Appellate Electricity Tribunal Cannot Casually Render Findings of Coercion Without Proper Pleading, Proof Or Probe: Supreme Court

A three-judge bench of Justices Sanjay Kishan Kaul, S Ravindra Bhat, and MM Sundresh was hearing a set of appeals preferred by Gujarat Urja Vikas Nigam Limited under Section 125 of the Electricity Act, 2003 challenging APTEL orders upholding Gujarat Electricity Regulatory Commission’s decision to invalidate the power purchase agreements (PPA) between the appellant and wind power developers (WPD), including the respondent Renew Wind Energy (Rajkot) Private Limited. Notably, both the state commission and the appellate body accepted the respondents’ submission that the agreements were unenforceable as the contracts were entered into be parties with unequal bargaining power and under coercion and duress.

Before the apex court bench, one of the central questions, therefore, was whether the respondents were indeed coerced into entering the agreement with Gujarat Urja. The Supreme Court took a markedly different stand from the appellate tribunal, which held that the state commission’s findings regarding coercion, duress, and unequal bargaining power were “just and right in accordance with law”. Not only did the bench set aside the concurrent findings of the two subordinate bodies and allow the appeals by the state electricity regulation board, but it also observed that the ‘salutary’ rule requiring a party who sets up a plea of fraud, coercion, duress, or undue influence to prima facie establish the same by laying out all the material facts in support of such allegation was “thrown to the wind”. A bald plea, the bench quoted from an earlier judgement, would not be enough.

The bench also noted with disapproval that the appellate tribunal virtually ‘rubber stamped’ the state commission’s findings in a ‘cavalier’ fashion, even though there was no shred of evidence, nor any particularity of pleadings, beyond a bare allegation of coercion. Justice Bhat, who authored the judgement, wrote:

“In the present case, the salutary rule (requiring the party who sets up the plea of coercion to prima facie establish it) was thrown to the wind, by the state commission. APTEL, in the most cavalier fashion, virtually rubber stamped the state commission’s findings on coercion, in regard to the entering into the PPA by the parties. There was no shred of evidence, nor any particularity of pleadings, beyond a bare allegation of coercion, alleged against Gujarat Urja.

While concluding that the findings regarding coercion were wholly untenable, the bench also observed, “It is incomprehensible how such an allegation could have been entertained and incorporated as a finding, given that the respondents are established companies, who enter into negotiations and have the support of experts, including legal advisers, when contracts are finalised.” Importantly, the bench criticised the ‘casual approach’ of the appellate tribunal, saying, “The casual approach of APTEL, in not reasoning how such findings could be rendered, cannot be countenanced.” It added:

“As a judicial tribunal, dealing with contracts and bargains, which are entered into by parties with equal bargaining power, APTEL is not expected to casually render findings of coercion, or fraud, without proper pleadings or proof, or without probing into evidence.”

Thus, the bench set aside the findings of coercion and quashed the orders of both APTEL and the state commission, allowing the civil appeals by Gujarat Urja.

Case Title

Gujarat Urja Vikas Nigam & Ors. v. Renew Wind Energy (Rajkot) Private Limited & Ors. | Civil Appeal Nos. 3480-3481 of 2020

Citation : 2023 LiveLaw (SC) 315

Headnotes

Plea of Fraud, Coercion, Duress, or Undue Influence – Electricity Act, 2003 – Appeal under Section 125 – Party that sets up plea of fraud, coercion, duress, or undue influence must prima facie establish it by laying out material facts – Appellate Tribunal for Electricity (APTEL) not to render findings on coercion without proper and specific pleadings, adequate evidence, or without conducting a probe, in a casual or cavalier way – Held, concurrent findings of APTEL and state commission unsustainable owing to the absence of evidence of coercion and particularity of pleadings beyond a bare allegation – Appeal allowed.

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