New Delhi, October 13, 2023 – The Supreme Court of India has rendered a significant decision in a contractual dispute, imposing substantial costs on Punjab State Power Corporation Limited (PSPCL), the respondent in the case, for their repeated failure to comply with the court’s directives.

In a bench comprising Justice Sanjay Kishan Kaul, Justice Sudhanshu Dhulia, and Justice Aravind Kumar, the court determined that the respondent’s continued efforts to evade payment obligations, despite prior court orders, warranted significant financial consequences.

**Background of the Dispute**

The dispute in question revolved around the recovery of deductions of monthly tariff by the respondent, PSPCL, from Nabha Power Limited (NPL), the appellant. This led to proceedings initiated under the Electricity Act, 2003, with the case progressing from the Regulatory Commission to the Supreme Court.

On October 5, 2017, the Supreme Court delivered a judgment in Nabha Power Limited (NPL) v. Punjab State Power Corporation Limited (PSPCL) and Anr., (2018) 11 SCC 508. In this judgment, the court directed PSPCL to make certain payments to NPL.

However, PSPCL failed to comply with this order, initiating a series of further legal actions. PSPCL filed a Miscellaneous Application and Review petition, both of which were dismissed. Contempt proceedings were subsequently brought against PSPCL, which resulted in a favorable judgment for NPL.

Undeterred, PSPCL filed proceedings before the Regulatory Commission, seeking accounts and details related to the washing of coal, a refund of the principal amount of Rs. 386.80 crores, and late payment surcharge. The Regulatory Commission deemed the petition maintainable, as it considered the matter a fresh dispute between the parties.

**Supreme Court’s Verdict and Legal Basis**

The Supreme Court found that PSPCL’s petition before the Regulatory Commission was yet another attempt to evade its contractual obligations. In light of this, the court imposed a cost on PSPCL for reopening issues that had already been conclusively decided in the court’s previous judgment of October 5, 2017.

The court observed, “We have, thus, no hesitation in coming to the conclusion that the impugned order, innocuous as it may seem, is not sustainable, and this is yet another endeavor of the respondent to wriggle out of its obligation under the judgment dated 05.10.2017, repeatedly explained by various orders. This kind of endeavor can neither be appreciated nor left without consequences thereof.”

The judgment highlights that the dispute between the parties was fundamentally a contractual dispute, and the principles for interpreting commercial contracts were thoroughly addressed in the court’s earlier judgment. The court specifically emphasized that the issue of coal pricing was the crux of the problem and had already been adjudicated upon.

In light of the appellant’s substantial legal expenses, which totaled Rs. 1,95,80,081/- due to their engagement of multiple counsels, the court awarded a cost of Rs. 40 lakhs to NabhaPower Limited. Furthermore, Talwandi Sabo Power Limited, another appellant, was awarded a cost of Rs. 25 lakhs. The court emphasized the need to set an example in such cases and called upon both parties to submit their actual bills of costs.

The court set aside the order of the Regulatory Commission, underscoring the importance of upholding contractual obligations and the significance of legal principles governing commercial contracts.

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