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TMI Blog2020 (8) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... 14th October, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata by virtue whereof the application of Resolution Professional for not giving effect to the termination of the 'Power Purchase Agreement' (PPA) by GRIDCO came to be disposed off holding that the termination of PPA was in violation of Moratorium declared by the Adjudicating Authority in the case and the finding culminated in passing of a direction to GRIDCO to restore the PPA dated 26th May, 2012 as if there was no termination of PPA. The instant appeal has been preferred by GRIDCO assailing the impugned order to the extent of disposal of CA (IB) No. 1184/KB/2019. 2. For proper grasp of the controversy involved in this appeal, brief reference to the factual matrix is indispensable. 3. GRIDCO- a state owned Company of Odisha has been carrying on business of bulk supply of electricity after purchasing power from various sources and supplying the same to the Distribution Utilities for onward use of the consumers. It also purchases Solar Power from various generators in fulfilment of its Renewable Purchase Obligation. GRIDCO entered into a PPA with 'Alex Green Energy Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... around Rs. 10 crore/MW whereas the bid amount offered by Respondent No.4 is much lower. It is further submitted that the tariff of Rs. 7 per unit was provided in the PPA in view of the investment of Rs. 50 Crore for putting up the power plant and Respondent No.4 whose bid was only 11.07 Crore could not claim the benefit of same tariff of Rs. 7 per unit to the prejudice of the consumers. It is submitted that the Tribunal can mould the relief to balance the interest of the Respondent No.4 and the consumers of the State. It is further submitted that the power of the Electricity Regulatory Commission to regulate price of sale and purchase of electricity includes the power to amend the tariff under the PPA. Lastly, it is contended that since in the instant case PPA was terminated on the ground that the Corporate Debtor did not supply electricity since June 2018, the impugned order directing restoration of PPA and purchase of power in terms thereof would result in unjust enrichment of Respondent No.4 at the cost of consumers of the State of Odisha. 5. Per contra, learned counsel for the Respondent No.1- Mr. Surya Kanta Satapathy, who was the Resolution Professional for the duration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the PPA also for the reason that no termination notice was issued to the defaulting party. Therefore, Appellant cannot be heard to say that it is willing to restore the PPA at revised rates. It is further argued that on facts also the Appellant has no case as it is procuring solar power at rates which is even higher than Rs. 7 per KWH. Even on ground of equity such rates cannot be permitted. The guidelines issued by OERC pertaining to procurement are not applicable retrospectively and do not apply to the PPA. Therefore, there is no unjust enrichment of Respondent No.4 as alleged. 6. Learned counsel for the Respondent No.4 submitted that in terms of Clause 3.1 of the PPA power was to be supplied to the Appellant at a fixed tariff for the entire period of 25 years at the rate of Rs. 7 per KWH and that there is no provision for alteration of the said rate in the PPA. It is submitted that the Solar Power Plant operated by Corporate Debtor was damaged in a storm in June 2018 resulting in stoppage of supply of power to the Appellant. Subsequently, Corporate Insolvency Resolution Process was initiated against the Corporate Debtor on 18th February, 2019 and it was only thereafter on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for FY 2019- 20 (Rs.Cr.) 20 MW through NVVN Under 'New Projects Scheme' under JNNSM, ph-1 34 1272 1065 36.21 10 MW through NTPC from 5 MW Solar PV projects at Dadri & Faridabad 17 1039 8.50 MU @1294 P/U 8.50 MU @935 P/U 18.95 5MW from M/S Alex Green Energy Ltd. Through OREDA State Scheme 8 700 700 5.6 25 MW from Power Pvt. Ltd. ACME Odisha Solar 42 728 728 30.576 Accordingly, the estimated procurement of 686 MU of solar power during FY 2019-20 will be made at around Rs. 365.80 Crore at an average proposed rate of 533.24 P/U. Proposed procurement & cost of solar power during FY 2020-21 Solar RE Sources Energy Proposed for FY 2020-21 OERC Approved Rates for FY 2019-20 Proposed rates for FY 2020-21 Estimated Total cost for FY 2020-21 (MU) (P/U) (P/U) (Rs. Cr.) 20 MW through NVVN Under 'New Projects Scheme' under JNNSM, ph-1 34 1272 1065 36.21 10 MW through NTPC from 5 MW Solar PV projects at Dadri & Faridabad 17 1039 8.50 MU @1294 P/U 8.50 MU @935 P/U 18.95 5MW from M/S Alex Green Energy Ltd. Through OREDA State Scheme 8 700 700 5.60 25 MW from ACME Odisha Solar Power Pvt. Ltd. 42 728 728 30.576 Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d acceptance thereto is appended as Annexure-1." 10. On a plain reading of Clause 7 of the PPA, it emerges that the tariff at the rate of Rs. 7/- per KWH was quoted by the Corporate Debtor as per tariff bid submitted by it through 'Odisha Renewable Energy Development Agency' ("OREDA" for short) and same was accepted with Corporate Debtor being the L1 bidder. The bid process culminated in acceptance of quoted tariff of Corporate Debtor for 25 years for Solar Power Plant at the fixed rate of Rs. 7/- per KWH and the terms and conditions agreed upon crystallized into the PPA executed inter se the Corporate Debtor and Appellant. The argument that presently the tariff of solar power is much less than Rs. 7/ KWH does not hold water as the tariff in PPA was decided on commercial consideration obtaining at the time the PPA was executed. Admittedly, PPA does not contain a provision for revision of tariff though it makes a provision for force majeure and default and termination. The relevant portion of Clause 14 reads as under: "............Neither party shall be entitled for claiming compensation for damages and loss in the event of force majeure........." 11. This clause brings within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly with the force majeure clause embodied in Clause 14. A juxtaposition of these provisions would leave no scope for any ambiguity in deriving the conclusion that the default and termination of PPA in consequence of a default arising out of failure on the part of project proponent/ seller for any reason beyond his control and falling within the force majeure clause would require one month notice on the part of buyer/ Appellant to set right the default and in the event of non-compliance it may seek specific performance of agreement till the default is corrected. It is also manifestly clear that in the event of default being cured within a maximum period of six months, the PPA will revive. Clause 17.1 provides that the PPA may be terminated by either of the parties only in the event of default by the other party. This clause protects the interest of a non-defaulting party to escape the obligations under the PPA to saddle it with any liability. Any other interpretation will lead to absurdity and render the provisions unworkable. 15. Admittedly, in the instant case, power supply from Corporate Debtor to Appellant got disrupted and completely stopped on account of damage to the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rem on all stakeholders including the Appellant. In this regard, it is significant to notice that the order of Adjudicating Authority dated 25th November, 2019 approving the Resolution Plan of Respondent No.4 came to be challenged before this Appellate Tribunal in CA (AT) (Insolvency) No. 11 of 2020 and CA (AT) (Insolvency) No. 75 of 2020 (Kundan Care Products Limited vs. Mr. Surya Kanta Satapathy & Ors.) and both appeals were dismissed on 30th January, 2020. Thus, the approval of Resolution Plan of Respondent No.4 by the Adjudicating Authority stands upheld by this Appellate Tribunal. Admittedly, judgment rendered by this Appellate Tribunal on 30th January, 2020 in the aforesaid appeals goes unassailed. The effect of approval of the Resolution Plan of Respondent No.4 and such approval having been upheld by this Appellate Tribunal which stands un-assailed is that the Resolution Plan of Respondent No.4 is binding on the Corporate Debtor and all other stakeholders involved in the Resolution Plan which encompasses the Appellant within its fold who had the notice of pendency of Corporate Insolvency Resolution Process culminating in approval of the Resolution Plan of Respondent No.4. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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