SOUTHERN POWER DISTRIBUTION POWER COMPANY LIMITED OF ANDHRA PRADESH (APSPDCL) vs. M/S HINDUJA NATIONAL POWER CORPORATION LIMITED

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  CIVIL APPEAL NO.1844 OF 2020 SOUTHERN POWER DISTRIBUTION POWER  COMPANY LIMITED OF ANDHRA PRADESH  (APSPDCL) & ANR.   ...APPELLANT(S) VERSUS M/S HINDUJA NATIONAL POWER  CORPORATION LIMITED & ANR.       .... RESPONDENT(S) J U D G M E N T  B.R. GAVAI, J. The   present   appeal   filed   by   the   appellants   – 1. Distribution   Companies   (hereinafter   referred   to   as   “the appellants ­ DISCOMS”) challenges the judgment and order th dated 7  January, 2020, passed by the Appellate Tribunal for Electricity, New Delhi (hereinafter referred to as “the APTEL”) in Appeal No. 41 of 2018, thereby allowing the appeal filed by the   respondent   No.1   –   M/s   Hinduja   National   Power 2 Corporation Limited (hereinafter referred to as “HNPCL”).  By the impugned judgment and order, the APTEL has directed the   Andhra   Pradesh   Electricity   Regulatory   Commission (hereinafter referred to as “the State Commission”) to dispose of O.P. No.21 of 2015 filed by HNPCL for determination of capital cost and O.P. No.19 of 2016 filed by the appellants – DISCOMS   for   approval   of   amended   and   restated   Power Purchase   Agreement   (hereinafter   referred   to   as   “PPA”) (Continuation Agreement) on merits.  2. The facts, in brief, giving rise to the present appeal are as under: 3. The erstwhile Andhra Pradesh State Electricity Board (hereinafter   referred   to   as   “APSEB”)   entered   into   a Memorandum   of   Understanding   (hereinafter   referred   to   as th “MoU”) with HNPCL on 17  July, 1992.  As per the said MoU, APSEB transferred all the licenses, approvals, clearance and permits, fuel linkage, water required for establishment of the power   project   at   Visakhapatnam   in   the   erstwhile   State  of 3 Andhra   Pradesh,   to   HNPCL   to   generate   and   supply   the electricity to APSEB.   4. An initial PPA was entered into between APSEB and th th HNPCL  on   9   December,   1994.     On   25   July,   1996,   the Central Electricity Regulatory Commission (CERC) granted a Techno   Economic   Clearance   for   the   power   project   for   an estimated cost of Rs.4628.11 crores (Rs. 4.45 crores per MW). 5. Owing to certain change in conditions, the parties agreed to amend the initial PPA.   Accordingly, an Amended th and Restated PPA dated 15   April, 1998, was entered into between APSEB and HNPCL.   Between the years 1998 and 2007, the Amended and Restated PPA, for sale of power by HNPCL to APSEB, was not implemented.   Subsequently, in the year 2007, HNPCL approached the Government of Andhra Pradesh to revive the power project mainly structuring it as a merchant plant, offering 25% of the power generated to the State and balance 75% power to third parties.   However, it appears that there were negotiations between the parties, and the State Government had offered to purchase 100% power 4 generated   from   the   plant  of   HNPCL  and   that  HNPCL  had agreed to it.   The same would be clearly evident from the material   placed   on   record,   to   which   we   will   be   referring hereinafter.  The material placed on record would reveal that in 6. the year 2011­2012, the Central Power Distribution Company of   Andhra   Pradesh   Limited   (hereinafter   referred   to   as “APCPDCL”) for and on behalf of four Distribution Companies of Andhra Pradesh (hereinafter referred to as “APDISCOMS”) had  initiated the process  for procurement of  power under Case­1   long   term   bidding   route,   to   meet   the   base   load requirements   of   APDISCOMS   from   the   years   2014­2015 onwards.   In the said bidding process, HNPCL participated and had successfully emerged as the second lowest bidder (L­ 2   bidder).       After   the   completion   of   the   bidding   process, APCPDCL   had   filed   O.P.   No.55   of   2013   before   the   State Commission for approval of the tariffs emerged in the said bidding process.  However, the State Level Expert Committee for   evaluation   of   Case­1   bidding   (hereinafter   to   as   “Bid 5 th Evaluation Committee”) in its meeting dated 28  September, 2012, had noted that, the State Government had informed that the entire capacity of HNPCL was encumbered to the State   of   A.P./APDISCOMS   and   was   not   available   for consideration   under   the   tender.     Accordingly,   the   Bid Evaluation   Committee   had   discarded   HNPCL   from   the bidding process.   7. In   the   meanwhile,   there   was   a   correspondence between HNPCL and the State Government in the year 2012, with regard to the steps to be taken for the development of the   project   and   requesting   State   support   for   scheduled commissioning   of   the   project.     In   this   regard,   HNPCL th addressed a letter dated 6  August, 2012 to the then Hon’ble Chief   Minister   of   the   erstwhile   State   of   Andhra   Pradesh, thereby conveying  its intention to develop  the  project  and th seeking   State’s   support.     Vide   communication   dated   26 December, 2012, the State Government addressed a letter to HNPCL accepting its proposal and agreeing to purchase 100% power from the project of HNPCL as per the Amended and 6 th Restated   PPA.     Vide   communication   dated   14   January, 2013,  HNPCL  agreed  to  supply  100% power  to the  State­ Distribution Companies at the tariff to be determined by the State Commission.  th The   HNPCL   vide   communication   dated   16   May, 8. 2013,   addressed   to   the   appellants   –  DISCOMS,   inter  alia , provided   therein   the   details   with   regard   to   the   estimated capital cost of the power project to the tune of Rs.6098 crores as against Rs.5545 crores that was given in June, 2010.  The th appellants – DISCOMS vide communication dated 17   May, 2013,   expressed   their   reservations   about   the   capital   cost furnished by HNPCL and reserved their rights to contest the same before the State Commission.   th On   the   same   day,   i.e.,   17   May,   2013,   a 9. Memorandum of Agreement (hereinafter referred to as “MoA”) was   entered   into   between   the   APDISCOMS   and   HNPCL, thereby deciding to continue the Amended and Restated PPA th dated 15   April, 1998, on the terms and conditions set out therein.   In pursuance of the aforesaid MoA, a Fuel Supply 7 th Agreement (“FSA” for short) dated 26  August, 2013, came to be entered between HNPCL and Mahanadi Coalfield Limited for coal supply for the said project.  th On 12  March, 2014, a petition being O.P. No.21 of 10. 2015,   came   to   be   filed   by   HNPCL   before   the   State Commission for determination of capital cost for the project and for determination of the tariff for such generation and sale of electricity by HNPCL to APDISCOMS. nd Thereafter, on 2   June, 2014, the Andhra Pradesh 11. State   Reorganisation  Act,  2014,  (hereinafter  referred  to as “Reorganisation   Act”)   came   into   effect   vide   which   the erstwhile State of Andhra Pradesh was bifurcated into two States, i.e., the State of Andhra Pradesh and the State of Telangana. th On   28   July,   2015,   HNPCL   filed   an   Addendum 12. Application  in  O.P.   No.21  of   2015,  thereby  enhancing  the capital cost of the project to Rs.8,087 crore.   This capital cost was disputed by the APDISCOMS. 8 th 13. On 11   January, 2016, the first unit of the Power project (520 MW) was declared Commercial Operation Date st (COD) by HNPCL.  Vide interim order dated 1  March, 2016, the State Commission fixed the provisional tariff at the rate of Rs.3.61 per unit for supply of electricity by HNPCL to the APDISCOMS.   th 14. On 30  March, 2016, HNPCL filed I.A. No.5 of 2016 in O.P. No.21 of 2015, for payment of variable charges and fixed   charges   at   Rs.1.80   per   unit   and   Rs.2.16   per   unit aggregating to Rs.3.96 per unit at 80% availability.   th 15. On   28   April,   2016,   distinct   Power   Distribution Corporations   were   created   including   the   appellants   – DISCOMS i.e. Southern Power Distribution Power Company Limited of Andhra Pradesh (“APSPDCL”) and Eastern Power Distribution Company of Andhra Pradesh (“APEPDCL”). These corporations succeeded the APSEB, which had entered into th the Amended and Restated PPA dated 15   April, 1998 with HNPCL.       As   such,   the   Continuation   Agreement   to   the 9 Amended and Restated PPA was entered into between the th appellants – DISCOMS and HNPCL on 28  April, 2016.   th 16. On 11  May, 2016, the appellants – DISCOMS filed a petition   being   O.P.   No.19   of   2016   before   the   State Commission   for   approval   of   the   Continuation   Agreement th dated 28  April, 2016, read with the Amended and Restated th PPA dated 15  April, 1998.    st 17. The   State   Government   vide   order   dated   1   June, 2016, accorded approval for purchase of 100% power from HNPCL.    rd 18. On 3  July, 2016, the second unit of the HNPCL (520 MW) came to be declared COD by HNPCL.    th Vide   order   dated   6   August,   2016,   the   State 19. Commission re­determined the provisional tariff at the rate of Rs.3.82 per unit, payable by the appellants – DISCOMS for the power supplied by HNPCL.   th On   15   May,   2017,   the   State   Commission   after 20. hearing the parties on merits, reserved the judgment in both 10 the petitions, i.e., in O.P. No.19 of 2016 and O.P. No.21 of 2015.   21. It is further to be noted that in the appeal arising out st of interlocutory proceedings, the APTEL vide order dated 1 June, 2017, directed the State Commission to dispose of O.P. th No.19   of   2016   and   O.P.   No.21   of   2015   on   or   before   14 August, 2017.     The said period came to be extended from st time to time, the last of such extension was granted till 31 th January, 2018, vide order dated 10  January, 2018.   th Thereafter, on 4   January, 2018, the appellants – 22. DISCOMS   filed   two   Interlocutory   Applications,   viz.,   (i)   I.A. No.1 of 2018 in O.P. No.19 of 2016 for withdrawal of O.P. No.19 of 2016 together with initial PPA; and (ii) I.A. No.2 of 2018 in O.P. No.21 of 2015 for disposal of O.P. No.21 of 2015.   st 23. Vide   order   dated   31   January,   2018,   the   State Commission allowed withdrawal of O.P. No.19 of 2016 filed by the appellants – DISCOMS seeking approval of PPA and 11 consequentially dismissed O.P. No.21 of 2015 filed by HNPCL seeking determination of tariff.   24. Aggrieved by the same, an appeal being Appeal No.41 of 2018, came to be filed by HNPCL before the APTEL.  The said appeal came to be admitted by the APTEL vide order th th dated 26  February, 2018.  The APTEL vide order dated 16 March,   2018,   passed   in   I.A.   No.211   of   2018   in   the   said appeal, as an ad hoc arrangement, directed the parties to st maintain status quo as prevalent prior to 31  January, 2018. This was without prejudice to the rights and contentions of the parties in the main appeal, i.e., Appeal No.41 of 2018. th 25. It is also to be noted that the order dated 16  March, 2018, passed by the APTEL in I.A. No.211 of 2018 in Appeal No.41 of 2018, came to be challenged by the appellants – DISCOMS before the High Court of Andhra Pradesh by filing Writ Petition being Writ Petition No.10814 of 2018.  Another writ petition being Writ Petition No.13689 of 2018 came to be filed by the appellants – DISCOMS challenging the order of th the APTEL dated 26   February, 2018, admitting the appeal 12 filed by HNPCL.  The said writ petitions came to be dismissed nd by the High Court of Andhra Pradesh vide order dated 2 May, 2018.   th In the meantime, on 16   April, 2018, HNPCL had 26. filed an Execution Petition being Execution Petition No.3 of 2018 before the APTEL seeking execution of the order dated th 16   March, 2018, passed by the APTEL in I.A. No.211 of 2018   in   Appeal   No.41   of   2018.     Certain   directions   were passed by the APTEL in the said Execution Petition vide order st dated 31  May, 2018. 27. The appellants – DISCOMS had also challenged the th order dated 16  March, 2018, passed by the APTEL, by way of Civil Appeal No.5772 of 2018 before this Court. This Court th vide order dated 4  June, 2018, refused to interfere with the said order, since it was an interim order.  However, this Court directed the appeal to be decided expeditiously without taking into consideration the observations, in the order impugned before it, as conclusive.   13 th 28. Vide   impugned   judgment   and   order   dated   7 January, 2020, the APTEL allowed the appeal filed by HNPCL and directed the State Commission to dispose of O.P. No.21 of 2015 and O.P. No.19 of 2016.  Being aggrieved thereby, the appellants – DISCOMS have approached this Court by way of the present appeal.   th 29. On 14   July, 2020, this Court passed the following order in the present appeal:   “The appeal is admitted.   Until   further   orders,   the   impugned order passed by the Appellate Tribunal for Electricity New Delhi in Appeal No. 41/2019 shall remain stayed.  List for hearing after four weeks.” An   application   being   I.A.   No.67061   of   2020   for 30. th modification of the said order dated 14  July, 2020, came to st be filed by HNPCL.  This Court vide order dated 21  August, 2020, modified the order as under: “Heard.  14 By order dated 14.07.2020, we directed the stay of impugned order passed by the Appellate   Tribunal   for   Electricity,   New Delhi, in Appeal No.41/2019.  We clarify that there shall be no stay of the order dated 16.03.2018 passed by the Appellate   Tribunal   for   Electricity,   New Delhi, providing for interim measure. Order accordingly.  The   instant   interlocutory   application stands disposed of accordingly” 31. It   appears   from   the   record   that   during   the intervening   period,   certain   Interlocutory   Applications   have been   filed   from   both   the   sides,   wherein,   the   appellants   – st DISCOMS are seeking vacation of the interim order dated 21 August, 2020, whereas HNPCL is seeking implementation of st the order dated 21   August, 2020.   The record would show that the matter has been adjourned from time to time and th was finally heard by this Court on 20  January, 2022.   We   have   heard   Shri   C.S.   Vaidyanathan,   learned 32. Senior   Counsel   appearing   on   behalf   of   the   appellants   – DISCOMS and Dr. Abhishek Manu Singhvi and Shri M.G. 15 Ramachandran, learned Senior Counsel appearing on behalf of HNPCL. 33. Shri   C.S.   Vaidyanathan,   learned   Senior   Counsel appearing on behalf of the appellants – DISCOMS, submitted that   the   APTEL   has   grossly   erred   in   holding   that   the appellants   –   DISCOMS   were   not   entitled   to   apply   for withdrawal of O.P. No.19 of 2016, filed for grant of approval of the PPA.  It is submitted that unless there was prohibition in law, the appellants were very much within their right to apply for withdrawal of the O.P. filed by them.  In this regard, Shri Vaidyanathan relied on the following authorities: (i) Boal Quay Wharfingers Ltd. v. King’s Lynn 1 Conservancy Board   and  (ii) Hulas Rai Baij Nath v. Firm K.B. Bass and 2 Co. 34. Shri Vaidyanathan further submitted that the PPA was not a valid document until it was approved by the State Commission   under   Section   86(1)(b)   of   The   Electricity   Act, 1 (1971) 1 WLR 1558 [Court of Appeal, England) 2 (1967) 3 SCR 886 16 2003 (hereinafter referred to as “the Act of 2003”).  He further submitted   that   under   Section   21   of   The   Andhra   Pradesh Electricity Reform Act, 1998 (hereinafter referred to as “the Reform   Act”),   any   agreement   relating   to   generating, transmitting,   distribution   or   supply   of   energy   without   the previous consent in writing of the Commission was void ab initio.   He submitted that by the impugned judgment, the APTEL   has,   in   effect,   granted   HNPCL   a   decree   of   specific performance of a contract, which is void ab initio.   He further th submitted   that   MoA   dated   17   May,   2013   and   the th Continuation   Agreement   dated   28   April,   2016   were themselves contrary to the National Tariff Policy issued under Section 3 of the Act of 2003 and Regulation 5.2(b) of the Andhra   Pradesh   Electricity   Regulatory   Commission   (Terms and   conditions   for   determination   of   tariff   for   supply   of electricity by a generating company to a distribution licensee and   purchase   of   electricity   by   distribution   licensees) Regulation,   2008   (Regulation   No.1   of   2008)   (hereinafter referred to as ‘the Tariff Regulations’) issued by the State 17 Commission.     As   such,   the   direction   by   the   APTEL,   to continue   to   get   the   electricity   supply   from   HNPCL,   being contrary to the statutory provision, would not be tenable in law.  Shri   Vaidyanathan   submitted   that   the   present 35. project does not fall under any of the categories mentioned in Regulation 5.2 of the Tariff Regulations, which aspect has not been taken into consideration by the APTEL.   Shri Vaidyanathan further submitted that the finding 36. of the APTEL, that HNPCL had made huge investments on the basis of the assurance given by the appellants – DISCOMS that   they   will   purchase   100%   power   from   it,   is   itself erroneous.   He submitted that the initial project of HNPCL was lying in cold storage from 1996 to 2007.  He submitted that in the year 2007, HNPCL had attempted to revive the project as a Merchant­power plant.   He submitted that the project of HNPCL had also attained financial closure in the year 2010. He further submitted that before the acceptance of the proposal of HNPCL by the State Government, HNPCL had 18 already completed upto 93% of the project.   It is therefore, submitted that the finding that huge investments made by HNPCL were on the basis of the representation by the State Government is totally erroneous.   In any case, he submits, that the appellants – DISCOMS are independent authorities and not bound by the decision of the State.   He submitted that under the scheme of the Act of 2003, the appellants – DISCOMS   cannot   purchase   the   power   without   the   prior approval of the State Commission.  He submits that the State has no role to play in the said matter.  It is submitted that, in any case, the appellants – DISCOMS could not be bound by the representation made by the State Government.    37. Shri Vaidyanathan further submits that since the re­ initiation of the project in the year 2007 by HNPCL is as a Merchant­power plant, it can very well sell the power to the third parties in the market.  He submitted that however, the appellants – DISCOMS cannot be compelled to purchase the power from HNPCL, which will be at a very high price.   He submitted   that   the   capital   cost   of   the   project,   which   was 19 initially estimated at Rs.4628.11 crores has now gone up to Rs.8087   crores,   which   will   have   a   direct   effect   on   the purchase   price   of   the   electricity   by   the   appellants   – DISCOMS.     He   therefore   submits   that   if   the   appellants   – DISCOMS are directed to purchase the electricity at such a high price, the loss would be ultimately to the consumers and as such, the direction given by the APTEL is also against the public interest.   38. Per   contra,   Dr.   Abhishek   Manu   Singhvi   and   Shri M.G. Ramachandran, learned Senior Counsel appearing on behalf   of   HNPCL   submitted   that   the   order   passed   by   the APTEL is such, which does not at all harm the appellants – DISCOMS.     Dr. Singhvi submitted that by the impugned order, the APTEL has only directed the State Commission to dispose   of   O.P.   No.21   of   2015   filed   by   HNPCL   for determination of capital cost and O.P. No.19 of 2016 filed by the   appellants   –   DISCOMS   for   approval   of   Amended   and Restated PPA on merits.   20 39. Dr. Singhvi submits that the APTEL has given sound and   elaborate   reasons   and   as   such,   no   interference   is warranted in the present appeal.   40. Shri M.G. Ramachandran, learned Senior Counsel, submitted that when withdrawal of an application is sought, which has the effect of frustrating the contract and defeating the defendant’s right, the appellants cannot be said to have the   right   to   withdraw   the   proceedings.     He   relied   on   the following authorities in support of this proposition.   3 (i) Madhu Jajoo v. State of Rajasthan   4 (ii) Kiran Girhotra & Ors. v. Raj Kumar & Ors. (iii) M.   Radhakrisna   Murthy   v.   Government   of 5 A.P. & Ors. 6 (iv) Smt. Ajita Debi v. Musst. Hossenara Begum 7 (v) Mathuralal v. Chiranji Lal (vi) The   Registrar,   Manonmaniam   Sundaranar 8 University v. Suhura Beevi 41. Shri   Ramachandran   has   further   submitted   that   a right of withdrawal is not an absolute right and that once the 3 AIR 1999 Raj 1 4 (2009) 164 DLT 483 5 (2001) 3 ALD 330 (DB) 6 AIR 1977 Cal 59 7 AIR 1962 Raj 109 8 AIR 1995 Mad 42 21 judgment is reserved there cannot be any further application seeking withdrawal.  In support of this proposition, he relied on the following authorities:  9 (i) Arjun Singh v. Mohindra Kumar 10 (ii) Bharati Behera v. Jhili Prava Behera   (iii) Rabia   Bi   Qasim   v.   Countrywide   Consumer 11 Financial Services Limited (iv) Pujya   Sindhi   Panchayat   v.   Prof.   C.L. 12 Mishra 13 (v) Yash Mehra v. Arundhati Mehra (vi) Dharani Sugars and Chemicals Limited v. 14 TMN Engineering Industry 42. Dr.   Singhvi,   learned   Senior   Counsel,   further submitted that, as a matter of fact, HNPCL desired to start the project as a Merchant­power plant.  It is however, on the insistence of the State of Andhra Pradesh that HNPCL was compelled to supply 100% of power generated to the State. He further   submitted   that   it   is   evident   from   the   record   that HNPCL had participated in the competitive bidding process 9 AIR 1964 SC 993 10 W.P. No.26254 of 2013 decided by Orissa High Court on 18.04.2014 11 ILR 2004 KAR 2215 12 AIR 2002 Rajasthan 274 (DB) 13 (2006) 132 DLT 166 14 CRP PD No.3309 to 3312 of 2011 and MP No.1 of 2011 decided by the Madras High Court on 30.08.2017 22 conducted by the APCPDCL.   It was the decision of the Bid Evaluation Committee, to not consider the bid submitted by HNPCL on the premise that the entire generation capacity of HNPCL’s   project   was   already   encumbered   to   the   State   of Andhra Pradesh under the Amended and Restated PPA of 1998.  He further submitted that not only this but the entire communication placed on record would show that it was the State   Government,   which   had   expressed   its   interest   to purchase   100%   power   from   HNPCL’s   project   as   per   the th Amended and Restated PPA dated 15  April, 1998.   He further submitted that on the reorganisation of 43. the erstwhile State of Andhra Pradesh and its bifurcation into two States, i.e., the State of Andhra Pradesh and the State of Telangana;   though   the   State   of   Telangana   had   demanded 54% of the power from HNPCL’s project, the Government of Andhra Pradesh insisted HNPCL to supply 100% of the power to the State of Andhra Pradesh. He therefore submits that the APTEL has rightly, on appreciation of the material placed on record, held that it was on the representation of the State 23 Government that the HNPCL had made huge investments for the   project.     He   submitted   that   the   contention   of   the appellants – DISCOMS, that if the power generated by the HNPCL is purchased by them, it will be at a very heavy cost, is totally erroneous.  He submitted that, as a matter of fact, when as per the interim orders passed by the APTEL and this Court, the appellants – DISCOMS could have purchased the power   from   HNPCL   at   the   rate   of   Rs.3.82   per   unit,   the appellants – DISCOMS are purchasing the power at a much higher rate from the generators, which were ranked much below HNPCL in the merit order. He further submits that the conduct of the appellants – DISCOMS is totally   mala fide. When   under the interim orders of this Court as well as of the APTEL,   they   were   bound   to  purchase   the   power   at  much lesser  price than compared to  the  rate  at  which they  are purchasing,   they   continued   to   purchase   power   at   much higher price.   He therefore submits that such an act, apart from being violative of the order of this Court, is contrary to the public interest.   24 44. Dr. Singhvi further submits that on account of  mala fide   attitude   of   the   appellants   –  DISCOMS,   it   is   not   only HNPCL, but also the public at large, who are the sufferers. He submits that huge investment of thousands of crores of rupees   is   lying   idle.     He   further   submits   that   apart  from generating   employment   for   more   than   1000   people,   the generation   project,   which   is   fully   operational,   would   also provide   electricity   in   the   State   of   Andhra   Pradesh.   He submitted that the contention of the appellants – DISCOMS that they had decided to withdraw the application on account of huge capital cost and the power being available in excess is also   factually   incorrect.     He   submits   that   recently   the appellants   have   entered   into   an   MoU   with   SEMBCORP Energy India in December, 2021 for generation of 625 MW of electricity.  He submits that insofar as the price at which the electricity would be purchased by the appellants – DISCOMS from the generation unit of HNPCL would be determined by the   State   Commission,   which   will   have   to   take   into consideration various aspects while approving the capital cost 25 of   the   project   as   well   as   while   doing   the   exercise   of determination of tariff. The learned Senior Counsel therefore submits   that   no   interference   is   warranted   in   the   present appeal.  The   facts   in   the   present   case   are   not   much   in 45. th dispute. It is not in dispute that on 17  July, 1992, an MoU came to be entered between APSEB and HNPCL, vide which APSEB had transferred all the licences, approvals, clearance and permits, fuel linkage, water required for the project to th HNPCL.  It is also not in dispute that on 9  December, 1994, an   initial   PPA   came   to   be   entered   between   HNPCL   and th APSEB.   On 25   July, 1996, the CERC granted a Techno Economic Clearance for the power project for an estimated cost of Rs.4628.11 crores (Rs.4.45 crores per MW).  It is also not in dispute that APSEB and HNPCL mutually agreed to amend 1994 PPA and accordingly, an Amended and Restated th PPA came to be executed on 15  April, 1998.  It is also not in dispute that from 1996 till 2007, the project remained in cold storage.     In   the   year   2007,   the   promoters   of   HNPCL 26 approached the then Hon’ble Chief Minister of the erstwhile State of Andhra Pradesh. It appears that certain discussions took   place   between   the   then   Hon’ble   Chief   Minister   of erstwhile   State   of   Andhra   Pradesh   and   the   promoters   of th HNPCL.  On 5  January, 2007, Mr. G.P. Hinduja addressed a communication   to   the   then   Hon’ble   Chief   Minister   of   the erstwhile State of Andhra Pradesh.  It will be relevant to refer to the following excerpt from the said communication, which reads thus:  “As per our discussion I am summarizing herein below our proposal for your ready reference:  1. Vizag   Power   project   will   be   mainly structured   as   a   Merchant   plant   and implemented in  a period manner with an   initial   capacity   of   1040   MW   and increasing   upto   400   MW   in   a   phased manner.  2. GoAP will sign a MoU with the Project Sponsors to provide:  - Title deeds for 1122.38 acres of land against balance payment of Rs.16.48 cr. - Transfer of remaining land of 1921.34 acres against payment of an amount of Rs. 67.63 cr.  27 - Infrastructure   support   including   for construction, power and water.  - Recommend to GoI mega status for the project.  - Revive   the   Coal   supply   and Transportation Agreements.  - Facilitate environment clearance from MOEF.  - Sanction of all other applicable State Approvals.  3. GoAP will have the first right of refusal, in   the   MoU,   to   purchase   25%   of   the power at regulated tariff.” It could thus be seen that when HNPCL proposed to 46. revive the project in the year 2007, it was mainly structured as   a   Merchant   plant,   wherein   the   Government   of   Andhra Pradesh was to have the first right of refusal, to purchase 25% of the power at regulated tariff.   It is also not in dispute that APCPDCL on behalf of all 47. the   four   APDISCOMS   (viz.,   Central   Power   Distribution Company   of   Andhra   Pradesh   Limited,   Southern   Power Distribution Company of Andhra Pradesh Limited, Northern Power Distribution Company of Andhra Pradesh Limited and Eastern   Power   Distribution   Company   of   Andhra   Pradesh Limited) had conducted bidding process for procurement of 28 power of 2000 MW +/­ 20% under Case­1 to meet the base load requirements of APDISCOMS from the year 2014­2015 onwards.   It is also not in dispute that in the said bidding process, HNPCL had also submitted its bid and successfully emerged   as   L­2   bidder.     After   completion   of   the   bidding process, APCPDCL had applied for approval of the tariff at which the power was to be purchased from the successful bidders in the said process.   It will be relevant to refer to th paragraph 4(u) of the order dated 13  August, 2013, passed by the State Commission in O.P. No. 55 of 2013, filed by APCPDCL on behalf of all the four APDISCOMS, which reads thus:   “u)  In   the   minutes   of   meeting   held   on th 28   September   2012,   the   Bid Evaluation   Committee   noted   that "The   Principal   Secretary,   Energy informed   the   Evaluation   Committee that   the   entire   capacity   of   Hinduja National   Power   Corporation   Limited (HNPCL) is encumbered to the state of A.P. /DISCOMs of A.P. and hence not available for consideration under this tender. Hence, HNPCL must be taken   out   of   the   bid   process   and APERC   must   be   informed 29 accordingly.     Hence   the   Committee took   the   note   of   it   and   decided   to separate   HNPCL   from   the   bid process” 48. It   could   thus   be   seen   that   though   HNPCL   had successfully emerged as the L­2 bidder in the open bidding process, it was at the instance of the State of Andhra Pradesh that the Bid Evaluation Committee had discarded the bid of HNPCL, on the ground that the entire capacity of HNPCL was encumbered to the State of Andhra Pradesh/APDISCOMS.  49. It will also be relevant to refer to the following excerpt th from the letter dated 26  December, 2012, addressed by the Principal Secretary to Government, Energy Department, to HNPCL: “This   Is   to   Invite   your   attention   to   the above   cited   letter   intimating   the implementation   of   the   coal   fired   power project   (1040   MW)   by   you   at Visakhapatnam   and   supply   of   power therefrom.   In   this   regard,   HNPCL   has sought   certain   support   so   as   to   achieve scheduled   commissioning   of   the   Project commencing   in   July   2013.   On   this matter I am to clarify that Government of   Andhra   Pradesh   reiterates   its 30 Interest   in   purchasing   100%   power (through   APDISCOMs)   from   the   said project, as already contemplated in the restated   PPA   entered   into   between APSEB   and   HNPCL   in   1998   based   on the   MOU   in   1992   on   the   broad conditions mentioned in the PPA signed in 1998, except to the extent they may stand   modified   due   to   Impact   of change   in   laws/rules   and   regulatory standards guiding such power projects post 1998.   2.  In this background, the Government of   Andhra   Pradesh   hereby   agrees   to facilitate the implementation of the power project to achieve the timeline for schedule commissioning.   The   Government   has also decided to direct the APDlSCOMs as the successor entities of APSEB to enter into a continuation Agreement to the  PPA   of  1998  With  HNPCL  to this effect. ” [emphasis supplied] th 50. A   perusal   of   the   said   letter   dated   26   December, 2012, would reveal that the Government of Andhra Pradesh has   reiterated   its   interest   in   purchasing   100%   of   power (through   APDISCOMS)   from   the   said   project,   as   already contemplated   in   the   restated   PPA   entered   into   between 31 APSEB and HNPCL in 1998 based on the MoU of 1992.  No doubt that it mentions that the same shall be except to the extent they may stand modified due to impact of change in laws/rules   and   regulatory   standards   guiding   such   power projects post 1998. The said letter would also reveal that the Government had decided to direct the APDISCOMS as the successor   entities   of   APSEB   to   enter   into   a   continuation agreement to the PPA of 1998 with HNPCL to the said effect. It will also be relevant to note that in the said letter it is observed that the State Government will take necessary steps within three months for execution of PPA and provision of Transmission   System   for   Start­up   Power   and   Power Evacuation.  In the said letter, the State had also agreed for providing   assistance   in   obtaining   statutory clearances/approvals from State/local authorities within the timeline for scheduled commissioning of Project.  51. In response to the aforesaid letter, HNPCL addressed th a   communication   dated   14   January,   2013,   to   the   State Government,   thereby   expressing   its   concurrence   to   the 32 proposal   given   by   the   Government   of   Andhra   Pradesh   of procuring entire power from the Project.  Vide the said letter th dated   14   January,   2013,   HNPCL   requested   the   State Government to provide all the necessary support required for taking the requisite approvals from the State Commission for tariff determination based on the actual project cost.   th 52. A further communication dated 16  May, 2013, was addressed by HNPCL to the appellants ­ DISCOMS.  By the said letter, HNPCL had estimated the project cost to the tune of Rs.6098 crores.  The said project cost was worked out on th the basis of the order passed by the CERC dated 4   June, 2012, providing a Benchmark Capital Cost (Hard cost) model for   Thermal   Power   Stations   with   Coal   as   Fuel   for   tariff determined by the Commission under Section 62 of the Act of 2003. The   appellants   –   DISCOMS   vide   communication 53. th dated 17  May, 2013, recorded that the documents of capital cost  of   the   Project  were   received   without   prejudice   to the rights of APDISCOMS to contest the cost of the project on 33 every component before the State Commission at appropriate stage and that the receiving of the capital cost document did not constitute that the APDISCOMS had agreed/accepted the same without demur.   th On the same day, i.e., 17   May, 2013, an MoA for 54. th continuation of the Amended and Restated PPA dated 15 April, 1998, came to be executed between APDISCOMS and HNPCL. It will be relevant to refer to clauses E and F of the th said MoA dated 17  May, 2013, which read thus: “E.   HNPCL   shall   agree   that   the   entire capacity of the project and all the units of the power station shall at all times be for the exclusive benefit of the DISCOMs and   the   DISCOMs   shall   have   the exclusive right as well as obligation to purchase   the   entire   capacity   from   the project. HNPCL shall not grant to any third party or allow any third party to obtain any entitlement to the Available Capacity   and/or   scheduled   energy.   In case DISCOMs do not avail power up to the   Available   Capacity   provided   by HNPCL, DISCOMs shall pay to HNPCL the capacity charges for such unavailed Available Capacity.  Notwithstanding   the   above,   in   case DISCOMS do not avail power up to the Available Capacity provided by HNPCL, 34 HNPCL   shall   have   the   option   to   sell such Available Capacity not availed by DISCOMS to any third party or require the   payment   of   capacity   charges   from DISCOMS   towards   such   unavailed Available   Capacity   not   sold   to   third parties. DISCOMs shall not be required to   pay   capacity   charges   for   such capacity sold to third parties. F.   Transmission   line/system   for   start­up power and  power evacuation from the Project   will   be   provided   by   DISCOMs through APTRANSCO in time so as to ensure availability of power evacuation facility at the time of COD of Unit 1. DISCOMs assure that power evacuation shall   be   done   through   APTRANSCO without any delay.” th 55. It could thus be seen that in the MoA dated 17  May, 2013, it was agreed that the entire capacity of the project and all the units of the power station shall at all times be for the exclusive benefit of the DISCOMS and the DISCOMS were to have the exclusive right as well as the obligation to purchase the   entire   capacity   from   the   project.   Vide   the   said   MoA, HNPCL was restrained from granting to any third party or allowing   any   third   party   to   obtain   any   entitlement   to   the available capacity and/or scheduled energy.   It was further 35 agreed that in case DISCOMS do not avail power up to the Available Capacity provided by HNPCL, the DISCOMS were to pay   HNPCL,   the   capacity   charges   for   such   un­availed Available Capacity.   No doubt, that in case the DISCOMS failed to avail power up­to the Available Capacity provided by HNPCL,   an   option   was   available   to   HNPCL   to   sell   such Available Capacity, not availed by DISCOMS, to any third party. It was also agreed that the DISCOMS were not required to   pay   capacity   charges   for   such   capacity   sold   to   third parties. As per the said MoA, the Transmission line/system for start­up power and power evacuation from the project was to   be   provided   by   DISCOMS   through   Transmission Corporation of Andhra Pradesh (APTRANSCO) in time so as to ensure availability of power evacuation facility at the time of COD of Unit­1.  It is also not in dispute that in pursuance of the execution of the said MoA, HNPCL entered into an FSA with Mahanadi Coalfield Limited for supply of coal for the project.  36 56. Pursuant   to   the   execution   of   the   said   MoA,   an application  being  O.P.   No.21   of  2015  came   to  be   filed by th HNPCL before the State Commission on 12  March, 2014, for determination of Capital Cost of the coal fired power station of   1040   MW   (2   x   520   MW)   capacity   in   the   district   of Visakhapatnam. 57. Pursuant   to   these   events,   the   Reorganisation   Act nd came into effect on 2   June, 2014, thereby bifurcating the erstwhile State of Andhra Pradesh into the State of Andhra Pradesh and the State of Telangana.  It is the contention of HNPCL that after the bifurcation of  the  erstwhile State of Andhra Pradesh, though the State of Telangana demanded 54% of the power from the project, the Government of Andhra Pradesh insisted HNPCL to supply 100% of the power to the State of Andhra Pradesh. 58. It is not in dispute that HNPCL filed an Addendum th Application in O.P. No.21 of 2015 on 28  July, 2015, thereby showing the capital cost of the project to have increased to Rs.8087 crores.   37 When O.P. No.21 of 2015, was listed before the State 59. th Commission on 26  September, 2015, the State Commission passed the following order: “Sri   P.   Shiva   Rao,   learned   Standing Counsel for the respondents filed counter on behalf for the respondents and sought for further time to respond to the further material filed by the petitioner by way of addendum before the Commission. Sri P. Shiva Rao, learned Standing Counsel for the respondents also represented that they are filing an application to dispense with the earlier Consultant as the respondents appointed   their   own   Consultant.   Hence, for   further   response   of   the   respondents and   rejoinder   of   the   petitioner   to   the counter filed by tile respondents and for further   hearing   on   the   question   of Consultant including on the application for dispensing   with   the   earlier   Consultant. Posted to 03­10­2015 at 11 AM. Both the learned   counsel   also   represented   that there is no issue of jurisdiction involved in the matter.” 60. It is also not in dispute that the first unit of the th power project of HNPCL (520 MW) was declared COD on 11 January, 2016. 38 61. Further,   it   is   not   in   dispute   that   the   State st Commission by an order dated 1  March, 2016, directed the appellants – DISCOMS to pay an interim tariff at the rate of Rs.3.61 per unit to HNPCL.   By the said order, the State Commission also clarified that such interim tariff was without prejudice to the rights and contentions of both parties in the main petition, i.e., O.P. No.21 of 2015. 62. After the bifurcation of the erstwhile State of Andhra Pradesh into the State of Andhra Pradesh and the State of th Telangana, on 28   April, 2016, a Continuation Agreement came to be signed between the appellants – DISCOMS and HNPCL.   A   perusal   of   the   recital   in   the   said   Continuation th Agreement   dated   28   April,   2016   would   reveal   that   the Government of Andhra Pradesh represented by the erstwhile APSEB had expressed the desire to establish a coal­based Thermal Power Project at Visakhapatnam and had selected the   consortium   of   Ashok   Leyland   Limited,   a   company incorporated   in   India   and   Mission   Energy   Company,   a California,   USA   corporation,   to   set   up   a   joint   venture   for 39 establishing a thermal power station. The said Continuation th Agreement dated 28   April, 2016, also refers to the MoU of th th 1992   (dated   17   July,   1992),   PPA   of   1994   (dated   9 December, 1994), the Amended and Restated PPA of 1998 th (dated   15   April,   1998),   the   correspondence   between   the State of Andhra Pradesh and HNPCL, and MoA between the th erstwhile   State   of   Andhra   Pradesh   and   HNPCL   dated   17 May, 2013.  It will be relevant to refer to the following part of th the Continuation Agreement dated 28  April, 2016: “3)  The   Parties   acknowledge   and   agree that the Procurers have replaced the APSEB in all respects with regard to the 1998 PPA and shall execute such other   or   further   documents   and/or take   such   steps,   as   are   necessary and/or incidental, in order to give full and complete effect to such transfer of contracts, deeds, agreements and other instruments of whatever nature to the Procurers. 4) The Procurers hereby agree that they are jointly and separately liable for all obligations under the Agreement. 5) Subject   to   Clause   3   hereof   and pending the execution of such other or   further   documents   as   envisaged under   Clause   3   hereof,   the   Parties 40 hereto   are   entering   into   this Continuation Agreement to the 1998 PPA   and   confirm,   agree   to   the following:  (a) The   1998   PPA   shall   stand amended   as   mentioned   hereunder and   as   indicated   in   the   Annexure attached   hereto,   which   Annexure shall   constitute   an   integral   part   of this Continuation Agreement.  (b) The   1998   PPA   and   the   MoA shall stand modified or amended to the extent provided herein. All other terms and conditions of the 1998 PPA including   the   obligations   of   the Parties   as   stated   thereunder   shall continue to be binding on the Parties. This Continuation Agreement and the 1998   PPA   shall   together   constitute one and the same agreement and the provisions   of   this   Continuation Agreement shall form an Integral part of   the   1998   PPA.   However, notwithstanding the foregoing, should any   provisions   of   this   Continuation Agreement   be   at   variance   or   in conflict with any of the provisions of the   1998   PPA   or   the   MoA,   the provisions   of   this   Continuation Agreement shall prevail.” It could thus clearly be seen that the appellants – 63. DISCOMS have clearly represented that they had replaced the 41 APSEB in all respects with regard to the 1998 PPA and had agreed to execute all further documents and take such steps as are necessary in order to give full and complete effect to such   transfer   of   contracts,   deeds,   agreements,   etc.     The appellants – DISCOMS have also clearly agreed that the 1998 th PPA (i.e. the Amended and Restated PPA dated 15   April, 1998)   shall   stand   amended   as   mentioned   in   the   said th Continuation Agreement dated 28  April, 2016.  It has been specifically averred that the Continuation Agreement and the 1998   PPA   shall   together   constitute   one   and   the   same agreement.   Immediately after the said Continuation Agreement 64. was   entered   into  between   the   appellants   –  DISCOMS  and HNPCL, the appellants – DISCOMS filed an application being O.P. No.19 of 2016 under Section 86(1)(b) of the Act of 2003 for grant of approval of PPA.  The said application contained the entire history narrated herein above leading up to the th execution   of   the   Continuation  Agreement  dated   28   April, 2016.  The prayer clause in the said application reads thus: 42 “ PRAYER 32. Therefore,   it   is   prayed   that   the Hon’ble   Commission   may   be   pleased   to grant   approval/consent   for   the   initialed Continuation Agreement to the PPA dated 15.04.1998   together   with   Amended   & Restated   PPA   dated   15.04.1998   of HNPCL.” st The  State   Government  vide   order   dated   1   June, 65. 2016, accorded approval for purchase of 100% power from rd HNPCL. On 3   July, 2016, the second unit of HNPCL (520 th MW) was declared COD.  Vide order dated 6  August, 2016, the   State   Commission,   after   hearing   the   counsel   for   the parties, directed the appellants – DISCOMS to pay an interim st tariff   at   the   rate   of   Rs.3.82   per   unit   to   HNPCL   from   1 August, 2016 for the power received by them. This was to operate until further orders passed by the State Commission. 66. It is also not in dispute that after elaborate hearing in both the petitions i.e. O.P. No.21 of 2015 and O.P. No.19 of 2016, the State Commission reserved the matters for orders th on 15  May, 2017.  It is also not in dispute that in an appeal between the parties arising out of interlocutory proceedings, 43 the APTEL had directed the State Commission to decide O.P. No.19 of 2016 and O.P. No.21 of 2015 expeditiously and on th or before 14   August, 2017.   The said period came to be extended from time to time, the last of such extension was st th granted till 31  January, 2018, vide order dated 10  January, 2018.  67. At this juncture, the appellants – DISCOMS filed two th Interlocutory  Applications on 4   January, 2018, viz., (i) I.A. No.1 of 2018 in O.P. No.19 of 2016 for withdrawal of O.P. No.19 of 2016 together with initial PPA; and (ii) I.A. No.2 of 2018 in O.P. No.21 of 2015 for disposal of O.P. No.21 of 2015. st 68. Vide order dated 31   January, 2018, passed by the State Commission, which was impugned before the APTEL, the State Commission allowed withdrawal of O.P. No.19 of 2016 filed by the appellants ­ DISCOMS and consequently dismissed O.P. No.21 of 2015 filed by HNPCL.   69. As discussed herein above, being aggrieved, HNPCL filed Appeal No.41 of 2018 before the APTEL, which came to 44 th be admitted by the APTEL on 26  February, 2018.  It is also not in dispute that the APTEL passed an interim order dated th 16  March, 2018 in I.A. No.211 of 2018 in Appeal No.41 of 2018, on an ad hoc arrangement basis, thereby directing the st parties   to   maintain   status   quo   as   prevalent   prior   to   31 January, 2018.  It is also not in dispute that both the orders th passed   by   the   APTEL,   i.e.,   order   dated   16   March,   2018 st directing maintenance of status quo as prevalent prior to 31 th January,   2018   and   order   dated   26   February,   2018, admitting   Appeal  No.41   of   2018,   were   assailed   before   the High Court of Andhra Pradesh by way of Writ Petitions being Writ Petition No. 10814 of 2018 and Writ Petition No.13689 of 2018 respectively.  However, the same were dismissed by the nd High Court of Andhra Pradesh by order dated 2  May, 2018.    It   is   also   not   in   dispute   that   in   the   meantime, 70. Execution Petition No. 3 of 2018 was filed by HNPCL before th the APTEL seeking execution of order dated 16  March, 2018, passed by the APTEL in I.A. No.211 of 2018 in Appeal No.41 of 2018.  45 71. The appellants – DISCOMS had also approached this Court by way of Civil Appeal No.5772 of 2018, challenging the th interim order passed by the APTEL dated 16  March, 2018. However, this Court refused to interfere with the said order and directed the APTEL to decide the appeal pending before it expeditiously   without   taking   into   consideration   the observation in the impugned order as conclusive.    th 72. Vide   the   impugned   judgment   and   order   dated   7 January, 2020, the Appeal No.41 of 2018, filed by HNPCL has been allowed by the APTEL, the correctness of which is under challenge in the present proceedings. 73. It could thus clearly be seen that though HNPCL had initially proposed to revive its project in the year 2007 as a Merchant­power   plant   and   had   proposed   to   give   the Government of Andhra Pradesh first right of refusal, in the MoU, to purchase 25% of the power at regulated tariff, it was at the instance of the State of Andhra Pradesh that it had agreed   to   supply   100%   power   to   the   State   through APDISCOMS.   It could clearly be seen from the record that 46 though   HNPCL   had   participated   in   the   bidding   process conducted   by   the   APCPDCL   in   the   year   2011­2012   and though HNPCL had successfully emerged as L­2 bidder in the said bidding process, it was on account of the decision of the Bid Evaluation Committee, that HNPCL was discarded from the bidding process since the entire generation capacity of HNPCL   was   encumbered   to   the   State   of   Andhra th Pradesh/APDISCOMS.  The minutes of the meeting dated 28 September, 2012 of the Bid Evaluation Committee, as has th been noticed in the order of the State Commission dated 13 August, 2013, clarify this position.   It   is   the   State   of   Andhra   Pradesh,   which   had 74. expressed   its   interest   in   purchasing   100%   power   from HNPCL, as could be seen from the various documents placed on record.   The communication addressed by the Principal Secretary   to   the   Government   of   Andhra   Pradesh,   Energy th Department, to HNPCL dated 26   December, 2012, clearly reiterates the intention of the Government of Andhra Pradesh in   purchasing   100%   power   (through   DISCOMS)   from   the 47 project of HNPCL.  The said communication would also show that the State has assured to take all necessary steps for commissioning the project at the earliest including execution of PPA and for making provision of Transmission system for start­up   power   and   power   evacuation.     The   said communication   would   clearly   show   that   the   parties   had agreed to abide by the conditions mentioned in the Amended th and Restated PPA dated 15  April, 1998, except to the extent they   may   stand   modified   due   to   impact   of   change   in laws/rules   and   regulated   standards   guiding   such   power projects post 1998.   No   doubt,   that   the   documents   placed   on   record 75. would show that though HNPCL had given its estimation of project   cost   on   the   basis   of   the   guidelines   issued   by   the CERC, the same was received by the appellants – DISCOMS without prejudice to their rights to contest the same on every component  before   the  State   Commission.     The  documents placed on record would clearly show that the State of Andhra Pradesh has, on more than one occasion, expressed that it 48 was   interested   in  buying   100%  power   from   the   project of HNPCL.  The MoA signed between the appellants – DISCOMS th and HNPCL dated 17  May, 2013, would clearly show that it was agreed between the parties that the entire capacity of HNPCL project and all the units of the power stations shall, at all times, be for the exclusive benefit of the DISCOMS and the DISCOMS were to have the exclusive right as well as obligation to purchase the entire capacity from the project. Not  only   this,   but  after   the   Reorganisation   Act  came   into effect   and   the   erstwhile   State   of   Andhra   Pradesh   was bifurcated into the State of Andhra Pradesh and the State of Telangana, the State of Andhra Pradesh, on more than one occasion, reiterated its stand of procuring 100% power from the project of HNPCL.   Perusal of the orders of the State th th Commission   dated   26   September,   2015   and   6   August, 2016, would clearly reveal that the appellants – DISCOMS also stood by the position that the 100% power generated in the power plant of HNPCL was to be purchased by them. Not only this, but after the bifurcation of the erstwhile State of 49 Andhra Pradesh, the appellants – DISCOMS entered into a th Continuation Agreement dated 28   April, 2016, reiterating their stand.   After the Continuation Agreement was entered into 76. th on   28   April,   2016,   the   appellants   –   DISCOMS   filed   O.P. No.19 of 2016 for approval of the Continuation Agreement th with the Amended and Restated PPA of 1998 on 11   May, st 2016.     The  State   Government  again   on   1   June,   2016, accorded its approval for purchase of 100% power generated by HNPCL.   It could thus be seen that right from the year 2012 till January, 2018, it was the consistent stand of the State of Andhra Pradesh as well as the appellants – DISCOMS and its predecessors that the appellants ­ DISCOMS were to purchase 100% power generated by HNPCL.   77. It is also not in dispute that in pursuance of the th MoA, executed on 17   May, 2013, HNPCL had also entered th into FSA dated 26   August, 2013 with Mahanadi Coalfield Limited for supply of coal for the project.   50 78. It   is   thus   clear   that   the   consistent   stand   of   the appellants ­ DISCOMS from the year 2012, for the first time, th changed on 4  January, 2018, when they filed Interlocutory Applications before the State Commission for withdrawal of O.P. No.19 of 2016 and disposal of O.P. No.21 of 2015. 79. As already observed hereinabove, in the open bidding process, conducted in the year 2011­2012, HNPCL emerged as the successful L­2 bidder. It is however on account of the stand taken by the Bid Evaluation Committee, that it was discarded from the bidding process.   As such, the stand of the appellants – DISCOMS, that the revival of the project of HNPCL was as a Merchant­power plant and therefore, the appellants   –   DISCOMS   cannot   be   compelled   to   purchase power from it, is self­contradictory.   On one hand, HNPCL was discarded from the open bidding process, though it was the successful L­2 bidder, on the ground that 100% power generated by HNPCL is encumbered to the State of Andhra Pradesh/APDISCOMS whereas, on the other hand, it is now sought to be urged that the appellants – DISCOMS cannot be 51 compelled to purchase the power from HNPCL, since it was a merchant­power plant.   We have no hesitation to hold that the APTEL has rightly held that, on account of the assurance given by the State of Andhra Pradesh/APDISCOMS, HNPCL had altered its position and as such, it was not permissible for   the   appellants   –   DISCOMS   to   withdraw   O.P.   No.19   of 2016.  The grounds, which are sought to be urged in I.A. No.1 of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015, were very much available when the appellants th – DISCOMS had entered into MoA on 17  May, 2013 and the th Continuation Agreement dated 28  April, 2016.  It is difficult to   appreciate   how   it   is   permissible   for   the   appellants   – DISCOMS to withdraw the application for grant of approval of PPA   on   the   ground   that   it   could   procure   the   power   only through the competitive bidding process, when in the facts of the present case, it was the State of Andhra Pradesh, which had discarded HNPCL from the open bidding process of 2011­ 2012, though it had successfully emerged as L­2 bidder in the said bidding process.   52 80. Various   authorities   have   been   cited   at   the   Bar  in support of the proposition that withdrawal of an application could not be permissible when such a withdrawal amounts to frustration of a contract and thereby defeats the rights of the defendant and that the right of withdrawal is not absolute.  In this respect, we will refer to the observations made by this Court in the case of   Arjun Singh v. Mohindra Kumar & 15 .  Though the issue involved in the said case is distinct Ors. than the issue involved in the present case, we find that it will be apposite to seek guidance from the observations made by this Court, while construing the provisions of Order IX and Order XX of the Code of Civil Procedure, 1908 (CPC).   The relevant extract reads thus: “  ….In   the   present   context   when   once the   hearing   starts,   the   Code   contem­ plates only two stages in the trial of the suit: (1) where the hearing is adjourned or (2) where the hearing is completed. Where, the hearing is completed the parties have no further rights or priv­ ileges in the matter and it is only for the convenience of the Court that Or­ 15 (1964) 5 SCR 946 53 der XX. Rule 1 permits judgment to be delivered after interval after the hearing is completed. It would, there­ fore, follow that after the stage con­ templated   by   Order   IX.   Rule   7   is passed   the   next   stage   is   only   the passing   of   a   decree   which   on   the terms of Order IX. Rule 6 the Court is And   then   follows competent   to   pass.   the remedy of the party to have that de­ cree set aside by application under Or­ der IX. Rule 13.  There is thus no hia­ tus between the two stages of reser­ vation of judgment and pronouncing the judgment so as to make it neces­ sary  for  the   Court   to   afford   to  the party   the   remedy   of   getting   orders passed on the lines of Order IX. Rule We are, therefore, of the opinion that 7.  the Civil Judge was not competent to en­ tertain   the   application   dated   May   31, 1958 purporting to be under Order IX. Rule 7 and that consequently the rea­ sons given in the order passed would not be res judicata to bar the hearing of the petition undo Order IX. Rule 13 filed by the appellant.” [emphasis supplied] 81. It can be seen that this Court has held that CPC contemplates two stages of the trial in the suit: (1) where the hearing is adjourned; and (2) where the hearing is completed. 54 It has been held that where the hearing is completed, the parties have no further rights or privileges in the matter and it is only for the convenience of the Court that Order XX rule 1 permits judgment to be delivered after an interval after the hearing is completed. It has been held that there is no hiatus between   the   two   stages   of   reservation   of   judgment   and pronouncing the judgment so as to make it necessary for the Court  to   afford   to   the   party   the   remedy   of   getting   orders passed on the lines of Order IX rule 7.  82. The other judgments of various High Courts relied upon by Shri Ramachandran, follow the line laid down by this Court in  Arjun Singh  (supra).   83. Insofar as the reliance placed by Shri Vaidyanathan, learned Senior Counsel, on the judgment of Court of Appeal in   the   case   of   Boal   Quay   Wharfingers   Ltd.   (supra)   is concerned, the said case arose out of an application made by the appellant therein to the Licensing Authority for grant of a license.     It   was   not   an   application   in   a   quasi­judicial proceeding   where   the   withdrawal   of   an   application   would 55 adversely affect the rights of the other party.  In the said case, it has been observed that if a person applies for a license, there   is   no   prohibition   as   to   why   he   is   not   entitled   to withdraw his application, unless, of course, there is some provision in law, which would prevent him from doing so. The proceedings in the aforesaid case did not arise from a lis between the two parties, but arose out of an application made by   a   party   to   a   licensing   authority   under   the   Docks   and Harbours Act, 1966. 84. Insofar as the reliance placed on the judgment of this Court   in   the   case   of   Hulas   Rai   Baij   Nath   (supra)   is concerned, the respondent therein had instituted a suit for rendition of accounts against the appellant­firm, alleging that the   appellant­firm   was   the   commission   agent   of   the respondent and that the accounts between respondent as the principal and appellant as the agent were not settled. The claim of the respondent was resisted by the appellant therein, stating that the claim of the respondent was fully settled and that the suit was not fit to proceed in accordance with law. 56 In the said suit, after a considerable amount of evidence had been recorded, an application was presented on behalf of the respondent­plaintiff for withdrawal of the suit.  The same was objected   to.   The   trial   court   overruled   the   objection   of  the appellant­defendant, holding that the plaintiff had a right to withdraw the suit and that right could be exercised at any time before judgment.   The defendant could only claim an order   for   costs   in   his   favour.     The   suit   was   therefore dismissed   awarding   costs   of   the   suit   to   the   appellant­ defendant.  The appellant­defendant filed revision in the High Court.   The   High   Court   dismissed   the   revision.     Being aggrieved, the appellant­defendant had approached the Apex Court.  In this factual background, this Court observed thus: “ 2.  The short question that, in these cir­ cumstances, falls for decision is whether the   respondent  was   entitled  to  withdraw from the suit and have it dismissed by the application   dated   5th   May,   1953   at   the stage when issues had been framed and some evidence had been recorded, but no preliminary   decree   for   rendition   of   ac­ counts had yet been passed. The language of order 23 Rule 1 sub­rule (1) CPC, gives an unqualified right to a plaintiff to with­ 57 draw from a suit and, if no permission to file a fresh suit is sought under sub­rule (2) of that Rule, the plaintiff becomes liable for such costs as the Court may award and becomes   precluded   from   instituting   any fresh suit in respect of that subject­matter under sub­rule (3) of that Rule. There is no provision   in   the   Code   of   Civil   Procedure which requires the Court to refuse permis­ sion to withdraw the suit in such circum­ stances and to compel the plaintiff to pro­ ceed with it. It is, of course, possible that different considerations may arise where a set­off may have been claimed under order 8 CPC, or a counter claim may have been filed, if permissible by the procedural law applicable   to   the   proceedings   governing the suit. In the present case, the pleadings in paras 8 and 11 of the written statement mentioned above, clearly did not amount to a claim for set­off. Further, there could be no counter­claim, because no provision is   shown   under   which   a   counter­claim could have been filed in the trial court in such a suit. There is also the circumstance that   the   application   for   withdrawal   was moved at a stage when no preliminary de­ cree had been passed for rendition of ac­ count and, in fact, the appellant was still contending that there could be no rendi­ tion of accounts in the suit, because ac­ counts had already been settled. Even in para 11, the only claim put forward was that, in case the Court found it necessary to   direct   rendition   of   accounts   and   any amount is found due to the appellant, a decree may be passed in favour of the ap­ pellant for that amount. In this paragraph 58 also,   the   right   claimed   by   the   appellant was a contingent right which did not exist at   the   time   when   the   written   statement was filed.”  85. It could thus be seen that the facts in the aforesaid case are totally different from the facts in the present case. This   Court   in   the   aforesaid   case   held   that   there   is   no provision   in   the   CPC,   which   requires   the   Court   to   refuse permission to withdraw the suit and compel the plaintiff to proceed with it.  However, this Court itself has clarified that different considerations could arise where a set­off may have been claimed under order VIII of CPC, or a counter claim may have   been   filed,   if   permissible   by   the   procedural   law applicable to the proceedings governing the suit.     It was found that from the pleadings in the written statement, it could be clearly seen that there is no claim for set­off.  It was further found that there could be no counter­claim, since no provision was shown under which a counter­claim could have been filed in the trial court in such a suit. It was further found   that   the   right   claimed   by   the   appellant   was   a 59 contingent one and did not exist at the time at which the written statement was filed.   86. The facts in the  present  case  are  totally different, wherein,   after   execution   of   various   agreements,   an application being  O.P. No.19 of 2016  came to be filed for grant of approval of PPA.   Not only this, but the said  O.P. No.19 of 2016  was clubbed along with  O.P. No.21 of 2015, which was filed for determination of capital cost of the project as well as for determination of tariff.  It can further be seen that in the aforesaid case, an application for withdrawal of the suit was filed at the stage of leading of evidence.  It is not as if the application was filed after the suit was closed for judgment.   87. In any case, we are of the considered view that the conduct of the  appellants – DISCOMS, in the present case, would disentitle them to withdraw the application.  88. Another argument, that on account of increase of the capital cost of the project, the appellants – DISCOMS would be required to purchase power at much higher rate, also does 60 not hold water.  The State Commission while determining the tariff would be guided by various factors as are required to be taken into consideration in view of the provisions of Section 61   of   the   Act   of   2003.       In   any   event,   the   appellants   – DISCOMS have themselves reserved their right to contest the correctness of the cost on every component at an appropriate stage   before   the   State   Commission.     As   already   stated hereinabove, the State Commission, while approving the cost of   the   project   and   determining   the   tariff   at   which   the electricity   would   be   purchased   by   the   APDISCOMS   from HNPCL, would be required to look into various factors as are stated in Section 61 of the Act of 2003, so also under the Regulations notified for that purpose.   While doing so, the State   Commission   would   be   required   to   take   into consideration the various aspects as well as submissions to be made by the appellants – DISCOMS and HNPCL.  Merely because, the cost of the project is estimated by HNPCL at a particular amount, the State Commission is not bound to accept the same.  The State Commission would only approve 61 the   cost   as   it   would   feel   appropriate,   as   guided   by   the provisions   under   Section   61   of   the   Act   of   2003   and   the Regulations.  In that view of the matter, the argument in this regard also, is without substance.   The appellants – DISCOMS have heavily relied on the 89. judgment of this Court in the case of  Tata Power Company 16 ,   and Limited   v.   Reliance   Energy   Limited   and   others particularly, on paragraph 106 thereof, which reads thus: “ 106.  The   scheme   of   the   Act,   namely, the   generation   of   electricity   is   outside the licensing purview and subject to ful­ filment of the conditions laid down un­ der Section 42 of the Act a generating company   may   also   supply   directly   to consumer wherefor no licence would be required, must be given due considera­ tion. The said provision has to be read with   Regulation   24.   In   regard   to   the grant of approval of PPA the procedures laid down in Regulation 24 are required to be followed.” 90. No doubt, that this Court has held that  a generating company may also supply directly to consumer wherefor no licence would be required, however, this Court itself observed 16 (2009) 16 SCC 659 62 that the said provision has to be read with Regulation 24 and with regard to the grant of approval of PPA, the procedures laid down in Regulation 24 are required to be followed.   It will also be relevant to refer to paragraph 119 of 91. the said judgment.  “ 119.  The   2003   Act   even   permits   the generating company to supply electricity to a consumer directly. For the said pur­ pose what is necessary is to comply with the provisions of the Act, the Rules and the  Regulations. Section  14  of the  Act categorically provides for grant of licence to any person who is transmitting elec­ tricity or distributing supply or under­ taking   trading   therein,   indisputably, however,   the   generator   of   an   electrical energy,   although   is   not   subject   to   the grant of licence but while supplying elec­ trical energy to a distributing agency, in turn would be subject to approval and directions of the Commission.” 92. It can thus clearly be seen that this Court has held that though the Act of 2003 permits the generating company to   supply   electricity   to   a   consumer   directly,   and   that  the generator of an electrical energy is not subject to the grant of license, but while supplying electrical energy to a distributing 63 agency,   in   turn,   it   would   be   subject   to   approval   and directions of the Commission.   93. We are, therefore, of the view that the said judgment is of no assistance to the case sought to be advanced by the appellants – DISCOMS.   On the contrary, we find that the view that is being taken by us is fortified by the  following observations   of   this   Court   in   the   case   of   Tata   Power (supra): Company Limited  “ 87.  ….   The   agreement   of   distribution (PPA)   being   subject   to   approval,   indis­ putably the Commission would have the public interest in mind. It has power to approve   an   MoU   which   subserves   the public interest. It, while granting such approval may also take into considera­ tion   the   question   as   to   whether   the terms to be agreed are fair and just.   * 111.  Section 86(1)( b ) provides for regula­ tion of electricity purchase and procure­ ment process of distribution licensees. In respect of generation its function is to determine   the   tariff   for   generation   as also in relation to supply, transmission and wheeling of electricity. Clause ( b ) of 64 sub­section (1) of Section 86 provides to regulate   electricity   purchase   and   pro­ curement   process   of   distribution   li­ censees including the price at which the electricity   shall   be   procured   from   the generating   companies   or   licensees   or from other sources through agreements. As a part of the regulation it can also ad­ judicate upon disputes between the li­ censees and generating companies in re­ gard to the implementation, application or interpretation of the provisions of the said agreement.” It   is   thus   trite   that,   while   considering   grant   of 94. approval to the PPA, the State Commission will have to keep in mind the public interest.   It will have to consider, as to whether the PPA, which is subject to approval, sub­serves the public   interest.     It   will   also   be   required   to   take   into consideration, as to whether the terms agreed are fair and just while granting approval.   While exercising power under Section 86(1)(b) of the Act of 2003, the Commission will have to   regulate   the   price   at   which   the   electricity   would   be procured from the generating companies.  Undoubtedly, while doing   so,   the   Commission   will   be   guided   by   the   factors 65 mentioned   in   Section   61   of   the   Act   of   2003   and   the Regulations concerning the same.   Under Section 86(1)(f) of the   Act   of   2003,   the   Commission   is   also   empowered   to adjudicate   upon   the   disputes   between   the   licensees   and generating   companies,   and   to   refer   any   such   dispute   for arbitration. 95. Another argument made on the basis of Section 21 of the Reform Act is also not tenable.   Much reliance is placed on sub­section (5) of Section 21 of the said Act, which reads thus: “(5) Any   agreement   relating   to   any transaction of the nature described in sub sections (1), (2), (3) or (4) unless made with or subject to such consent as aforesaid, shall be void.” It could  thus be seen that any of the agreements 96. mentioned in sub­sections (1), (2), (3) or (4) of Section 21 would be void unless they are made with the consent of the Commission   or   subject   to   such   consent.     Undisputedly, understanding this legal position, O.P. No.19 of 2016 came to be   filed   by   the   appellants   –   DISCOMS,   so   as   to   obtain 66 approval of the State Commission for the PPA entered into by them with HNPCL. 97. Insofar   as   the   reliance   placed   on   the   provision  of Regulation   5.2   of   the   Tariff   Regulations   is   concerned,   the same deals with approach to determination of tariff.  It could be seen that, whereas Regulation 5.1 of the Tariff Regulations provides   that   where   tariff   has   been   determined   through transparent   process   of   bidding   in   accordance   with   the guidelines   issued   by   the   Central   Government,   the Commission shall adopt such tariff in accordance with the provisions of the Act; Regulation 5.2 of the Tariff Regulations provides that the provisions specified in Part­II of the said Regulation shall apply in determining tariff based on capital cost for supply to a Distribution Licensee. Part­II of the Tariff Regulations   deals   with   ‘Filing   Details’   and   ‘Tariff Determination’. Regulation 9 requires that each application where tariff is to be determined based on capital cost shall include various details duly accompanied by supporting data and documentary and other evidence regarding Fixed Costs, 67 Variable Costs and Norms of operation, etc.  Regulation 10 of the Tariff Regulations requires the tariff to be determined in accordance   with   the   norms   specified   under   the   said Regulations,   guided   by   the   principles   and   methodologies specified   in   CERC   (Terms   and   Conditions   of   Tariff) Regulations,   2004,   as   amended   from   time   to   time.     The Regulations contain detailed guidelines, as to what shall be the component of tariff and as to how the capital cost and tariff is to be determined.   98. We find that such an argument at the behest of a party, which has discarded HNPCL from the bidding process, though it had emerged as the successful L­2 bidder, does not hold   water   and   we   have   no   hesitation   to   say   that   the appellants   –   DISCOMS’   approach   is   of   approbate   and reprobate.   In any event, we find that the State Commission has 99. totally erred in dismissing O.P. No.21 of 2015 filed by HNPCL. Perusal of Section 64 of the Act of 2003 would reveal that even   a   Generating   Company   is   entitled   to   make   an 68 application for determination of tariff under Section 62 of the Act   of   2003.   As   such,   irrespective   of   the   question,   as   to whether an application for withdrawal of O.P. No.19 of 2016 filed   by   the   appellants   ­   DISCOMS   could   have   been entertained, the State Commission was wholly unjustified in dismissing O.P. No.21 of 2015 filed by HNPCL. In any case, we   have   held   that   in   the   facts   of   the   present   case   and, particularly,   taking   into   consideration   the   conduct   of   the appellants – DISCOMS, the APTEL has rightly held that the appellants   –   DISCOMS   could   not   have   been   permitted   to withdraw O.P. No.19 of 2016.   Undisputedly,   the   appellants   –   DISCOMS   are 100. instrumentalities of the State and as such, a State within the meaning of Article 12 of the Constitution of India.   Every action of a State is required to be guided by the touch­stone of non­arbitrariness, reasonableness and rationality.   Every action of a State is equally required to be guided by public interest. Every holder of a public office is a trustee, whose highest duty is  to  the people of  the  country.   The  Public 69 Authority is therefore required to exercise the powers only for the public good.   101. We may gainfully refer to the following observations of this Court in the case of   Kumari Shrilekha Vidyarthi 17 and others v. State of U.P. and others : “  Unlike a private party whose acts un­ 27. informed by reason and influenced by per­ sonal predilections in contractual matters may result in adverse consequences to it alone without affecting the public interest, any such act of the State or a public body even in this field would adversely affect the public interest. Every holder of a public of­ fice by virtue of which he acts on behalf of the State or public body is ultimately ac­ countable   to   the   people   in   whom   the sovereignty vests. As such, all powers so vested in him are meant to be exercised for public good and promoting the public inter­ est. This is equally true of all actions even in the field of contract. Thus, every holder of a public office is a trustee whose highest duty is to the people of the country and, therefore, every act of the holder of a public office,   irrespective   of   the   label   classifying that   act,   is   in   discharge   of   public   duty meant ultimately for public good. With the diversification of State activity in a Welfare State requiring the State to discharge its 17 (1991) 1 SCC 212 70 wide   ranging   functions   even   through   its several   instrumentalities,   which   requires entering   into   contracts   also,   it   would   be unreal and not pragmatic, apart from being unjustified to exclude contractual matters from the sphere of State actions required to be non­arbitrary and justified on the touch­ stone of Article 14. 28.  Even assuming that it is necessary to import   the   concept   of   presence   of   some public element in a State action to attract Article   14   and  permit  judicial  review,   we have no hesitation in saying that the ulti­ mate impact of all actions of the State or a public body being undoubtedly on public interest,   the   requisite   public   element   for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial re­ view to test its validity on the anvil of Arti­ cle 14.” 102. It   will   also   be   apposite   to   refer   to   the   following observations of this Court in the case of  Food Corporation 18 of India v. M/s Kamdhenu Cattle Feed Industries : “ 7.  In contractual sphere as in all other State actions, the State and all its instru­ 18 (1993) 1 SCC 71 71 mentalities have to conform to Article 14 of   the   Constitution   of   which   non­arbi­ trariness is a significant facet. There is no unfettered   discretion   in   public   law:   A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a pro­ cedure which is ‘fairplay in action’. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary compo­ nent of the decision­making process in all State actions. To satisfy this requirement of non­arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legit­ imate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may   amount   to   an   abuse   or   excess   of power apart from affecting the bona fides of the decision in a given case. The deci­ sion so made would be exposed to chal­ lenge on the ground of arbitrariness. Rule of law does not completely eliminate dis­ cretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. 8.  The mere reasonable or legitimate ex­ pectation of a citizen, in such a situation, may not by itself be a distinct enforceable 72 right, but failure to consider and give due weight to it may render the decision arbi­ trary, and this is how the requirement of due consideration of a legitimate expecta­ tion forms part of the principle of non­ar­ bitrariness,   a   necessary   concomitant   of the rule of law. Every legitimate expecta­ tion   is   a   relevant   factor   requiring   due consideration   in   a   fair   decision­making process. Whether the expectation of the claimant   is   reasonable   or   legitimate   in the context is a question of fact in each case. Whenever the question arises, it is to   be   determined   not   according   to   the claimant's perception but in larger public interest   wherein   other   more   important considerations may outweigh what would otherwise have been the legitimate expec­ tation of the claimant. A bona fide deci­ sion  of  the   public  authority  reached  in this   manner   would   satisfy   the   require­ ment of non­arbitrariness and withstand judicial   scrutiny.   The   doctrine   of   legiti­ mate expectation gets assimilated in the rule of law and operates in our legal sys­ tem in this manner and to this extent.” Recently,   this   Court   in   the   case   of   103. Indian   Oil Corporation   Limited   and   others   v.   Shashi   Prabha 19 after referring to earlier judgments of Shukla and another ,   this Court on the present issue has observed thus: 19 (2018) 12 SCC 85 73   “ 33.  Jurisprudentially thus, as could be gleaned   from   the   above   legal   enuncia­ tions, a public authority in its dealings has   to   be   fair,   objective,   non­arbitrary, transparent and non­discriminatory. The discretion   vested   in   such   an   authority, which   is   a  concomitant  of   its   power   is coupled with duty and can never be un­ regulated or unbridled. Any decision or action contrary to these functional pre­ cepts would be at the pain of invalidation thereof. The State and its instrumentali­ ties, be it a public authority, either as an individual   or   a   collective   has   to   essen­ tially abide by this inalienable and non­ negotiable  prescriptions   and   cannot  act in   breach   of   the   trust   reposed   by   the polity and on extraneous considerations. In exercise of uncontrolled discretion and power, it cannot resort to any act to frit­ ter, squander and emasculate any public property, be it by way of State largesse or contracts,   etc.   Such   outrages   would clearly be unconstitutional and extinctive of   the   rule   of   law   which   forms   the bedrock of the constitutional order.” 104. In   the   present   case,   though   initially,   HNPCL   had revived   its   project  in   the   year   2007   as   a  Merchant­power plant and offered 25% of electricity to the State, it was the State, which offered to purchase 100% power from HNPCL. HNPCL agreed for the said offer of the State Government.  It 74 th is clear from the record and, particularly, the letter dated 26 December,   2012,   that   the   State   had   given   various facilities/concessions   to   HNPCL   for   execution   of   its   power project.  The documents on record would reveal that the State has also allotted thousands of acres of land for the project to HNPCL.  It is not in dispute that in pursuance of the MoA of th 2013 (dated 17  May, 2013) and the Continuation Agreement th of 2016 (dated 28  April, 2016), the entire project has been erected and is operational.  Not only this, but from the year th 2016 till 14  July, 2020, the power has been purchased by the appellants – DISCOMS from HNPCL.   It could thus be seen that after investment of huge resources including the land belonging to the State, the project is complete and has become operational.   The question, at this juncture, would be, whether to discard such a project is in the public interest or against it.   At the cost of repetition, it may be reiterated, that the determination of the capital cost of the project and the rate of tariff at which the power has to be purchased would always be subject to regulatory control of the State 75 Commission.    What has  been done  by  the  APTEL is  only directing the State Commission to determine the same.     105. The record would clearly reveal that from the year th 2012 onwards till 4   January, 2018, it was the consistent stand   of   the   State   of   Andhra   Pradesh   as   well   as   the APDISCOMS   that   it   would   be   purchasing   100%   power generated from the project of HNPCL.  Not only an application being   O.P.   No.21   of   2015   was   filed   by   HNPCL   for determination of capital cost, but also O.P. No.19 of 2016 was filed by the appellants – DISCOMS for grant of approval to the th Continuation   Agreement   dated   28   April,   2016   with   the Amended and Restated PPA of 1998.  The matters were heard th finally on 15   May, 2017 and closed for orders.   For some unknown reasons, exclusively within the knowledge of the appellants – DISCOMS, things turned topsy­turvy between th th 15   May, 2017 and 4   January, 2018, on which date, the appellants   –   DISCOMS   did   a   somersault   and   filed applications   for   withdrawal   of   O.P.   No.19   of   2016   and disposal   of   O.P.   No.21   of   2015.     As   already   discussed 76 hereinabove,   every   decision   of   the   State   is   required   to  be guided by public interest and the power is to be exercised for public   good.     For   reasons   unknown,   the   appellants   – DISCOMS took a decision to resile from their earlier stand, due to which, not only the huge investment made by HNPCL would go in waste, but also valuable resources of the public including thousands of acres of land would go in waste.  As already discussed hereinabove, the reasons/grounds, which are sought to be given in I.A. No. 1 of 2018 in O.P. No.19 of th 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015, filed on 4 January, 2018, were very much available between 2011 till th 15  May, 2017.  It is not as if something new has emerged th th between 15  May, 2017 and 4  January, 2018, which would have entitled the appellants – DISCOMS to resile from their earlier   stand.     We   have   no   hesitation   to   hold   that   the appellants – DISCOMS could not be permitted to change the decision at their whims and fancies and, particularly, when it is adversarial  to   the   public  interest  and  public   good.   The 77 record   would   clearly   show   that   the   change   in   decision   is arbitrary, irrational and unreasonable.   106. We   may   also   gainfully   refer   to   the   following observations   of   this   Court   in   the   case   of   Kalabharati Advertising   v.   Hemant   Vimalnath   Narichania   and 20 : others  “25.  The State is under obligation to act fairly without ill will or malice— in fact or in law. “Legal malice” or “malice in law” means something done without lawful ex­ cuse. It is an act done wrongfully and wil­ fully   without   reasonable   or   probable cause, and not necessarily an act done from ill feeling and spite. It is a deliberate act in disregard to the rights of others. Where malice is attributed to the State, it can never be a case of personal ill will or spite on the part of the State. It is an act which is taken with an oblique or indirect object.   It   means   exercise   of   statutory power for “purposes foreign to those for which   it   is   in   law   intended”.   It   means conscious violation of the law to the prej­ udice of another, a depraved inclination on the part of the authority to disregard the rights of others, which intent is mani­ fested   by   its   injurious  acts.   (Vide  ADM, Jabalpur  v.  Shivakant   Shukla  [(1976)   2 20 (2010) 9 SCC 437 78 SCC   521   :   AIR   1976   SC   1207]   ,  S.R. Venkataraman  v.  Union of India  [(1979) 2 SCC   491   :   1979   SCC   (L&S)   216   :   AIR 1979 SC 49] ,  State of A.P.  v.  Goverdhan­ lal Pitti  [(2003) 4 SCC 739 : AIR 2003 SC 1941] ,  BPL Ltd.  v.  S.P. Gururaja  [(2003) 8 SCC   567]   and  W.B.   SEB  v.  Dilip   Kumar Ray  [(2007) 14 SCC 568 : (2009) 1 SCC (L&S) 860] .) 26.  Passing an order for an unauthorised purpose   constitutes   malice   in   law. (Vide  Punjab   SEB   Ltd.  v.  Zora Singh  [(2005) 6 SCC 776] and  Union of In­ dia  v.  V.   Ramakrishnan  [(2005)   8   SCC 394 : 2005 SCC (L&S) 1150] .)” 107. We have no hesitation to hold that I.A. No.1 of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015 filed by the appellants – DISCOMS, are acts, which have been  done  wrongfully and  wilfully  without  reasonable  and probable cause.  It may not necessarily be an act done out of ill feeling and spite.  However, the act is one, affecting public interest and public good, without there being any rational or reasonable basis for the same.   108. Though serious allegations of   mala fide   have been made by HNPCL, we do not find it necessary to go in those 79 allegations.   However, in our view, the present case would squarely fit in the realm of ‘legal malice’ or ‘malice in law’. 109. In any case, we find that the judgment impugned before us cannot be said to be of such a nature, which can be said to be prejudicial to the interests of any of the parties. What has been done by the APTEL is only to direct the State Commission   to   dispose   of   O.P.   No.21   of   2015   filed   for determination of capital cost and O.P. No.19 of 2016 filed for approval   of   Amended   and   Restated   PPA   (Continuation Agreement) on merits.   On remand, the State Commission would be bound to take into consideration all the relevant factors and the contentions to be raised by both the parties before deciding the said O.Ps.  110. We   therefore   find   no   reason   to   interfere   with   the impugned   judgment.   However,   before   parting   with   the judgment, it is necessary to place on record the conduct of th the appellants – DISCOMS.   Though vide order dated 14 July, 2020, this Court had stayed the impugned judgment st passed by the APTEL, vide order dated 21  August, 2020, this 80 Court had clarified that there shall be no stay of the order th dated 16   March, 2018 passed by the APTEL.   It is not in th dispute that in pursuance of the interim order dated 16 March,   2018,   passed   by   the   APTEL,   the   appellants   – DISCOMS were purchasing the power at the rate of Rs.3.82 th per unit from HNPCL till 14  July, 2020.  It is thus clear that st in view of the order passed by this Court on 21   August, 2020, the appellants – DISCOMS were required to continue to purchase the power from HNPCL at the rate of Rs.3.82 per unit.   Undisputedly, this has not been done.   The reason given for the same is that the appellants ­ DISCOMS had already filed an application for vacation of the order dated st 21   August,   2020.     By   merely   filing   an   application,   the appellants – DISCOMS could not have avoided abiding with th the   order   of   the   APTEL   dated   16   March,   2018,   as st maintained by this Court vide order dated 21  August, 2020. It   is   brought   to   our   notice   that   though   the   appellants   – DISCOMS could have purchased the power from HNPCL at the rate of Rs.3.82 per unit in view of the orders passed by 81 the APTEL and by this Court, they have chosen to purchase the power at higher rate from various generators including KSK Mahanadi from whom the power is being purchased at the rate of Rs.4.33 per unit.   We ask a question to ourselves, as to whether public 111. interest, which is so vociferously pressed into service in the present   matter   by   the   appellants   –   DISCOMS,   lies   in purchasing the power at the rate of Rs.3.82 per unit from HNPCL or by purchasing it at the rate of Rs.4.33 per unit from KSK Mahanadi. We strongly deprecate such a conduct of the appellants – DISCOMS, which are instrumentalities of the State.  The appellants – DISCOMS, rather than acting in public interest, have acted contrary to public interest.   For defying the orders passed by this Court, we could very well have initiated the action against the officials of the appellants – DISCOMS for having committed contempt of this Court, but we refrain ourselves from doing so.   82 112. In the result, the present appeal is dismissed with costs, quantified at Rs.5,00,000/­ (Rupees Five lakh only). Pending I.As., if any, shall stand disposed of.    113. Taking into consideration that the issue before the State Commission is pending since long, we direct the State Commission to decide O.P. No.21 of 2015 and O.P. No.19 of 2016, as expeditiously as possible, and in any case, within a period of six months from the date of this judgment.  114. Needless to say that till O.P. No.21 of 2015 and O.P. No.19   of   2016   are   decided   by   the   State   Commission,   the appellants – DISCOMS shall forthwith start purchasing the power from HNPCL at the rate of Rs.3.82 per unit as per the th orders passed by the APTEL dated 16  March, 2018 and by st this Court dated 21  August, 2020.   …............................J.                              [L. NAGESWARA RAO]          ...............................J.                                                   [B.R. GAVAI] NEW DELHI; FEBRUARY 02, 2022