KERALA STATE ELECTRICITY BOARD LTD. versus JHABUA POWER LIMITED AND OTHERS
[2024] 9 S.C.R. 971, Supreme Court of India, 2024
Outcome: Disposed off
Segment: Issues
[2024] 9 S.C.R. 971 : 2024 INSC 768
Kerala State Electricity Board Ltd. 
v. 
Jhabua Power Limited and Others 
(Civil Appeal Nos. 10046-10047 of 2024)
30 September 2024
[Dr Dhananjaya Y Chandrachud, CJI, 
J.B. Pardiwala and Manoj Misra, JJ.]
Issue for Consideration
Whether the Appellate Tribunal for Electricity (APTEL) was right 
in passing the impugned judgment holding that the Kerala State 
Electricity Regulatory Commission (KSERC) was not bound by 
the directives of the State Government issued under Section 108 
of the Electricity Act, 2003 and it exceeded its review jurisdiction 
under Section 94.
Headnotes†
Electricity Act, 2003 – s.108 – Scope – State Electricity 
Regulatory Commissions, if ‘bound’ by the directions issued by 
State Government u/s.108 – Kerala State Electricity Regulatory 
Commission (KSERC) allowed the review petition filed by 
the appellant and approved the Power Supply Agreements in 
view of the public interest highlighted in the policy directions 
issued by the State Government u/s.108 holding that KSERC 
was bound by the directions of the State Government – Order 
set aside by APTEL by way of the impugned judgment – 
Correctness:
Held: Correct – State regulatory commissions are not ‘bound’ by 
the directions of the State Government or the Central Government – 
Under Section 108, the State Commission shall only be ‘guided’ 
by the directions issued by the State Government and is not 
automatically bound by them – s.108 does not control the exercise
of 
quasi-judicial power by the State Commissions based on directions 
issued by the State Government. [Paras 17, 18]
Code of Civil Procedure, 1908 – Or. XLVII, r.1 – Electricity Act, 
2003 – s.94(f) – Review – Limited scope – Review petitions 
filed by the appellant against the order of KSERC declining
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to grant approval for the Power Supply Agreements (PSAs) 
were allowed by KSERC and it approved the PSAs in view of 
the public interest highlighted in the policy directions issued 
by the State Government – Order set aside by APTEL:
Held: An order cannot be made the subject of an appeal under the 
garb of a review – While reviewing an order, the court or tribunal 
must be satisfied that there was an error apparent in its previous 
order, which warrants review – However, while allowing the review 
petitions, KSERC did not point out any errors in its previous order 
instead, sole reliance was placed on the subsequent directions 
of the State Government which highlighted the purported ‘public 
interest’ that would be served by approving the PSAs – APTEL rightly 
set aside the order of KSERC on the ground that it exceeded its 
jurisdiction u/s.94 – Original appeal restored to the file of APTEL. 
[Para 19]
Case Law Cited
A.P. TRANSCO v. Sai Renewable Power (P) Ltd. [2010] 8 SCR 
636 : (2011) 11 SCC 34 – referred to.
List of Acts
Electricity Act, 2003; Code of Civil Procedure, 1908.
List of Keywords
Section 108 of the Electricity Act, 2003; Section 94 of the Electricity 
Act, 2003; State Electricity Regulatory Commission; Kerala State 
Electricity Regulatory Commission; APTEL; Competitive bidding 
process; Tender, Tariff; Bidders; Power Supply Agreements; Power 
procurement; Distribution licensees; Generating companies;
Generators; Public interest; Directions of the State Government/
Central Government; ‘bound’; Mandatory; Quasi-judicial power; 
Review; Error apparent; Jurisdiction exceeded.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 10046-10047 
of 2024
From the Judgment and Order dated 26.07.2024 of the Appellate 
Tribunal for Electricity in Apl. No. 38 and 47 of 2024
[2024] 9 S.C.R. 
973
Kerala State Electricity Board Ltd. v.  
Jhabua Power Limited and Others
Appearances for Parties
V. Giri, Sr. Adv., Prabhas Bajaj, Ms. Rao Vishwaja, Priyanshu 
Tyagi, Harsh Chauhan, Rahul Narang, Harshed Sunder, Nihar 
Dharmadhikari, R.K. Nayyar, Advs. for the Appellant.
Dr. Abhishek Manu Singhvi, Sajan Poovayya, C. Aryama Sundaram, 
Sr. Advs., Mrs. Sanjanthi Sajan Poovayya, Matrugupta Mishra, 
Amit Bhandari, Nipun Dave, Ms. Raksha Agrawal, Harshwardhan 
Sharma, Ms. Divya Roy, Ms. Swapna Seshadri, Nikunj Dayal, 
Pramod Dayal, Zafar Inayat, Ms. Harsha Rao, Ms. Aishwarya 
Subramani, Biju Mattam, Ms. Ankita Bafna, Gaurav Prakash Pathak, 
Nishant Kumar, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
1.	
These appeals arise from a judgment of the Appellate Tribunal for 
Electricity1 dated 26 July 2024.
2.	
Kerala State Electricity Board Limited, the appellant, floated two 
separate tenders for the procurement of power through a competitive 
bidding process under Section 63 of the Electricity Act 2003.2 The first 
was for procuring 450 MW of power and the second was for 400 MW.
3.	
Two entities emerged as L1 bidders in respect of the two tenders 
which were floated. However, the L1 bidders did not bid for the entire 
tender quantum. The L1 bidder in the first bid offered to supply only 
200 MW out of the total quantum of 450 MW. Similarly, the L1 bidder 
in the second bid offered to supply only 100 MW as against the 
400 MW for
which the bid had been invited. The appellant invited 
the other bidders to match the tariff quoted by the L1 bidders for the 
remaining quantum. None of the other bidders in the first bid were 
willing to match the tariff quoted by the L1 bidder therein. However, 
in relation to the second bid, the L2 to L5 bidders conveyed their 
willingness to match the tariffs quoted by the L1 bidder.
4.	
With regard to the first bid, despite the L2 bidder refusing to match 
the tariff of the L1 bidder, the appellant accepted its tariff for 115 MW 
1	
“APTEL”
2	
“Act”
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and justified it on the ground that the tariff was competitive and less 
than the tariff quoted by the L1 bidder in the second bid. Since the 
tariff quoted by the remaining bidders in the first bid was either equal 
to or more than the tariff derived in the second bid, the appellant did 
not consider their offers. Therefore, in the first bid out of the tendered 
quantity of 450 MW, the appellant accepted offers for a quantum of 
315 MW and issued letters of acceptance to L1 and L2 for 200 MW 
and 115 MW, respectively.
5.	
With regard to the second bid, the appellant accepted the offers of 
the L2, L3, L4 and L5 bidders, who matched the tariff quoted by the 
L1 bidder. As against the tendered quantity of 400 MW, the appellant 
accepted offers for a total quantum of 550 MW. The appellant justified 
this decision in view of the “likely power shortages in the forthcoming 
years” and on the ground that the tariff offered was competitive.
6.	
Seven Power Supply Agreements3 were accordingly executed with 
the various generators for a total quantum of 865 MW of power. The 
appellant sought the approval of the Kerala State Electricity Regulatory 
Commission4 to adopt the tariff laid down in the respective PSAs. 
The KSERC prima facie observed that the appellant had deviated 
from the standard bidding guidelines issued by the Ministry of Power, 
Government of India5 and failed to obtain prior approval from the 
KSERC or the Central
Government in relation to these deviations. 
Accordingly, by an Order dated 30 August 2016, the KSERC approved 
the PSAs with the L1 bidders in both bids, but with regard to the 
remaining PSAs, it deferred the decision to obtain the approval of 
the Central Government and the views of the Government of Kerala 
with respect to the process of bidding which was adopted by the 
appellant.6
7.	
In view of the critical need for power procurement in the state, KSERC 
passed orders in 2016-2017 permitting the appellant to provisionally 
procure power from the generators and, as a consequence, the 
appellant states that it has been procuring power under the four 
PSAs since then till 2023.
3	
“PSAs”
4	
“KSERC”
5	
“standard bidding guidelines”
6	
OP No. 13 of 2015
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975
Kerala State Electricity Board Ltd. v.  
Jhabua Power Limited and Others
8.	
In 2020, the appellant moved the KSERC seeking approval of the 
fuel surcharge rate under some of the unapproved PPAs in the 
second bid. The KSERC did not approve the fuel surcharge rate and 
directed the appellant to limit payment at the rate of the L1 bidder 
in the second bid until the PSAs were approved. The case travelled 
to the APTEL and in parallel, the appellant filed a petition before the 
KSERC seeking final orders on the approval of the PSAs. The order 
of the APTEL was challenged before this Court, and KSERC was 
called upon to decide the petition for final approval expeditiously, in 
no later than three months.7
9.	
By an order dated 10 May 2023, KSERC declined to grant approval 
for the PSAs and concluded that the tariff determined by the 
appellant did not follow a transparent process and grossly deviated 
from the standard bidding guidelines. KSERC further held that the 
deviations were against public interest and created long-term financial 
implications for the consumers and the state.8 The appellant moved 
the APTEL in appeal.
10.	 On 10 October 2023, while the appeal was pending before the APTEL, 
the Government of Kerala invoked the provisions of Section 108 of 
the Act9 and issued policy directions highlighting the public interest 
that would be served by approving the PSAs. The state government 
opined that the non-approval of the PSAs would compel the
appellant 
to purchase power at higher rates, resulting in immense financial 
implications and a power crisis in the state. The liability of higher 
rates of power procurement would, it was opined, be passed on to 
the consumers, increasing the cost of power in the state. Alternative 
means, it was opined, should have been sought earlier and the public 
should not be held liable for procedural flaws. The Government of 
Kerala, accordingly, directed as follows:
“NOW THEREFORE, after detailed examination of the 
matter, considering all facts and observations, without 
prejudice to any enquiry ongoing in the matter and without 
7	
Civil Appeal No. 41/2021
8	
OP No. 05 of 2021
9	
S.108, Electricity Act 2003. [Section 108. (Directions by State Government): ---- (1) In the discharge 
of its functions, the State Commission shall be guided by such directions in matters of policy involving 
public interest as the State Government may give to it in writing. 
(2) If any question arises as to whether any such direction relates to a matter of policy involving public 
interest, the decision of the State Government thereon shall be final]
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ratifying the procedural irregularities pointed out by 
KSERC, keeping in view the larger interest of the public, 
the Government deems it appropriate to invoke the power 
under section 108 of Electricity Act 2003 and accordingly, 
in exercise of the said power, Government hereby direct 
Kerala State Electricity Regulatory Commission to 
reconsider/review their orders in O.P No.5/2021 filed by 
Kerala State Electricity Board Limited, in accordance 
with the policy of the Government for the best interest 
of the State and public at large.”
(emphasis supplied)
11.	 In view of the above directive, the appellant withdrew its appeal 
before APTEL. While allowing the request for withdrawal, APTEL by 
its order dated 31 October 2023, directed as follows:
“We consider it appropriate, in such circumstances, 
to permit the Appeal to be withdrawn, with liberty to 
the Appellant to invoke the review jurisdiction of the 
Commission. It is made clear that the order now passed by 
us shall not disable the Appellant, if need be later, from 
availing their appellate remedy against the original 
order passed by the Commission dated 10.05.2023.”
(emphasis supplied)
12.	 The appellant moved a petition before the KSERC seeking a review 
of its order dated 10 May 2023. On 29 December 2023, KSERC 
allowed the review petition and approved the four PSAs in view of 
the public interest highlighted in the policy directions issued under 
Section 108 by
the State government. The KSERC held that it was 
bound by the directions of the state government. Further, it was 
held that the subsequent directions issued by the state government 
fell within the ambit of “any other sufficient reasons” to review a 
previous order, as required by Order XLVII Rule 1 of the Code of 
Civil Procedure 190810 read with Section 94 of the Act.
13.	 Two of the generators who are now respondents before this Court, 
moved the APTEL in appeal. They contended that the above order 
of the KSERC violated Order XLVII Rule 1 of the CPC read with 
10	
“CPC”
[2024] 9 S.C.R. 
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Kerala State Electricity Board Ltd. v.  
Jhabua Power Limited and Others
Section 94 of the Act as it was passed solely on the ground that 
a subsequent direction issued by the State Government under 
Section 108 is binding on the KSERC.
14.	 By its impugned judgment, APTEL allowed the appeals and set aside 
the order of KSERC. The findings of the APTEL are summarized below.
a.	
After recapitulating the decisions of this Court pertaining to the 
scope of the phrase “any other sufficient reasons” in Order XLVII 
Rule 1 of the CPC, the APTEL held that the threshold was not 
satisfied in the present case. The KSERC failed to point out 
any error in its previous order and instead relied solely on the 
subsequent directions issued by the state government under 
Section 108 to review its earlier order. None of the grounds 
which weighed with the KSERC in its previous order were even 
referred to, thereby, defeating the purpose for which the power 
of review is exercised; 
b.	
The APTEL traced the decisions of this Court and its own 
decisions pertaining to the scope of Section 108 of the Act and 
held that the KSERC was not bound by the directives of the 
state government. The state government could not have issued 
a directive to compel the KSERC to exercise its quasi-judicial 
powers in a particular manner. Such powers are to be exercised 
independently by the KSERC in accordance with the Act; and 
c.	
APTEL held that Section 86(1)(b) of the Act expressly
confers 
the function of regulating the price at which electricity should be 
procured by distribution licensees from generating companies to 
the KSERC. Under the Act, this power must be exercised solely 
in terms of Sections 62 and 63 of the Act. While approving the 
tariff under Section 63 of the Act, the KSERC can only adopt 
the tariff if it has been determined through a transparent process 
of bidding and is in accordance with the standard bidding 
guidelines. The KSERC had, in the exercise of its power under 
Section 86(1)(b) read with Section 63, already passed an order, 
declining to adopt the tariff, since it was satisfied that the process 
of bidding was not in accordance with the standard bidding 
guidelines. A policy directive could not, therefore, override the 
statutory functions already exercised by the KSERC.
15.	 We have heard Mr V Giri, senior counsel appearing on behalf of 
the appellant. Mr Aryama Sundaram, senior counsel appears for
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the first respondent (Jhabua Power Limited) and Dr Abhishek Manu 
Singhvi, senior counsel for the second respondent (Jindal India 
Power Thermal Limited).
16.	 We are in agreement with the judgment of APTEL insofar as it holds 
that the directive which was issued by the State government under 
Section 108 could not have displaced the adjudicatory function which 
was entrusted to KSERC. The State government while issuing a policy 
directive in the exercise of its power under Section 108 cannot impinge 
on the adjudicatory discretion which is vested in an authority under 
the Act. In this regard, we may helpfully refer to the observations of 
this Court in A.P. TRANSCO v. Sai Renewable Power (P) Ltd.,11 
in the context of a similar provision in the erstwhile Andhra Pradesh 
Electricity Reforms Act 1998 (which was repealed by the Electricity 
Act 2003). A two-judge bench of this Court, speaking through Justice 
Swatanter Kumar, observed:
“59. Section 12 of the Act vests the State Government with 
the power to issue policy directions on matters concerning 
electricity in the State including the overall planning and 
coordination. All policy directions shall be issued by 
the State Government consistent with the objects 
sought to be achieved by this Act and, accordingly, 
shall not adversely affect or interfere with the 
functions and powers of the Regulatory Commission 
including, but not limited to, determination of the
structure of tariffs for supply of electricity to various 
classes of consumers. The State Government is 
further expected to consult the Regulatory Commission 
in regard to the proposed legislation or rules concerning 
any policy direction and shall duly take into account the 
recommendation by the Regulatory Commission on all 
such matters. Thus the scheme of these provisions is 
to grant supremacy to the Regulatory Commission 
and the State is not expected to take any policy 
decision or planning which would adversely affect 
the functioning of the Regulatory Commission or 
interfere with its functions. This provision also clearly 
implies that fixation of tariff is the function of the 
11	
[2010] 8 SCR 636 : (2011) 11 SCC 34
[2024] 9 S.C.R. 
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Kerala State Electricity Board Ltd. v.  
Jhabua Power Limited and Others
Regulatory Commission and the State Government 
has a minimum role in that regard.”
17.	 That the state regulatory commissions are not ‘bound’ by the 
directions of the state government, or the Central Government is 
also evident from the text of Section 108. The provision reads: “In 
the discharge of its functions, the State Commission shall be guided 
by such directions in matters of policy …”. This indicates that the 
state commission shall only be ‘guided’ by the directions issued by 
the state government and is not automatically bound by them. This 
interpretation is strengthened by the divergence in the language 
used in other provisions of the Act, such as Section 11 of the Act 
which reads as follows: 
“Section 11. (Directions to generating companies): --- 
(1) Appropriate Government may specify that a generating 
company shall, in extraordinary circumstances operate 
and maintain any generating station in accordance with 
the directions of that Government. 
Explanation. - For the purposes of this section, the 
expression “extraordinary circumstances” means 
circumstances arising out of threat to security of the 
State, public order or a natural calamity or such other 
circumstances arising in the public interest. 
…”
18.	 The above provision uses mandatory language and provides that the 
generating company “shall … operate and maintain any generating 
station in accordance
with the directions of that Government” in 
extraordinary circumstances. This can be distinguished from the 
language in Section 108, which merely requires that the state 
commission “be guided by” the directions of the State Government. 
The provision, in no manner, seeks to control the exercise of quasi-
judicial power by the state commissions based on directions issued 
by the state government.
19.	 Similarly, the findings of the APTEL on the limited scope of the review 
are also consistent with settled law. Section 94(f) of the Act provides 
that the state commission has the same powers as vested in a civil 
court under the CPC in respect of reviewing its decisions, directions 
and orders. Order XLVII Rule 1 of the CPC provides for review on 
limited grounds. An order cannot be made the subject of an appeal
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under the garb of a review. While reviewing an order, the court or 
tribunal must be satisfied that there was an error apparent in its 
previous order, which warrants the exercise of its power to review. 
While allowing the review petitions, the KSERC failed to explain 
how this threshold was met and did not point out any errors of that 
nature in its previous order. Instead, sole reliance was placed on the 
subsequent directions of the State Government, which highlighted 
the purported ‘public interest’ that would be served by approving the 
PSAs. Therefore, there is no infirmity in the decision of the APTEL 
to set aside the order of KSERC on the ground that it exceeded its 
jurisdiction under Section 94 of the Act.
20.	 We are in agreement with the judgement of the APTEL on the above 
aspects. However, having said so, it emerges from the earlier order of 
APTEL dated 31 October 2023, that while permitting the appeal filed 
by the appellant to be withdrawn, APTEL had permitted the appellant 
to invoke the review jurisdiction of KSERC. APTEL, however, expressly 
made it clear that “the order now passed … shall not disable the 
appellant, if need be later, from availing their appellate remedy against 
the original order passed by the Commission dated 10.05.2023”.
21.	 Consequently, while we do not find fault with the impugned order of 
APTEL insofar as it set aside the order passed by KSERC, at the 
same time, the
appropriate course of action would be to allow for 
restoration of the original appeal filed against the order of KSERC 
dated 10 May 2023. This appeal, being Appeal No 518 of 2023, shall 
stand restored to the file of APTEL.
22.	 We, however, clarify that issues which are covered by the impugned 
order of APTEL shall not be re-agitated. The appeal which has been 
restored to the file of APTEL shall, in other words, be considered 
on any other grounds that were raised before APTEL prior to the 
withdrawal of the appeal.
23.	 The appeals shall stand disposed of accordingly.
24.	 Pending applications, if any, stand disposed of.
Result of the Case: Appeals disposed of.
†Headnotes prepared by: Divya Pandey