Arbitration at the Crossroads of Energy Regulations: Critical Assessment of Cerc’s Exclusive Arbitration Referral Authority

– Anup Koushik Karavadi and Kanishk Tiwari

Introduction

Poised between private autonomy and statutory control, Arbitration occupies a peculiar space in India’s energy sector. Projects contracts such as Power purchase agreements (PPAs), transmission contracts, and implementation agreements increasingly incorporate arbitration clauses, reflecting the sector’s growing commercial sophistication and the parties’ desire for depoliticized dispute resolution. Yet, the field is not governed solely by party consent. The Electricity Act, 2003, a comprehensive statute establishing an intricate regulatory framework through the Central and State Electricity Regulatory Commissions, also embeds its own adjudicatory and referral mechanisms. The question that has repeatedly tested courts and scholars alike is whether these mechanisms eclipse the operation of the Arbitration and Conciliation Act, 1996 when the two intersect. The issue of is further extended to parties interests in claiming remedies inter alia appointment of arbitrator or securing interim reliefs.

The overlapping jurisdiction of forums under A&C Act & Electricity Act form the crucible of the present debate that is whether arbitral reference in energy disputes remains a matter of contractual volition or has transformed into a regulatory function embedded within statutory design of the commission. This article will first examine how the legislative architecture of the Electricity Act evolved to create a self-contained dispute resolution mechanism distinct from the A&C Act, but since State Commission’s mandate and powers are mutas mutandis the Central Commission, focus shall be on the provisions governing role of CERC. The article will then trace the judicial journey, from early Supreme Court pronouncements to recent High Court interpretations, revealing how the idea of “exclusive referral authority” has crystallized.

Legislative Architecture and Statutory Design

Electricity Act

The Electricity Act was enacted with the objective of consolidating and modernising India’s laws relating to generation, transmission, distribution, trading and use of electricity.¹ The Act contemplates the creation of the Central Electricity Regulatory Commission and analogous State-level commissions to regulate the sector, fostering competition, efficiency, and consumer protection.²

Under Section 79(1)(f) the CERC is empowered “to adjudicate upon disputes involving generating companies or transmission licensees in regard to matters connected with” the functions listed in clauses (a)-(d) and “to refer any dispute for arbitration”.³ In parallel, Section 86(1)(f) empowers the State Electricity Regulatory Commission (SERC) to “adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration”.⁴ These provisions highlight that the Act anticipates a dispute resolution architecture firmly embedded in the regulatory framework.

The reference to “any dispute” and the referral power to arbitration under Section 79(1)(f) and Section 86(1)(f) signal an intent to subsume certain intra-sectoral disputes within the commissions’ adjudicatory gate-keeping role rather than leaving them entirely to private arbitration.⁵ Additionally, Section 158 of the Electricity Act provides that where any matter is directed to arbitration under the Act, the Commission shall appoint or nominate the arbitrator.⁶ In this sense, the Act circumscribes, not merely allows arbitration, establishing a regime distinct from the typical contractual arbitration regime.

Further, Sections 174-175 of the Act effectuate general provisions for overriding and saving of other laws. Section 174 states the Act shall have effect not with standing anything inconsistent in other laws, and Section 175 preserves existing contracts and proceedings unless inconsistent with the Act.⁷ Thus the legislative design reflects a self-contained disputeresolution mechanism with primacy over general statutes in the electricity field.

Arbitration Act

The Arbitration and Conciliation Act, 1996 was enacted to provide a comprehensive legal framework for domestic and international commercial arbitration in India.⁸ Central to its design is party autonomy. Sections 7 and 9 allow parties to agree to arbitration and obtain interim relief, while Sections 8 and 11 mandate courts to refer matters to arbitration and appoint arbitrators respectively where an arbitration agreement exists.⁹

Section 8(1) provides that a judicial authority before which an action is brought may refer the parties to arbitration if there is an arbitration agreement, unless it finds that the agreement is null and void or inoperative.¹⁰ Section 9 allows a party to apply to a court for interim relief “before, during or after” arbitral proceedings.¹¹ Section 11 empowers the court to appoint arbitrators where parties fail to agree.¹² The amendments effected in 2015 sought to limit judicial intervention and strengthen efficiency in arbitral processes.¹³

The A&C Act’s general, non-sector-specific nature means it operates on the default assumption of private dispute resolution and party consent, unless a special statute indicates otherwise. The well-known interpretive presumption generalia specialibus non derogant suggests that a later or special statute (such as the Electricity Act) may displace a general one (such as the A&C Act) where there is an inconsistency.¹⁴

Reading the two Statutes Together

When one reads the Electricity Act and the A&C Act side by side, a fundamental tension emerges: the Electricity Act establishes a statutory mechanism for the adjudication or referral of disputes in the power sector by CERC or SERC, thereby potentially curtailing the consenting parties’ recourse under the A&C Act. The referral powers under Sections 79(1)(f) and 86(1)(f) of the Electricity Act appear to vest control in a regulatory commission rather than a court and suggest a distinct path for arbitration that bypasses the standard mechanisms in the A&C Act (Sections 8, 9, 11).

This overlap raises interpretive questions like should the parties’ arbitration clause under a PPA trigger the A&C Act route regardless of the Electricity Act? Or does the Electricity Act’s special machinery override or exclude the A&C Act in this sector? The overriding clause in Section 174 of the Electricity Act supports the latter reading, but the saving clause in Section 175 ensures contracts not inconsistent are preserved, thus leaving room for nuance.¹⁵

In a broader comparative context, other sectoral statutes (for example in telecommunications or oil & gas) similarly embed dispute-resolution provisions, but the explicit “refer for arbitration” wording in the Electricity Act makes this statutory architecture especially significant for energy sector contracts.¹⁶

Jurisprudential Evolution

The jurisprudential departure begins with the Supreme Court’s decision in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. There, the Court faced a conflict between the A&C Act and the Electricity Act, 2003 concerning a PPA between a licensee and a generating company.¹⁷ The High Court of Gujarat had previously referred the dispute to arbitration under Section 11 of the A&C Act.¹⁸ The Supreme Court reversed, holding that Section 86(1)(f) of the Electricity Act constituted a special provision that displaced the general referral power of courts under the A&C Act.¹⁹

The Court reasoned that Parliament intended the State Commission to be the “exclusive forum” for disputes between licensees and generating companies.²⁰ Reading the word “and” in Section 86(1)(f) as “or”, it concluded that the Commission could either adjudicate or refer a dispute to arbitration.²¹ Importantly, the Court observed:

“Section 86(1)(f) is a special provision and hence will override the general provision in Section 11 of the Arbitration and Conciliation Act, 1996 for arbitration of disputes between the licensee and generating companies.” ²²

This ratio laid the foundation for the doctrine that the Electricity Act, being a special statute, prevails over the A&C Act where both cover the same field. Subsequent tribunals have repeatedly relied upon this holding to demarcate jurisdiction between regulatory commissions and arbitral tribunals.²³

However, after Essar Power, courts struggled to delineate the boundary between regulatory disputes (subject to commission adjudication) and contractual disputes (potentially arbitrable).

In Coastal Andhra Power Ltd. v. Andhra Pradesh Central Power Distribution Co. Ltd., the Delhi High Court held that parties must first approach CERC, which would then determine which part of a dispute may be referred to arbitration under Section 79(1)(f).²⁴ The Court emphasized that CERC’s discretion to “adjudicate or refer” operates as a statutory gatekeeping mechanism.²⁵ This interpretation effectively imported the Essar Power ratio into the Central Commission’s domain.

Similarly, in PTC India Ltd. v. Jaiprakash Ventures Ltd., the same court reaffirmed that only the CERC can decide “which dispute, if any, involving a generating company has to be referred to arbitration.”²⁶ The reasoning crystallized the principle of exclusive referral competence.

However, later cases displayed inconsistency. In Global Energy Pvt. Ltd. v. Jindal Power Ltd., the High Court suggested that where the dispute was “purely contractual,” commissions might lack jurisdiction, reopening the door to private arbitration.²⁷ Likewise, in MB Power (Madhya Pradesh) Ltd. v. State Bank of India, the Court confined CERC’s adjudicatory power to tariff-related issues, suggesting that non-tariff disputes could fall under the A&C Act.²⁸ The court reasoned that since the PPA had not commenced, no tariff could be said to be in issue, thus excluding CERC jurisdiction.²⁹

These decisions exposed some fault lines. While Essar Power emphasized statutory exclusivity, subsequent rulings oscillated between a broad and narrow understanding of “matters connected with” tariff regulation under Section 79(1)(f).

The Appellate Tribunal for Electricity attempted to harmonize the jurisprudence. In M.P. Power Management Co. Ltd. v. Damodar Valley Corp., it held that arbitration is not alien to the Electricity Act’s framework and that commissions are “not only justified but bound” to refer disputes to arbitration when a valid arbitration clause exists and the matter does not concern regulatory functions.³⁰ The Tribunal thus reaffirmed the statutory pathway through CERC or SERC nomination under Section 158, while maintaining a limited scope for contractual autonomy.

APTEL further clarified that disputes “relating to termination or breach of contract” that do not impact tariff directly or indirectly are non-tariff disputes and may be referable to arbitration.³¹ Yet, it highlighted that even such referral must issue from the appropriate commission, preserving institutional control.³² This line of reasoning signalled a move toward a nuanced taxonomy, distinguishing tariff versus non-tariff disputes rather than a binary statutory-versus-contractual classification.

The Delhi High Court View

The most recent shedding of light on the issue of Arbitration referral conflict was in the case of ReNew Wind Energy (AP2) Pvt. Ltd. v. SECI. The case arose from a 2018 Power Purchase Agreement between ReNew Wind Energy (a generating company under Section 2(28) of the Electricity Act) and Solar Energy Corporation of India, a Central Government licensee under Section 2(39).³³ When SECI sought to deduct compensation for generation shortfall, the petitioner approached the Delhi High Court under Section 9 of the Arbitration & Conciliation Act seeking interim restraint.³⁴ The maintainability of that petition, given Section 79(1)(f) of the Electricity Act, became the fulcrum of the judgment.³⁵

The Court held that the petition was non-maintainable on the premise that the CERC alone is empowered to refer such disputes for arbitration under Section 79(1)(f).³⁶ Justice Purushaindra Kumar Kaurav’s dictum effectively reaffirms the Electricity Act’s institutional supremacy over general arbitral law.

The Court interpreted Section 79(1)(f); First, it reads the conjunction “and” between the phrases “in regard to matters connected with clauses (a) to (d)” and “to refer any dispute for arbitration” as “or.”³⁷ This construction, borrowing from Essar Power, prevents an absurd result where the Commission would both adjudicate and refer simultaneously.³⁸ Accordingly, the provision confers two distinct powers: (i) an adjudicatory power limited to disputes concerning tariff-related matters (clauses (a)–(d)); and (ii) a referral power enabling CERC to refer any dispute involving a generating company or transmission licensee for arbitration.³⁹

Within this framework, the Court identified two facets of the referral power:

1. Referral of disputes that CERC is itself capable of adjudicating but chooses, in its discretion, to send to arbitration;⁴⁰ and
2. Referral of disputes that CERC cannot adjudicate (non-tariff or purely contractual matters) but must nevertheless refer to arbitration if a valid arbitration clause exists.⁴¹

The first facet is discretionary; the second, mandatory.⁴² Consequently, even where the dispute falls outside the regulatory ambit, only CERC can trigger arbitration proceedings. This interpretation expands the Commission’s jurisdictional gate-keeping beyond its adjudicatory competence, transforming it into the exclusive statutory conduit for arbitral reference.⁴³

Relying on Sections 158, 173, and 174 of the Electricity Act, the Court reasoned that Parliament consciously vested the referral function in CERC and SERCs, thereby displacing the concurrent jurisdiction of civil courts under Sections 8 and 11 of the A&C Act.⁴⁴ Drawing heavily on Essar Power, the Court reaffirmed that a “special law” overrides the “general law” where both occupy the same field.⁴⁵ Permitting any other authority to refer disputes for arbitration, it held, would “render Parliament’s wisdom nugatory.”⁴⁶ Accordingly, referral powers under Section 79(1)(f) are exclusive, not concurrent.⁴⁷

The Court distinguished MB Power (Madhya Pradesh) Ltd. v. State Bank of India, 2023 SCC OnLine Del 149, and Global Energy Pvt. Ltd. v. Jindal Power Ltd., 2015 SCC OnLine Del 14691, noting that those cases addressed the adjudicatory competence of CERC, not its referral authority.⁴⁸ By clarifying this conceptual divide, the judgment harmonizes the earlier jurisprudence and recent APTEL decisions such as M.P. Power Mgmt. Co. v. Damodar Valley Corp.⁴⁹

A significant uniqueness of the judgement lies in its contribution to treatment of interim relief. After ruling out the High Court’s jurisdiction under Section 9 of the A&C Act, the Court observed that parties are not left remediless. Section 94(2) of the Electricity Act empowers the Commission to “pass such interim order in any proceeding, hearing or matter before it, as that Commission may consider appropriate.”⁵⁰ This, according to the Court, acts as a statutory substitute for Section 9.⁵¹ Thus, a party seeking protection prior to arbitral constitution must approach the Commission, not the civil court.⁵² The holding brings clarity to the interim-relief conundrum that had persisted since Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.,⁵³ where the Supreme Court recognized that certain classes of disputes are reserved for public fora by legislative design.

Conclusion

The Delhi High Court’s decision in ReNew Wind Energy reaffirms the supremacy of the Electricity Act, 2003, over the Arbitration & Conciliation Act, 1996. Its construction of Section 79(1)(f) as embodying both discretionary and mandatory facets of referral power transforms CERC from a regulator into the exclusive gatekeeper of arbitral initiation in the power sector.

From a policy standpoint, this development strengthens the institutional architecture of sectoral regulation but simultaneously circumscribes contractual freedom. While regulatory coherence demands a unified forum, investor expectations of neutral and efficient dispute resolution may suffer if commissions become overburdened or perceived as biased regulators. A balanced legislative approach perhaps through specialized electricity-sector arbitration panels under CERC oversight could reconcile these competing imperatives.

In sum, the Court’s reasoning situates arbitration within the broader regulatory governance of energy law, reaffirming that when a special statute prescribes a path, that path alone must be followed. Whether this model advances or constrains India’s renewable-energy ambitions will depend on how CERC operationalizes its new-found authority in practice.

References

1. Electricity Act, No. 36 of 2003, § 1 (India).
2. Id. § 2(4)–(5), (6); see also PowerGrid Ltd., Salient Features of the Electricity Act, 2003, app. to report, at 1.
3. Electricity Act § 79(1)(f).
4. Id. § 86(1)(f).
5. See JSA Legal Alert, “APTEL Holds That State Electricity Regulatory Commissions Have Jurisdiction under Section 86(1)(f) of the Electricity Act to Adjudicate Disputes Between Licensees and Generating Companies …” (June 2025).
6. Electricity Act § 158.
7. Id. §§ 174–175.
8. Arbitration & Conciliation Act § 8(1); see MKBA C IAR Sections 8 & 11.
9. Id. §§ 7–11; see also The Legal School, “Important Sections of Arbitration and Conciliation Act, 1996.”
10. Arbitration & Conciliation Act § 8(1); see MKBA C IAR Sections 8 & 11
11. Id. § 9; see iPleaders, “Section 9 of the Arbitration and Conciliation Act, 1996.”
12. Id. § 11; see LawBhoomi Notes on Arbitration & Conciliation Act.
13. “India Revises the 1996 Arbitration Act,” WilmerHale client alert (Jan. 2016).
14. See The Anomalous Case of Sections 8 & 11 of India’s Arbitration and Conciliation Act (1996), Wolters Kluwer Arbitration Blog (Dec. 2018).
15. Electricity Act §§ 174–175; see also Regulators and Regulation under the Electricity Act 2003, IJPIEL vol. 29 (2022) 40.
16. See “Regulators and Regulation under the Electricity Act 2003,” IJPIEL (Oct. 2022).
17. (2008) 4 S.C.C. 755 ¶¶ 26–28 (India).
18. Id. ¶ 8.
19. Id. ¶ 28.
20. Id. ¶ 59.
21. Id. ¶ 27 (citing G.P. Singh, Principles of Statutory Interpretation 404 (9th ed. 2004)).
22. Id. ¶ 28.
23. See Coastal Andhra Power Ltd. v. Andhra Pradesh Cent. Power Distrib. Co. Ltd., 2012 SCC OnLine Del 3352 ¶ 17 (Del. HC) (applying Essar Power to Section 79(1)(f)); PTC India Ltd. v. Jaiprakash Ventures Ltd., 2012 (130) D.R.J. 351 ¶ 48 (Del. HC).
24. 2012 SCC OnLine Del 3352 ¶ 17.
25. Id. ¶ 18.
26. 2012 (130) D.R.J. 351 ¶ 48 (Del. HC).
27. 2015 SCC OnLine Del 14691 ¶ 14.
28. 2023 SCC OnLine Del 149 ¶ 63.
29. Id. ¶ 65.
30. M.P. Power Mgmt. Co. Ltd. v. Damodar Valley Corp., 2024 SCC OnLine APTEL 76 ¶ 22.
31. Id. ¶ 25.
32. Id. ¶ 37.
33. ReNew Wind Energy (AP2) Pvt. Ltd. v. Solar Energy Corp. of India, O.M.P.(I)(Comm.) 213/2025 ¶ 3 (Del. H.C. Nov. 3, 2025).
34. Id. ¶¶ 4–6.
35. Id. ¶ 7.
36. Id. ¶ 115.
37. ReNew Wind Energy, ¶ 20.
38. Id. (citing Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2008) 4 S.C.C. 755, ¶ 27 (India)).
39. Id. ¶ 21.
40. Id. ¶ 23.
41. Id. ¶ 29.
42. Id. ¶ 30.
43. Id. ¶ 52.
44. ReNew Wind Energy, ¶¶ 54–63.
45. Id. ¶ 61 (citing Essar Power, (2008) 4 S.C.C. 755, ¶ 28).
46. Id. ¶ 58.
47. Id. ¶ 79.
48. Id. ¶¶ 80–88.
49. Id. ¶ 32 (discussing APTEL precedent).
50. ReNew Wind Energy, ¶ 92 (quoting Electricity Act, 2003, § 94(2)).
51. Id. ¶ 93.
52. Id. ¶ 94.
53. (2011) 5 S.C.C. 532 ¶ 35.