New Delhi, The Supreme Court on Wednesday said power distribution companies (discoms) cannot be permitted to change their decisions in connection with power purchase agreement at their whims and fancies, as it imposed a cost of Rs 5 lakh on Andhra Pradesh Southern Power Distribution Power Company Ltd (APSPDCL).

A bench of Justices L. Nageswara Rao and B.R. Gavai said: "We have no hesitation to hold that the appellants - discoms, could not be permitted to change the decision at their whims and fancies and, particularly, when it is adversarial to the public interest and public good. The record would clearly show that the change in decision is arbitrary, irrational and unreasonable."

It noted that discoms are instrumentalities of the state government and every action of a state is equally required to be guided by public interest, and every holder of a public office is a trustee, whose highest duty is to the people of the country.

The top court judgment came on an appeal filed by APSPDCL and others challenging the January 7, 2020, judgment passed by the Appellate Tribunal for Electricity (APTEL), allowing the appeal of Hinduja National Power Corporation Ltd (HNPCL).

The bench upheld the APTEL decision and cited that the state government had given assurance procuring 100 per cent power from the project of the HNPCL.

In the 82-page judgment, the bench said: "We ask a question to ourselves, as to whether public interest, which is so vociferously pressed into service in the present matter by the appellants - discoms, lies in purchasing the power at the rate of Rs 3.82 per unit from HNPCL or by purchasing it at the rate of Rs 4.33 per unit from KSK Mahanadi".

"We strongly deprecate such a conduct of the appellants - discoms, which are instrumentalities of the state. The appellants - discoms, rather than acting in public interest, have acted contrary to public interest... we could very well have initiated the action against the officials of the appellants - discoms for having committed contempt of this court, but we refrain ourselves from doing so."

The bench said the documents placed on record would show that though the HNPCL had given its estimation of project cost, which was received by the discoms without prejudice to their rights to contest the same on every component before the state commission. It noted that documents placed on record would clearly show that Andhra Pradesh has, on more than one occasion, expressed that it was interested in buying 100 per cent power from the project of the HNPCL.

"The MoA signed between the appellants - discoms and HNPCL dated May 17, 2013, would clearly show that it was agreed between the parties that the entire capacity of HNPCL project and all the units of the power stations shall, at all times, be for the exclusive benefit of the discoms and the discoms were to have the exclusive right as well as obligation to purchase the entire capacity from the project."

The bench added that perusal of the orders of the State Commission on September 26, 2015 and August 6, 2016, would clearly reveal that the discoms also stood by the position that the 100 per cent power generated in the power plant of HNPCL was to be purchased by them. "Not only this, but after the bifurcation of the erstwhile state of Andhra Pradesh, the appellants entered into a Continuation Agreement dated 28th April, 2016, reiterating their stand."

The dispute started after HNPCL was discarded from the bidding process, though it had emerged as the successful LA2 bidder. The State Commission dismissed the petition filed by HNPCL in 2015.

On January 31, 2018, the State Commission allowed withdrawal of plea filed by the discoms, seeking approval of power purchase agreement (PPA) and dismissed plea by HNPCL seeking determination of tariff. The HNPCL moved APTEL challenging this order.

"As such, the stand of the appellants - discoms, that the revival of the project of HNPCL was as a merchant power plant and therefore, the appellants cannot be compelled to purchase power from it, is self-contradictory," noted the bench.

"In the result, the present appeal is dismissed with costs, quantified at Rs 5,00,000 (Rupees five lakh only). Pending IAs, if any, shall stand disposed of."