2021 (5) TMI 1081 - SC - Indian Laws

Reduction of the tariff payable by Appellant No. 1 from Rs. 6.10/kWh to Rs. 4.36/kWh and imposition of damages of Rs. 20, 00, 000/- for delay in commissioning the plant - Whether the Project of the Appellants was delayed by one day in terms of Power Purchase Agreement and whether the Commission was justified in imposing liquidated damages on the Appellant for such delay in commissioning the Project? - HELD THAT - Reduction of applicable tariff is permissible Under Article 12.2 of the PPA only when there is delay in commissioning of the Project beyond the Scheduled Commissioning Date. As discussed above there is no dispute that the Scheduled Commissioning date shall be 12 months from the effective date. There is no quarrel between the parties that the effective date is 17.10.2016. The interpretation Clause contains three provisions which are 1.2.1(k) 1.2.1(l) and 1.2.1(m). According to 1.2.1(k) any reference to a month shall mean a reference to a Calendar month as per the Gregorian Calendar. 1.2.1(l) provides that references to any date or period shall mean and include such date period as may be extended pursuant to the agreement. As per Article 1.2.1(m) any reference to any period commencing from a specified date and until the specified day shall include both such day or dates. The conclusion of the Commission is not agreed upon that the definition of month is with reference only to one month and not more which is wrong a reading of the provision. The Commission applied 1.2.1(m) which refers to a period commencing from a specified date to a specified day for the purpose of including the date of the event. The Commission has committed an error in applying 1.2.1(m) when the provision that is applicable is 1.2.1(k) read with the definition of month in Article 21.1. There is a specific mention of twelve months in the definition of SCOD and Article 1.2.1(k) categorically provides that any reference to a Month shall be a calendar month. Applicability of Article 1.2.1(k) excludes the operation of Article 1.2.1(m) to the facts of this case. The next contention of the Appellant is that actual injection of power into the Grid was on 17.10.2017 and as the Scheduled is 16.10.2017 the reduction of the tariff in view of the delay of 1 day in commissioning is justified. The alternate submission that is made by the Respondents that even assuming that the Scheduled Commissioning Date is 16.10.2017 and not 17.10.2017 the Respondents commissioned the Solar Plants on 16.10.2017 itself - There is no dispute that the power was injected from the solar plants on 17.10.2017. In view of the conclusion reached by us on the issue relating to the Scheduled Commissioning Date being 17.10.2017 it is not necessary to adjudicate the point relating to the requirement of actual injection of power into the Grid to decide the date of commissioning. The judgment of the Appellate Tribunal is upheld and the Appeals are dismissed.

Summary

Issues Involved:
1. Determination of the Scheduled Commissioning Date (SCOD) for the Solar Power Projects.
2. Requirement of actual injection of power for determining the date of commissioning.
3. Imposition of liquidated damages and reduction of tariff.

Issue-wise Detailed Analysis:

1. Determination of the Scheduled Commissioning Date (SCOD) for the Solar Power Projects:
The central dispute was whether the SCOD was 16.10.2017 or 17.10.2017. The Karnataka Electricity Regulatory Commission (KERC) held that the SCOD was 16.10.2017, including the date of approval of the Power Purchase Agreement (PPA) on 17.10.2016. The Appellate Tribunal for Electricity, however, excluded 17.10.2016 from the computation, making the SCOD 17.10.2017. The Supreme Court agreed with the Tribunal, emphasizing the definition of "Month" in the PPA, which excludes the date of the event. Therefore, the SCOD was determined to be 17.10.2017.

2. Requirement of actual injection of power for determining the date of commissioning:
The KERC held that actual injection of power into the Grid was essential to declare the project commissioned, which occurred on 17.10.2017. The Appellate Tribunal disagreed, relying on the Commissioning Certificate issued by KPTCL, which stated that the Solar Plants were commissioned on 16.10.2017. The Supreme Court, considering its conclusion on the SCOD, did not find it necessary to adjudicate this point further.

3. Imposition of liquidated damages and reduction of tariff:
The Respondents were penalized by the Appellant for a one-day delay in commissioning, reducing the tariff from Rs. 6.10/kWh to Rs. 4.36/kWh and imposing liquidated damages. The Appellate Tribunal found this unjustified, as the SCOD was 17.10.2017, and the project was commissioned within the stipulated time. The Supreme Court upheld the Tribunal's decision, confirming that there was no delay and the Respondents were entitled to the original tariff.

Conclusion:
The Supreme Court upheld the judgment of the Appellate Tribunal, dismissing the appeals. The SCOD was determined to be 17.10.2017, and the Respondents were not liable for any delay. The imposition of liquidated damages and reduction of tariff by the Appellant was deemed unjustified. The Appellant was granted four weeks to implement the Tribunal's judgment.