Corporate Lawyer: Supreme Court upheld termination of PPA in 2009 by 'Adani Power' for supply of electricity in Gujarat, due to non-supply of Coal by GMDC - termination was legal and correct.

Supreme Court of India

Justice B.R. Gavai, Justice Arun Mishra and Justice Surya Kant

02, July, 2019

The SC {M/S Adani Power Ltd Vs. Gujarat Electricity Commission And Ors.} setting aside the Judgment of Electricity Appellate Tribunal and Commission, held that as the GMDC had not supplied the coal to the appellant, it was justified in invoking  Article 3.4.2 of the PPA as the appellant had submitted bid for supply of electricity on the assurance of the GMDC to supply 4 Million tonnes of Coal to the appellant. In the impugned judgments, the Appellate Tribunal directed the appellant to supply the power to procurer at the rate determined in the PPA and held the termination of PPA by the appellant was illegal. The said impugned judgments were set aside, by allowing the appeal, It was held by the SC that the termination of the PPA by the appellant vide notice dated 28/12/2009 is legal and valid.

Dilating on the law of interpretation, held that in case of conflict between the general clause and specific clause of the contract, the specific clause prevails. It was also held that a term in the contract can be implied, if it is necessary to give business efficacy to the contract, to avoid such a failure of consideration that the parties cannot as reasonable businessmen have intended. If the contract makes business sense without the term, the courts will not imply the term in the contract.