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Only CERC Can Send Power Disputes to Arbitration, Says DHC

Introduction

The Delhi High Court discussed the applicability of the Electricity Act, 2003 read with the Arbitration and Conciliation Act, 1996, in particular, whether a generating company can maintain a Section 9 petition for interim relief before a civil court when disputes arise under a power purchase agreement (PPA). The Court finally concluded that such petitions are not maintainable, as the Central Electricity Regulatory Commission (CERC) has exclusive jurisdiction to adjudicate or refer such disputes for arbitration.

 

Background Facts

The petitioner, Renew Wind Energy (AP2) Pvt. Ltd., is a generating company within the meaning of Section 2(28) of the Electricity Act, operating a 300 MW wind power project in Kutch, Gujarat. The respondent, Solar Energy Corporation of India, a government-owned body and a Renewable Energy Implementing Agency, entered into a PPA with the petitioner on 23 May 2018 for supply of power for a period of 25 years.

By notice dated May 2025, SECI informed the petitioner that it had failed to supply the Minimum Energy Supply Requirement of 946.08 MUs for FY 2024-25 and had supplied only 632 MUs. SECI demanded compensation under Article 4.4.1 of the PPA and threatened to deduct this amount from subsequent monthly invoices. The petitioner responded by stating that there was a shortfall in supply due to force majeure events and that any deductions would be illegal on the part of SECI. Without an arbitral tribunal having been constituted, the petitioner has filed the instant Section 9 petition praying for an injunction against such deduction.

 

Respondent’s Submissions

Respondent raised a jurisdictional objection, arguing that the dispute fell squarely within the exclusive domain of the CERC under Section 79(1)(f) of the Electricity Act. The key points were:

 

  1. Tariff-related dispute: The PPA itself had explicitly connected shortfall compensation with tariff-related provisions; indeed, Article 16.3.1 imposed an obligation to have such issues adjudicated by the “appropriate commission.”

2. Exclusive statutory mechanism: The arbitration under Section 158 of the Electricity Act can happen only when the CERC refers the matter, and the Commission appoints the arbitrator. Hence, the application of Sections 8, 9, and 11 of the Arbitration Act is excluded.

3. Overriding effect: Sections 173–174 grant the Electricity Act primacy over inconsistent laws, including the Arbitration Act.

 

Petitioner’s Submissions

Petitioner argued that this labelling of the dispute by SECI as “tariff-related” was artificial and wide. The controversy involved contractual compensation for non supply of energy, not tariff fixation, and thus was arbitrable under Article 16.3.2 of the PPA. He further distinguished between Section 79(1)(f) dealing with central government-owned entities and inter-State matters, and Section 86(1)(f) dealing with State Commissions, on the basis that only disputes “involving” regulatory functions are within the jurisdiction of CERC. Ordinary commercial disputes, he thus argued, remained arbitrable.

 

Court’s Analysis

The court undertook an in-depth review of the adjudicatory and referral powers of CERC under the Electricity Act, set against the backdrop of the provisions under the Arbitration Act.

  1. CERC’s Adjudicatory and Referral Powers

Section 79(1)(f) gives power to CERC to “adjudicate upon disputes involving generating companies or transmission licensees” as also to refer such disputes for arbitration. No other body has these dual powers of adjudication and referral. The Court considered two facets:

1. Facet One: CERC may refer disputes that it could itself adjudicate.

2. The second facet: It may also refer disputes it cannot adjudicate but that arise in the electricity regulatory context.

(B) Exclusivity of CERC’s Power

The Court held that Section 79(1)(f) read with Section 158 provides a self-contained mechanism for dispute resolution. Consequently, no independent right under either Section 9 or 11 of the Arbitration Act could be exercised to seek interim relief or the appointment of arbitrators without a referral by the CERC. The Electricity Act overrides the Arbitration Act in case of conflict.

  1. Section 94(2) as an Alternative to Section 9

The Court observed that Section 94(2) of the Electricity Act grants the power to the CERC to issue interim orders, which would effectively substitute for the interim protection under Section 9 of the Arbitration Act. Hence, parties can approach the CERC for urgent interim relief rather than the civil courts.

The petition was accordingly dismissed, reinforcing the exclusive domain of electricity regulatory commissions in disputes in the renewable and power purchase sector.

Case Reference:- O.M.P.(I) (COMM.) 213/2025 RENEW WIND ENERGY (AP2) PVT. LTD. Vs. SOLAR ENERGY CORPORATION OF INDIA