Union of India and Anr. Vs. Rajbir Singh .
CIVIL APPEAL NO.2904 OF 2011
Union of India & Anr.
CIVIL APPEAL NO.2905 OF 2011
CIVIL APPEAL NO.3409 OF 2011
CIVIL APPEAL NO.5144 OF 2011
CIVIL APPEAL NO.2279 OF 2011
CIVIL APPEAL NO.1498 OF 2011
CIVIL APPEAL NO.5090 OF 2011
CIVIL APPEAL NO.5414 OF 2011
CIVIL APPEAL NO.5163 OF 2011
CIVIL APPEAL NO.5840 OF 2011
CIVIL APPEAL NO.7368 OF 2011
CIVIL APPEAL NO.7479 OF 2011
CIVIL APPEAL NO.7629 OF 2011
CIVIL APPEAL NO.5469 OF 2011
CIVIL APPEAL NO.10747 OF 2011
CIVIL APPEAL NO.11398 OF 2011
CIVIL APPEAL NO.183 OF 2012
CIVIL APPEAL NO.167 OF 2012
CIVIL APPEAL NO. 10105 OF 2011
CIVIL APPEAL NO. 5819 OF 2012
CIVIL APPEAL NO. 5260 OF 2012
CIVILL APPEAL D.16394 OF 2013
CIVIL APPEAL NO.1856 OF 2015
(Arising out of SLP (C) No.15768 of 2011)
CIVIL APPEAL NO.1854 OF 2015
(Arising out of SLP (C) No.14478 of 2011)
CIVIL APPEAL NO.1855 OF 2015
Arising out of SLP (C) No.26401 of 2010
CIVILL APPEAL NO.1858 OF 2015
(Arising out of SLP(C) No. 32190 of 2010)
CIVILL APPEAL NO.1859 OF 2015
(Arising out of SLP(C) No.27220 of 2012)
T.S. THAKUR, J.
1. Leave granted.
2. These appeals arise out of separate but similar orders
passed by the Armed Forces Tribunal holding the respondents
entitled to claim disability pension under the relevant Pension
Regulations of the Army. The Tribunal has taken the view that
the disability of each one of the respondents was attributable to
or aggravated by military service and the same having been
assessed at more than 20% entitled them to disability pension.
The appellant-Union of India has assailed that finding and
direction for payment of pension primarily on the ground that the
Medical Boards concerned having clearly opined that the disability
had not arisen out of or aggravated by military service, the
Tribunal was not justified in taking a contrary view.
Relying upon the decisions of this Court in Union of India
and Ors. v. Keshar Singh (2007) 12 SCC 675; Om Prakash
Union of India and Ors. (2010) 12 SCC 667;
Secretary, Ministry of Defence and Ors. v. A.V. Damodaran
(Dead) through LRs. and Ors.
(2009) 9 SCC 140; and
Union of India and Ors. v. Ram Prakash
(2010) 11 SCC
220, it was contended by Mr. Balasubramanian, learned counsel
appearing for the appellant in these appeals, that the opinion of
the Release Medical Board and in some cases Re-survey Medical
Board and Appellate Medical Authority must be respected,
especially when the question whether the disability suffered by
the respondents was attributable to or aggravated by military
service was a technical question falling entirely in the realm of
medical science in which the opinion expressed by medical
experts could not be lightly brushed aside.
Inasmuch as the
Tribunal had failed to show any deference to the opinion of the
experts who were better qualified to determine the question of
attributability of a disease/disability to a military service, the
Tribunal had fallen in error argued the learned counsel.
On behalf of the respondents it was, on the other hand,
submitted that the decisions relied upon by learned counsel for
the appellant were of no assistance in view of the later
pronouncement of this Court in Dharamvir Singh v. Union of
India and Ors. (2013) 7 SCC 316 where a two-Judge Bench of
this Court had, after a comprehensive review of the case law and
decisions and stated the true legal position. It
that the earlier decisions in the cases relied upon by the
appellants were decided in the peculiar facts of those cases and
did not constitute a binding precedent especially when the said
decisions had not dealt with several aspects to which the decision
of this Court in Dharamvir Singh’s case (supra) had adverted.
Applying the principles enunciated in Dharamvir Singh’s case
(supra) these appeals, according to the learned counsel for the
respondents, deserve to be dismissed and indeed ought to meet
The material facts giving rise to the controversy in these
appeals are not in dispute.
It is not in dispute that the
respondents in all these appeals were invalided out of service on
account of medical disability shown against each in the following
Case No. Name of the Nature of Percentage of
Respondent Disease/Disability Disability
C.A. No. 2904/2011 Ex. Hav. Rajbir Singh Generalized Seizors 20% for 2
C.A. No. 5163/2011 Ex. Recruit Amit Kumar Manic Episode (F-30). 40%
C.A. No. 5840/2011 Hony. Flt. Lt. P.S. Primary Hypertension. 30%
C.A. No. 7368/2011 Ex. Power Satyaveer Diabetes Mellitus (IDDM) 40%
Singh ICD E 10.9. (Permanent).
C.A. No. 7479/2011 Ex. Gnr. Jagjeet Singh 20% each and
C.A. No. 7629/2011 Ex. Rect. Charanjit Ram 1. Non-Insulin Dependent C.A. No. 5469/2011 Jugti Ram (through LR) 80%
2. Fracture Lateral
Condyl of Tibia with
fracture neck of Fibula
Mal-descended Testis (R)
with Inguinal hernia.
C.A. D. No. HavaldarSurjit Singh Schizophrenic Reaction C.A. No. 2905/2011 Ex. Naik Ram Phai Otosolerosis (Rt.) Ear 20%
16394/2013 (300) OPTD
C.A. No. 10747/2011 Sadhu Singh Schizophrenia C.A. No. 11398/2011 Rampal Singh Neurosis (300. 20% for 2
20% for 2
C.A. No. 183/2012 Raj Singh Neurosis 30%.
C.A. No. 167/2012 Ranjit Singh C.A. No. 5819/2012 Ex. Sub. Ratan Singh Other Non-Organic C.A. No. 5260/2012 Ex. Sep. Tarlochan Epilepsy (345) 20% for 2
Psychosis (298, V-67) Singh years.
Primary Hypertension Harbans Singh 30%
Less than 20%
1.Epilepsy (345) 20% each and
2. High Hyper-metropia composite
Rt. Eye with partial disability 40%
Amblyopia. for 2 years.
Personality Disorder 60%
C.A. No. 10105/2011
40% for 2
(@ SLP (C) No.
C.A. No. 5090/2011
Sharanjit Singh Generalized Tonic Clonic Less than 20%
Seizure, 345 V-64.
Abdulla Othyanagath Schizophrenia 30%
C.A.NO……..OF 2015 Sqn. Ldr. Manoj Rana 1. Non-Organic Psychosis 40%
(@ SLP (C) No. 2. Stato-Hypatitis
C.A. No. 2279/2011 Labh Singh Schizophrenia C.A. No. 5144/2011 Makhan Singh Neurosis (300-Deep) 30% for 2
C.A. No. 14478/2011 Ajit Singh 20%
C.A.NO…….OF 2015 ManoharLal Idiopathic Epilepsy IHD (Angina Pectoris) Less than 20%
(@ SLP (C) No. (Grandmal)
15768/2011) Renal Calculus (Right)
C.A. No. 3409/2011
1.Generalized Seizors 70%
2. Inter-vertebral Disc (permanent)
3.PIVD C-7-D, (Multi-Disc
Bipolar Mood Disorder
C.A. No. 1498/2011*
C.A. No. 5414/2011
Major Man Mohan
Ex. Sgt. Suresh Kumar
Rakesh Kumar Singla
20% for 5
It is also not in dispute that the extent of disability in each
one of the cases was assessed to be above 20% which is the
bare minimum in terms of Regulation 173 of the Pension
Regulations for the Army, 1961. The only question that arises in
the above backdrop is whether the disability which each one of
the respondents suffered was attributable to or aggravated by
military service. The Medical Board has rejected the claim for
disability pension only on the ground that the disability was not
attributable to or aggravated by military service. Whether or not
that opinion is in itself sufficient to deny to the respondents the
disability pension claimed by them is the only question falling for
our determination. Several decisions of this Court have in the
past examined similar questions in almost similar fact situations.
But before we refer to those pronouncements we may briefly
refer to the Pension Regulations that govern the field.
The claims of the respondents for payment of pension, it is a
common ground, are regulated by Pension Regulations for the
Army, 1961. Regulation 173 of the said Regulations provides for
grant of disability pension to persons who are invalided out of
service on account of a disability which is attributable to or
aggravated by military service in non-battle casualty and is
assessed at 20% or above. The regulation reads:
"173. Primary conditions for the grant of disability
Unless otherwise specifically provided a
disability pension may be granted to an individual who is
invalided from service on account of a disability which is
attributable to or aggravated by military service and is
assessed at 20 percent or over. The question whether a
disability is attributable to or aggravated by military
service shall be determined under the rule in Appendix II.”
The above makes it manifest that only two conditions have
been specified for the grant of disability pension viz. (i) the
disability is above 20%; and (ii) the disability is attributable to or
aggravated by military service. Whether or not the disability is
attributable to or aggravated by military service, is in turn, to be
determined under Entitlement Rules for Casualty Pensionary
Awards, 1982 forming Appendix-II to the Pension Regulations.
Significantly, Rule 5 of the Entitlement Rules for Casualty
Pensionary Awards, 1982 also lays down the approach to be
adopted while determining the entitlement to disability pension
under the said Rules. Rule 5 reads as under:
“5. The approach to the question of entitlement to
casualty pensionary awards and evaluation of disabilities
shall be based on the following presumptions:
Prior to and during service
(a) A member is presumed to have been in sound
physical and mental condition upon entering
service except as to physical disabilities noted
or recorded at the time of entrance.
(b) In the event of his subsequently being
discharged from service on medical grounds
any deterioration in his health, which has
taken place, is due to service.”
Equally important is Rule 9 of the Entitlement Rules (supra)
which places the onus of proof upon the establishment. Rule 9
“9. Onus of proof. “ The claimant shall not be called
upon to prove the conditions of entitlements. He/She will
receive the benefit of any reasonable doubt. This benefit
will be given more liberally to the claimants in field/afloat
10. As regards diseases Rule 14 of the Entitlement Rules
stipulates that in the case of a disease which has led to an
individual’s discharge or death, the disease shall be deemed to
have arisen in service, if no note of it was made at the time of
individual’s acceptance for military service, subject to the
condition that if medical opinion holds for reasons to be stated
that the “disease could not have been detected on medical
examination prior to acceptance for service, the same will not be
deemed to have so arisen”. Rule 14 may also be extracted for
facility of reference.
“14. Diseases.- In respect of diseases, the following rule
will be observed “
(a) Cases in which it is established that conditions
of military service did not determine or
contribute to the onset of the disease but
influenced the subsequent courses of the
disease will fall for acceptance on the basis of
(b) A disease which has led to an individual’s
discharge or death will ordinarily be deemed
to have arisen in service, if no note of it was
made at the time of the individual’s
acceptance for military service. However, if
medical opinion holds, for reasons to be
stated, that the disease could not have been
detected on medical examination prior to
acceptance for service, the disease will not be
deemed to have arisen during service.
(c) If a disease is accepted as having arisen in
service, it must also be established that the
conditions of military service determined or
contributed to the onset of the disease and
that the conditions were due to the
circumstances of duty in military service.”
11. From a conjoint and harmonious reading of Rules 5, 9 and
14 of Entitlement Rules (supra) the following guiding principles
a member is presumed to have been in sound physical
and mental condition upon entering service except as
to physical disabilities noted or recorded at the time of
in the event of his being discharged from service on
medical grounds at any subsequent stage it must be
presumed that any such deterioration in his health
which has taken place is due to such military service;
the disease which has led to an individual’s discharge
or death will
ordinarily be deemed to have arisen in
service, if no note of it was made at the time of the
individual’s acceptance for military service; and
if medical opinion holds that the disease, because of
which the individual was discharged, could not have
acceptance of service, reasons for the same shall be
12. Reference may also be made at this stage to the guidelines
set out in Chapter-II of the Guide to Medical Officers (Military
Principles”, and the approach to be adopted in such cases. Paras
7, 8 and 9 of the said guidelines reads as under:
“7. Evidentiary value is attached to the record of a
member’s condition at the commencement of service, and
such record has, therefore, to be accepted unless any
different conclusion has been reached due to the
inaccuracy of the record in a particular case or otherwise.
Accordingly, if the disease leading to member’s
invalidation out of service or death while in service, was
not noted in a medical report at the commencement of
service, the inference would be that the disease arose
during the period of member’s military service. It may be
that the inaccuracy or incompleteness of service record on
entry in service was due to a non-disclosure of the
essential facts by the member e.g. pre-enrolment history
of an injury or disease like epilepsy, mental disorder, etc.
It may also be that owing to latency or obscurity of the
symptoms, a disability escaped detection on enrolment.
Such lack of recognition may affect the medical
categorisation of the member on enrolment and/or cause
him to perform duties harmful to his condition. Again,
there may occasionally be direct evidence of the
contraction of a disability, otherwise than by service. In all
such cases, though the disease cannot be considered to
have been caused by service, the question of aggravation
by subsequent service conditions will need examination.
The following are some of the diseases which ordinarily
escape detection on enrolment:
(a) Certain congenital abnormalities which are latent and
only discoverable on full investigations e.g. Congenital
Defect of Spine, Spina bifida, Sacralisation,
(b) Certain familial and hereditary diseases e.g.
Haemophilia, Congential Syphilis, Haemoglobinopathy.
(c) Certain diseases of the heart and blood vessels e.g.
Coronary Atherosclerosis, Rheumatic Fever.
(d) Diseases which may be undetectable by physical
examination on enrolment, unless adequate history is
given at the time by the member e.g. Gastric and
Duodenal Ulcers, Epilepsy, Mental Disorders, HIV
(e) Relapsing forms of mental disorders which have
intervals of normality.
(f) Diseases which have periodic attacks e.g. Bronchial
Asthma, Epilepsy, Csom, etc.
8. The question whether the invalidation or death of a
member has resulted from service conditions, has to be
judged in the light of the record of the member’s condition
on enrolment as noted in service documents and of all
other available evidence both direct and indirect.
In addition to any documentary evidence relative to the
member’s condition to entering the service and during
service, the member must be carefully and closely
questioned on the circumstances which led to the advent
of his disease, the duration, the family history, his
pre-service history, etc. so that all evidence in support or
against the claim is elucidated. Presidents of Medical
Boards should make this their personal responsibility and
ensure that opinions on attributability, aggravation or
otherwise are supported by cogent reasons; the approving
authority should also be satisfied that this question has
been dealt with in such a way as to leave no reasonable
9. On the question whether any persisting deterioration
has occurred, it is to be remembered that invalidation
from service does not necessarily imply that the member’s
health has deteriorated during service. The disability may
have been discovered soon after joining and the member
discharged in his own interest in order to prevent
deterioration. In such cases, there may even have been a
temporary worsening during service, but if the treatment
given before discharge was on grounds of expediency to
prevent a recurrence, no lasting damage was inflicted by
service and there would be no ground for admitting
entitlement. Again a member may have been invalided
from service because he is found so weak mentally that it
is impossible to make him an efficient soldier. This would
not mean that his condition has worsened during service,
but only that it is worse than was realised on enrolment in
the army. To sum up, in each case the question whether
any persisting deterioration on the available evidence
which will vary according to the type of the disability, the
consensus of medical opinion relating to the particular
condition and the clinical history.”
13. In Dharamvir Singh’s case (supra) this Court took note of
the provisions of the Pensions Regulations, Entitlement Rules and
the General Rules of Guidance to Medical Officers to sum up the
legal position emerging from the same in the following words:
“29.1. Disability pension to be granted to an individual
who is invalided from service on account of a disability
which is attributable to or aggravated by military service
in non-battle casualty and is assessed at 20% or over.
The question whether a disability is attributable to or
aggravated by military service to be determined under the
Entitlement Rules for Casualty Pensionary Awards, 1982 of
Appendix II (Regulation 173).
29.2. A member is to be presumed in sound physical and
mental condition upon entering service if there is no note
or record at the time of entrance. In the event of his
subsequently being discharged from service on medical
grounds any deterioration in his health is to be presumed
due to service [Rule 5 read with Rule 14(b)].
29.3. The onus of proof is not on the claimant
(employee), the corollary is that onus of proof that the
condition for non-entitlement is with the employer. A
claimant has a right to derive benefit of any reasonable
doubt and is entitled for pensionary benefit more liberally
29.4. If a disease is accepted to have been as having
arisen in service, it must also be established that the
conditions of military service determined or contributed to
the onset of the disease and that the conditions were due
to the circumstances of duty in military service [Rule
29.5. If no note of any disability or disease was made at
the time of individual’s acceptance for military service, a
disease which has led to an individual’s discharge or death
will be deemed to have arisen in service [Rule 14(b)].
29.6. If medical opinion holds that the disease could not
have been detected on medical examination prior to the
acceptance for service and that disease will not be
deemed to have arisen during service, the Medical Board
is required to state the reasons [Rule 14(b)]; and
29.7. It is mandatory for the Medical Board to follow the
guidelines laid down in Chapter II of the Guide to Medical
Officers (Military Pensions), 2002 “ “Entitlement: General
Principles”, including Paras 7, 8 and 9 as referred to above
14. Applying the above principles this Court in Dharamvir
Singh’s case (supra) found that no note of any disease had been
recorded at the time of his acceptance into military service. This
Court also held that Union of India had failed to bring on record
any document to suggest that Dharamvir was under treatment
for the disease at the time of his recruitment or that the disease
was hereditary in nature. This Court, on that basis, declared
Dharamvir to be entitled to claim disability pension in the
absence of any note in his service record at the time of his
acceptance into military service. This Court observed:
“33. In spite of the aforesaid provisions, the Pension
Sanctioning Authority failed to notice that the Medical
Board had not given any reason in support of its opinion,
particularly when there is no note of such disease or
disability available in the service record of the appellant at
the time of acceptance for military service. Without going
through the aforesaid facts the Pension Sanctioning
Authority mechanically passed the impugned order of
rejection based on the report of the Medical Board. As per
Rules 5 and 9 of the Entitlement Rules for Casualty
Pensionary Awards, 1982, the appellant is entitled for
presumption and benefit of presumption in his favour. In
the absence of any evidence on record to show that the
appellant was suffering from “generalised seizure
(epilepsy)” at the time of acceptance of his service, it will
be presumed that the appellant was in sound physical and
mental condition at the time of entering the service and
deterioration in his health has taken place due to service.”
15. The legal position as stated in Dharamvir Singh’s case
(supra) is, in our opinion, in tune with the Pension Regulations,
the Entitlement Rules and the Guidelines issued to the Medical
Officers. The essence of the rules, as seen earlier, is that a
member of the armed forces is presumed to be in sound physical
and mental condition at the time of his entry into service if there
is no note or record to the contrary made at the time of such
entry. More importantly, in the event of his subsequent discharge
from service on medical ground, any deterioration in his health is
presumed to be due to military service. This necessarily implies
that no sooner a member of the force is discharged on medical
ground his entitlement to claim disability pension will arise unless
of course the employer is in a position to rebut the presumption
that the disability which he suffered was neither attributable to
nor aggravated by military service. From Rule 14(b) of the
Entitlement Rules it is further clear that if the medical opinion
were to hold that the disease suffered by the member of the
armed forces could not have been detected prior to acceptance
for service, the Medical Board must state the reasons for saying
Last but not the least is the fact that the provision for
payment of disability pension is a beneficial provision which
ought to be interpreted liberally so as to benefit those who have
been sent home with a disability at times even before they
completed their tenure in the armed forces. There may indeed
be cases, where the disease was wholly unrelated to military
service, but, in order that denial of disability pension can be
justified on that ground, it must be affirmatively proved that the
disease had nothing to do with such service.
The burden to
establish such a disconnect would lie heavily upon the employer
for otherwise the rules raise a presumption that the deterioration
in the health of the member of the service is on account of
military service or aggravated by it. A soldier cannot be asked to
prove that the disease was contracted by him on account of
military service or was aggravated by the same. The very fact
that he was upon proper physical and other tests found fit to
serve in the army should rise as indeed the rules do provide for a
presumption that he was disease-free at the time of his entry
into service. That presumption continues till it is proved by the
employer that the disease was neither attributable to nor
aggravated by military service. For the employer to say so, the
least that is required is a statement of reasons supporting that
view. That we feel is the true essence of the rules which ought to
be kept in view all the time while dealing with cases of disability
16. Applying the above parameters to the cases at hand, we are
of the view that each one of the respondents having been
discharged from service on account of medical disease/disability,
the disability must be presumed to have been arisen in the
course of service which must, in the absence of any reason
recorded by the Medical Board, be presumed to have been
attributable to or aggravated by military service. There is
admittedly neither any note in the service records of the
respondents at the time of their entry into service nor have any
reasons been recorded by the Medical Board to suggest that the
disease which the member concerned was found to be suffering
from could not have been detected at the time of his entry into
service. The initial presumption that the respondents were all
physically fit and free from any disease and in sound physical and
mental condition at the time of their entry into service thus
remains unrebutted. Since the disability has in each case been
assessed at more than 20%, their claim to disability pension
could not have been repudiated by the appellants.
17. In the result these appeals fail and are hereby dismissed
without any order as to costs.
February 13, 2015
S U P R E M E C O U R T O F
RECORD OF PROCEEDINGS
I N D I A
Civil Appeal No.2904/2011
UNION OF INDIA & ANR.
C.A.No…………../2015 @ SLP(C)No.27220/2012
C.A. D 16394/2013
Date : 13/02/2015 These appeals were called on for pronouncement
of judgment today.
Mrs. Anil Katiyar,Adv.
Mr. R.D. Upadhyay,Adv.
Mr. J.P. Tripathi,Adv.
Mr. Awadhesh Kumar Singh,Adv.
Ms. Asha Upadhyay,Adv.
Mr. Anand Mishra,Adv.
Mr. Amrendra Kumar Singh,Adv.
Mr. Abhijeet Shah,Adv.
For Dr. (Mrs.) Vipin Gupta,Adv.
Mr. B.V. Balaram Das,Adv.
Mr. R.C. Kaushik,Adv.
Mr. Avijit Bhattacharjee,Adv.
Dr. Kailash Chand,Adv.
Mr. Sanchar Anand,Adv.
Mr. Apoorva Singhal,Adv.
For Mr. Devendra Singh,Adv.
Sanjay R. Hegde,Adv.
Biju R. Raman,Adv.
Mr. Nikhil Jain,Adv.
Mr. Prakash Kumar Singh,Adv.
Mr. Ranbir Singh Yadav,Adv.
Mr. Bimlesh Kumar Singh,Adv.
Mr. Saurabh Mishra,Adv.
Mr. Dinesh Verma,Adv.
Mr. Rajat Sharma,Adv.
For Mr. Subhasish Bhowmick,Adv.
Mr. Pawan Upadhyay,Adv.
Mr. Sarvjit Pratap Singh,Adv.
For Ms. Sharmila Upadhyay,Adv.
Mr. Mohan Kumar,Adv.
Mr. Ghan Shyam Vasisht,Adv.
UPON hearing the counsel the Court made the following
O R D E R
Civil Appeal No.2904/2011,C.A.No…………./2015 @
2010, C.A.No.1498/2011, C.A.No.2279/2011, C.A.No.2905/2011,
C.A.No.3409/2011, C.A.No.5090/2011, C.A.No.5144/2011, C.A.
No. 5163/2011, C.A.No.5414/2011, C.A.No.5469/2011, C.A.No.
5840/2011, C.A.No.7368/2011, C.A.No.7479/2011, C.A.No.
7629/2011, C.A.No.10105/2011, C.A.No.10747/2011, C.A.No.
2012, C.A.No.183/2012, C.A.No.5260/2012, C.A.No.5819/2012,
C.A.No………/2015 D No.16394/2013 :
reportable judgment of the Bench comprising His Lordship
and Hon’ble Mrs. Justice R. Banumathi.
The appeals are dismissed in terms of the signed
C.A.No.4409/2011 and SLP(C)No.22765/2011 :
(Signed reportable judgment is placed on the file)
CIVIL APPELLATE JURISDICTION
I.A. NO.4 OF 2015 IN CIVIL APPEAL NO. 11133 OF 2011
M/S. ADANI POWER LTD. APPLICANT/APPELLANT
GUJARAT ELECTRICITY REGULATORY COMMISSION & OTHERS RESPONDENTS
O R D E R Chelameswar, J.
1. This application is filed by the appellant in Civil Appeal No.11133/2011. The prayer in the application is as follows: “a) to stay the operation of the impugned Judgment dated 7.9.2011 and suspend further supply of electricity in terms of the PPA during the pendency of this Appeal.
b) in the alternative to prayer (a) above, during the pendency of the accompanying Civil Appeal the Hon’ble Court may direct the Respondent(s) to pay the tariff as per CERC norms for tariff on cost plus basis; and also make the payment from the date of the supply of power under the PPA of the differential amount between the PPA tariff and the tariff as per CERC norms for tariff on cost plus basis on the such terms and condition as this Hon’ble court deems fit as just and proper;”
However, prayer (a) was not pressed when the matter was taken up for hearing. A brief background of the appeal and the application is as follows.
2. The appellant company is a power generating company. The 2nd respondent herein is a company owned by the State of Gujarat carrying on business of purchasing power in bulk from power generating companies such as the appellant herein and supplying to various distributing companies in the State of Gujarat.
3. The appellant and the 2nd respondent entered into a Power Purchase Agreement (hereinafter PPA, for short). Under the said agreement, the appellant is obliged to sell 1000 megawatt of power from the appellant’s power project. For various reasons, the details of which are not necessary at this stage, the appellant issued a notice of termination dated 28.12.2009 of the above mentioned PPA w.e.f. 4.1.2010.
4. After some correspondence, the 2nd respondent filed a petition before the Gujarat Electricity Regulatory Commission (the 1st respondent herein) seeking adjudication of the dispute arising out of termination of the PPA by the appellant.
5. The 1st respondent, by its order dated 31.8.2010, set aside the termination notice sent by the appellant and directed the appellant to supply power to the 2nd respondent as per the terms of the PPA.
6. Aggrieved by the said order, the appellant carried the matter in appeal before the Appellate Tribunal for Electricity unsuccessfully. Hence, the appeal No.11133/2011. The appeal was admitted by an order dated 13.8.2012 and since pending. Hence the instant application with averments as follows: “7. If the relief sought for by the Appellant is not granted, there is a serious risk of Mundra Power Project becoming a Non Performing Asset causing an irreparable harm to the consumers as well as the lenders of the Mundra Power Project. Since the main Civil Appeal is pending adjudication for final hearing and the Appellant is supplying the power to the Respondent No.2 “ GUVNL, the present application is being filed to compensate the Appellant upto the actual cost of generation as per CERC norms for determination of tariff. The same is in order to sustain the generation and supply of power pending the hearing of the main Civil Appeal.
xxxx xxxx xxxx
9. It is submitted that whereas the pendency of the present appeal is piling huge losses upon the Appellant no prejudice would be occasioned to the Respondents if the present Application is allowed on an undertaking by the Appellant to refund the amount over and above the PPA tariff that will be paid, to the Respondent No.2 or such other condition as this Hon’ble Court may deem fit. Alternatively, in view of the recurring losses, the Appellant be permitted to suspend further supply of electricity in terms of the PPA during the pendency of this Appeal. This shall meet the ends of justice.”
7. On behalf of the 2nd respondent, an affidavit dated 23.11.2015 is filed. The said affidavit, while contesting the various assertions made by the appellant and its rights, stated: 15. I submit that, without prejudice to the rights of the Respondent No.2 to contest the present appeal, the answering Respondent with the approval of Government of Gujarat has already shown its willingness to pay compensatory tariff prospectively (from next month of CERC order i.e. March 2014) subject to paras 12 and 13 above to resolve the issue by making suitable adjustments in tariff which till date is not implemented because of non acceptance by Appellant and other stakeholders.
16. I say that without prejudice to its rights in the present appeals the Respondent No.2 is willing to implement the decisions of State Govt. for paying compensatory tariff prospectively (from next month of CERC order i.e. March 2014) to resolve the issue by making suitable adjustment in tariff on the directions of the Hon’ble Court. xxxxxx”
8. Shri Prashant Bhushan, learned counsel appearing for respondent No.4 opposed the prayers of the applicant alleging that the 2nd respondent is colluding with the appellant as there is no occasion for the respondent to make any concession such as the one made in the affidavit filed by the 2nd respondent (the relevant portion of which are already extracted above). More particularly, when the 2nd respondent succeeded before two fora below, the concession of the 2nd respondent to pay compensatory tariff to the appellant though said to be subject to the contentions of the respondent in the appeal is nothing but largesse of the State to the appellant and not consistent with public interest. He further submitted that this Court may not affix a stamp of approval for such a decision of the 2nd respondent by passing any order accepting the concession made by the respondent. He also submitted that the payment of compensatory tariff to the appellant would ultimately result in compelling the consumers to pay higher price.
9. On the other hand, Shri Harish Salve, learned senior counsel for the appellant denied the allegations of collusion between the appellant and the 2nd respondent. He argued that the decision of the 2nd respondent is supported by a decision of the State of Gujarat on an assessment of the subsequent developments. He submitted that compelling the appellant to supply energy in terms of the PPA is bound to financially destroy the appellant company and therefore prayed that the 2nd respondent be permitted to make the payment in terms of his concession.
10. A PPA is a contract between the parties and the terms of any contract are nothing but the agreed terms of the contracting parties. It is also a settled principle of the law of contracts that parties to a contract can alter the terms of the contract subsequent to the formation of the contract by mutual consent.
11. However, the rights of the State and its agencies and instrumentalities in the realm of contracts are circumscribed by the considerations of public interest. Apart from such general principle, the rights and obligations of the parties to the PPA in question are also subject to certain statutory prescriptions.
12. The questions (i) whether the appellant is entitled to terminate the PPA and (ii) if so, on what terms and conditions are to be examined in the appeal.
13. Independent of such right, if any, of the appellant, if the parties to the PPA are agreeable to alter the terms of the PPA (as indicated in the counter) for whatever reasons, whether such a variation is consistent with the requirements of the statutes applicable to the contract is a separate question. Whether such a variation is consistent with the larger public interest is altogether a different question. An ancillary question arises whether such an issue can be properly the subject matter of the instant appeal. All these matters require a detailed examination as and when the appeal is taken up for hearing.
14. Coming to the question whether the 2nd respondent be directed to pay the appellant compensatory tariff as indicated in its counter, we are of the opinion no direction can be given at this stage during the pendency of the appeal as the right of the appellant for such compensatory tariff appears to be one of the issues in the appeal.
15. In so far as the question of permitting the 2nd respondent to pay the compensatory tariff as indicated in its counter, we are of the opinion that it requires no permission from this Court. It is upto the 2nd respondent to take a decision in accordance with law to the best of its understanding. We may make it clear that if the 2nd respondent chooses to make such payment, the same shall be subject to the result of the appeal.
The I.A. is disposed of as indicated above.
..J. (J. Chelameswar)
..J. (Abhay Manohar Sapre)
New Delhi; December 3, 2015