Holding

No waiver of the 95% capacity requirement was established; therefore COD did not occur on 31‑Mar‑2013 and the independent engineer’s certificate was not a final test certificate.

Summary

The dispute concerned the commercial operation date (COD) of Unit‑3 of the Sasan Ultra Mega Power Project under a Power Purchase Agreement (PPA) dated 7‑8‑2007. The procurers alleged that the generator had not met the PPA’s requirement of operating at least 95% of the contracted capacity for 72 consecutive hours, and that the independent engineer’s certificate dated 30‑Mar‑2013 was not a final test certificate. The generator argued that the procurers had waived the 95% requirement through email communications, thereby making 31‑Mar‑2013 the COD. The Supreme Court examined the meaning of waiver under Section 63 of the Indian Contract Act, the public‑interest constraints imposed by Sections 61‑63 of the Electricity Act, 2003, and the contractual provisions of Article 6.3.1. It held that the emails did not demonstrate a clear, intentional relinquishment of the known right to demand 95% capacity, and that any such waiver affecting tariffs would be contrary to public interest. Consequently, the COD could not be deemed to have occurred on 31‑Mar‑2013, the independent engineer’s certificate was not a final test certificate, and the Appellate Tribunal’s finding of waiver was set aside.

Issues considered

The requirement of 95% contracted capacity under Article 6.3.1 of the PPA was waived by the procurers.
Whether a waiver affecting electricity tariffs and consumer interest is permissible under the Electricity Act, 2003.
Whether the COD of Unit‑3 can be fixed on 31‑Mar‑2013 based on the independent engineer’s certificate.
Whether the independent engineer’s certificate dated 30‑Mar‑2013 qualifies as a final test certificate under the PPA.

Legislation cited

Electricity Act, 2003s. 28, s. 29, s. 61, s. 62, s. 63
Indian Contract Act, 1872s. 62, s. 63

Subjects

waivercommercial operation datepower purchase agreementelectricity tariffpublic interestindependent engineerperformance testcontract lawElectricity Act 2003Section 63contractual amendment

Judgment

[2016] 9 S.C.R. 901

ALL INDIA POWER ENGINEER A
FEDERATION & ORS.
v.
SASAN POWER LTD. & ORS. ETC.
(Civil Appeal Nos. 5881-5882 of2016) B
DECEMBER 08, 2016
[KURIAN JOSEPH AND R.F. NARIMAN, JJ.]
ELECTRICITY ACT, 2003:
ss. 61 to 63 - Commercial Operation Date (COD) - c
Determination of- Procurement ofpower from generating companies
- Sasan Power Ltd. was incorporated as a special purpose vehicle
by Power Finance corporation the nodal agency for procuring
power - Power Purchase Agreement (PPA) dated 7.8.2007 executed
between Sasan Power Ltd. and procurers of generation and sale of
D
electricity - Article 6 r/w Schedule 5 provided for preconditions to
be satisfied for declaration of 'COD' namely readiness to commence
commercial operations - This happens only when the pe1formance
test by operating the gene1·ating unit at 98% of the contracted
capacity as existing on the effective date on a continuous running
basis for 72 hours is certified by an independent engineer by giving E
a final test certificate to the said effect - The date for commissioning
the first unit was fixed under the PPA as 7.5.2013 - However, under
Schedule 11 thereof. this date was preponed to 27.11.2012 - As
Sasan kept postponing this date, the commissioning tests for
generating Unit No.3 commenced from 20.3.2013 - Various emails
F
were exchanged from 27.3.2013 to 30.3.2013 between Sasan and
WRLDC, a statutory authority under the Act of 2003 - It was the
case of Sasan that though they were ready to deliver electricity on
31.3.2013 at 95% of the contracted capacity of 620 MW of the
unit, they could not do so as WRLDC did not give them the necessary
green signal to go ahead - They relied heavily upon the independent G
engineer's test certificate dated 30.3.2013 to show that a COD took
place on the following day - Petition was filed by WRLDC before
the CER Commission challenging the veracity of certificate issued
by the independent engineer - Commission arrived at the conclusion
that COD had not been achieved on 31.3.2013 but had only been
H
901
902 SUPREME COURT REPORTS [2016] 9 S.C.R.

A achieved tater on 16.8.2013 - Appellate Tribunal set aside the
finding of Commission holding that though COD had not been
achieved on 31.3.2013 in accordance with the PPA but that the
procurers under the PPA had waived their right to demand
performance at 95% and that the pe1formance of unit no.3 which
was only roughly 17% of its contracted capacity was accepted by
B
all the procurers and that, therefore, there was a waiver of this
essential condition which would then entitle the generator to treat
31.3.2013 as the-date on which commercial operation of unit no.3
commenced - Challenged - Held: A perusal of the emails exchanged
between the parties show that the parties did not intend to amend
c any of the provisions of the PPA - The two emails sent by the lead
procurer to Sasan read together do not amount to waiver of the
right mentioned in clause 6.3.1 - There is no .such clear intention
that can be spelled out on a reading of the two emails - All that can
be spelled out is that the first email of 31.3.2013 categorically stated
that the test result is not as per Article 6.3.1, and is not acceptable
D
- The last sentence of this very email then refers to clause 6.3.4 and
to a de-rated capacity of 101.38 MW - Thereafter, email of 2..1.2013
expands on the said last sentence of the earlier email by referring
to Article 6.3.4 and Article 11 proviso - This is akin to a 'without
prejudice' acceptance of de-rated power, being a non-acceptance
E of the test certificate dated 30.3.2013 coupled with a desperate
attempt to somef10w get whatever power is available - But this does
not amount to a clear and unequivocal intention to relinquish a
known right - There is no waiver - Appellate Tribunal is wholly
incorrect in accepting the case of waiver and is equally incorrect
in absolving the, independent engineer for the test cer.tificate given
F
by him on 30.3.2013.
ss. 61 to 63 - Electricity tariff- Variation in - Effect on public
interest - Held: The moment electricity tariff gets affected, the
consumer interest comes in and public interest gets affected - Under
s.61, the appropriate commission, when ·it specifies terms and
G conditions for determination of tariff, is to be guided inter alia by
the safeguarding of the consumer interest and the recovery of the
cost of electricity in a reasonable manner.
WAIVER:
H Waiver of right - Held: Waiver is an intentional relinquishment
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 903
SASAN POWER LTD. & ORS. ETC.

of a known right - Waiver must be ~pelled out with crystal clarity A
for there must be a clear intention to give up a known right -
Therefore, unless there is a clear intention to relinquish a right that
is fully known to a party, a party cannot be said to waive it.
Waiver ofprovision of contract if any element ofpublic interest
is involved - Held: Such waiver will not be given effect to if it is B
contrary to such public interest - If there is any element of public
interest involved, the court steps in to thwart any waiver which may
be contrary to such public interest - Judicial review - Electricity
Act, 2003.
Contract Act, 1872: s.63 -Applicability of- Held: If on facts C
there is a waiver of a provision of the PPA by one of the parties to
the PPA, then s.63 of the Contract Act will operate in order to give
effect to such waiver - Waiver.
Allowing the appeals, t11e Co.urt
HELD: 1. Waiver is an intentional relinquishment of a known D
right, and, therefore, unless there is a clear intention to relinquish
a right that is fully known to a party, a party cannot be said to
waive it. It is also clear that if any element of public interest is
involved and a waiver takes place by one of the parties to an
agreement, such waiver will not be given effect to if it is contrary E
to such public interest. [Para 20][935-G-H; 936-A]
Jagad Bandhu Chatterjee v. Nilima Rani (1969) 3 SCC
445; P. Dasa Muni Reddy v. P. Appa Rao (1974) 2 SCC .
725 : 1975 (2) SCR 32; Lachoo Mal v. Radhey Shyam
(1971) 1 sec 619; Jndira Bai V. Nand Kishore, (1990)
F
4 SCC 668; Krishna Bahadur v. Puma Theatre, (2004)
8 sec 229 - relied on.
2. Under Section 62 of the Act, the appropriate commission
is to determine such tariff in accordance with the principles
contained in Section 61. The present case, however, is covered
G
by Section 63, which begins with a 11011 obstm1te clause stating
that notwithstanding anything ci;mtained in Section 62, the
appropriate commission shall adopt the tariff if such tariff has
been determined through a transparent process of bidding in
accordance with the guidelines issued by t)le Central
H
904 SUPREME COURT REPORTS [2016] 9 S.C.R.

A Government. A perusal of the CERC tariff adoption order dated
17.10.2007 makes it clear that the tariff is adopted by the
Commission only because the competitive bidding process which
has been undertaken is in accordance with the guidelines so
issued. All this would make it clear that even if a waiver is claimed
of some of the provisions of the PPA, such waiver, if it affects
B
tariffs that are ultimately payable by the consumer, would
necessarily affect public interest and would have to pass muster
of the Commission under Sections 61 to 63 of the Electricity Act.
This is for the reason that what is adopted by the Commission
under Section 63 is only a tariff obtained by competitive bidding
c in conformity with guidelines issned. If at any subsequent point
of time such tariff is increased, which increase is outside the four
corners of the PPA, even in cases covered by Section 63, the
legislative intent and the language of Sections 61 and 62 make it
clear that the Commission alone can accept such amended tariff
as it would impact consumer interest and therefore public
D
interest. If COD is declared on 31.3.2013, the very tariff laid
down in Schedule 11 becomes applicable, but for year one being
treated as one day and year two commencing from 1.4.2013. The
substance of the matter is that a consumer would have to pay
substantially more by way of tariff under the PPA if year one is
E gobbled up in one day, as year two's tariff is one paisa more than
year one and year three's tariff is substantially more than year
two. In short, instead of getting two years or part thereof
exceeding one year at a substantially lower tariff, the consumer
now gets only one year and one day at the lower tariff rates. This
may also by itself not lead to the parties having to go to the
F
Commission as this is envisaged by the PPA. But if a waiver is to
be accepted on the facts of this case, it would clearly impact the
public interest, in that consumers would have to pay substantially
more for electricity consumed by them. This being the case, on
facts it may not be necessary to go to the Commission as had
G Sasao in fact met the parameters of Schedule 5 on 30'" March,
then as per Schedule 11, year one would in fact have been only
for one day. However, any waiver of the requirement of Schedule
5 would definitely impact the generation of electricity at the
mandated percentage of contracted capacity as also the amounts
payable by ronsumers, and would therefore affect the public
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 905
SASAN POWER LTD. & ORS. ETC.

interest. [Paras 25, 29, 30 and 31][937-E-F; 939-C-H; 940-A-C) A
3. Article 6 deals with synchronization, commissioning, and
commercial operations. In the first step to be taken by the seller,
the unit producing electricity has to be synchronized to the grid
system. It is only after synchronization takes place that the unit
is to be commissioned. At the commissioning stage, the B
parameters mentioned in Schedule 5 are to be met. The most
important parameter mentioned _in Schedule 5, when the
performance test is to be taken for the purpose of commissioning,
is that a unit shall be deemed to have passed such test only if it
operates continuously for 72 consecutive hours at or about 95%
of its contracted capacity as existing on the effective date and c
within the electrical system limits and functional specifications.
Further, as a part of the performance test, the seller must
demonstrate that the unit meets functional specifications for
ramping rate separately mentioned in Schedule 4 of the PPA. It
is only when such test is passed that a unit can be said to be D
commissioned under the PPA. This then is to be certified by the
independent engineer jointly appointed by the parties under
Article 6.3.1, in the form of a final test certificate, which states -
that (a) the commission tests have been carried out in accordance
with Schedule 5 and are acceptable to him, and (b) the result of
the performance test shows that the unit's tested capacity is not E
less than 95% of the contracted demand as existing on the
effective date. [Para 32][940-F-H; 941-A-C)
4. If the Schedule 5 parameters are not met, it is incumbent
on the independent engineer to then state reasons for the non-
issuance of the final test certificate. Once this is done, under F
Article 6.3.2, the seller may retake the relevant test within a
reasonable period after the end of the previous test so as to
comply with the basic requirements of Schedule 5. It is only
after this that a unit can be said to be a "commissioned unit" as
defined, which means that it is a unit in respect of which COD G
has occurred. COD or commercial operation date is also
separately defined as meaning, in relation to a unit, the date one
day after the date when each of the procurers receives a final
test certificate of the independent engineer as per Article 6.3.1.
It is thus clear that the scheme of Article 6 is that a unit cannot
H
906 SUPREME COURT REPORTS (2016] 9 S.C.R.

A be said to have a commercial operation date unless and until it is
first synchronized with the grid and commi.ssioned after meeting
the parameters mentioned in Schedule 5 of the PPA. Article 6.3.3
refers to performance tests of a unit during the period of the
PPA. If under Article 6.3.3 after COD has been achieved in a
unit, an increased tested capacity over and above that provided
B
in 6.3.1 (b) is achieved in a subsequent performance test, certain
consequences follow. Equally, if after COD has been obtained in
a unit, and the most recent performance test mentioned during
the working of the PPA has been conducted, and it is found that
in such test a figure less than contracted capacity is achieved,
c the unit shall be de-rated with certain consequences which are
mentioned in Article 6.3.4 read with Article 8.2.2. The scheme
of Article 6 therefore read as a whole appears to be that COD
cannot be achieved until the parameters mentioned in Schedule
5 are achieved and there is a final test certificate to that effect.
The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick
D
in after COD is obtained in a unit, leading to either increased
capacity or to de-rated capacity with consequences which follow
under the PPA.[Paras 33, 34l[941-C-H; 942-A)
5. The examination of meetings, emails, and letters between
the parties showed that the first important meeting of 27.2.2013
E was Chaired by the Managing Director of the lead procurer. It
was attended by all the other procurers, and officials of Sasan.
What is emphasized on behalf of Sasan is that the revised COD
of the Sasan units was accepted by all the procurers under article
4.5.1 of the PPA to be - (first unit) by 31.3.2013. The procurers
F asked Sasao for the estimated date for synchronization and COD
of the first unit. Sasan indicated that synchronization is expected
in the first week of March, 2013, and the COD before 31.3.2013.
What is important about this meeting is that the procurers were
no doubt interested in getting electricity from Sasan as soon as
possible, but obviously only in accordance with article 6.3.1 read
G with the 5'" Schedule. This would only mean that the ·meeting
would disclose that the anxiety of the procurers to get eledricity
· at cheap rates would be in accordance with the PPA and not against
it. In other words, if a final test certificate had been given to the
effect that 95% of contracted capacity could have been delivered
H by Unit No.3 on or before 31.3~2013, the procurers were anxious
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 907
SASAN POWER LTD. & ORS. ETC.

to avail of it, and not otherwise.[Para 35][942-B-E] A
6. The examination of performance of Sasan for the period
1" April to l6 1h August, 2013 shows that various tests were
undertaken, but 95% of contract capacity for a continuous period
of 72 hours had only been achieved in June even according to
Sasan. It is apparent from the certificate issued on 30.3.2013 B
that the tested capacity of the Unit was found to be only 101.38
MW as against 95% of 620 MW i.e. 587 MW. It was also stated
that since the unit was operating below 50% of the rated load
due to grid restriction, the unit could not demonstrate ramping
rate above 50% of rated load in accordance with the Schedule 4
of the PPA. If the tested capacity is 101.38 MW as against the c
required 95% i.e. 587 MW, the test could not have been carried
out in accordance with article 6 read with schedule 5, and that
despite the fact that ramping up and down could not be achieved,
functional specifications stipulated in Schedule 4 of the PPA were
said to have been met. CERC rightly castigated this certificate. D
What article 6.3.1 requires is first and foremost a final test
certificate of the Independent Engineer. The certificate dated
· 30.3.2013 given by the Independent Engineer is not a final test
certificate. Indeed, it is only in August that a final test certificate
was given in accordance with Article 6.3.1 of the PPA by the very
same independent engineer. Obviously the commissioning tests E
could not have been carried out in accordance with Schedule 5,
which requires in clause 1.1 (i)(d) that the seller shall perform,
in respect of each unit, a performance test, by which such unit
shall be deemed to have passed only if it operates continuously
for 72 consecutive hours, at or above 95% of its contracted F
c,apacity as existing on the effective date. Also, part of the same
schedule requires that as a part of the performance test, the seller
shall demonstrate that the unit meets the functional specifications
for ramping rate as mentioned in Schedule 4, which was again
conspicuous by its absence. According to the Independent
Engineer, " ... the Unit 3 is certified to have achieved Commercial G
Operation, with a tested capacity 101.3~ MW" after carrying out
the commissioning test in accordance with Article 6 and Schedule
5 of the PPA. In his certificate, he has stated that on witnessing
the performance test from 27.03.2013 to 30.03.2013, the tested
H
908 SUPREME COURT REPORTS [2016] 9 S.C.R.

A capacity of the Unit is 101.38 MW. However, it is clearly recorded
that Unit was operated beyond 100 MW only from the morning of
28.03.2013. In the chart on the performance test, the
Independent Engineer has noted that 101.38 MW is operated
only from 06.00 a.m. on 28.03.2013. Under Article 6 read with
Schedule 5 .•. "Unit shall be deemed to have passed if it
B
operates continuously for 72 consecutive hours at or above 95%
of its contracted capacity as existing on the Effective Date." Even
according to thl' lmlq1l'ndcnt Engineer, 101.38 MW was injected
only at 06.00 a.m. on 28.03.2013. Such a tested capacity of 101.38
MW for 72 hours continuously could therefore have been certified
c only at 06.00 a.m. on 31.03.2013. If that be so, the COD would
have been only one day after the date when the test certificate of
the Independent Engineer has been received by the procurers.
For this reason also, the test certificate is by no means in
accordance with Article 6.3.1 of the PPA read with Schedule 5
D thereof. [Paras 36, 38 and 39)[942-G; 946-D-H; 947-A-F)
7. The two emails sent by the lead procurer to Sasao read
together would show that the lead procurer made it clear that
declaration of COD of unit 3 is not accepted by them as the test
was not performed as per Article 6.3.1. However, in its anxiety
to procure electricity, what was stated in the second email was
E that the capacity of 101.38 MW was acceptable only under Article
6.3.4 of the PPA, meaning thereby that this ought to be treated
as de-rated capacity, which should be paid for as provided.
And any quantity produced over and above 101.38 MW would
be treated as infirm power under Article 11.1 proviso, and paid
F for as such. Waiver is an intentional relinquishment of a known
right. Waiver must be spelled out with crystal clarity for there
must be a clear intention to give up a known right. There is no
such clear intention that can be spelled out on a reading of the
two emails. The first email categorically stated that the test result
is not as per Article 6.3.1, and.is not acceptable. The last sentence
G of this very email then refers to clause 6.3.4 and to a de-rated
capacity of 101.38 MW. Thereafter, the email of 2"d April, 2013
expands on the said last sentence of the earlier email by referring
to Article 6.3.4 and Article 11 proviso. This is akin to a 'without
prejudice' acceptance of de-rated power, being a non-acceptance
H of the test certificate dated 30.3.2013 coupled with a desperate
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 909
SASAN POWER LTD.

attempt to somehow get whatever power is available. But this A
does not amount to a clear and unequivocal intention to relinquish
a known right. There is no waiver and the Appellate Tribunal in
coming to an opposite conclusion, is clearly erroneous. [Paras
42, 43 and 46][949-E, F; 950-C-F; 951-CJ
Commissioner of Customs, Bombay v. Virgo Steels B
Bombay (2002) 4 SCC 316 - Distinguished.
Juggilal Kamlapat v. N. V. Internationale Crediet-En-
Handels Vereeninging 'Rotterdam AIR 1955 Cal 65;
Official Assignee of Bombay v. Madho/al Sindhu ILR
1948 (2) Born 1 - referred to. C
Case Law Reference
AIR 1955 Cal 65 referred to Para 14
ILR 1948 (2) Born 1 referred to Para 16
(1969) 3 sec 445 relied on Para 18 D
1975 (2) SCR 32 relied on Para 19
(1971) 1 sec 619 relied on Para 21
(1990) 4 sec 668 relied on Para22
(2004) 8 sec 229 relied on Para 23 E
(2002) 4 sec 316 distinguished Para 31
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5881-
5882 of2016.
From the Judgment and Order dated 31.03.2016 of the Appellate F
Tribunal for Electricity, New Delhi in Appeal Nos. 233 and 266of2014
WITH
C. A. Nos. 5239-5240, 5246, 5342-5343, 5879, 5355, 5365, 5367,
5956 of2016.
G
Jayant Bhushan, Kapil Sibal, J. J. Bhatt, Chetan Sharma, Sanjay
Sen, Sr. Advs., Purushaindra Kaurav, AAG., M. G. Ramachandran,
K. V. Mohan, Ms. Ranj itha Ramachandran, Ms. Poorva Saigal,
Ms. Anushree Bardhan, Shubham Arya, Nikunj Dayal, Pramod Dayal,
Ms. Paya! Dayal, Anand Ganesan, Ms. Swapna Seshadri, Rajiv Kr.
H
910 SUPREME COURT REPORTS [2016] 9 S.C.R.

A Shrivastava, Ms. Gargi Shrivastava, Rakesh K. Sharma, Ms. Anuradha
Mishra, G. Umapathy, Aditya Singh, Alok Shankar, Vikas Upadhyay,
$akya Singh Choudhuri, Avijit Lala, Anand Shrivastava, Alok Shankar,
Kush Chaturvedi, Mahesh Agarwal, Ms. Sadapurua Mukharjee, Navjot
Singh, E. C. Agrawala, Rishabh Parikh, Saurabh Mishra, Dhan Raj,
Matrugupta Mishra, Shikha Ohri, Hemant Singh, Ms. Divya Roy, Ms.
B
Swapna Seshadri, Sitesh Mukherjee, Gautam Chawla, Ms. Akansha Tyagi,
Sandeep Devashish Das, Rahul Dhawan, Ms. Udita Singh, Advs. for
the appearing parties.
The Judgment of the Court was delivered by "-
C R.F. NARIMAN, J. I. These appeals have been argued over
a number of days, but ultimately the points raised in them lie within a
narrow compass.
2. On 19.1.2005, the Central Government, in exercise of powers
under Section 63 of the Electricity Act, 2003 issued guidelines for a
D tariff based competitive bid process to be initiated by distribution licensees
/procurers for procurement of power from generating companies. The
electricity to be procured by such procurers is for the purpose of
distribution and retail supply to consumers generally. On I 0.2.2006, in
pursuance of these guidelines, procurers in different States, namely,
appellants I to 3 and respondents 5 to 15 (in Civil Appeal Nos.5239-
E 5240 of 2016.) nominated Power Finance Corporation Limited, a
Government of India. undertaking as the Nodal Agency to complete a
competitive bid process for development of an ultra mega power project
based on linked coalmines using super critical technology ofunits of 660
mega watts (MW) each, plus or minus 20%, in Sasan District, Singrauli,
F Madhya Pradesh. On 10.2.2006, Sasan Power Limited was incorporated
as a special purpose vehicle by Power Finance Corporation in order to
. implement the aforesaid purpose. On 1.8.2007, based _on the competitive
bidding process held by Power Finance Corporation, Reliance Power
Limited, having quoted the lowest amount, was selected as th~ successful
bidder, and a letter of intent was issued to Reliance Power. Ltd. The
G quoted tariff, year by year, for a period of25 years, which was accepted
and incor.porated as Schedule 11 in the Power Purchase Agreement
dated 7 .8.2007 (PPA) had tariffs at an extremely depressed rate for the
first two years, after which the tariffs were fixed ata significantly higher
rate. On the very day that the PPA was executed between Sasan Power \

H Limited and the procurers for generation and sale of electricity, 100%
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 911
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

share holding of the.special purpose vehicle was acquired by Reliance A
Power Limited. The PPA contains detailed clauses with respect to
generation of po_JVer and the tariffs payable for the period of 25 years.
Apart from other provisions, we are really concerned with Article 6
read with Schedule 5 which provides for pre-conditions to be satisfied
for declaration of a generating unit as Commercial Operation Date,
B
"COD", namely readiness to commence commercial operations. This
happens only when a perfonnance test, by operating the generating unit
at 95% of the contracted capacity as existing on the Effective Date on
a continuous running basis for 72 hours, has been certified by an
independent engineer, by giving a final test certificate to the aforesaid
effect. The PPA also contains various other clauses which will be set c
out during the course of this judgment.
3. The bone of contention in these matters is whether the COD
for Unit No.3, which was the first Unit to l;Je commissioned, had been
achieved on 31.3.2013. If it had, then under Schedule 11 to the_ PPA,
the entire first year would get exhausted in one day, i.e., 31" March D
being the end of the contract year, for which tariff payable would be at
the rate of 69 paise per unit. If not, then it is only on and from the
commencement of COD that such year would begin, which, according
to the appellants before us, would only begin on 16.8.2013 when a final
test certificate in accordance with Article 6 of the PPA was given by the
independent engineer to the effect that 95% of the contracted capacity E
had been achieved for a continuous period of72 hours. We are infonned
that if the COD is said to be on 31.3.2013, as has-been held by the
Appellate Tribunal, the consumers would ~ave to pay a sum of over 1 • .
I 000 crores, being the differential tariffthat would apply.
4. The date for commissioning the first unit was fixed under the F
PPA as 71h May, 2013. However, under Schedule 11 thereof, this date
was preponed to 27'h November, 2012. As Sasan kept postponing this
date, it appears that the commissioning tests for generating Unit No.3
commenced from 20.3.2013. Various emails were exchanged from
27.3.2013 to 30.3.2013 between Sasan and the Western Region Load G
Dispatch Centre (hereinafter referred to as "the WRLDC"), a statutory
authority under the Electricity Act, 2003. It is the case of Sasan that
though they were ready to deliver electricity on 31.3.2013 at 95% of the
contracted capacity of 620 MW of the unit, they could not do so as
WRLDC did not give them the necessary green signal to go ahead.
H
912 SUPREME COURT REPORTS [2016] 9 S.C.R.

A They relied heavily upon the independent engineer's test certificate dated
30.3.2013 to show that a COD took place on the following day, which
we will consider in some detail later. At this stage, suffice it to say that
a petition was filed by WRLDC before the Central Electricity Regulatory
Commission (CERC) on 25.4.2013, in which it was prayed:-
B " I. Kindly look into the veracity of the certificate issued by
the Independent Engineer in view of deliberate suppression
and misrepresentation of the facts and issue suitable
directions to respondent no.2 to desist from such act.
2. Kindly look into the matter of Respondent No. I including
c into intentional mis-declaration of parameters related to
commercial mechanism in vogue and has purported to
declare the part (de-rated) capacity of I 01.3 8 MW as
commercial on the grounds of load restriction by
WRLDC and issued suitable directions in the matter.

D 3. Issue specific guidelines with respect to declaration of
COD of the generators who are not governed by the CERC
(Terms and Conditions of Tari ft) Regulations, 2009 to be in
line with CERC regulations so that the same can be
implemented in a dispute free manner and eliminate any
possibility of gaming by generator.
E
4. Hon 'ble Commission may give any further directions as
deemed fit in the circumstances of the case."
5. This petition was allowed by the CERC by its order dated
8.8.2014, by which it first set out five issues as follows:-
F (a) Whether the petition filed by WRLDC is maintainable?
(b) Whether the Certificate issued by IE is in accordance
with the PPA and if not, whether IE has made deliberate
suppression or misrepresentation of facts while issuing the
certificate?
G ( c) Whether COD of the station as declared by SPL is in
accordance with the PPA?
(d) Whether the Respondent No.I has indulged in mis-
declaration of parameters relating to commercial mechanism
in vogue?
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 913
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

(e) Guidelines with regard to the commercial operation of a A
generating station which is not regulated by the tariff
regulations of the Commission."
6. The CERC answered issues (a), (b), (c), and (e) in the
affirmative, and issue ( d) in the negative. Ultimately the Commission
arrive.d atthe conclusion that COD had not been achieved on 31.3.2013 B
but had only been achieved later, on l61h August of the same year. This
finding was set aside by the Appellate Tribunal by its judgment dated
31.3.2016, in which the Appellate Tribunal found that though COD had
not been achieved on 31.3.2013 in accordance with the PPA, but that
the procurers under the PPA had waived their right to demand
performance at 95%, and that the performance of Unit No.3, which
c
·was only roughly 17% of its contracted capacity, was accepted by all
the procurers, and that therefore there was a waiver of this essential
condition, which would then entitle the generator to treat 31.3.2013 as
the date on which commercial operation of Unit No.3 commenced. It is·
the correctness of this judgment which has been assailed by the various D
appellants before us.
7. Mr. Jayant Bhushan, learned senior counsel, Mr. Gopal Jain,
learned senior counsel, Mr: M.G. Ramachandran, learned counsel, Mr.
Purusha Indra Kavrar, learned AAG, and Mr. Alok Shankar, learned
counsel appearing for the appellants have relied heavily on Article 6.3. l E
read with Schedule 5 of the PPA, and stated that this is an Article which
does not merely reflect the individual rights and liabilities of the generator
and procurers of electricity but would also sound in public interest inasmuch
as the declaration of COD would have effect on the tariff that is payable
by consumers generally. They, therefore, argued that Article 6.3 .1 cannot
be waived as a matter of law. They also argued that it cannot also be F
waived as a matter of fact inasmuch as when the PPA expressly allowed
a certain provision to be waived, it expressly stated so. In this regard,
Articles 3.1.2, 4.4.2(b) 10.l(c), 10.2(c) were pointed out by them.
Referring to Article 18.3 of the PPA, it was argued that the said Article
is not a substantive provision for waiver, but only a provision dealing G
with the manner in which waiver is to be exercised, and has reference
only to the aforesaid Articles. Further, even assuming that there was a
waiver, such waiver took place as late as 15.4.2013 when the last
communication from Uttarakhand Power was received. There was,
therefore, no waiver of the aforesaid condition on 31.3:2013. They also
H
914 SUPREME COURT REPORTS [20 I 6] 9 S.C.R.

A argued that as a matter of fact the emails exchanged between the parties
would show that the lead procurer and all the other procurers had in fact
never consented to 31.3.2013 as being the COD for the purpose of the
PPA. They also argued that really speaking any such alleged waiver
was not a waiver at all, but an amendment to the PPA which would
require the Commission's consent under Article 18.1, inasmuch as it
B
would affect the tariff payable by consumers. They also argued that it
is clear from a reading of a chart which showed generation from March
to August, 2013 that Sasan was not able to achieve anywhere near 95%
of contracted capacity until l 6'h August which is when the COD took
place on facts. They also pointed out.that, for example, in the month of
c July, there was no supply of power at all by Sasan Power. Ultimately, it
was stated that the Independent Engineer's certificate dated 30.3.2013
was a document made only to favour Sasan, so that Sasan could swallow
one entire year of tariff in one day, so that the consumer would have to
pay the higher tariff for what is in reality the first year, but is now being
treated as the second year of generation and supply.
D
8. As against this, Shri Chidambaram and Shri Sibal, learned senior
counsel appearing on behalf of Sasan Power Ltd., have argued that as
against 69 and 70 paise per unit for electricity supplied under the PPA,
the procurers were in fact procuring electricity at much higher rates. It
was the procurers themselves, therefore, who kept telling Sasan to supply
E power as soon as possible. For this, they relied, in particular, on the
minutes of a meeting dated 27.2.2013 between the procurers and Sasan,
in which the procurers unequivocally stated that any time upto 31.3.2013,
the power generation should begin from Unit No.3. This was because
the moment such power generation began, whether it was 69 paise or
F 70 paise for the second year, the aforesaid tariff was much, much lower
than what the procurers would have to pay otherwise. It was their
argument that it was only at the behest of the procurers themselves that
the COD was declared on 31.3.2013. They further argued that on a
correct reading of emails and lettc;s.exchanged between the parties, the
lead proct_Jrer and ~II other procurers had actually and unequivocally
G waived the requirement of95% of contracted capacity demand.and that
the AppellateTribunal was right in this behalf. Countering the arguments
of the appellant, they referred to and relied upon Section 63 of the !ndian
Contract Act, 1872 to buttress their submission that waiver is a right
granted by the Contract Act and does not depend upon the PPA.
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 915 -
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

Therefore, whatever the construction of Article 18.3 of the PPA, it is clear A
that the. Contract Act itself gives them this right which the procurers
themselves have exercised in accordance with law, for the very good reason
that they wanted the supply of cheap energy at any cost, even at the cost
of being at 17% instead of 95% of contracted demand. It was also their
case that they were ready to supply electricity on 31" March at 95% of the
contracted demand, but unfortunately WRLDC prevented them from doing B
so, and that the independent engineer's certificate had been wrongly
castigated by CERC, as was correctly held by the Appellate Tribunal. The
independent engineer laid bare the facts correctly and therefore did not
give a false or wrong certificate as was found by CERC. They also met an
argument raised by the appellant that Haryana at least had waived its right
without prejudice to its other rights and contentions. This was met by
c
stating that Haryana accounted only for roughly 12% of the total electricity
demanded by all the procurers and that as per a clause in the PPA, if the
lead procurer and the other procurers constitute 65% or more, they can
bind all the other procurers. '
9. In order to appreciate the rival submissions, it is necessary to D
refer to the relevant provisions of the PPA, which reads as follows:-
"l. Definitions
The terms used in this Agreement, unless as defined below
or repugnant to the context, shall have the same meaning as
assigned to them by the Electricity Act, 2003 and the rules or E
regulations framed thereunder, including those issued/framed
by Appropriate Commission (as defined hereunder), as
amended or re-enacted from time to time.
The following terms w~en used in this Agreement shall have
the ·respective meanings, as specified below: F

"Commercial Means, in relation to a Unit, the date
Operation "Date" or one day after the date when each of the
"COD" Procurers receives a Final Test
Certificate of the Independent Engineer
as per the provisions of Article 6.3.1 G
and in relation to the Power Station
shall mean the date by which such Final
Test Certificates as per Article 6.3.1 are
received by the Procurers for all the
Units;
H
916 SUPREME COURT REPORTS [2016] 9 S.C.R.

A "Commissioning" or Means, in relation to a Unit, that the
"commissioned with its Unit or in relation to die Power Station
grammatical variations all the Units of the Power Station have
passed the Commissioning Tests
successfully;
"Commissioning Tests" or Means the Tests provided in Schedule
B "Commissioning Test" 5 herein;
"Commissioned Unit" Means the Unit in respect of which
co D has OCCUJTed;
"Contract Year" Means the pe1iod beginning on the
date of this Agreement and ending on
the immediately succeeding March 3 I
c and thereafter each period of I 2
mondis beginning on April I and
ending on March 31 provided that:
In tlc financial year in which
Scheduled COD of the first Unit
would have occurred, a Contract Year
shall end on tlx: date immediately
D before the Scheduled COD of the first
Unit and a new Coniract Year shall
begin once again from die Scheduled
Commercial 0 pera tion Date of the
first Unit and end on immediately
succeeding March 3 I and provided
E further tliat

(ii) The last Contract Year of this
Agreement shall end on the last day
of die tcmi of this Agreement;

"Contracted Capacity" Means (1) for the first Unit, 620.4
F MW; (ii) for tlie second Unit, 620.4
MW; (iii) for the tliird Unit, 620.4
MW; (iv) for the fou1th Unit, 620.4
MW; (v) for the fifth Unit, 620.4 MW
and (vi) for the sixth Unit 620.4 MW
rated net capacity at tl-e
G Interconnection Point, and in relation
to tlx: Power Station as a whole
means 3722.4 MW rated net capacity
at t:,~ I ntcrconnection Point, or such
rated capacities as may be detenni1-ed
in accordance with Article 6.3.4 or
A1ticle 8.2 of this Agreement;
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 917
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

A
"Effective Date" Means the date of signing of this
Agreement by last of all the Parties;
"Declared Capacity'' In relation to a Unit or the Power
Station at any time means the net
capacity of the Unit or the Power
Station at the relevant time (expressed B
in MW at the Interconn:ction Point)
as declared by the Seller 111
accordance with the Grid Code and
dispatching procedures as per the
Availabilitv Based Tariff;
"Final Test Certificate" Means c
(a) A certificate of the Independent
Engineer ce11ifying and accepting the
results of a Commissioning Testis in
accordance with Article 6.3. l of this
Agreement; or

(b) A certificate of tre Independent D
Engineer certifying the result of a
Repeat Pe1formance Tests 111
accordance with Article 8.2. l of this
Agreement;

"Grid Code" or "I EGC" Means any set of regulations or codes E
issued by CERC as amended and
revised from time to time and legally
binding on the Sellers' and
Procedures' governing the operation
of the Grid System or any succeeding
set of regulations or code;
· "Independent Enginee1" Means an independent consulting F
engineering firm or group appointed
jointly by all the Procurers (jointly)
and the Seller, to carry out the
functions in accordance with Article
4. 7. l and Article 6, Article 12 and
"''- A11icle 8 herein. G
"Lead Procurer" Shall have the meaning scribed
thereto in Article 2.5;
"Perfo1111ance Test" Means the test carried out 111
accordance with Article l. l of
Schedule 5 of this Agreement;
H
918 SUPREME COURT REPORTS [2016] 9 S.C.R.

A
"Scheduled COD" or Means (i) for the first Unit, May 7,
"Scheduled Commercial 2013; (ii) for the second Unit,
Operation Date" December 7, 2013; (iii) for the third
Unit, July 7, 2014; (iv) for the fourth
Unit, Febrnary 7, 2015; (v) for the fifth
Unit, September 7, 2015 and (vi) for
B
the sixth Unit, April 7, 2016 or such
other dates from time to time specified
in accordance with the provisions of
this Agreement;
"Scheduled Means in relation to a Unit, the date,
Synchronization Date" which shall be maximum of one
c hundred and eighty (I 80) days prior to
the Schedule COD of the respective
Unit;
"Tariff' Means the tariff as computed 111
accordance with Schedule 7;
"Tested Capacity" In relation to a Unit, or the Power
D Station as a whole (if all the Units of
the Power Station have been
commissioned) means the results of
the most recent Performance Test or
Repeat Performance Test carried out in
relation to the Power Station 111
accordance with Article 6, Article 8
E and Schedule 5 ofthis Agreement;
Hu nit" Means one steam generator, steam
turbine, generator and associated
auxiliaries of the Power Station based
on Supercritical Technology;

F
6: Synchronization, Commissioning and Commercial
Operation
6.1 Synchronisation
6. L 1 The Seller shall give the Procurers and RLDC at least
G
sixty (60) days advance preliminary written notice and at
least thirty (30) days advance final written notice, of the
date on which it intends to synchronize a Unit to the Grid
System, Provided that no Unit shall be synchronized prior
to 36 months from NTP.
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 919
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

6.1.2 Subject to Article 6.1.1, a Unit may be synchronized A
by the Seller to the Grid System when it meets all connection
conditions prescribed in any Grid Code then in effect and
Qtherwise meets all other Indian legal requirements for
synchronization to the Grid System. ·
6.2 Commissioning B
6.2.1 The Seller shall be responsible for ensuring that each
Unit is Commissioned in accordance with Schedule 5 at its
own cost, risk and expense.
6.2.2 The Seller shall give all the Procurers and the
Independent Engineer not less than ten (I 0) days prior c
written notice of Commissioning Test of each Unit.
6.2.3 The Seller (individually), the Procurers (jointly) and
the Independent Engineer (individually) shall each designate
qualified and authorized representatives to witness and
monitor Commissioning Test of each Unit. D

6.2.4 Testing and measuring procedures applied during each
Commissioning Test shall be in accordance with the codes,
practices and procedures mentioned in Schedule 5 of this
Agreement.
E
6.2.5 Within five (5) days of a Commissioning Test, the
Seller shall provide the Procurers (jointly) and the
Independent Engineer with copies of the detailed
Commissioning Test results. Within five (5) days ofreceipt
of the Commissioning Test results, the Independent Engineer
shall provide to the Procurers and the Seller in writing, his F
findings from the evaluation of Commissioning Test results,
either in the form of Final Test Certificate certifying the
matters specified in Article 6.3 .1 or the reasons for non-
issuance of Final Test Certificate.
6.3 Commercial Operation G
6.3.1 A Unit sl1all be Commissioned on the day after the
date when all the Procurers receive a Final Test Certificate
of the Independent Engineer stating that:
a) the Commissioning Tests have been carried out in
H
920 SUPREME COURT REPORTS [2016] 9 S.C.R.

A accordance with Schedule 5 and are acceptable to him;
and
b) the results of the Performance Test show that the Unit's
Tested Capacity, is not less than ninety five (95) percent of
its Contracted Capacity as existing on the Effective Date.
B 6.3 .2 If a Unit fails a Commissioning Test, the Seller may
retake the relevant test, within a reasonable period after
the end of the previous test, with three (3) day's prior written
notice to the Procurers and the Independent Engineer.
Provided however, the Procurers shall have a right to require
c deferment of any such re-tests for a period not exceeding
fifteen (15) days, without incurring any liability for such
defennent, ifthe Procurers are unable to provide evacuation
of power to be generated, due to reasons outside the
reasonable control of the Procurers or due to inadequate
demand in the Grid.
D
6.3 .3 The Seller may retake the Performance Test by giving
at least fifteen ( 15) days advance notice in writing to the
Procurers, up to eight (8) times, during a period of one
hundred and eighty ( 180) days ("Initial Performance Retest
Period") from a Unit's COD in order to demonstrate an
E increased Tested Capacity over and above as provided in
Article 6.3.1 (b ). Provided however, the Procurers shall
have a ~ight to require deferment of any such re-tests for a
period not exceeding fifteen (15) days, without incurring
any liability for such deferment, ifthe Procurers are unable
F to ptovide evacuation of power to be generated, due to
reasons outside the reasonable control of the Procurers or
due to inadequate demand in the Grid.
6.3.4 (i) If a Unit's Tested Capacity after the most recent
I
Performance Test mentioned in Article 6.3.3 has been
G conducted, is less than its Contracted Capacity as existing
on the Effective Date, the Unit shall be de-rated with the
following consequences in each case with effect from the
date of completion of such most recent test:
a) the Unit's Contracted Capacity shall be reduced to its
Tested Capacity, as existing at the most recent Performance
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 921
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

Test referred to in Article 6.3.3 and Quoted Capacity A
Charges shall be paid with respect to such reduced
Contracted Capacity;
b) The Quoted Non Escalable Capacity Charge (in Rs./
kwh) shall be reduced by the following in the event Tested
Capacity is less than ninety five (95%) per cent of its 8
Contracted Capacity as existing on the Effective Date:
Rs.0.25/kwh x [I - {(Tested Capacity of all Commissioned
Units+ Contracted Capacity of all Units not Commissioned
at the Effective Date)/ Contracted Capacity of all Units at·
the Effective Date})
c
c) the Seller shall not be permitted to declare the Available
Capacity of the Unit at a level greater than its Tested
Capacity;
d) the Availability Factor of the derated Unit shall be
calculated by reference to the reduced Contracted Capacity; D
and
e) the Capital Cost and each element of the Capital Structure
Schedule shall be reduced in proportion to the reduction in
the Contracted Capacity of the Power Station as a result
of that de-rating (taking into account the Contracted E
Capacity of any Unit which has yet to be Commissioned).
(ii) If at the end oflnitial Performance Retest Period or the
date of the eighth Performance Test mentioned in A11icle
6.3.3, whichever is earlier, the Tested Capacity is less than
the Contracted Capacity (as existing on the date of this
F
Agreement), the consequences mentioned in A11icle 8.2.2
shall apply for a period of one year. Provided that such
consequences shall apply with respect to the Tested
Capacity existing at the end of Initial Performance Retest
Period or the date of the eighth Performance Test mentioned
in Article 6.3.3, whichever is earlier. G
6.3.5 If a Unit's Tested Capacity as at the end of the Initial
Performance Retest Period or the date of the eighth
Performance Test mentioned in Article 6.3.3, whichever is
earlier, is found to be more than it's Contracted Capacity
H
922 SUPREME COURT REPORTS [2016] 9 S.C.R.

A as existing on the Effective Date, the Tested Capacity shall
be deemed to be the Unit's Contracted Capacity if any
Procurer/s agrees and intimates the same to the Seller within
thirty (30) days of receipt of the results of the last
Performance Test to purchase such excess Tested Capacity
and also provide to the Seller additional Letter of Credit
B
and Collateral Arrangement (ifapplicable) for payments in
respect of such excess Tested Capacity agreed to be
purchased by stich Procurer/s. In case the Procurer/s
decide not to purchase such excess Tested Capacity, the
Seller shall be free to sell such excess Tested Capacity to
c any third party and the Unit's Contracted Capacity shall
remain unchanged, notwithstanding that the Tested Capacity
exceeded the Contracted Capacity.
Provided that in all the above events, the Seller shall be
liable to obtain/maintain all the necessary consents (including
D Initial Consents), permits_ and approvals including those
required under the environmental laws for generation of
such excess Tested Capacity.
6.4 Costs Incurred.
The Seller expressly agrees that all costs incurred by him
E in synchronizing, connecting, Commissioning and/or Testing
or Retesting a Unit shall be solely and completely to his
account and the Procurer's or Procurers' liability shall not
exceed the amount of the Energy Charges payable for such
power output, as set"out in Schedule 7.
F 18: Miscellaneous Provisions
18. l Amendment
The Agreement may only be amended or supplemented by
a written agreement between the Pa11ies and after duly
obtaining the approval of the Appropriate Commission,
G
where n~cessary.
18.3. No Waiver
A valid waiver by a Party shall be in writing and executed
by an authorized representative of that Party. Neither the
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 923
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

failure by any Party to insist on the performance of the A
terms, conditions, and provisions of this Agreement nor.time
or other indulgence granted by any Party to the other Parties
shall act as a waiver of such breach or accepta,nce of any
variation or the relinquishment of any such right or any other
right under this Agreement, which shall remain in full force
B
and effect. ·
Schedule 5: Commissioning and Testing
1.1 Performance Test
i. (a) The Performance Test shall be conducted under any
and all ambient conditions (temperature, humidity .etc.) and c
any and all Fuel qualities that may exist during the time of
the Performance Test and no corrections in final gross and
net output of the Unit will be allowed as a result of prevailing
ambient conditions or Fuel quality.
(b) The correction curves will only be used ifthe Grid System D
operation during the Performance Test exceeds Electrical
System Limits.
(c) The Performance Test shall be deemed to have
demonstrated the Contracted Capacity of the Unit under
all designed conditions and therefore no adjustments shall E
be made on account of fuel quality or ambient conditions.
(d) The Seller shall perform in respect of each Unit a
Performance Test, which such Unit shall be deemed to have
passed if it operates continuously for seventy two
consecutive hours at or above ninety five (95) percent of F
its Contracted Capacity as existing on the Effective Date
and within the Electrical System Limits and the Functional
· Specifications.
ii. For the purposes of any Performance Test pursuant to
this sub-article 1.1, the Electrical System Limits to be G
achieved shall be as follows:
(a) Voltage
The Unit must operate within the voltage levels described
in the Functional Specification for the duration of the
H
924 SUPREME COURT REPORTS [2016] 9 S.C.R.

A Performance Test. If, during the Performance Test, voltage
tests cannot be perfonned due to Grid System, data supplied
from tests of the generator step-up transformers and
generators supplied by the manufacturers shall be used to
establish the ability of the Unit to operate within the specified
voltage limits.
B
(b) Grid System Frequency
The Unit shall operate within the Grid System frequency
levels described in the Functional Specification for the
duration of the Performance Test.
c (c) Power Factor
The Unit shall operate within the power factor range
described in the Functional Specification for the duration of
the Performance Test. If, during the Performance Test,
power factor tests cannot be performed due to the Grid
D System, data supplied from tests of the generators and the
generator step-up transformers supplied by the
manufacturers shall be used to establish the ability of the
Unit to operate within the specified power factor range.
(d) Fuel quality and cooling water temperature
E
The Unit must operate to its Contracted Capacity with Fuel
quality and water temperature available at the t,ime of
Testing and no adjustment shal11'be allowed for any variation
in these parameters.
iii. As a part of the Performance Test, the Seller shall
F
demonstrate that the Unit meets the Functional
Specifications for Ramping rate as mentioned in Schedule
4. For this purpose, representative samples of ramp rates
shall be taken, by ramping up or down the gross turbine
load while maintaining the required temperature and
G temperature differences associated with each ramp rate
within the turbine while maintaining all other operational
parameters within equipment limits.
iv. Further, as a part of the Performance Test, the Unit
shall be tested for compliance with parameters of
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 925
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.)

Supercritical Technology. A
1.2 Testing and Measurement procedures applied during
Performance Test shall be in accordance with codes,
practices or pr9cedures as generally/normally applied for
the Performance Tests.
1.3 The Seller shall comply with the prevalent Laws, rules B
and regulations as applicable to the provisions contained in
this Schedule from time to time.
Schedule 11: Quoted Tariff
Contract Comntence End Date of Quoted Quoted Quoted Quoted
Year mentDateof Contnct :'\on· Estalable :'\on· Indexed c
Contract Year Year Escalable Capacity lndmd Energy
Capacity Charges Ener~· Charges
Charges (Rs. lkwh) Charges (Rs.lkwh)
(Rs.lkwh) (Rs.11,·wh)
l 27Nor2012 31 May2013 0.21 0.001 0575 0.001
2 1·Apr·2013 3l·ilfar·20l4 0.125 Same as 0.575 Same as
Ab on AboH
D
3 l·Apr-2014 31-Mar-2015 0.163 Same as 1.148 Same as
Above Abore
4 J l·Apr-2015 31-~lar-2016 0.171 Same as 1.148 Same as
I Abo,·e Above
5 1 l·Apr-2016 31·!.far-2017 0.169 Same as l.148 Same as
Abon Abo1·e E
6 J l-Apr-2017 Jl-~!ar·2018 0.!69 Same as l.l4S · Same as
l ! Above Above
7 1 l-Apr·lO!S 3l·~far-20!9 0.169 Same as L14S Same as
Abore I Abote
8 1 l·Apr·2019 3l-:.!ar-2020 0.168 San1e as l.148 I Same as
Ab on Ab ore
9 I l·Apr-2020 31·~!ar·202l 0167 Same as l.148 Same as F
I Ab ore Abo»e
lO j l·Apr-2021 31-~far-2022 0.166 Same as l.147 Samns
Ab on Above
ll l·Apr-2022 31-:-.lar-2023 0.165 Same as U47 Same as
Above Above
12 l-Apr-2023 3l-Mar-2014 0164 Same as 1147 Same as
Abon Ab on
G
l3 l-Apr-2024 31-~lar-2025 0164 Sarne as 1.147 Sarne as
Abon Abore
14 l-Apr-2025 31-Mar·2026 0.163 Same as l.l47 Same as
Above I Abore
15 1·Apr-2026 31-~lar-2027 0162 Same as l.l46 Same as
Ab on Abo»e H
926 SUPREME COURT REPORTS [2016] 9 S.C.R.

. A,.
16 l·Apr-2027 31-Mar-2028 0.161 Same as Ll46 Same as
Abol'e Above·
17 l·Apr-2028 3l-Mar-2029 0.160 Same as 1.146 Sameai
Abore Above
!8 l·Apr-2029 31-Mar-2030 0160 Same as L146 Samrn
B Above Above
!9 l·Apr·2030 31-Mar-2031 0.159 Samrn 1145 Same as
Above Abore
20 1·Apr-2031 3!-Mar-2032 0.158 Same as 1.145 Samrn
Above Abol'e
21 1-Apr-2032 3l·Mar·2033 0.157 Sameas 1.145 Samrn
c Abore Above
22 1-Apr-2033 31-Mar-2034 0.136 Same as l.145 Same as
Abo1·e Above
23 l·Apr-2034 31-Mar-2035 0.126 Same as 1144 Same as
Above Above
D
).'
•' l-Apr-2035 31-Mar-2036 0.126 Sameas 1.144 Sameas
Above Above
.
25 l·Apr-2036 ll·Mar-2037 0.137 Same as l.144 Same as
Above Above
~6 l-Apr-2037 25<1 0.169 Samrn l.143 S.unrn
annirmaiy of Abol'e Above
E the Scheduled
COD of the
first Unit

I 0. It is also necessary to set out the relevant provisions of the
Electricity Act, 2003. Sections 28, 29, 61, 62 and 63 of the Electricity
F Act, 2003 read as under:-
"Section 28. Functions of Regional Load Despatch
Centre:
(I) The Regional Load Despatch Centre shall be the apex
body to ensure integrated operation of the power system in
G
the ccncemed region.
(2) The Regional Load Despatch Centre shall comply with
such principles, guidelines and methodologies in respect of
the wheeling and optimum ~cht><luling and despatch of
electricity as the Central Commission may specify in the
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 927
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

Grid Code. A
(3) The Regional Load Despatch Centre shall -
(a) be responsible for optimum scheduling and despatch of
electricity within the region, in accordance with the contracts
entered into with the licensees or the generating companies
operating in the region; B

(b) monitor grid operations;
(c) keep accounts of quantity of electricity transmitted
through the regional grid;
( d) exercise supervision and control over the inter-State
transmission system; and
( e) be responsible for carrying out real time operations for
grid control and despatch of electricity within the region·
through secure and economic operation of the regional grid
in accordance with the Grid Standards and the Grid Code. D
(4) The Regional Load Despatch Centre may levy and
collect such fee and charges from the generating companies
or licensees engaged in inter-State transmission of electricity
as may be specified by the Central Commission.
Section 29. Compliance of directions: - (I) The E
Regional Load Despatch Centre may give such directions
and exercise such supervision and control as may be required
for ensuring stability of grid operations and for achieving
the maximum economy and efficiency in the operation of
the power system in the region under its control. F
(2) Every licensee, generating company, generating station,
sub-station and any other person connected with the
operation of the power system shall comply with the
directions issued by the Regional Load Despatch Centres
under subsection (I). G
(3) Alt directions issued by the Regional Load Despatch
Centres to any transmission licensee of State transmission
tines or any other licensee of the State or generating
company (other than those connected to inter State
H
928 SUPREME COURT REPORTS [2016] 9 S.C.R.

A transmission system) or sub-station in the State shall be
. issued through the State Load Despatch Centre and the
State Load Despatch Centres shall ensure that such
directions are duly complied with the licensee or generating
company or sub-station.
B (4) The Regional Power Committee in the region may, from
time to time, agree on matters concerning the stability and
smooth operation of the integrated grid and economy and
efficiency in the operation of the power system in that
region.

c (5) If any dispute arises with reference to the quality of
electricity or safe, secure and integrated operation of the
regional grid or in relation to any direction given under sub-
section ( 1), it shall be referred to the Central Commission
for decision : Provided that pending the decision of the
Central Commission, the directions of the Regional Load
D ·Despatch Centre shall be complied with by the State Load
Despatch Centre or the Iicensee or the generating company,
as the case may be.
(6) Ifany licensee, generating company or any other person
fails to comply with the directions issued under sub-section
E (2) or sub-section (3), he shall be liable to a penalty not
exceeding rupees fifteen lacs.
Section 61. Tariff regulations: The Appropriate
Commission shall, subject to the provisions of this Act,
specify the terms and conditions for the determination of
F tariff, and in doing so, shall be guided by the following,
namely:-
( a) the principles and methodologies specified by the Central
Commission for determination of the tariff applicable to
generating companies and transmission licensees;
G
(b) the generation, transmission, distribution and supply of
electricity are conducted on commercial principles;
(c) the factors which would encourage competition,
efficiency, economical use of the resources, good
performance and optimum investments;
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 929
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

(d) safeguarding of consumers' interest and at the same A
time, recovery of the cost of electricity in a reasonable
manner;
(e) the principles rewarding efficiency in performance;
(t) multi year tariff principles;
B
(g) that the tariff progressively reflects the cost of supply
of electricity and also, reduces cross-subsidies in the manner
specified by the Appropriate Commission;
(h) the promotion of co-generation and generation of
electricity from renewable sources of energy; c
(i) the National Electricity Policy and tariff policy:
Provided that the terms and conditions for determination of
tariff under the Electricity (Supply)Act, 1948, the Electricity
Regulatory Commission Act, 1998 and the enactments
specified in the Schedule as they stood immediately before D
the appointed date, shall continue to apply for a period of
one year or until the terms and conditions for tariff are
specified under this section, whicheve.r is earlier:
Section 62. Determination of tariff: ( 1) The Appropriate
Commission shall determine the tariff in accordance with E
the provisions of this Act for-
(a) supply of electricity by a generating company to a
distribution licensee: Provided that the Appropriate
Commission may, in case of shortage of supply of electricity,
fix the minimum and maximum ceiling of tariff for sale or F
purchase of electricity in pursuance of an agreement, entered
into between a generating company and a licensee or
between licensees, for a period not exceeding one year to
ensure reasonable price~ of electricity;
(b) transmission of electricity; G
( c) wheeling of electricity;
( d) retail sale of electricity:
Provided that in case of distribution of electricity in the same
area by two or more distribution licensees, the Appropriate H·
930 SUPREME COURT REPORTS [2016) 9 S.C.R.

A Commission may, for promoting competition among
distribution licensees, fix only maximum ceiling oftariff for
retail sale ofelectricity.
(2) The Appropriate Commission may require a licensee or
a generating co1lipany to furnish separate details, as may
B be specified in respect of generation, transmission and
distribution for determination of tariff.
(3) The Appropriate Commission shall not, while determining
the tariff urider this Act, show undue preference to any
consumer of electricity but may differentiate according to
.c the consumer's load factor, power factor, voltage, total
consumption of electricity during any specified period or
the time at which the supply is required or the geographical
position of any area, the nature of supply and the purpose
for which the supply is required.
D (4) No tariff or part of any tariff may ordinarily be amended,
more frequently than once in any financial year, except in
respect of any changes expressly permitted under the terms
of any fuel surcharge formula as may be specified.
(5) The Commission may require a licensee or a generating
E company to comply with such procedures as may be
specified for calculating the expected revenues from the
tariff and charges which he or it is permitted to recover. (6)
If any licensee or a generating company recovers a price
or charge exceeding the tariff determined under this section,
the excess amount shall be recoverable by the person who
F has paid such price or charge along with interest equivalent
to the bank rate without prejudice to any other liability
incurred by the Iicensee.
Section 63. Determination of tariff by bidding process:
Notwithstanding anything contained in section 62, the
G Appropriate Commission shall adopt the tariff if such tariff
has been determined through transparent process of bidding
in accordance with the guidelines is:;ued by the Central
Government."
11. Since counsel for the opposing parties have made wide ranging
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 931
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

arguments on the effect of A1iicle 18 and waiver as a legal concept, it is A
important first to find out as to which pigeonhole the facts of the present
case fit- whether the emails exchanged by the parties would amount to
an "amendment" governed by Article 18.1, or whether it would amount
to a "waiver" governed by A1iicle 18.3.
12. A perusal of the emails exchanged between the parties would B
show that the parties did not intend to amend by a written agreement
any of the provisions of the PPA. Whereas an amendment of the PPA
under Article 18. I would be bilateral, a waiverofa provision of the PPA
would be unilateral under Article 18.3:
13. In order to better understand, conceptually, the difference c
between amendment and waiver, it is necessary to advert to Sections l,
62 and 63 of the Indian Contract Act, 1872.
"Section I.Short title.-This Act may be called the Indian
C "ntract Act, 1872.
Extent, Commencements.-lt extends to the whole of India D
except the State of Jammu and Kashmir; and it shall come
into force on the first day of September, 1872.
Nothing herein contained shall affect the provisions of any
Statute, Act or Regulation not hereby expressly repealed,
nor any usage or custom of trade, nor any incident of any E
contract, not inconsistent with the provisions of this Act.
Section 62. Effect of novation, rescission, and
alteration of contract.
If the pa11ies to a contract agree to substitute a new contract
F
for it, or to rescind or alter it, the original contract need not
be performed.
Section 63. Promisee may dispense with or remit
performance of promise.- Every promisee may dispense
with or remit, wholly or in part, the performance of the
promise made to him, or may extend the time for such G
performance, or may accept instead of it any satisfaction
which :ie thinks fit."
14. Under Section 62, apati from novation of a contract and
rescission of a contract, alteration of a contract is mentioned. Alteration
H
932 SUPREME COURT REPORTS [2016) 9 S.C.R.

A is understood here, in the facts of the present case, in the sense of
amendment. It is settled law that an amendment to a contract being in
the nature of a modification of the terms oftha contract must be read in
and become a part of the original contract in order to amount to an
alteration under Section 62 of the Indian Contract Act. This iS' clear
from Juggilal Kamlapat v. N. V. Internationale Crediet-En-Hande/s
B
Vereeninging 'Rotterdam',AIR 1955 Cal 65 in paragraph 15 of which
it is stated:-
"The effect of the alterations or modifications is that there
is a new arrangement; in the language of Viscount Haldane
in Morris v. Baron & Co. (I) (1918 Appeal Cases, I at
c 17), "a new contract containing as an entirety the old terms
together with and as modified ,by the new terms
incorporated." The modifications are read into and become
part and parcel of the original contract. The original terms
also continue to be part of the contract and are not rescinded
D and/or superseded except in so far as they are inconsistent
with the modifications. Those of the original terms which
cannot make sense when read with the alterations must be
rejected. In my view the arbitration clause in this case is in
no way inconsistent with the subsequent modifications and
continues to subsist." [para 15)
E
15. No such thing having occurred on the present facts, it is clear
tJ1at there is in fact no amendment by written agreement to the PPA. To
this extent, learned counsel for Sasan are correct.
. 16. The relevant section therefore that would apply on the facts
F of the present case is Section 63. At this stage, it is important to advert
to an argument made by counsel for the appellants that Article 18.3 only
refers to waivers that can expressly be made under various provisions
of the agreement and not to Article 6 which, according to learned counsel,
cannot be waived under the PPA. Assuming that such argument is
correct, and that Article 18.3 refers only to the mode of carrying out a
G waiver und\!r the PPA, yet it is clear that Section 63 would operate on
~!he facts of this case. This is forthe reason that, when read with Section
I of the Contract Act, it becomes clear that the PPA is subject to Section
63 of the Contract Act, which would allow a promisee to dispense with
or remit, wholly or in part, the performance of the promise made to him,
H and accept instead of it any satisfaction which he thinks fit. This is
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 933
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.)

made clear in an interestingjudgment by Chief Justice Stone in Official A
Assignee of Bombay v. Madliolal Sindltu, ILR 1948 (2) Born 1. The
learned Chief Justice after setting out the facts had this to say on the
effect of Section I of the Contract Act:
"The Indian Contract Act of 1872 applies to all contracts in
India and with regard to a pawn is a codification of the B
English common law. Speaking of the common law right to
sell Mr. Justice Story in his commentaries on the Law of
Bailments, eighth edition, says at p. 262:-
"Another right.resulting, by the common law, from the
contract of pledge is the right to sell the pledge, where there c
has been a default in the pledge in complying with his
engagement, but a sale before default would be a
conversion. Such a right does not divest the general property
of the pawner but still leave in him (as we shall presently
see) a right of redemption."
D
And at p. 263 : -
"The common law of England, existing in the time of
Glanville, seems to have required a judicial process to justify
the sale, or at least to destroy the right of redemption. But
the law as at present established leaves an election to the E
pawnee. He may file a bill in equity against the pawner for
a foreclosure and sale; or, he may proceed to sell ex mero
motu, upon giving notice of his intention to the pledger."
The terms of an instrument of pledge, such as there is in
this case, giving an unqualified power of sale, are
F
inconsistent with the provisions of s. 176 of the Indian
Contract Act, and, therefore, by virtue of s. I of that Act
must give place to the express provisions of the Act:
See Chitguppi & Co. v. Vinaya Kashinath [( 1920) 45
.
Born. 157, s.c.22 Born L.R. 959) .
G
The group of sections in the Indian Contract Act dealing
with bailment commence withs. 148, and it is to be observed
that in the ss. 152, 163, 171and174 the power is given to
contract out of the Act. In the former section the words
are "in the absence of any special contract" and in the three
latter sections the expression used is "in the absence of H
934 SUPREME COURT REPORTS [2016] 9 S.C.R.

A any contract to contrary". In my op in ion, therefore, except
in these four sections, the provisions of the Act with regard
to bailment are mandatory: see The Co-operative
Hindustan Bank, Ltd. v. Sure11dra11ath De [( 1931) 59 Cal.
667.]."
B 17. It is thus clear that if on facts there is a waiver of a provision
of the PPA by one of the parties to the PPA, then Sectio11 63 of the
Contract Act will operate in order to give effect to such waiver.
18. At this juncture, it is important to understand what exactly is
meant by waiver. In Jagad Bmullm Chatterjee v. Nilima Rani, ( 1969)
c 3 SCC 445, this Court held:
"In India the general principle with regard to waiver of
contractual obligation is to be found in Section 63 of the
Indian Contract Act. Under that section it is open to a
promisee to dispense with or remit, wholly or in part, the
D performance of the promise made to him or he can accept
instead of it any satisfaction which he thinks fit. Under the
Indian law neither consideration nor an agreement would
be necessary to constitute waiver. This Com1 has already
laid down in Waman Shrinill'as Kini v. Ratilal
Bhagwandas & Co. [ 1959 Supp 2 SCR 21 7, 226] that
E waiver is the abandonment of a right which normally
eve1ybody is at liberty to waive. "A waiver is nothing unless
it amounts to a release. It signifies nothing more than an
intention not to insist upon the right". It is well-known that
in the law of pre-emption the general principle which can
F be said to have been uniformly adopted by the Indian com1s
is that acquiescence in the sale by any positive act
amounting to relinquishment of a pre-emptive right has the
effect of the forfeiture of such a right. So far as the law of
pre-emption is concerned the principle of waiver is based
mainly on Mohammedan Jurisprudence. The contention that
G the waiver of the appellant's right under Section 26-F of
the Bengal Tenancy Act must be founded on contract or
agreement cannot be acceded to and must be rejected."
[para 5]
19. In P. Dasa Muni Reddy v. P. Appa Rao, ( 1974) 2 SCC 725,
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 935
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

this Court held: A
"Waiver is an intentional relinquishment of a known right or
advantage, benefit, claim or privilege which except for such
waiver the party would have enjoyed. Waiver can also be a
voluntary surrender of a right. The doctrine of waiver has
been applied in cases where landlords claimed forfeiture of B
lease or tenancy because of breach of some condition in
the contract of tenancy. The doctrine which the courts of
law will recognise is a rule of judicial policy that a person
will not be allowed to take inconsistent position to gain
advantage through the aid of courts. Waiver sometimes
partakes of the nature of an election. Waiver is consensual
c
in nature. It implies a meeting of the minds. It is a matter of
mutual intention. The doctrine does not depend on
misrepresentation. Waiver actually requires two parties, one
party waiving and another receiving the benefit of waiver.
There can be waiver so intended by one party and so D
understood by the other. The essential element of waiver is
thatthere must· untaiy and intentional relinquishment
of a right. The voluntary choice is the essence of waiver.
There should exist an oppo11unity for choice between the
relinquishment and an enforcement of the right in question.
It cannot be held that there has been a waiver of valuable E
rights where the circumstances show that what was done
was involuntary. There can be no waiver of a non-existent
right. Similarly, one cannot waive that which is not one's as
a right at the time of waiver. Some mistake or.
misapprehension as to some facts which constitute the.· F
underlying assumption without which pa11ies would not have
made the contract may be sufficient to justify the court in
saying that there was no consent." [para 13]
20. Regard being had to th_e aforesaid decisions, it is clear that
when waiver is spoken of in tire "realm of contract, Section 63 of the · (i
Indian Contract Act governs. But it is important to note that waiver. rs
an intentional relinquishment of a known right, and that, therefo~e, unless
there is a clear intention to relinquish a right that is fully kno~n to a
party, a party cannot be said to waive it: But the matter does not'end
here. It is also clear that ifany element of public interest is involved and
H
936 SUPREME COURT REPORTS [2016] 9 S.C.R.

A a waiver takes place by one of the parties to an agreement, such waiver
will not be given effect to if it is contrary to such public interest. This is
clear from a reading of the following authorities.
21. In Lac/100 Mal v. Radliey Sliyam, ( 1971) 1 SCC 619, it was
held:-
B "The general principle is that everyone has a right to waive
and to agree to waive the advantage of a law or rule made
solely for the benefit and protection of the individual in his
private capacity which may be dispensed with without
infringing any public right or public policy. Thus the maxim
c which sanctions the non-observance of the statutory
provision is cuilibet licet renuntiarejuri prose introducto.
(See Maxwell on Interpretation of Statutes, Eleventh Edn.,
pp. 3 75 and 376). If there is any express prohibition against
contracting out of a statute in it then no question can arise
of anyone entering into a contract which is so prohibited
D but where there is no such prohibition it will have to be
seen whether an Act is intended to have a more-extensive
operation as a matter of public policy." [para 6]
22. In Indira Bai v. Nand Kislwre, (1990) 4 SCC 668, it was
·held:-
E
"The test to determine the nature of interest, namely, private
or public is whether the right which is renunciated is the
right of party alone or of the public also in the sense that
the general welfare of the society is involved. If the answer
is latter then it may be difficult to put estoppel as a defence.
F But if it is right of party alone then it is capable of being
abnegated either in writing or by conduct." [para 5]
23. In Krishna Balwdur v. Puma Theatre, (2004) 8 SCC 229,
it was held:
"The principle of waiver although is akin to the principle of
G
estoppel; the difference between the two, however, is that
whereas estoppel is not a cause of action; it is a rule of
evidence; waiver is contq1ctual and may constitute a cause
of action; it is an agreement between the parties and a party
fully knowing of its rights has agreed not to assert a right
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 937
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

for a consideration. A
A right can be waived by the party for whose benefit certain
requirements or conditions had been provided for by a statute
subject to the condition that no public interest is involved
therein. Whenever waiver is pleaded it is for the party
pleading the same to show that an agreement waiving the 8
right in consideration of some compromise came into being.
Statutory right, however, may also be waived by his
conduct." [para 9]
24. It is thus clear that if there is any element of public interest
involved, the court steps in to thwart any waiver which may be contrary c
to such public interest.
25. On the facts of this case, it is clear that the moment electricity
tariff gets affected, the consumer interest comes in and public interest
gets affected. This is in fact statutorily recognized by the Electricity Act
in Sections 61 to 63 thereof. Under Section 61, the appropriate D
commission, when it specifies terms and conditions for determination of
tariff, is to be guided inter alia by the safeguarding of the consumer
interest and the recovery of the cost of electricity in a reasonable manner.
Forth is purpose, factors that encourage competition, efficiency and good
performance are also to be heeded. Under Section 62 of the Act, the
appropriate commission is to determine such tariff in accordance with E
the principles contained in Section 61. The present case, however, is
covered by Section 63, which begins with a 11011 obstante clause stating
that notwithstanding anything contained in Section 62, the appropriate
commission shall adoptthe tariff if such tariff has been determined through
a transparent process of bidding in accordance with the guidelines issued F
by the Central Government. The guidelines dated 19.1.2005 issued by
the Central Government under Section 63 make it clear that such guidelines
are framed with the following objectives in mind:
"These guidelines have been framed under the above
provisions of section 63 of the Act. The specific objectives G
of these guidelines are as follows:
I) Promote competitive procurement of electricity by
distribution licensees;
2) Facilitate transpwency and fairness in procurement
processes; H
938 SUPREME COURT REPORTS [2016] 9 S.C.R.

A 3) Facilitate reduction ofinformation asymmetries for various
bidders;
4) Protect consumer interests by facilitating competitive
conditions in procurement of electricity;
5) Enhance standardization and reduce ambiguity and hence
B time for materialization of projects;
6) Provide flexibility to suppliers on internal operations while
ensuring certainty on availability of power and tariffs for
buyers.

c Clause 2.3 of the said guidelines reads as follows:
"2.3. Unless explicitly specified in these guidelines, the
provisions of these guidelines shall be binding on the
procurer. The process to be adopted in event of any
deviation proposed from these guidelines is specified later
in these guidelines under para 5.16."
D
26. Paragraph 4 of the aforesaid guidelines relates to tariff structure
and paragraph 4.11 in particular, which relates to energy charges, is as
follows:-
"4.11 Where applicable, the energy charges payable during
E the operation of the contract shall be related on the base
energy charges specified in the bid with suitable provision
for escalation. In case the bidder provides firm energy
charge rates for each of the years of the contract term, the
same shall be permitted in. the tariffs."
F 27. Para 5.4 then speaks of a inodel power purchase agreement
proposed to be entered into with the seller of electricity as follows:-
"(ii) Model PPA proposed to be entered into with the seller
of electricity. The PPA shall include necessary details on:
• Risk allocation between paiiies;
G
• Technical requirements on minimum load conditions;
• Assured offtake levels;
• Force majeure clauses as per industry standards;
• Lead times for scheduling of power;
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 939
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

• Default conditions and cure thereof, and penalties; A
• Payment security proposed to be offered by the procurer."
28. Paragraph 5.16 then goes on to state:-
"Deviation from process defined_ in the guidelines
5.16 In case there is any deviation from these guidelines, B
the same shall be with the prior approval of the Appropriate
Commission. The Appropriate Commission shall decide on
the modifications to the bid documents within a reasonable
time not exceeding 90 days."
29. A perusal of the CERC tariff adoption order in the present C
case dated 17.10.2007 makes it clear that the tariff is adopted by the
Commission only because the competitive bidding process which has
been undertaken is in accordance with the guidelines so issued.
30. All this would make it clear that even if a waiver is claimed of
some of the provisions of the PPA, such waiver, if it affects tariffs that D
are ultimately payable by the consumer, would necessarily affect public
interest and would have to pass muster of the Commission under Sections
61 to 63 of the Electricity Act. This is for the reason that what is adopted
by the Commission under Section 63 is only a tariff obtained by
competitive bidding in conformity with guidelines issued. If at any
E
subsequent point of time such tariff is increased, which increase is outside
the four corners of the PPA, even in cases covered by Section 63, the
legislative intent and the language of Sections 61 and 62 make it clear
that the Commission alone can accept such amended tariff as it would
impact consumer interest and therefore public interest.
F
31. But on the facts of these cases, it is argued by learned counsel
for Sasan that in point of fact the tariff laid down in Schedule 11 of the
PPA has not been sought to be changed. All that has happened is that, as
a result of COD being declared on 31.3.2013, the very tariff laid down in
Schedule 11 becomes applicable, but for year one being treated as one
day and year two commencing from 1.4.2013. Counsel for Sasan may G
be right in saying this, but the substance of the matter is that a consumer
would have to pay substantially more by way of tariff under the PPA if
year one is gobbled up in one day, as year two's tariff is one paisa more
than year one and year three's tariff is substantially more than year
two. In short, instead of getting two years or part thereof exceeding one
H
940 SUPREME COURT REPORTS [2016] 9 S.C.R.

A year at a substantially lower tariff, the consumer now gets only one year
and one day at the lower tariff rates. This may also by itself not lead to
the parties having to go to the Commission as this is envisaged by the
PPA. But it is clear that if a waiver is to be accepted on the facts of this
case, it would clearly impact the pub! ic interest, in that consumers would
have to pay substantially more for electricity consumed by them. This
B
being the case, on facts it may not be necessary to go to the Commission
as had Sasan in fact met the parameters of Schedule 5 on 30'h March,
then as per Schedule 11, year one would in fact have been only for one
day. However, any waiver of the requirement ~f Schedule 5 would
definitely impact the generation of electricity at the mandate.d percentage
c of contracted capacity as also the amounts payable by consumers, and
would therefore affect the public interest. This being the case, this is
not a case covered by the judgments cited on behalfofSasan, in particular
the judgment of this Court in Commissioner of Customs, Bombay
v. Virgo Steels Bombay, (2002) 4 SCC 316, in which it has been held
that even the mandatory requirement of a statute can be waived by the
D
party concerned, provided it is intended only for his benefit. This case
would fall within the parameters of the other judgments referred to above,
and would therefore be governed by judgments which state that any
waiver of the requirements ofArticle 6.3 and Schedule 5 would ultimately
impact consumer interest and therefore the public interest. Such waiver
E therefore cannot be allowed to pass muster on the facts of the present
case.
32. Since the result of this case also depends upon the correct
reading of Article 6 read with Schedule 5 of the PPA, and whether there
has been waiver in fact in the sense ofbeing the intentional relinquishment
F of a known right by the procurers or on their behalf, it is necessary to
advert to the scheme ofArticle 6, the independent engineer's certificate,
and various meetings, emails, and letters exchanged between the parties.
Article 6 deals with synchronization, commissioning, and commercial
operations. In the first step to be taken by the seller, the unit producing
electricity has to be synchronized to the grid system. It is only after
G synchronization takes place that the unit is to be commissioned. What is
important is that at the commissioning stage, the parameters mentioned
in Schedule 5 are to be met. The most important parameter mentioned
in Schedule 5, when the performance test is to be taken for the purpose
·of commissioning, is that a unit shall be deemed to have passed such test
H

•
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 941
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

only if it operates continuously for 72 consecutive hours at or about 95% A
of its contracted capacity as existing on the effective date and within the
electrical system limits and functional specifications. Further, as a part
of the performance test, the seller must demonstrate that the unit meets
functional specifications for ramping rate separately mentioned in
Schedule 4 of the PPA. It is only when such test is passed that a unit
B
can be said to be commissioned under the PPA. This then is to be
certified by the independent engineer jointly appointed by the parties
under Article 6.3.1, in the form ofa final test certificate, which states
that (a) the commission tests have been carried in accordance with
Schedule 5 and are acceptable to him, and (b) the result of the
performance test shows that the unit's tested capacity is not less than c
95% of the contracted demand as existing on the effective date.
33. If the Schedule 5 parameters are not met, it is incumbent on
the independent engineer to then state reasons for the non-issuance of
the final test certificate. Once this is done, under Articfe 6.3 .2, the seller
may retake the relevant test within a reasonable period after the end of D
the previous test so as to comply with the basic requirements of Schedule
5. It is only after this that a unit can be said to be a "commissioned unit"
as defined, which means that it is a unit in respect of which COD has
occurred. COD or commercial operation date is also separately defined
as meaning, in relation to a unit, the date one day after the date when
E
each of the procurers receives a final test certificate of the independent
engineer as per Article 6.3.1. It is thus clear that the scheme of Article
6 is that a unit cannot be said to have a commercial operation date
unless and until it is first synchronized with the grid and commissioned
after meeting the parameters mentioned in Schedule 5 of the PPA.
34. Article 6.3.3 refers ·to performance tests of a unit during the F
period of the PPA. If under Article 6.3.3 after COD has been achieved
in a unit, an increased tested capacity over and above that provided in
6.3. l (b) is achieved in a subsequent performance test, certain
consequences follow. Equally, if after COD has been obtained in a unit,
and the most recent performance test mentioned during the working of G
the PPA has been conducted, and it is found that in such test a figure
less than contracted capacity is achieved, the unit shall be de-rated with
certain consequences which are mentioned in Article 6.3.4 read with
Article 8.2.2. The scheme of Article 6 therefore read as a whole appears
to be that COD cannot be achieved until the parameters mentioned in
H
942 SUPREME COURT REPORTS [2016] 9 S.C.R.

A Schedule 5 are achieved and there is a final test certificate to that effect.
The subsequent clauses, Article 6.3.3 and Article 6.3.4 only kick in after
COD is obtained in a unit, leading to either increased capacity or to de-
rateC! capacity with consequences which follow under the PPA.
35. The meetings, emails, and letters between the parties have
B now to be examined. The first important 111eeting that is necessary for
us to advert to is the meeting of27.2.2013. The meeting was Chaired
by the Managing Director of the lead procurer i.e. M.P. Power
Management Company Li111ited. It was attended by all the other
procurers, and officials of Sasan. What is emphasized on behalf of
Sasan is that the revised COD of the Sasan units was accepted by all
c the procurers under article 4.5.1 of the PPA to be - (first unit) by
31.3.2013. The procurers asked Sasan for the estimated date for
synchronization and COD of the first unit. Sasan indicated that
synchronization is expected in the first week of March, 2013, and the
COD before 31.3.2013. What is i111portant about this meeting is that the
D procurers were no doubt interested in getting electricity from Sasan as
soon as possible, but obviously only in accordance with article 6.3.1 read
with the 5'" Schedule. This would only 111ean that the meeting would
disclose that the anxiety of the procurers to get electricity at cheap rates
would be in accordance with the PPA and not against it. In other words,
if a final test certificate had been given to the effect that 95% of
E
contracted capacity could have been delivered by Unit No.3 on or before
31.3.2013, the procurers were anxious to avai I of it, and not otherwise.
36. It is unnecessary for us to burden th is judgment with the e111ails
that passed between Sasan and WRLDC between 27.3.2013 and
30.3.2013. It is enough for us to state that Sasan contends that it was
F ready to deliver at 95% of the contracted demand but for WRLDC, and
WRLDC states that Sasan was never obstructed by WRLDC, and in
fact was not capable of delivering electricity at 95% of the contracted
demand at the relevant time. WRLDC a;--~'ears to be correct in this for
the simple reason that if we see the performance of Sasan for the period
G 1"April to 16'" August, 2P 13, it is clear that various tests were undertaken,
but 95% of contract capacity for a continuous period of 72 hours had
only beei. ac!~ieved in June even according to Sasan.
3 7. ln any event, the performance test certificate issued on
30.3.2013 leaves much to be desired. Since the Commission has
H castigated this certificate and the Appcl!ite Tribunal has absolved the
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 943
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

Independent Engineer completely, it is necessary to set out th is certificate A
in full.
"Lahmeyer International (India) Pvt. Ltd.
Corporate Office & Correspondence address:
lntec House, 37 Institutional Area, Sector 44, Gurgaon- B
122002, National Capital Region (INDIA)
CERTIFICATE OF INDEPENDENT ENGINEER (IE)
Test Certificate of Performance Test for the Commercial
Operation Declaration of the First Unit (Unit-3 of660 MW)
of SASAN ULTRA MEGA POWER PROJECT (6x660 C
MW)
This Certificate is issued by IE with reference to article
6.3.1 of PPA executed on 7'" August 2007 between Sasan
Power Limited (SPL, the Seller) and the Power Procurers.
Based on the Performance Test witnessed by IE from 27'h D
March 2013 to 30'11 March 2013 and review of the detailed
Performance Test results provided by the Seller, it is certified
that:
I. The Unit was synchronized with the grid at 15.18 hrs on
27'h March 2013 after receiving the permission ofWRLDC. E
2. The Seller (SPL) had submitted the power injection
schedule to WRLDC at 15.35 hours on 27 1h March 2013
for raising the load gradually to 100% of the Contracted
Capacity of620.4 MW(ex bus) by 2000 hrs. on 27'11 March
2013 for demonstrating continuous operation at that load F
for continuous 72 (seventy two) consecutive hours.
However, WRLDC, did not permit the Seller to operate the
Unit beyond l 00 MW (ex bus) till the morning of28'11 March
2013 due to the following reasons:
a) The demand in the grid was low due to the Holiday on G
account ofHoli Festival.
b) All the Units in the grid were operating at their technical
minimum capacity.
3. The Seller was continuously keeping in touch with
H
944 SUPREME COURT REPORTS [2016] 9 S.C.R.

A WRLDC till 21.40 hours on 29 1h March 2013 for seeking
permission to raise the load. At 22.19 hrs on 291h March
2013 WRLDC permitted the seller to raise the load.
Accordingly, Seller raised the load to around 150 MW (ex
bus).
B 4. At 07 .13 hours on 30 1h March 2013, WRLDC asked the
seller to submit its revised power injection schedule for
raising the load. At this point of time, the Unit had already
completed continuous operation of 50 (fifty) consecutive
hours at a low load of about 100 MW (ex-bus) and another
9 (nine) consecutive hours immediately thereafter at 150
c MW. Seller informed WRLDC at 14.18 hrs that it would
increase the load from 20.00 hours to reach full load. As
such, in line with WRLDC instructions and grid conditions.
Seller maintained load of around 100 MW (ex bus) for
around 50 hours and maintained load of around 150 MW
D (ex bus) for remaining 22 hours as per WRLDC instructions
and grid conditions.
5. The Commissioning Test has been carried out in
accordance with Schedule 5 of PPA and the results of the
Performance Test are acceptable to IE. The results of the
E Performance Test show that the Unit's Tested Capacity is
not less than 101.38 MW (ex bus), the maximum permitted
load by WRLDC for injection into the grid. During the
above stated period of continuous 72 (seventy two)
consecutive hours, the performance of the unit was found
to conform to the Electrical Limits of the Functional
F Specifications in accordance with Schedule 4 of PPA.
The salient details of the Performance Test are as follows:
Minimum Hourly Net Generation lOL1SmwFROM0600 HRS TO
of the Unit during 72 Hours Test 0700 hrs on 2811 March 2013
· (M\V)
G
Maximum Hourly Ne.t Generation 161.01 MW from 1900 hrs to
of the Unit duting 72 Hours Test 2000 hrs on 30'1 March 2013.
(M\V')
Anrage Hourly Net Generation of 120.84 MW
rl1e Unit during 72 Hours Test
H (M\V)
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 945
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

A
10138 MW
21.66 KV to 21.83 KV (Paramettt
as per OCM-22 K\~
Power actor 096 Max (lagging), 0.89 MIN
Qa gin ) B
yWRLDC.

6. Since the Unit was operating below 50% of the rated
load due to grid restriction, the Unit could not be demonstrate
the Ramping Rate above 50% of the rated load in
accordance with Schedul~. 4 of PPA. However, as per the
c
certificate provided by Original Equipment Manufacturer
ofBoiler, Turbine {$l, Generator, minimum ramp up and ramp
down rate of 1% ,of Contracted Capacity per minute can
be achieved.
D
7. The Unit could not be tested forthe following parameters
of Supercritical Technology at the steam turbine inlet as
defined in PPA due to grid restriction.
i)Main Stearn Pressure: 247 kg/cm2 (abs)
ii) Main Steam Temperature: 535 deg C. E
iii) Reheat Temperature: 565 deg C.
However, the Unit was found to operate with the following
parameters at the steam turbine inlet during one hour
operation from 1200 hrs to 1300 hrs on 29'h March 2013.
F
i) Main Stearn Pressure: 7?:36 Kg/crn2 (abs)'
ii) Main SteamTernperature: 535.64 deg.C.
iii) Reheat Temperature: 575.04 deg C.
8. All the systems and equipment have been commissioned
and are operational with two coal mills which were taken G
into service. The balance mills could not be taken into
service due to the restrictions imposed by the grid. The
furnace was found to operate stably even at a low load of
101.38 MW (ex-bus) and the parameters of Turbine shaft
H
946 SUPREME COURT REPORTS [2016] 9 S.C.R.

A vibrations, Generator slot temperature and Generator core
temperature were found to be well within the equipment
limits recommended by OEM.
9. In view of the above, the Unit-3 is certified to have
achieved Commercial Operation, with a tested capacity of
B 101.38 MW (ex bus) since:
(a) Commissioning Test was carried out in accordance with
Article 6 and Schedule 5 of the PPA.
(B) Results of the test show that Unit-3 has met functional
specifications stipulated in Schedule 4 of the PPA.
c
For Lahmeyer International s(India)
Sd/-
R.K. Soni
Project Manager
D
Dated: 30'h March 2013"
38. It will be seen from this certificate that the tested capacity of
the Unit was found to be only I 01.38 MW as against 95% of 620 MW
i.e. 587 MW. It was also stated that since the unit was operating below
E 50% of the rated load due to grid restriction, the unit could not demonstrate
ramping rate above 50% ofrated load in accordance with the Schedule
4 ofthe PPA.
39. Paragraph 9 of the certificate leaves much to be desired.
Obviously, if the tested capacity is 1013 8 MW as against the required
p 95% i.e. 587 MW, the test could not have been carrieqout in accordance
with article 6 read with schedule 5, and that despite the fact that ramping
up and down could not be achieved, functional specifications stipulated
in Schedule 4 of the PPA were said to have been met. We are
constrained, therefore, to agree with CERC which in its order dated
8.8.2014 has castigated this certificate. What article 6.3.1 requires is
d first and foremost a final test certificate of the Independent Engineer.
The certificate dated 30.3.2013 given by the Independent Engineer-is
not a final test certificate. Indeed, it is only in August that a final test
certificate was given in accordance with Article' 6.3.1 of the PPA by the
very same independent engineer. Obviously the commissioning tests
H
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 947
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

could not have been carried out in accordance with Schedule 5, which A
requires in clause 1.1 (i) ( d) that the seller shall perform, in respect of
each unit, a performance test, by which such unit shall be deemed to
have passed only if it operates continuously for 72 consecutive hours, at
or above 95% of its contracted capacity as existing on the effective
date. Also, part of the same schedule requires that as a part of the
B
performance test, the seller shall demonstrate that the unit meets the
functional specifications for ramping rate as mentioned in Schedule 4,
which was again conspicuous by its absence. According to the
Independent Engineer, " ... the Unit 3 is certified to have achieved
Commercial Operation, with a tested capacity I 0 I .3 8 MW" after carrying
out the commissioning test in accordance with Article 6 and' Schedule 5 c
of the PPA. In the certificate dated 30.3.2013 he has stated that on
witnessing the performance test from 27.03.2013 to 30.03.2013, the tested
capacity of the Unit is 101.38 MW. However, it is clearly recorded that
Unit was operated beyond I 00 MW only from the morning of28.03.2013.
In the chart on the performance test, the Independent Engineer has
D
noted that 101.38 MW is operated only from 06.00 a.m. on 28.03.2013.
Under Article 6 read with Schedule 5 ... "Unit ·shall be deemed to
have passed if it operates continuously for 72 consecutive hours at or
above 95% of its contracted capacity as existing on the Effective lJate."
Even according to the Independent Engineer, 101.38 MW was injecti;d
only at 06.00 a.m. on 28.03.2013. Such a tested capacity of I 01.38 MW E
for 72 hours continuously could therefore have been certified only at
06.00 a.m. on 31.03.2013. If that be so; the Commercial Operation
Date would have been only one day after the date when the test certificate
of the Independent Engineer has been ~eceived by the procurers.· For
this reason also, the test certificate is by no means in accor<:lance with
F
Article 6.3.1 of the PPAread with Schedule 5 thereof.
40. It is now important to examine the correspondence between .
the parties in order to ascertain whether the Appellate Tribunal is correct
in stating that waiver had in fact taken place. At this stage, it is important
to advert t9 an email dated 31.3.2013 sent by the lead procurer to Sasan.
· This email categorically states as follows: G

"With reference to the letter no. GEIE 12086/12-13/001/
RKS dt. 30'h March 2013relating to the Test Certificate of
the Independent Engineer towards the Performance Test
for declaration of COD of Unit-3 of 660 MW of UMPP
H.
948 SUPREME COURT REPORTS [20 I 6] 9 S;C.R.

A Sasan Project. It is to inform that as per clause 6.3. I (a)
and (b) of the PPA, Commissioning Test should have been
caJTied out in accordance with Schedule 5 of PPA and that
the result of the test should not ha.ve been less than ninety.. ·
five (95) percen_t of its Contracted Capacity. The test result
is not as per the aforesaid clause and, therefore, is not
B
acceptable to us. If the Seller is agreeable to consider the
performance test under clause 6.3.4 for a de-rated capacity
of 101.38 MW, the same could be agreed by us."
4 I. However, Sasan relies heavily u-pon an email sent on 2.4.20 I 3
by the lead procurer to Sasan. This email reads as follows:
c
"To
The Chief Executive Officer
Mis. Sasan Power Ltd.,

D DhirubhaiAmbani Knowledge City,
1 Block, 2nd Floor, North Wing,
Thane, Belapur Road, Koparkhairane,
Navi Mumbai,
E Maharashtra 400 710
Sub: Independent Engineer's letter dated 3Q1h March20 J3
Ref: Independent Engineer's letter dated 301h March 2013
Dear Sir,
F ~lease refer the Independent Engineer's letter dated 301h
March 2013 pertaining to "Test Ce11ificate of Performance
Test for the Commercial Operation Declaration of the First
Unit (Unit-3 of 660 MW) of SASAN ULTRA MEGA
POWER PROJECT (6x660 MW)" and e-mail dated
3 1.3.2013 of 12.39 AM sent by Western Region Load
G
Despatch Centre regarding scheduling of power from Unit
No.3 of Sasan UMPP. As lead procurer, the Performance
Test, as certified by the independent Engineer for a capacity
of 101.38 MW (ex-bus), is acceptable to us under Clause
6.3.4 of the PPA. You may kindly go for Performance
H Test under notice to us for increasing the capacity beyond
ALL INDIA POWER ENGINEER FEDERATION & ORS. v. 949
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

certification by the Independent Engineer in accordance A
with Clause 6.3.3 of the PPA.
As provided In Article 6.3.4 of the PPA, irr the period
between this perfonnance test and the next performance
test, the unit's contracted capacity and available capacity
would be considered as 101.38 MW (ex-bus) and its 8
availability factor shall be calculated by reference to 101.38
MW. The charges payable for power shall be as laid down
in Article 6.3 .4 of the PPA. Jn case the unit is in position to
produce beyond 101.38 MW, the additional quantity would
be scheduled in favour of the Procurers under proviso to
Article 11. l of the PPA, until the next Performance Test is c
conducted under Article 6.3.3.
Thanking you,
Yours faithfully,
Sd/- D
Executive Director (IPC)"
42. The two emails read together would show that the lead procurer
made it clear that declaration of COD ofl!nit 3 is not accepted by them
as the test was not performed as per Article 6.3.1. However, in its
E
anxiety to procure electricity, what was stated in th_e second email was
that the capacity of 101.38 MW was acceptable only under Article 6.3.4
of the PPA, meaning thereby that this ought to be treated as de-rated
c;apacity, which should be paid for as provided. And any quantity
produced over and above I 01.38 MW would be treated as infirm
power under A11icle 11. l proviso, and paid for as such. F
43. Shri Sibal argued that the moment Article 6.3 .4 of the PPA is
attracted, this would necessarily mean that the Appellants have waived
the requirement of 95% of the contracted capacity as existing on the
effective date mentioned in Article 6.3 .1 (b ). According to him, this would
mean that scheduled power would have lo be supplied, which in turn can G
only be done ifthere is waiver of the aforesaid requirement. It is difficult
to agree. The case of the appellants has throughout been, starting from
12'" April, 2013, onwards, that it has never consented to Schedule 5 of
the PPA and Article 6.3. l(b) parameters being lowered. It is true that
Article 6.3.4 would not apply for the reason that it would come into
H
950 SUPREME COURT REPORTS [2016] 9 S.C.R.

A effect only after the last recent performance test mentioned in Article
6.3.3 has been conducted. And for Article 6.3.3 to apply, a performance
test must first indicate that from a unit's COD ·an increased tested
capacity over and above that provided in Article 6.3. l (b) must first occur.
Admittedly on facts this has not happened. What is important to note
therefore is that the appellants desperately wanted power at a cheaper
B
rate, and were willing to go to any extent to get such power, including
invoking clause 6.3.4, which would not apply, and stating that anything
over and above 101.38 MW ought to be treated as infirm power. It is
clear under the Regulations, however, that infirm power can never be
supplied to the appellants themselves but can only be supplied to the
c grid. This being the case, the question that is still posed is whether the
two emails read together would amount to a waiver of the right mentioned
in clause 6.3 .1. Waiver is, as has been pointed out above, an intentional
relinquishment of a known right. Waiver must be spelled out with crystal
clarity for there must be a clear intention to give up a known right.
There is no such clear intention that can be spelled out on a reading of
D
the two emails. All that can be spelled out is that the first email of
31.3.2013 categorically states that the test result is not as per Article
6.3.1, and is not acceptable. The last sentence of this very email then
refers to clause 6.3.4 and to a de-rated capacity of 101.38 MW.
Thereafter, the email of 2"d April, 2013 expands on the aforesaid last
E sentence of the earlier email by referring to Article 6.3.4 and Article 11
proviso. This is akin to a 'without prejudice' acceptance of de-rated
power, being a non-acceptance of the test certificate dated 30.3.2013
coupled with a desperate attempt to somehow get whatever power is
available. But this does not amount to a clear and unequivocal intention
to relinquish a known right.
F
44. It is not necessary to burden this judgment with various other
acceptance emails of the other discoms inasmuch as they are all in terms
of the email sent by the lead procurer. Haryana discom has sent an
email dated 12.4.2013 in which, even while accepting derated power, it
has accepted the same without prejudice to its rights.
G
45. In contrast to the aforesaid emails, the acceptance emails of
BYPL and BRPL, both Reliance Group Companies, may now be quoted:-
"Dear Sir
From Sasan UMPP Delhi has allocation of 450 mw as per
H
ALL INDIA POWER ENGINEER FEDERATION '& ORS. v. 951
SASAN POWER LTD. & ORS. ETC. [R. F. NARIMAN, J.]

MOP out of which BRPL share is 43.58 out of Delhi A
allocation. We accept the COD of I" unit of 660 mw as
declared by SPL. May please schedule Full quantum of
BRPL with immediate effect and confirm.
Regards.
Sanjay Srivastav. B

Assistant VP BRPL. 9312147045
Sanjay Srivastav (As V.P.)"
46. This acceptance email is in stark contrast with the acceptance
email of the lead procurer, in that it unequivocally accepts COD of the c
first Unit of 660 MW as declared by Sasan. It is therefore clear that on
facts in this case there is no waiver and the Appellate Tribunal in coming
to an opposite conclusion, is clearly erroneous.
47. Interestingly enough, the Appellate Tribunal, in the impugned
judgment dated 31.3.2016, contradicts itself when it states in one portion D
as follows:-
"e) We have carefully gone through the ratio of the law laid
down by Hon'ble Supreme Court in Wama11 Sltri11iwas
and in Krislw11 La/'s case, wherein in the latter case the
Hon'ble Supreme Court cited an illustration in paragraph E
21 thereof. The words of the Hon'ble Supreme Court are
"to illustrate this principle, it has been stated that if the
statutory condition be imposed simply for the security
or the benefit of the parties to the action themselves,
such condition will not be considered as indispensable
F
and either party may-waive it. " In the present case, the
requirement of achieving 95% of the contracted capacity
for declaration of COD was not one for the private benefit
of the seller and procurers. The said requirement and the
appointment of ·an independent expert to oversee the
commissioning process was built into the statutory contract G
i.e. PPA itself for a specific purpose, as a requirement of
general policy, to ensure that generators do not declare their
units to be commercially available without even
demonstrating the capability of such units to achieve at least
95% of the contracted capacity."
H
952 SUPREME COURT REPORTS . [2016] 9 S.C.R.

A And then goes on to state:
"We further find that in the present case, there is no question
of any public interest or public polic:' or morals or statutory
regulations being violated. The WRLDC, who wa.s a.
petitioner before the Central Commission, in its Petition
B clearly and equivocally states that there are no guidelines
in respect of declaration of COD of the generators who
are not governed by CERF (Tariff Regulations) 2009 and
in the Petition, WRLDC prays to the Central Commission
for issuing regulations and guidelines in that behalf."

c 48. We thus find that the Appellate Tribunal is wholly incorrect in
accepting the case of waiver put forward by .learned counsel for Sasan,
and is equally incorrect in absolving the independent engineer for the
test certificate given by him on 30.3.2013. We, therefore, set aside the
Appellate Tribunal's judgment, and reinstate the judgment dated 8.8.2014
of the Central Electricity Regulatory Commission.
D
49. Shri Sibal 's last argument is that there is no substantial question
of law so as to attract Section 125 of the Electricity Act, 2003 in these
appeals. We are afraid that we cannot agn:e. One substantial question
oflaw is whether, when public interest is involved, waiver can atall take
place of a right in favour of the· generator of electricity under
E a PPA if the right also has an impact on consumer interest. This
substantial question of law has' been answered by us in the course of
the judgment. We have also pointed out that the Appellate Tribunal's
finding that the Independent Engineer's test certificate can pass muster
and that there is a waiver on facts is not a possible conclusion, and such
F finding is, therefore, perverse and hence set aside. That apart, we have
also pointed out the contradictory nature of the judgment of the Appellate
Tribunal, when it points out that the requirement of Article 6.3.1 is not
merely for the private benefit of the procurers of electricity, but is as a
matter of general policy; and then later on in the judgment finds that no
question of public interest or public policy arises in the present case. In
G these circumstances, this plea must also be turned down. In the result,
the appeals are allowed but with no order as to costs.

D~vika Gujral Appeals allowed.