9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1763 - SC - Indian LawsDeclaration of a generating unit as Commercial Operation Date, COD - pre-conditions to be satisfied - date of commissioning - whether the COD for Unit No. 3, which was the first Unit to be commissioned, had been achieved on 31.3.2013? Held that - A perusal of the emails exchanged between the parties would show that the parties did not intend to amend by a written agreement any of the provisions of the PPA. Whereas an amendment of the PPA Under Article 18.1 would be bilateral, a waiver of a provision of the PPA would be unilateral Under Article 18.3 - Under Section 62, apart from novation of a contract and rescission of a contract, alteration of a contract is mentioned. Alteration is understood here, in the facts of the present case, in the sense of amendment. It is settled law that an amendment to a contract being in the nature of a modification of the terms of the contract must be read in and become a part of the original contract in order to amount to an alteration Under Section 62 of the Indian Contract Act. No such thing having occurred on the present facts, it is clear that there is in fact no amendment by written agreement to the PPA. The relevant Section therefore that would apply on the facts of the present case is Section 63. At this stage, it is important to advert to an argument made by counsel for the Appellants that Article 18.3 only refers to waivers that can expressly be made under various provisions of the agreement and not to Article 6 which, according to learned Counsel, cannot be waived under the PPA. Assuming that such argument is correct, and that Article 18.3 refers only to the mode of carrying out a waiver under the PPA, yet it is clear that Section 63 would operate on the facts of this case. This is for the reason that, when read with Section 1 of the Contract Act, it becomes clear that the PPA is subject to Section 63 of the Contract Act, which would allow a promise to dispense with or remit, wholly or in part, the performance of the promise made to him, and accept instead of it any satisfaction which he thinks fit - It is thus clear that if on facts there is a waiver of a provision of the PPA by one of the parties to the PPA, then Section 63 of the Contract Act will operate in order to give effect to such waiver. The Appellate Tribunal is wholly incorrect in accepting the case of waiver put forward by learned Counsel for Sasan, and is equally incorrect in absolving the independent engineer for the test certificate given by him on 30.3.2013. Applicability of Section 125 of the Electricity Act, 2003 - Held that - We are afraid that we cannot agree. One substantial question of law is whether, when public interest is involved, waiver can at all take place of a right in favour of the generator of electricity under a PPA if the right also has an impact on consumer interest. This substantial question of law has been answered by us in the course of the judgment. Appeal allowed.
Issues Involved:
1. Validity of the Certificate issued by the Independent Engineer (IE). 2. Whether the Commercial Operation Date (COD) of Unit No. 3 was achieved on 31.3.2013. 3. Whether the procurers waived the requirement of achieving 95% of the contracted capacity for COD. 4. Impact of waiver on public interest and consumer tariffs. 5. The role and findings of the Central Electricity Regulatory Commission (CERC) and the Appellate Tribunal. Detailed Analysis: 1. Validity of the Certificate issued by the Independent Engineer (IE): The Independent Engineer (IE) issued a certificate on 30.3.2013 stating that the performance test for Unit No. 3 was carried out in accordance with Schedule 5 of the Power Purchase Agreement (PPA) and that the unit achieved a tested capacity of 101.38 MW. However, the Supreme Court found that the certificate was not in compliance with Article 6.3.1 and Schedule 5 of the PPA, which required the unit to operate continuously for 72 hours at 95% of its contracted capacity (587 MW). The Court agreed with the Central Electricity Regulatory Commission (CERC) that the certificate was flawed and not a final test certificate as required by the PPA. 2. Whether the Commercial Operation Date (COD) of Unit No. 3 was achieved on 31.3.2013: The bone of contention was whether COD was achieved on 31.3.2013. The Supreme Court held that COD could not be declared on 31.3.2013 as the performance test did not meet the 95% contracted capacity requirement. The Court noted that the performance tests conducted between 1st April and 16th August 2013 showed that the unit did not achieve the required capacity until June 2013. Therefore, the COD could only be declared on 16.8.2013, when the final test certificate was issued. 3. Whether the procurers waived the requirement of achieving 95% of the contracted capacity for COD: The Supreme Court examined the emails and correspondence between the parties to determine if there was a waiver. The Court found that the lead procurer's email on 31.3.2013 categorically stated that the test result was not acceptable as it did not meet the 95% requirement. A subsequent email on 2.4.2013 accepted the performance test under Article 6.3.4 of the PPA for a de-rated capacity of 101.38 MW, but this was without prejudice to their rights. The Court concluded that there was no clear and unequivocal intention to waive the 95% requirement, and thus, no waiver occurred. 4. Impact of waiver on public interest and consumer tariffs: The Supreme Court emphasized that any waiver affecting the tariff payable by consumers would impact public interest. The Court referred to Sections 61 to 63 of the Electricity Act, 2003, which mandate safeguarding consumer interests and ensuring reasonable recovery of electricity costs. The Court held that any waiver of the requirement under Article 6.3.1 and Schedule 5 would affect consumer tariffs and public interest, and therefore, such a waiver cannot be allowed. 5. The role and findings of the Central Electricity Regulatory Commission (CERC) and the Appellate Tribunal: The CERC, in its order dated 8.8.2014, found that the COD was not achieved on 31.3.2013 and set the date as 16.8.2013. The Appellate Tribunal, however, held that the procurers had waived the 95% requirement and accepted the COD as 31.3.2013. The Supreme Court set aside the Appellate Tribunal's judgment, reinstating the CERC's findings. The Court noted that the Appellate Tribunal's conclusion on waiver was erroneous and that the Independent Engineer's certificate did not comply with the PPA requirements. Conclusion: The Supreme Court allowed the appeals, setting aside the Appellate Tribunal's judgment and reinstating the CERC's order. The Court held that the COD could only be declared on 16.8.2013, as the performance test on 31.3.2013 did not meet the 95% contracted capacity requirement. The Court also found no waiver of the requirement by the procurers and emphasized the impact on public interest and consumer tariffs.
|
