Arbitration Act Interim Relief Unavailable In Electricity Disputes When Commission Can Grant Similar Relief: Delhi High Court

The Delhi High Court has recently held that it cannot entertain a plea seeking interim relief in an electricity dispute when the State Electricity Regulatory Commission is empowered to grant similar relief under the Electricity Act, 2003.

Justice Tushar Rao Gedela dismissed a petition filed by Enerica Infra 3 Private Limited seeking to restrain NTPC Vidyut Vyapar Nigam Limited and Uttar Pradesh Power Transmission Corporation Limited from encashing bank guarantees worth ₹52.20 crore.

“It is clear from a reading of sub-section (2) of Section 94 of the Act that the SERC has the inherent powers to pass interim orders in any proceeding, hearing or matter before it. This jurisdiction conferred upon the SERC also postulates that the Commission can pass interim protection orders in the nature of those passed by Civil Courts under Section 9 of the A&C Act,” the court observed.

It further held, “Thus, the jurisdiction to adjudicate any dispute between the petitioner and the respondents falls squarely within the domain and jurisdiction of the SERC, and this Court would be denuded of exercise of its jurisdiction under Section 9 of the A&C Act.”

The dispute arose from a project awarded to Enerica on August 12, 2025, to develop a 125 MW/500 MWh standalone battery energy storage system at the Garautha Substation in Uttar Pradesh.

Under a Power Purchase Agreement executed on August 26, 2025, the utilities were required to provide 10 acres of contiguous, encumbrance-free land within 60 days.

Enerica alleged that the entire parcel was not handed over. It relied on a joint demarcation report which, according to the company, showed that only about 8.9 acres were available, with part of the land occupied by an engineering, procurement and construction contractor. The respondents disputed this, contending that 9.05 acres had been handed over.

Enerica terminated the agreement on August 14, 2026, alleging a fundamental contractual breach. Two days later, it approached the high court seeking protection against encashment of a performance guarantee worth ₹27.96 crore, a viability gap funding guarantee worth ₹13.50 crore, and connectivity guarantees worth ₹10.74 crore.

NTPC Vidyut Vyapar Nigam opposed the petition, arguing that the dispute fell within the SERC's jurisdiction under Section 86(1)(f) of the Electricity Act.

Relying on the Supreme Court's ruling in Gujarat Urja Vikas Nigam Limited v. Essar Power Limited, the high court held that the SERC has the authority to adjudicate disputes between electricity licensees and generating companies or refer them to arbitration. It also held that Section 94(2) empowers the Commission to grant interim protection similar to that available under Section 9 of the Arbitration and Conciliation Act, 1996.

The court separately considered a contractual clause permitting arbitration only where the disputed amount did not exceed ₹25 crore. It rejected Enerica's argument that the threshold did not apply because the company sought an injunction rather than monetary recovery. The court noted that the guarantees together exceeded ₹25 crore and that the dispute could not be split to avoid the restriction.

The petition was dismissed for lack of jurisdiction. The court did not decide whether Enerica had lawfully terminated the agreement or whether the guarantees could be encashed. It directed the SERC to disregard any observations on the merits of the dispute.

For Petitioner (Enerica Infra 3 Private Limited): Senior Advocate Jayant Mehta; Advocates Vishrov Mukherjee, Yashaswi Kant, Ameya Vikram Mishra, Vibhor Yadav, Om Shelat, Ali Ahmed Chaudhary, Aparajita Upadhaya.

For Respondent (NTPC Vidyut Vyapar Nigam Limited): Senior Advocate Ankit Jain; Advocates Tushar Jain, Alok Shankar, Vaibhav Choudhary, Kanika Gupta.

For Respondent (Uttar Pradesh Power Transmission Corporation Limited): Advocates Aditya K. Singh, Vinit Kumar, Mridul Gupta, Vineet Gupta, Divyansh Singh, Dalima Gupta.

For Respondent (Uttar Pradesh Power Corporation Limited): Senior Advocate Nikhil Nayyar; Advocates Divyanshu Bhatt, Pranjit Bhattacharya, Abhayaditya Singh.