Case Note & Summary
The case involves an appeal by Indsil Hydro Power & Manganese Ltd against the State of Kerala and the Kerala State Electricity Board (KSEB) regarding a dispute over the supply of free power under an agreement for a captive hydel power project. The appellant, an EHT consumer with a power-intensive unit, was allowed to set up a 21 MW hydel project at Kuthungal under a government policy. An agreement was executed in 1992, under which the appellant was to construct the project and KSEB was to build a transmission line. Clause 10 of the agreement provided that energy fed into the grid less 12% towards wheeling charges and transmission losses would be delivered free of cost to the appellant. The appellant completed the project, but KSEB delayed the transmission line, preventing the evacuation of power. The appellant filed a writ petition seeking a declaration that it was entitled to free power and a mandamus to complete the transmission line. The High Court dismissed the petition, holding that the obligation to provide free power arose only after the transmission line was ready. The Supreme Court allowed the appeal, holding that Clause 10 was not contingent on the transmission line and that the appellant was entitled to compensation for the period of delay. The court directed the State to pay compensation as determined by the High Court.
Headnote
A) Contract Law - Interpretation of Contractual Clauses - Clause 10 of Agreement - Free Power Obligation - The appellant was entitled to free power under Clause 10 of the agreement, which was not contingent on the completion of the transmission line by KSEB. The High Court erred in holding that the obligation to provide free power arose only after the transmission line was ready. (Paras 18-30) B) Electricity Law - Captive Power Project - Wheeling Charges - Clause 10 of Agreement - The agreement provided that energy fed into the grid less 12% towards wheeling charges and transmission losses would be delivered free of cost to the appellant. The court held that this obligation was independent of the transmission line construction. (Paras 10-11) C) Constitutional Law - Writ Jurisdiction - Article 226 - Compensation for Breach of Contract - The High Court could have granted compensation for the delay in completing the transmission line by KSEB. The Supreme Court directed the State to pay compensation for the period of delay. (Paras 31-35)
Issue of Consideration
Whether the appellant is entitled to free power under Clause 10 of the agreement despite the transmission line not being completed by KSEB, and whether the High Court erred in dismissing the writ petition.
Final Decision
Appeal allowed. The judgment of the High Court is set aside. The matter is remitted to the High Court for determination of compensation payable to the appellant for the period of delay in completion of the transmission line by KSEB.
Law Points
- Contractual interpretation
- Promissory estoppel
- Compensation for breach
- Electricity tariff
- Captive power project
