APTEL Sets Aside DERC Order, Holds BSES Discoms Not Liable for Post-PPA Expiry Energy Bills from Rajghat Power House
APTEL quashes DERC's direction to BSES Yamuna and BSES Rajdhani to pay Rajghat Power House energy bills after their PPAs expired in mid-2015, ruling obligations ceased on expiry.
The Appellate Tribunal for Electricity (APTEL) has set aside a December 2019 order of the Delhi Electricity Regulatory Commission (DERC) that had directed BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL) to pay energy bills raised by Indraprastha Power Generation Company Limited (IPGCL) for power supplied from the Rajghat Power House until 31 December 2015. APTEL held that once the Power Purchase Agreements between the appellants and IPGCL expired — in May 2015 for BRPL and July 2015 for BYPL — all obligations under those agreements ceased. The tribunal found that continued scheduling and dispatch of power by the State Load Despatch Centre (SLDC) after PPA expiry was unlawful, and that energy bills raised by IPGCL beyond the expiry dates were not legally tenable. The appeal was allowed in full and the impugned DERC order was quashed.
The PPAs, Their Expiry, and the Dispute Before DERC
The background to the dispute lies in a 2006 policy direction issued by the Delhi Government under Section 108 of the Electricity Act, 2003, directing the Commission to make power arrangements in Delhi beyond 1 April 2007. Acting on this, DERC by an order dated 30 March 2007 reassigned all existing PPAs from Delhi Transco Limited to the distribution licensees operating in the NCT of Delhi, including BYPL and BRPL.
Pursuant to this reassignment, the two appellants executed PPAs with IPGCL on 16 July 2012 for purchase of power from the Rajghat Power House. Clause 13.1 of those PPAs fixed the validity of the agreements at 25 years from the date of commercial operation of the last unit or module of the power station, unless specifically extended on mutually agreed terms.
The Commission found, and no party disputed, that the PPAs expired in May 2015 (BRPL) and July 2015 (BYPL). After expiry, the appellants informed IPGCL that they had no intention to extend the PPAs and requested that no power be scheduled or dispatched from the Rajghat Power House to them. Despite this, IPGCL continued to schedule and dispatch power, and raised energy bills for the months of June 2015 to December 2015 and January to February 2016.
The appellants approached DERC by way of two petitions — Petition Nos. 24/2016 and 28/2016 — seeking withdrawal of the post-expiry energy bills, a restraint on further billing, and directions to IPGCL and SLDC not to schedule or dispatch power. DERC, in its order dated 10 December 2019, acknowledged that the PPAs had expired but held the appellants liable to pay energy bills till 31 December 2015, the date on which the Rajghat Power House was finally closed as per directions of the Delhi Pollution Control Committee (DPCC). DERC's reasoning rested on a government-level meeting held on 5 June 2015 at which it was decided that power allocation from the Rajghat Power House would continue for at least six months after stabilisation of a 400 kV grid sub-station under construction under the Inter-State Transmission System scheme.
Arguments Before APTEL
Before APTEL, the appellants argued through senior counsel that once the PPAs expired and were not renewed, there was no contractual basis for any liability to pay capacity or energy charges. They also contended that IPGCL, having not filed any appeal against the DERC order, could not be heard to challenge findings contained in that order in the appellants' appeal.
IPGCL countered on two fronts. First, it argued that the Commission had erred in reckoning the 25-year period from May 1990 when the Rajghat Power House was initially commissioned. IPGCL submitted that a stabilisation period of six to nine months was required before commercial operation could be declared, and that the period of 25 years under Clause 13.1 ought therefore to be counted from December 1990, placing PPA expiry in December 2015 — which would make the bills payable in any event. Second, IPGCL relied on the 5 June 2015 government meeting, arguing that the appellants' representative had attended and that the decision to continue power allocation amounted to consent by the appellants.
SLDC, the third respondent, argued that its functions are operational and technical in nature and are not governed by contractual arrangements between generating companies and distribution licensees. It submitted that it could not stop scheduling merely on the basis of a unilateral assertion by a distribution licensee about PPA expiry.
On the procedural question of whether IPGCL could challenge findings in the DERC order without filing a cross-appeal, APTEL examined the Supreme Court's decisions in Banarsi & Ors. v. Ram Phal (2003) 9 SCC 606 and Rattan India Power Ltd. v. Maharashtra State Electricity Distribution Company Limited and Anr. in Civil Appeal No. 8232 of 2023 decided on 10 December 2025. APTEL accepted that a respondent who has not filed a separate appeal may still support the order in its favour by assailing findings recorded against it, provided the order itself was not adverse to it. Since the DERC order was passed in IPGCL's favour, IPGCL had no occasion to file a cross-appeal, and was competent to support the order by challenging the finding on the reckoning of the 25-year period.
APTEL's Reasoning on PPA Expiry and SLDC's Obligations
APTEL rejected IPGCL's argument on the December 1990 date at the threshold. The tribunal found that this plea had been raised for the first time before APTEL and had not been agitated before DERC. No submissions on the stabilisation period were made before the Commission, and there was accordingly no finding on the point in the impugned order. APTEL applied the settled principle that a party cannot raise a fresh plea for the first time in appeal that was not raised before the original forum.
APTEL also found the argument substantively lacking. IPGCL itself did not know the actual date of commercial operation of the power house. The tribunal observed that it had not been explained whether a stabilisation period of six to nine months is mandatory for every power house or whether commercial operation could be achieved within a shorter period. The plea was therefore rejected on merits as well.
On the 5 June 2015 meeting, APTEL found that the minutes of the meeting themselves recorded that “DISCOMs & IPGCL are accordingly requested to take necessary actions for renewal of PPAs.” This, the tribunal held, showed that renewal of PPAs was necessary to give effect to the reallocation decided at the meeting. IPGCL took no steps to get the PPAs renewed after the meeting, and no correspondence was exchanged between IPGCL and the appellants on the subject. Clause 13.1 of the PPAs required any extension to be on mutually agreed terms, meaning there had to be a fresh meeting of minds. In the absence of such agreement, the reallocation decided at the meeting could not be treated as accepted by the appellants.
On the legal character of a PPA, APTEL held that while a PPA requires approval under Section 86(1)(b) of the Electricity Act, 2003, once approved it becomes akin to any other commercial contract. Duration is an essential term. Once the duration of the Power Purchase Agreement comes to an end by efflux of time, the obligations on the respective parties under the agreement also come to an end. The generator is no longer bound to supply power and the distribution licensee is not bound to receive or pay for it.
On SLDC's position, APTEL turned to Section 32(2)(a) of the Electricity Act, 2003, which provides that SLDC is responsible for scheduling and dispatch of electricity within a state “in accordance with the contracts entered into with the licensees or the generating companies.” The tribunal held that the existence of a PPA forms the very basis on which SLDC is to schedule and dispatch power. SLDC cannot close its eyes and continue scheduling when informed by a distribution licensee that the PPA has expired. At most, SLDC could verify the factum of expiry with the generating company and then stop scheduling forthwith. The tribunal described SLDC's assertion that its functions are not governed by contractual arrangements as “fallacious, to say the least.”
Order
APTEL set aside the DERC order dated 10 December 2019 in its entirety. The tribunal held that BRPL is not liable to pay any energy charges to IPGCL beyond May 2015, and BYPL is not liable to pay any energy charges beyond July 2015. All energy bills raised by IPGCL to the appellants beyond those respective dates were declared unlawful and quashed. The appeal was allowed. Pending interlocutory applications, if any, were disposed of accordingly. The judgment was pronounced in open court on 25 May 2026 by the bench of Officiating Chairperson Ms. Seema Gupta and Judicial Member Mr. Virender Bhat.