NHPC. Ltd. vs Andhra Pradesh Electricity Regulatory Commission & Ors

Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
IA NO. 862 OF 2026 IN APPEAL No. 194 OF 2026
nd
Dated: 02 November, 2026
Present: Hon`ble Ms. Seema Gupta, Officiating Chairperson
Hon`ble Mr. Virender Bhat, Judicial Member
IN THE MATTER OF:
NHPC. Ltd.
Through its General Manager (Commercial),
NHPC Office Complex, Sector-33,
Faridabad, Haryana-121003. … Appellant
VERSUS
1. Andhra Pradesh Electricity Regulatory Commission,
Through its Secretary,
Vidyut Niyantara Bhavan,
Adjacent to 220/132/33kV A Carbides SS,
Dinnedevarapadu Road,
Kurnoon-518002,
Andhra Pradesh
2. Eastern Power Distribution Company
of Andhra Pradesh Limited (APEPDCL)
Through its Chairman & Managing Director
C/o 50-27, 5/1, TPT Colony,
Seethammadhara, Visakhapatnam,
Andhra Pradesh-530013.
3. Southern Power Distribution Company
of Andhra Pradesh Limited (APSPDCL)
Through its Chairman & Managing Director
19-13-65/A,
Srinivasapuram,
Tiruchanoor Road,
Tirupati, Andhra Pradesh-517503.
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
4. Andhra Pradesh Central Power Distribution Company
of Andhra Pradesh Limited (APCPDCL)
Through its Chairman & Managing Director
Corporate Office Beside Polytechnic College,
ITI Road, Vijayawada-520 008,
NTR District,
Andhra Pradesh ….Respondent(s)
Counsel on record for the Appellant(s) : Shri Venkatesh
Shryeshth Ramesh Sharma
Suhael Buttan
Abhishek Nangia
Mohit Mansharamani
Surbhi Kapoor
Kunal Veer Chopra
Nikunj Bhatnagar
Punyam Bhutani
Nuha Rahman
Devishi Gupta
Kanika Chugh
Nihal Bhardwaj
Manu Tiwari
Vineet Kumar
Aashwyn Singh
Aniket Kanhaua
Vedant Choudhary
Amol Rana
Drishti Rathi
Nilesh Purohit
Ashutosh Kumar Srivastava
Priya Dhankar
Siddharth Nigotia
Shourya Vir Das
Akash Lamba
Tanishka Khatana
Adarsh Singh
Ananya Dutta
R Jatin Kattyar for App. 1
Counsel on record for the Respondent(s) : Gaichangpou Gangmei
Arjun D Singh
Maitreya Mahaley
Yimyanger Longkumer for Res. 1
Yelamanchili Shiva Santosh Kumar
Rudhrajit Ghosh for Res.2 to 4
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
ORDER
IA NO. 862 OF 2026
(interim relief)
PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON
1. The present Interlocutory Application has been filed in Appeal No
194 of 2026, under Section 111 of the Electricity Act, 2003 (“ Act ”) by
NHPC Limited (“ Appellant ”/ “ NHPC ”) assailing the Order dated
16.03.2026 (“ Impugned Order ”) passed by the Andhra Pradesh
Electricity Regulatory Commission (“ State Commission ”/ “ APERC ”) in
O.P. No. 65 of 2025, with respect to the limited issue that the State
Commission has disallowed and altered the trading margin of 7 paise/kWh
payable to the Appellant under the Battery Energy Storage System
(“ BESS ”) framework or margin of 0.5% of Capacity Charges. The
Impugned Order otherwise approves the Battery Energy Storage Sale
Agreements (“ BESSA ”) dated 10.07.2025, the associated Battery Energy
Storage Purchase Agreements (“ BESPA ”) dated 16.07.2025, for
procurement of 500 MW/1000 MWh BESS capacity and adoption of the
discovered tariffs for a period of 12 years.
2. In the Impugned Order, State Commission while purporting to adopt
the tariff of Battery Energy Storage System ( BESS) under Section 63,
substituted the margin of 7 paise/kWh as agreed with 0.5% of Capacity
Charges relying on the Clause 2.G(4) of the MoP Guidelines dated
10.03.2022 which permits an Intermediary Procurer to charge a trading
margin of “7 paise/kWh OR 0.5% of Capacity Charges (whichever
applies)”
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
3. Aggrieved by the aforesaid order, the Appellant preferred the
Appeal and in the present Application seeking following interim reliefs: -
a. Stay the operation and effect of the Impugned Order dated
16.03.2026 passed by the Ld. APERC in O.P. No. 65 of 2025, to
the extent it disallows and substitutes the trading margin of 7
paise/kWh and directs modification of the executed contractual
framework;
b. Direct the Respondents to maintain status quo with respect to the
contractual arrangements under the BESSA dated 10.07.2025
and BESPA dated 16.07.2025, including the trading margin of 7
paise/kWh payable to the Appellant;
c. Pass any such order that this Hon’ble Tribunal may deem fit in
the interest of justice.
DISCUSSION AND ANALYSIS
4. We have heard Mr. S. Venkatesh Learned Counsel appearing on
behalf of the Appellant/Applicant, and Mr. Rudrajit Ghosh, learned counsel
for the Respondent Nos. 2 to 4 and perused the written submissions filed
by parties, which are summarized hereunder, and other documents on
record:
SUBMISSIONS URGED ON BEHALF OF APPELLANT
5. It is submitted that once the Commission approved the project
explicitly stating the trading margin of 7 paise/unit, a tariff is discovered
through a bidding process and the parties are entitled to execute the
contract on settled terms and the same cannot be subsequently altered
by defeating the legitimate expectation created by its own representation.
State Commission’s own letter dated 04.07.2025 (“Tariff, Trading Margin,
and BESSA”) which was issued subsequent to examination of
submissions, relevant documents and formats of agreements, without
qualification or reservation, recorded a trading margin of Rs.0.07/unit
payable to the Appellant, pursuant to which the BESSA dated 10.07.2025
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
and the BESPAs dated 16.07.2025 and 28.07.2025 were executed fixing
the margin at 7 paise/kWh under Article 1.1. It is further submitted that the
Impugned Order records no intervening finding of illegality, non-
compliance or new fact to justify departure from agreed contractual
framework. It is merely a change of opinion on two dates by different
reading of Clause 2.G(4), and same is impermissible without cogent
reasons ( “ Food Corporation of India v. Kamdhenu Cattle Feed
Industries”; (1993) 1 SCC 71, “Navjyoti Coop. Group Housing
Society v. Union of India”; (1992) 4 SCC 477, “ State of Jharkhand v.
Brahmaputra Metallics Ltd.”; 2020 SCC OnLine SC 968).
6. Respondents, in their reply has placed reliance on Article 1.1 to
contend that the transaction concerns a sale of “capacity”, however
Respondents themselves executed the BESSA without demur, sought
only its approval and not its amendment in O.P. No. 65 of 2025, and raised
no objection to the 7 paise/kWh margin at the RfS stage, at execution, or
at the public hearing dated 05.02.2026, and therefore, cannot now be
permitted to approbate and reprobate as held in Rajasthan State
Industrial Development & Investment Corporation v. Diamond & Gem
Development Corporation Ltd., (2013) 5 SCC 470; R.N. Gosain v.
Yashpal Dhir, (1992) 4 SCC 683; Premlata v. Naseeb Bee, (2022) 6
SCC 585.
7. It is contended that the Clause 2.G(4) of the BESS Guidelines
recognises both the 7 paise/kWh and 0.5% of Capacity Charges
formulations “as applicable ”, without confining either to a particular class
of procurement, energy transaction for the former and capacity transaction
for the latter or using the expression “ respectively ”, thereby leaves no
room for the Commission to select one formulation in substitution of that
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
stipulated in the procurement documents. Guidelines contemplate
competitive procurement in terms of BESS capacity while nevertheless
retaining both formulations under Clause 2.5G(4). The parties have been
given liberty to have contract on mutual consent on trading margin as per
the Regulation 8(1)(d) of Central Electricity Regulatory Commission
(Procedure, Terms and Conditions for grant of trading license and other
related matters) Regulations, 2020, which stipulates that for transactions
under long term contracts, the trading margin shall be decided mutually
between the Trading Licensee and the seller and accordingly, both parties
have mutually signed the contract on Trading Margin @ 07 Paise/unit be
kept exclusive of tariff.
8. Appellant does not seek the recharacterization of the procurement
as energy-based , but submits that a capacity-based bidding parameter,
does not textually or conceptually, render the 7 paise/kWh limb of Clause
2.G(4) inapplicable and that, had the Guidelines intended the 0.5% metric
to mandatorily apply wherever the tariff is expressed through Capacity
Charges, same would have been stipulated in Clause 2.G(4).
9. Further RfS itself requires buying entity to off-take both contracted
capacity and energy, and prescribes scheduled charging and discharge
in MWh, and requires daily charge-discharge cycles, measures availability
with reference to actual and scheduled energy injection/drawal, and
accordingly the executed BESSA itself combines the sale of BESS
Capacity with a Trading Margin denominated in paise/kWh.
10. It is submitted that Section 63 confines the Respondent
Commission to adoption, not determination, of a tariff discovered through
transparent bidding. Trading Margin at 7 paise /kWh is not itself a
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
competitive discovered bid parameter but the Commission cannot
substitute its own preferred Trading Margin unless agreed formulation
itself is prohibited by the Guidelines. The reliance has been placed on
Energy Watchdog v. CERC, (2017) 14 SCC 80 to support the contention
that Commission’s statutory function is just to adopt the tariff; SECI v.
DERC, SECI v. UPERC and Ayana Ananthapuramu Solar v. APERC
wherein mutually agreed Trading Margins in long-term transactions has
been protected.
11. Finding in the Impugned Order that Appellant bears zero risk is
contrary to the express terms of the BESPA, Article 14.4.1 whereof, by a
non-obstante clause, provides that the Appellant's payment obligation to
the BESS Developer shall not be on a back-to-back basis, and Article
10.4.7 whereof places the cost of the Appellant's Letter of Credit upon the
Appellant itself.
12. The Appellant submits that Paragraph 26 of the Impugned Order
goes beyond adoption and directs “ the DISCOMs shall amend the
BESSAs ” amendment of a contractual term the Appellant never agreed
to, contrary to GUVNL v. Solar Semiconductor Power Co. (India) Pvt.
Ltd., (2017) 16 SCC 498, wherein it is held that even where a regulator
may possess tariff jurisdiction, it cannot compel a party to enter into a
contract on the basis of a redetermined tariff or vary the terms of the
concluded contract by invoking regulatory jurisdiction. Therefore, the
direction to rewrite Article 1.1 therefore raises a substantial prima facie
issue independent of the ultimate quantum of Trading Margin.
13. Further, the Paragraph 28 of the Impugned order makes approval
of the BESSA/BESPAs contingent upon compliance with amendment
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
stated in Paragraph 26, while Articles 2.1.3 and 2.1.4 of the BESPA tie
Tariff Adoption within stipulated time and Financial Closure and the
Scheduled Commissioning Date to the tariff-adoption order, respectfully.
Therefore, the Appellant is not in the position of either altering a concluded
contractual term which is the very subject matter of the Appeal or exposing
implementation of the projects to contractual consequences flowing from
delayed/conditional adoption.
SUBMISSIONS URGED ON BEHALF OF RESPONDENT NO. 2 to 4
14. It is submitted that the interim relief sought, being in substance a
prayer to set aside the very direction under challenge in the Appeal,
amounts to grant of final relief at the interim stage and ought not to be
granted, relying on Central Council for Research in Unani Medicine v.
Dr. Salma Khatoon, (2021) 20 SCC 61 and Super Cassettes Industries
Ltd. v. Music Broadcast Pvt. Ltd., (2012) 5 SCC 488; ; and that there is,
in any event, no pre-existing ‘ status quo’ capable of restoration, since the
BESS facility is yet to be commissioned and the Impugned Order was
passed at the stage of preliminary approval of the BESSA and BESPA, so
that the prayer for 'status quo' mischaracterizes what is, in substance, a
prayer for final relief;
15. Appellant has failed to make a prima facie case for interim relief.
That the BESSA and BESPA are, on their own terms, agreements for
purchase and sale of BESS Capacity as borne out by the Preamble and
specific provisions concerning under “purchase and sale of contracted
capacity” and Article V of the BESSA record that the Answering
Respondents agreed to purchase, and the Appellant agreed to sell, the
500 MW/1000 MWh of 'BESS Capacity' procured by the Appellant from
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
the BESSDs under back-to-back BESPAs. Further, Article 1.1 which
states that the 7 paise/kWh margin is 'for sale of BESS capacity' , and by
Clauses 3.1 and 3.2 of the RfS (referring to 'total capacity' and 'Contracted
Capacity' respectfully ), a characterization of the BESSA being for sale and
purchase of capacity has been admitted by the Appellant, at paragraphs
10-11 of its Rejoinder in the present Application and paragraph 19 of its
Rejoinder in the Appeal, to be 'not disputed'.
16. It is submitted that Section 63 requires the Respondent Commission
to examine whether a tariff has been discovered through a transparent
bidding process in accordance with the guidelines issued by the Central
Government, so that non-compliance with the BESS Guidelines can found
interference even in the proceedings under Section 63 of the Act, relying
on JSW Renew Energy v. CERC, 2025 SCC OnLine APTEL 56 .
17. Clause 2.G(4), prescribes trading margin of two types, i.e., “7
paise/kWh” or “0.5% of Capacity Charges” depending on the BESSA and
BESPA being for purchase and sale of either “ energy ” or “ capacity ”
respectively. Further, as per BESS Guidelines 2022, trading margin
'applicable' for the purchase and sale of contracted capacity, as against
units of energy, is “ 0.5% of the Capacity Charges ”. The Respondents also
dispute the Appellant's reliance on Ayana Ananthapuramu Solar v.
APERC and SECI v. UPERC , since the guidelines considered in those
cases left the margin to mutual consent, unlike Clause 2.G(4), which
admits no such negotiation; and that the direction to amend the BESSA is
consistent with Article 4.7 thereof, which itself provides for amendment to
ensure compliance with applicable law.
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
18. It is submitted that the Commission has exercised its jurisdiction
vested u/s 63 of the Electricity Act and with the applicable Guidelines in
terms of the BESSA, specifically Article 4.7 which provides for
amendments to be made to the BESSA to bring the same in compliance
with applicable laws. Therefore, the Appellant's obligations as
Intermediary Procurer afford no ground for interim relief, since the
Impugned Order itself records and accounts for such obligations in
prescribing the applicable margin, and the adequacy of a Guideline-
mandated margin cannot be reopened at the interim stage.
Our consideration
19. The Issue in consideration pertains to substituting the Trading
margin of 7 paisa/ unit as agreed in the BESSA between the Appellant
and Respondent –Discom by .5 % of capacity charges under the
Impugned Order , while approving the Battery Energy Storage Sale
Agreements (“ BESSA ”) dated 10.07.2025, and associated Battery Energy
Storage Purchase Agreements (“ BESPA ”) dated 16.07.2025, for
procurement of Battery Energy storage System, via Appellant, the
Intermediary Procurer. Vide the present application, Appellant is seeking
stay of the Impugned Order.
20 The grant or refusal of interlocutory relief is covered by three well
established principles viz., (1) whether the Appellant has made out a
prima facie case, (2) whether the balance of convenience is in their favour
i.e., whether it would cause greater inconvenience to them if interim relief
is not granted than the inconvenience which the opposite party would be
put to if it is granted, and (3) whether the Appellant would suffer irreparable
injury. With the first condition as a sine quo non, at least two conditions
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
should be satisfied by the Appellant conjunctively, and a mere proof of
fulfilment of one of the three conditions does not entitle them to the grant
of interlocutory relief in their favour. ( Nawab Mir Barkat Ali Khan v. Nawab
Zulfiquar Jah Bahadur , AIR 1975 AP 187; Gone Rajamma v.
Chennamaneni Mohan Rao , (2010) 3 ALD 175; Kishoresinh Ratansinh
Jadeja v. Maruti Corpn , (2009) 11 SCC 229; Best Sellers Retail (India)
Private Ltd. v. Aditya Birla Nuvo Ltd. , (2012) 6 SCC 792; State of Mizoram
v. Pooja Fortune Private Limited , 2019 SCC OnLine SC 1741).
21. In the present case, State Commission granted in-principle approval
on 09.04.2025 for procurement of 500 MW/1000 MWh Battery Storage
Project at three locations and appointment of NHPC-the Appellant as
Implementing Agency. NHPC proceeded ahead with the competitive
bidding process and discovered the tariff for three identified project
locations. The Respondent, vide its letter dated 26.06.2025 informed the
State Commission with regard to completion of bidding process and
sought approval for discovered tariff and it also informed that as per RfS
provision, the Discom were required to pay a trading margin of 7 paisa per
unit to NHPC- the Appellant State Commission. State Commission taking
note of the submissions, vide letter dated 04.07.2025, conveyed that “
Commission is inclined to permit APDISCOMs to initiate further steps for
the procurement of BSES services as stated above, following its in-
principle approval’. Accordingly the BESSA dated 10.07.2025, between
Appellant and APDISCOMs and associated Battery Energy Storage
Purchase Agreements between Appellant and selected BESS developers
(“ BESPA ”) dated 16.07.2025 & 28.07.2025 were executed. APDISCOMs
filed a petition No OP 65 of 2025 before State Commission on 1.10.2025,
seeking approval of BESSA and BESPA, in which Impugned Order was
passed. It is of relevance to mention that under Article 1.1 of the BESSA,
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
the trading margin of 7 paisa /Unit is agreed to be payable to NHPC by
APDISCOM for making the BESS capacity available, in additional to the
Applicable Tariff under BESPA . State Commission in the impugned Order
notes that it being the standalone BESS project procured purely on
capacity basis ( Rs/MW/Month), and thereafter deliberating about the role
and risk involved on the part of NHPC and applying the option available
in the BESS guidelines, rejects the trading margin of 7 paisa per unit and
instead approved trading margin of .5 % of capacity charges and directs
amendment of BESSA accordingly. Relevant paragraph is extracted
hereunder
“By choosing the 7 paise metric instead of the 0.5% capacity metric
offered in the same MoP guideline, NHPC is extracting an
administrative fee that is more than 7.5 times higher than the latter.
This is an unjustified burden on AP consumers for a purely
administrative, pass-through service. NHPC cites Regulation 8(1) of
the CERC Trading Licence Regulations to justify the 7 paise.
However, CERC trading margins are meant to compensate
traditional traders who assume the risk of volume fluctuations, open
access, and energy market volatility. In this back-to-back
BESSA/BESPA arrangement, NHPC assumes absolutely zero
energy-volume risk. They are a "BESS Implementing Agency" (BIA)
executing a fixed-capacity tolling agreement. Their compensation
should reflect fixed administrative effort (a percentage of the capacity
charge), not an energy trader's volume-based markup.
As regards the contention of NHPC that other State Commissions
permitted 7 paise per unit trading margin, it may be noted that
APERC is an independent statutory body whose primary mandate
under Section 86(1)(b) of the Electricity Act, 2003, is to regulate
electricity purchase and procurement to protect the consumers of
Andhra Pradesh and it is not legally bound by the decisions State
Commissions.
Therefore, the Commission rejects the unjustified 7 paise/kWh
margin and directs the DISCOMs to cap the same at 0.5% of the
Capacity Charges, as explicitly provided as an option in Clause
2.G(4) of the MoP Guidelines. The DISCOMs shall amend the
BESSAs appropriately to reflect the same.”
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22. As a general principle, where a tariff has been discovered through
a transparent competitive bidding process and is placed before the
Appropriate Commission for adoption under Section 63 of the Electricity
Act, 2003, the nature and scope of the Commission's jurisdiction are
materially distinct from its tariff determination powers under Section 62.
Under Section 63, the Commission is not required to undertake an
independent determination of tariff; rather, its function is to satisfy itself
that the bidding process has been conducted in a transparent manner, in
accordance with the statutory framework and the guidelines issued by the
Central Government, and that the tariff has emerged from genuine
competitive bidding. Upon such satisfaction, the Commission is ordinarily
obliged to adopt the discovered tariff and cannot, under the guise of tariff
scrutiny, rewrite the commercial bargain negotiated by the contracting
parties. However, the position becomes slightly nuanced when dealing
with a trading margin. Trading margin is not merely a matter of contract; it
is also a regulated subject under the Electricity Act and the applicable
Trading Licence Regulations. Furthermore, Section 86(1)(b) of the
Electricity Act, 2003 empowers a State Commission to regulate the
electricity purchase and procurement process of distribution licensees,
including the price at which electricity is procured. The exercise of such
regulatory jurisdiction is ultimately anchored in the protection of consumer
interest and the maintenance of regulatory discipline within the electricity
sector.
23. Hon’ble Supreme Court in Energy Watchdog v. CERC, (2017) 14
SCC 80, and Jaipur Vidyut Vitran Nigam Ltd. v. MB Power (Madhya
Pradesh) Ltd., (2024) 8 SCC 513, recognised that even in matters arising
under Section 63, the Commission is not reduced to a mere post office
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
and remains entitled to undertake scrutiny within the confines of the
applicable statutory and regulatory framework, having due regard to
consumer interest and other relevant considerations. Likewise, in All
India Power Engineer Federation v. Sasan Power Ltd., (2017) 1 SCC
487 , decided on 08.12.2016, the Hon’ble Supreme Court emphasised that
contractual arrangements affecting the tariff payable by consumers are
subject to regulatory scrutiny, having regard to the public interest
underlying electricity tariff determination. That contractual consent cannot,
by itself, dispense with compliance with the statutory and regulatory
framework governing electricity procurement.
24. In the present case, the controversy pertains to the trading margin
payable to the Appellant. It is an admitted position that the selection of the
Intermediary, namely the Appellant, was not undertaken through a
competitive bidding process. It is further undisputed that the trading
margin of 7 paise/kWh stipulated in the Battery Energy Storage Purchase
Agreement (BESSA) was agreed by the contracting parties having regard
to the provisions contained in the Guidelines for Procurement and
Utilisation of Battery Energy Storage Systems dated 10.03.2022 ("BESS
Guidelines, 2022").
25. Therefore, the issue requiring determination is not merely whether
the parties had mutually agreed upon a trading margin of Rs 0.07 per kWh.
The real question is whether such agreed trading margin is permissible
and consistent with the governing regulatory framework, particularly when
the procurement of the Intermediary was not through a competitive
process and the transaction is expressly governed by the BESS
Guidelines, 2022. In other words, the validity of the agreed trading margin
must be examined in the context of the applicable statutory and regulatory
provisions rather than solely on the basis of contractual consensus
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
between the parties. In this regard, it is apposite to refer to the relevant
provisions of the BESS Guidelines dated 10.03.2022, which read as
under:
“4. The Intermediary Procurer shall enter into the Battery Storage
Purchase Agreement (BESPA) / Power Purchase Agreement with
the Developer(s) and enter into a Battery Storage Sale Agreement
(BESSA) /Power Sale Agreement with the distribution licensee(s)/
consumer(s). The BESSA shall contain the relevant provisions of the
BESPA on a back-to-back basis. The Intermediary Procurer shall be
entitled to charge trading margin of seven paise/kWh or 0.5% of the
Capacity Charges (as applicable) from the Buying entity / Procurer
for purchase and sale of such energy/capacity.”
26. A plain reading of the applicable Guidelines suggests that the
trading margin payable to an intermediary may be determined in either of
two ways, namely: (i) 7 paise per unit of electricity traded, or (ii) 0.5% of
the applicable capacity charges. The expression "as applicable" appears
to indicate that the applicable margin would depend upon the nature of
the transaction and the charging structure adopted. Prima facie, therefore,
the Guidelines contemplate two distinct charging mechanisms rather than
authorising a regulatory authority to freely replace one agreed mechanism
with another after the conclusion of the bidding process and execution of
the contract.
27. In the present case, as recorded in the Impugned Order and not
disputed by the Appellant, the Respondent DISCOMs themselves supply
power for charging the battery and subsequently draw back the stored
energy. Under Article V of the BESSA, the Respondents have agreed to
procure 500 MW/1000 MWh of "BESS Capacity" arranged by the
Appellant under back-to-back BESPAs executed with the Battery Energy
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
Storage System Developers. Prima facie we are of the view that
transaction, has a significant capacity-based component, with the
developers being compensated primarily for making the storage capacity
available rather than for sale of energy generated by them.
28. Appellant has contended that the parties, with full knowledge of the
commercial structure of the project, expressly agreed upon a trading
margin of 7 paise/unit in the executed BESSA. It is further asserted that
the State Commission had already taken cognisance of the said provision
in its communication dated 04.07.2025 and no objection was raised at that
stage. According to the Appellant, once the tariff emerged through a
competitive bidding process and the trading margin formed an integral
component of the executed contractual framework, the Commission's role
was confined to examining conformity with the applicable Guidelines and
public interest, and did not extend to rewriting a negotiated commercial
term between the parties. The Appellant has argued that the substitution
of the agreed trading margin of 7 paise/unit with a margin linked to 0.5%
of capacity charges amounts not merely to regulatory scrutiny but to
modification of a concluded bargain.
29. We are of the considered view that the rival contentions advanced
by the parties, namely, whether the trading margin of 7 paise per unit,
having been expressly agreed upon by the Respondent, ought to govern
the transaction, or whether the State Commission was justified in
substituting the agreed trading margin by applying the alternative
stipulation of 0.5% of the Capacity Charges envisaged under the BESS
Guidelines, require detailed examination. Having regard to the facts and
circumstances of the present case, we are not inclined to render any
conclusive finding on the said issue at this interlocutory stage. The matter
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warrants comprehensive consideration on merits, which shall be
undertaken at the time of final hearing of the Appeal.
30. It is a settled principle of law that interlocutory mandatory directions,
particularly directing adopting an alternative course of action, are not to
be granted lightly or as a matter of course. Such relief, being exceptional
in nature and approximately the final relief at an interim stage, may be
granted only in circumstances where the Court is satisfied that the
Applicant/Appellant has established a strong prima facie case, that the
balance of convenience is demonstrably in favour of the applicant, and
that irreparable prejudice would ensue if such relief were withheld (
“ Dorab Cawasji Warden v. Coomi Sorab Warden” ,; (1990) 2 SCC 117,
“ Hammad Ahmed v. Abdul Majeed ”, ;(2019) 14 SCC 1, “ Samir Narain
Bhojwani v. Aurora Properties & Investments ,; (2018) 17 SCC 203) .
Therefore, the grant of mandatory directions at the interlocutory stage,
being in the nature of final relief, must be confined to cases where the
equities are clear, the obligation is undisputed, and the denial of
immediate enforcement would defeat the ends of justice.
31. In the present case, considering the averments made by parties,
and deliberations recorded hereinabove, we are of the considered view
that appellant has not been able to make out a prima facie case for
passing any interim direction for adoption of trading margin of 7 paisa /unit
instead of .5 % of capacity charge as provided in the Impugned Order.
Having regard to the settled principles governing interlocutory mandatory
relief, we find no justification for granting the interim relief sought at this
stage. The application, therefore, does not merit acceptance and
accordingly the prayer for interim relief is declined. It is, however, clarified
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Order in IA No. 862 of 2026 in Appeal No. 194 of 2026
that any action undertaken pursuant to the Impugned Order shall remain
subject to the outcome of the present Appeal.
32. All observations made in this order are prima facie and shall not
prejudice the rights and contentions of either party at the stage of final
hearing. The IA No. 862 of 2026 is disposed of in these terms.
APPEAL No. 194 OF 2026
Registry to verify and after completion of pleadings the Appeal to
be included in the ‘ List of Finals’ to be taken up from there in their turn.
nd
PRONOUNCED IN THE OPEN COURT ON THIS 02 DAY OF
NOVEMBER, 2026.
(Virender Bhat)
Judicial Member
(Seema Gupta)
Officiating Chairperson
REPORTABLE / NON-REPORTABLE
Pr/ak
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