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Punjab State Power Corporation Limited v. Talwandi Sabo Power Limited  2026 INSC 515 -Electricity Act - Punjab State Grid Code

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Electricity Act, 2003, - Punjab State Grid Code, 2013 - SG Code in its operation and scheduling and despatch contemplates breach by the SGS on four facets : (i) over-injection and underinjection, covered in UI Regulations (ii) deviation, reckoned by the DSM Regulations (iii) gaming, contemplated under Regulation 11.3.4 read with 11.3.12 and 11.3.20 (iv) demonstration of declared capability, specified under Regulation 11.3.4 read with Regulation 11.3.13 and 11.5 (xi). Gaming in relation to the SG Code contemplates an intentional misdeclaration of capacity by a generating station in order to make an undue gain through UI charges or otherwise. a deviation simplicitor would neither amount to gaming nor misdeclaration for failure to demonstrate declared capability. But a failure to demonstrate DC and a measure employed of gaming would definitely constitute a deviation. Likewise, a failure to demonstrate declared capability, on notice issued, would not necessarily lead to an allegation of gaming, which if raised, as we have already found, should be commenced with a notice, proceeded with an inquiry, affording a reasonable opportunity to the State Generating Station (SGS). [Context: The Supreme Court held that failure by Talwandi Sabo Power Limited (SGS) to demonstrate its declared capabilitywhen called upon by the State Load Despatch Centre attracts a strict, civil penalty under Regulation 11.3.13 of the Punjab State Grid Code, independent of any requirement to prove “gaming” or mala fide intent.]

Punjab State Power Corporation Limited v. Talwandi Sabo Power Limited  2026 INSC 515 -Electricity Act - Punjab State Grid Code
Punjab State Power Corporation Limited v. Talwandi Sabo Power Limited  2026 INSC 515 -Electricity Act - Punjab State Grid Code.pdf
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Case Info

Case name: Punjab State Power Corporation Limited v. Talwandi Sabo Power Limited & Ors. (with Civil Appeal No. 7436 of 2025)


Neutral citation: 2026 INSC 515


Coram:

  • Justice Sanjay Kumar
  • Justice K. Vinod Chandran (author of the judgment)

Judgment date: 20 May 2026 (NEW DELHI; MAY 20, 2026)


Key Case Laws & Citations Referred

  1. Union of India v. Dharamendra Textile Processors, (2008) 13 SCC 369
  2. Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47
  3. Chairman, SEBI v. Shriram Mutual Fund and Anr., (2006) 5 SCC 361
  4. Tata Power Delhi Distribution Limited v. Pragati Power Corporation Limited and Others, CERC Petition No. 199/MP/2019 (referred to as TPDDL v. PPCL, order dated 29.11.2023)
  5. Punjab State Electricity Board v. Central Electricity Regulatory Commission, APTEL Appeal No. 79 of 2007, order dated 11.12.2007 (referred to as PSEB v. CERC)

Statutes / Regulations / Legal Instruments Referred

  1. Electricity Act, 2003, especially Section 32 (functions of State Load Despatch Centre)
  2. Punjab State Grid Code, 2013, including in particular:
    • Regulation 5.3.8 (ramp up/ramp down – governor action)
    • Regulation 6.3.8 (operational planning – demand estimation)
    • Part IV, Section 11 – “Scheduling and Despatch”, including:
      • Regulation 11.2 (objectives)
      • Regulation 11.3.2 (despatch instructions)
      • Regulation 11.3.4 (responsibilities of SLDC; definition and control of “gaming”)
      • Regulation 11.3.10 (declaration of capability)
      • Regulation 11.3.12 (gaming: over/under declaration, notice and inquiry)
      • Regulation 11.3.13 (demonstration of declared capability and penalty for failure)
      • Regulation 11.5 (revision in injection/drawal schedules, especially 11.5(vii) and 11.5(xi))
  4. CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2014 (DSM Regulations)
  5. CERC (Open Access in Inter-State Transmission) Regulations, 2008, as referred to via DSM Regulations
  6. Power Purchase Agreement (PPA) between PSPCL and Talwandi Sabo Power Limited, particularly Schedule 7 (two-part tariff; capacity charges and energy charges) and clauses:
    • Clause 1.2.4 of Schedule 7 – incentive for availability above 85%
    • Clause 1.2.5 of Schedule 7 – disincentive/penalty when availability is less than 75%

Three‑Sentence Brief Summary


The Supreme Court held that failure by Talwandi Sabo Power Limited (SGS) to demonstrate its declared capabilitywhen called upon by the State Load Despatch Centre attracts a strict, civil penalty under Regulation 11.3.13 of the Punjab State Grid Code, independent of any requirement to prove “gaming” or mala fide intent. It distinguished between four concepts—deviation, UI/DSM charges, gaming (which requires mens rea and illegal enrichment), and failure to demonstrate declared capability (which does not)—and found that the Appellate Tribunal for Electricity erred in importing the gaming standard into Regulation 11.3.13 and in misreading the CERC decision in TPDDL v. PPCL. Restoring the State Electricity Regulatory Commission’s order (with minor clarification), the Court reinstated the penalties for misdeclaration on the four days in January 2017 and directed that the financial consequences and interest/surcharge follow accordingly.