In Brief
The Supreme Court upheld the Appellate Tribunal for Electricity's order directing two Andhra Pradesh distribution companies (DISCOMS) to continue purchasing 100% of power from Hinduja National Power Corporation (HNPCL). The DISCOMS had represented to HNPCL and the State that they would purchase all power generated, causing HNPCL to invest heavily and restructure its project. However, after hearings concluded and judgment was reserved, the DISCOMS abruptly sought to withdraw their application for approval of the Power Purchase Agreement. The Court held that parties cannot withdraw applications after hearing is complete when such withdrawal frustrates contracts and defeats the other party's rights. As a State instrumentality, the DISCOMS are bound by Article 14 to act non-arbitrarily and in public interest. Their abrupt withdrawal, contrary to years of consistent assurances, constituted 'legal malice' and was unreasonable and arbitrary, particularly since they subsequently purchased power from other generators at higher rates."
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