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TMI Blog2017 (4) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 provides for procurement of power and determination of tariff by a transparent competitive bidding process. Once this is done, the appropriate Commission is to "adopt" the tariff which is accepted in the competitive bid subject to guidelines that are made by the Central Government. On 19th January, 2005, the Central Government issued detailed guidelines under this provision, which were amended from time to time. On 1st February, 2006, Gujarat Urja Vikas Nigam Limited (GUVNL) issued a public notice inviting proposals for supply of power on long term basis under three different competitive bid processes. The participating bidders were to decide on the tariff and quote such tariff after competing against each other. The bidders were entitled to quote escalable or non-escalable tariff or partly escalable and partly non- escalable tariff, as was considered appropriate by them to cover their respective risks so as to obtain whatever returns are available to them. The best levelised tariff as per certain pre-disclosed criteria was to be followed in order to arrive at the lowest tender. 3. Haryana Utilities also initiated a separate competitive bidding process for purchase of 2000 MW o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a entities for supply of 712 MW of power to each of them from the Mundra Power Project. The Haryana State Commission adopted the tariff under Section 63 of the Electricity Act on 31st July, 2008 (The Gujarat State Commission had adopted the tariff under Section 63 for supply of power to GUVNL on 20th December, 2007). An important part of the case on behalf of the respondents is that a change in law in Indonesia took place in 2010 and 2011, which aligned the export price of coal from Indonesia to international market prices instead of the price that was prevalent for the last 40 years. This being the case, in both the cases, Adani Power filed a petition before the Central Electricity Regulatory Commission being Petition No.155 of 2012 on 5th July, 2012 under Section 79 of the Electricity Act seeking relief on the score of the impact of the Indonesian Regulation to either discharge them from the performance of the PPA on account of frustration, or to evolve a mechanism to restore the petitioners to the same economic condition prior to occurrence of the change in law. 6. On 16th October, 2012, the Central Commission held that the Power Purchase Agreements entered into by Adani in bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the meaning of Section 79(1) (b) of the Act and that, therefore, the Central Commission would have jurisdiction to proceed further in the matter. The Appellate Tribunal considered the Supreme Court order dated 31st March, 2015 and felt that the argument of force majeure and change in law could be gone into by it. It ultimately concluded, having regard to the law on frustration contained in the Indian Contract Act, 1872 and the relevant provisions of the PPAs, that force majeure was made out on the facts of these cases and reversed the Commission on this score. It also reversed the Commission on exercise of regulatory powers under Section 79, stating that these powers could not be exercised once there was a PPA entered into under Section 63 of the Act. It also held that change in law provisions do not apply to foreign law and, therefore, changes in Indonesian law did not come within the scope of the provisions. Insofar as changes in Indian law were concerned, it held that the Government Policies that were relied upon, do not constitute 'law'. Accordingly, the matter was remanded to the Commission to find out the impact of the force majeure event to grant compensatory tariff. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whereas under Section 63 of the Act, the Commission does not "determine" but only "adopts" tariff obtained through a transparent process of competitive bidding. This being the case, it is clear that there is no residuary source of power contained in the Commission either in Section 79 or otherwise to fix compensatory tariffs once the tariff is adopted under Section 63. If at all, such tariff can be modified only in accordance with the guidelines issued by the Central Government and not otherwise. They also argued that the Central Commission itself has no jurisdiction in view of the fact that on facts there is no composite scheme for the reason that the generation and sale of electricity from the power project of Adani, under independent PPAs to Gujarat and Haryana Utilities, with different tariffs, and from different generating units selected under different competitive bidding processes, would show that there is no one composite scheme containing uniform tariffs. This being the case, the State Commissions alone would have jurisdiction. It was further argued that there is no change in law, either for the very good reason stated by the Commission, viz. that change in law applies t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountered the submissions on force majeure by stating that the fundamental basis of the contract was the fuel supply agreement that was to be entered into, and pointed out various clauses in the PPAs to show that the fuel supply agreement and imported coal were both very important elements, both in the bid and the PPAs. Non-escalable tariffs do not lead to the conclusion that if a source of coal becomes unavailable in a manner that completely undermines the basis of the bid, the tariff cannot be adjusted. If otherwise they fall within the change in law provision and/or force majeure provision, the mere fact that a non-escalable tariff has been quoted would make no difference. A large part of the argument was centered around the meaning of the expression "frustration" in the Contract Act and the correct construction of clause 12 of the PPA. A large number of authorities, both English and Indian, were cited to show that the contract had become commercially impracticable, and that they would have to fold up operations, which would not be in public interest as the consumers would then have to obtain electricity at rates much higher than were quoted by them. According to them, a force ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness among them, which then translates itself into reasonable tariffs that are payable by consumers of electricity. For this purpose, he relied strongly upon Section 3 of the Electricity Act, which states that the Central Government, shall from time to time, prepare a National Electricity Policy and a tariff policy in consultation with the State Governments, and the authority for development of the power system, based on optimal utilization of natural resources. According to him, the National Electricity Policy and tariff policy that are issued from time to time, being statutory in nature, are binding on all concerned. This is, in fact, further recognized by Section 61(i) by which the appropriate Commission, in specifying terms and conditions for determination of tariffs, shall be guided by the National Electricity Policy and tariff policy. The Central Government's role can further be seen even in Section 63, where guidelines that are binding on all are issued by the Central Government in cases where there is a transparent process of bidding. Further, according to him, Section 79(4) also points in the same direction, stating that, in discharge of its functions, the Central Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, however, the performance of SEBs has deteriorated substantially on account of various factors. For instance, though power to fix tariffs vests with the State Electricity Boards, they have generally been unable to take decisions on tariffs in a professional and independent manner and tariff determination in practice has been done by the State Governments. Cross-subsidies have reached unsustainable levels. To address this issue and to provide for distancing of government from determination of tariffs, the Electricity Regulatory Commissions Act, was enacted in 1998. It created the Central Electricity Regulatory Commission and has an enabling provision through which the State Governments can create a State Electricity Regulatory Commission. 16 States have so far notified/created State Electricity Regulatory Commissions either under the Central Act or under their own Reform Acts. 2. Starting with Orissa, some State Governments have been undertaking reforms through their own Reform Acts. These reforms have involved unbundling of the State Electricity Boards into separate Generation, Transmission and Distribution Companies through transfer schemes for the transfer of the assets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dispatch function could be kept with the Transmission Utility or separated. In the case of separation the load dispatch function would have to remain with a State Government organization/company. (iii) There is provision for private transmission licensees. (iv) There would be open access in transmission from the outset with provision for surcharge for taking care of current level of cross subsidy with the surcharge being gradually phased out. (v) Distribution licensees would be free to undertake generation and generating companies would be free to take up distribution licensees. (vi) The State Electricity Regulatory Commissions may permit open access in distribution in phases with surcharge for - (a) current level of cross subsidy to be gradually phased out along with cross subsidies; and (b) obligation to supply. (vii) For rural and remote areas stand alone systems for generation and distribution would be permitted. (viii) For rural areas decentralized management of distribution through Panchayats, Users Associations, Cooperatives or Franchisees would be permitted. (ix) Trading as a distinct activity is being recognized with the safeguard of the Regulatory Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electricity Plan and invite suggestions and objections thereon from licensees, generating companies and the public within such time as may be prescribed: Provided further that the Authority shall - (a) notify the plan after obtaining the approval of the Central Government; (b) revise the plan incorporating therein the directions, if any, given by the Central Government while granting approval under clause (a). (5) The Authority may review or revise the National Electricity Plan in accordance with the National Electricity Policy. 61. Tariff Regulations. The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles; (c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; (d) saf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. (4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified. (5) The Commission may require a licensee or a generating company to comply with such procedure as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. 63. Determination of tariff by bidding process. Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one State; (c) to regulate the inter-State transmission of electricity ; (d) to determine tariff for inter-State transmission of electricity; (e) to issue licenses to persons to function as transmission licensee and electricity trader with respect to their inter-State operations; (f) to adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration; (g) to levy fees for the purposes of this Act; (h) to specify Grid Code having regard to Grid Standards; (i) to specify and enforce the standards with respect to quality, continuity and reliability of service by licensees; (j) to fix the trading margin in the inter-State trading of electricity, if considered, necessary; (k) to discharge such other functions as may be assigned under this Act. 86. Functions of State Commission. - (1) The State Commission shall discharge the following functions, namely, - (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Provided that where open access h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d alone provision and has to be construed on its own terms, and that, therefore, in the case of transparent bidding nothing can be looked at except the bid itself which must accord with guidelines issued by the Central Government. One thing is immediately clear, that the appropriate Commission does not act as a mere post office under Section 63. It must adopt the tariff which has been determined through a transparent process of bidding, but this can only be done in accordance with the guidelines issued by the Central Government. Guidelines have been issued under this Section on 19th January, 2005, which guidelines have been amended from time to time. Clause 4, in particular, deals with tariff and the appropriate Commission certainly has the jurisdiction to look into whether the tariff determined through the process of bidding accords with clause 4. 19. It is important to note that the regulatory powers of the Central Commission, so far as tariff is concerned, are specifically mentioned in Section 79(1). This regulatory power is a general one, and it is very difficult to state that when the Commission adopts tariff under Section 63, it functions de hors its general regulatory power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily be a scheme in which there is uniformity of tariff under a PPA where there is generation and sale of electricity in more than one State. It is not enough that generation and sale of electricity in more than one State be the subject matter of one or more PPAs, but that something more is necessary, namely, that there must be a composite scheme for the same. 21. In order to appreciate and deal with this submission, it is necessary to set out Section 2(5) of the Act which defines appropriate Government as follows: "2. Definitions. In this Act, unless the context otherwise requires, (5) "Appropriate Government" means, - (a) the Central Government, - (i) in respect of a generating company wholly or partly owned by it; (ii) in relation to any inter-State generation, transmission, trading or supply of electricity and with respect to any mines, oil-fields, railways, national highways, airports, telegraphs, broadcasting stations and any works of defence, dockyard, nuclear power installations; (iii) in respect of the National Load Despatch Centre; and Regional Load Despatch Centre; (iv) in relation to any works or electric installation belonging to it or under its con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n would have jurisdiction, something which would lead to absurdity. Since generation and sale of electricity is in more than one State obviously Section 86 does not get attracted. This being the case, we are constrained to observe that the expression "composite scheme" does not mean anything more than a scheme for generation and sale of electricity in more than one State. 23. This also follows from the dictionary meaning [(Mc-Graw-Hill Dictionary of Scientific and Technical Terms (6th Edition), and P.Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition)] of the expression "composite": (a) 'Composite' - "A re-recording consisting of at least two elements. A material that results when two or more materials, each having its own, usually different characteristics, are combined, giving useful properties for specific applications. Also known as composite material." (b) 'Composite character' - "A character that is produced by two or more characters one on top of the other." (c) 'Composite unit" - "A unit made of diverse elements." The aforesaid dictionary definitions lead to the conclusion that the expression "composite" only means "consisting of at least two elements". In the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in all cases involving inter- State supply, transmission, or wheeling of electricity, the Central Commission alone has jurisdiction. In fact this further supports the case of the Respondents. Section 64(5) can only apply if, the jurisdiction otherwise being with the Central Commission alone, by application of the parties concerned, jurisdiction is to be given to the State Commission having jurisdiction in respect of the licensee who intends to distribute and make payment for electricity. We, therefore, hold that the Central Commission had the necessary jurisdiction to embark upon the issues raised in the present cases. Force Majeure 28. A large part of the argument turned on the finding of the Appellate Tribunal that the rise in price of coal consequent to change in Indonesian law would be a force majeure event which would entitle the respondents to claim compensatory tariff. Before embarking on the merits of this claim, we must first advert to the argument of the appellant that force majeure can only be argued for a very restricted purpose, as has been pointed out in the Supreme Court judgment dated 31st March, 2015. 29. In order to appreciate this contention, it is first ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the question of the applicability of Order 41 Rule 22 in the instant appeal as the decision of the Appellate Tribunal to reject the cross-objections of the appellant by its order dated 1-8-2014 has become final and no appeal against the said order is pending before us. 18. We are also not required to go into the question whether the order of the Central Commission dated 2-4-2013 by which it declined to grant a declaration of frustration of the contracts either on the ground of "force majeure" or on the ground of "change of law" is independently appealable, since no such appeal even if maintainable, is preferred by the appellant. 19. The question whether the appellant made out a case for condonation of delay in preferring the appeal before the Appellate Tribunal, in our opinion, need not also be examined by us in view of the last submission made by the appellant. If the appellant is not desirous of seeking a declaration that the appellant is relieved of the obligation to perform the contracts in question, the correctness of the decision of the Appellate Tribunal in rejecting the application to condone the delay in preferring the appeal would become purely academic. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press or implied clause in a contract, such as the PPAs before us, it is governed by Chapter III dealing with the contingent contracts, and more particularly, Section 32 thereof. In so far as a force majeure event occurs de hors the contract, it is dealt with by a rule of positive law under Section 56 of the Contract. Sections 32 and 56 are set out herein: "32. Enforcement of Contracts contingent on an event happening - Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void. 56. Agreement to do impossible act - An agreement 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 made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful. Where one person has promised to do something which he knew or, with reasonable diligence, might h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract to ignore the express covenants thereof and to claim payment of consideration, for performance of the contract at rates different from the stipulated rates, on a vague plea of equity. Parties to an executable contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, for example, a wholly abnormal rise or fall in prices which is an unexpected obstacle to execution. This does not in itself get rid of the bargain they have made. It is only when a consideration of the terms of the contract, in the light of the circumstances existing when it was made, showed that they never agreed to be bound in a fundamentally different situation which had unexpectedly emerged, that the contract ceases to bind. It was further held that the performance of a contract is never discharged merely because it may become onerous to one of the parties. 36. Similarly, in Naihati Jute Mills Ltd. v. Hyaliram Jagannath, 1968 (1) SCR 821, this Court went into the English law on frustration in some detail, and then cited the celebrated judgment of Satyabrata Ghose v. Mugneeram Bangur & Co. Ultimately, this Court concluded that a contract is not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have to be considered are the terms of the contract itself, its matrix or context, the parties' knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties' reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances. Since the subject matter of the doctrine of frustration is contract, and contracts are about the allocation of risk, and since the allocation and assumption of risk is not simply a matter of express or implied provision but may also depend on less easily defined matters such as "the contemplation of the parties", the application of the doctrine can often be a difficult one. In such circumstances, the test of "radically different" is important: it tells us that the doctrine is not to be lightly invoked; that mere incidence of expense or delay or onerousness is not sufficient; and that there has to be as it were a break in identity between the contract as provided for and contemplated and its performance in the new circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts: Direct Non-Natural Force Majeure Events Nationalization or compulsory acquisition by any Indian Government Instrumentality or any material assets or rights of the Seller or the Seller's contractors; or The unlawful, unreasonable or discriminatory revocation of, or refusal to renew, any Consent required by the Seller or any of the Seller's contractors to perform their obligations under the Project Documents or any unlawful, unreasonable or discriminatory refusal to grant any other consent required for the development/ operation of the Project, provided that an appropriate court of law declares the revocation or refusal to be unlawful, unreasonable and discriminatory and strikes the same down; or Any other unlawful, unreasonable or discriminatory action on the part of an Indian Government Instrumentality which is directed against the Project, provided that an appropriate court of law declares the revocation or refusal to be unlawful, unreasonable and discriminatory and strikes the same down. Indirect Non - Natural Force Majeure Events Any act of war (whether declared or undeclared), invasion, armed conflict or act of foreign enemy, blockade, embargo, revolution, riot, insurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of the Financing Agreements by the Procurer(s) from the Seller, in the form of an increase in Capacity Charge. Provided such Capacity Charge increase shall be determined by CERC on the basis of putting the Seller in the same economic position as the Seller would have been in case the Seller had been paid Debt Service in a situation when the Indirect Non Natural Force Majeure had not occurred. Provided that the Procurers will have the above obligation to make payment for the Debt Service only (a) after the Unit(s) affected by such Indirect Non Natural Force Majeure Event has been Commissioned, and (b) only if in the absence of such Indirect Non Natural Force Majeure Event, the Availability of such Commissioned Unit(s) would have resulted in Capacity Charges equal to Debt Services. e) If the average Availability of the Power Station is reduced below eighty (80) percent for over two (2) consecutive months or for any non consecutive period of four (4) months both within any continuous period of sixty (60) months, as a result of a Direct Non Natural Force Majeure, then, with effect from the end of that period and for so long as the daily average Availability of the Power St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the Seller would have been paid Capacity Charges equal to Debt Service in case of Indirect Non Natural Force Majeure Event (or Natural Force Majeure Event affecting the Procurer/s), then the Procurers shall make pro-rata payment of Debt Service but only with respect to such reduced Availability. For the avoidance of doubt, if Debt Service would have been payable at an Availability of 60% and pursuant to a Repeat Performance Test it is established that the Availability would have been 40%, then Procurers shall make payment equal to Debt Service multiplied by 40% and divided by 60%. Similarly, the payments in case of Direct Non Natural Force Majeure Event (and Natural Force Majeure Event affecting the Procurer/s) shall also be adjusted pro-rata for reduction in Available Capacity. (g) In case of a Natural Force Majeure Event affecting the Procurer/s which adversely affects the performance obligations of the Seller under this Agreement, the provisions of sub-proviso (d) and (f) shall apply. (h) For the avoidance of doubt, it is specified that the charges payable under this Article 12 shall be paid by the Procurers in proportion to their then existing Allocated Contracted Capaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Wilson and Co. Ltd., 1917 Appeal Cases 495 for the proposition that a mere rise in price rendering the contract more expensive to perform will not constitute "hindrance". This is echoed in the celebrated judgment of Peter Dixon & Sons Ltd. v. Henderson, Craig & Co. Ltd., 1919(2) KB 778 in which it was held that the expression "hinders the delivery" in a contract would only be attracted if there was not merely a question of rise in price, but a serious hindrance in performance of the contract as a whole. At the beginning of the First World War, British ships were no longer available, and although foreign shipping could be obtained at an increased freight, such foreign ships were liable to be captured by the enemy and destroyed through mines or sub-marines, and could be detained by British or allied warships. In the circumstances, the Tennants (Lancashire) Ltd. judgment was applied, and the Court of Appeals held: "Under the circumstances, can it be said that the sellers were not "hindered or prevented" within the meaning of the contract? It is not a question of price, merely an increase of freight. Tonnage had to be obtained to bring the pulp in Scandinavian ships, and although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or default under this Agreement or any Project Documents." This clause makes it clear that changes in the cost of fuel, or the agreement becoming onerous to perform, are not treated as force majeure events under the PPA itself. 45. We are, therefore, of the view that neither was the fundamental basis of the contract dislodged nor was any frustrating event, except for a rise in the price of coal, excluded by clause 12.4, pointed out. Alternative modes of performance were available, albeit at a higher price. This does not lead to the contract, as a whole, being frustrated. Consequently, we are of the view that neither clause 12.3 nor 12.7, referable to Section 32 of the Contract Act, will apply so as to enable the grant of compensatory tariff to the respondents. Dr. Singhvi, however, argued that even if clause 12 is held inapplicable, the law laid down on frustration under Section 56 will apply so as to give the respondents the necessary relief on the ground of force majeure. Having once held that clause 12.4 applies as a result of which rise in the price of fuel cannot be regarded as a force majeure event contractually, it is difficult to appreciate a submission that in the alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take levels; Force majeure clauses as per industry standards; Lead times for scheduling of power; Default conditions and cure thereof, and penalties; Payment security proposed to be offered by the procurer. Clause 5.6. Standard documentation to be provided by the procurer in the RFP shall include - (ii) PPA proposed to be entered with the selected bidder. The model PPA proposed in the RFQ stage may be amended based on the inputs received from the interested parties, and shall be provided to all parties responding to the RFP. No further amendments shall be carried out beyond the RFP stage; Clause 5.16 (old) Deviation from process defined in the guidelines Clause 5.16. In case there is any deviation from these guidelines, the same shall be subject to approval by the Appropriate Commission. The Appropriate Commission shall approve or require modification to the bid documents within a reasonable time not exceeding 90 days. Clause 5.17 (old) Arbitration Clause 5.17. The procurer will establish an Amicable Dispute Resolution (ADR) mechanism in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996. The ADR shall be mandatory and time-bound to mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any statute, ordinance, regulation, notification or code, rule, or any interpretation of any of them by an Indian Government Instrumentality and having force of law and shall further include all applicable rules, regulations, orders, notifications by an Indian Governmental Instrumentality pursuant to or under any of them and shall include all rules, regulations, decisions and orders of the Appropriate Commission; "Project Documents" mean Construction Contracts; Fuel Supply Agreements, including the Fuel Transportation Agreement, if any; O&M contacts; RFP and RFP Project Documents; and Any other agreements designated in writing as such, from time to time, jointly by the Procurers and the Seller; 13. ARTICLE 13: CHANGE IN LAW 13.1 Definitions In this Article 13, the following terms shall have the following meanings: 13.1.1 "Change in Law" means the occurrence of any of the following events after the date, which is seven (7) days prior to the Bid Deadline: (i) the enactment, bringing into effect, adoption, promulgation, amendment, modification or repeal, of any Law or (ii) a change in interpretation of any Law by a competent Court of law, tribunal or Indian Governmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Escalable Capacity Charges. Provided that the Seller provides to the Procurers documentary proof of such increase/decrease in Capital Cost for establishing the impact of such Change in Law. In case of Dispute, Article 17 shall apply. It is clarified that the above mentioned compensation shall be payable to either Party, only with effect from the date on which the total increase/decrease exceeds amount of Rs.fifty (50) crores. Operation Period As a result of Change in Law, the compensation for any increase/decrease in revenues or cost to the Seller shall be determined and effective from such date, as decided by the Central Electricity Regulatory Commission whose decision shall be final and binding on both the Parties, subject to rights of appeal provided under applicable Law. Provided that the above mentioned compensation shall be payable only if and for increase/decrease in revenues or cost to the Seller is in excess of an amount equivalent to 1% of Letter of Credit in aggregate for a Contract Year. 13.3 Notification of Change in Law 13.3.1 If the Seller is affected by a Change in Law in accordance with Article 13.2 and wishes to claim a Change in Law under this Article, it sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment This Agreement may only be amended or supplemented by a written agreement between the Parties and after duly obtaining the approval of the Appropriate Commission, where necessary." 47. The respondents have argued before us that it is clear from the change made in clause 4.7 of the guidelines read with clause 5.17 that any change in law impacting cost or revenue from the business of selling electricity shall be adjusted separately. Learned counsel for the respondents have argued that "any change in law" is not qualified and, therefore, would include foreign law. According to them, the power purchase agreement is subservient to the guidelines and can never negate the terms of the guidelines. Under clauses 4.7 and 5.1.7 of the guidelines, these guidelines are binding on all parties including the procurers and any deviation therefrom has to be approved by the appropriate Commission. Therefore, according to them, the PPA must be read as including foreign laws as well. On the other hand, our attention was invited to the definition of "electricity laws" and it was argued that clause 13 would have to be read in the light of the PPA provisions and so read it would not include changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a competent Court of law/Tribunal or Indian Government instrumentality. 'Competent Court', as we have seen above, speaks only of the Indian judicial system and, therefore, the enactments spoken of in sub-clause (1) would necessarily refer only to Indian enactments. 50. However, we were referred to other clauses in the PPA, for example, clauses 12.4(f)(ii), 4.1.1(a) and 17.1, all of which speak of Indian law. It was, therefore, argued that wherever the parties wanted to refer to Indian law, they did so explicitly, and from this it should be inferred that the expression "law" would otherwise include all laws whether Indian or otherwise. 51. This argument is based on the Latin maxim expressio unius est exclusio alterius. This maxim has been referred to in a number of judgments of this Court in which it has been described as a 'useful servant but a dangerous master'. (See for example CCE v. National Tobacco Co. of India Ltd., (1972) 2 SCC 560 at Para 30). From a reading of the above, it is clear that if otherwise the expression "any law" in clause 13 when read with the definition of "law" and "Electricity Laws" leads unequivocally to the conclusion that it refers only to the law o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangement for supply of coal. It has been decided that, seeing the overall domestic availability and the likely requirement of power projects, the power projects will only be entitled to a certain percentage of what was earlier allowable. This being the case, on 31st July, 2013, the following letter, which is set out in extenso states as follows : FU-12/2011-IPC (Vol-III) Government of India Ministry of Power Shram Shakti Bhawan, New Delhi Dated 31st July, 2013 To, The Secretary, Central Electricity Regulatory Commission, Chanderlok Building, Janpath, New Delhi Subject: Impact on tariff in the concluded PPAs due to shortage in domestic coal availability and consequent changes in NCDP. Ref. CERC's D.O. No.10/5/2013-Statutory Advice/CERC dated 20.05.13 Sir, In view of the demand for coal of power plants that were provided coal linkage by Govt. of India and CIL not signing any Fuel Supply Agreement (FSA) after March, 2009, several meetings at different levels in the Government were held to review the situation. In February 2012, it was decided that FSAs will be signed for full quantity of coal mentioned in the Letter of Assurance (LOAs) for a period of 20 years with a trigger lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th January, 2006. Further amendments to the Tariff Policy were notified on 31st March, 2008, 20th January, 2011 and 8th July, 2011. In exercise of powers conferred under Section 3(3) of Electricity Act, 2003, the Central Government hereby notifies the revised Tariff Policy to be effective from the date of publication of the resolution in the Gazette of India. Notwithstanding anything done or any action taken or purported to have been done or taken under the provisions of the Tariff Policy notified on 6th January, 2006 and amendments made thereunder, shall, in so far as it is not inconsistent with this Policy, be deemed to have been done or taken under provisions of this revised policy. Clause 6.1 states: 6.1 Procurement of Power As stipulated in para 5.1, power procurement for future requirements should be through a transparent competitive bidding mechanism using the guidelines issued by the Central Government from time to time. These guidelines provide for procurement of electricity separately for base load requirements and for peak load requirements. This would facilitate setting up of generation capacities specifically for meeting such requirements. However, some of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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