ALL INDIA POWER ENGINEER FEDERATION & ORS. versus SASAN POWER LTD. & ORS. ETC.
[2016] 9 S.C.R. 901, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
Segment: Body
[2016] 9 S.C.R. 901 
ALL INDIA POWER ENGINEER 
FEDERATION & ORS. 
v. 
SASAN POWER LTD. & ORS. ETC. 
(Civil Appeal Nos. 5881-5882 of2016) 
DECEMBER 08, 2016 
[KURIAN JOSEPH AND R.F. NARIMAN, JJ.] 
ELECTRICITY ACT, 2003: 
ss. 61 to 63 -
Commercial Operation Date (COD) -
Determination of- Procurement of power from generating companies 
- Sasan Power Ltd. was incorporated as a special purpose vehicle 
by Power Finance corporation the nodal agency for procuring 
power - Power Purchase Agreement (PPA) dated 7.8.2007 executed 
between Sasan Power Ltd. and procurers of generation and sale of 
electricity - Article 6 r/w Schedule 5 provided for preconditions to 
be satisfied for declaration of 'COD' namely readiness to commence 
commercial operations - This happens only when the pe1formance 
test by operating the gene1·ating unit at 98% of the contracted 
capacity as existing on the effective date on a continuous running 
basis for 72 hours is certified by an independent engineer by giving 
a final test certificate to the said effect - The date for commissioning 
the first unit was fixed under the PPA as 7.5.2013 - However, under 
Schedule 11 thereof. this date was preponed to 27.11.2012 - As 
Sasan kept postponing this date, the commissioning tests for 
generating Unit No.3 commenced from 20.3.2013 - Various emails 
were exchanged from 27.3.2013 to 30.3.2013 between Sasan and 
WRLDC, a statutory authority under the Act of 2003 - It was the 
case of Sasan that though they were ready
to deliver electricity on 
31.3.2013 at 95% of the contracted capacity of 620 MW of the 
unit, they could not do so as WRLDC did not give them the necessary 
green signal to go ahead - They relied heavily upon the independent 
engineer's test certificate dated 30.3.2013 to show that a COD took 
place on the following day - Petition was filed by WRLDC before 
the CER Commission challenging the veracity of certificate issued 
by the independent engineer - Commission arrived at the conclusion 
that COD had not been achieved on 31.3.2013 but had only been 
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achieved tater on 16.8.2013 - Appellate Tribunal set aside the 
finding of Commission holding that though COD had not been 
achieved on 31.3.2013 in accordance with the PPA but that the 
procurers under the PPA had waived their right to demand 
performance at 95% and that the pe1formance of unit no.3 which 
was only roughly 17% of its contracted capacity was accepted by 
all the procurers and that, therefore, there was a waiver of this 
essential condition which would then entitle the generator to treat 
31.3.2013 as the-date on which commercial operation of unit no.3 
commenced - Challenged - Held: A perusal of the emails exchanged 
between the parties show that the parties did not intend to amend 
any of the provisions of the PPA - The two emails sent by the lead 
procurer to Sasan read together do not amount to waiver of the 
right mentioned in clause 6.3.1 - There is no .such clear intention 
that can be spelled out on a reading of the two emails - All that can 
be spelled out is that the first email of 31.3.2013 categorically stated 
that the test result is not as per Article 6.3.1, and is not acceptable 
- The last sentence of this very email then refers to clause 6.3.4 and 
to a de-rated capacity of 101.38 MW - Thereafter, email of 2..1.2013 
expands on the said last sentence of the earlier email by referring 
to Article 6.3.4 and Article 11 proviso - This is akin to a 'without 
prejudice' acceptance of
de-rated power, being a non-acceptance 
of the test certificate dated 30.3.2013 coupled with a desperate 
attempt to somef10w get whatever power is available - But this does 
not amount to a clear and unequivocal intention to relinquish a 
known right - There is no waiver - Appellate Tribunal is wholly 
incorrect in accepting the case of waiver and is equally incorrect 
in absolving the, independent engineer for the test cer.tificate given 
by him on 30.3.2013. 
ss. 61 to 63 - Electricity tariff- Variation in - Effect on public 
interest - Held: The moment electricity tariff gets affected, the 
consumer interest comes in and public interest gets affected - Under 
s.61, the appropriate commission, when ·it specifies terms and 
conditions for determination of tariff, is to be guided inter alia by 
the safeguarding of the consumer interest and the recovery of the 
cost of electricity in a reasonable manner. 
WAIVER: 
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Waiver of right - Held: Waiver is an intentional relinquishment
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
903 
SASAN POWER LTD. & ORS. ETC. 
of a known right - Waiver must be ~pelled out with crystal clarity 
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for there must be a clear intention to give up a known right -
Therefore, unless there is a clear intention to relinquish a right that 
is fully known to a party, a party cannot be said to waive it. 
Waiver of provision of contract if any element of public interest 
is involved - Held: Such waiver will not be given effect to if it is 
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contrary to such public interest - If there is any element of public 
interest involved, the court steps in to thwart any waiver which may 
be contrary to such public interest - Judicial review - Electricity 
Act, 2003. 
Contract Act, 1872: s.63 -Applicability of- Held: If on facts 
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there is a waiver of a provision of the PPA by one of the parties to 
the PPA, then s.63 of the Contract Act will operate in order to give 
effect to such waiver - Waiver. 
Allowing the appeals, t11e Co.urt 
HELD: 1. Waiver is an intentional relinquishment of a known 
right, and, therefore, unless there is a clear intention to relinquish 
a right that is fully known to a party, a party cannot be said to 
waive it. It is also clear that if any element of public interest is 
involved and a waiver takes place by one of the parties to an 
agreement, such waiver will not be given effect to if it is contrary 
to such public interest. [Para 20][935-G-H; 936-A] 
Jagad Bandhu Chatterjee v. Nilima Rani (1969) 3 SCC
445; P. Dasa Muni Reddy v. P. Appa Rao (1974) 2 SCC . 
725 : 1975 (2) SCR 32; Lachoo Mal v. Radhey Shyam 
(1971) 1 sec 619; Jndira Bai V. Nand Kishore, (1990) 
4 SCC 668; Krishna Bahadur v. Puma Theatre, (2004) 
8 sec 229 - relied on. 
2. Under Section 62 of the Act, the appropriate commission 
is to determine such tariff in accordance with the principles 
contained in Section 61. The present case, however, is covered 
by Section 63, which begins with a 11011 obstm1te clause stating 
that notwithstanding anything ci;mtained in Section 62, the 
appropriate commission shall adopt the tariff if such tariff has 
been determined through a transparent process of bidding in 
accordance with the guidelines issued by t)le Central 
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Government. A perusal of the CERC tariff adoption order dated 
17.10.2007 makes it clear that the tariff is adopted by the 
Commission only because the competitive bidding process which 
has been undertaken is in accordance with the guidelines so 
issued. All this would make it clear that even if a waiver is claimed 
of some of the provisions of the PPA, such waiver, if it affects 
tariffs that are ultimately payable by the consumer, would 
necessarily affect public interest and would have to pass muster 
of the Commission under Sections 61 to 63 of the Electricity Act. 
This is for the reason that what is adopted by the Commission 
under Section 63 is only a tariff obtained by competitive bidding 
in conformity with guidelines issned. If at any subsequent point 
of time such tariff is increased, which increase is outside the four 
corners of the PPA, even in cases covered by Section 63, the 
legislative intent and the language of Sections 61 and 62 make it 
clear that the Commission alone can accept such amended tariff 
as it would impact consumer interest and therefore public 
interest. If COD is declared on 31.3.2013, the very tariff laid 
down in Schedule 11 becomes applicable, but for year one being 
treated as one day and year two commencing from 1.4.2013. The 
substance of the matter is that a consumer would have to pay 
substantially more by way of tariff under the PPA if year one is 
gobbled up in
one day, as year two's tariff is one paisa more than 
year one and year three's tariff is substantially more than year 
two. In short, instead of getting two years or part thereof 
exceeding one year at a substantially lower tariff, the consumer 
now gets only one year and one day at the lower tariff rates. This 
may also by itself not lead to the parties having to go to the 
Commission as this is envisaged by the PPA. But if a waiver is to 
be accepted on the facts of this case, it would clearly impact the 
public interest, in that consumers would have to pay substantially 
more for electricity consumed by them. This being the case, on 
facts it may not be necessary to go to the Commission as had 
Sasao in fact met the parameters of Schedule 5 on 30'" March, 
then as per Schedule 11, year one would in fact have been only 
for one day. However, any waiver of the requirement of Schedule 
5 would definitely impact the generation of electricity at the 
mandated percentage of contracted capacity as also the amounts 
payable by ronsumers, and would therefore affect the public
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. 
interest. [Paras 25, 29, 30 and 31][937-E-F; 939-C-H; 940-A-C) 
3. Article 6 deals with synchronization, commissioning, and 
commercial operations. In the first step to be taken by the seller, 
the unit producing electricity has to be synchronized to the grid 
system. It is only after synchronization takes place that the unit 
is to be commissioned. At the commissioning stage, the 
parameters mentioned in Schedule 5 are to be met. The most 
important parameter mentioned _in Schedule 5, when the 
performance test is to be taken for the purpose of commissioning, 
is that a unit shall be deemed to have passed such test only if it 
operates continuously for 72 consecutive hours at or about 95% 
of its contracted capacity as existing on the effective date and 
within the electrical system limits and functional specifications. 
Further, as a part of the performance test, the seller must 
demonstrate that the unit meets functional specifications for 
ramping rate separately mentioned in Schedule 4 of the PPA. It 
is only when such test is passed that a unit can be said to be 
commissioned under the PPA. This then is to be certified by the 
independent engineer jointly appointed by the parties under 
Article 6.3.1, in the form of a final test certificate, which states -
that (a) the commission tests have been carried out in accordance 
with Schedule 5 and are acceptable to him, and (b) the result of 
the
performance test shows that the unit's tested capacity is not 
less than 95% of the contracted demand as existing on the 
effective date. [Para 32][940-F-H; 941-A-C) 
4. If the Schedule 5 parameters are not met, it is incumbent 
on the independent engineer to then state reasons for the non-
issuance of the final test certificate. Once this is done, under 
Article 6.3.2, the seller may retake the relevant test within a 
reasonable period after the end of the previous test so as to 
comply with the basic requirements of Schedule 5. It is only 
after this that a unit can be said to be a "commissioned unit" as 
defined, which means that it is a unit in respect of which COD 
has occurred. COD or commercial operation date is also 
separately defined as meaning, in relation to a unit, the date one 
day after the date when each of the procurers receives a final 
test certificate of the independent engineer as per Article 6.3.1. 
It is thus clear that the scheme of Article 6 is that a unit cannot 
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be said to have a commercial operation date unless and until it is 
first synchronized with the grid and commi.ssioned after meeting 
the parameters mentioned in Schedule 5 of the PPA. Article 6.3.3 
refers to performance tests of a unit during the period of the 
PPA. If under Article 6.3.3 after COD has been achieved in a 
unit, an increased tested capacity over and above that provided 
in 6.3.1 (b) is achieved in a subsequent performance test, certain 
consequences follow. Equally, if after COD has been obtained in 
a unit, and the most recent performance test mentioned during 
the working of the PPA has been conducted, and it is found that 
in such test a figure less than contracted capacity is achieved, 
the unit shall be de-rated with certain consequences which are 
mentioned in Article 6.3.4 read with Article 8.2.2. 
The scheme 
of Article 6 therefore read as a whole appears to be that COD 
cannot be achieved until the parameters mentioned in Schedule 
5 are achieved and there is a final test certificate to that effect. 
The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick 
in after COD is obtained in a unit, leading to either increased 
capacity or to de-rated capacity with consequences which follow 
under the PPA.[Paras 33, 34l[941-C-H; 942-A) 
5. The examination of meetings, emails, and letters between 
the parties showed that the first important meeting of 27.2.2013 
was Chaired by
the Managing Director of the lead procurer. It 
was attended by all the other procurers, and officials of Sasan. 
What is emphasized on behalf of Sasan is that the revised COD 
of the Sasan units was accepted by all the procurers under article 
4.5.1 of the PPA to be - (first unit) by 31.3.2013. The procurers 
asked Sasao for the estimated date for synchronization and COD 
of the first unit. Sasan indicated that synchronization is expected 
in the first week of March, 2013, and the COD before 31.3.2013. 
What is important about this meeting is that the procurers were 
no doubt interested in getting electricity from Sasan as soon as 
possible, but obviously only in accordance with article 6.3.1 read 
with the 5'" Schedule. This would only mean that the ·meeting 
would disclose that the anxiety of the procurers to get eledricity 
· at cheap rates would be in accordance with the PPA and not against 
it. In other words, if a final test certificate had been given to the 
effect that 95% of contracted capacity could have been delivered 
by Unit No.3 on or before 31.3~2013, the procurers were anxious
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. 
to avail of it, and not otherwise.[Para 35][942-B-E] 
6. The examination of performance of Sasan for the period 
1" April to l61h August, 2013 shows that various tests were 
undertaken, but 95% of contract capacity for a continuous period 
of 72 hours had only been achieved in June even according to 
Sasan. It is apparent from the certificate issued on 30.3.2013 
that the tested capacity of the Unit was found to be only 101.38 
MW as against 95% of 620 MW i.e. 587 MW. It was also stated 
that since the unit was operating below 50% of the rated load 
due to grid restriction, the unit could not demonstrate ramping 
rate above 50% of rated load in accordance with the Schedule 4 
of the PPA. If the tested capacity is 101.38 MW as against the 
required 95% i.e. 587 MW, the test could not have been carried 
out in accordance with article 6 read with schedule 5, and that 
despite the fact that ramping up and down could not be achieved, 
functional specifications stipulated in Schedule 4 of the PPA were 
said to have been met. CERC rightly castigated this certificate. 
What article 6.3.1 requires is first and foremost a final test 
certificate of the Independent Engineer. The certificate dated 
· 30.3.2013 given by the Independent Engineer is not a final test 
certificate. Indeed, it is only in August that a final test certificate 
was given in accordance with Article 6.3.1 of the PPA by the very 
same
independent engineer. Obviously the commissioning tests 
could not have been carried out in accordance with Schedule 5, 
which requires in clause 1.1 (i)(d) that the seller shall perform, 
in respect of each unit, a performance test, by which such unit 
shall be deemed to have passed only if it operates continuously 
for 72 consecutive hours, at or above 95% of its contracted 
c,apacity as existing on the effective date. Also, part of the same 
schedule requires that as a part of the performance test, the seller 
shall demonstrate that the unit meets the functional specifications 
for ramping rate as mentioned in Schedule 4, which was again 
conspicuous by its absence. According to the Independent 
Engineer, " ... the Unit 3 is certified to have achieved Commercial 
Operation, with a tested capacity 101.3~ MW" after carrying out 
the commissioning test in accordance with Article 6 and Schedule 
5 of the PPA. In his certificate, he has stated that on witnessing 
the performance test from 27.03.2013 to 30.03.2013, the tested 
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capacity of the Unit is 101.38 MW. However, it is clearly recorded 
that Unit was operated beyond 100 MW only from the morning of 
28.03.2013. 
In the chart on the performance test, the 
Independent Engineer has noted that 101.38 MW is operated 
only from 06.00 a.m. on 28.03.2013. Under Article 6 read with 
Schedule 5 .•. "Unit shall be deemed to have passed if it 
operates continuously for 72 consecutive hours at or above 95% 
of its contracted capacity as existing on the Effective Date." Even 
according to thl' lmlq1l'ndcnt Engineer, 101.38 MW was injected 
only at 06.00 a.m. on 28.03.2013. Such a tested capacity of 101.38 
MW for 72 hours continuously could therefore have been certified 
only at 06.00 a.m. on 31.03.2013. If that be so, the COD would 
have been only one day after the date when the test certificate of 
the Independent Engineer has been received by the procurers. 
For this reason also, the test certificate is by no means in 
accordance with Article 6.3.1 of the PPA read with Schedule 5 
D thereof. [Paras 36, 38 and 39)[942-G; 946-D-H; 947-A-F) 
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7. The two emails sent by the lead procurer to Sasao read 
together would show that the lead procurer made it clear that 
declaration of COD of unit 3 is not accepted by them as the test 
was not performed as per Article 6.3.1. However, in its anxiety 
to procure electricity, what was stated in the second email was 
that the capacity of 101.38 MW was
acceptable only under Article 
6.3.4 of the PPA, meaning thereby that this ought to be treated 
as de-rated capacity, which should be paid for as provided. 
And any quantity produced over and above 101.38 MW would 
be treated as infirm power under Article 11.1 proviso, and paid 
for as such. Waiver is an intentional relinquishment of a known 
right. Waiver must be spelled out with crystal clarity for there 
must be a clear intention to give up a known right. There is no 
such clear intention that can be spelled out on a reading of the 
two emails. The first email categorically stated that the test result 
is not as per Article 6.3.1, and.is not acceptable. The last sentence 
G of this very email then refers to clause 6.3.4 and to a de-rated 
capacity of 101.38 MW. Thereafter, the email of 2"d April, 2013 
expands on the said last sentence of the earlier email by referring 
to Article 6.3.4 and Article 11 proviso. This is akin to a 'without 
prejudice' acceptance of de-rated power, being a non-acceptance 
H of the test certificate dated 30.3.2013 coupled with a desperate
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
909 
SASAN POWER LTD. 
attempt to somehow get whatever power is available. But this 
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does not amount to a clear and unequivocal intention to relinquish 
a known right. There is no waiver and the Appellate Tribunal in 
coming to an opposite conclusion, is clearly erroneous. [Paras 
42, 43 and 46][949-E, F; 950-C-F; 951-CJ 
Commissioner of Customs, Bombay v. Virgo Steels 
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Bombay (2002) 4 SCC 316 - Distinguished. 
Juggilal Kamlapat v. N. V. Internationale Crediet-En-
Handels Vereeninging 'Rotterdam AIR 1955 Cal 65; 
Official Assignee of Bombay v. Madho/al Sindhu ILR 
1948 (2) Born 1 - referred to. 
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Case Law Reference 
AIR 1955 Cal 65 
referred to 
Para 14 
ILR 1948 (2) Born 1 
referred to 
Para 16 
(1969) 3 sec 445 
relied on 
Para 18 
1975 (2) SCR 32 
relied on 
Para 19 
(1971) 1 sec 619 
relied on 
Para 21 
(1990) 4 sec 668 
relied on 
Para22 
(2004) 8 sec 229 
relied on 
Para 23 
(2002) 4 sec 316 
distinguished 
Para 31 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5881-
5882 of2016. 
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From the Judgment and Order dated 31.03.2016 of the Appellate 
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Tribunal for Electricity, New Delhi in Appeal Nos. 233 and 266of2014 
WITH 
C. A. Nos. 5239-5240, 5246, 5342-5343, 5879, 5355, 5365, 5367, 
5956 of2016. 
Jayant Bhushan, Kapil Sibal, J. J. Bhatt, Chetan Sharma, Sanjay 
Sen, Sr. Advs., Purushaindra Kaurav, AAG., M. G. Ramachandran, 
K. V. Mohan, Ms. Ranj itha Ramachandran, Ms. Poorva Saigal, 
Ms. Anushree Bardhan,
Shubham Arya, Nikunj Dayal, Pramod Dayal, 
Ms. Paya! Dayal, Anand Ganesan, Ms. Swapna Seshadri, Rajiv Kr. 
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Shrivastava, Ms. Gargi Shrivastava, Rakesh K. Sharma, Ms. Anuradha 
Mishra, G. Umapathy, Aditya Singh, Alok Shankar, Vikas Upadhyay, 
$akya Singh Choudhuri, Avijit Lala, Anand Shrivastava, Alok Shankar, 
Kush Chaturvedi, Mahesh Agarwal, Ms. Sadapurua Mukharjee, Navjot 
Singh, E. C. Agrawala, Rishabh Parikh, Saurabh Mishra, Dhan Raj, 
Matrugupta Mishra, Shikha Ohri, Hemant Singh, Ms. Divya Roy, Ms. 
Swapna Seshadri, Sitesh Mukherjee, Gautam Chawla, Ms. Akansha Tyagi, 
Sandeep Devashish Das, Rahul Dhawan, Ms. Udita Singh, Advs. for 
the appearing parties. 
The Judgment of the Court was delivered by 
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R.F. NARIMAN, J. I. These appeals have been argued over 
a number of days, but ultimately the points raised in them lie within a 
narrow compass. 
2. On 19.1.2005, the Central Government, in exercise of powers 
under Section 63 of the Electricity Act, 2003 issued guidelines for a 
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tariff based competitive bid process to be initiated by distribution licensees 
/procurers for procurement of power from generating companies. The 
electricity to be procured by such procurers is for the purpose of 
distribution and retail supply to consumers generally. On I 0.2.2006, in 
pursuance of these guidelines, procurers in different States, namely, 
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appellants I to 3 and respondents 5 to 15 (in Civil Appeal Nos.5239-
5240 of 2016.) nominated Power Finance Corporation Limited, a 
Government of India. undertaking as the Nodal Agency
to complete a 
competitive bid process for development of an ultra mega power project 
based on linked coalmines using super critical technology ofunits of 660 
mega watts (MW) each, plus or minus 20%, in Sasan District, Singrauli, 
Madhya Pradesh. On 10.2.2006, Sasan Power Limited was incorporated 
as a special purpose vehicle by Power Finance Corporation in order to 
. implement the aforesaid purpose. On 1.8.2007, based _on the competitive 
bidding process held by Power Finance Corporation, Reliance Power 
Limited, having quoted the lowest amount, was selected as th~ successful 
bidder, and a letter of intent was issued to Reliance Power. Ltd. The 
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quoted tariff, year by year, for a period of25 years, which was accepted 
and incor.porated as Schedule 11 in the Power Purchase Agreement 
dated 7 .8.2007 (PPA) had tariffs at an extremely depressed rate for the 
first two years, after which the tariffs were fixed ata significantly higher 
rate. On the very day that the PPA was executed between Sasan Power 
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Limited and the procurers for generation and sale of electricity, 100% 
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ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
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share holding of the.special purpose vehicle was acquired by Reliance 
Power Limited. The PPA contains detailed clauses with respect to 
generation of po_JVer and the tariffs payable for the period of 25 years. 
Apart from other provisions, we are really concerned with Article 6 
read with Schedule 5 which provides for pre-conditions to be satisfied 
for declaration of a generating unit as Commercial Operation Date, 
"COD", namely readiness to commence commercial operations. This 
happens only when a perfonnance test, by operating the generating unit 
at 95% of the contracted capacity as existing on the Effective Date on 
a continuous running basis for 72 hours, has been certified by an 
independent engineer, by giving a final test certificate to the aforesaid 
effect. The PPA also contains various other clauses which will be set 
out during the course of this judgment. 
3. The bone of contention in these matters is whether the COD 
for Unit No.3, which was the first Unit to l;Je commissioned, had been 
achieved on 31.3.2013. If it had, then under Schedule 11 to the_ PPA, 
the entire first year would get exhausted in one day, i.e., 31" March 
being the end of the contract year, for which tariff payable would be at 
the rate of 69 paise per unit. If not, then it is only on and from the 
commencement of COD that such year would begin, which, according 
to the appellants before
us, would only begin on 16.8.2013 when a final 
test certificate in accordance with Article 6 of the PPA was given by the 
independent engineer to the effect that 95% of the contracted capacity 
had been achieved for a continuous period of72 hours. We are infonned 
that if the COD is said to be on 31.3.2013, as has-been held by the 
Appellate Tribunal, the consumers would ~ave to pay a sum of over 1• . 
I 000 crores, being the differential tariffthat would apply. 
4. The date for commissioning the first unit was fixed under the 
PPA as 71h May, 2013. However, under Schedule 11 thereof, this date 
was preponed to 27'h November, 2012. As Sasan kept postponing this 
date, it appears that the commissioning tests for generating Unit No.3 
commenced from 20.3.2013. Various emails were exchanged from 
27.3.2013 to 30.3.2013 between Sasan and the Western Region Load 
Dispatch Centre (hereinafter referred to as "the WRLDC"), a statutory 
authority under the Electricity Act, 2003. It is the case of Sasan that 
though they were ready to deliver electricity on 31.3.2013 at 95% of the 
contracted capacity of 620 MW of the unit, they could not do so as 
WRLDC did not give them the necessary green signal to go ahead. 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
They relied heavily upon the independent engineer's test certificate dated 
30.3.2013 to show that a COD took place on the following day, which 
we will consider in some detail later. At this stage, suffice it to say that 
a petition was filed by WRLDC before the Central Electricity Regulatory 
Commission (CERC) on 25.4.2013, in which it was prayed:-
" I. Kindly look into the veracity of the certificate issued by 
the Independent Engineer in view of deliberate suppression 
and misrepresentation of the facts and issue suitable 
directions to respondent no.2 to desist from such act. 
2. Kindly look into the matter of Respondent No. I including 
into intentional mis-declaration of parameters related to 
commercial mechanism in vogue and has purported to 
declare the part (de-rated) capacity of I 01.3 8 MW as 
commercial on 
the grounds 
of load restriction by 
WRLDC and issued suitable directions in the matter. 
3. Issue specific guidelines with respect to declaration of 
COD of the generators who are not governed by the CERC 
(Terms and Conditions of Tari ft) Regulations, 2009 to be in 
line with CERC regulations so that the same can be 
implemented in a dispute free manner and eliminate any 
possibility of gaming by generator. 
4. Hon 'ble Commission may give any further directions as 
deemed fit in the circumstances of the case." 
5. This petition was allowed by the CERC by its order dated 
8.8.2014, by which it
first set out five issues as follows:-
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(a) Whether the petition filed by WRLDC is maintainable? 
(b) Whether the Certificate issued by IE is in accordance 
with the PPA and if not, whether IE has made deliberate 
suppression or misrepresentation of facts while issuing the 
certificate? 
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( c) Whether COD of the station as declared by SPL is in 
accordance with the PPA? 
(d) Whether the Respondent No.I has indulged in mis-
declaration of parameters relating to commercial mechanism 
in vogue?
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
(e) Guidelines with regard to the commercial operation of a 
generating station which is not regulated by the tariff 
regulations of the Commission." 
6. The CERC answered issues (a), (b), (c), and (e) in the 
affirmative, and issue ( d) in the negative. Ultimately the Commission 
arrive.d atthe conclusion that COD had not been achieved on 31.3.2013 
but had only been achieved later, on l61h August of the same year. This 
finding was set aside by the Appellate Tribunal by its judgment dated 
31.3.2016, in which the Appellate Tribunal found that though COD had 
not been achieved on 31.3.2013 in accordance with the PPA, but that 
the procurers under the PPA had waived their right to demand 
performance at 95%, and that the performance of Unit No.3, which 
·was only roughly 17% of its contracted capacity, was accepted by all 
the procurers, and that therefore there was a waiver of this essential 
condition, which would then entitle the generator to treat 31.3.2013 as 
the date on which commercial operation of Unit No.3 commenced. It is· 
the correctness of this judgment which has been assailed by the various 
appellants before us. 
7. Mr. Jayant Bhushan, learned senior counsel, Mr. Gopal Jain, 
learned senior counsel, Mr: M.G. Ramachandran, learned counsel, Mr. 
Purusha Indra Kavrar, learned AAG, and Mr. Alok Shankar, learned 
counsel appearing for the appellants have relied heavily
on Article 6.3. l 
read with Schedule 5 of the PPA, and stated that this is an Article which 
does not merely reflect the individual rights and liabilities of the generator 
and procurers of electricity but would also sound in public interest inasmuch 
as the declaration of COD would have effect on the tariff that is payable 
by consumers generally. They, therefore, argued that Article 6.3 .1 cannot 
be waived as a matter of law. They also argued that it cannot also be 
waived as a matter of fact inasmuch as when the PPA expressly allowed 
a certain provision to be waived, it expressly stated so. In this regard, 
Articles 3.1.2, 4.4.2(b) 10.l(c), 10.2(c) were pointed out by them. 
Referring to Article 18.3 of the PPA, it was argued that the said Article 
is not a substantive provision for waiver, but only a provision dealing 
with the manner in which waiver is to be exercised, and has reference 
only to the aforesaid Articles. Further, even assuming that there was a 
waiver, such waiver took place as late as 15.4.2013 when the last 
communication from Uttarakhand Power was received. There was, 
therefore, no waiver of the aforesaid condition on 31.3:2013. They also 
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argued that as a matter of fact the emails exchanged between the parties 
would show that the lead procurer and all the other procurers had in fact 
never consented to 31.3.2013 as being the COD for the purpose of the 
PPA. They also argued that really speaking any such alleged waiver 
was not a waiver at all, but an amendment to the PPA which would 
require the Commission's consent under Article 18.1, inasmuch as it 
would affect the tariff payable by consumers. They also argued that it 
is clear from a reading of a chart which showed generation from March 
to August, 2013 that Sasan was not able to achieve anywhere near 95% 
of contracted capacity until l 6'h August which is when the COD took 
place on facts. They also pointed out.that, for example, in the month of 
July, there was no supply of power at all by Sasan Power. Ultimately, it 
was stated that the Independent Engineer's certificate dated 30.3.2013 
was a document made only to favour Sasan, so that Sasan could swallow 
one entire year of tariff in one day, so that the consumer would have to 
pay the higher tariff for what is in reality the first year, but is now being 
treated as the second year of generation and supply. 
8. As against this, Shri Chidambaram and Shri Sibal, learned senior 
counsel appearing on behalf of Sasan Power Ltd., have argued that as 
against 69 and 70 paise per unit for electricity supplied under the PPA, 
the
procurers were in fact procuring electricity at much higher rates. It 
was the procurers themselves, therefore, who kept telling Sasan to supply 
power as soon as possible. For this, they relied, in particular, on the 
minutes of a meeting dated 27.2.2013 between the procurers and Sasan, 
in which the procurers unequivocally stated that any time upto 31.3.2013, 
the power generation should begin from Unit No.3. This was because 
the moment such power generation began, whether it was 69 paise or 
70 paise for the second year, the aforesaid tariff was much, much lower 
than what the procurers would have to pay otherwise. It was their 
argument that it was only at the behest of the procurers themselves that 
the COD was declared on 31.3.2013. They further argued that on a 
correct reading of emails and lettc;s.exchanged between the parties, the 
lead proct_Jrer and ~II other procurers had actually and unequivocally 
waived the requirement of95% of contracted capacity demand.and that 
the AppellateTribunal was right in this behalf. Countering the arguments 
of the appellant, they referred to and relied upon Section 63 of the !ndian 
Contract Act, 1872 to buttress their submission that waiver is a right 
granted by the Contract Act and does not depend upon the PPA.
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
Therefore, whatever the construction of Article 18.3 of the PPA, it is clear 
that the. Contract Act itself gives them this right which the procurers 
themselves have exercised in accordance with law, for the very good reason 
that they wanted the supply of cheap energy at any cost, even at the cost 
of being at 17% instead of 95% of contracted demand. It was also their 
case that they were ready to supply electricity on 31" March at 95% of the 
contracted demand, but unfortunately WRLDC prevented them from doing 
so, and that the independent engineer's certificate had been wrongly 
castigated by CERC, as was correctly held by the Appellate Tribunal. The 
independent engineer laid bare the facts correctly and therefore did not 
give a false or wrong certificate as was found by CERC. They also met an 
argument raised by the appellant that Haryana at least had waived its right 
without prejudice to its other rights and contentions. This was met by 
stating that Haryana accounted only for roughly 12% of the total electricity 
demanded by all the procurers and that as per a clause in the PPA, if the 
lead procurer and the other procurers constitute 65% or more, they can 
bind all the other procurers. 
' 
9. In order to appreciate the rival submissions, it is necessary to 
refer to the relevant provisions of the PPA, which reads as follows:-
"l. Definitions 
The terms used in this
Agreement, unless as defined below 
or repugnant to the context, shall have the same meaning as 
assigned to them by the Electricity Act, 2003 and the rules or 
regulations framed thereunder, including those issued/framed 
by Appropriate Commission (as defined hereunder), as 
amended or re-enacted from time to time. 
The following terms w~en used in this Agreement shall have 
the ·respective meanings, as specified below: 
"Commercial 
Operation "Date" or 
"COD" 
Means, in relation to a Unit, the date 
one day after the date when each of the 
Procurers 
receives 
a 
Final 
Test 
Certificate of the Independent Engineer 
as per the provisions of Article 6.3.1 
and in relation to the Power Station 
shall mean the date by which such Final 
Test Certificates as per Article 6.3.1 are 
received by the Procurers for all the 
Units; 
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"Commissioning" 
or 
"commissioned 
with 
its 
grammatical variations 
"Commissioning Tests" or 
"Commissioning Test" 
"Commissioned Unit" 
"Contract Year" 
"Contracted Capacity" 
Means, in relation to a Unit, that the 
Unit or in relation to die Power Station 
all the Units of the Power Station have 
passed the Commissioning Tests 
successfully; 
Means the Tests provided in Schedule 
5 herein; 
Means the Unit in respect of which 
co D has OCCUJTed; 
Means the pe1iod beginning on the 
date of this Agreement and ending on 
the immediately succeeding March 3 I 
and thereafter each period of I 2 
mondis beginning on April I and 
ending on March 31 provided that: 
In 
tlc 
financial 
year 
in which 
Scheduled COD of the first Unit 
would have occurred, a Contract Year 
shall end on tlx: date immediately 
before the Scheduled COD of the first 
Unit and a new Coniract Year shall 
begin once again from die Scheduled 
Commercial 0 pera tion Date of the 
first Unit and end on immediately 
succeeding March 3 I and provided 
further tliat 
(ii) The last Contract Year of this 
Agreement shall end on the last day 
of die tcmi of this Agreement; 
Means (1) for the first Unit, 620.4 
MW; (ii) for tlie second Unit, 620.4 
MW; (iii) for the tliird Unit, 620.4 
MW; (iv) for the fou1th Unit, 620.4 
MW; (v) for the fifth Unit, 620.4 MW 
and (vi) for the sixth Unit 620.4 MW 
rated 
net 
capacity 
at 
tl-e 
Interconnection
Point, and in relation 
to tlx: Power Station as a whole 
means 3722.4 MW rated net capacity 
at t:,~ I ntcrconnection Point, or such 
rated capacities as may be detenni1-ed 
in accordance with Article 6.3.4 or 
A1ticle 8.2 of this Agreement;
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
917 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
A 
"Effective Date" 
Means the date of signing of this 
Agreement by last of all the Parties; 
"Declared Capacity'' 
In relation to a Unit or the Power 
Station at any time means the net 
capacity of the Unit or the Power 
Station at the relevant time (expressed 
B 
in MW at the Interconn:ction Point) 
as 
declared 
by 
the 
Seller 
111 
accordance with the Grid Code and 
dispatching procedures as per the 
Availabilitv Based Tariff; 
"Final Test Certificate" 
Means 
c 
(a) A certificate of the Independent 
Engineer ce11ifying and accepting the 
results of a Commissioning Testis in 
accordance with Article 6.3. l of this 
Agreement; or 
(b) A certificate of tre Independent 
D 
Engineer certifying the result of a 
Repeat 
Pe1formance 
Tests 
111 
accordance with Article 8.2. l of this 
Agreement; 
"Grid Code" or "I EGC" 
Means any set of regulations or codes 
E 
issued by CERC as amended and 
revised from time to time and legally 
binding 
on 
the 
Sellers' 
and 
Procedures' governing the operation 
of the Grid System or any succeeding 
set of regulations or code; 
· "Independent Enginee1" 
Means an independent consulting 
F 
engineering firm or group appointed 
jointly by all the Procurers (jointly) 
and the Seller, to carry out the 
functions in accordance with Article 
4. 7. l and Article 6, Article 12 and 
"''-
A11icle 8 herein. 
G 
"Lead Procurer" 
Shall have the 
meaning
scribed 
thereto in Article 2.5; 
"Perfo1111ance Test" 
Means 
the 
test 
carried 
out 
111 
accordance 
with 
Article 
l. l 
of 
Schedule 5 of this Agreement; 
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"Scheduled 
COD" 
or 
Means (i) for the first Unit, May 7, 
"Scheduled Commercial 
2013; 
(ii) 
for the second 
Unit, 
Operation Date" 
December 7, 2013; (iii) for the third 
Unit, July 7, 2014; (iv) for the fourth 
Unit, Febrnary 7, 2015; (v) for the fifth 
Unit, September 7, 2015 and (vi) for 
the sixth Unit, April 7, 2016 or such 
other dates from time to time specified 
in accordance with the provisions of 
this Agreement; 
"Scheduled 
Means in relation to a Unit, the date, 
Synchronization Date" 
which shall be maximum of one 
hundred and eighty (I 80) days prior to 
the Schedule COD of the respective 
Unit; 
"Tariff' 
Means the tariff as computed 
111 
accordance with Schedule 7; 
"Tested Capacity" 
In relation to a Unit, or the Power 
Station as a whole (if all the Units of 
the 
Power 
Station 
have 
been 
commissioned) means the results of 
the most recent Performance Test or 
Repeat Performance Test carried out in 
relation 
to 
the 
Power Station 
111 
accordance with Article 6, Article 8 
and Schedule 5 ofthis Agreement; 
Hu nit" 
Means one steam generator, steam 
turbine, 
generator 
and 
associated 
auxiliaries of the Power Station based 
on Supercritical Technology; 
6: Synchronization, Commissioning and Commercial 
Operation 
6.1 
Synchronisation 
6. L 1 The Seller shall give the Procurers and RLDC at least 
sixty (60) days advance preliminary written notice and at 
least thirty (30) days
advance final written notice, of the 
date on which it intends to synchronize a Unit to the Grid 
System, Provided that no Unit shall be synchronized prior 
to 36 months from NTP.
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
919 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
6.1.2 Subject to Article 6.1.1, a Unit may be synchronized 
A 
by the Seller to the Grid System when it meets all connection 
conditions prescribed in any Grid Code then in effect and 
Qtherwise meets all other Indian legal requirements for 
synchronization to the Grid System. · 
6.2 Commissioning 
B 
6.2.1 The Seller shall be responsible for ensuring that each 
Unit is Commissioned in accordance with Schedule 5 at its 
own cost, risk and expense. 
6.2.2 The Seller shall give all the Procurers and the 
Independent Engineer not less than ten (I 0) days prior 
written notice of Commissioning Test of each Unit. 
6.2.3 The Seller (individually), the Procurers (jointly) and 
the Independent Engineer (individually) shall each designate 
qualified and authorized representatives to witness and 
monitor Commissioning Test of each Unit. 
6.2.4 Testing and measuring procedures applied during each 
Commissioning Test shall be in accordance with the codes, 
practices and procedures mentioned in Schedule 5 of this 
Agreement. 
6.2.5 Within five (5) days of a Commissioning Test, the 
Seller shall provide the Procurers (jointly) and the 
Independent Engineer with copies of the detailed 
Commissioning Test results. Within five (5) days ofreceipt 
of the Commissioning Test results, the Independent Engineer 
shall provide to the Procurers and the Seller in writing, his 
findings from the
evaluation of Commissioning Test results, 
either in the form of Final Test Certificate certifying the 
matters specified in Article 6.3 .1 or the reasons for non-
issuance of Final Test Certificate. 
6.3 Commercial Operation 
6.3.1 A Unit sl1all be Commissioned on the day after the 
date when all the Procurers receive a Final Test Certificate 
of the Independent Engineer stating that: 
a) the Commissioning Tests have been carried out in 
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A 
accordance with Schedule 5 and are acceptable to him; 
and 
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b) the results of the Performance Test show that the Unit's 
Tested Capacity, is not less than ninety five (95) percent of 
its Contracted Capacity as existing on the Effective Date. 
6.3 .2 If a Unit fails a Commissioning Test, the Seller may 
retake the relevant test, within a reasonable period after 
the end of the previous test, with three (3) day's prior written 
notice to the Procurers and the Independent Engineer. 
Provided however, the Procurers shall have a right to require 
deferment of any such re-tests for a period not exceeding 
fifteen (15) days, without incurring any liability for such 
defennent, ifthe Procurers are unable to provide evacuation 
of power to be generated, due to reasons outside the 
reasonable control of the Procurers or due to inadequate 
demand in the Grid. 
6.3 .3 The Seller may retake the Performance Test by giving 
at least fifteen ( 15) days advance notice in writing to the 
Procurers, up to eight (8) times, during a period of one 
hundred and eighty ( 180) days ("Initial Performance Retest 
Period") from a Unit's COD in order to demonstrate an 
increased Tested Capacity over and above as provided in 
Article 6.3.1 (b ). Provided however, the Procurers shall 
have a ~ight to require deferment of any such re-tests for a 
period not exceeding fifteen (15) days, without incurring 
any liability for such deferment,
ifthe Procurers are unable 
to ptovide evacuation of power to be generated, due to 
reasons outside the reasonable control of the Procurers or 
due to inadequate demand in the Grid. 
6.3.4 (i) If a Unit's Tested Capacity after the most recent 
I Performance Test mentioned in Article 6.3.3 has been 
conducted, is less than its Contracted Capacity as existing 
on the Effective Date, the Unit shall be de-rated with the 
following consequences in each case with effect from the 
date of completion of such most recent test: 
a) the Unit's Contracted Capacity shall be reduced to its 
Tested Capacity, as existing at the most recent Performance
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
Test referred to in Article 6.3.3 and Quoted Capacity 
Charges shall be paid with respect to such reduced 
Contracted Capacity; 
b) The Quoted Non Escalable Capacity Charge (in Rs./ 
kwh) shall be reduced by the following in the event Tested 
Capacity is less than ninety five (95%) per cent of its 
Contracted Capacity as existing on the Effective Date: 
Rs.0.25/kwh x [I - {(Tested Capacity of all Commissioned 
Units+ Contracted Capacity of all Units not Commissioned 
at the Effective Date)/ Contracted Capacity of all Units at· 
the Effective Date}) 
c) the Seller shall not be permitted to declare the Available 
Capacity of the Unit at a level greater than its Tested 
Capacity; 
d) the Availability Factor of the derated Unit shall be 
calculated by reference to the reduced Contracted Capacity; 
and 
e) the Capital Cost and each element of the Capital Structure 
Schedule shall be reduced in proportion to the reduction in 
the Contracted Capacity of the Power Station as a result 
of that de-rating (taking into account the Contracted 
Capacity of any Unit which has yet to be Commissioned). 
(ii) If at the end oflnitial Performance Retest Period or the 
date of the eighth Performance Test mentioned in A11icle 
6.3.3, whichever is earlier, the Tested Capacity is less than 
the Contracted Capacity (as existing on the date of this 
Agreement), the consequences mentioned in A11icle 8.2.2
shall apply for a period of one year. Provided that such 
consequences shall apply with respect to the Tested 
Capacity existing at the end of Initial Performance Retest 
Period or the date of the eighth Performance Test mentioned 
in Article 6.3.3, whichever is earlier. 
6.3.5 If a Unit's Tested Capacity as at the end of the Initial 
Performance Retest Period or the date of the eighth 
Performance Test mentioned in Article 6.3.3, whichever is 
earlier, is found to be more than it's Contracted Capacity 
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SUPREME COURT REPORTS 
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as existing on the Effective Date, the Tested Capacity shall 
be deemed to be the Unit's Contracted Capacity if any 
Procurer/s agrees and intimates the same to the Seller within 
thirty (30) days of receipt of the results of the last 
Performance Test to purchase such excess Tested Capacity 
and also provide to the Seller additional Letter of Credit 
and Collateral Arrangement (ifapplicable) for payments in 
respect of such excess Tested Capacity agreed to be 
purchased by stich Procurer/s. In case the Procurer/s 
decide not to purchase such excess Tested Capacity, the 
Seller shall be free to sell such excess Tested Capacity to 
any third party and the Unit's Contracted Capacity shall 
remain unchanged, notwithstanding that the Tested Capacity 
exceeded the Contracted Capacity. 
Provided that in all the above events, the Seller shall be 
liable to obtain/maintain all the necessary consents (including 
Initial Consents), permits_ and approvals including those 
required under the environmental laws for generation of 
such excess Tested Capacity. 
6.4 Costs Incurred. 
The Seller expressly agrees that all costs incurred by him 
in synchronizing, connecting, Commissioning and/or Testing 
or Retesting a Unit shall be solely and completely to his 
account and the Procurer's or Procurers' liability shall not 
exceed the amount of the Energy Charges payable for such 
power output, as set"out in Schedule 7. 
18:
Miscellaneous Provisions 
18. l Amendment 
The Agreement may only be amended or supplemented by 
a written agreement between the Pa11ies and after duly 
obtaining the approval of the Appropriate Commission, 
where n~cessary. 
18.3. No Waiver 
A valid waiver by a Party shall be in writing and executed 
by an authorized representative of that Party. Neither the
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
failure by any Party to insist on the performance of the 
terms, conditions, and provisions of this Agreement nor.time 
or other indulgence granted by any Party to the other Parties 
shall act as a waiver of such breach or accepta,nce of any 
variation or the relinquishment of any such right or any other 
right under this Agreement, which shall remain in full force 
and effect. 
· 
Schedule 5: Commissioning and Testing 
1.1 Performance Test 
i. (a) The Performance Test shall be conducted under any 
and all ambient conditions (temperature, humidity .etc.) and 
any and all Fuel qualities that may exist during the time of 
the Performance Test and no corrections in final gross and 
net output of the Unit will be allowed as a result of prevailing 
ambient conditions or Fuel quality. 
(b) The correction curves will only be used ifthe Grid System 
operation during the Performance Test exceeds Electrical 
System Limits. 
(c) The Performance Test shall be deemed to have 
demonstrated the Contracted Capacity of the Unit under 
all designed conditions and therefore no adjustments shall 
be made on account of fuel quality or ambient conditions. 
(d) The Seller shall perform in respect of each Unit a 
Performance Test, which such Unit shall be deemed to have 
passed if it operates continuously for seventy two 
consecutive hours at or above ninety five (95) percent of 
its Contracted Capacity
as existing on the Effective Date 
and within the Electrical System Limits and the Functional 
· Specifications. 
ii. For the purposes of any Performance Test pursuant to 
this sub-article 1.1, the Electrical System Limits to be 
achieved shall be as follows: 
(a) Voltage 
The Unit must operate within the voltage levels described 
in the Functional Specification for the duration of the 
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Performance Test. If, during the Performance Test, voltage 
tests cannot be perfonned due to Grid System, data supplied 
from tests of the generator step-up transformers and 
generators supplied by the manufacturers shall be used to 
establish the ability of the Unit to operate within the specified 
voltage limits. 
(b) Grid System Frequency 
The Unit shall operate within the Grid System frequency 
levels described in the Functional Specification for the 
duration of the Performance Test. 
(c) Power Factor 
The Unit shall operate within the power factor range 
described in the Functional Specification for the duration of 
the Performance Test. If, during the Performance Test, 
power factor tests cannot be performed due to the Grid 
System, data supplied from tests of the generators and the 
generator step-up transformers supplied by the 
manufacturers shall be used to establish the ability of the 
Unit to operate within the specified power factor range. 
(d) Fuel quality and cooling water temperature 
The Unit must operate to its Contracted Capacity with Fuel 
quality and water temperature available at the t,ime of 
Testing and no adjustment shal11'be allowed for any variation 
in these parameters. 
iii. As a part of the Performance Test, the Seller shall 
demonstrate that the Unit meets the Functional 
Specifications for Ramping rate as mentioned in Schedule 
4. For this purpose, representative samples of
ramp rates 
shall be taken, by ramping up or down the gross turbine 
load while maintaining the required temperature and 
temperature differences associated with each ramp rate 
within the turbine while maintaining all other operational 
parameters within equipment limits. 
iv. Further, as a part of the Performance Test, the Unit 
shall be tested for compliance with parameters of
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
925 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.) 
Supercritical Technology. 
A 
1.2 Testing and Measurement procedures applied during 
Performance Test shall be in accordance with codes, 
practices or pr9cedures as generally/normally applied for 
the Performance Tests. 
1.3 The Seller shall comply with the prevalent Laws, rules 
and regulations as applicable to the provisions contained in 
this Schedule from time to time. 
Schedule 11: Quoted Tariff 
Contract Comntence 
End Date of 
Quoted 
Quoted 
Quoted 
Quoted 
Year 
mentDateof 
Contnct 
:'\on· 
Estalable 
:'\on· 
Indexed 
Contract Year Year 
Escalable 
Capacity 
lndmd 
Energy 
Capacity 
Charges 
Ener~· 
Charges 
Charges 
(Rs. lkwh) 
Charges 
(Rs.lkwh) 
(Rs.lkwh) 
(Rs.11,·wh) 
l 
27Nor2012 
31 May2013 
0.21 
0.001 
0575 
0.001 
2 
1·Apr·2013 
3l·ilfar·20l4 
0.125 
Same as 
0.575 
Same as 
Ab on 
AboH 
3 
l·Apr-2014 
31-Mar-2015 
0.163 
Same as 
1.148 
Same as 
Above 
Abore 
4 
J l ·Apr-2015 
31-~lar-2016 
0.171 
Same as 
1.148 
Same as 
I 
Abo,·e 
Above 
5 
1 l·Apr-2016 
31·!.far-2017 
0.169 
Same as 
l.148 
Same as 
Abon 
Abo1·e 
6 
J l-Apr-2017 
Jl-~!ar·2018 
0.!69 
Same as 
l.l4S 
· Same as 
l 
! Above 
Above 
7 
1 l-Apr·lO!S 
3l·~far-20!9 
0.169 
Same as 
L14S 
Same as 
A bore 
I Abote 
8 
1 l·Apr·2019 
3 l-:.!ar-2020 
0.168 
San1e as 
l.148 
I Same as 
Ab on 
Ab ore 
9 
I l·Apr-2020 
31·~!ar·202l 
0167 
Same as 
l.148 
Same as 
I 
Ab ore 
Abo»e 
lO 
j l·Apr-2021
31-~far-2022 
0.166 
Same as 
l.147 
Samns 
Ab on 
Above 
ll 
l·Apr-2022 
31-:-.lar-2023 
0.165 
Same as 
U47 
Same as 
Above 
Above 
12 
l-Apr-2023 
3 l-Mar-2014 
0164 
Same as 
1147 
Same as 
Abon 
Ab on 
l3 
l-Apr-2024 
31-~lar-2025 
0164 
Sarne as 
1.147 
Sarne as 
Abon 
Abore 
14 
l-Apr-2025 
31-Mar·2026 
0.163 
Same as 
l.l47 
Same as 
Above 
I Abore 
15 
1 ·Apr-2026 
31-~lar-2027 0162 
Same as 
l.l46 
Same as 
Ab on 
Abo»e 
B 
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. A,. 
16 
l·Apr-2027 
31-Mar-2028 
0.161 
Same as 
Ll46 
Same as 
Abol'e 
Above· 
17 
l·Apr-2028 
3 l-Mar-2029 
0.160 
Same as 
1.146 
Sameai 
Abo re 
Above 
!8 
l·Apr-2029 
31-Mar-2030 0160 
Same as 
L146 
Samrn 
B 
Above 
Above 
!9 
l·Apr·2030 
31-Mar-2031 
0.159 
Samrn 
1145 
Same as 
Above 
Abore 
20 
1 ·Apr-2031 
3!-Mar-2032 
0.158 
Same as 
1.145 
Samrn 
Above 
Abol'e 
21 
1-Apr-2032 
3l·Mar·2033 
0.157 
Sameas 
1.145 
Samrn 
Abore 
Above 
c 
22 
1-Apr-2033 
31-Mar-2034 
0.136 
Same as 
l.145 
Same as 
Abo1·e 
Above 
23 
l·Apr-2034 
31-Mar-2035 
0.126 
Same as 
1144 
Same as 
Above 
Above 
).' 
l-Apr-2035 
31-Mar-2036 
0.126 
Sameas 
1.144 
Sameas 
•' 
Above 
Above 
D 
25 
. l·Apr-2036 
ll·Mar-2037 
0.137 
Same as 
l.144 
Same as 
Above 
Above 
~6 
l-Apr-2037 
25<1 
0.169 
Samrn 
l.143 
S.unrn 
annirmaiy of 
Abol'e 
Above 
E 
the Scheduled 
COD of the 
first Unit 
I 0. It is also necessary to set out the relevant provisions of the 
Electricity Act, 2003. Sections 28, 29, 61, 62 and 63 of the Electricity 
F 
Act, 2003 read as under:-
G 
H 
"Section 28. Functions of Regional Load Despatch 
Centre: 
(I) The Regional Load Despatch Centre shall be the apex 
body to ensure integrated operation of the power system in 
the ccncemed region. 
(2) The Regional Load Despatch Centre shall comply with 
such principles, guidelines and methodologies in respect of 
the wheeling and optimum ~cht><luling and despatch of 
electricity as the
Central Commission may specify in the
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
927 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
Grid Code. 
A 
(3) The Regional Load Despatch Centre shall -
(a) be responsible for optimum scheduling and despatch of 
electricity within the region, in accordance with the contracts 
entered into with the licensees or the generating companies 
operating in the region; 
(b) monitor grid operations; 
( c) keep accounts of quantity of electricity transmitted 
through the regional grid; 
( d) exercise supervision and control over the inter-State 
transmission system; and 
( e) be responsible for carrying out real time operations for 
grid control and despatch of electricity within the region· 
through secure and economic operation of the regional grid 
in accordance with the Grid Standards and the Grid Code. 
(4) The Regional Load Despatch Centre may levy and 
collect such fee and charges from the generating companies 
or licensees engaged in inter-State transmission of electricity 
as may be specified by the Central Commission. 
Section 29. Compliance of directions: -
(I) The 
Regional Load Despatch Centre may give such directions 
and exercise such supervision and control as may be required 
for ensuring stability of grid operations and for achieving 
the maximum economy and efficiency in the operation of 
the power system in the region under its control. 
(2) Every licensee, generating company, generating station, 
sub-station and any other person connected with the
operation of the power system shall comply with the 
directions issued by the Regional Load Despatch Centres 
under subsection (I). 
(3) Alt directions issued by the Regional Load Despatch 
Centres to any transmission licensee of State transmission 
tines or any other licensee of the State or generating 
company (other than those connected to inter State 
B 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
A 
transmission system) or sub-station in the State shall be 
. issued through the State Load Despatch Centre and the 
State Load Despatch Centres shall ensure that such 
directions are duly complied with the licensee or generating 
company or sub-station. 
B 
( 4) The Regional Power Committee in the region may, from 
time to time, agree on matters concerning the stability and 
smooth operation of the integrated grid and economy and 
efficiency in the operation of the power system in that 
region. 
c 
D 
E 
F 
G 
H 
(5) If any dispute arises with reference to the quality of 
electricity or safe, secure and integrated operation of the 
regional grid or in relation to any direction given under sub-
section ( 1 ), it shall be referred to the Central Commission 
for decision : Provided that pending the decision of the 
Central Commission, the directions of the Regional Load 
·Despatch Centre shall be complied with by the State Load 
Despatch Centre or the I icensee or the generating company, 
as the case may be. 
(6) Ifany licensee, generating company or any other person 
fails to comply with the directions issued under sub-section 
(2) or sub-section (3), he shall be liable to a penalty not 
exceeding rupees fifteen lacs. 
Section 61. Tariff regulations: The Appropriate 
Commission shall, subject to the provisions of this Act, 
specify the terms and conditions for the determination of 
tariff, and in doing so, shall be guided by the
following, 
namely:-
( a) the principles and methodologies specified by the Central 
Commission for determination of the tariff applicable to 
generating companies and transmission licensees; 
(b) the generation, transmission, distribution and supply of 
electricity are conducted on commercial principles; 
(c) the factors which would encourage competition, 
efficiency, economical use of the resources, good 
performance and optimum investments;
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
929 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
(d) safeguarding of consumers' interest and at the same 
A 
time, recovery of the cost of electricity in a reasonable 
manner; 
( e) the principles rewarding efficiency in performance; 
(t) multi year tariff principles; 
(g) that the tariff progressively reflects the cost of supply 
of electricity and also, reduces cross-subsidies in the manner 
specified by the Appropriate Commission; 
(h) the promotion of co-generation and generation of 
electricity from renewable sources of energy; 
(i) the National Electricity Policy and tariff policy: 
Provided that the terms and conditions for determination of 
tariff under the Electricity (Supply)Act, 1948, the Electricity 
Regulatory Commission Act, 1998 and the enactments 
B 
c 
specified in the Schedule as they stood immediately before 
D 
the appointed date, shall continue to apply for a period of 
one year or until the terms and conditions for tariff are 
specified under this section, whicheve.r is earlier: 
Section 62. Determination of tariff: ( 1) The Appropriate 
Commission shall determine the tariff in accordance with 
E 
the provisions of this Act for-
(a) supply of electricity by a generating company to a 
distribution licensee: Provided that the Appropriate 
Commission may, in case of shortage of supply of electricity, 
fix the minimum and maximum ceiling of tariff for sale or 
F 
purchase of electricity in pursuance of an
agreement, entered 
into between a generating company and a licensee or 
between licensees, for a period not exceeding one year to 
ensure reasonable price~ of electricity; 
(b) transmission of electricity; 
G 
( c) wheeling of electricity; 
( d) retail sale of electricity: 
Provided that in case of distribution of electricity in the same 
area by two or more distribution licensees, the Appropriate 
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SUPREME COURT REPORTS 
[2016) 9 S.C.R. 
A 
Commission may, for promoting competition among 
distribution licensees, fix only maximum ceiling of tariff for 
retail sale ofelectricity. 
(2) The Appropriate Commission may require a licensee or 
a generating co1lipany to furnish separate details, as may 
B 
be specified in respect of generation, transmission and 
distribution for determination of tariff. 
(3) The Appropriate Commission shall not, while determining 
the tariff urider this Act, show undue preference to any 
consumer of electricity but may differentiate according to 
. c 
the consumer's load factor, power factor, voltage, total 
consumption of electricity during any specified period or 
the time at which the supply is required or the geographical 
position of any area, the nature of supply and the purpose 
for which the supply is required. 
D 
( 4) No tariff or part of any tariff may ordinarily be amended, 
more frequently than once in any financial year, except in 
respect of any changes expressly permitted under the terms 
of any fuel surcharge formula as may be specified. 
(5) The Commission may require a licensee or a generating 
E 
company to comply with such procedures as may be 
specified for calculating the expected revenues from the 
tariff and charges which he or it is permitted to recover. (6) 
If any licensee or a generating company recovers a price 
or charge exceeding the tariff determined under this section, 
the excess amount shall be
recoverable by the person who 
F 
has paid such price or charge along with interest equivalent 
to the bank rate without prejudice to any other liability 
incurred by the I icensee. 
Section 63. Determination of tariff by bidding process: 
Notwithstanding anything contained in section 62, the 
G 
Appropriate Commission shall adopt the tariff if such tariff 
has been determined through transparent process of bidding 
in accordance with the guidelines is:;ued by the Central 
Government." 
11. Since counsel for the opposing parties have made wide ranging 
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
931 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
arguments on the effect of A1iicle 18 and waiver as a legal concept, it is 
A 
important first to find out as to which pigeonhole the facts of the present 
case fit- whether the emails exchanged by the parties would amount to 
an "amendment" governed by Article 18.1, or whether it would amount 
to a "waiver" governed by A1iicle 18.3. 
12. A perusal of the emails exchanged between the parties would 
B 
show that the parties did not intend to amend by a written agreement 
any of the provisions of the PPA. Whereas an amendment of the PPA 
under Article 18. I would be bilateral, a waiverofa provision of the PPA 
would be unilateral under Article 18.3: 
13. In order to better understand, conceptually, the difference 
c 
between amendment and waiver, it is necessary to advert to Sections l, 
62 and 63 of the Indian Contract Act, 1872. 
"Section I.Short title.-This Act may be called the Indian 
C "ntract Act, 1872. 
Extent, Commencements.-lt extends to the whole of India 
D 
except the State of Jammu and Kashmir; and it shall come 
into force on the first day of September, 1872. 
Nothing herein contained shall affect the provisions of any 
Statute, Act or Regulation not hereby expressly repealed, 
nor any usage or custom of trade, nor any incident of any 
E 
contract, not inconsistent with the provisions of this Act. 
Section 62. Effect of novation, rescission, and 
alteration of
contract. 
If the pa11ies to a contract agree to substitute a new contract 
for it, or to rescind or alter it, the original contract need not 
be performed. 
Section 63. Promisee may dispense with or remit 
performance of promise.- Every promisee may dispense 
with or remit, wholly or in part, the performance of the 
promise made to him, or may extend the time for such 
performance, or may accept instead of it any satisfaction 
which :ie thinks fit." 
14. Under Section 62, apati from novation of a contract and 
rescission of a contract, alteration of a contract is mentioned. Alteration 
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SUPREME COURT REPORTS 
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is understood here, in the facts of the present case, in the sense of 
amendment. It is settled law that an amendment to a contract being in 
the nature of a modification of the terms oftha contract must be read in 
and become a part of the original contract in order to amount to an 
alteration under Section 62 of the Indian Contract Act. This iS' clear 
from Juggilal Kamlapat v. N. V. Internationale Crediet-En-Hande/s 
Vereeninging 'Rotterdam',AIR 1955 Cal 65 in paragraph 15 of which 
it is stated:-
"The effect of the alterations or modifications is that there 
is a new arrangement; in the language of Viscount Haldane 
in Morris v. Baron & Co. (I) (1918 Appeal Cases, I at 
17), "a new contract containing as an entirety the old terms 
together with and as modified ,by the new terms 
incorporated." The modifications are read into and become 
part and parcel of the original contract. The original terms 
also continue to be part of the contract and are not rescinded 
and/or superseded except in so far as they are inconsistent 
with the modifications. Those of the original terms which 
cannot make sense when read with the alterations must be 
rejected. In my view the arbitration clause in this case is in 
no way inconsistent with the subsequent modifications and 
continues to subsist." [para 15) 
15. No such thing having occurred on the present facts, it is clear 
tJ1at there is in fact no amendment by written
agreement to the PPA. To 
this extent, learned counsel for Sasan are correct. 
. 16. The relevant section therefore that would apply on the facts 
of the present case is Section 63. At this stage, it is important to advert 
to an argument made by counsel for the appellants that Article 18.3 only 
refers to waivers that can expressly be made under various provisions 
of the agreement and not to Article 6 which, according to learned counsel, 
cannot be waived under the PPA. Assuming that such argument is 
correct, and that Article 18.3 refers only to the mode of carrying out a 
waiver und\!r the PPA, yet it is clear that Section 63 would operate on 
~!he facts of this case. This is forthe reason that, when read with Section 
I of the Contract Act, it becomes clear that the PPA is subject to Section 
63 of the Contract Act, which would allow a promisee to dispense with 
or remit, wholly or in part, the performance of the promise made to him, 
and accept instead of it any satisfaction which he thinks fit. This is
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.) 
made clear in an interestingjudgment by Chief Justice Stone in Official 
Assignee of Bombay v. Madliolal Sindltu, ILR 1948 (2) Born 1. The 
learned Chief Justice after setting out the facts had this to say on the 
effect of Section I of the Contract Act: 
"The Indian Contract Act of 1872 applies to all contracts in 
India and with regard to a pawn is a codification of the 
English common law. Speaking of the common law right to 
sell Mr. Justice Story in his commentaries on the Law of 
Bailments, eighth edition, says at p. 262:-
"Another right.resulting, by the common law, from the 
contract of pledge is the right to sell the pledge, where there 
has been a default in the pledge in complying with his 
engagement, but a sale before default would be a 
conversion. Such a right does not divest the general property 
of the pawner but still leave in him (as we shall presently 
see) a right of redemption." 
And at p. 263 :-
"The common law of England, existing in the time of 
Glanville, seems to have required a judicial process to justify 
the sale, or at least to destroy the right of redemption. But 
the law as at present established leaves an election to the 
pawnee. He may file a bill in equity against the pawner for 
a foreclosure and sale; or, he may proceed to sell ex mero 
motu, upon giving notice of his intention to the pledger." 
The terms of an instrument of pledge, such as
there is in 
this case, giving an unqualified power of sale, are 
inconsistent with the provisions of s. 176 of the Indian 
Contract Act, and, therefore, by virtue of s. I of that Act 
must give place to the express provisions of the Act: 
See Chitguppi & Co. v. Vinaya Kashinath [( 1920) 45 
Born. 157, s.c.22 Born L.R. 959) . 
. 
The group of sections in the Indian Contract Act dealing 
with bailment commence withs. 148, and it is to be observed 
that in the ss. 152, 163, 171and174 the power is given to 
contract out of the Act. In the former section the words 
are "in the absence of any special contract" and in the three 
latter sections the expression used is "in the absence of 
933 
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SUPREME COURT REPORTS 
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any contract to contrary". In my op in ion, therefore, except 
in these four sections, the provisions of the Act with regard 
to bailment are mandatory: see The Co-operative 
Hindustan Bank, Ltd. v. Sure11dra11ath De [( 1931) 59 Cal. 
667.]." 
17. It is thus clear that if on facts there is a waiver of a provision 
of the PPA by one of the parties to the PPA, then Sectio11 63 of the 
Contract Act will operate in order to give effect to such waiver. 
18. At this juncture, it is important to understand what exactly is 
meant by waiver. In Jagad Bmullm Chatterjee v. Nilima Rani, ( 1969) 
3 SCC 445, this Court held: 
"In India the general principle with regard to waiver of 
contractual obligation is to be found in Section 63 of the 
Indian Contract Act. Under that section it is open to a 
promisee to dispense with or remit, wholly or in part, the 
performance of the promise made to him or he can accept 
instead of it any satisfaction which he thinks fit. Under the 
Indian law neither consideration nor an agreement would 
be necessary to constitute waiver. This Com1 has already 
laid down in Waman Shrinill'as Kini v. Ratilal 
Bhagwandas & Co. [ 1959 Supp 2 SCR 21 7, 226] that 
waiver is the abandonment of a right which normally 
eve1ybody is at liberty to waive. "A waiver is nothing unless 
it amounts to a release. It signifies nothing more than an 
intention not to insist upon the right". It is well-known that
in the law of pre-emption the general principle which can 
be said to have been uniformly adopted by the Indian com1s 
is that acquiescence in the sale by any positive act 
amounting to relinquishment of a pre-emptive right has the 
effect of the forfeiture of such a right. So far as the law of 
pre-emption is concerned the principle of waiver is based 
mainly on Mohammedan Jurisprudence. The contention that 
the waiver of the appellant's right under Section 26-F of 
the Bengal Tenancy Act must be founded on contract or 
agreement cannot be acceded to and must be rejected." 
[para 5] 
19. In P. Dasa Muni Reddy v. P. Appa Rao, ( 1974) 2 SCC 725,
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
this Court held: 
"Waiver is an intentional relinquishment of a known right or 
advantage, benefit, claim or privilege which except for such 
waiver the party would have enjoyed. Waiver can also be a 
voluntary surrender of a right. The doctrine of waiver has 
been applied in cases where landlords claimed forfeiture of 
lease or tenancy because of breach of some condition in 
the contract of tenancy. The doctrine which the courts of 
law will recognise is a rule of judicial policy that a person 
will not be allowed to take inconsistent position to gain 
advantage through the aid of courts. Waiver sometimes 
partakes of the nature of an election. Waiver is consensual 
in nature. It implies a meeting of the minds. It is a matter of 
mutual intention. The doctrine does not depend on 
misrepresentation. Waiver actually requires two parties, one 
party waiving and another receiving the benefit of waiver. 
There can be waiver so intended by one party and so 
understood by the other. The essential element of waiver is 
thatthere must· 
untaiy and intentional relinquishment 
of a right. The voluntary choice is the essence of waiver. 
There should exist an oppo11unity for choice between the 
relinquishment and an enforcement of the right in question. 
It cannot be held that there has been a waiver of valuable 
rights where the circumstances show that what was done 
was involuntary. There
can be no waiver of a non-existent 
right. Similarly, one cannot waive that which is not one's as 
a right at the time of waiver. Some mistake or. 
misapprehension as to some facts which constitute the.· 
underlying assumption without which pa11ies would not have 
made the contract may be sufficient to justify the court in 
saying that there was no consent." [para 13] 
935 
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20. Regard being had to th_e aforesaid decisions, it is clear that 
when waiver is spoken of in tire "realm of contract, Section 63 of the · (i 
Indian Contract Act governs. But it is important to note that waiver. rs 
an intentional relinquishment of a known right, and that, therefo~e, unless 
there is a clear intention to relinquish a right that is fully kno~n to a 
party, a party cannot be said to waive it: But the matter does not'end 
here. It is also clear that ifany element of public interest is involved and 
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[2016] 9 S.C.R. 
A 
a waiver takes place by one of the parties to an agreement, such waiver 
will not be given effect to if it is contrary to such public interest. This is 
clear from a reading of the following authorities. 
B 
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21. In Lac/100 Mal v. Radliey Sliyam, ( 1971) 1 SCC 619, it was 
held:-
"The general principle is that everyone has a right to waive 
and to agree to waive the advantage of a law or rule made 
solely for the benefit and protection of the individual in his 
private capacity which may be dispensed with without 
infringing any public right or public policy. Thus the maxim 
which sanctions the non-observance of the statutory 
provision is cuilibet licet renuntiarejuri prose introducto. 
(See Maxwell on Interpretation of Statutes, Eleventh Edn., 
pp. 3 75 and 376). If there is any express prohibition against 
contracting out of a statute in it then no question can arise 
of anyone entering into a contract which is so prohibited 
but where there is no such prohibition it will have to be 
seen whether an Act is intended to have a more-extensive 
operation as a matter of public policy." [para 6] 
22. In Indira Bai v. Nand Kislwre, (1990) 4 SCC 668, it was 
·held:-
"The test to determine the nature of interest, namely, private 
or public is whether the right which is renunciated is the 
right of party alone or of the public also in the sense that 
the general welfare of the society is involved. If the answer 
is
latter then it may be difficult to put estoppel as a defence. 
But if it is right of party alone then it is capable of being 
abnegated either in writing or by conduct." [para 5] 
23. In Krishna Balwdur v. Puma Theatre, (2004) 8 SCC 229, 
it was held: 
"The principle of waiver although is akin to the principle of 
estoppel; the difference between the two, however, is that 
whereas estoppel is not a cause of action; it is a rule of 
evidence; waiver is contq1ctual and may constitute a cause 
of action; it is an agreement between the parties and a party 
fully knowing of its rights has agreed not to assert a right
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
for a consideration. 
A right can be waived by the party for whose benefit certain 
requirements or conditions had been provided for by a statute 
subject to the condition that no public interest is involved 
therein. Whenever waiver is pleaded it is for the party 
pleading the same to show that an agreement waiving the 
right in consideration of some compromise came into being. 
Statutory right, however, may also be waived by his 
conduct." [para 9] 
24. It is thus clear that if there is any element of public interest 
involved, the court steps in to thwart any waiver which may be contrary 
to such public interest. 
25. On the facts of this case, it is clear that the moment electricity 
tariff gets affected, the consumer interest comes in and public interest 
gets affected. This is in fact statutorily recognized by the Electricity Act 
in Sections 61 to 63 thereof. Under Section 61, the appropriate 
commission, when it specifies terms and conditions for determination of 
tariff, is to be guided inter alia by the safeguarding of the consumer 
interest and the recovery of the cost of electricity in a reasonable manner. 
Forth is purpose, factors that encourage competition, efficiency and good 
performance are also to be heeded. Under Section 62 of the Act, the 
appropriate commission is to determine such tariff in accordance with 
the principles contained in Section 61. The
present case, however, is 
covered by Section 63, which begins with a 11011 obstante clause stating 
that notwithstanding anything contained in Section 62, the appropriate 
commission shall adoptthe tariff if such tariff has been determined through 
a transparent process of bidding in accordance with the guidelines issued 
by the Central Government. The guidelines dated 19.1.2005 issued by 
the Central Government under Section 63 make it clear that such guidelines 
are framed with the following objectives in mind: 
"These guidelines have been framed under the above 
provisions of section 63 of the Act. The specific objectives 
of these guidelines are as follows: 
I) Promote competitive procurement of electricity by 
distribution licensees; 
2) Facilitate transpwency and fairness in procurement 
processes; 
937 
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[2016] 9 S.C.R. 
A 
3) Facilitate reduction ofinformation asymmetries for various 
B 
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bidders; 
4) Protect consumer interests by facilitating competitive 
conditions in procurement of electricity; 
5) Enhance standardization and reduce ambiguity and hence 
time for materialization of projects; 
6) Provide flexibility to suppliers on internal operations while 
ensuring certainty on availability of power and tariffs for 
buyers. 
Clause 2.3 of the said guidelines reads as follows: 
"2.3. Unless explicitly specified in these guidelines, the 
provisions of these guidelines shall be binding on the 
procurer. The process to be adopted in event of any 
deviation proposed from these guidelines is specified later 
in these guidelines under para 5.16." 
26. Paragraph 4 of the aforesaid guidelines relates to tariff structure 
and paragraph 4.11 in particular, which relates to energy charges, is as 
follows:-
"4.11 Where applicable, the energy charges payable during 
E 
the operation of the contract shall be related on the base 
energy charges specified in the bid with suitable provision 
for escalation. In case the bidder provides firm energy 
charge rates for each of the years of the contract term, the 
same shall be permitted in. the tariffs." 
F 
27. Para 5.4 then speaks of a inodel power purchase agreement 
proposed to be entered into with the seller of electricity as follows:-
"(ii) Model PPA proposed to be entered into with the seller 
of
electricity. The PPA shall include necessary details on: 
G 
• Risk allocation between paiiies; 
• Technical requirements on minimum load conditions; 
• Assured offtake levels; 
• Force majeure clauses as per industry standards; 
H 
• Lead times for scheduling of power;
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
939 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
• Default conditions and cure thereof, and penalties; 
A 
• Payment security proposed to be offered by the procurer." 
28. Paragraph 5.16 then goes on to state:-
"Deviation from process defined_ in the guidelines 
5.16 In case there is any deviation from these guidelines, 
the same shall be with the prior approval of the Appropriate 
Commission. The Appropriate Commission shall decide on 
the modifications to the bid documents within a reasonable 
time not exceeding 90 days." 
B 
29. A perusal of the CERC tariff adoption order in the present 
C 
case dated 17.10.2007 makes it clear that the tariff is adopted by the 
Commission only because the competitive bidding process which has 
been undertaken is in accordance with the guidelines so issued. 
30. All this would make it clear that even if a waiver is claimed of 
some of the provisions of the PPA, such waiver, if it affects tariffs that 
are ultimately payable by the consumer, would necessarily affect public 
interest and would have to pass muster of the Commission under Sections 
61 to 63 of the Electricity Act. This is for the reason that what is adopted 
by the Commission under Section 63 is only a tariff obtained by 
competitive bidding in conformity with guidelines issued. If at any 
subsequent point of time such tariff is increased, which increase is outside 
the four corners of the PPA, even in cases covered by
Section 63, the 
legislative intent and the language of Sections 61 and 62 make it clear 
that the Commission alone can accept such amended tariff as it would 
impact consumer interest and therefore public interest. 
31. But on the facts of these cases, it is argued by learned counsel 
for Sasan that in point of fact the tariff laid down in Schedule 11 of the 
PPA has not been sought to be changed. All that has happened is that, as 
a result of COD being declared on 31.3.2013, the very tariff laid down in 
Schedule 11 becomes applicable, but for year one being treated as one 
day and year two commencing from 1.4.2013. Counsel for Sasan may 
be right in saying this, but the substance of the matter is that a consumer 
would have to pay substantially more by way of tariff under the PPA if 
year one is gobbled up in one day, as year two's tariff is one paisa more 
than year one and year three's tariff is substantially more than year 
two. In short, instead of getting two years or part thereof exceeding one 
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SUPREME COURT REPORTS 
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year at a substantially lower tariff, the consumer now gets only one year 
and one day at the lower tariff rates. This may also by itself not lead to 
the parties having to go to the Commission as this is envisaged by the 
PPA. But it is clear that if a waiver is to be accepted on the facts of this 
case, it would clearly impact the pub! ic interest, in that consumers would 
have to pay substantially more for electricity consumed by them. This 
being the case, on facts it may not be necessary to go to the Commission 
as had Sasan in fact met the parameters of Schedule 5 on 30'h March, 
then as per Schedule 11, year one would in fact have been only for one 
day. However, any waiver of the requirement ~f Schedule 5 would 
definitely impact the generation of electricity at the mandate.d percentage 
of contracted capacity as also the amounts payable by consumers, and 
would therefore affect the public interest. This being the case, this is 
not a case covered by the judgments cited on behalfofSasan, in particular 
the judgment of this Court in Commissioner of Customs, Bombay 
v. Virgo Steels Bombay, (2002) 4 SCC 316, in which it has been held 
that even the mandatory requirement of a statute can be waived by the 
party concerned, provided it is intended only for his benefit. This case 
would fall within the parameters of the other judgments referred to above, 
and would therefore be governed by judgments which
state that any 
waiver of the requirements of Article 6.3 and Schedule 5 would ultimately 
impact consumer interest and therefore the public interest. Such waiver 
therefore cannot be allowed to pass muster on the facts of the present 
case. 
32. Since the result of this case also depends upon the correct 
reading of Article 6 read with Schedule 5 of the PPA, and whether there 
has been waiver in fact in the sense ofbeing the intentional relinquishment 
of a known right by the procurers or on their behalf, it is necessary to 
advert to the scheme of Article 6, the independent engineer's certificate, 
and various meetings, emails, and letters exchanged between the parties. 
Article 6 deals with synchronization, commissioning, and commercial 
operations. In the first step to be taken by the seller, the unit producing 
electricity has to be synchronized to the grid system. It is only after 
synchronization takes place that the unit is to be commissioned. What is 
important is that at the commissioning stage, the parameters mentioned 
in Schedule 5 are to be met. The most important parameter mentioned 
in Schedule 5, when the performance test is to be taken for the purpose 
·of commissioning, is that a unit shall be deemed to have passed such test 
•
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
only if it operates continuously for 72 consecutive hours at or about 95% 
of its contracted capacity as existing on the effective date and within the 
electrical system limits and functional specifications. Further, as a part 
of the performance test, the seller must demonstrate that the unit meets 
functional specifications for ramping rate separately mentioned in 
Schedule 4 of the PPA. It is only when such test is passed that a unit 
can be said to be commissioned under the PPA. This then is to be 
certified by the independent engineer jointly appointed by the parties 
under Article 6.3.1, in the form ofa final test certificate, which states 
that (a) the commission tests have been carried in accordance with 
Schedule 5 and are acceptable to him, and (b) the result of the 
performance test shows that the unit's tested capacity is not less than 
95% of the contracted demand as existing on the effective date. 
33. If the Schedule 5 parameters are not met, it is incumbent on 
the independent engineer to then state reasons for the non-issuance of 
the final test certificate. Once this is done, under Articfe 6.3 .2, the seller 
may retake the relevant test within a reasonable period after the end of 
the previous test so as to comply with the basic requirements of Schedule 
5. It is only after this that a unit can be said to be a "commissioned unit" 
as defined, which means that
it is a unit in respect of which COD has 
occurred. COD or commercial operation date is also separately defined 
as meaning, in relation to a unit, the date one day after the date when 
each of the procurers receives a final test certificate of the independent 
engineer as per Article 6.3.1. It is thus clear that the scheme of Article 
6 is that a unit cannot be said to have a commercial operation date 
unless and until it is first synchronized with the grid and commissioned 
after meeting the parameters mentioned in Schedule 5 of the PPA. 
34. Article 6.3.3 refers ·to performance tests of a unit during the 
period of the PPA. If under Article 6.3.3 after COD has been achieved 
in a unit, an increased tested capacity over and above that provided in 
6.3. l (b) is achieved in a subsequent performance test, certain 
consequences follow. Equally, if after COD has been obtained in a unit, 
and the most recent performance test mentioned during the working of 
the PPA has been conducted, and it is found that in such test a figure 
less than contracted capacity is achieved, the unit shall be de-rated with 
certain consequences which are mentioned in Article 6.3.4 read with 
Article 8.2.2. The scheme of Article 6 therefore read as a whole appears 
to be that COD cannot be achieved until the parameters mentioned in 
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SUPREME COURT REPORTS 
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Schedule 5 are achieved and there is a final test certificate to that effect. 
The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick in after 
COD is obtained in a unit, leading to either increased capacity or to de-
rateC! capacity with consequences which follow under the PPA. 
35. The meetings, emails, and letters between the parties have 
now to be examined. The first important 111eeting that is necessary for 
us to advert to is the meeting of27.2.2013. The meeting was Chaired 
by the Managing Director of the lead procurer i.e. M.P. Power 
Management Company Li111ited. It was attended by all the other 
procurers, and officials of Sasan. What is emphasized on behalf of 
Sasan is that the revised COD of the Sasan units was accepted by all 
the procurers under article 4.5.1 of the PPA to be - (first unit) by 
31.3.2013. The procurers asked Sasan for the estimated date for 
synchronization and COD of the first unit. Sasan indicated that 
synchronization is expected in the first week of March, 2013, and the 
COD before 31.3.2013. What is i111portant about this meeting is that the 
procurers were no doubt interested in getting electricity from Sasan as 
soon as possible, but obviously only in accordance with article 6.3.1 read 
with the 5'" Schedule. This would only 111ean that the meeting would 
disclose that the anxiety of the procurers to get electricity at cheap rates 
would be in accordance
with the PPA and not against it. In other words, 
if a final test certificate had been given to the effect that 95% of 
contracted capacity could have been delivered by Unit No.3 on or before 
31.3.2013, the procurers were anxious to avai I of it, and not otherwise. 
36. It is unnecessary for us to burden th is judgment with the e111ails 
that passed between Sasan and WRLDC between 27.3.2013 and 
30.3.2013. It is enough for us to state that Sasan contends that it was 
ready to deliver at 95% of the contracted demand but for WRLDC, and 
WRLDC states that Sasan was never obstructed by WRLDC, and in 
fact was not capable of delivering electricity at 95% of the contracted 
demand at the relevant time. WRLDC a;--~'ears to be correct in this for 
the simple reason that if we see the performance of Sasan for the period 
1 "April to 16'" August, 2P 13, it is clear that various tests were undertaken, 
but 95% of contract capacity for a continuous period of 72 hours had 
only beei. ac!~ieved in June even according to Sasan. 
3 7. ln any event, the performance test certificate issued on 
30.3.2013 leaves much to be desired. Since the Commission has 
castigated this certificate and the Appcl!ite Tribunal has absolved the
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
943 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
Independent Engineer completely, it is necessary to set out th is certificate 
A 
in full. 
"Lahmeyer International (India) Pvt. Ltd. 
Corporate Office & Correspondence address: 
lntec House, 37 Institutional Area, Sector 44, Gurgaon-
B 
122002, National Capital Region (INDIA) 
CERTIFICATE OF INDEPENDENT ENGINEER (IE) 
Test Certificate of Performance Test for the Commercial 
Operation Declaration of the First Unit (Unit-3 of660 MW) 
of SASAN ULTRA MEGA POWER PROJECT (6x660 
C 
MW) 
This Certificate is issued by IE with reference to article 
6.3.1 of PPA executed on 7'" August 2007 between Sasan 
Power Limited (SPL, the Seller) and the Power Procurers. 
Based on the Performance Test witnessed by IE from 27'h 
D 
March 2013 to 30'
11 March 2013 and review of the detailed 
Performance Test results provided by the Seller, it is certified 
that: 
I. The Unit was synchronized with the grid at 15.18 hrs on 
27'h March 2013 after receiving the permission ofWRLDC. 
E 
2. The Seller (SPL) had submitted the power injection 
schedule to WRLDC at 15.35 hours on 271h March 2013 
for raising the load gradually to 100% of the Contracted 
Capacity of620.4 MW(ex bus) by 2000 hrs. on 27'11 March 
2013 for demonstrating continuous operation at that load 
F 
for continuous 72 (seventy two) consecutive hours. 
However, WRLDC, did not permit the Seller to operate the 
Unit beyond l 00 MW (ex bus)
till the morning of28'11 March 
2013 due to the following reasons: 
a) The demand in the grid was low due to the Holiday on 
G 
account ofHoli Festival. 
b) All the Units in the grid were operating at their technical 
minimum capacity. 
3. The Seller was continuously keeping in touch with 
H
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SUPREME COURT REPORTS 
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WRLDC till 21.40 hours on 291h March 2013 for seeking 
permission to raise the load. At 22.19 hrs on 291h March 
2013 WRLDC permitted the seller to raise the load. 
Accordingly, Seller raised the load to around 150 MW (ex 
bus). 
4. At 07 .13 hours on 301h March 2013, WRLDC asked the 
seller to submit its revised power injection schedule for 
raising the load. At this point of time, the Unit had already 
completed continuous operation of 50 (fifty) consecutive 
hours at a low load of about 100 MW (ex-bus) and another 
9 (nine) consecutive hours immediately thereafter at 150 
MW. Seller informed WRLDC at 14.18 hrs that it would 
increase the load from 20.00 hours to reach full load. As 
such, in line with WRLDC instructions and grid conditions. 
Seller maintained load of around 100 MW (ex bus) for 
around 50 hours and maintained load of around 150 MW 
D 
(ex bus) for remaining 22 hours as per WRLDC instructions 
and grid conditions. 
E 
F 
G 
H 
5. The Commissioning Test has been carried out in 
accordance with Schedule 5 of PPA and the results of the 
Performance Test are acceptable to IE. The results of the 
Performance Test show that the Unit's Tested Capacity is 
not less than 101.38 MW (ex bus), the maximum permitted 
load by WRLDC for injection into the grid. During the 
above stated period of continuous 72 (seventy two) 
consecutive hours, the performance of the unit was found 
to conform to the Electrical Limits of
the Functional 
Specifications in accordance with Schedule 4 of PPA. 
The salient details of the Performance Test are as follows: 
Minimum Hourly Net Generation 
lOL1SmwFROM0600 HRS TO 
of the Unit during 72 Hours Test 
0700 hrs on 2811 March 2013 
· (M\V) 
Maximum Hourly Ne.t Generation 
161.01 MW from 1900 hrs to 
of the Unit duting 72 Hours Test 
2000 hrs on 30'1 March 2013. 
(M\V') 
Anrage Hourly Net Generation of 
120.84 MW 
rl1e Unit during 72 Hours Test 
(M\V)
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
945 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
Power actor 
yWRLDC. 
10138 MW 
21.66 KV to 21.83 KV (Paramettt 
as per OCM-22 K\~ 
096 Max (lagging), 0.89 MIN 
Qa gin ) 
6. Since the Unit was operating below 50% of the rated 
load due to grid restriction, the Unit could not be demonstrate 
the Ramping Rate above 50% of the rated load in 
accordance with Schedul~. 4 of PPA. However, as per the 
certificate provided by Original Equipment Manufacturer 
ofBoiler, Turbine {$l, Generator, minimum ramp up and ramp 
down rate of 1 % ,of Contracted Capacity per minute can 
be achieved. 
7. The Unit could not be tested forthe following parameters 
of Supercritical Technology at the steam turbine inlet as 
defined in PPA due to grid restriction. 
i)Main Stearn Pressure: 247 kg/cm2 (abs) 
ii) Main Steam Temperature: 535 deg C. 
iii) Reheat Temperature: 565 deg C. 
However, the Unit was found to operate with the following 
parameters at the steam turbine inlet during one hour 
operation from 1200 hrs to 1300 hrs on 29'h March 2013. 
i) Main Stearn Pressure: 7?:36 Kg/crn2 (abs)' 
ii) Main SteamTernperature: 535.64 deg.C. 
iii) Reheat Temperature: 575.04 deg C. 
8. All the systems and equipment have been commissioned 
and are operational with two coal mills which were taken 
into service. The balance mills could not be taken into 
service due to the restrictions imposed by the grid. The 
furnace was found to operate stably even at a
low load of 
101.38 MW (ex-bus) and the parameters of Turbine shaft 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
A 
vibrations, Generator slot temperature and Generator core 
temperature were found to be well within the equipment 
limits recommended by OEM. 
9. In view of the above, the Unit-3 is certified to have 
achieved Commercial Operation, with a tested capacity of 
B 
101.38 MW (ex bus) since: 
c 
D 
(a) Commissioning Test was carried out in accordance with 
Article 6 and Schedule 5 of the PPA. 
(B) Results of the test show that Unit-3 has met functional 
specifications stipulated in Schedule 4 of the PPA. 
For Lahmeyer International s(India) 
Sd/-
R.K. Soni 
Project Manager 
Dated: 30'h March 2013" 
38. It will be seen from this certificate that the tested capacity of 
the Unit was found to be only I 01.38 MW as against 95% of 620 MW 
i.e. 587 MW. It was also stated that since the unit was operating below 
E 
50% of the rated load due to grid restriction, the unit could not demonstrate 
ramping rate above 50% ofrated load in accordance with the Schedule 
4 ofthe PPA. 
39. Paragraph 9 of the certificate leaves much to be desired. 
Obviously, if the tested capacity is 1013 8 MW as against the required 
p 
95% i.e. 587 MW, the test could not have been carrieqout in accordance 
with article 6 read with schedule 5, and that despite the fact that ramping 
up and down could not be achieved, functional specifications stipulated 
in Schedule 4 of the PPA were said to have been met. We are 
constrained, therefore, to agree with CERC which in
its order dated 
8.8.2014 has castigated this certificate. What article 6.3.1 requires is 
d 
first and foremost a final test certificate of the Independent Engineer. 
H 
The certificate dated 30.3.2013 given by the Independent Engineer-is 
not a final test certificate. Indeed, it is only in August that a final test 
certificate was given in accordance with Article' 6.3.1 of the PPA by the 
very same independent engineer. Obviously the commissioning tests
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
could not have been carried out in accordance with Schedule 5, which 
requires in clause 1.1 (i) ( d) that the seller shall perform, in respect of 
each unit, a performance test, by which such unit shall be deemed to 
have passed only if it operates continuously for 72 consecutive hours, at 
or above 95% of its contracted capacity as existing on the effective 
date. Also, part of the same schedule requires that as a part of the 
performance test, the seller shall demonstrate that the unit meets the 
functional specifications for ramping rate as mentioned in Schedule 4, 
which was again conspicuous by its absence. According to the 
Independent Engineer, " ... the Unit 3 is certified to have achieved 
Commercial Operation, with a tested capacity I 0 I .3 8 MW" after carrying 
out the commissioning test in accordance with Article 6 and' Schedule 5 
of the PPA. In the certificate dated 30.3.2013 he has stated that on 
witnessing the performance test from 27.03.2013 to 30.03.2013, the tested 
capacity of the Unit is 101.38 MW. However, it is clearly recorded that 
Unit was operated beyond I 00 MW only from the morning of28.03.2013. 
In the chart on the performance test, the Independent Engineer has 
noted that 101.38 MW is operated only from 06.00 a.m. on 28.03.2013. 
Under Article 6 read with Schedule 5 ... "Unit ·shall be deemed to 
have passed if it operates continuously for 72
consecutive hours at or 
above 95% of its contracted capacity as existing on the Effective lJate." 
Even according to the Independent Engineer, 101.38 MW was injecti;d 
only at 06.00 a.m. on 28.03.2013. Such a tested capacity of I 01.38 MW 
for 72 hours continuously could therefore have been certified only at 
06.00 a.m. on 31.03.2013. If that be so; the Commercial Operation 
Date would have been only one day after the date when the test certificate 
of the Independent Engineer has been ~eceived by the procurers.· For 
this reason also, the test certificate is by no means in accor<:lance with 
Article 6.3.1 of the PPAread with Schedule 5 thereof. 
40. It is now important to examine the correspondence between . 
the parties in order to ascertain whether the Appellate Tribunal is correct 
in stating that waiver had in fact taken place. At this stage, it is important 
to advert t9 an email dated 31.3.2013 sent by the lead procurer to Sasan. 
· This email categorically states as follows: 
"With reference to the letter no. GEIE 12086/12-13/001/ 
RKS dt. 30'h March 2013relating to the Test Certificate of 
the Independent Engineer towards the Performance Test 
for declaration of COD of Unit-3 of 660 MW of UMPP 
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SUPREME COURT REPORTS 
[20 I 6] 9 S;C.R. 
Sasan Project. It is to inform that as per clause 6.3. I (a) 
and (b) of the PPA, Commissioning Test should have been 
caJTied out in accordance with Schedule 5 of PPA and that 
the result of the test should not ha.ve been less than ninety .. · 
five (95) percen_t of its Contracted Capacity. The test result 
is not as per the aforesaid clause and, therefore, is not 
acceptable to us. If the Seller is agreeable to consider the 
performance test under clause 6.3.4 for a de-rated capacity 
of 101.38 MW, the same could be agreed by us." 
4 I. However, Sasan relies heavily u-pon an email sent on 2.4.20 I 3 
by the lead procurer to Sasan. This email reads as follows: 
"To 
The Chief Executive Officer 
Mis. Sasan Power Ltd., 
DhirubhaiAmbani Knowledge City, 
1 Block, 2nd Floor, North Wing, 
Thane, Belapur Road, Koparkhairane, 
Navi Mumbai, 
E 
Maharashtra 400 710 
F 
G 
H 
Sub: Independent Engineer's letter dated 3Q1h March20 J 3 
Ref: Independent Engineer's letter dated 301h March 2013 
Dear Sir, 
~lease refer the Independent Engineer's letter dated 301h 
March 2013 pertaining to "Test Ce11ificate of Performance 
Test for the Commercial Operation Declaration of the First 
Unit (Unit-3 of 660 MW) of SASAN ULTRA MEGA 
POWER PROJECT (6x660 MW)" and e-mail dated 
3 1.3.2013 of 12.39 AM sent by Western Region Load 
Despatch Centre regarding scheduling of power from Unit 
No.3 of Sasan UMPP. As lead procurer, the Performance
Test, as certified by the independent Engineer for a capacity 
of 101.38 MW (ex-bus), is acceptable to us under Clause 
6.3.4 of the PPA. You may kindly go for Performance 
Test under notice to us for increasing the capacity beyond
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
certification by the Independent Engineer in accordance 
with Clause 6.3.3 of the PPA. 
As provided In Article 6.3.4 of the PPA, irr the period 
between this perfonnance test and the next performance 
test, the unit's contracted capacity and available capacity 
would be considered as 101.38 MW (ex-bus) and its 
availability factor shall be calculated by reference to 101.38 
MW. The charges payable for power shall be as laid down 
in Article 6.3 .4 of the PPA. Jn case the unit is in position to 
produce beyond 101.38 MW, the additional quantity would 
be scheduled in favour of the Procurers under proviso to 
Article 11. l of the PPA, until the next Performance Test is 
conducted under Article 6.3.3. 
Thanking you, 
Yours faithfully, 
Sd/-
Executive Director (IPC)" 
42. The two emails read together would show that the lead procurer 
made it clear that declaration of COD ofl!nit 3 is not accepted by them 
as the test was not performed as per Article 6.3.1. However, in its 
anxiety to procure electricity, what was stated in th_e second email was 
that the capacity of 101.38 MW was acceptable only under Article 6.3.4 
of the PPA, meaning thereby that this ought to be treated as de-rated 
c;apacity, which should be paid for as provided. And any quantity 
produced over and above I 01.38 MW would be treated as infirm 
power under A11icle 11. l proviso, and paid for as such. 
43. Shri
Sibal argued that the moment Article 6.3 .4 of the PPA is 
attracted, this would necessarily mean that the Appellants have waived 
the requirement of 95% of the contracted capacity as existing on the 
effective date mentioned in Article 6.3 .1 (b ). According to him, this would 
mean that scheduled power would have lo be supplied, which in turn can 
only be done ifthere is waiver of the aforesaid requirement. It is difficult 
to agree. The case of the appellants has throughout been, starting from 
12'" April, 2013, onwards, that it has never consented to Schedule 5 of 
the PPA and Article 6.3. l(b) parameters being lowered. It is true that 
Article 6.3.4 would not apply for the reason that it would come into 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
effect only after the last recent performance test mentioned in Article 
6.3.3 has been conducted. And for Article 6.3.3 to apply, a performance 
test must first indicate that from a unit's COD ·an increased tested 
capacity over and above that provided in Article 6.3. l (b) must first occur. 
Admittedly on facts this has not happened. What is important to note 
therefore is that the appellants desperately wanted power at a cheaper 
rate, and were willing to go to any extent to get such power, including 
invoking clause 6.3.4, which would not apply, and stating that anything 
over and above 101.38 MW ought to be treated as infirm power. It is 
clear under the Regulations, however, that infirm power can never be 
supplied to the appellants themselves but can only be supplied to the 
grid. This being the case, the question that is still posed is whether the 
two emails read together would amount to a waiver of the right mentioned 
in clause 6.3 .1. Waiver is, as has been pointed out above, an intentional 
relinquishment of a known right. Waiver must be spelled out with crystal 
clarity for there must be a clear intention to give up a known right. 
There is no such clear intention that can be spelled out on a reading of 
the two emails. All that can be spelled out is that the first email of 
31.3.2013 categorically states that the test result is not as per Article 
6.3.1, and is not acceptable. The last
sentence of this very email then 
refers to clause 6.3.4 and to a de-rated capacity of 101.38 MW. 
Thereafter, the email of 2"d April, 2013 expands on the aforesaid last 
sentence of the earlier email by referring to Article 6.3.4 and Article 11 
proviso. This is akin to a 'without prejudice' acceptance of de-rated 
power, being a non-acceptance of the test certificate dated 30.3.2013 
coupled with a desperate attempt to somehow get whatever power is 
available. But this does not amount to a clear and unequivocal intention 
to relinquish a known right. 
44. It is not necessary to burden this judgment with various other 
acceptance emails of the other discoms inasmuch as they are all in terms 
of the email sent by the lead procurer. Haryana discom has sent an 
email dated 12.4.2013 in which, even while accepting derated power, it 
has accepted the same without prejudice to its rights. 
45. In contrast to the aforesaid emails, the acceptance emails of 
BYPL and BRPL, both Reliance Group Companies, may now be quoted:-
"Dear Sir 
From Sasan UMPP Delhi has allocation of 450 mw as per
ALL INDIA POWER ENGINEER FEDERATION '& ORS. v. 
951 
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.] 
MOP out of which BRPL share is 43.58 out of Delhi 
A 
allocation. We accept the COD of I" unit of 660 mw as 
declared by SPL. May please schedule Full quantum of 
BRPL with immediate effect and confirm. 
Regards. 
Sanjay Srivastav. 
Assistant VP BRPL. 9312147045 
Sanjay Srivastav (As V.P.)" 
46. This acceptance email is in stark contrast with the acceptance 
email of the lead procurer, in that it unequivocally accepts COD of the 
first Unit of 660 MW as declared by Sasan. It is therefore clear that on 
facts in this case there is no waiver and the Appellate Tribunal in coming 
to an opposite conclusion, is clearly erroneous. 
47. Interestingly enough, the Appellate Tribunal, in the impugned 
judgment dated 31.3.2016, contradicts itself when it states in one portion 
as follows:-
"e) We have carefully gone through the ratio of the law laid 
down by Hon'ble Supreme Court in Wama11 Sltri11iwas 
and in Krislw11 La/'s case, wherein in the latter case the 
Hon'ble Supreme Court cited an illustration in paragraph 
21 thereof. The words of the Hon'ble Supreme Court are 
"to illustrate this principle, it has been stated that if the 
statutory condition be imposed simply for the security 
or the benefit of the parties to the action themselves, 
such condition will not be considered as indispensable 
and either party may-waive it. " In the present case, the 
requirement of achieving
95% of the contracted capacity 
for declaration of COD was not one for the private benefit 
of the seller and procurers. The said requirement and the 
appointment of ·an independent expert to oversee the 
commissioning process was built into the statutory contract 
i.e. PPA itself for a specific purpose, as a requirement of 
general policy, to ensure that generators do not declare their 
units to be commercially available without even 
demonstrating the capability of such units to achieve at least 
95% of the contracted capacity." 
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SUPREME COURT REPORTS 
. [2016] 9 S.C.R. 
And then goes on to state: 
"We further find that in the present case, there is no question 
of any public interest or public polic:' or morals or statutory 
regulations being violated. The WRLDC, who wa.s a. 
petitioner before the Central Commission, in its Petition 
clearly and equivocally states that there are no guidelines 
in respect of declaration of COD of the generators who 
are not governed by CERF (Tariff Regulations) 2009 and 
in the Petition, WRLDC prays to the Central Commission 
for issuing regulations and guidelines in that behalf." 
48. We thus find that the Appellate Tribunal is wholly incorrect in 
accepting the case of waiver put forward by .learned counsel for Sasan, 
and is equally incorrect in absolving the independent engineer for the 
test certificate given by him on 30.3.2013. We, therefore, set aside the 
Appellate Tribunal's judgment, and reinstate the judgment dated 8.8.2014 
of the Central Electricity Regulatory Commission. 
49. Shri Sibal 's last argument is that there is no substantial question 
of law so as to attract Section 125 of the Electricity Act, 2003 in these 
appeals. We are afraid that we cannot agn:e. One substantial question 
oflaw is whether, when public interest is involved, waiver can atall take 
place of a right in favour of the· generator of electricity 
under 
a PPA if the right also has an impact on consumer interest. This 
substantial question of law has'
been answered by us in the course of 
the judgment. We have also pointed out that the Appellate Tribunal's 
finding that the Independent Engineer's test certificate can pass muster 
and that there is a waiver on facts is not a possible conclusion, and such 
finding is, therefore, perverse and hence set aside. That apart, we have 
also pointed out the contradictory nature of the judgment of the Appellate 
Tribunal, when it points out that the requirement of Article 6.3.1 is not 
merely for the private benefit of the procurers of electricity, but is as a 
matter of general policy; and then later on in the judgment finds that no 
question of public interest or public policy arises in the present case. In 
these circumstances, this plea must also be turned down. In the result, 
the appeals are allowed but with no order as to costs. 
D~vika Gujral 
Appeals allowed.