Supreme Court of India
THE HP POWER TRANSMISSION CORPORATION LTD.versusM/S BRUA HYDROWATT PVT. LTD. & ORS.
- Citation
- 2025 INSC 680
- Decided
- 14 May 2025
- Disposal
- Appeal(s) allowed
- Bench
- ABHAY S OKA
Holding
A party not privy to a contract cannot be held liable under that contract; therefore the APTEL erred and the State Commission’s order holding BHP liable for the Bay cost is restored.
Summary
The Himachal Pradesh Power Transmission Corporation Ltd (HPPTC) built a 66 kV Bay at Urni for three generating companies and sought the full construction cost from Brua Hydrowatt Pvt Ltd (BHP), the lead partner, under a Connection Agreement dated 02‑07‑2021. BHP argued that the cost should be shared proportionately with the other two generators under an internal tripartite agreement (ITA) dated 27‑12‑2019, and that it could not be made to pay the entire amount. The Himachal Pradesh Electricity Regulatory Commission held BHP liable for the full cost, but the Appellate Tribunal for Electricity (APTEL) reversed that order, exonerating BHP from the other generators' shares. HPPTC appealed, contending that the doctrine of privity prevents it from recovering from parties not privy to the Connection Agreement and that the ITA does not form part of that agreement. The Supreme Court examined the terms of the Connection Agreement, the ITA, and relevant case law on privity, concluding that only BHP, as the sole party to the Connection Agreement, can be held liable for the Bay charges. Consequently, the Court set aside the APTEL judgment and restored the State Commission’s order, allowing HPPTC’s claim against BHP alone.
Issues considered
- Whether the Appellate Tribunal for Electricity was correct in reversing the State Commission’s order and relieving the respondents from bearing the entire construction cost of the Bay.
- Whether the appellant can recover dues from the other generating companies despite not being a party to the internal tripartite agreement, in view of the doctrine of privity.
- How Clause 2.4 and 2.5 of the Connection Agreement should be interpreted with respect to liability for Bay construction and O&M charges.
- Whether the internal tripartite agreement forms part of, or can be read into, the Connection Agreement for the purpose of cost sharing.
Legislation cited
Headnote
Issue for Consideration Whether the Appellate Tribunal for Electricity was correct in reversing the Order passed by Himachal Pradesh Electricity Regulatory Commission thereby exonerating respondent from bearing the entire construction cost for the Bay. Headnotes† – Whether the appellant can recover dues and other charges despite being a stranger to the internal tripartite agreement (ITA) dated 27.12.2019 among the respondents: Held: The respondents executed an ITA wherein they agreed to pool in the power to be generated from their respective
Subjects
Doctrine of PrivityConnection AgreementTransmission LicenceHydro Electric ProcessStranger to an agreement cannot enforce
Judgment
[2025] 5 S.C.R. 1360 : 2025 INSC 680
The HP Power Transmission Corporation Ltd.
v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
(Civil Appeal No. 3919 of 2023)
14 May 2025
[Abhay S. Oka and Augustine George Masih,* JJ.]
Issue for Consideration
Whether the Appellate Tribunal for Electricity was correct in
reversing the Order passed by Himachal Pradesh Electricity
Regulatory Commission thereby exonerating respondent from
bearing the entire construction cost for the Bay.
Headnotes†
Doctrine of Privity – Whether the appellant can recover dues and
other charges despite being a stranger to the internal tripartite
agreement (ITA) dated 27.12.2019 among the respondents:
Held: The respondents executed an ITA wherein they agreed to
pool in the power to be generated from their respective generative
stations at Bay and the entire cost of the terminal, including metering
arrangements, were to be shared between them in proportion to
their individual generating capacities – Separately, the appellant
executed a Connection Agreement with only respondent no. 1,
wherein respondent no. 1 acted as lead partner of the consortium
of the respondents, had the liability to pay for cost of construction,
additional charges, and O&M Charges to the appellant in relation to
the Bay – Respondent no. 1 was to ensure the payment to be made
to the appellant and thereafter seek reimbursement in case of non-
payment of the amount by the other generating companies within
the time stipulated – Respondent no. 3 defaulted in its payment,
the appellant raised a demand from the respondent no. 1 citing sole
liability of the said respondent as per Connection Agreement dated
02.07.2021 – Since the appellant was not a party to the ITA which
was executed by and between the respondent no. 1, 2 and 3, thus
appellant could not have and cannot claim proportionate shares as
per the installed capacity of the project from Respondent No. 02 and
Respondent No. 03 – The right, to claim and seek recovery of the
liability from Respondent No. 02 and Respondent No. 03 would be
* Author
[2025] 5 S.C.R. 1361
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
only with respondent no. 1 as per the ITA – Appellant is not privy to
the ITA executed among the respondents, therefore does not have
any right to claim for dues or liabilities from respondent no. 2 & 3 –
As ITA does form part and parcel of the Connection Agreement
executed between appellant and respondent no. 1, the exact wording
only binds respondent no. 1 for the payment of concerned cost and
charges – APTEL’s judgment is based upon wrong assumptions and
misreading of the terms of agreement thereby ignoring the basic
principle that a party not privity to the agreement or contract cannot
be, unless the context otherwise makes it apparent, made liable for
any term(s) and condition(s) unrelated to it.
Case Law Cited
Essar Oil Limited v. Hindustan Shipyard Limited and Others [2015] 6
SCR 924 : (2015) 10 SCC 642 – relied on.
Jamna Das v. Pandit Ram Autar Pande and Others, 1911 SCC
OnLine PC 35 – relied on.
Tweddle v. Atkinson (1861) 121 ER 762 – relied on.
List of Acts
Electricity Act, 2003; The Himachal Pradesh Electricity Regulatory
Commission (Conduct of Business) Regulations, 2005.
List of Keywords
Doctrine of Privity; Connection Agreement; Transmission Licence;
Hydro Electric Process; Stranger to an agreement cannot enforce.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3919 of 2023
From the Judgment and Order dated 17.03.2023 of the Appellate
Tribunal for Electricity at New Delhi at AN No. 30 of 2023
Appearances for Parties
Advs. for the Appellant:
Anand K. Ganesan, Nikunj Dayal, Pramod Dayal, Amal Nair,
Ms. Shivani Verma.
Advs. for the Respondents:
Tarun Johri, Ankur Gupta, Vishwajeet Tyagi.
1362 [2025] 5 S.C.R.
Supreme Court Reports
Judgment / Order of the Supreme Court
Judgment
Augustine George Masih, J.
1. This Civil Appeal assails the Judgment dated 17.03.2023 in Appeal
No. 30 of 2023 (“Impugned Judgment”) by the Appellate Tribunal for
Electricity at New Delhi (“APTEL”) which reversed the findings returned
vide Order dated 27.12.2022, by Himachal Pradesh Electricity
Regulatory Commission at Shimla (State Commission) in Petition
No. 35 of 2022, holding M/s Brua Hydrowatt Pvt. Ltd., Respondent
No.01 herein (“BHP Ltd”) liable to bear the entire cost for Bay at the
66kV Switching Station at Urni (“Bay”), which was constructed by
the HP Power Transmission Corporation Limited, Appellant herein
(“HPPTC Ltd”) as per the Connection Agreement (Revised) dated
02.07.2021 “(CA dated 02.07.2021”).
2. The details of the parties before us are that the HPPTC Ltd is
a transmission licensee responsible for executing transmission
networks, including transmission lines and sub-stations of 66kV and
above in the State of Himachal Pradesh. The BHP Ltd, formerly
known as M/s Contransys Pvt Ltd, is a company incorporated under
the Companies Act, 1956, and classified as a generating company
under Section 02 (28) of the Electricity Act, 2003. Respondent No.
02 and Respondent No. 03, being M/s Darjeeling Power Pvt Ltd
and M/s Roura Non-Conventional Energy Pvt Ltd respectively, are
the other generating companies engaged in hydroelectric projects
within the State of Himachal Pradesh. Respondent No. 04 and 05
are proforma respondents, being the State Commission and State
of Himachal Pradesh respectively.
3. The facts leading to the case are that Government of Himachal
Pradesh entered into an Implementation Agreement with the HPPTC
Ltd on 25.07.2006 to establish the Brua Hydro Electric Project
(“BHEP”), initially with a capacity of 05 MW. The interconnection
was originally planned at a 33kV single circuit transmission line
at Karcham in Kinnaur district of Himachal Pradesh. However, the
Power Purchase Agreement dated 06.04.2009 was revised through
a Supplementary Power Purchase Agreement on 09.07.2018 to
increase the capacity to 09 MW at a fixed tariff of INR 2.93 per unit.
[2025] 5 S.C.R. 1363
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
The connection at Karcham was approved on 03.12.2010 by the
Himachal Pradesh State Electricity Board Ltd (HPSEBL), but stood
modified to be connected at Urni instead of Karcham, allowing for
the Bay in joint mode for the three generating companies i.e. BHEP,
Shaung and Roura-II Hydro Power Project.
4. To this effect, an application for connectivity had been submitted by
the BHP Ltd on 04.07.2012 and stood approved by the HPPTC Ltd
on 18.03.2013 and 23.04.2013 leading to the Connection Agreement
dated 04.06.2014, designating Urni as the connection point. Admittedly,
the HPPTC Ltd informed the BHP Ltd on 04.12.2015 that Bay would
only be operational after completion of the Urni-Wangtoo 66kV line
and the Wangtoo sub-station. In the interregnum, it allowed BHP Ltd
to utilize the 220kV Kahshang Bhaba line circuit at 66kV. Further, in
pursuance of direction of the HPSEBL, the HPPTC Ltd completed a
66kV feeder Bay at Nathpa sub-station for interim power evacuation,
leading to signing of Interim Power Transmission Agreement dated
23.01.2016, requiring the BHP Ltd to pay INR 0.14 per unit to the
HPPTC Ltd for providing interim arrangements.
5. All three generating companies i.e., BHP Ltd, Respondent No.02
and Respondent No.03 entered into an Internal Tripartite Agreement
dated 27.12.2019 (ITA dated 27.12.2019) to allow for proportionate
sharing of transmission charges, including the cost of Bay installed
by the HPPTC Ltd at Urni. As per the agreement, while the BHP
Ltd would handle claims for deemed generation and Operation and
Maintenance Charges (O&M Charges), the other parties to the ITA
dated 27.12.2019 i.e., Respondent No.02 and Respondent No.03
would reimburse BHP Ltd.
6. The HPPTC Ltd and BHP Ltd then entered the CA dated 02.07.2021
wherein, while the HPPTC Lt d was to manage the interconnection
to the State’s Transmission Utility System, BHP Ltd was made liable
for all the payments concerned, including the construction cost for
the Bay. Subsequently, request was made by BHP Ltd for connection
to Bay, and the HPPTC Ltd raised a demand for INR 3,42,85,447
(Rupees Three Crore Forty-Two Lakh Eighty-Five Thousand Four
Hundred Forty-Seven only) as construction cost for the Bay vide
Letter dated 24.01.2022.
7. Against this demand, BHP Ltd wrote to Respondent No.02 and
Respondent No.03 for the payment of their proportionate shares.
1364 [2025] 5 S.C.R.
Supreme Court Reports
While Respondent No. 02 agreed for transfer of payment, Respondent
No. 03 responded with their inability to do so at that point in time.
Consequently, the BHP Ltd wrote Letter dated 10.05.2022 to HPPTC
Ltd stating that it is willing to deposit the proportionate share for itself
and that of Respondent No.02, however, Respondent No.03 shall
pay its proportionate share along with interest subsequently. This
demand was rejected by the HPPTC Ltd vide Letter dated 30.05.2022,
citing the sole liability of BHP Ltd under the CA dated 02.07.2021.
8. This prompted the BHP Ltd to move the State Commission through
Petition No. 35 of 2022 under Section 86(1)(f) read with Section
158 and other enabling provisions of the Electricity Act, 2003 and
Regulations 53, 68, and 70 of the Himachal Pradesh Electricity
Regulatory Commission (Conduct of Business) Regulations, 2005.
8A. While dismissing the petition of the BHP Ltd vide Order dated
27.12.2022, the State Commission observed that BHP Ltd was
acting as the lead partner of the consortium, while it applied
for the connection for all three projects and agreed to pay the
cost of construction, additional charges, and O&M Charges to
the HPPTC Ltd, with the expectation that the amount would be
reimbursed by the Respondent No.02 and Respondent No.03
in their proportionate shares, which aspect of liability had been
acknowledged by them. The HPPTC Ltd, therefore, rightfully
issued the invoice(s) to the BHP Ltd, which is responsible and
liable for payment as per the agreement. Recovery, if any, from
Respondent No.02 and Respondent No.03 was an internal
matter between them, and the HPPTC Ltd had no concern.
While rejecting the contention that the HPPTC Ltd should issue
separate bills or that HPPTC Ltd must enter into separate O&M
agreements with the parties concerned, the State Commission
observed that the BHP Ltd must fulfil its obligations under the
agreements dated 27.12.2019 and 02.07.2021.
9. Aggrieved by the said Order, the BHP Ltd moved the APTEL vide
Appeal No. 30 of 2023 under Section 111 of the Electricity Act, 2003,
which effected the pronouncement of the Impugned Judgment dated
17.03.2023. APTEL, while considering the CA dated 02.07.2021,
observed that the BHP Ltd was liable for construction cost and O&M
Charges of the Bay on “mutually agreed terms”. A reference was also
made to the ITA dated 27.12.2019 stipulating that the costs would
[2025] 5 S.C.R. 1365
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
be shared by the parties in proportion to their individual capacities.
Furthermore, the Supplementary Power Purchase Agreement dated
09.07.2018 indicates that the interconnection facilities required for
the project, including switching equipment, protection, control, and
metering devices, shall be installed and maintained by the HPPTC
Ltd at the Bay, with the costs to be shared proportionately by the
parties. The BHP Ltd had submitted that no specific agreement for
the payment of charges to the Appellant under Clause 2.4 of the
CA dated 02.07.2021 was executed, holding that, in the absence
of such an agreement, the demand for payment of the entire Bay
charges could not be imposed on it. However, the State Commission
concluded that the BHP Ltd, acting as the lead partner, had agreed
to pay these charges, contrary to the assertion.
9A. Inclined with the assertions of the BHP Ltd, APTEL further
observed that the Clauses 2.4 and 2.5 of the CA dated
02.07.2021 do not indicate that the BHP Ltd agreed to pay the
entire Bay charges and O&M Charges on behalf of Respondent
No.02 and Respondent No.03, in addition to its own liabilities.
Furthermore, it does not address the scenario where one of the
generating companies fails to pay the Bay charges or does not
commission its project, leaving the lead member responsible for
the costs and charges of such defaulting generating Company.
Therefore, the unilateral demand for payment of Bay charges
by the HPPTC Ltd for liability of other generating companies is
contrary to the terms of the CA dated 02.07.2021.
9B. Thereafter, APTEL examined the ITA dated 27.12.2019 and
while rejecting the contentions of the HPPTC Ltd, observed that
it cannot place reliance on the said ITA for its benefit without
being a party therein as it does not form part and parcel of the
CA dated 02.07.2021, nor does it govern the payment of Bay
charges. While concluding on the liability of the BHP Ltd, APTEL
observed that before the State Commission, the other generating
companies, i.e. Respondent No.02 and Respondent No.03,
had accepted their liability of the proportionate Bay charges
and an undertaking to that effect being given by Respondent
No. 03 should similarly apply to the BHP Ltd, so as to not hold
it liable for share of other generating companies. The interim
arrangement for power evacuation should cease once the
BHP Ltd is connected through the Bay. Respondent No. 03’s
1366 [2025] 5 S.C.R.
Supreme Court Reports
failure to commission its project has led to complications, but
the BHP Ltd cannot be burdened with additional costs without
explicit contractual provisions. The Bay charges attributable to
Respondent No. 03 may be recovered by the HPPTC Ltd after
its project is commissioned or through other legal remedies.
9C. Appeal No. 30 of 2023 preferred by BHP Ltd was allowed vide
Judgment dated 17.03.2023 passed by APTEL; setting aside
the Order dated 27.12.2022 passed by the State Commission.
Further directions were issued to HPPTC Ltd to provide
connection to the BHP Ltd and Respondent No.02 on payment
of their respective share of charges for the Bay.
10. This resulted in the HPPTC Ltd moving this Court through instant
Civil Appeal No. 3919 of 2023 assailing the Impugned Judgment
passed by APTEL. To press their claim, the counsels on behalf of
the HPPTC Ltd have asserted that even by virtue of the ITA dated
27.12.2019 it was the BHP Ltd who was liable to act on behalf of
other two generating companies and the mandate was limited to
recovery of the proportionate charges by BHP Ltd from the other
generating companies. It was solely BHP Ltd who was designated
as the sole applicant in CA dated 02.07.2021 for payment of charges
and to settle claims of deemed generation for the Bay to the HPPTC
Ltd. Furthermore, as a stranger to the ITA dated 27.12.2019, HPPTC
Ltd cannot seek or enforce to recover the other part of charges from
Respondent No.02 and Respondent No.03 which APTEL failed to
appreciate while directing HPPTC Ltd to do so.
11. Contesting the assertions by the HPPTC Ltd, the counsels for the
BHP Ltd submitted that in pursuance of the Impugned Judgment, the
parties entered into an agreement for the O&M of interconnection
facilities as stipulated in Clause 2.5 of the CA dated 02.07.2021 which
included provisions for a separate arrangement for the execution,
operation and maintenance (O&M) of the Bay. Moreover, proportionate
share of liability arising as against the BHP Ltd has been deposited
and acknowledged by the HPPTC Ltd vide Letter dated 01.04.2023
and the connection has been provided at the Bay. Having complied
with the Impugned Judgment, the HPPTC Ltd is now precluded from
challenging it, rendering this Civil Appeal infructuous. Moreover,
separate bills have been raised by the HPPTC Ltd for the three
generating companies vis-à-vis payment of provisional O&M Charges
for April 2023 to March 2024. Therefore, it is asserted that the new
[2025] 5 S.C.R. 1367
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
Agreement dated 01.04.2023 supersedes the terms of ITA dated
27.12.2019 and reveals an acceptance on the part of the HPPTC
Ltd to treat the three projects separately.
11A. It was further contended on behalf of the BHP Ltd that the APTEL
rendered its decision after thoroughly examining the relevant
facts and circumstances and that the Order dated 27.12.2022 as
passed by the State Commission was based on a fundamentally
erroneous interpretation of the terms and conditions of the CA
dated 02.07.2021 and other pertinent documents.
12. In response to these contentions, it is argued on behalf of the
HPPTC Ltd that execution of O&M Agreement is in compliance on
the directions by APTEL as it could not have risked contempt in case
of non-compliance as there was no stay on the Impugned Judgment
and same does not imply any concession on part of the HPPTC Ltd.
Moreover, the BHP Ltd has not paid the Bay charges and while the
Respondent No.02 attempted to pay its proportionate share, it was
refused by the HPPTC Ltd because it had no locus to receive the
amount owing the CA dated 02.07.2021 being only between the
HPPTC Ltd and BHP Ltd and accordingly, such a payment does not
impact the liability of the latter to pay charges for the Bay.
13. No submissions were made on behalf of other parties in the instant
Civil Appeal.
14. We have heard the submissions on behalf of the parties at length.
15. Before perusing the legal conundrum of singular or shared liability
of the BHP Ltd as against the CA dated 02.07.2021, it is pertinent to
analyze the provisions of the terms negotiated and agreed to therein.
16. A bare perusal of the CA dated 02.07.2021 indicates that Respondent
No.02 and Respondent No.03. are not privy to the agreement entered
between the HPPTC Ltd and the BHP Ltd. The HPPTC is referred
to as STU and BHP Ltd as Applicant in the CA dated 02.07.2021.
The preamble of the said agreement reads:
“STU and Applicant are hereinafter collectively referred to
as “Parties” and individually as “Party”.
WHEREAS:
(A) The Applicant has applied to the STU for connection
of the Brua (9.00 MW) Small Hydro Electric Project facility
1368 [2025] 5 S.C.R.
Supreme Court Reports
in joint mode with Shaung (3.00MW) SHP and Roura-II
(24.00MW) SHP to the STU Transmission System and use
of the STUs Transmission system to transmit electricity to
and or from the Facility through the Intrastate Transmission
system.
(B) The STU has agreed to the connection of the Brua
(9.00 MW) Hydro Electric Project facility in joint mode
with Shaung (3.00MW) SHP and Roura-II (24.00MW)
SHP to the STU’s System and Communication System
(via the applicant’s Stie – Related Connection Equipment)
at the Connection Point i.e. 66kV Feeder Bay at 66kV
Switching Station, Urni through 66kV S/C Line in joint
mode with Shaung and Roura-II SHPs using the (wave
length) Transmission and Communication System of the
STU, to transmit electricity as well as real time data to
and or from the facility through the STU’s Transmission
and Communication System.”
17. The General Conditions for Connectivity are laid down in paragraph 01
of the CA dated 02.07.2021, and the relevant obligations are as under:
“1.1 (b) The applicant, shall be responsible for planning,
design, construction, and safe and reliable operation
of its own equipments in accordance with the Central
Electricity Authority (Technical Standards for Connectivity
to the Grid) Regulations, 2007, Central Electricity Authority
(Technical Standards for Construction of electrical plants
and electric lines) Regulations, Central Electricity Authority
(Grid Standards) Regulations, Indian Electricity Grid Code
(IEGC) and other statutory provisions.
(c) The applicant shall provide necessary facilities for voice
& data communication for transfer of real time operational
data such as voltage, frequency, real and reactive power
flow, energy, and status of circuit breaker & isolators
positions, transformer taps and other parameters from
their station to Data Collection Point (DCP) of STU as
per CGC/IEGC. STU shall provide access to applicants
data transfer through communication network in case
spare channels are available on mutually agreed terms.
The location of DCP of STU shall be the nearest station
[2025] 5 S.C.R. 1369
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
connected electrically where wideband communication
capacity STU is available.
Additional communication system from DCP to the
HPSLDC shall be the responsibility of STU however its
cost shall be borne by the applicant. The responsibility of
data transfer shall be that of the applicant.”
18. On the liability to pay the charges and costs, it was agreed in Clause
02 of the CA dated 02.07.2021 that:
“2 Agreement to Pay Charges and Costs
2.1 Agreement to Monthly Transmission Tariff
The applicant declares that it shall pay the Monthly
Tariff including HPSLDC charges, for use of Intra State
Transmission system, as and when long term access,
Medium-term open access or short-term open access is
availed by the applicant, in accordance with the relevant
regulations of HPERC in this regard.
2.2 Agreement to additional costs
The applicant declares that it shall pay the cost towards
modification/alterations to the Infrastructure of STU or Intra-
State transmission licensee/Distribution Licensee other
than the STU, as the case may be, for accommodating
the proposed connection as specified in the letter of STU
furnishing connection details.
2.3 Agreement to pay for damages
The applicant declares that it shall pay/make good
damages, if any, caused by the customer to the property
of the STU or Intra-State transmission licensee/Distribution
Licensee other than the STU, as the case may be, which
has been notified by the STU within reasonable time of
its occurrence, during the course of control, operation and
maintenance of the equipment.
2.4 Agreement to pay Charges for construction of Bays:
The applicant will execute an agreement with STU for the
erection of equipment of applicant or intra-state transmission
1370 [2025] 5 S.C.R.
Supreme Court Reports
licensee/Distribution Licensee in the substation premises
of the STU for construction of bays, if required. For this
purpose the applicant shall pay charges to the STU on
mutually agreed terms.
2.5 Agreement to pay O&M Charges:
The applicant shall pay O&M charges to the STU on
mutually agreed terms for the bay equipment of applicant
being operated & maintained by the STU in their substation.
These O&M charges will be governed time to time as per
the mutually agreed terms.”
19. BHP Ltd has asserted that the ITA dated 27.12.2019 is relevant to
the terms and conditions of the CA dated 02.07.2021 and also forms
a part while interpreting the latter. On that note, the relevant terms
of the former agreement between the three generating companies
i.e., the BHP Ltd, Respondent No.02 and Respondent No.03 are
as follows:
1. That all the IPPs shall pool in the power to be generated
from their generating stations at the common 66kV terminal
bay at proposed 66/220kV sub-station at Urni of HPPTCL
in District Kinnaur, Himachal Pradesh.
2. That the entire cost of common 66kV terminal bay
including metering arrangements required to be in place
for metering purpose etc. shall be shared by the IPPs in
proportionate to their individual generating capabilities.
4. That the cost of operation & Maintenance of the
Interconnection facilities at the HPPTCL grid as per the
claim to be raised by HPPTCL shall be borne by the IPPs
injecting power therein in proportionate to the installed
capacity of project. M/s Roura Non Conventional Energy
Private Limited and M/s Darjeeling Power Private Limited
shall reimburse the proportionate O&M charges to M/s
Brua Hydro Watt (P) Limited within 15 days of raising
the bills thereof. M/s Brua Hydro Watt (P) Limited shall
ensure that the payment of O&M charges received from
M/s Roura Non Conventional Energy Private Limited and
M/s Darjeeling Power Private Limited along with their own
share of O & M charges are deposited with the HPPTCL
[2025] 5 S.C.R. 1371
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
within 3 days. Any claim arising out of delayed remission
of O&M charges after receipt of the same from M/s
Roura Non Conventional Energy Private Limited and M/s
Darjeeling Power Private Limited shall be to the account
of M/s Brua Hydro Watt (P) Limited.”
5. That the IPPs jointly nominate M/s Brua Hydro Watt (P)
Limited to settle the claim, if any, of the deemed generation
of the projects with the HPSEBL in line with the decision
of HPERC in the Case no. 254/2006, M/s Sri Sai Krishna
Hydro Energies Private Limited & Others Versus Himachal
Pradesh State Electricity Board Shimla (Annexure-B),
The internal settlement of the deemed generation claims
amongst the IPPs shall be made in proportion to the
installed capacities of the respective IPPs.”
20. A perusal of the terms of the CA dated 02.07.2021, as referred to
above would indicate that BHP Ltd moved an application before the
HPPTC Ltd for seeking connection to the Bay and use of the said
system to transmit electricity. This was done not only on behalf of
itself, but in joint mode with Respondent No.02 and Respondent
No.03. The said request was accepted by the HPPTC Ltd, subject to
certain conditions as had been laid down. The relevant provision, as
far as the present issue is concerned, is covered by Clause 02 of the
said agreement which deals with the payment of charges and costs.
21. As per this Clause 02, all the charges were to be paid by the applicant
therein i.e. the BHP Ltd, which included not only the monthly tariff but
the payment of costs towards modification/alteration of infrastructure,
the other charges including the payment of damages if caused by
the customer to the property of the HPPTC Ltd as also the charges
of construction of the Bay. Even the payment of O&M Charges were
to be made by the BHP Ltd. These terms make it clear that the sole
liability was that of BHP Ltd not only in its individual capacity but
also on behalf of the Respondent No.02 and Respondent No.03. It
would not be out of way to mention here that CA dated 02.07.2021
was entered into between the HPPTC Ltd and BHP Ltd only while
Respondent No.02 and Respondent No.03 were not a party to the
said agreement.
22. As has been insisted upon and asserted by the Counsel for the BHP
Ltd, the ITA dated 27.12.2019, which had been entered into between
1372 [2025] 5 S.C.R.
Supreme Court Reports
the three generating companies i.e., BHP Ltd, Respondent No.02,
and Respondent No.03 was an internal arrangement between them
where the HPPTC Ltd was not a party. The relevant provisions of
the ITA dated 27.12.2019, as have been reproduced above, leave
no manner of doubt that as per the said agreement all three of them
had agreed to pool in the power to be generated from their respective
generative stations at Bay of the HPPTC Ltd. The entire cost of
the terminal, including metering arrangements, were to be shared
between them in proportion to their individual generating capacities.
23. Cost of operation and maintenance of the interconnection facilities
at the grid was to be borne by all three of them as would be raised
by the HPPTC Ltd as per their proportionate installation capacity of
the project. BHP Ltd had taken up the responsibility to be the joint
nominee for all three of them to settle the claim, if any, of the deemed
generation of projects with the HPPTC Ltd. It clearly laid down that
Respondent No.02 and Respondent No.03 would reimburse the
proportionate amount due as per the agreement to BHP Ltd within
15 days of raising of the bills by the HPPTC Ltd. BHP Ltd was to
ensure the payment to be made to the HPPTC Ltd and thereafter
seek reimbursement in case of non-payment of the amount by
the other generating companies within the time stipulated. What,
therefore, turns out is that the primary responsibility had been taken
upon itself by BHP Ltd, taking the lead for the other two generating
companies and thereafter recover the proportionate amount as
per the respective installed capacity of the project of the other two
generating companies i.e. Respondent No.02 and Respondent No.03.
24. Liability, if any, being therefore upon BHP Ltd as per the CA dated
02.07.2021 with HPPTC Ltd not being a party to ITA dated 27.12.2019,
the latter could not have and cannot claim proportionate shares as
per the installed capacity of the project from Respondent No.02 and
Respondent No.03. The right, if any, of the claim and recovery of
the liability from Respondent No.02 and Respondent No.03 would
be only with BHP Ltd. The HPPTC Ltd, therefore, has rightly put
forth its claim to BHP Ltd.
25. Having considered the provisions of the contracts/agreements as
above, we should ideally be considerate of the impact of the liability
of the charges under the CA dated 02.07.2021, if so imposed on
Respondent No.02 and Respondent No.03 through existing legal
doctrines and decisions of the Courts.
[2025] 5 S.C.R. 1373
The HP Power Transmission Corporation Ltd. v.
M/s Brua Hydrowatt Pvt. Ltd. & Ors.
26. The Doctrine of Privity, as originally introduced in the decision of
Tweddle v. Atkinson1 and acknowledged by the Privy Council in
Jamna Das v. Pandit Ram Autar Pande and others2, still holds
relevance when it comes to contractual rights and obligations of
parties inter se. In a similar factual backdrop, as in this case, vis-à-vis
relationship between the parties and their ability to sue for recovery
thereof, a three-Judge Bench of this Court in Essar Oil Limited v.
Hindustan Shipyard Limited and Others3 denied the Appellant
therein, to sue ONGC for recovery of payment in its capacity as
a sub-contractor, as it was not privy to the contract between the
ONGC and Respondent-Contractor. Their reliance on some direct
payments made to it by ONGC were observed to be not sufficient
to establish privity of contract.
27. In the light of the above legal position, if the contentions of the BHP
Ltd are accepted by this Court, HPPTC Ltd would technically have no
legal remedy to recover its dues or other charges from Respondent
No.02 and Respondent No.03 in event of a default as they are not
under any contractual obligation to discharge any liability towards
the HPPTC Ltd vis-à-vis the Bay.
28. Therefore, it is our opinion that the APTEL was incorrect in not
considering the absence of privity of Respondent No.02 and
Respondent No.03 to the CA dated 02.07.2021, especially when it
went on to observe that the ITA dated 27.12.2019 cannot be relied
upon by the HPPTC Ltd for its contentions as it does not form part
and parcel of the CA dated 02.07.2021. An equivalence should have
then been drawn by the APTEL to consider the fact that Respondent
No.02 and Respondent No.03, although beneficiaries to the liability of
the HPPTC Ltd to construct, operate and maintain the Bay through
the CA dated 02.07.2021, could not have been held liable for the
charges when explicit wording in the CA dated 02.07.2021 only binds
BHP Ltd for the payment of concerned cost and charges.
29. If that be so, as per the terms of agreement, the Impugned Judgment
of the APTEL is based upon wrong assumptions and misreading of
the terms of agreement ignoring the basic principle that a party not
1 (1861) 121 ER 762
2 1911 SCC OnLine PC 35
3 (2015) 10 SCC 642
1374 [2025] 5 S.C.R.
Supreme Court Reports
privity to the agreement or contract cannot be, unless the context
otherwise makes it apparent, made liable for any term(s) and
condition(s) unrelated to it.
30. Accordingly, the decision rendered by the State Commission is good
in law, and the observations herein above mandate that the Impugned
Judgment as passed by the APTEL be set aside.
31. Therefore, the instant Appeal is allowed in favour of the HPPTC Ltd
to the effect that the Impugned Judgment dated 17.03.2023 passed
by the APTEL is set aside and the Order dated 27.12.2022 passed
by the State Commission is restored.
32. There shall be no order as to costs.
33. Pending application(s), if any, stand disposed of.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Gaurav Upadhyay, Hony. Associate Editor
(Verified by: Abhinav Mukerji, Sr. Adv.)
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