Delhi High Court
Spectrum Power Generation Limited vs Gail India Limited on 23 July, 2026
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 07.07.2026
Judgment pronounced on: 23.07.2026
+ O.M.P. (COMM) 64/2025 & I.A. 2952/2025
SPECTRUM POWER GENERATION LIMITED .....Petitioner
Through: Mr. Saurabh Kirpal, Sr. Adv.
with Mr. Rudra Pratap, Mr.
Rajat Chaudhary, Mr. Tushar
Randhawa, Mr. Rahul Sharma
& Mr. Ali Ibrahim, Advs.
versus
GAIL INDIA LIMITED .....Respondent
Through: Mr. Ratan Kumar Singh, Sr.
Adv. with Mr. Anish Chawla &
Mr. Prateek, Advs.
CORAM:
HON'BLE MR. JUSTICE AVNEESH JHINGAN
JUDGMENT
1. This petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short „the Act‟) against the award dated
30.09.2024 (for brevity „the award‟) is filed by the petitioner/claimant.
BRIEF FACTS
2. The brief facts are that the petitioner, a limited company, is
engaged in the business of generation of power and operates a natural
gas-based power plant. The respondent a limited company, is engaged
in the business of selling natural gas and other gases. The parties
entered into a Gas Sale Agreement dated 18.12.2015 (hereinafter
referred to as the „GSA‟) for the supply of natural gas to the petitioner
till 05.07.2021. Pursuant to implementation of Goods and Services
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Tax (for short „GST‟) the respondent raised invoices for
reimbursement of GST on the transmission charges of natural gas
(hereinafter referred to as the „tax paid‟).
2.1 The arbitration proceeding was initiated claiming refund of the
GST amount reimbursed to the respondent. The case set up by the
petitioner is that the sale of natural gas was governed by the Andhra
Pradesh Value Added Tax Act, 2005 (hereinafter referred to as the
„AP VAT Act‟) and no GST was leviable. Further that there was no
transmission of gas by the respondent to the petitioner, rather the
movement of gas was from one unit of the respondent to another unit.
2.2 The tribunal rejected the claim holding that as per the clauses of
GSA, the tax paid was to be reimbursed by the petitioner and the
Value Added Tax (for short „VAT‟) was payable on the price
inclusive of tax paid. It was considered that the petitioner under
Clause 12.6 of GSA had not challenged the quantification of the bill
within fourteen days of receipt of the invoice. The principle of
estoppel was invoked and the tribunal further held that the petitioner
waived right to raise objections after having reimbursed the tax paid
for three years. The interpretation of GSA by the respondent was held
to be bona fide. A factual finding was recorded that the GST amount
collected from the petitioner and other similarly situated customers
was deposited by the respondent with the GST authorities and it was
not a case of undue enrichment but of reimbursement of the tax paid.
SUBMISSIONS OF THE PARTIES
3. Learned senior counsel for the petitioner contends that the
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tribunal without any evidence recorded that the respondent deposited
the tax paid. The submission is that the respondent adduced evidence
by filing the affidavit of RW-2, Ankur Daruka, annexing the receipts
of deposit of GST and the admissibility of tax receipts was challenged.
The tribunal vide email dated 01.05.2024, informed that the
admissibility of the documents would be decided after the conclusion
of the cross-examination of witnesses of the claimant. The tribunal
without deciding the issue of admissibility relied upon the tax deposit
receipts. The submission is that production of receipts of tax deposited
in August 2017, September 2017, February 2021 and March 2021
does not prove the payment of GST on the transmission of gas
supplied to the petitioner.
3.1 Reliance is on the decision of the Supreme Court in Motilal
Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 to
fortify the submission that the prerequisites for invoking estoppel
were not fulfilled. Reliance is on Clause 18.1 of GSA to submit that
the waiver had to be in writing and there was no waiver by the
petitioner to object to reimbursement of tax paid.
4. Per contra, the tax paid was proved by filing the affidavit of
RW-2 and annexing the tax deposit receipts along with it. The
submission is that the petitioner failed to highlight before the tribunal
that the issue of admissibility of tax deposit receipts was not decided.
The petitioner chose not to cross-examine RW-2 on the tax deposit
receipts. The submission is that the email dated 01.05.2024 of the
tribunal is being read in part, the tribunal stated that the rigours of
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Code of Civil Procedure, 1908 (CPC) are not applicable to arbitration
proceedings.
4.1 The invocation of the principles of estoppel and waiver is
defended relying on the invoices raised indicating the GST payable
and the petitioner without any demur continued to pay for more than
three years and also after raising objection. The decision of the
Supreme Court in Sepco Electric Power Construction Corporation
vs. GMR Kamalanga Energy Ltd., 2025 INSC 1171 and Abdulla
Ahmed v. Animendra Kissen Mitter, 1950 SCC OnLine SC 2 are
pressed into service to buttress the argument that despite Clause 18.1
of GSA, there can be a waiver of rights otherwise than expressly in
writing.
4.2 It is contended that the petitioner during the subsistence of GSA
never challenged the leviability of GST on transmission of Gas.
Moreover, the issue of taxability of the transmission of gas under the
GST regime was never in issue in arbitration and this was taken note
of by the Court while appointing the arbitrator.
4.3 It is submitted that the view taken by the tribunal is a plausible
one and does not warrant interference merely for another possible
view. Reliance is placed on the decision of the Supreme Court in
Consolidated Construction Consortium Limited v. Software
Technology Parks of India, (2025) 7 SCC 757.
4.4 The contention is that scope under Section 34 of the Act is
limited and the interpretation of the terms of the contract and
appreciation of evidence fall within the exclusive domain of the
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tribunal. Reliance is placed on the decisions of the Supreme Court in
Prakash Atlanta (JV) v. National Highways Authority of India, 2026
INSC 76 and Ssangyong Engineering and Construction Company
Ltd. v. National Highway Authority of India, (2019) 15 SCC 131.
4.5 The argument is that interference under Section 34 of the Act
cannot be made for every factual or legal error, the decision of the
Supreme Court in Sepco Electric (supra) is relied upon.
5. In rebuttal, learned senior counsel for the petitioner submits that
the tax deposit receipts were not admissible. The tribunal kept the
issue of admissibility of tax deposit receipts pending, the issue was not
decided and there was no occasion for the petitioner to cross-examine
RW-2 on tax receipts. It is reiterated that GST on transmission of gas
was not paid by respondent and reliance is placed on Question No. 24
of cross-examination of RW-2, wherein to the question “Have you
ever deposited GST to the account of the claimant in terms of form
GSTR-1 for the claimed GST cost on transmission charges?” the reply
was in the negative.
6. Learned counsel for the parties submitted that no synopsis or
written submissions are to be filed and argued the matter at length. No
issues other than those noted above were pressed.
RELEVANT CLAUSES
7. Before proceeding further it would be appropriate to reproduce
the relevant clauses of GSA:
“4.2 Title and Risk
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(a) The facilities up to the Delivery Point shall be
continued to be maintained/constructed, operated and
maintained by the SELLER at their own risk and cost
(b) The facilities downstream from the Delivery Point
onwards shall continue to be constructed, operated and
maintained by the BUYER at their own risk and cost;
(c) Title, control and risk of the Gas shall pass from the
SELLER to the BUYER at the Delivery Point.
Clause 12.6
In case of any discrepancy/dispute, regarding the
invoices, the BUYER shall not return the bills or
withhold or disallow part of full payment. After
making the full payment the BUYER shall lodge a
quantified claim with the SELLER within a period of
14 (Fourteen) days from the date of receipt of the
related invoice. To the extent the claim is admitted by
the SELLER, the SELLER shall issue a credit note in
favour of the BUYER and adjust the same in the next
invoice to be raised. The SELLER undertakes to
consider the claim of the BUYER within a period of 30
(Thirty) days from the receipt of such claim, if found
acceptable. Failure of the BUYER to put forward any
claim within the time above specified shall be an
absolute waiver of any claim.
Clause 18.1
Waiver
No breach of any provisions of this Agreement will be
waived except with the express written consent of the
party not in breach. Any waiver or delay by any Party
of any default by any of the other party or Parties in the
performance of this Agreement shall not operate as a
waiver of any other default of that Party or those
Parties.”
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ANALYSIS
8. The tribunal dealt three facets of the controversy. Firstly,
whether the burden of tax paid, including the transmission from one
unit of the respondent to another unit could be passed on to the
petitioner? Secondly, whether the respondent deposited the tax on the
cost of transmission of gas with GST authorities? Lastly, whether the
petitioner was estopped from raising the issue after having reimbursed
the tax paid for more than three years and had in fact waived the right
to object?
FIRST FACET
9. The dispute pertains to post implementation of the GST laws.
The foundation of the entire dispute as noted by the tribunal is the
assertion that there is no levy or collection of GST on the sale of gas
and the transactions is taxable under AP VAT Act. The issue of
exigibility of GST on the transmission of gas falls within the exclusive
domain of the GST authorities and cannot be decided in arbitration.
The controversy confined to the contractual obligations of the parties
and the findings recorded thereon.
10. The tribunal, though not decided the issue of exigibility of GST
on the transmission of gas but relied upon Notification No. 11/2017 –
Central Tax (rate) issued on 28.06.2017 wherein the rate of tax on
transportation of natural gas was stipulated. The reliance of the
petitioner on an interim order of the CESTAT, Delhi to contend that
the respondent had stopped collecting service tax on transmission of
gas after passing of this order was rejected as the tax regime had
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changed and the order was interim in nature. Clause 4.2(c) of GSA
was noted that the ownership of the gas shall be transferred to the
petitioner at the delivery point and held that the VAT would be
payable on the price inclusive of GST components on transmission of
gas. The interpretation placed by the respondent on the clauses of the
GSA was held to be bonafide.
11. The tribunal after considering the clauses of GSA and the
evidence adduced, recorded a detailed finding to conclude that the tax
paid was to be reimbursed by the petitioner. The tribunal rightly noted
that the changes in the subsequent contract cannot be considered while
interpreting the clauses of GSA. The view taken by the tribunal is
plausible and calls for no interference.
12. The law is well settled that the interpretation of the clauses of a
contract falls within the exclusive domain of the tribunal and
interference is warranted where the conclusion is such that no
reasonable person would arrived at or where the relevant clauses have
been ignored or the tribunal travelled beyond the terms of the contract.
Reference in this regard be made to:
12.1 In Prakash Atlanta (JV) (supra) it was held as under:-
“59. (vi) If an arbitral tribunal‟s view is found to be a
possible and plausible one, it cannot be substituted
merely because an alternate view is possible.
Construction and interpretation of a contract and its
terms is a matter for the arbitral tribunal to determine.
Unless the same is found to be one that no fair-minded
or reasonable person would arrive at, it cannot be
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interpretations of the terms of a contract, then no fault
can be found if the arbitrator accepts one such
interpretation as against the other. To be in conflict
with the public policy of India, the award must
contravene the fundamental policy of Indian law,
which makes it narrower in its application.”
12.2 In Parsa Kente Collieries Limited. v. Rajasthan Rajya Vidyut
Utpadan Nigam Limited, (2019) 7 SCC 236 held as under:-
“9.1. In Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] ,
this Court had an occasion to consider in detail the
jurisdiction of the Court to interfere with the award
passed by the Arbitrator in exercise of powers under
Section 34 of the Arbitration Act. In the aforesaid
decision, this Court has considered the limits of power
of the Court to interfere with the arbitral award. It is
observed and held that only when the award is in
conflict with the public policy in India, the Court
would be justified in interfering with the arbitral
award. In the aforesaid decision, this Court considered
different heads of “public policy in India” which, inter
alia, includes patent illegality. After referring Section
28(3) of the Arbitration Act and after considering the
decisions of this Court in McDermott International Inc.
v. Burn Standard Co. Ltd. [McDermott International
Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] ,
SCC paras 112-113 and Rashtriya Ispat Nigam Ltd. v.
Dewan Chand Ram Saran [Rashtriya Ispat Nigam Ltd.
v. Dewan Chand Ram Saran, (2012) 5 SCC 306] , SCC
paras 43-45, it is observed and held that an Arbitral
Tribunal must decide in accordance with the terms of
the contract, but if an Arbitrator construes a term of the
contract in a reasonable manner, it will not mean that
the award can be set aside on this ground. It is further
observed and held that construction of the terms of aSignature Not Verified
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contract is primarily for an Arbitrator to decide unless
the Arbitrator construes the contract in such a way that
it could be said to be something that no fair-minded or
reasonable person could do. It is further observed by
this Court in the aforesaid decision in para 33 that
when a court is applying the “public policy” test to an
arbitration award, it does not act as a court of appeal
and consequently errors of fact cannot be corrected. A
possible view by the Arbitrator on facts has necessarily
to pass muster as the Arbitrator is the ultimate master
of the quantity and quality of evidence to be relied
upon when he delivers his arbitral award. It is further
observed that thus an award based on little evidence or
on evidence which does not measure up in quality to a
trained legal mind would not be held to be invalid on
this score.”
(Emphasis supplied)
SECOND FACET
13. The stand of the petitioner that the respondent had not proved
the deposit of GST on the transmission charges was noted by the
tribunal. It would be relevant to note that the petitioner vide email
dated 01.05.2024 objected to the admissibility of tax deposit receipts
annexed with the affidavit of RW-2. The tribunal vide email dated
01.05.2024, after taking note that CPC is strictly not applicable to
arbitration proceedings, kept the issue of admissibility of the
documents pending till the conclusion of the cross-examination of the
evidence of petitioner.
14. The issue of admissibility of the documents and the objection
raised by the petitioner were not decided. The tribunal in order dated
15.05.2024, recorded that the petitioner had not cross-examined RW-2
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qua the tax deposit receipts. The tribunal further recorded that the
petitioner stated that the tax receipts produced along with the affidavit
were not admissible and were not being subject matter of cross-
examination. The tribunal without deciding the issue of admissibility
erred in recording the finding that GST was deposited, more so when
except for the annexed tax receipts no evidence was produced by
respondent to prove deposit of tax.
15. The division bench of Bombay High Court in Bi-Water
Penstocks Ltd. v. Municipal Corporation Of Gr. Bombay, 2010 SCC
OnLine Bom 1784 held that the admission of documents without
having been proved is not only a procedural defect but also a violation
of the principles of natural justice. Relevant paragraph is reproduced:
“18. Considering the case law on the subject and facts
and circumstances of the case, in Our view, admitting
certain documents in evidence by the Arbitrator,
without the same being proved, is an act of legal
misconduct. In our view, in blatant breach of the
principles of natural justice the Arbitrator permitted the
documents to be admitted in evidence, in spite of
repeated objections raised by the respondent. By
receiving such documents, therefore, amounts to a
procedural error which can also be said to in breach of
principles of natural justice. The learned single Judge
has given appropriate reasons in this behalf and
considering the facts of the case, we are in agreement
with the view taken by the learned single Judge on the
aforesaid aspect.”
(Emphasis supplied)
16. It would be apposite to note that though it was stated in the
affidavit that the GST returns were filed depicting the transmission of
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gas but no returns were produced. There is no evidence to prove tax
paid. The admissibility of four GST receipts for the tax paid in August
2017, September 2017, February 2021 and March 2021 was not
decided and tax receipts could not have been relied upon.
17. Matter needs to be considered from another aspect. The receipts
in themselves are not evidence of the tax paid, much less on the gas
transmitted to the petitioner. The respondent had not produced the
purchase list, sale list, documents filed along with the GST returns or
the books of account to substantiate the tax paid.
18. In the absence of the issue of admissibility having been decided
by the tribunal, non cross-examination of RW-2 on the tax receipts
produced shall not prove fatal to the case of the petitioner. The
respondent has to stand on its own legs to prove the tax paid. In other
words, production of the tax receipts without having been held to be
admissible cannot form the basis for concluding that GST on the
transmission of gas was deposited by the respondent.
19. The findings of the tribunal in paragraphs 74 and 75 reproduced
below are perverse in the absence of evidence much less admissible
evidence on record: –
“74. The interpretation put by the respondent to the
agreement in question is a bonafide one. The GST
amounts, not only in respect of the claimants but also
for all other similarly situated persons, have been
deposited with the GST authorities. Therefore, the
respondent’s action in collecting the GST amount was
not for their benefit, as they have deposited the amount
collected with the relevant authorities. There has beenSignature Not Verified
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no wrongful gain accrued to the respondent by
claiming the GST amount on the transmission and
other components of tax, as the respondent was duty
bound to claim GST amount.
75. The argument raised by the claimant that no GST
invoice has been raised by the respondent on the
claimant, therefore, the claimant has been deprived of
claiming input credit. The product – electricity
produced by the claimant is exempt from payment of
GST; therefore, the claimant may not be eligible for
input tax credit. This Tribunal has not been apprised of
the fact whether the transmission of gas by the
transmission pipeline was exclusively for the claimant
or if the gas was being supplied to the other entities by
a common pipeline, with the last delivery point specific
to the unit. The question as to whether a GST invoice
was required to be issued or the consequences arising
from the non-issuance of GST invoices is an issue that
could have been raised or should have been raised
before the GST authorities during the contract period.
The claimant, having accepted the situation of GST
being levied on the transmission charges and paid
voluntarily the GST and Vat amount as claimed by the
respondents, for more than three years, cannot now
argue that because GST invoices were not issued,
therefore, the amount of GST is not payable. It is too
late for the claimant to raise such an argument after
having accepted the interpretation put forth by the
respondent on the terms of the GSA. This
interpretation was not one of undue enrichment of the
respondent; rather, the tax amount collected from the
claimant has been deposited with the GST authorities.”
20. It is important to note that it is recorded that the tribunal was
not apprised whether the transmission of gas through the pipeline was
exclusively for the petitioner. The foundation for holding that claim
was for reimbursement of the tax paid and was not the case of undue
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enrichment is eroded once the finding that the GST was deposited
with the authorities is held to be without any basis and perverse.
THIRD FACET
21. The tribunal held that the petitioner after having reimbursed the
tax paid up to September 2020 was estopped by the act and conduct
from raising the dispute. The stand of the petitioner that the agreement
was examined during the COVID-19 period and it was then noticed
that GST had been wrongly reimbursed, was found to be unbelievable.
It was held that the petitioner waived the right to object as the parties
were ad idem regarding the levy of GST on transmission charges.
22. The tribunal erred in recording that the petitioner waived the
right to object to the reimbursement of the tax paid as the parties were
ad idem regarding the transmission charges attracting GST. The issue
of the exigibility of GST on the transmission of natural gas was not
before the tribunal and could be decided by statutory authorities. The
bone of contention was that tax paid was not reimbursable by the
petitioner and dispute pertained to clauses of GSA.
23. It is trite law that waiver and estoppel cannot be used
interchangeably. For waiver, there has to be an intention to abandon a
right whereas intention is not significant for estoppel. Reference be
made to the following authorities: –
23.1 In Provash Chandra Dalui v. Biswanath Banerjee, 1989 Supp
(1) SCC 487 it was held:
“24. The essential element of waiver is that there must
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be a voluntary and intentional relinquishment of a
known right or such conduct as warrants the inference
of the relinquishment of such right. It means the
forsaking the assertion of a right to the proper
opportunity. The first respondent filed suit at the
proper opportunity after the land was transferred to
him, and no covenant to treat the appellants as thika
tenants could be shown to have run with the land.
Waiver is distinct from estoppel in that in waiver the
essential element is actual intent to abandon or
surrender right, while in estoppel such intent is
immaterial. The necessary condition is the detriment of
the other party by the conduct of the one estopped. An
estoppel may result though the party estopped did not
intend to lose any existing right. Thus voluntary choice
is the essence of waiver for which there must have
existed an opportunity for a choice between the
relinquishment and the conferment of the right in
question. Nothing of the kind could be proved in this
case to estop the first respondent.”
23.2 In Article 1175 at p. 637 of Halsbury’s Laws of England, 3rd
Edn., Vol. 14, it is stated:
“1175. Waiver is the abandonment of a right, and is
either express or implied from conduct. A person who
is entitled to the benefit of a stipulation in a contract or
of a statutory provision (a) may waive it….””
“The essence of waiver is „estoppel‟ and where there is
no „estoppel‟ there can be no „waiver‟, the connection
between „estoppel‟ and „waiver‟ being very close. But,
in spite of that, there is an essential difference between
the two and that is whereas estoppel is a rule of
evidence, waiver is a rule of conduct. Waiver has
reference to man’s conduct, while estoppel refers to the
consequences of that conduct.”
23.3 In Krishna Bahadur v. Purna Theatre, (2004) 8 SCC 229, it
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was held:
“9. The principle of waiver although is akin to the
principle of estoppel; the difference between the two,
however, is that whereas estoppel is not a cause of
action; it is a rule of evidence; waiver is contractual
and may constitute a cause of action; it is an agreement
between the parties and a party fully knowing of its
rights has agreed not to assert a right for a
consideration.
10. A right can be waived by the party for whose
benefit certain requirements or conditions had been
provided for by a statute subject to the condition that
no public interest is involved therein. Whenever waiver
is pleaded it is for the party pleading the same to show
that an agreement waiving the right in consideration of
some compromise came into being. Statutory right,
however, may also be waived by his conduct.”
23.4 In Hindustan Construction Co. Ltd. v. Bihar Rajya Pul
Nirman Nigam Ltd., (2026) 3 SCC 264 it was held:
“68. Though waiver, acquiescence, and estoppel are
often discussed together in arbitral jurisprudence, they
occupy distinct conceptual spaces. Waiver is the
intentional relinquishment of a known right;
acquiescence arises from passive acceptance or delay;
and estoppel precludes a party from resiling from a
representation on which the other has relied. The Act,
however, incorporates only the doctrine of waiver —
presuming parties to be conscious of their conduct and
its consequences. The Act elevates silence to waiver by
importing an element of intent, thereby preventing
parties from approbating and reprobating. A party who
has actively participated or consented to continuation
of the proceedings cannot later challenge the same
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and multiplicity of proceedings.”
(Emphasis supplied)
24. For waiver, the party fully aware of the right intentionally agree
not to assert it. The onus is on the party pleading waiver. Reference be
made to the following decisions of the Supreme Court:
24.1 In Kalpraj Dharamshi v. Kotak Investment Advisors Ltd.,
(2021) 10 SCC 401 it was held:
“121. It has been held, that a waiver cannot always and
in every case be inferred merely from the failure of the
party to take the objection. Waiver can be inferred,
only if and after it is shown that the party knew about
the relevant facts and was aware of his right to take the
objection in question. The waiver or acquiescence, like
election, presupposes, that the person to be bound is
fully cognizant of his rights, and that being so, he
neglects to enforce them, or chooses one benefit
instead of another.
122. As such, for applying the principle of waiver, it
will have to be established, that though a party was
aware about the relevant facts and the right to take an
objection, he has neglected to take such an objection.
127. Thus, for constituting acquiescence or waiver it
must be established, that though a party knows the
material facts and is conscious of his legal rights in a
given matter, but fails to assert its rights at the earliest
possible opportunity, it creates an effective bar of
waiver against him. Whereas, acquiescence would be a
conduct where a party is sitting by, when another is
invading his rights. The acquiescence must be such as
to lead to the inference of a licence sufficient to create
a new right in the defendant. Waiver is an intentional
relinquishment of a right. It involves conscious
abandonment of an existing legal right, advantage,Signature Not Verified
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benefit, claim or privilege. It is an agreement not to
assert a right. There can be no waiver unless the person
who is said to have waived, is fully informed as to his
rights and with full knowledge about the same, he
intentionally abandons them.”
24.2 In Galada Power & Telecommunication Ltd. v. United India
Insurance Co. Ltd., (2016) 14 SCC 161 it was held:
“15. In Manak Lal v. Prem Chand Singhvi [Manak Lal
v. Prem Chand Singhvi, AIR 1957 SC 425] , it has
been held : (AIR p. 431, para 8)
“8. … It is true that waiver cannot always and in every
case be inferred merely from the failure of the party to
take the objection. Waiver can be inferred only if and
after it is shown that the party knew about the relevant
facts and was aware of his right to take the objection in
question. As Sir John Romilly, M.R. has observed in
Vyvyan v. Vyvyan [Vyvyan v. Vyvyan, (1861) 30
Beav 65 : 54 ER 813] : (Beav p. 75 : ER p. 817)
„… Waiver or acquiescence, like election, presupposes
that the person to be bound is fully cognizant of his
rights, and that being so, he neglects to enforce them,
or chooses one benefit instead of another, either, but
not both, of which he might claim.”
(Emphasis supplied)
25. Every failure to raise an objection or to assert right cannot lead
to an inference of waiver. It must be established that the petitioner was
aware of its right to object yet consciously chose not to raise the issue.
The respondent raised the plea that the petitioner had waived the right
to contend that there was no liability of the petitioner to shoulder the
burden of tax paid and the onus to prove waiver is on party pleading
waiver but no evidence was produced to discharge the onus. The
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contention that despite Clause 18.1 of GSA an express waiver in
writing is not mandatory need not be dilated upon. The fundamental
requirements for invoking waiver were neither gone into by the
tribunal nor proved. The award suffers from patent illegality in
holding that the petitioner waived the right to object.
26. For invoking estoppel there has to be a representation with the
intention that it be acted upon by the other party; the representation
must be relied upon and the promisee should alter its position. There
was no unequivocal representation by the petitioner for reimbursement
of the tax paid. Moreover, it is not a case of the respondent that it
changed its position by acting upon any representation if any made by
the petitioner.
26.1 In Motilal Padampat Sugar Mills Co. Ltd. (supra) the Supreme
Court examined the doctrine of prmomissory estoppel. The principles
emerging from the decision are: (i) definite and unequivocal
representation or promise; (ii) the representation must be intended, or
made with knowledge, that it would be acted upon by the promisee;
(iii) the promisee must have actually relied upon the promise; (iv) the
promisee must have altered his position on the basis of such reliance,
though proof of detriment is not required; and (v) being an equitable
doctrine, it can be defeated only where overriding public interest so
demands, are missing.
26.2 The Supreme Court in Chhaganlal Keshavlal Mehta Mehta v.
Patel Narandas Haribhai, (1982) 1 SCC 223 held that pre-requisites
for estoppel under Section 115 of Evidence Act are:
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“23. To bring the case within the scope of estoppel as
defined in Section 115 of the Evidence Act : (1) there
must be a representation by a person or his authorised
agent to another in any form — a declaration, act or
omission; (2) the representation must have been of the
existence of a fact and not of promises de futuro or
intention which might or might not be enforceable in
contract; (3) the representation must have been meant
to be relied upon; (4) there must have been belief on
the part of the other party in its truth; (5) there must
have been action on the faith of that declaration, act or
omission, that is to say, the declaration, act or omission
must have actually caused another to act on the faith of
it, and to alter his former position to his prejudice or
detriment; (6) the misrepresentation or conduct or
omission must have been the proximate cause of
leading the other party to act to his prejudice; (7) the
person claiming the benefit of an estoppel must show
that he was not aware of the true state of things. If he
was aware of the real state of affairs or had means of
knowledge, there can be no estoppel; (8) only the
person to whom representation was made or for whom
it was designed can avail himself of it. A person is
entitled to plead estoppel in his own individual
character and not as a representative of his assignee.”
27. The respondent was liable to pay the GST leviable on
transmission of gas, irrespective of whether the burden could have
been passed on to the petitioner or not. Meaning thereby, even for the
sake of argument if the payment made by the petitioner up to
September 2020 is treated as a representation, it was neither acted
upon nor was there alteration of position by respondent, the liability to
deposit GST was not dependent upon reimbursement by the petitioner.
There is a patent illegality in invoking the principle of estoppel against
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the petitioner.
28. The entire claim of the petitioner was rejected for failure to
raise objections under Clause 12.6 of the GSA. The defence set up by
the petitioner that the payments were made under coercion as non-
payment would have resulted in disruption of the supply of natural gas
and could have affected the operation of the power generation plant
was rejected for failure to prove coercion.
29. Clause 12.6 of GSA relied upon by the tribunal against the
petitioner in fact supports the defence of the petitioner that non-
payment of the amount would have disrupted the supply of natural
gas. It provides that payment of the invoice raised shall not be
withheld and only after making full payment the buyer could lodge a
discrepancy or quantified claim within fourteen days from the date of
receipt of the invoice. This indicates that the petitioner had to make
payment of invoiced amount to ensure an uninterrupted supply of gas.
30. Another aspect to be considered is that the dispute regarding
reimbursement of the tax paid gave rise to a recurring cause of action
with the issuance of each invoice claiming reimbursement of tax paid.
Consequently, the entire claim could not have been rejected by
pressing into service Clause 12.6 of the GSA. It is apposite to note
that the invoices were also raised after the petitioner had raised
objections in September 2020.
31. The tribunal has not ousted the petitioner on the ground of
limitation. The payment of the earlier invoices shall not take away the
cause of action accruing to the petitioner upon issuance of the
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subsequent invoices. The payment made by the petitioner in itself
shall not be the sole factor to debar the petitioner from raising an issue
regarding reimbursement of tax paid.
32. The findings of the tribunal that the petitioner had waived its
right, was estopped from raising the dispute and the respondent had
proved deposit of GST on the transmission charges cannot be
sustained. The award is set aside and the petition is allowed. Pending
application stands disposed of.
AVNEESH JHINGAN, J.
JULY 23, 2026
‘JK’/KP
Reportable:- Yes
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