LI Network
Published on: January 10, 2024 at 16:43 IST
The Supreme Court recently weighed in on the Rajasthan High Court’s directive to the Jaipur Vidyut Vitran Nigam Ltd regarding a power purchasing agreement, questioning whether such a direction should be given under Article 226.
A bench comprising Justices BR Gavai and PS Narasimha expressed disapproval regarding the Rajasthan High Court’s instruction to the state instrumentality, considering it harmful to public interest. They remarked, “The High Court couldn’t have directed the State instrumentalities to enter into a contract that was detrimental to public interest.”
The Court emphasized the cautious exercise of discretionary power under Article 226, asserting that such powers should align with public interest rather than merely on a legal basis.
Case Overview:
In this case, Respondent No. 1 submitted a bid to supply electricity at Rs. 5.517 per unit to the appellant. However, after evaluations, the Bid Evaluation Committee deemed the prices quoted by certain bidders excessively high and could burden the consumers by over Rs. 1715 crore.
Upon the Supreme Court’s interim order favoring another bidder, Respondent No. 1 approached the Rajasthan High Court under Article 226. They sought a writ mandating the Appellants to issue a Letter of Intent in their favor, sign the power Purchase Agreement, and adopt their tariff for power supply.
Court Observations:
The Division Bench, reversing the High Court’s decision, critiqued the intervention, highlighting that the High Court erred in entertaining the Writ Petition.
Referring to the Air India Ltd. v. Cochin International Airport Ltd. case, the Court underscored that while the State has discretion in its decision-making process, it must adhere to laid-down norms and procedures, intervening only in cases of arbitrariness or mala fides.
The Court’s Conclusion:
The Court noted the High Court’s misstep in issuing a mandamus to the State instrumentality, emphasizing the dire implications of accepting higher electricity rates that could pass on financial burdens to consumers. The judgment, therefore, was deemed unsustainable and was set aside, highlighting the oversight in considering consumers’ larger interests.
The Court’s observation in Paragraph 105 accentuates the ruling, emphasizing the failure to prioritize consumer and public interest in the High Court’s decision.
