2019 (2) TMI 1874 - Commission - Insolvency and Bankruptcy

Restraint from terminating the PPA - delay in commissioning of the generating station of the Petitioner - invocation of Contract Performance Guarantee - HELD THAT - Presently, the Petitioner is subject to the proceedings under the Insolvency and Bankruptcy Code, 2016. Pursuant to the order of the National Company Law Tribunal, Hyderabad Bench dated 29.8.2018, the Resolution Professional has been appointed. Further, the order of NCLT has imposed a moratorium on institution or combination of suits or proceedings under Section 14 of the IBC. The Petitioner has submitted that this Commission has jurisdiction to adjudicate the dispute under Section 79(1)(f) of the Act as its generating station which is situated in Odisha and is supplying power to the distribution companies of Uttar Pradesh - Since, we have decided that during the period of moratorium under Section 14 of the IBC, no proceeding can lie before this Commission, we are not expressing any view on the issue of the jurisdiction. Petition disposed off.

Summary

Issues:
- Petition seeking directions against distribution companies for termination of Power Purchase Agreement (PPA) and quashing of Termination Letter
- Petitioner's prayers for quashing Termination Notice, demand raised, and restraining from invoking Bank Guarantee
- Petitioner's application for stay on termination letter, interim order, and restraining from invoking Bank Guarantee
- Impact of Insolvency and Bankruptcy Code (IBC) proceedings on the case
- Alleged force majeure events affecting the generating station
- Jurisdiction of Central Electricity Regulatory Commission under Section 79(1)(f) of the Electricity Act
- Requirement for the Petitioner to deposit the filing fee for the application

Analysis:

1. The Petitioner filed a petition under Section 79(1)(f) of the Electricity Act against distribution companies to prevent termination of the PPA and quash the Termination Letter, citing a demand of ?823.42 crore and potential invocation of a Bank Guarantee of ?169.58 crore. The prayers included quashing the Termination Notice, demand, and restraining from invoking the Bank Guarantee.

2. Additionally, the Petitioner sought interim relief through an application to stay the termination letter, restrain the Respondents from taking further steps, and prevent the invocation of the Bank Guarantee pending adjudication. The Petitioner highlighted the impact of IBC proceedings, stating a moratorium under Section 14 of the IBC was in place.

3. The Petitioner argued that force majeure events, such as land acquisition delays and coal linkage issues, affected the generating station, leading to the termination notice. The Petitioner contended that the termination and damages demand contravened the IBC's moratorium.

4. The Commission acknowledged the NCLT's moratorium under the IBC, preventing any legal proceedings during that period. Therefore, the Commission stated it could not entertain the Petition under Section 79(1)(f) of the Act due to the ongoing IBC proceedings.

5. The Commission highlighted the Petitioner's option to approach the NCLT for appropriate directions under Section 60(5) of the IBC, which grants jurisdiction to the NCLT for matters related to insolvency resolution or liquidation proceedings.

6. While the Petitioner argued the Commission's jurisdiction under Section 79(1)(f) of the Act due to the generating station's location in Odisha, the Commission reiterated its inability to proceed during the IBC moratorium.

7. As a result, the Commission refrained from expressing a view on jurisdiction, emphasizing the importance of adhering to the IBC's legal framework during the moratorium period.

8. Finally, the Commission directed the Petitioner to deposit the filing fee for the application within a specified timeframe, concluding the proceedings related to the petition and application.