APTEL Holds That State Electricity Regulatory Commissions Have Jurisdiction Under Section 86(1)(f) of The Electricity Act, To Adjudicate Disputes between Licensees and Generating Companies and any other agency/entity directly engaged in generation and procurement of power on behalf of Government or the Licensees – JSA Successfully Represents Hindustan Cleanenergy

JSA Advocates and Solicitors successfully represented Hindustan Cleanenergy Pvt. Ltd. (“HCL”) before the Appellate Tribunal for Electricity (“APTEL”) in an Appeal filed by Punjab Energy Development Agency (“PEDA”) wherein before delving into the merits of the matter, APTEL examined the maintainability of Petitions before State Electricity Regulatory Commissions under Section 86(1)(f) of the Electricity Act, 2003 (“Electricity Act”) while adjudicating disputes involving Government Agencies. By its Order dated 12.07.2025, APTEL has held that:-

Government Agencies like PEDA can be impleaded as a party to disputes under Section 86(1)(f) of the Electricity Act with regards to PEDA’s activities which are directly related to generation and procurement of power either for the Government or for the distribution licensees.
While adjudicating disputes under Section 86(1)(f) of the Electricity Act, State Electricity Regulatory Commissions are competent to issue directions to PEDA and in case PEDA is aggrieved by any such direction by the Commission, PEDA will be competent to maintain an Appeal before APTEL under Section 111 of the Electricity Act.
The expression “any other agency/entity directly engaged in generation and procurement of power on behalf of the Government or the Licensees” shall be read after the expression “Disputes between Licensee and Generating Companies” in Section 86(1)(f) of the Electricity Act.

The brief facts leading to the dispute are under:-

HCL is the parent company of Magnet Buildtech Pvt. Ltd. (“MBPL”) which was incorporated as a wholly owned subsidiary of HCL in terms of the Letter of Award (“LoA”) issued to HCL.
MBPL is a generating company in terms of Section 2(28) of the Electricity Act and has set up a 50 MW Solar Power Project (“Project”) in the State of Punjab.
MBPL had entered into the following agreements w.r.t. the Project:-
- Implementation Agreement (“IA”) dated 24.11.2015 with PEDA; and,
- Power Purchase Agreement (“PPA”) dated 12.01.2016 with Punjab State Power Corporation Ltd. (“PSPCL”).
In terms of Article 6.2 of the IA r/w Article 10.1.0 of the PPA, the Scheduled Commercial Operation Date (“SCOD“) of the Project was to be achieved within 12 months from the date of signing of PPA i.e., by 11.01.2017.
In terms Section 3 of the Request for Proposal (“RfP“) dated 29.06.2015, HCL had deposited Unconditional Bank Guarantee of Rs. 5 Crores with PEDA.
Due to the alleged delay in commissioning of the Project, PEDA wrongfully encashed the Bank Guarantee partially for Rs. 3.05 Crores.
On 30.05.2017, HCL and MBPL filed Petition No. 37 of 2017 before Punjab State Electricity Regulatory Commission (“PSERC”) seeking extension of the SCOD till 14.02.2017 due to occurrence of the Force Majeure events which were beyond the control of HCL/MBPL and sought refund of wrongful encashment of HCL’s Bank Guarantee by PEDA on account of the alleged delay in commissioning the Project.
By way of the Order dated 22.03.2018, PSERC had held that:-
- The delay/extension of 36 days from 20.12.2016 to 25.01.2017 in commissioning the Project was caused due to Civil Court Orders restraining MBPL from erecting transmission towers and constructing transmission line in land belonging to various land owners.
- MBPL was granted extension in achieving CoD of 11 days from 23.01.2017 to 03.02.2017 for Unit I and extension of 4 days from 30.01.2017 to 03.02.2017 for Unit II. In view of the above, Ld. PSERC held that the delay in commissioning of Unit I was 15 days (26 days – 11 days) and Unit II is 30 days (34 days – 4 days).
- PEDA is entitled to encashment of the Bank Guarantee in respect of delayed commissioning to the above extent in terms of IA/PPA.
- The Bank Guarantee for the remaining amount was directed to be released to HCL within 7 working days from the date of the Order.
Similar Appeals were filed by PEDA against various orders passed by PSERC which directed PEDA to return Bank Guarantees to the Project Developers.
Before dwelling into the Appeals on merits, PEDA raised a preliminary objection on maintainability of any directions issued by PSERC to PEDA while adjudicating disputes under Section 86(1)(f) of the Electricity Act. Accordingly, APTEL has first considered the issue of maintainability of Petitions against PEDA.
Since the matters involved interpretation of Section 86(1)(f) of the Electricity Act and the wide ramifications that will occur due to the decision in the batch Appeals, APTEL requested three Senior Advocates to assist APTEL as amicus curiae.

By its Order dated 12.07.2025, APTEL has, inter alia, held that:-

Section 86(1)(b) of the Electricity Act confers power upon the SERCs to ‘regulate’ electricity purchase and procurement undertaken by the distribution licensees for distribution and supply within the State.
Section 86(1)(f) of the Electricity Act empowers SERCs to adjudicate upon disputes between the licensees and generating companies and to refer any dispute for arbitration.
The word ‘Dispute’ touches upon all aspects of generation, transmission and distribution of electricity envisaged under the Electricity Act.
Even though the clause specifies that the disputes to be brought before the Commission for adjudication should be between a licensee and a generating company, there may be situations where the disputes would involve the rights and obligations of a person or entity other than a licensee and a generating company. There may also be situations which necessitates passing any directions against the State Governments or its instrumentalities.
Once the SERCs find that any act of State Government or instrumentality of a State Government related to tariff determination is against consumer interest, SERCs would not be powerless to issue appropriate directions which would binding upon the State Government and its instrumentalities.
Section 86(1)(f) of the Electricity Act cannot be read in isolation and has to be read with Section 86(1)(b), preamble of the Electricity Act and the accompanying Statement of Objects and Reasons. It is a fundamental rule of interpretation that a statute must be read as a whole. One provision of the Act should be construed with reference to other provisions in the same Act.
Section 86(1)(f) specifically empowers SERCs to decide the disputes between Generating Companies and Licensees. Sometimes distribution licensees procure the power itself, whereas, sometimes the procurement takes place through a nodal agency appointed by the Government. Section 86(1)(b) of the Electricity Act enjoins upon the State Commission to also regulate the procurement process of power which can be facilitated through a nodal agency.
The legislative intent behind Section 86(1)(b) of the Act is to empower SERCs to regulate all matters regarding the electricity purchase and procurement process.
Section 86(1)(f) cannot be read in isolation and has to be read with Section 86(1)(b) which would make it limpid that all the disputes relating to procurement process would necessarily fall within the domain of SERCs, irrespective of whether the procurement process is initiated and carried out by the distribution licensee itself or through a nodal agency.
As the power procurement process and purchase of electricity are regulated activities under Section 86(1)(b), the related disputes would fall within the powers of the SERC and are amenable to its jurisdiction. It hardly matters whether the procurement process is carried out by the distribution licensee itself or through a nodal agency.
The SERC having been set up under the special statute i.e. Electricity Act with one of the functions to resolve the disputes, alone ought to be held to have jurisdiction to adjudicate upon such a dispute and to rule upon the entitlement of PSPCL for liquidated damages along with the entitlement of PEDA for encashment of the Performance Bank Guarantee of the project developer.
The words ‘and any other agency/entity directly engaged in generation and procurement of power on behalf of Government or the Licensees’ shall be read after the expression ‘Disputes between Licensee and Generating Companies’ in Section 86(1)(f) of the Electricity Act. PEDA can be impleaded as a party to disputes under Section 86(1)(f) of the Electricity Act regarding its activities which are directly related to generation and procurement process of power either for the Government or for the Distribution Licensees.