GUJARAT URJA VIKAS NIGAM LIMITED & ORS. v. RENEW WIND ENERGY (RAJKOT) PRIVATE LIMITED & ORS.

A Section 79(1) has to be in conformity with such regulation under Section 178. This principle flows from various judgments of this Court, which we have discussed hereinafter. For example, under Section 79(1)(g), the Central Commission is required to levy fees for the purpose of the 2003 Act. An order imposing regulatory fees could be passed even in the absence of a regulation under Section 178. If the levy is unreasonable, it could be the subject-matter of challenge before the appellate authority under Section 111 as the levy is imposed by an order/ decision-making process. Making of a regulation under Section 178 is not a precondition to passing of an order levying a regulatory fee under Section 79(1)(g). However, if there is a regulation under Section 178 in that regard then the order levying fees under Section 79(1)(g) has to be in consonance with such regulation. *********

D 40. [..] One must keep in mind the dichotomy between the power to make a regulation under Section 178 on the one hand and the various enumerated areas in Section 79(1) in which the Central Commission is mandated to take such measures as it deems fit to fulfil the objects of the 2003 Act. E Applying this test to the present controversy, it becomes clear that one such area enumerated in Section 79(1) refers to fixation of trading margin. Making of a regulation in that regard is not a precondition to the Central Commission exercising its powers to fix a trading margin under Section 79(1)(j), however, if the Central Commission in an appropriate case, as is the case herein, makes a regulation fixing a cap on the trading margin under Section 178 then whatever measures the Central Commission takes under Section 79(1)(j) have to be in conformity with Section 178. One must understand the reason why a regulation has been made in the matter of capping the trading margin under Section 178 of the Act. Instead of fixing a trading margin (including capping) on a case-to-case basis, the Central Commission thought it fit to make a regulation which has a general application to the entire trading activity which has been recognised, for the first time, under the 2003 Act. Further, it H

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is important to bear in mind that making of a regulation under A Section 178 became necessary because a regulation made under Section 178 has the effect of interfering and overriding the existing contractual relationship between the regulated entities. A regulation under Section 178 is in the nature of a subordinate legislation. Such subordinate legislation can even B override the existing contracts including power purchase agreements which have got to be aligned with the regulations under Section 178 and which could not have been done across the board by an order of the Central Commission under Section 79(1)(j). ********* C

43. [..] While deciding the nature of an order (decision) vis- à-vis a regulation under the Act, one needs to apply the test of general application. On the making of the impugned 2006 Regulations, even the existing power purchase agreements (PPA) had to be modified and aligned with the said D Regulations. In other words, the impugned Regulations make an inroad into even the existing contracts. This itself indicates the width of the power conferred on CERC under Section 178 of the 2003 Act. All contracts coming into existence after making of the impugned 2006 Regulations have also to factor E in the capping of the trading margin. This itself indicates that the impugned Regulations are in the nature of subordinate legislation. Such regulatory intervention into the existing contracts across the board could have been done only by making regulations under Section 178 and not bypassing an order under Section 79(1)(j) of the 2003 Act. F Therefore, in our view, if we keep the above discussion in mind, it becomes clear that the word “order” in Section 111 of the 2003 Act cannot include the impugned 2006 Regulations made under Section 178 of the 2003 Act.”

63Copy pinpoint63. Whilst there cannot be any doubt that regulations framed under G the Act can be made applicable to existing contracts, what is discernible from PTC India (supra) is that in that case, the applicability of the Trading Margin Regulations which for the first time, compelled persons engaged in trading of electricity, in terms of Section 2 (17) of the Act, to register, obtain licenses, and operate within the margin limits indicated in the H

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A regulations. These provisions introduced a new regime, regulating an area, or activity which had hitherto been unregulated. The entire edifice of prescribing general standards for application to all those operating within its sweep, is to ensure that they are universal and constitute a code. The observations in PTC India (supra), therefore, are to be seen in this context. Being regulations of general application, dealing with a B range of commercial activity, there could have been no question of existing contracts, operating in isolation, through separate silos, outside of their framework. In the present case, however, the PPAs were entered into in the exercise of equal bargaining power, after due negotiation by the parties, and within the framework of existing regulations: both central C and state. Therefore, unless any later amendment expressly overrides existing contracts, the terms of such agreements bind the parties.

64Copy pinpoint64. That amendments to laws, or regulations, unless expressly retrospective, are always prospective, is a settled proposition. In Purbanchal Cables & Conductors (P) Ltd. v. Assam State Electricity D Board & Ors.33, the position was articulated in this manner: “39. [..] This Court, time and again, has observed that any substantive law shall operate prospectively unless retrospective operation is clearly made out in the language of the statute. Only a procedural or declaratory law operates retrospectively as there is no vested right in procedure.

40. In the absence of any express legislative intendment of the retrospective application of the Act, and by virtue of the fact that the Act creates a new liability of a high rate of interest against the buyer, the Act cannot be construed to have retrospective effect. Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only be said to accrue for sale agreements after the date of commencement of the Act i.e. 23- 9-1992 and not any time prior.”

65Copy pinpoint65. In Commissioner of Income Tax v Vatika Township (P) Ltd.34, this court observed, in this context, that: “31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary 33

(2012) 6 S.C.R. 905

34 H (2014) 12 S.C.R. 1037

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intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow’s backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips v. Eyre [Phillips v. Eyre, (1870) LR C 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. D

32. The obvious basis of the principle against retrospectivity is the principle of “fairness”, which must be the basis of every legal rule as was observed in [L’Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd., (1994) 1 All ER 20 (HL)] Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later.” This proposition was again explained and applied in Union of G India v. Indusind Bank Ltd 35.

66Copy pinpoint66. In view of the above discussion, it is held that agreements, such as the PPAs in the present case, entered into, voluntarily by the 35

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A parties, before the Second Amendment, were not affected, by its terms. The findings to the contrary in the impugned order, are set aside. Were the respondents coerced into entering into PPAs

67Copy pinpoint67. The State Commission had concluded that the PPAs were also unenforceable, to the extent of being in non-conformity with the pre-amended Rule 5, of the REC Regulations, as the contracts were entered into by parties with unequal bargaining power. This aspect was noted by APTEL, which held as follows: “9.19 [..] The State Commission after careful consideration of the submissions made by both the parties and after due analysis of the available material on record has recorded its findings in the impugned order that the conditions envisaged in the PPA relating to the tariff and other associated conditions appeared to be one sided in favour of the Appellant and accordingly concluded the case of coercion or duress and unequal bargaining power between the parties being responsible for executing an Agreement full of unjustness and perversity. In view of these facts, we hold that the State Commission has analysed this issue rightly in accordance with law and passed the order assigning cogent reasoning. Thus, we do not find any material case or ground for our interference in the matter.

10. SUMMARY OF OUR FINDINGS: Having regard to the careful consideration and critical analysis of the facts and submissions of the learned counsel for the Appellants as well as the Respondents, we hold that the findings of the State Commission are just and right in accordance with law.”

68Copy pinpoint68. In Transmission Corporation of Andhra Pradesh Ltd (supra), this court observed, in the context of a contention of coercion, as follows: “42. [..] To frustrate a contract on the ground of duress or coercion, there have to be definite pleadings which have to be substantiated normally by leading cogent and proper evidence. However, in the case where summary procedure is adopted like the present one, at least some documentary evidence or affidavit ought to have been filed raising this plea of duress specifically.[..]”

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69Copy pinpoint69. In Shanti Budhiya Vesta Patel & Ors. v. Nirmala Jayprakash A Tiwari& Ors.36 , this court held that to establish fraud or coercion, there should be”(a) an express allegation of coercion or fraud, and (b) all the material facts in support of such allegations must be laid out in full and with a high degree of precision. In other words, if coercion or fraud is alleged, it must be set out with full particulars.” The B court had cited and applied the principle enunciated in Bishundeo Narain v. Seogeni Rai37where it was held that: “ […] Now if there is one rule which is better established than any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars C as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any court ought to take notice, however strong the language in which they are couched may be, and the same applies to undue influence and coercion. D [See Order 6 Rule 4 of the Civil Procedure Code.]”

70Copy pinpoint70. In New Indian Assurance Co. Ltd v Genus Power Infrastructure Ltd38 this court dealt with the standard of pleadings and evidence, needed in cases, where coercion or duress is alleged: “8. It is therefore clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prime facie establish the same by placing material before the Chief Justice/his designate.”

71Copy pinpoint71. In the present case, this salutary rule was thrown to the wind, by the State Commission. In this court’s opinion, APTEL, in the most cavalier fashion, virtually rubber stamped the State Commission’s findings on coercion, in regard to the entering into the PPA by the parties. There was no shred of evidence, nor any particularity of pleadings, beyond a bare allegation of coercion, alleged against Gujarat Urja. It is incomprehensible how such an allegation could have been entertained and incorporated as a finding, given that the respondents are established companies, who enter into negotiations and have the support of experts, including legal advisers, when contracts are finalized. The findings 36

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A regarding coercion are, therefore, wholly untenable. This court is also of the opinion that the casual approach of APTEL, in not reasoning how such findings could be rendered, cannot be countenanced. As a judicial tribunal, dealing with contracts and bargains, which are entered into by parties with equal bargaining power, APTEL is not expected to casually render findings of coercion, or fraud, without proper pleadings or proof, or without probing into evidence. The findings of coercion are therefore, set aside. Conclusions

72Copy pinpoint72. In view of the foregoing discussion, it is held that the concurrent findings and orders of the State Commission and APTEL cannot be sustained. They are accordingly set aside. The appeals are allowed, with costs payable to the appellants.

Divya Pandey Appeals allowed. (Assisted by : Shevali Monga, LCRA) D