In Brief
Gujarat Urja Vikas Nigam Limited (GUVNL) and Essar Power Limited (EPL) entered into Power Purchase Agreements in 1996 for supply of electricity from EPL's 515 MW plant. A dispute arose because EPL diverted more electricity to its sister company, Essar Steel, beyond its allocated share. GUVNL claimed reimbursement of fixed charges paid monthly for undelivered electricity, in addition to compensation at energy charge rates. The Supreme Court held that GUVNL is entitled to both: compensation for wrongful diversion based on energy charges, and separate reimbursement of proportionate fixed charges on the principle of restitution, since it paid charges for electricity never supplied. The Court also held that diversion should be computed on half-hourly basis (per a 2005 CEA recommendation adopted by all parties) rather than hourly basis. It observed that parties are bound by their pleadings but the Court cannot ignore misconstructions of its prior judgments in subsequent litigation.
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