Supreme Court Weekly Digest December 11 - 16, 2025

Alignment of PPAs with Regulations — Held that terms and conditions of a PPA are not unregulated and must be aligned with the Regulations framed by the Appropriate Commission under the 2003 Act - Even if a PPA is amended, it must factor in the statutory definitions of "COD" and "Unit" as provided in the CERC/State Regulations - An unapproved PPA that defines COD based on "Project Completion" (requiring combined cycle capacity) is in direct conflict with Regulations that recognize COD in relation to an individual "Unit" (Open Cycle) - Under Section 61(d) of the 2003 Act, the recovery of the cost of electricity in a reasonable manner must be ensured- Held that the respondent supplied continuous power (firm power) from the gas turbine unit during the relevant period, it is entitled to pro-rata fixed charges in addition to variable charges- Appeal dismissed. [Paras 25-32] Tamil Nadu Generation and Distribution Corporation Ltd. v. Penna Electricity Ltd; 2025 LiveLaw (SC) 1213 : 2025 INSC 1439 Arbitration and Conciliation Act, 1996; Section 29A(4) & 29A(6) - Termination of Mandate and Substitution of Arbitrator – Held, upon the expiry of the initial or extended period for making an arbitral award, the arbitrator cannot proceed with the proceedings as the mandate terminates by operation of law, making the arbitrator functus officio - While this termination is not "absolute" and is subject to court-ordered extensions under Section 29A(4), the court is empowered and obligated under Section 29A(6) to substitute the arbitrator to effectuate the object of the Act, which is the expeditious resolution of disputes - The power of substitution under Section 29A(6) is a separate remedy from those available under Sections 14 and 15 - In the present case, where the mandate expired on 28.02.2023 and the arbitrator failed to pass an award, the High Court erred in merely granting an extension without considering that the mandate had ceased to exist; thus, substitution was warranted - Appeal allowed. [Relied on Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. - 2024 SCC OnLine SC 2494; Paras 9-13] Mohan Lal Fatehpuria v. Bharat Textiles, 2025 LiveLaw (SC) 1190 : 2025 INSC 1409 Arbitration and Conciliation Act, 1996 – Doctrine of Competence-Competence – Limits at Referral Stage – Held that the "hands-off" approach of referral courts does not apply where there is absolutely no prima facie evidence of an intent to effect a legal relationship between the parties- Allowing absolute strangers to force an arbitration reference by merely claiming to be a "veritable party" would lead to "disastrous consequences." [Relied on ASF Buildtech Private Limited vs. Shapoorji Pallonji and Company Private Limited (2025) 9 SCC 76; Paras 38-39] Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd., 2025 LiveLaw (SC) 1184 : 2025 INSC 1401 Arbitration and Conciliation Act, 1996 – Privity of Contract and Assignment – Consent Requirement – Held that Rights under a contract are assignable unless the contract is personal or prohibited by agreement, but obligations cannot be assigned without the promisee's consent- Where the tender conditions expressly prohibited subletting or assignment without prior written consent, a unilateral "Settlement-cum-Assignment Agreement" between a contractor and a sub-vendor cannot bind the principal employer to an arbitration agreement. [Relied on Khardah Company Limited vs. Raymon & Co. (1963) 3 SCR 183; Paras 24-30] Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd., 2025 LiveLaw (SC) 1184 : 2025 INSC 1401 Arbitration and Conciliation Act, 1996 – Section 11(4) and Section 11(6-A) – Joinder of Non-Signatory– "Veritable Party" Doctrine – Scope of Referral Court's Jurisdiction– Held that While a referral court should generally leave complex questions of joinder to the Arbitral Tribunal under Section 16, it is not a "monotonous automation."- The court must be prima facie satisfied that the non-signatory is a "veritable party" (genuinely intended to be bound) before making a reference- Mere commercial relationship or marking of emails to the principal employer does not establish a legal relationship or intent to bind a third-party sub-vendor to the main arbitration agreement. [Relied on Cox and Kings Limited vs. Sap India Private Limited and Another (2024) 4 SCC 1; Paras 24-35] Hindustan Petroleum Corporation Ltd. v. BCL Secure Premises Pvt. Ltd., 2025 LiveLaw (SC) 1184 : 2025 INSC 1401 Arbitration and Conciliation Act, 1996– Section 38(2)– Termination of Arbitral Proceedings for Non-Payment of Fees– Distinction between 'Termination of Proceedings' and 'Termination of Mandate'– The Supreme Court clarified the legal framework surrounding the termination of arbitral proceedings due to a party's failure to deposit the required fees- i. Source of Power to Terminate- Held that under Section...

Supreme Court Weekly Digest December 11 - 16, 2025

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