The Delhi High Court has directed a wind energy developer to approach the Central Electricity Regulatory Commission (CERC) to settle its dispute with the Solar Energy Corporation of India (SECI) over the payment of liquidated damages.

The High Court said that according to Section 79 (1) (f) of the Electricity Act, 2003, the CERC was vested with adjudicatory powers to settle disputes between power generators and distributors, as well as referral powers for disputes outside the CERC’s purview.

It dismissed ReNew Wind Energy’s (AP2) plea seeking an interim injunction against SECI seeking liquidated damages for not meeting the minimum energy requirements during the financial year (FY) 2025 as per the power purchase agreement (PPA).

Background

In 2018, ReNew signed a PPA with SECI to supply 300 MW of wind power in Kutch, Gujarat, for 25 years.

In May 2025, SECI issued a notice to the petitioner, alleging non-fulfillment of the minimum energy requirement of 946.08 million units (MU) for the financial year (FY) 2025. SECI demanded that ReNew must pay compensation amounting to 75% of the cost of the shortfall in energy as per the PPA.

ReNew argued that the energy shortfall of 632 MUs during FY 2025 was solely due to force majeure events and therefore it should be absolved of the liability for compensation.

The wind developer filed a petition under Section 9 of the Arbitration Act, seeking interim protection from the imposition of liquidated damages.

However, SECI questioned the validity of the petition, considering Section 79(1)(f) of the Electricity Act, which grants the CERC adjudicatory and referral powers.

Petitioners argued that the petitioner’s claim was fundamentally flawed and that CERC did not have any jurisdiction. It added that Section 86(1)(f) pertains to the adjudicatory powers of the Commission, while Section 79(1)(f) pertains to disputes in tariff regulation, scheduling, and generation by central government-owned entities.

Commission’s Analysis

The Court ruled that CERC has the exclusive power to refer disputes involving generating companies or transmission licensees for arbitration.

It stated that CERC can settle all disputes falling within Section 79 (1)(a)-(d) and can refer any dispute for arbitration.

It also ruled that the referral powers vested with the CERC under Section 79(1)(f) of the Electricity Act would prevail over the referral powers vested with a court/authority under Sections 11 or 8 of the Arbitration Act.

The High Court also noted that the petitioners had also erroneously submitted precedents of cases that are still pending for review. It stressed the importance of instructing and briefing counsel/law firms to do their due diligence before citing precedents before the Court.

Last year, the Delhi High Court quashed a Customs Department circular and show-cause notices issued by the Central Board of Indirect Taxes and Customs, revoking the permission for solar developers to warehouse imported solar modules to defer paying basic customs duty on solar cells and modules effective from April 1, 2022.

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