Rajasthan High Court was not justified in issuing the mandamus as it failed to consider the significant impact on both consumer and public interests: Supreme court
Case Title: Jaipur Vidyut Vitran Nigam Ltd. & Ors. Vs MB power (Madhya Pradesh) Ltd. & Ors.
Case No: CIVIL APPEAL NO.6503 OF 2022
Decided on: 08.01.2024
Coram: Hon’ble Mr. Justice B.R. Gavai
Facts of the Case
The appeal challenged the judgment and order dated 20th September 2021, passed by the Division Bench of the High Court of Judicature for Rajasthan. The High Court held that the respondent no. 1 to 5 are bound to purchase a total of 906 MW of electricity from the successful bidders. It, therefore, directed the writ petitioner- MB Power to supply 200 MW electricity to the respondents within the limit of 906 MW. Furthermore, it ordered respondent 1 to 5 to issue Letter of Intent to PTC within 2 weeks of receiving compliant application. Court had specifically directed the State Commission to decide the tariff under Section 63 of the Electricity Act having regard to the law laid down both statutorily and by this Court.
Rajasthan Electricity Regulatory Commission sought to procure 1000 MW of power via competitive bidding in 2009. Bids were received, 7 bidders qualified, but MB Power wasn’t among them. PTC India, a power-trading company, submitted a bid for 1041 MW sourced from five generators. BEC gave its opinion that since the rates quoted vary considerably, negotiations could be held with the bidders. the L-4 and L-5 bidders filed Writ Petitions before the High Court, seeking to strike down the negotiations process. The court directed the State Commission to go into the issue of approval for the adoption of tariffs concerning L-4 and L-5 bidders. Subsequent to the judgment, the BEC came to a finding that the tariffs quoted by the L-4 and L-5 bidders were not aligned to the prevailing market prices, and the state government held the same. The writ petition filed by MB Power has been allowed by the High Court. Aggrieved by this, the present appellants filed this civil appeal.
Issue
Whether the High Court was justified in issuing mandamus in the nature it issued?
Legal provision
Article 226 of Indian Constitution gives High Courts the power to issue writs to carry out the implementation of Fundamental Rights.
Section 63 of the Electricity Act –
Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.
Court Analysis and Decision
The Apex court found that the High Court was not justified in issuing the mandamus in the nature it issued for which it took reference to the case of Air India Ltd. v. Cochin International Airport Ltd. and Ors. [(2000) 2 SCC 617]. The court deemed the issued mandamus flawed, since is failed to consider the significant impact on both consumer and public interests
The court held that Contract awards, public or private, are primarily commerce-driven. While the State has flexibility in selecting its decision-making method and even negotiating offers, it must follow its own established procedures and avoid arbitrariness. While courts generally don’t scrutinize award decisions, they can review the process for bias, unreasonableness, or arbitrariness. Even then, judicial intervention happens only under exceptional circumstances, prioritizing public interest and avoiding merely technical irregularities. Furthermore, the decision-making process, as adopted by the BEC was totally in conformity with the principles laid down by the Court from time to time. The conclusion by BEC that the rates quoted by SKS Power (L-5 bidder) were not market aligned, was approved by the state commission.
The appeals were therefore allowed and the judgment and order of the learned APTEL dated 1st June 2023 is quashed and set aside.
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Written by- Bhawana Bahety