SECTION 9 PETITION : WHETHER MAINTAINABLE FOR DISPUTES ARISING UNDER A POWER PURCHASE AGREEMENT

• Author(s): Abhishek Kumar, Shubham Singh
• Date: 28-Nov-2025
• Post in: Arbitration

Introduction

Delhi High Court’s recent decision in Renew Wind Energy (AP2) Pvt. Ltd. v. Solar Energy Corporation of India reported at 2025 SCC OnLine Del 8252 is one of those judgments that quietly, but decisively, reshapes the way disputes in the power sector will be resolved for years to come. The case involved a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“A&C Act”) filed by a wind power generator seeking protection against probable unilateral recovery by Solar Energy Corporation of India (“SECI”). The Court while dismissing the petition has discussed in detail the circumstances under which a section 9 petition would not be maintainable in case of disputes arising out of Power Purchase Agreements (“PPA”), despite existence of an arbitration clause.

Brief Background

2. 1. Renew Wind Energy (AP2) Pvt. Ltd. (“Renew Wind”) had entered into a PPA dated 23.05.2018 with SECI for supplying 300 MW of wind power from its Kutch project for 25 years. The scheduled commissioning date of the project was 24.11.2019. In FY 2024–25, SECI alleged a substantial shortfall in minimum energy supply and threatened to deduct compensation for such shortfall, from upcoming monthly invoices. Renew Wind claimed that the shortfall stemmed entirely due to force majeure events and invoked the arbitration clause contained under the PPA.
    
3. 2. Before an arbitral tribunal could be constituted, Renew Wind approached Delhi High Court under Section 9 of the A&C Act, seeking interim protection against imminent deductions by SECI.
    
4. 3. However, the maintainability of the petition was challenged by SECI on the ground that in terms of Section 79(1)(f) of the Electricity Act, 2003 (“Electricity Act”), only Central Electricity Regulatory Commission (“CERC”) had the jurisdiction to refer any dispute between the parties to arbitration. It was also contended that section 174 of the Electricity Act would have overriding effect upon any other law in force, and therefore, the provisions of section 9, section 8 and section 11 would not be applicable.
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   4. The above objection opened a much deeper inquiry, one that required the Court to examine the conflict if any between the provisions of the A&C Act and Electricity Act.

The Legislative Architecture: Understanding Section 79(1)

• 1. The Court while discussing the scope and ambit of powers of CERC under section 79(1) of the Electricity Act observed that the CERC has the powers to adjudicate upon certain disputes as mentioned under section 79(1) and at the same time it is also empowered to refer any dispute to arbitration. The Court further noted that the expression “and” as appearing in 79(1)(f), if interpreted in its literal sense, would lead to absurdity. The above provision, thus, cannot mean that CERC must both adjudicate and refer the same dispute to arbitration.
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• 2. Further, following the law laid down by the Supreme Court of India in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. - (2016) 9 SCC 103, the Court held that the expression “and” appearing in Section 79(1)(f) must be read as “or”. From the observations made by the Court, the following analogy can be derived from the present judgement with respect to powers of CERC:
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  • Adjudicatory Jurisdiction – CERC has the jurisdiction to adjudicate upon tariff-related matters under Section 79(1)(a) to 79(1)(d).
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  • Referral Jurisdiction – CERC has broader powers to refer any dispute involving generating companies and transmission licensees to arbitration.

The Court, thereafter, proceeded to discuss the scope and ambit of CERC’s powers and types of disputes which can be adjudicated upon by the CERC. The Court observed the following:

Scope of CERC’s Powers

• The Court examined this crucial issue in detail and held that CERC enjoys a discretion to adjudicate upon the disputes mentioned categorically under section 79(1)(a) to 79(1)(d) of the Electricity Act.
   
• The CERC also has a discretion to adjudicate upon a dispute mentioned above, either by itself or refer the same to arbitration by exercising its powers under section 79(1)(f).
   
• The CERC under section 79(1)(f) has the jurisdiction to refer any other dispute as well which do not fall within the ambit of 79(1)(a) to 79(1)(d), to arbitration.
   
• The Court further observed that CERC can refer any dispute to arbitration which may be either a tariff related dispute or a contractual dispute
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• The Court discussed the law laid down in Solar Energy Corporation of India Ltd. Vs. Kerala State Electricity Regulatory Commission & Anr. in Appeal No. 414 of 2022, Madhya Pradesh Power Management Company Ltd. Vs Damodar Valley Corporation & Anr. reported at 2024 SCC OnLine APTEL 76 and some other judgements and held that if a dispute falls outside the ambit of Section 79(1)(a) to 79(1)(d) of the Electricity Act, CERC cannot adjudicate such dispute and the same must be referred to arbitration, provided that a valid arbitration clause existed in the PPA. The obligation to refer such dispute to arbitration is not a discretionary power of CERC but a mandatory obligation.
   

Exclusivity of the Referral Function: Why High Courts Cannot Step In

• The Court in order to decide the maintainability of the petition, proceeded to examine the issue “whether the power of referring disputes to arbitration is exclusive to the CERC even when there was an arbitration agreement between the parties”. The Court in addition to discussing the scope of section 79(1) also examined section 173 and 174 of the Electricity Act. A reading of the above revealed that the provisions laid down under the Electricity Act would have overriding effect upon any other law in force for the time being except the ones mentioned in section 173.
   
• The Court further referred to various judgements in order to decide whether there is any conflict between the provisions of the Electricity Act and the A&C Act. Reference was made to the judgement of Gujarat Urja Vikas Nigam Ltd. (supra) and it was observed that a special law would prevail over the general law. It was also observed that CERC and Arbitral Tribunals were not rivals or competing fora but complementary mechanisms, designed to achieve the common objective of efficient and expert dispute resolution.
   
• The Court thereafter proceeded to hold that CERC had the exclusive jurisdiction to refer any dispute to arbitration and the provisions empowering CERC in this regard would prevail over the provisions of the A&C Act. It was thus, concluded that no other Court or authority including High Courts acting either under section 11 or section 8 or section 9 of the A&C Act would have jurisdiction to entertain or adjudicate upon any such petition including a request for granting interim protection even if an arbitration clause existed in the PPA.
   

Section 94(2): The Built-In Substitute for Section 9

• Since, it was held by the Court that no Court would have the jurisdiction to entertain a petition under section 9 in a dispute arising out of a PPA, a question arose as to what remedy was available to an aggrieved party, in such case.
   
• The Court referred to the provisions contained under Section 94(2) of the Electricity Act and observed that CERC had the necessary powers to adjudicate upon any request for any interim measure or interim protection under section 94(2). Thus, the parties in case of any dispute are not remedy-less as the legislature empowered the CERC to pass necessary directions, if required. Accordingly, it was concluded that instead of a petition under section 9, the aggrieved party should approach CERC under the aforesaid provision.

On the basis of the above legal position and the provisions contained under the Electricity Act and the A&C Act, the Court rejected the petition filed by Renew Wind, finding the same to be not maintainable and left the parties to avail the necessary remedies as available under the law.

Conclusion

The present case settles an important question of law as to which forum has the jurisdiction to refer the parties to a PPA to arbitration. It is also an important judgment as the Court refused to entertain a petition under section 9 despite existence of an arbitration clause in the PPA. The judgment emphasizes the exclusivity of the powers conferred upon the CERC under the Electricity Act and confirms that the intention of the legislature was to create a regulator-based system for handling disputes in the electricity sector.