The Appellate Tribunal for Electricity (APTEL) held that Jindal Aluminium was not entitled to receive any compensation for the energy it injected into the electricity grid between October 4 and November 17 of 2015, before the execution of a wheeling and banking agreement.

The Tribunal found no merit in the appeal and concluded that the original order of the Karnataka Electricity Regulatory Commission (KERC) was not erroneous.

Background

On October 3, 2015, Jindal commissioned 12 MW of wind energy capacity intended for captive consumption and third-party sale.

Although the wheeling and banking agreement was executed only on November 18, 2015, with Gulbarga Electricity Supply Company, Bangalore Electricity Supply Company, Chamundeshwari Electricity Supply Corporation, and Karnataka Power Transmission Corporation, the company began injecting power into the grid starting from October 4, 2015.

Jindal claimed it injected 897,303 units of electricity into the grid during this pre-agreement period and subsequently raised two invoices amounting to ₹1.28 million (~$14,744) and ₹2.75 million (~$31,677). When the distribution companies did not pay these invoices, Jindal petitioned KERC for compensation or the return of equivalent power.

The Commission rejected the claim, holding that without a valid agreement in place at the time of injection, Jindal was not entitled to compensation under Section 70 of the Indian Contract Act, 1872.

In its appeal before APTEL, Jindal argued that it met the conditions set out under Section 70 of the Indian Contract Act. It contended that the power injected was not gratuitous and was accepted by the distribution companies without objection, and therefore should be compensated.

The respondents countered that the facts in Jindal’s case were entirely different from those in other cases cited by the appellant, such as the Green Energy Association and Greenko Maha Wind Energy decisions. They maintained that the power injected was neither used by the distribution companies nor accounted toward any renewable purchase obligations (RPOs), and that the Commission’s order was sound and legally justified.

Tribunal’s Analysis

APTEL analyzed the facts of the present case in comparison to previous rulings where generators were granted compensation despite the absence of formal agreements. In the Green Energy Association case, developers were allowed compensation because the Maharashtra State Electricity Distribution Company (MSEDCL) had delayed granting open access and yet benefited financially from the power injected into the grid.

The Tribunal noted that the conduct of MSEDCL implied acceptance of the power and constituted a quasi-contract under Section 70 of the Indian Contract Act.

A similar conclusion was drawn in the Greenko Maha Wind Energy case, where the Tribunal ruled in favor of the appellant because the energy injected from one unregistered wind turbine was used by MSEDCL for nearly five years, and the failure to register the turbine stemmed from bureaucratic inaction by the Maharashtra Energy Development Agency, not the generator.

In contrast, APTEL emphasized that in Jindal’s case, the distribution licensees had filed affidavits stating that they had not utilized the energy injected between October 4 and November 17, 2015. They further affirmed that this power was neither supplied to consumers nor used to fulfill their RPO obligations.

The Tribunal found this distinction critical. For Section 70 to apply, three conditions must be met. First, the act must be lawful. Second, it must not be gratuitous. Third, the recipient must derive a benefit. APTEL held that the third condition was not met in this case, as the respondents had not gained any benefit from the injected energy.

Moreover, APTEL highlighted a letter dated October 1, 2015, from the Karnataka Power Transmission Corporation granting provisional interconnection approval. This letter explicitly warned Jindal that power injection into the grid without a contractual agreement or state load dispatch centre approval would not be compensated. Despite this, Jindal proceeded to inject power into the grid.

Based on this evidence, the Tribunal held that Jindal was fully aware of the risks and contractual prerequisites before commencing power injection. As such, it could not claim compensation for the same.

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