INDIA THERMAL POWER LTD. vs STATE OF M.P.

The Supreme Court addressed the appeals concerning the establishment of power plants by private companies in Madhya Pradesh under the liberalization policy initiated in 1991-92. The Court examined the Power Purchase Agreements (PPAs) and the obligations of the Madhya Pradesh Electricity Board (MPEB) regarding payment mechanisms, including the establishment of Letters of Credit and Escrow Accounts for securing payments to Independent Power Producers (IPPs). The Court upheld the validity of the agreements and clarified the obligations of MPEB under Article 8 of the PPA, reinforcing the contractual rights of the IPPs.