Case Note & Summary
The Supreme Court allowed the appeal filed by HP Power Transmission Corporation Ltd (HPPTC Ltd) against the judgment of the Appellate Tribunal for Electricity (APTEL) which had held that BHP Ltd was liable only for its proportionate share of the Bay construction cost. The dispute arose from a Connection Agreement dated 02.07.2021 between HPPTC Ltd and BHP Ltd, under which BHP Ltd was designated as the sole applicant for connectivity for three hydroelectric projects. HPPTC Ltd constructed a 66kV Bay at Urni and demanded the entire cost of INR 3,42,85,447 from BHP Ltd. BHP Ltd sought to pay only its proportionate share, relying on an Internal Tripartite Agreement (ITA) dated 27.12.2019 among the three generators for cost sharing. The State Commission dismissed BHP Ltd's petition, holding it liable for the entire Bay cost. APTEL reversed, directing HPPTC Ltd to provide connection on payment of proportionate shares. The Supreme Court restored the State Commission's order, holding that under the Connection Agreement, BHP Ltd was solely liable for all payments, including Bay construction cost. The ITA was a private arrangement among generators and could not bind HPPTC Ltd. The Court directed BHP Ltd to pay the entire Bay cost, with liberty to recover proportionate shares from the other generators. The appeal was allowed, and the impugned judgment of APTEL was set aside.
Headnote
A) Electricity Law - Interpretation of Connection Agreement - Liability for Bay Construction Cost - Section 86(1)(f), Electricity Act, 2003 - The dispute pertained to whether BHP Ltd, as lead applicant under the Connection Agreement, was liable for the entire Bay cost or only its proportionate share. The Supreme Court held that the plain language of the Connection Agreement made BHP Ltd solely liable for all payments, including Bay construction cost, and the internal tripartite agreement could not bind the transmission licensee. (Paras 1-10) B) Contract Law - Privity of Contract - Third Party Rights - The Court held that the transmission licensee (HPPTC Ltd) was not a party to the Internal Tripartite Agreement dated 27.12.2019 and could not be compelled to recover proportionate shares from other generators. The lead generator's liability under the Connection Agreement was independent of internal arrangements. (Paras 9B-10) C) Electricity Law - Recovery of Charges - Default by Co-Generators - The Court held that the lead generator cannot be burdened with additional costs due to default by other generators without explicit contractual provisions; however, the lead generator's liability to the transmission licensee remains unaffected. The transmission licensee may recover the defaulting generator's share through separate legal remedies. (Paras 9B-9C)
Issue of Consideration
Whether the lead generating company (BHP Ltd) is liable to pay the entire construction cost of the Bay under the Connection Agreement dated 02.07.2021, or only its proportionate share.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of APTEL, and restored the order of the State Commission dated 27.12.2022. BHP Ltd is directed to pay the entire Bay construction cost to HPPTC Ltd, with liberty to recover proportionate shares from Respondent No.2 and Respondent No.3 in accordance with the ITA dated 27.12.2019.
Law Points
- Interpretation of contract
- Liability of lead generator
- Bay construction cost
- Connection Agreement
- Electricity Act 2003
