Delhi High Court Upholds CERC's Exclusive Arbitration Referral Powers in Energy Dispute

Court Dismisses Renew Wind Energy's Plea Against SECI's Invoice Deductions; Asserts CERC's Authority Under Electricity Act

In a landmark judgment, the Delhi High Court has reinforced the Central Electricity Regulatory Commission's (CERC) exclusive jurisdiction over arbitration referrals in disputes involving energy generating companies and transmission licensees. The case involved Renew Wind Energy (AP2) Pvt. Ltd., which sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, against unilateral deductions from its monthly invoices by the Solar Energy Corporation of India (SECI).

Renew Wind Energy operates a 300 MW wind power project in Gujarat and had entered into a Power Purchase Agreement (PPA) with SECI for a 25-year supply. The dispute arose when SECI issued a notice demanding compensation for not meeting the minimum energy generation requirements, threatening deductions from upcoming invoices.

The petitioner argued that the shortfall resulted from force majeure events, exempting them from liability under the PPA. However, SECI contended that disputes involving tariff must be adjudicated by the CERC, as per the Electricity Act, 2003.

The High Court's judgment, delivered by Justice Purushaindra Kumar Kaurav, concluded that the petition was not maintainable, affirming CERC's exclusive power to refer disputes for arbitration under Section 79(1)(f) of the Electricity Act. This section prevails over general referral powers under the Arbitration Act, emphasizing the precedence of special law in the domain of electricity regulation.

The court clarified that Section 79(1)(f) empowers CERC to adjudicate or refer for arbitration any disputes involving generating companies, even those outside its adjudicatory scope, provided an arbitration clause exists. The judgment further addressed concerns over interim relief, suggesting Section 94(2) of the Electricity Act as a statutory substitute for Section 9 of the Arbitration Act, allowing parties to seek interim orders during proceedings before CERC.

This decision underscores the legislative intent to streamline dispute resolution within the energy sector, reinforcing CERC's role in regulating tariff-related conflicts and arbitration referrals. The ruling is expected to have significant implications for energy companies, emphasizing the necessity to approach CERC for arbitration proceedings.

Bottom Line:

The Central Electricity Regulatory Commission (CERC) holds exclusive powers under Section 79(1)(f) of the Electricity Act, 2003 to refer disputes involving generating companies or transmission licensees for arbitration. The CERC's referral power prevails over the referral powers of a Court or authority under Sections 8 or 11 of the Arbitration and Conciliation Act, 1996.

Statutory provision(s): Section 79(1)(f) Electricity Act, 2003; Sections 8, 9, 11 Arbitration and Conciliation Act, 1996; Section 94(2) Electricity Act, 2003

Renew Wind Energy (AP2) Pvt. Ltd. v. Solar Energy Corporation of India, (Delhi) : Law Finder Doc Id # 2803623