CLP India Pvt. Ltd


Gujarat Urja Vikas Nigam Ltd. & Anr

Civil Appeal No. 2969 of 2010

Provisions Involved

Section 125 of the Electricity Act, 2003


The Gujarat Electricity Board (GEB) entered into a power purchase agreement (PPA) with CLP ON 03.02.1994 for the tenure of 20 years.Prior to PPA, the central Government had issued a notification specifying the controlling norms, terms and conditions for determination of tariff for sale of electricity and one of those conditions was the provision of incentive to units using Naphtha. After signing of the PPA between the parties, an amendment notification dated 06.11.1995 was issued by the Central Government according to which there would no longer be any deemed Generation Incentive payable to any generating company on available declaration of Naphtha as a fuel. The electricity board also sent a letter to CLP to amend the clause of the PPA according to the new notification but CLP refused to do so. After which with effect from December 1997, CLP started billing Gujarat Urja for the power supplied including the incentive ignoring the amending notification. In 2005, a high level committee was made for recovery of excess payouts made as incentives which led Gujarat Urja Board to file an application in GERC claiming the recovery from CLP. The GERC held that recovery of the amount paid in last three years only shall be done due to time barred provisions.



When the cause of action arose, it was May 1996 when Gujarat Urja Board rejected it contention that incentive was payable in terms of the PPA, notwithstanding the notification of 06.11.1995. the arguments by the CLP, in the opinion of the court, that the parties were bound only by the terms of the agreement and that the amendment notification being prospective could not have altered the terms of tariff,especially the incentive payable, are insubstantial and have no force.


The findings of the lower authorities are correct, and no interference is called for. Appeal stands to be dismissed.