The Supreme Court on Monday said the Gujarat Urja Vikas Nigam Limited (GUVNL) cannot be guided only by its own commercial interests and it's conduct as a state-instrumentality must be of the standard of a model citizen.
A bench of Justices Sanjay Kumar and Satish Chandra Sharma dismissed the appeals filed by GUVNL challenging a September 2015 order of the Appellate Tribunal for Electricity (APTEL), New Delhi.
APTEL confirmed the orders passed by the Gujarat Electricity Regulatory Commission (GERC) on the petitions filed by four companies.
In its verdict, the top court considered the issue of whether the four companies were entitled to approach the GERC for determination of tariff for procurement of power by GUVNL from their wind energy projects.
The bench noted the GERC answered the issue in their favour and the same stood confirmed by APTEL.
GUVNL, it said, was bound to promote and give effect to the government's policy of encouraging generation of power from renewable energy sources.
"GUVNL cannot be guided only by its own commercial interests, like a private business entity and it's conduct, as a State-instrumentality, must be of the standard of a model citizen," the bench said.
The order found GUVNL to have sought a "patently unfair treatment" to be meted out to the four firms by binding them to a rate that was wholly inapplicable to them.
"Such conduct, akin to a Shylock, does not reflect positively upon GUVNL," it said.
The top court noted it was not open to GUVNL to contend that the four firms were estopped from seeking determination of tariff by GERC as they had willingly signed power purchase agreements with it at the tariff fixed for wind energy projects availing accelerated depreciation.
"As GUVNL failed to obtain commitments from the respondent companies that they would only avail accelerated depreciation at the time they had to choose that option, GUVNL has no indefeasible right to bind them to a tariff which was applicable only to such wind energy projects that availed accelerated depreciation," it said.
The bench noted that GERC had earlier made it quite clear that tariff of Rs 3.56 per kilowatt-hour would apply only to those wind energy projects that availed accelerated depreciation.
"GUVNL cannot apply that wholly inapplicable tariff to the respondent companies which, admittedly, did not avail accelerated depreciation. The orders passed by the GERC and the APTEL holding to this effect, therefore, do not brook any interference," it said.
It said GUVNL was an instrumentality of the state and, therefore, bound by its policy directives.
"It cannot advance commercial considerations in isolation on par with a private party, divorced from its responsibility to abide by and further the policy objectives of the state," the bench said.
While dismissing the appeals, the top court vacated its February 2023 order which permitted GERC to proceed with the tariff determination hearings subject to condition that no final order should be passed without the leave of the top court
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