GUJARAT URJA VIKAS NIGAM LIMITEDversusGREEN INFRA CORPORATE WIND PRIVATE LIMITED AND OTHERS ETC.

                  [2025] 8 S.C.R. 345 : 2025 INSC 922

                 Gujarat Urja Vikas Nigam Limited
                                 v.
             Green Infra Corporate Wind Private Limited
                          and Others Etc.
                 (Civil Appeal No(s). 14098-14101 of 2015)
                                04 August 2025
           [Sanjay Kumar* and Satish Chandra Sharma, JJ.]


                            Issue for Consideration
       Whether the four respondent companies were entitled to
       approach the Gujarat Electricity Regulatory Commission (GERC)
       for determination of the tariff for procurement of power by
       Appellant-GUVNL from their wind energy projects.

                                   Headnotes†
       Electricity Act, 2003 – ss.61, 62, 64, 86 – Income Tax Act, 1961 –
       s.32 – Power Purchase Agreements (PPAs) entered into between
       GUVNL and the respondent companies containing a clause w.r.t
       the tariff applicable for purchase of power from the respondent
       companies’ wind energy projects – Respondent companies
       approached the GERC seeking project-wise determination of
       tariff, claiming that they had not availed accelerated depreciation
       under the Income Tax Act, 1961 – Claim contested by GUVNL,
       arguing that they had willingly entered into PPAs and were
       bound to the tariff rate of ₹3.56 per kWh, and therefore, could
       not seek determination of tariff on a case-to-case basis – GERC
       decided the issue in favour of respondent companies – Order
       confirmed by the APTEL – Correctness:
       Held: GUVNL, an instrumentality of the State is bound to promote
       and give effect to the Government’s policy of encouraging generation
       of power from renewable energy sources – When the Government
       promulgated a policy in that regard, offering various incentives to
       wind energy projects, GUVNL cannot act contrary thereto by fixing a
       tariff for purchase of power from such wind energy projects contrary
       to the mandate of Order dated 30.01.2010 issued by GERC as per
       which the tariff of ₹3.56 per kWh was applicable only to those wind
       energy projects that availed the benefit of accelerated depreciation –

* Author
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       It is not disputed that the four respondent companies did not avail
       such benefit – Thus, the question of applying to them the tariff that
       was only meant for wind energy projects that did avail accelerated
       depreciation would not arise – GUVNL cannot be guided only by
       its own commercial interests, like a private business entity and it’s
       conduct, as a State instrumentality, must be of the standard of a
       model citizen – It cannot contend that the respondent companies are
       estopped from seeking determination of tariff by the GERC as they
       had willingly signed PPAs with it at the tariff fixed for wind energy
       projects availing accelerated depreciation – As GUVNL failed to
       obtain commitments from the respondent companies that they would
       only avail accelerated depreciation at the time they had to choose
       that option, GUVNL has no indefeasible right to bind them to a tariff
       which was applicable only to such wind energy projects that availed
       accelerated depreciation – Orders passed by the GERC and the
       APTEL not interfered with – Income Tax Rules, 1962. [Paras 24, 25]

                                 Case Law Cited
       Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited
       and Others [2016] 5 SCR 990 : (2016) 8 SCC 743 – relied on.
       Gujarat Urja Vikas Nigam Limited v. EMCO Limited and Another
       [2016] 1 SCR 857 : (2016) 11 SCC 182 – referred to.

                                    List of Acts
       Electricity Act, 2003; Income Tax Act, 1961; Income Tax Rules, 1962.

                                List of Keywords
       Gujarat Electricity Regulatory Commission (GERC); Determination
       of the tariff; Gujarat Urja Vikas Nigam Limited (GUVNL);
       Procurement of power by GUVNL; Wind energy projects;
       Accelerated Depreciation; Procurement of power by distribution
       licensees; Project-wise determination of tariff; Determination of tariff
       on a case to case basis; Appellate Tribunal for Electricity (APTEL);
       Instrumentality of the State; State instrumentality; Renewable
       energy sources; Generation of power from renewable energy
       sources; Wind power, Solar power; National Electricity Policy;
       National Electricity Policy and Plan; Tariff policy; Ministry of New
       and Renewable Energy; Government of Gujarat; Wind Power Policy
       2007; Non-conventional renewable energy; Normal depreciation;
       Gujarat Energy Development Agency (GEDA).
[2025] 8 S.C.R.                                                         347

                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

                           Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 14098-
     14101 of 2015
     From the Judgment and Order dated 28.09.2015 of the Appellate
     Tribunal for Electricity at New Delhi in FA No. 198, 199, 200 and
     291 of 2014

                        Appearances for Parties
     Advs. for the Appellant:
     C A Sundaram, Mr Ramachandran, Sr. Advs., Ms. Hemantika Wahi,
     Ms. Ranjitha Ramachandran, Ms. Jesal Wahi, Ms. Srishti Khindaria.
     Advs. for the Respondents:
     Sanjay Sen, Shyam Divan, Sr. Adv., Vishal Gupta, Anupam
     Chaudhary, Sarthak Garg, Shri Venkatesh, Ms. Kanika Chugh,
     Ashutosh Kumar Srivastava, Shryeshth Ramesh Sharma, Siddharth
     Nigotia, Harsh Vardhan, Nitin Saluja, Divyakant Lahoti, Akshaya
     Babu, Ms. Praveena Bisht, Siddharth Tripathi, Rongon Choudhary.

                Judgment / Order of the Supreme Court

                               Judgment

     Sanjay Kumar, J.

1.   Gujarat Urja Vikas Nigam Limited (GUVNL), the appellant in these
     four appeals, assails the common judgment dated 28.09.2015
     rendered by the Appellate Tribunal for Electricity (APTEL), New Delhi,
     in Appeal Nos. 198, 199, 200 and 291 of 2014. Thereby, the APTEL
     confirmed the orders dated 13.06.2014, 11.06.2014, 13.06.2014 and
     20.09.2014 passed by the Gujarat Electricity Regulatory Commission
     (GERC), Gandhi Nagar, in Petition Nos. 1239 of 2012, 1221 of 2012,
     1241 of 2012 and 1365 of 2013 filed by Green Infra Corporate Wind
     Private Limited, New Delhi; Vaayu (India) Power Corporation Private
     Limited, Daman; Green Infra Wind Power Limited, New Delhi; and
     Tadas Wind Energy Private Limited, Mumbai, respectively, viz., the
     four contesting respondent companies.
2.   By order dated 05.05.2016, this Court requested the GERC to defer
     its proceedings till the matter was finally decided and disposed of by
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       this Court. This order was passed in view of the fact that, pursuant
       to the APTEL’s common judgment under appeal, the GERC began
       hearings for determination of tariff on the petitions filed by each of the
       four respondent companies. Thereafter, by order dated 03.02.2023,
       this Court permitted the GERC to proceed with the tariff determination
       hearings subject to the condition that no final order should be passed
       without the leave of this Court. We are informed that the hearings
       before the GERC have concluded but the final orders have not been
       pronounced owing to the aforestated order.
3.     The short issue for consideration is whether the four respondent
       companies were entitled to approach the GERC for determination of
       the tariff for procurement of power by GUVNL from their wind energy
       projects. The GERC answered this issue in their favour and the same
       stood confirmed by the APTEL. Hence, these statutory appeals.
4.     By Order No. 1 of 2010 dated 30.01.2010, passed in exercise of
       the powers conferred by Sections 61(h), 62(1)(a) and 86(1)(e) of
       the Electricity Act, 2003 (for brevity, ‘the Act of 2003’), the GERC
       determined the tariff for procurement of power by distribution
       licensees, such as GUVNL, from wind energy projects. This order was
       applicable for a control period of 3 years with effect from 11.08.2009.
       In consequence, all wind energy projects commissioned during
       that 3-year control period were covered by this order. One of the
       factors considered by the GERC for tariff determination thereunder
       is ‘Depreciation’. In relation thereto, GUVNL and others had pointed
       out that some of the wind energy projects availed the benefit of
       ‘Accelerated Depreciation’ as a tax-planning measure and if the same
       is taken into account, the tariff would reduce drastically, i.e., to about
       ₹3.05 per unit, but if it is not taken into account, the tariff would be
       higher, working out to ₹3.77 per unit. They, therefore, suggested
       that the GERC should specify either an average tariff of ₹3.50 per
       unit or two different tariffs for wind energy projects - (i) those which
       are availing the benefit of accelerated depreciation; and (ii) those
       which are not availing the benefit of accelerated depreciation. They
       also suggested that the wind energy projects which did not avail
       accelerated depreciation benefit should be asked to submit affidavits
       along with supporting documents that accelerated depreciation was
       not being claimed by them. Upon considering these objections/
       suggestions, the GERC ruled as follows: -
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                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

           ‘Commission’s Ruling
           Depreciation is a non-cash flow expenditure and it is linked
           with the loan repayment. The loan repayment period is
           considered by the Commission as 10 years. Hence, the
           requirement of cash flow in the initial 10 years is more
           to match with the loan repayment. After considering the
           suggestions of the objectors, the Commission decided to
           allow 6% of the capital cost per annum as depreciation
           for the initial 10 years and 2% per annum from 11th to 25th
           year of the plant.
           The provisions of Accelerated Depreciation are provided in
           the Income Tax Act, 1961 and Rules framed thereunder. A
           person who qualifies under the above statutory provisions
           is entitled to get benefits of the Accelerated Depreciation.
           Hence, the Commission decides to determine the tariff
           taking into account the benefit of accelerated depreciation
           available under Income Tax Act, 1961 and Rules framed
           under it. Those who do not avail of such benefit may
           submit petitions on case-to-case basis.’
5.   In effect, the GERC made it clear that those wind energy projects
     which did not avail the benefit of accelerated depreciation under the
     Income-Tax Act, 1961 (for brevity, ‘the Act of 1961’), were entitled
     to approach it on a case-to-case basis for determination of tariff for
     the power supplied by them to distribution licensees. As regards
     those wind energy projects which did avail accelerated depreciation,
     the GERC took into consideration various factors and determined
     the levelized tariff for wind energy generation at ₹3.56 per kWh
     (Kilowatt-hour), a much higher tariff than that suggested by GUVNL.
     The GERC also made it clear that the said tariff took into account
     the benefit of accelerated depreciation under the Act of 1961 and
     the Rules made thereunder and again reiterated that for a project
     which did not get such benefit, the GERC would, on a petition filed
     in that respect, determine a separate tariff taking into account all the
     relevant facts. The GERC further clarified that the tariff determined
     at ₹3.56 (constant) was applicable for the entire project life of 25
     years, i.e., from the 1st year to the 25th year, in the case of wind
     energy projects which availed accelerated depreciation.
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6.     Section 32 of the Act of 1961 deals with depreciation of buildings,
       machinery, plant or furniture, being tangible assets. Section 32(1)
       provides that in the case of assets of an undertaking engaged in
       generation or generation and distribution of power, such percentage
       on the actual cost thereof would be allowed as depreciation to the
       assessee, as may be prescribed. Rule 5 of the Income-Tax Rules,
       1962 (for brevity, ‘the Rules of 1962’), deals with depreciation. Rules
       5(1) and 5(1A) read thus: -
            ‘(1) Subject to the provisions of sub-rule (2), the allowance
            under clause (ii) of sub-section (1) of section 32 in respect
            of depreciation of any block of assets shall be calculated
            at the percentages specified in the second column of the
            Table in Appendix I to these rules on the written down
            value of such block of assets as are used for the purposes
            of the business or profession of the assessee at any time
            during the previous year:
            (1A) The allowance under clause (i) of sub-section (1)
            of section 32 of the Act in respect of depreciation of
            assets acquired on or after 1st day of April, 1997 shall
            be calculated at the percentage specified in the second
            column of the Table in Appendix IA of these rules on the
            actual cost thereof to the assessee as are used for the
            purposes of the business of the assessee at any time
            during the previous year:….’
       The second and third provisos thereunder are of relevance insofar
       as ‘Accelerated Depreciation’ is concerned. The provisos read as
       follows: -
            ‘Provided further that the undertaking specified in clause
            (i) of sub-section (1) of section 32 of the Act may, instead
            of the depreciation specified in Appendix I-A, at its option,
            be allowed depreciation under sub-rule (1) read with
            Appendix I, if such option is exercised before the due date
            for furnishing the return of income under sub-section (1)
            of section 139 of the Act,
            (a)   for the assessment year 1998-99, in the case of an
                  undertaking which began to generate power prior to
                  1st day of April, 1997; and
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                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

           (b)   for the assessment year relevant to the previous year
                 in which it begins to generate power, in case of any
                 other undertaking:
           Provided also that any such option once exercised shall
           be final and shall apply to all the subsequent assessment
           years.’
7.   Appendix I to the Rules of 1962 provides that, insofar as ‘Renewable
     energy devices’ are concerned, the rate of accelerated depreciation
     effective from Assessment Year 2006-2007 would be 80%. Wind mills
     and specially designed devices which run on wind mills are classified
     as ‘Renewable energy devices’ thereunder. Thus, if a wind energy
     project which began power generation after 01.04.1997 wishes to
     avail acceleration depreciation of 80%, as aforestated, it is required
     to exercise such option before the due date for furnishing its return
     of income for the Assessment Year relevant to the previous year in
     which it began generation of power.
8.   In so far as tariff determination is concerned, Section 61 of the
     Act of 2003 vests the Appropriate Commission, i.e., the Central
     Electricity Regulatory Commission or the State Electricity Regulatory
     Commission, with the power to specify the terms and conditions for
     determination of tariff, guided by the factors enumerated therein under
     Clauses (a) to (i). Safeguarding of consumers’ interest is one such
     factor but promotion of co-generation and generation of electricity
     from renewable sources of energy is also a factor. Section 62 of
     the Act of 2003 deals with determination of tariff. It states that the
     Appropriate Commission shall determine the tariff in accordance
     with the provisions of the Act of 2003 for supply of electricity by a
     generating company to a distribution licensee. Section 64 enables
     a generating company or licensee to apply to the Appropriate
     Commission for determination of tariff under Section 62. A detailed
     procedure is prescribed thereunder as to how the Commission would
     then go about dealing with such an application. Once the Commission
     issues a tariff order upon such an application, Section 64(6) provides
     that such tariff order, unless amended or revoked, shall continue to
     be in force for such period as may be specified in the tariff order.
     The functions of State Electricity Regulatory Commissions, such
     as the GERC, are set out in Section 86 of the Act of 2003. Section
     86(1)(a) states that such Commission shall determine the tariff for
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       generation, supply, transmission and wheeling of electricity, wholesale,
       bulk or retail, as the case may be, within the State. Section 86(1)(b)
       provides that the Commission shall regulate electricity purchase and
       procurement process of distribution licensees, including the price at
       which electricity shall be procured from the generating companies or
       licensees or from other sources, through agreements for purchase
       of power for distribution and supply within the State.
9.     This being the scheme forming the backdrop of the case, we may
       now take note of relevant case law. The decision of this Court in
       Gujarat Urja Vikas Nigam Limited vs. EMCO Limited and another1
       pertained to a solar energy project and determination of tariff for that
       project. The GERC’s First Tariff Order, viz., Order No. 2 of 2010,
       was dated 29.01.2010 and the tariff per unit was fixed thereunder
       by the GERC for solar energy projects that availed the benefit of
       accelerated depreciation. The GERC made it clear that, for projects
       not availing such benefit, it would, on a petition in that respect,
       determine a separate tariff taking into account all the relevant facts.
       GUVNL entered into a PPA on 09.12.2010 for purchase of power
       from EMCO Ltd.’s solar energy project. While so, the Second Tariff
       Order came to be issued by the GERC on 27.01.2012 and was
       made applicable to solar power projects commissioned on or after
       29.01.2012. EMCO Ltd. commissioned its project on 02.03.2012 due
       to some delays and it did not avail accelerated depreciation under
       the Act of 1961. The tariff under the Second Tariff Order for projects
       availing accelerated depreciation was less favourable to them and
       the tariff payable to power producers which did not avail such benefit
       was more favourable.
10. EMCO Ltd., thereupon, approached the GERC claiming entitlement
    to determination of tariff under the Second Tariff Order on the ground
    that it had not availed accelerated depreciation. The GERC held in its
    favour and the APTEL confirmed the same, holding that the Second
    Tariff Order applied as EMCO Ltd.’s project was commissioned only on
    02.03.2012. Further, as it had not availed accelerated depreciation, the
    APTEL held that the tariff determined without accelerated depreciation
    should be applied to it. GUVNL, thereupon, approached this Court.
    The case of EMCO Ltd. was that, though it had entered into a PPA


1    (2016) 11 SCC 182
[2025] 8 S.C.R.                                                          353

                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

     during the control period specified in the First Tariff Order, it was not
     bound by the tariff mentioned therein and was entitled to seek fixation
     of tariff by the GERC under the Second Tariff Order. Per contra,
     GUVNL contended that the First Tariff Order was applicable only to
     those projects which availed the benefit of accelerated depreciation
     and if EMCO Ltd. did not wish to avail that benefit, it ought not to
     have entered into a PPA without first seeking determination of the
     tariff. GUVNL contended that, having chosen to enter into a PPA,
     EMCO Ltd. could not opt for not availing accelerated depreciation at
     a later point of time and claim the benefit of a more advantageous
     tariff under the Second Tariff Order. GUVNL further contended that
     the tariff under the First Tariff Order would not apply to only those
     power generating projects which, by operation of law and not by their
     own violation, were not entitled to claim accelerated depreciation.
11. Noting that neither party had contended that, in law, there was a
    possibility of a power project not getting the benefit of accelerated
    depreciation if it opted for it, but assuming for the sake of argument
    that in law such a possibility exists, this Court observed that the
    construction sought to be placed on the relevant portion of the First
    Tariff Order by GUVNL could not be accepted, because it would be
    inherently illogical. The relevant portion of the First Tariff Order, in
    this context, stated that for a project that does not get such benefit
    of accelerated depreciation under the Act of 1961, the Commission
    would, on a petition in that respect, determine a separate tariff taking
    into account all the relevant facts. The submission of GUVNL as to
    the construction of the aforestated clause in the First Tariff Order
    was accordingly rejected by this Court.
12. This Court, thereafter, dealt with the issue as to whether EMCO
    Ltd. had the right to exercise its choice not to avail accelerated
    depreciation after signing the PPA. This Court also considered the
    question as to whether it’s right under the Act of 1961 to make such
    a choice could be so exercised, resulting in a situation whereby
    GUVNL would be obliged under the PPA to purchase the power
    generated by it for a period of 25 years without knowing the price at
    which EMCO Ltd. would supply such power. The real question, per
    this Court, was as to what would be the point of time at which the
    power producer can exercise the right to seek the determination of a
    separate tariff? It was noted that the Act of 1961 gave the option to
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       the power producer to avail or not to avail accelerated depreciation
       and also specified the point of time at which that option was to be
       exercised. However, the availability of such an option was held not
       to relieve the power producer of the contractual obligations incurred
       under the PPA. Significantly, no finding was recorded as to whether
       EMCO Ltd. had given a commitment to GUVNL about availing
       accelerated depreciation. It was also noted that the PPA contained
       a condition that, in case commissioning of the project was delayed
       beyond 31.12.2011, GUVNL would pay the tariff determined by GERC
       for solar energy projects effective on the date of commissioning of
       such project or the tariff mentioned in the PPA, whichever was lower.
       This stipulation, per this Court, envisaged a situation where EMCO
       Ltd. was not able to commence generation of electricity within the
       control period stipulated in the First Tariff Order and dealt with that
       contingency. It was, therefore, held that EMCO Ltd. could not seek
       tariff fixation under the Second Tariff Order.
13. Certain observations in the above decision, taken in isolation,
    undoubtedly support the GUVNL presently but the law laid down
    in the said decision would have to be understood in the factual
    context thereof, involving two tariff orders and a specific condition
    in the PPA. This aspect was pointed out by this Court in Gujarat
    Urja Vikas Nigam Limited vs. Tarini Infrastructure Limited and
    others2. Therein, this Court had occasion to consider the power
    of the GERC to redetermine tariff even after execution of a PPA,
    incorporating a particular tariff. The question for consideration was
    specifically framed as to whether the tariff fixed under a PPA was
    sacrosanct or inviolable and beyond review and correction by the
    GERC, which is the statutory authority for fixation of tariff under the
    Act of 2003. The GERC had not conferred upon itself such power but
    the APTEL disagreed and held that such power would be available
    to the GERC. That is how the matter came before this Court at the
    behest of the GUVNL. Tarini Infrastructure Ltd. was a power producer
    which had setup hydropower projects. It entered into a PPA with
    GUVNL to supply power for a period of 35 years at a determined
    tariff. Thereafter, it sought enhancement of the tariff on the ground
    that additional infrastructure was required to be put up by it, in the


2   (2016) 8 SCC 743
[2025] 8 S.C.R.                                                          355

                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

     form of a transmission line over 23 kilometres instead of the originally
     envisaged 4 kilometres. It applied to the GERC for redetermination
     of the tariff. The GERC, however, negated its plea on the ground
     that once the tariff was determined and incorporated in the PPA,
     there was no scope for redetermination at the unilateral request of
     the power producer. In another set of appeals, redetermination of
     the tariff was sought by power producer(s) therein on the ground
     of increase in the price of biomass fuel but it was rejected by the
     GERC on a similar ground.
14. In appeal, the APTEL held that the GERC was clothed by the
    statute with the power to determine the tariff and, therefore, the tariff
    incorporated in a PPA was also liable to be reviewed in the light of
    changed circumstances of a given case. Taking note of the statutory
    scheme of the Act of 2003, this Court held that it would not be possible
    to hold that the tariff agreed by and between the parties, though it
    found mention in a contractual context, was the result of an act of
    volition of the parties which can, in no case, be altered except by
    mutual consent. It was affirmed that tariff determination was made
    in exercise of statutory powers and the same only got incorporated
    in a mutual agreement between the two parties involved. Referring
    to Section 86(1)(b) of the Act of 2003, this Court held that it must
    lean in favour of flexibility and not read inviolability into the terms of
    a PPA in so far as the tariff stipulated therein is concerned. It was
    further held that it would be a sound principle of interpretation to
    confer such power if public interest, dictated by surrounding events
    and circumstances, required review of the tariff. Dealing with the
    earlier judgment in EMCO Limited (supra), this Court observed
    that the power producer in that case did not seek determination of a
    separate tariff under the First Tariff Order, as it ought to have done,
    but sought tariff fixation under the Second Tariff Order, which was
    wholly inapplicable to it, given the terms of the First Tariff Order and
    the PPA. The decision in EMCO Limited (supra) was, therefore,
    distinguished on facts.
15. We may now note certain facts which are of particular relevance to
    this adjudication. GUVNL entered into individual Power Purchase
    Agreements (PPAs) with the four respondent companies. These
    PPAs were entered into by them between June, 2010, and March,
    2012, i.e., during the 3-year control period specified in Order No.1 of
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       2010 dated 30.01.2010 issued by the GERC and the four respondent
       companies also commissioned their wind energy projects during the
       said control period. Each of these PPAs contained a clause with regard
       to the tariff applicable for purchase of power from the respondent
       companies’ wind energy projects. For the purpose of illustration,
       clause 5.2 in the Power Purchase Agreement dated 28.03.2011
       pertaining to Green Infra Wind Power Limited is extracted hereunder:
            ‘5.2 GUVNL shall pay a fixed rate of Rs.3.56 per kWh
            for delivered energy as certified by SEA of Gujarat SLDC
            during the 25 years life of the project as determined by
            the Commission through Order No.1 of 2010 dated 30th
            January, 2010.’
16. It is an admitted fact that the four respondent companies signed PPAs
    with GUVNL with identical clauses therein. Having done so, they then
    approached the GERC seeking project-wise determination of tariff,
    claiming that they had not availed accelerated depreciation. This
    prayer was made by them in the subject petitions filed in 2012/2013
    before the GERC. GUVNL contested their claim before the GERC,
    arguing that these wind energy projects had willingly entered into
    PPAs with it, binding themselves to the tariff rate of ₹3.56 per kWh,
    and were, therefore, not at liberty to seek determination of tariff on
    a case-to-case basis thereafter. GUVNL asserted that, in the light
    of the valid, binding and enforceable contracts between the parties,
    embodied in the PPAs, the wind energy projects could not seek
    such benefit. It further asserted that, had these projects opted for
    a case-to-case specific tariff, it would not have even entered into
    PPAs with them. It claimed that it had not entered into any PPAs with
    wind energy projects that had not availed the benefit of accelerated
    depreciation and asserted that it could not be compelled to abide by
    the change of mind on the part of these wind energy projects and,
    thereby, be compelled to pay a higher tariff to them on the basis of
    a case-to-case determination by the GERC.
17. This argument on the part of GUVNL would have been compelling,
    had it simply been a commercial contract between two profit-oriented
    business entities. However, we cannot lose sight of the fact that
    GUVNL is an instrumentality of the State and was, therefore, bound
    by the policy directives of the State. It cannot advance commercial
    considerations in isolation on par with a private party, divorced from
[2025] 8 S.C.R.                                                        357

                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

     its responsibility to abide by and further the policy objectives of the
     State. In that context, it would be relevant to note the objectives
     underlying the Act of 2003 in relation to non-conventional and
     renewable energy sources, such as wind power, solar power, etc.
     Part II of the Act of 2003 is titled ‘National Electricity Policy and
     Plan’. Section 3 therein provides that the Central Government shall,
     from time to time, prepare the National Electricity Policy and tariff
     policy, in consultation with the State Governments and the Authority
     for development of the power system based on optimal utilization of
     resources such as coal, natural gas, nuclear substances or materials,
     hydro and renewable sources of energy.
18. A separate Ministry of New and Renewable Energy was setup by
    the Government of India as the nodal Ministry for all matters relating
    to new and renewable energy. The broad aim of this Ministry is to
    develop and deploy new and renewable energy to supplement the
    energy requirements of the country. Energy self-sufficiency was
    identified as the major driver for developing and promoting new
    and renewable energy generation in the country in the wake of the
    two oil shocks of 1970s; the sudden increase in the price of oil; the
    uncertainties associated with its supply; and the adverse impact on
    the balance of payments position.
19. In furtherance of the policy and vision of the Government of India
    in relation to non-conventional renewable energy generation, the
    Government of Gujarat, through its Energy and Petro-chemicals
    Department, promulgated the Wind Power Policy – 2007 dated
    13.06.2007. It stated therein that it was keen on development of
    the renewable energy sector, given the dwindling resources of
    fossil fuels; increased threat of global warming; and the concerns
    of environmental protection. It further stated that it was committed
    to having investment in clean and green energy to reduce carbon
    dioxide emissions. In order to accelerate investment in this sector,
    the Government of Gujarat recognized that there was a need to
    extend Governmental support and, in that context, the Government
    reviewed its wind power policy. This new policy was to come into
    effect on 20.06.2007 and remain in operation till 30.06.2012. Wind
    Turbine Generators (WTGs) installed and commissioned during the
    operative period were to be considered eligible for the incentives
    declared under the policy for 20 years or for their life span, whichever
358                                                         [2025] 8 S.C.R.

                          Supreme Court Reports


       was shorter. With regard to sale of such energy, the policy provided
       that the electricity generated by the WTGs may be sold to GUVNL
       and/or any distribution licensee within the State at the rate of ₹3.37
       per unit of electricity as per the GERC order, as amended from time
       to time. The requisite PPA was to be made between the purchaser
       of power and the eligible unit. Notably, the tariff of ₹3.37 per unit
       mentioned in the policy was relatable to the earlier Tariff Order of
       the GERC, viz., Order No.2 of 2006 dated 11.08.2006, which was
       in operation for a period of 3 years, i.e., upto 10.08.2009. Various
       other incentives were offered to WTGs under the aforestated policy of
       the Government of Gujarat. Thereafter, the Government of Gujarat’s
       Wind Power Policy-2013, effective from 25.07.2013 to 31.03.2016,
       reaffirmed its resolve and commitment to develop and promote wind
       energy projects, by offering them various incentives.
20. In the light of the aforestated policies and directives of the Government
    of Gujarat and as an instrumentality of the State, GUVNL was bound
    to promote and advance the objectives of the said policy. It may be
    noted that the PPAs executed by and between GUVNL and the four
    respondent companies specifically referred to the approvals given by
    the Gujarat Energy Development Agency (GEDA) for setting up of
    their wind energy projects. One such approval letter dated 01.08.2011
    issued by GEDA in favour of Green Infra Corporate Wind Private
    Limited was placed before us. Perusal thereof reflects that permission
    was granted to the said company to setup two WTGs subject to the
    terms and conditions specified in the Government of Gujarat’s Wind
    Policy, GERC orders pertaining to wind power and the conditions
    stipulated in the said letter. One of the conditions stipulated therein
    was that the company should enter into an Agreement with the
    GUVNL/DISCOM for selling or wheeling of the electricity generated
    from the Wind Farm. Though GUVNL was not the only distribution
    licensee in the State of Gujarat at that point of time, we cannot lose
    sight of the fact that, being a State-instrumentality, it was and is a
    major distributor of electricity across the State of Gujarat.
21. Further, it is manifest and demonstrable from the statutory scheme
    obtaining under the Act of 2003 that the price at which power is to
    be procured by a distribution licensee from a generating company is
    not a matter of consensus and private agreement between the parties
    as it is to be fixed statutorily by the Appropriate Commission. GUVNL
[2025] 8 S.C.R.                                                           359

                  Gujarat Urja Vikas Nigam Limited v.
      Green Infra Corporate Wind Private Limited and Others Etc.

     cannot, therefore, fix its own price or bind a generating company
     to such price, contrary to the dictum of the GERC. Significantly,
     in Tariff Order No. 1 of 2010 dated 30.01.2010, the GERC clearly
     stipulated that the levelized price of ₹3.56 per kWh was to apply only
     to those wind energy projects that availed the benefit of accelerated
     depreciation under the Act of 1961 and the Rules of 1962.
22. Pertinently, the scheme of the Act of 1961 and the Rules of 1962
    makes it clear that an assessee is required to choose the option of
    either availing accelerated depreciation or normal depreciation only
    at the time it files its return for the assessment year relatable to the
    previous year in which it started generation of power, if the same was
    after 01.04.1997. This liberty and discretion given to an assessee
    could not be truncated or cut-short by GUVNL by fixing a binding
    price unilaterally in the PPA executed long before the assessee had
    to statutorily choose its option, i.e., at the time it filed its return of
    income for the assessment year relatable to the previous year in
    which it actually started generation of power.
23. The conundrum in which a power producer is placed in this scenario
    is patent. Unless it generates power and sells it to a distribution
    licensee under a PPA, the power producer would not file its return
    of income in relation thereto. It is only at that stage that it is required
    to exercise its option to choose the rate of depreciation, but it would
    have already signed a PPA as it cannot sell the power generated
    by it without first entering into a PPA. In such circumstances, the
    tariff mentioned in the PPA would necessarily have to be conditional
    and dependent upon exercise of the statutory option by the power
    producer at the relevant point of time. The situation would, however,
    be different if the power producer chooses its option at the time of
    entering into the PPA with the distribution licensee itself and gives
    a commitment to such distribution licensee that it would only avail
    accelerated depreciation when the time comes and would, therefore,
    be bound by the tariff fixed for power producers availing such benefit.
24. Admittedly, GUVNL never secured any written commitments from the
    four respondent companies that they would only avail accelerated
    depreciation and would not choose to opt for the regular depreciation
    rate when the time came. Without securing such commitments
    from them, merely because these companies signed the PPAs
    with a fixed tariff which was applicable only to those projects that
    availed accelerated depreciation, GUVNL cannot take advantage of
360                                                          [2025] 8 S.C.R.

                          Supreme Court Reports


       its dominant position and its PPAs so as to bind them to the price
       mentioned therein for the entire life of their projects. As pointed out
       earlier, GUVNL is bound to promote and give effect to the Government’s
       policy of encouraging generation of power from renewable energy
       sources. When the Government promulgated a policy in that regard,
       offering various incentives to wind energy projects, GUVNL cannot
       act contrary thereto by fixing a tariff for purchase of power from
       such wind energy projects, which, on the face of it, is contrary to
       the mandate of Order No.1 of 2010 dated 30.01.2010 issued by the
       GERC. The said order put it beyond the pale of doubt that the tariff
       of ₹3.56 per kWh was applicable only to those wind energy projects
       that availed the benefit of accelerated depreciation. GUVNL does
       not dispute the fact that the four respondent companies did not avail
       such benefit. Ergo, the question of applying to them the tariff that
       was only meant for wind energy projects that did avail accelerated
       depreciation would not arise. GUVNL cannot be guided only by its
       own commercial interests, like a private business entity and it’s
       conduct, as a State-instrumentality, must be of the standard of a
       model citizen. However, patently unfair treatment was sought to be
       meted out by GUVNL to the respondent companies by binding them
       to a rate that was wholly inapplicable to them. Such conduct, akin
       to a Shylock, does not reflect positively upon GUVNL.
25. Given the circumstances obtaining in the appeals on hand and in the
    light of the law laid down by this Court earlier in Tarini Infrastructure
    Limited (supra), it is not open to GUVNL to contend that the four
    respondent companies are estopped from seeking determination of
    tariff by the GERC as they had willingly signed PPAs with it at the
    tariff fixed for wind energy projects availing accelerated depreciation.
    As GUVNL failed to obtain commitments from the respondent
    companies that they would only avail accelerated depreciation at
    the time they had to choose that option, GUVNL has no indefeasible
    right to bind them to a tariff which was applicable only to such wind
    energy projects that availed accelerated depreciation. The GERC had
    made it quite clear that the tariff of ₹3.56 per kWh would apply only
    to those wind energy projects that availed accelerated depreciation.
    Therefore, that tariff has no application to a wind energy project
    that did not avail accelerated depreciation. GUVNL cannot apply
    that wholly inapplicable tariff to the respondent companies which,
[2025] 8 S.C.R.                                                      361

                     Gujarat Urja Vikas Nigam Limited v.
         Green Infra Corporate Wind Private Limited and Others Etc.

     admittedly, did not avail accelerated depreciation. The orders passed
     by the GERC and the APTEL holding to this effect, therefore, do not
     brook any interference.
     The appeals are bereft of merit and are, accordingly, dismissed.
     Order dated 03.02.2023 shall stand vacated.
     Pending applications, if any, shall also stand dismissed.

     Result of the case: Appeals dismissed.




     †
         Headnotes prepared by: Divya Pandey