Electricity Act, 2003 – ss. 63, 86 – Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPN) filed Petition before the State Commission seeking approval for procurement of 1000 MW of power by a competitive bidding process – RFP was issued – Eventually, in consonance with the LoI, PPAs were signed with the L-1, L-2 and L-3 bidders – State Commission held that the quantum of only 500 MW power was liable to be approved considering the demand in the State as recommended by the EAC and it approved the tariff quoted by the L-1 to L-3 bidders – Appeals filed by L-2 and L-3 bidders before APTEL, allowed – Challenged by the appellants – Subsequently, Civil Appeals were filed by L-5 bidder also– Disposing of the appeals, State Commission was directed to go into the issue of approval for adoption of tariff with regard to L-4 and L-5 bidders– Further, vide order dtd.19.11.18, State Commission was directed to go into the issue of adoption of tariff – State Commission held that the tariffs offered by the L-4 and L-5 bidders were not aligned to the prevailing market prices – Appeal filed by L-5 bidder, allowed by APTEL – Writ petition was filed by the respondent No.1 – Allowed by impugned judgment:

Held: Unlike s.62 r/w ss. 61 and 64, under the provisions of s.63, the appropriate Commission does not “determine” tariff but only “adopts” tariff already determined u/s.63 – Such “adoption” is only if such tariff has been determined through a transparent process of bidding, and this transparent process of bidding must be in accordance with the guidelines issued by the Central Governments – s.86(1)(b) gives ample power to the State Commission to regulate electricity purchase and procurement process of distribution licensees – It also empowers the State Commission to regulate the matters including the price at which electricity shall be procured from the generating companies, etc. – Further, orders relied upon by the APTEL, specifically the order dtd. 19.11.2018, clarified that the State Commission was to decide the tariff u/s.63 having regard to the law laid down both statutorily and by this Court – As such, the State Commission was bound to take into consideration the Bidding Guidelines notified by the Central Government, and specifically clause 5.15 thereof – State Commission justified in considering the Clause 5.15 of the Bidding Guidelines which specifically permits to reject all price bids if the rates quoted are not aligned to the prevailing market prices – APTEL grossly erred in holding that the State Commission has no power to go into the question, as to whether the prices quoted are market aligned or not and also not to take into consideration the aspect of consumers’ interest – It cannot be read from the orders of this Court that the State Commission was bound to accept the bids as quoted by the bidders till the bucket was filled – No such direction can be issued by this Court dehors the provisions of ss. 63 and 86(1)(b) and the Bidding Guidelines – Since the decision-making process adopted by the Bid Evaluation Committee approved by the State Commission, was in accordance with the law laid down by this Court, the same ought not to have been interfered with by the APTEL – High Court could not have issued a mandamus to the instrumentalities of the State to enter into a contract harmful to the public interest inasmuch as, if the power was to be procured by the procurers at the rates quoted by the respondent No.1, which was even higher than the rates quoted by the L-5 bidder, then the State would have to bear financial burden in thousands of crore rupees, which in turn would have passed on to the consumers – Impugned judgment quashed and set aside – Cost imposed. [Paras 67, 71, 73-75, 78, 83, 104, 105]

Electricity – Competitive Bidding Guidelines notified by the Government of India u/s.63 – Respondent No.1 contended that the procurer is bound to accept all the bids emerged in a competitive bidding process once the bidding process was found to be transparent and in compliance with the Bidding Guidelines:

Held: If the contention is to be accepted it will do complete violence to clause 5.15 of the Bidding Guidelines itself – If that view is accepted, the DISCOMS will be compelled to purchase electricity at a much higher rate as compared with other suppliers – The said higher rate will be passed on to the consumers – As such, accepting the contention of the respondent No.1 would result in adversely affecting the interests of the consumers and, in turn, would be against the larger public interest. [Para 77]

Electricity Act, 2003 – s.63 – General Clauses Act – s.13(2) – “all”, “any” – Principle of literal interpretation – Principle of purposive construction – “all” used in clause 5.15 of the Bidding Guidelines r/ws. 86(1)(b) – Competitive Bidding Guidelines notified by the Government of India u/s.63 – It was contended that the power under clause 5.15 of the Bidding Guidelines can be exercised only when the bidding process is found to be not in compliance with the Bidding Guidelines and is not transparent in respect of all the bidders and not in respect of some of the bidders is concerned:

Held: The contention is without substance – Words “all” or “any” will have to be construed in their context taking into consideration the scheme and purpose of the enactment – What is the meaning which the legislature intended to give to a particular statutory provision has to be decided by the Court on a consideration of the context in which the word(s) appear(s) and in particular, the scheme and object of the legislation – The word “all” used in clause 5.15 of the Bidding Guidelines, read with the legislative policy for which the Electricity Act was enacted and r/ws. 86(1)(b), will have to be construed to be the one including “any” – Applying the principle of literal interpretation, the evaluation committee/BEC would be entitled to reject only such of the price bids if it finds that the rates quoted by the bidders are not aligned to the prevailing market prices – It does not stipulate rejection of all the bids in the bidding process – If the contention that clause 5.15 of the Bidding Guidelines will come into play, which permits the Evaluation Committee to reject “all” price bids and not “any” one of them is accepted, it will lead to absurdity – The Court, while interpreting a particular provision, will have to apply the principles of purposive construction – Such an interpretation would result in defeating one of the main objects of the enactment, i.e., protection of the consumer. [Paras 84, 87, 88 and 91]

Interpretation of Statutes – Principle of purposive construction – Discussed.

Electricity Act, 2003 – ss. 62, 63, 79(1)(b):

Held: The non-obstante clause advisedly restricts itself to s.62, there is no reason to put s.79 out of the way altogether – Either u/s.62, or 63, the general regulatory power of the Commission u/s.79(1)(b) is the source of the power to regulate, which includes the power to determine or adopt tariff – ss.62 and 63 deal with “determination” of tariff, which is part of “regulating” tariff – In a situation where the guidelines issued by the Central Government u/s.63 cover the situation, the Central Commission is bound by those guidelines and must exercise its regulatory functions, albeit u/s.79(1)(b), only in accordance with those guidelines. [Para 68]

Alternate remedy – Electricity Act, 2003 – Constitution of India – Article 226 – Judicial review – Scope:

Held: The Electricity Act is an exhaustive code on all matters concerning electricity – Under the Electricity Act, all issues dealing with electricity have to be considered by the authorities constituted under the said Act – The State Electricity Commission and the APTEL have ample powers to adjudicate in the matters with regard to electricity – These Tribunals are tribunals consisting of experts having vast experience in the field of electricity – In the present case, the High Court erred in directly entertaining the writ petition when the respondent No.1-the writ petitioner before the High Court had an adequate alternate remedy of approaching the State Electricity Commission – Although, availability of an alternate remedy is not a complete bar in the exercise of the power of judicial review by the High Courts but, recourse to such a remedy would be permissible only if extraordinary and exceptional circumstances are made out – While exercising its power of judicial review, the Court can step in where a case of manifest unreasonableness or arbitrariness is made out – There was not even an allegation with regard to that effect – In such circumstances, recourse to a petition under Article 226 of the Constitution of India in the availability of efficacious alternate remedy under a statute which is a complete code in itself was not justified. [Paras 93-95]

Contract – Award of contract, a commercial transaction – Judicial Scrutiny – Scope:

Held: The award of a contract, whether by a private party or by a public body or the State is essentially a commercial transaction – In arriving at a commercial decision, considerations which are paramount are commercial considerations – State can choose its own method to arrive at a decision – It can fix its own terms of invitation to tender and that is not open to judicial scrutiny – State can enter into negotiations before finally deciding to accept one of the offers made to it – Price need not always be the sole criterion for awarding a contract – State may not accept the offer even though it happens to be the highest or the lowest – However, the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily – Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness – Only when the Court comes to a conclusion that overwhelming public interest requires interference, the court should intervene. [Para 102]