Statutory tariff notifications override inconsistent contract terms, and express interest periods bar prior claims under the agreement.
Statutory tariff notifications governing a power purchase arrangement prevailed over inconsistent contractual claims, so the amended notification of 06.11.1995 removed the claimed deemed generation incentive; the article also notes that repeated correspondence did not extend limitation and that Section 18 of the Limitation Act was inapplicable absent a qualifying admission. On interest, the supplementary agreement fixed 14% per annum only for the stated period from 01.07.2003 to 31.12.2009, so no prior-period interest could arise by implication.
Issues: (i) Whether the amended tariff notification of 06.11.1995 applied to the power purchase arrangement so as to deny deemed generation incentive and justify recovery of excess payments, subject to limitation. (ii) Whether the supplementary agreement entitled the generating company to interest on the deemed loan component for any period prior to 01.07.2003.
Issue (i): Whether the amended tariff notification of 06.11.1995 applied to the power purchase arrangement so as to deny deemed generation incentive and justify recovery of excess payments, subject to limitation.
Analysis: The tariff regime under Section 43A of the Electricity (Supply) Act, 1948 was statutory and binding, and the power purchase arrangement had to operate subject to the governing notifications. The amended notification inserted a restriction that removed entitlement to incentive in the manner claimed, and the change-in-law clause in the agreement also contemplated such amendments. The Court found no merit in the contention that the amendment was inapplicable to the generating station. On limitation, the Court accepted that the cause of action arose when the purchaser rejected the claim, but held that repeated correspondence did not extend limitation and that Section 18 of the Limitation Act, 1963 was inapplicable for want of an admission extending time.
Conclusion: The amended notification applied, the incentive was not payable in the claimed manner, and recovery was permissible only to the extent upheld by the lower authorities on limitation.
Issue (ii): Whether the supplementary agreement entitled the generating company to interest on the deemed loan component for any period prior to 01.07.2003.
Analysis: The supplementary agreement expressly recognized the specified amount as own capital and fixed interest at 14% per annum only for the defined period from 01.07.2003 to 31.12.2009. The Court held that the parties had consciously fixed the rate and the operative period, and that no prior-period interest could be implied on equitable or contractual grounds. The agreed treatment of the amount as a normative or deemed loan did not create a separate entitlement beyond the express bargain.
Conclusion: No interest was payable for any period prior to 01.07.2003.
Final Conclusion: Both appeals failed, as the statutory tariff amendment controlled the incentive dispute and the supplementary agreement confined interest on the deemed loan component to the specified period.
Ratio Decidendi: Where tariff is regulated by statutory notification, contractual terms inconsistent with the notification cannot prevail, and an express agreement fixing both the rate and period of interest excludes any claim for a prior period not covered by the bargain.
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AI Drafter ✕
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