016 till the date of refund. In
addition, HTPPL claims that it is entitled to exemplary costs from
PCKL/State for causing hardship and mental harassment by their
unjustified acts of withholding the refund of the deposit due to the
HTPPL on 12.04.2016 and for unlawfully utilising the same.
3. PCKL had contested the said petition on several grounds,
including that HTPPL had an alternate remedy under Section
86(1)(f) of the Electricity Act, 2003 [the Electricity Act] before the
Karnataka Electricity Regulatory Commission [KERC]. PCKL
contends that HTPPL is not entitled to a refund of the EMD, which
was deposited on 28.11.1998. It also contested the writ petition on
the ground that HTPPL's claim is barred by delay and laches.
Impugned Order
4. The learned Single Judge held that the HTPPL's claim
involved the State's constitutional and fiduciary obligation under
Articles 14 and 300A of the Constitution of India and therefore, fell
within the domain of public law. The learned Single Judge further
found that PCKL's retention of the deposit constituted unjust
enrichment and deprivation of property, which would contravene
Article 300A of the Constitution of India. The learned Single Judge
also held that wrongful retention of the EMD constituted a
continuing wrong of Section 22 of the Limitation Act, 1963 [the
Limitation Act], giving rise to a fresh cause of action each day
until it is refunded.
5. PCKL assails the impugned order on several grounds.
Before addressing the rival contentions, it is apposite to set out the
factual matrix in which the present dispute arises.
Factual Context
6. By an order dated 05.03.1996, the Government of Karnataka
[Government] through the then Karnataka Electricity Board [KEB]
accorded its approval for M/s. Euro Kapital A.G [Euro AG] to set up
a Low Sulphur Heavy Stock [LSHS] based barge-mounted power
plant of 1x150 MW capacity on the Mulki river near Mangaluru in
Dakshina Kannada District, subject to several conditions. However,
Euro AG was declared bankrupt.
7. Two companies, namely, M/s.Euro India Power Canara
Private Limited (now HTPPL) and M/s.Euro India Energy Limited
raised rival claims to take up the project, which was previously
allotted to Euro AG. However before considering their request, the
Government by letter dated 19.09.1998 called upon them to
deposit `10 crore each, by way of a demand draft as Guarantee
Money.
8. Whilst HTPPL by its letter dated 26.09.1998 furnished a
Bank Guarantee for USD 2.38 million (approximately `10.11 crore),
Euro India Energy Limited did not furnish the requisite amount.
9. In view of the above, on 31.10.1998, the Government
accorded approval to HTPPL (then known as Euro India Power
Canara Private Limited) to set up the aforesaid project. In terms of
the said order, the Government accepted the Bank Guarantee
furnished but, also demanded Guarantee Money of `1 crore in
cash/demand draft in addition to the Bank Guarantee, to be
deposited within a period of thirty days from the date of the order.
The Government Order stipulated that the allotment would be
subject to HTPPL commencing generation of power from the plants
within six months of signing the Power Purchase Agreement [PPA]
with KEB, which would be initially valid for a period of seven years.
HTPPL was also required to obtain all statutory clearances under
the relevant enactments.
10. In compliance with the condition of furnishing additional
"Guarantee Money", HTPPL deposited a sum of `1 crore, which
was acknowledged by KEB vide receipt dated 28.11.1998.
11. Apparently, HTPPL sought revision in the project. The
Government Order dated 31.03.1999, which has been placed on
record, indicates that, by letter dated 09.02.1999, HTPPL
requested the Government to revise the capacity of the power plant
in question from 150 MW to 195 MW. It also requested permission
to include other companies as sponsors of the project by replacing
Euro AG. By a separate letter dated 06.03.1999 addressed to
Karnataka Electricity Board [KEB], HTPPL also sought permission
to change the use of fuel from LSHS to Naphtha and an eighteen-
month construction period. In the aforesaid context, the
Government passed an order dated 31.03.1999, the operative part
of which reads as under:
"In the circumstances explained in the preamble
and after careful consideration Government are
pleased to permit M/s. Euro India Power Canara (Pvt.)
Ltd., (E.I.P.C.L) to -
(a) enhance the capacity of the Barge mounted
power project at Mulki near Mangalore to 195 MW
on combined cycle mode.
(b) incorporate new sponsors in the agreement i.e., to
in- corporate (i) M/s. Engineering Power Systems,
Canada, (ii) M/s.Atlantic Sea Board Industries
Ltd., Canada and (iii) Sea King Engineers Ltd.,
Mumbai.
(c) Change the use of fuel from LSHS to Naphtha.
(2) Further, 11/s. Euro India Power Canara (Pvt.)
Ltd., B'lore is directed to sign immediately the Power
Purchase Agreement with Karnataka Electricity Board
and achieve financial closure within six months from
the date of order, failing which the project will be
cancelled, the security deposit forfeited and the Bank
Guarantee encashed, without any further notice to that
effect."
12. Thereafter, on 22.04.1999, HTPPL entered into a PPA with
the erstwhile KEB.
13. The record indicates that the project underwent several
changes after the initial order, granting approval for setting up a
150 MW plant. These changes were approved by the Government.
The structure of the project was changed to a coal-based thermal
power plant.
14. In February 2001, the Government granted in principle
approval for the enhancement of the thermal plant's capacity to 220
MW (net 200 MW) to be located in the adjoining districts of
Bengaluru. Thereafter, in May 2001 the location of the plant was
changed to Mandya District. However, the PPA was not amended.
15. In the year 2006, HTPPL again requested for change of the
location of the plant from Mandya District to Hassan and further
enhancement of capacity to 300 MW using imported coal.
Thereafter, in April 2007, the Government accorded its approval for
further enhancement of the capacity from 300 MW to 500 MW,
subject to certain conditions. On 30.07.2007, the Government of
Karnataka accorded its approval for the execution of the restated
PPA.
16. On 25.06.2007, the revised and restated PPA was executed
between HTPPL and the distribution companies of the State of
Karnataka.
17. PCKL also acknowledged the EMD of `1 crore. The PCKL
placed a letter dated 05/07.05.2015, acknowledging the deposit
and requesting HTPPL to confirm the same and return a copy duly
stamped and signed.
18. On 11.04.2016, the Government of Karnataka passed an
order for the withdrawal of the approval granted to HTPPL for the
implementation of a coal-based thermal plant at Hassan. The
relevant extracts of the said order which indicate the reasoning for
withdrawal of the approval, are reproduced below:
"14. The project though conceived in 1995 through
competitive bidding route, has undergone several
changes, over the period of time. All parameters of the
projects like location is changed from Mangalore to
adjoining district of Bangalore to Mandya and then to
Hassan, capacity is revised from 150MW to 195MW to
220 MW to 300MW to 500MW (subsequently changed
to 660 MW) and fuel is changed from LSHS to Naptha
and then to coal. Since 1995, as is evident from the
following:
Govt.Order/ Name of Capacity Fuel Location Remarks
Letter date the Firm
DE 284 PPC M/s Euro 150 MW LSHS Barge Initial Bid
95(3) dtd Kapital mounted
05-03-1996 Project at
Mangalore
DE 98 PPC 96 Euro India 150 MW LSHS Barge Change of
dtd Power mounted. Name
31-10-1998 Canara (P) Project at
Ltd., Mangalore.
(EIPCL)
DE 98 PPC 96 Euro India 195 MW Naptha Barge Change of
dtd Power mounted. Fuel and
31-03-1999 Canara (P) Project at enhancem
Ltd., Mangalore. ent of
(EIPCL) Capacity.
PPA was
signed on
22-04-
1999 with
KEB
DE 98 PPC 96 Euro India 220 MW Coal Land based. Change of
dtd 19-02-2001 Power Adjoining Location,
Canara (P) districts of Fuel,
Ltd., Bangalore capacity.
(EIPCL) Treating
the
proposal
as an
extended
bid route
project.
DE 98 PPC 96 Euro India 220 MW Coal Mandya Change of
dtd Power Dist. Location
22-05-2001 Canara (P)
Ltd.,
(EIPCL)
- 10 -
DE 98 PPC 96 Euro India 500 MW Importe Hassan Change of
dtd Power d Coal Location,
23-09-2006 Canara (P) Capacity
Ltd.,
(EIPCL)
DE 98 PPC 96 Euro India 500 MW Importe Hassan Enhanceme
dtd Power d Coal nt of
19-04-2007 Canara (P) Capacity.
Ltd.,
(EIPCL)
DE 98 PPC 96 Approval 500 MW Importe Hassan PPA was
dtd was d Coal initiated on
18-05-2007 accorded 25-06-2007
for between
changing ESCOMs
the name and http: &
from Governmen
EIPCL to t. accorded
M/s approval on
Hassan 30.07.2007.
Thermal
Power (P)
Limited
(HTPPL)
In November 2011 it is proposed to enhance the capacity of the project from
500 MW to 660 MW in view of advantages of supercritical project (660MW and
above) over subcritical projects (below 600MW)
Therefore the project has lost the character of the
bid route project.
15. Further, as per the provisions of Electricity Act
2003, National Electricity policy, National Tariff Policy
and KERC regulations Power has to be procured by
transparent bidding process.
16. Therefore procurement of power from this project
is not in the interest of Public."
19. HTPPL filed writ petitions including W.P.Nos.30954-55/2016
(GM-KEB) challenging the order withdrawing the approval, and
connected matters (W.P.Nos.30351-352/2015 and W.P.No.
41677/2017) which were subsequently withdrawn on 07.01.2020.
- 11 -
20. HTPPL is aggrieved by the withdrawal of the approval. In
light of the disputes, it moved before the Permanent Court of
Arbitration [PCA] and filed its statement of claims. Claim No.4 is set
out below:
"Claim of refund of security deposit of the amount
deposited with R-2 with pre- litigation pendent-lite and
future interest @18%"
21. Karnataka Power Transmission Corporation Limited [KPTCL]
filed a petition (O.P No.91/2018) before KERC, inter alia, praying
as under:
"WHEREFORE it is prayed that this may be Hon'ble
Commission pleased to:
a) Declare that in keeping with the provisions of the
Electricity Act 2003, this Hon'ble Commission alone is
empowered to adjudicate upon disputes between
Generating Companies and licensees:
b) Declare that the provisions of the Arbitration and
Conciliation Act 1996 or any other provision would not
be applicable in matters pertaining to appointment of
Arbitrators, in view of the pronouncements of the
Hon'ble Supreme Court of India:
c) Declare that communications dated 29.6.2018
(Annexure- C), 11.9.2018 (Annexure-K), and 26.9.2018
(Annexure-M) appointing Respondent No 4 to 6 as
Arbitrators is illegal and opposed to the mandate of the
Electricity Act 2003:
d) Punish Respondent No 1 to 3 for contravening the
provisions of the Electricity Act 2003.
e) Pass necessary orders as deemed fit by the
Hon'ble Commission".
- 12 -
22. KERC allowed the KPTCL's petition by order dated
17.12.2018 and held that HTPPL's invocation of arbitration was
illegal. The operative part of the said order is set out below:
"a. It is declared that, the dispute, said to have been
involved in PCA Case No.AA716, between the Hassan
Thermal Power Private Limited (formerly known as 'Euro
India Power Canara Private Limited') -Vs- The
Government of Karnataka and the Karnataka
Transmission Power Corporation Limited, is exclusively
triable by this Commission, under Section 86(1)(f) of the
Electricity Act, 2003, and not before any other Forum;
b. Consequently, it is declared that, the communications
dated 29.06.2018 (ANNEXURE-C), 11.09.2018
(ANNEXURE-K) and 26.09.2018 (ANNEXURE-M),
appointing the Respondents 4 to 6 as Arbitrators, are
illegal and opposed to the mandate of the Electricity Act,
2003; and,
c. The Respondents 1 and 2 are restrained from
proceeding with the above-mentioned arbitral case."
23. HTPPL challenged the aforementioned KERC's order dated
17.12.2018 in a writ petition, being W.P.No.1633/2019. This Court
allowed the said petition by an order dated 27.09.2019 and held
that KERC lacked jurisdiction to interfere with the arbitral
proceedings, which were then pending before the PCA.
24. KPTCL appealed the said decision by filing a writ appeal
(Writ Appeal No.3893/2019) and prevailed. This Court, by an order
dated 12.03.2021, allowed the appeal and upheld the KERC's
order dated 17.12.2018. HTPPL filed a review petition, being R.P
- 13 -
No.147/2021, seeking review of the said order dated 12.03.2021
passed in W.A No.3893/2019. However, this Court dismissed the
said review petition by an order dated 13.08.2021.
25. HTPPL filed a special leave petition (SLP No.17062-63/2021)
before the Supreme Court. However, the Supreme Court dismissed
the same by an order dated 04.08.2022, which reads as under:
"We have heard learned counsel for the parties for
quite some time and find no reason to interfere with the
judgment impugned passed by the Division Bench of
the High Court of Karnataka. Consequently, the special
leave petitions stand dismissed.
Learned counsel for the petitioner at this stage submits
that the issue/legal question which has been raised by
him be permitted to be raised before the Appellate
Tribunal. It is open to the petitioner to raise all the
contentions available under law before the Appellate
Tribunal and if raised, may be examined on its own
merits in accordance with law.
If the appeal is preferred before the Appellate Tribunal
within four weeks from today, this Court hopes and
trusts that it will be decided expeditiously in accordance
with law."
However, limited liberty was reserved to approach
APTEL and raise any contentions available under law
to be examined on their merits.
26. In view of the liberty granted by the Supreme Court, HTPPL
filed an appeal against the order dated 17.12.2018 before the
Appellate Tribunal for Electricity [APTEL], Appeal No.42/2023. The
same was rejected by an order dated 13.09.2024. HTPPL
- 14 -
appealed the said decision in the Supreme Court, Civil Appeal
No.305/2025. However, the Supreme Court dismissed the said
appeal by an order dated 09.01.2025, holding that the issue was
covered by its earlier order dated 04.08.2022.
27. HTPPL has since filed a petition (O.P No.12/2025) before
KERC under Section 86(1)(f) of the Electricity Act, inter alia,
praying that the disputes between the parties be referred to
arbitration.
28. Section 86(1)(f) of the Electricity Act is set out below:
" (1) _ _ _
(f) adjudicate upon the disputes between the licensees,
and generating companies and to refer any dispute for
arbitration;"
29. In terms of the said provision, the HTPPL requested KERC to
refer the disputes to arbitration. However, by an order dated
16.12.2025, KERC dismissed the said petition with liberty to the
HTPPL to file a fresh petition with all particulars of the disputes.
KERC also clarified that all contentions urged by the parties were
kept open to be decided on the merits, in the event of HTPPL filing
afresh.
- 15 -
30. HTPPL has challenged the KERC's order dated 16.12.2025
before the APTEL (Appeal No.49/2026), which is pending.
Submissions of counsel
31. We may now note the contentions advanced on behalf of the
learned counsel for the parties.
32. The learned Advocate General appearing on behalf of PCKL
and the State contended that several disputed questions of fact
were involved that were not considered by the learned Single
Judge. He submitted that Article 2.3 of the PPA dated 22.04.1999
expressly provided for the forfeiture of the Bank Guarantee and the
security deposit if the financial closure was not achieved within a
period of six months. He contended that the amount deposited was
a performance guarantee and was liable to be forfeited as HTPPL
had not performed its obligations to set up a power plant.
33. Next, he submitted that the HTPPL had an efficacious
remedy of raising the disputes before KERC under Section 86(1)(f)
of the Electricity Act. He submitted that in the initial round, HTPPL
had raised a claim in arbitration. But, for some reason did not raise
the same in its petition filed in KERC for reference of the disputes
to arbitration.
- 16 -
34. Mr. R.K. Naroola, learned counsel appearing for HTPPL,
contended that only disputes relating to tariffs can be referred
under Section 86(1)(f) of the Electricity Act. Thus, the said remedy
is not available to HTPPL for seeking recovery of the EMD. He
contended that the withdrawal of the project in question was the
unilateral decision of the Government and its agencies. And,
HTPPL cannot be penalised for it. He submitted that the HTPPL
was prevented from acting upon the PPA of 1999 for several
reasons, including the non-provision of the Government of
Karnataka guarantee, as required under Article 9.5 of the PPA.
Further, no steps were taken for setting up the escrow account as
required under Article 9.4 of the PPA. He submitted that the
HTPPL was vexed by repeated changes of policy by the
Government of Karnataka.
35. He stated that the contention that PCKL had forfeited the
EMD is erroneous, as neither any decision nor any communication
to that effect has been placed on record.
Reasons and Conclusion
36. It is apparent from the above that the disputes between the
parties concern the parties' contractual rights and obligations.
- 17 -
37. As noted above, it is contended on behalf of HTPPL that
"appellant is in fundamental breach of the contractual framework".
This is stoutly disputed by the PCKL and the Government. Given
the nature of disputes, it was not apposite for the learned Single
Judge to entertain the same under Article 226 of the Constitution of
India.
38. Prima facie, we are also unable to concur that the HTPPL
lacks an efficacious alternative remedy under Section 86(1)(f) of
the Electricity Act, which it has already invoked. It is relevant to
note that the HTPPL had raised a claim for recovery of EMD in
arbitration before PCA. The KERC as well as the APTEL had
accepted that KERC alone would have the jurisdiction to adjudicate
the disputes between the generating companies and the licensees.
The Supreme Court had found no ground to interfere with the said
decision and the HTPPL's special leave petitions (SLP Nos.17062-
63/2021) were dismissed. The Supreme Court reiterated the said
view in Civil Appeal No.305/2025 preferred by HTPPL against the
order passed by APTEL. PCKL's stand that all disputes under
Section 86(1)(f) of the Electricity Act could be raised before the
KERC, and not in arbitration, was upheld by KERC, APTEL and the
Supreme Court. Thus, it is difficult to accept that the HTPPL does
- 18 -
not have an alternate remedy before KERC. Concededly, HTPPL
had canvassed its contention that the disputes were required to be
decided in arbitration before the PCA, before KERC, and before
APTEL, and that view was rejected. Since HTPPL had raised a
claim regarding recovery of EMD before PCA, it would follow that,
according to KERC and APTEL, the said claim could also be raised
before KERC. As noted above, those decisions of KERC and
APTEL have attained finality.
39. Having stated the above, we must also add that even if it is
accepted (which we do not) that KERC or APTEL does not have
the jurisdiction to decide the disputes regarding return of the EMD,
it was not apposite that the said claim be adjudicated in a writ
petition under Article 226 of the Constitution of India. We say so
because the adjudication clearly involves disputed questions of
fact, and such disputes are not entertained under Article 226 of the
Constitution of India.
40. We may also note that although several disputed questions
have been raised regarding the refund of the EMD, the same have
not been addressed by the learned Single Judge. First of all there
is no finding as to the nature of the deposit. Whilst PCKL claims
that the deposit is a performance guarantee, HTPPL refers to it as
- 19 -
an EMD. It is pointed out by the learned counsel appearing for the
HTPPL that the said deposit has been mentioned in some
documents as security deposit and in another document as EMD. It
was initially deposited as "Guarantee Money". This brings us to the
question as to what contingency was contemplated against which
the deposit was required; or what was HTPPL's obligation, the
performance of which was intended to be secured by the deposit.
Once this question is addressed, the question that would follow is
whether HTPPL had performed its obligations, which were secured
by the security deposit or whether the contingency against which
the deposit is made had occurred.
41. HTPPL paid the amount in November 1998 to secure the
right to implement the project for setting up a 150 MW plant at
Mulki. The project had undergone several changes. However, the
project was not implemented. Whilst HTPPL states that the same
was for reasons attributable to the Government and the distributing
companies, the Government and the PCKL stoutly dispute the
same. These questions require adjudication and have not been
considered by the learned Single Judge.
42. The next question is whether the HTPPL's claim is barred by
the limitation period. The learned Single Judge held that it is a
- 20 -
continuing cause of action. Additionally, the learned Single Judge
also held that time spent by HTPPL in pursuing the remedies
before the competent forum ‒ High Court, Arbitral Tribunal, KERC
- would be liable to be excluded under Section 14 of the Limitation
Act. Section 14 of the Limitation Act is applicable where the
plaintiff has pursued the matter in good faith in a court which, from
the defect of jurisdiction or other cause of a like nature, is unable to
entertain it. In order to consider whether any period of time is
required to be excluded, it would be necessary for the Court to
examine each of the said factors.
43. To determine whether a claim is barred by limitation, it is
necessary to determine when the period of limitation begins. Prima
facie, Article 113 of the Schedule to the Limitation Act is applicable
and the period of limitation shall begin when the right to sue arises.
44. If HTPPL's argument is accepted that the amount was paid as
guarantee money merely to assure its commitment to execute the
project, the right to receive it would arise from the date of the
Government's decision to withdraw the approval for the project/PPA. The
same was withdrawn on 11.04.2016. Therefore, if HTPPL's argument is
accepted, the right to claim a refund arose on that date.
- 21 -
45. We are unable to accept that the HTPPL's cause of action is
continuing. HTPPL seeks recovery of the amount, which,
according to it, was due to it on 11.04.2016. The fact that PCKL
has declined to refund the same or fails to do so does not render
the cause of action a continuing one.
46. HTPPL moved the PCA and filed a statement, inter alia,
claiming refund of the EMD, along with pre-litigation, pendente lite,
and future interest at the rate of 18% per annum.
47. KERC held that HTPPL's invocation of arbitration was illegal.
KERC's order dated 17.12.2018 was set aside by this Court by an
order dated 27.09.2019 in W.P.No.1633/2019. But the appeal
(W.A.No.3893/2019) against the said order was allowed by an
order dated 12.03.2021. HTPPL's special leave petitions (SLP
Nos.17062-63/2021) were dismissed by the Supreme Court by an
order dated 04.08.2022, and HTPPL was relegated to avail its
remedies before APTEL. HTPPL appealed the KERC's order
dated 17.12.2018 before APTEL but, was unsuccessful. APTEL
rejected HTPPL's appeal (Appeal No.42/2023) by an order dated
13.09.2024. Further, the Supreme Court dismissed the appeal by
an order dated 09.01.2025. Thus, until 09.01.2025, HTPPL was
pursuing its remedies to pursue its claim in arbitration.
- 22 -
48. Thereafter, HTPPL on 21.06.2025, filed a petition before
KERC under Section 86(1)(f) of the Electricity Act. But, no specific
claim for refund was made in that application. However, HTPPL
filed a writ petition claiming the refund of the EMD, the order in
which is the subject matter of the present appeal.
49. In our view, HTPPL is entitled to exclusion of the time that it
had spent in pursuing its claim before the APTEL. HTPPL had
sought to pursue its claim before the PCA diligently and we are
unable to accept that its endeavours to be permitted to pursue its
remedy, were not bona fide. Thus, the period from the date on
which HTPPL had sought for the invocation of arbitration
proceedings by its letter dated 25.06.2018 to PCA seeking the
appointment of an arbitral tribunal, till the date of dismissal of its
appeal (CA.No.305/2025) by the Supreme Court, may be liable to
be excluded.
50. The question whether HTPPL's claim is barred by limitation
would thus have to be determined by excluding the aforementioned
period. The principal question whether the appellant was
responsible for the delay in executing the project is also a
contentious one.
- 23 -
51. Before concluding, we may also mention that the learned
counsel appearing for the HTPPL had also contended that although
the claim for refund was not specifically mentioned in HTPPL's
petition filed under Section 86(1)(f) of the Electricity Act, it does not
mean that HTPPL is not pursuing its remedy for refund before the
KERC. He contended that the said petition was filed praying that
KERC to refer the disputes to arbitration. He submitted that the
disputes mentioned there merely indicated the disputes between
the concerned parties and did not foreclose HTPPL's right to raise
specific claims arising from those disputes, if KERC referred the
same to arbitration.
52. Prima facie, we are inclined to accept this contention,
considering that the HTPPL's prayer before KERC was to refer the
disputes to arbitration. As noted above, KERC has dismissed the
said petition by an order dated 16.12.2025. However, granted
liberty to HTPPL to file a fresh petition setting out all particulars
regarding the disputes.
53. Considering that refund of the amount also arises from the
decision of the State Government to withdraw its consent to the
PPA and the project, HTPPL would not be precluded from raising a
specific claim for refund pursuant to the liberty granted by KERC.
- 24 -
54. In view of the above, we allow the present appeal and set
aside the impugned order. We, however, clarify that all rights and
contentions of the parties in regard to HTPPL's claim for refund of
the EMD, along with interest, are reserved.
55. The pending interlocutory applications also stand disposed
of.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C.M. POONACHA)
JUDGE
AHB/KPS
