Implied terms in contracts

In Nabha Power Limited (NPL) v Punjab State Power Corporation Limited (PSPCL)(1) the Supreme Court considered the interpretation of a power purchase agreement between the parties, in the context of certain deductions of components of monthly tariffs by the authority which issued the bid. The Supreme Court, while dealing with the said claims, held that the commercial courts should not seek to interpret the implied terms of a contract; instead, a contract should generally be read as per its express terms.

Force majeure events

In Energy Watchdog v Central Electricity Regulatory Commission(2) the Supreme Court faced the issue of whether an increase in coal prices (due to a change in Indonesian law) could be cited as a force majeure event by certain power-generating companies that were sourcing coal from Indonesia. The Supreme Court held that if the fundamental basis of the contract remains unchanged and no frustrating event occurs, except for a rise in coal prices, it could not be held that a mere increase in prices constituted a force majeure event.

Damages and wrongful termination

In Kanchan Udyog Ltd v United Spirits Ltd(3) the Supreme Court, in the context of a suit for damages and wrongful termination of a bottling contract, held that since it had concluded that the appellant was entitled to no expectation loss for anticipated profits on facts, any grant of reliance costs (intended to put the plaintiff back in the position in which it would have been had the contract never been made) would be tantamount to giving a benefit to the plaintiff for what were essentially its own lapses.

For further information on this topic please contact Ajit Warrier at Shardul Amarchand Mangaldas & Co by telephone (+91 11 4159 0700) or email ( The Shardul Amarchand Mangaldas & Co website can be accessed at


(1) Civil Appeal 179/2017, 2017 SCC Online SC 1239, two-judge bench.

(2) Civil Appeals 5399-5400/2016 (and other connected appeals), 2017 SCC Online SC 378, two-judge bench.

(3) Civil Appeal 1168/2007, (2017) 8 SCC 237, two-judge bench.

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