LEX/BDHC/0140/2017

Equivalent Citation: 70 DLR (2018) 85

IN THE SUPREME COURT OF BANGLADESH (HIGH COURT DIVISION)

Writ Petition Nos. 11992, 11993 and 11994 of 2016
Decided On: 17.08.2017
Appellants: Bangladesh Rural Electrification Board (BREB)
Vs.
Respondent: Bangladesh Energy Regulatory Commission (BERC) and Ors.
Hon'ble Judges:
Md. Ashfaqul Islam and Ashish Ranjan Das, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Ajmalul Hossain, QC, Reja-E-Rabbi Khandoker,
Meherunnesa and Md. Saiful Islam, Advocates
Case Note:
Contract - Declaration - Rules be issued calling upon Respondents to show
cause as to why PPA between Petitioner and Respondent no. 3,
Supplementary PPA-2 between Petitioner and Respondent no. 3, decision
passed by Respondent no. 1 and arbitration award passed by Respondent
no. 2 should not be declared to be illegal and of no legal effect - Whether
Petitioners had made out case for relief as sought for in petitions - Held,
solemnly executed commercial contract entered into by two competent
parties after same being approved by government or any terms of it could
not be waived, modified or altered unilaterally by one of parties on
dictation of superior authority - Of course this could be negotiated and
resolved in subsequent point of time as indicated in letter dated 2-6-2013
but previous claims of Respondent summit could not be given go by in any
manner - Contract in question was purely commercial contract with all
trappings and dispute that eventually ended in review was final and
conclusive - Therefore, court was of view that writ petitions were devoid of
any substance which should be discharged - Court hold that in context of
dispute in question contractual obligation should operate in its mandatory
implication having binding effect upon parties and 'award' on that score
was absolutely omnipotent - Rules discharged. [26]
JUDGMENT
Md. Ashfaqul Islam, J.
1 . All these Writ petitions are taken up together and disposed of by a single
judgment as there involved common question of fact and law. The terms of the Rule
in Writ Petition No. 11992 of 2016 is as under:
"Let a Rule Nisi be issued calling upon the respondents to show cause as to
why (1) the PPA dated 10-2-2000 between the petitioner and respondent No.
3 (Annexure-B), (ii) the Supplementary PPA-2 dated 28-6-2005 between the
petitioner and respondent No. 3 (Annexure-C); (iii) the decision passed by
the respondent No. 1 dated 5-1-2016 (Annexure-A) and (iv) the arbitration

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 award passed by the respondent No. 2 dated 11-8-2015 (Annexure-A1)
should not be declared to be illegal and of no legal effect."
2. The terms of the Rule in other petitions are almost similar to the above Rule only
the amount claimed is at variance.
3 . The petitioner herein Bangladesh Rural Electrification Board (BREB) impugns (i)
PPA dated 10-2-2000 between the petitioner and respondent No. 3, Summit Power
Ltd. (ii) Supplementary PPA-2 dated 28-6-2005 between the petitioner and
respondent No. 3 (iii) the decision dated 5-1-2016 passed by the respondent,
Bangladesh Energy Regulatory Commission (BERC) in the Arbitration Review Petition
No. 1 of 2015 (Madhabdi Expansion) rejecting the review petition preferred against
the Arbitration Award of the Arbitration Tribunal of Bangladesh Energy Regulatory
Commission (BERC) dated 11-8-2015 and (iv) Arbitration Award of the Arbitration
Tribunal of Bangladesh Energy Regulatory Commission (BERC) dated 11-8-2015
which was approved by the (BERC) on 23-9-2015 in Arbitration Case No. 1 of 2013 to
pay an amount of Taka 50,55,67,914 only to the respondent No. 3 Claimant-Summit
Power Limited being the amount due as of 31-3-2014 and the interest payable
thereon at the rate as per clause 11, 5(b) of the (PPA) Power Purchase Agreement
dated 10-2-2000 and to calculate and pay all subsequent invoices of the Claimant on
the basis of the Agreed Tariff and interests, of any, calculated as per the terms and
conditions of the Contract.
4. In furtherance of the Private Sector Generation Policy of Bangladesh 1996, a Power
Purchase Agreement (hereinafter referred to as PPA) was signed between the
petitioner and respondent No. 3 Summit Power Ltd. (SPL) on 10-2-2000 to build,
own and operate a power generation complex for production of 11 MW Electrical
Power based on gas. The SPL wishes to sell all the Net Electrical Output to the
petitioner and the petitioner wishes to purchase the same from SPL for Narshingdi
Palli Bidyut Samity-1 (hereinafter referred as PBS) and the parties entered into the
agreement which is solicited through tender procedure. In the mentioned PPA the
tariff has been fixed in accordance with the provisions of the Government Policy i.e.
Private Sector Power Generation Policy, 1996 (hereinafter referred as PSPGP)
(Annexures-"B" & "B-1").
5 . In all the writ petitions the parties are not in dispute, in respect of different
Clauses of Purchase Power Agreement dated 28-6-2005 between the BREB and
respondent No. 3 Summit Power Ltd. (SPL) except Clause VII of the same. The
petitioner BREB entered into the said agreement with respondent No. 3 (SPL) relating
to an additional power generation complex at Asulia, Savar, Dhaka of 23 MW
capacity. The said contract is a supplemental contract to an earlier power purchase
agreement (Annexure-B to the writ petition) between the same parties. For
understanding of the issue clause VII of supplemental contract (Annexure-C) is stated
below.
6. Clause VII sets out terms of the contract fixing tariff in effect (TE) of the expanded
complex:
The agreed tariff is defined and stipulated in the contract as BST-Taka 0.03
i.e. BST minus Taka 0.03 BST implies bulk supply tariff is also defined in the
contract specifically to mean the bulk supply tariff in effect for the billing
month. Agreed tariff is also defined in the definitions clause 1.1 of the
contract. Since its commercial operation respondent No. 3 Summit raised

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 invoices based on the agreed tariff (AT) to be BST-Taka 0.03 and the
petitioner BREB paid the same without any question up to September, 2011.
During this period BST was increased on several occasions and the petitioner
BREB paid according to the increased BST. From October, 2011 BREB
stopped paying as per terms of the contract and started paying a lesser
amount. Be it mentioned the contract contains an "Entire Agreement Clause"
and there is nothing in the contract which allows BREB to seek direction from
the Ministry i.e. the Ministry of Power, Energy and Mineral Resources,
represented by the respondent No. 1 Bangladesh Energy Regulatory
Commission (hereinafter referred as (BERC). BERC determined the indicative
Benchmark Bulk Tariff on 18-2-2013 (Annexure-"N" to the supplementary
affidavit), however, the same is not applicable in case of respondent Summit
as the contract provides for contractual tariff rather than regulated tariff.
Respondent Ministry in its letter dated 2-6-2013 (Annexure-I-2) noted the
indicative Benchmark bulk supply tariff and stated that renegotiation may be
undertaken, however, it expressly noted that as there exist a bilateral
contract, the tariff can be renegotiated or change only by way of amendment
to the contract with mutual consents. After exchange of few correspondences
respondent Summit invoked the arbitration proceeding under section 40 of
the Bangladesh Energy Regulatory Commission Act, 2003 claiming the
outstanding amount along with the interest as per terms of the contract.
7 . The respondent BERC accordingly constituted Arbitral Tribunal who upon
determination of 7 (seven) points passed an award dated 11-8-2015 in favour of the
respondent Summit (Annexure-A-1 to the writ petition). In the said Award the
Tribunal after long analysis mainly held the following:
a) "The Tribunal has jurisdiction to decide the dispute.
b) Ministry cannot be a party to the dispute as it is not a licensee;
c) Change of BST is not significant enough that can be accepted as a
fundamental change of circumstances. Price increase cannot be claimed as
Force Majeure as per Contract.
On the other hand, Bangladesh Export Processing Zones Authority (BEPZA)
entered into a long term (30 years) contract with M/s. Malancha Holdings
Ltd. (now United Power Generation Company Ltd. for purchasing power from
a gas based power project at a much higher Tariff than that of the present
projector which is currently 7.32 Taka per KWH.
d) An executive order cannot outweigh/override the terms and conditions of
a legally binding contract. Terms and conditions of a contract can only be
changed by way of amendment of the Contract.
e) No contractual disequilibrium as BREB took the BST increase risk and
Summit took the gas price increase risk.
f) BREB could not pass the "Foreseeability test" to exempt itself from the
performance of the contract on the ground of change of circumstances
amounting to force majeure.
g) Change of circumstances does not amount to force majeure under the
Power Purchase Agreement or supervening impossibility/frustration under the

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 law of Contract.
h) Tariff agreed between the parties are contractual tariff as opposed to
regulated tariff. Any change in tariff is not possible outside the contract. Only
possible by way of amendment of the contract.
i) Terms and conditions in the contract are clear and unambiguous. There is
no scope of varying the terms only because it becomes more profitable for
one of the parties.
j) Under section 37 of the Contract Act, 1872, BREB is bound to perform the
contract.
k) Until contracts are amended by mutual consents, BREB is bound to pay as
per terms of the Contract, i.e. BST-Taka 0.03 as agreed Tariff."
8 . The Tribunal in particular at paragraph 8, 9 and 10 stated that the contract with
regard to the tariff is clear and unambiguous and as per section 37 of the contract Act
the petitioner BREB is bound to pay as per the terms of the contract since there was
no frustration of the contract and there was no supervening impossibility and there
was no force majeure so as to avoid performance of the contract. Section 37 of the
contract Act enjoins:
"The parties to a contract must either perform, or offer to perform, their
respective promises, unless such performance is dispensed with or excused
under the provisions of this Act, or of any other law.
Promises bind the representatives of the promisors in case of the death of
such promisors before performance, unless a contrary intention appears from
the contract."
9 . However, the petitioner BREB thereafter preferred a Review Petition against the
Award dated 11-8-2015) before the BERC under regulation 22 of the Bangladesh
Energy Regulatory Commission Dispute Settlement Regulation, 2014. After hearing
the parties the Commission on 5-1-2016 (Annexure-A to the petition) rejected the
Review Petition mainly holding,
"All the issues as contained in the Review Petition are adequately addressed
in the Award that was earlier approved by the Commission. The Tribunal
addressed all the issues of the present Review Petition. Therefore, the Review
Petition of Bangladesh Rural Electrification Board (BREB) placed before the
Commission is rejected."
1 0 . It is at this stage the petitioner impleading 3 (three) respondents and one
proforma respondent moved this writ petition under Article 102 of the Constitution
impugning the aforesaid contract, the Award and the decision of the Commission in
Review and obtained the present Rule.
11. Mr. Ajmalul Hossain, QC, the learned Senior Advocate appearing with Mr. Reja-E-
Rabbi Khandoker and Mr. Md. Saiful Islam, the learned Advocates for the petitioner
BREB after placing the petition and all the materials on record by a lengthy
submissions tried to impress upon us that the condition of object of the contract in
question is opposed to public policy since the contract is illegal in pursuant to section
23 of the Contract Act which states.

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 "The consideration or object of an agreement is lawful, unless-it is forbidden
by law or
Is of such a nature that, if permitted, it would defeat the provisions of any
law; or is fraudulent, or
Involves or implies injury to the person or property of another; or the Court
regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to
be unlawful. Every agreement of which the object or consideration is
unlawful is void."
12. He submits that there is no structure as to the contract indicating the tariff would
be BST Minus 0.03 Taka. Therefore, inclusion of BST formula in the agreement itself
is unlawful and against the policy of the State. Highlighting the letter dated 12-4-
2012 (Annexure-H-1) by the proforma respondent Ministry of Energy Power and
Mineral Resources the learned Advocate further submits that because of internal letter
so issued by the ministry it has become impossible for the petitioner to perform the
contract. He contends that the claim of the respondent Summit falls under principle of
Unjust Enrichment, doctrine of supervening impossibility, force majeure, frustration
and so on.
1 3 . On the other hand, Mr. Rokon Uddin Mahmood, the learned Senior Advocate
appearing with Mr. Imtiaz Mahmood, the learned Advocate for the respondent No. 3
opposes the Rule on the question of maintainability as well as on merit. However,
question of maintainability of the writ petition has been accepted by the parties in the
affirmative i.e. the writ is maintainable. Their bone of contention precisely is that a
solemnly executed commercial contract entered into by the two competent parties
after the same being approved by the government or any terms of it cannot be
waived, modified or altered unilaterally by one of the parties on the dictation of a
superior authority. Clause XII(C) of the contract expressly stipulated that:
"Agreement constitute the full, complete and final agreement of the parties as
to the modification and amendment to be made to the PPA with respect to the
expanded complex."
14. Further it has been contended on behalf of the respondent that:
"At the time when the contract was executed between the parties and 4/5
year immediately before that no power plant in private sector was built in
Bangladesh except the three extension plants, which are the subject matters
of these writ petitions. Therefore, no general trend or tendency or policy of
any kind regarding nature of fuel used for private sector power plant cannot
be drawn for this period. It is further stated that price or cost is not the only
factor that is taken into account in deciding the use of fuel for a particular
power plant. Nature of fuel to be used in particular power plant is decided on
the basis of many considerations including availability of the fuel,
transportability, location and storage facility etc. Cost of fuel is only one of
the many considerations. In any case these re matter that is taken into
account or considered by the parities before or at the time of negotiating a
contract and, it is submitted that, these factors cannot be referred to modify
or alter a clear and unambiguous commercial term of a solemnly executed
contract."

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1 5 . The expanded complex at Ashulia, Savar, Dhaka commenced commercial
operation from 4-12-2007 and since then the respondent Summit has been raising
invoices as per terms and condition set out in the agreement i.e. based on the agreed
tariff to be BST or Bulk Supply Tariff Minus Taka 0.03. The dispute between the
parties being exhaustively, adequately and unambiguously addressed in the award
and the same being upheld in the review petition, there remains nothing left to be
decided by this Division in exercising of its jurisdiction under writ jurisdiction
specially in writ certiorari.
16. We have heard the learned Senior counsel of both sides and considered their
strenuous arguments with utmost care and concentration.
17. The moot question that falls for consideration in all the writ petitions is whether
the terms and condition of a commercial contract, in respect of which a dispute had
arisen between the parties and referred to the arbitration and resulted in an award
and finally the said award being upheld by a rejection of a Review Petition, can be
brushed aside owing to an arbitrary executive fiat.
18. The answer is simply an emphatic "No". An obligation rooted in the contract and
fortified by an award through arbitration cannot be dislodged or undone in a writ
jurisdiction. If that be allowed, the age old proposition that "Law does not permit to
achieve something indirectly which cannot be achieved directly" shall be undermined.
19. In our anxiety we have verified almost all the relevant papers and documents, in
particular the contract, award and the decision of the review with precision. The
award has been focused on each and every aspect of the contractual obligation of the
parties involved in the issues and conclusively upheld the supremacy and primacy of
a valid contract that was executed between the parties. Even at a slightest possible
manner this cannot be interfered with otherwise commercial discipline emanating, out
of a contract in particular would be shattered and defeated. By no stretch of
imagination it can be said that the contract falls within the mischief of section 56 of
the Contract Act i.e. the doctrine of frustration.
20. Section 56 of the Contract Act provides as follows:
"Agreement to do impossible Act--An Argument to do an act impossible in
itself is void.
Contract to do act afterwards becoming impossible or unlawful-A contract to
do an act which, after the contract is made, becomes impossible, or, by
reason of same event which the promisor could not prevent, unlawful,
becomes void when the act becomes impossible or unlawful."
21. To attract the doctrine of frustration of Contract the performance of contract must
become absolutely impossible due to the happening of some unforeseen event as
held in Mokbul Hossain Khondoker vs. Jaheda Khatuoon 47 DLR (AD) 430.
22. The Appellate Division observed:
"Where plea of frustration is raised on the happening of a certain event the
real question is whether the event which has accrued is such and whether its
relation to the contract is such that in considering the contract and the
surrounding circumstances it must be held that it would not be just and
reasonable to hold the parties any longer to the terms of the contract. To

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 attract the doctrine of frustration of contract the performance of the contract
must become absolutely impossible due to the event, where in spite of
intervention even subsequent to the making of the agreement which are not
in contemplation of the parties and which could not be foreseen with
reasonable diligence, the contract could still be performed in substance then
it could not be said that the contract has become impossible of performance
within the meaning of section 56 of the Contract Act."
23. The accepted tariff as it could be found from Clause VII of the contract is BST
Minus 0.03 which continued till October, 2011 before stopping of the same by the
petitioner BREB to the detriment of the respondent SPL. Tribunal did not find any
commercial impartibility as BREB is purchasing 90% of its electricity (bulk power) at
a higher price than Summit. These projects are: Ghorasal 45 MW gas based project
(per unit cost 5.38 Taka), Ghorasal 100 MW gas based project (per unit cost 6.19
Taka), Ghorasal 78 MW (max power) gas based project (per unit cost 5.73 Taka),
Ashuganj (Aggreko) 80 MW gas based project (per unit cost 4.95 Yaka), B. Baria 80
MW (Aggreko) gas based power project (per unit cost 5.33 Taka), Ashuganj 53 MW
(United) gas based power project (per unit cost 4.85 Taka), Argreko International
Project Ltd. 145 MW gas based power project (per unit cost 5.95 Taka) and Venture
Energy Resources Ltd. 34 MW gas based power project (per unit cost 4.16 Taka).
2 4 . On the other hand, Bangladesh Export Processing Zones Authority (BEPZA)
entered into a long term (30 years) contract with M/s. Malancha Holdings Ltd. (now
United Power Generation Company Ltd. for purchasing power from a gas based power
project at a much higher tariff than that of the present project which is currently 7.32
Taka per KWH.
25. The letter of the Ministry dated 2-6-2013 (Annexure-I-2) has been termed to be a
predicament in this regard. The letter is quoted hereunder:--

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2 6 . This executive interference had certainly indulged in excesses. A solemnly
executed commercial contract entered into by the two competent parties after the
same being approved by the government or any terms of it cannot be waived,
modified or altered unilaterally by one of the parties on the dictation of a superior

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authority. Of course this can be negotiated and resolved in subsequent point of time
as indicated in the said letter dated 2-6-2013 but the previous claims of the
respondent summit cannot be given a go by in any manner. The contract in question
is purely a commercial contract with all the trappings and a dispute that eventually
ended in review is final and conclusive. Therefore, we are of the view that the writ
petitions are devoid of any substance which should be discharged. We hold that in
the context of the dispute in question the contractual obligation shall operate in its
mandatory implication having binding effect upon the parties and the 'award' on that
score is absolutely omnipotent.
All the Rules are thus discharged, however, without any order as to cost.
(Underlinings are mine)
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