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TMI Blog2022 (11) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case. It should find out whether the impugned decision is based on any principle. If not, it may unerringly point to arbitrariness. If the act betrays caprice or the mere exhibition of the whim of the authority it would sufficiently bear the insignia of arbitrariness. In this regard supporting an order with a rationale which in the circumstances is found to be reasonable will go a long way to repel a challenge to state action. No doubt the reasons need not in every case be part of the order as such. If there is absence of good faith and the action is actuated with an oblique motive, it could be characterised as being arbitrary. A total non-application of mind without due regard to the rights of the parties and public interest may be a clear indicator of arbitrary action. A wholly unreasonable decision which is little different from a perverse decision under the Wednesbury doctrine would qualify as an arbitrary decision Under Article 14. Ordinarily visiting a party with the consequences of its breach under a contract may not be an arbitrary decision. WHETHER THERE IS AN ARBITRATION CLAUSE? - HELD THAT:- It may not be a case where the PPA provides for an arbitration Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the complaint of the first Respondent, if it is found that a case of clear arbitrariness has been established by the first Respondent. An inspection by the CEIG would necessarily have to be carried out in which the Appellant would have to be involved to facilitate the exercise. In the facts of this case, on being satisfied, the CEIG would necessarily have to grant the re-validation of the earlier Report. It would also involve an opportunity to the CEIG to look into the aspects which have been projected by the fist Respondent itself in its letter dated 16.09.2020. The report would indeed indicate the state of affairs about all the facets. As already noticed, even under the impugned judgment dated 27.02.2020, the first Respondent would have to submit necessary applications. We would think that essentially the Appellant's attempt was to secure a reduction in the rate. The rate of the first Respondent was found to be the lowest after a clearly keenly competitive international bidding, involving a large number of bidders. The view taken by the High Court upheld - appeal dismissed. - K.M. JOSEPH AND HRISHIKESH ROY, JJ. For the Appellant : K.M. Natraj, ASG, Anish Kumar Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent by the seller. The first Respondent is the seller under the PPA. 4. The Agreement contemplated completion of the conditions subsequent, within a period of 210 days. In other words, the Agreement, admittedly, provided that the first Respondent was to achieve fulfilment of conditions subsequent by 15.04.2016. The Agreement further contemplates an extension of the period of fulfilment of the condition subsequent on payment of penalty for a further period of nine months. Thus, calculating 210 days and an additional nine months from 18.09.2015, which is the date of the PPA, the period would come to an end on 15.01.2017. A communication was addressed dated 12.01.2017 by the first Respondent. The first Respondent purported to refer to Article 2.1 of the PPA, which, inter alia, reads as follows: Article 2.1 Seller agrees and undertaken to duly perform and complete all of the following activities seller's own cost and risk within 210 days from the effective Date unless such completion is affected by any force Majeure event, or if any of the Effective is specifically waived in writing by MPPMCL: a) The Seller shall obtain all Consents, Clearance and Permits required for supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jan 2017 3. Agreement (PPA) dated September 18, 2015 between MPPMCL and Sky Power Dear Sir, Further to our office letter dated 10 March 2017 skyP2/MP/SOLAR/MPPMCL/2015-16/06 dated 12 Jan 2017 we hereby submit that we have completed the entire acquisition for land 29, 85 Acres including balance 87. S Acres of land parcels. The relevant land registration documents have been enclosed for your perusal We hereby submit that we have duly completed land registration for 249,85 Acer for the project Thanking you in anticipation. M/S. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED Sd/- Shivani Jhariya (Authorized Signatory) Sd/- D.G.M. (Commercial-3) R.O. MPMCL, Bhopal 7. After a gap of nearly five months, the next date, which is invoked by the Appellant, is 09.08.2017. It is the case of the Appellant that as the first Respondent had failed to comply with the conditions subsequent, by misrepresentation and manipulation, it purported to obtain approval from the Chief Electrical Inspector General (CEIG) Under Regulation 32 of the Central Electricity Authority (Measures relating to safety and electricity supply) Regulation, 2010 read with Section 162 of the Act. According to the Appellant, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r terminating the agreement, therefore, the Respondents cannot supplement the reasons for termination of the contract by virtue of additional assertions in the return and/or in the arguments raised in view of the Supreme Court decision in Mohinder Singh Gill v. Chief Election Commissioner (1978) 1 SCC 405. 6. In view of the fact that the similar reason of termination of the agreement has not been found to be justified in the matter of Renew Clean Energy Private Limited (supra), therefore, the impugned communication dated 11.08.2017 is hereby set aside. However, liberty is granted to the Respondents to pass fresh orders in terms of Power Purchase Agreement dated 18th September, 2015 in accordance with law. 8. On 07.07.2018, the Appellant issued the fresh termination notice. This came to be challenged by the first Respondent by Writ Petition No. 420 of 2019. After exchange of pleadings, by the first impugned judgment dated 27.02.2020, the High Court set aside the termination order. Thereafter the Appellant in September, 2020 filed review petition which came to be dismissed by the second impugned order. On 15.04.2021 this Court issued notice and stayed the impugned orders. 9. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r manner, it does not take away the rights available to the State as a party to a contract to exercise the right with it under the contract. In other words, the Appellant as State within the meaning of Article 12 should not be denied the very right which could be duly exercised by a private party if it stood in the shoes of the Appellant in similar circumstances. This is all that has been done by the Appellant. Coming to the second stage, namely, commissioning of the project by the first Respondent, our attention was drawn to Article 2.6 of the PPA. He contended that agreement contemplated commissioning of plant within 12 months from the date of the financial closure subject to Force Majeure. He would point out that there were no circumstances for invoking Force Majeure. The period of 12 months from the date of financial closure determined the maximum period within which the commissioning had to take place. He would submit that first Respondent was in breach of even commissioning. Therefore, on that score also, there is no justification for the High Court to have interfered in the matter. He would further submit that there is another vital circumstance which should have dissuaded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ court interfering in the matter. In this regard he would expatiate by pointing out that the interference by the High Court will produce the following results: The PPA casts an obligation on the Appellant to purchase power at the rate of Rs. 5.109 per unit for a period of 25 years. Power is available in the market at a far cheaper rate. The inevitable result of implementing the order of the High court would be that the Appellant would have to purchase power at a much higher rate and what is more disturbing and should have troubled the High Court to decline jurisdiction is the aspect that the increased rate would have to be passed on to the end consumer. Put it differently, when the Appellant being entitled to terminate the contract and would be in a position to purchase power at a cheaper rate and charge the consumers at the lower rate, by the court granting relief to the first Respondent, the Appellant is compelled to purchase power at the higher rate and that too for a long period of 25 years, and what is more, compelled to pass on the burden to the hapless consumer. Thus, public interest in fact in the case lay in the court declining to grant relief to the first Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbibing the grand mandate in Article 14 that it behoves the State to steer clear of unfairness in all its acts, this Court has weaved a taboo against arbitrary action by the state even after it entered into a contract. He would point out in this regard the judgment of this Court in ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 553 and the decisions following the same approving of the writ court granting relief in contractual matters also. He would point out that, present arbitrariness, be it after a contract is entered into, the State has no place to hide when action is challenged and its action must pass the scrutiny of the constitutional court. It must demonstrate that the action was fair. The action of the State falls far short of the exacting standard of fairness that the Constitution demands in the case at hand for the following reasons: 12. Outbidding an unusually large body of competitors, a bid based on competitive tariff, the first Respondent which is a global player in Renewable Energy (solar power) bids at a rate which was very much acceptable to the Appellant and investment was made by the first Respondent in the region of near ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of approval by this Court as well. As far as the only other aspect about commissioning not being in time Dr. Singhvi addressed two submissions. Firstly, he would point out that admittedly, the Appellant has not issued the pre-termination notice contemplated in Article 9.1 of the PPA. This suffices to sustain the judgment. Secondly, equally importantly the Appellant has acted arbitrarily in not realizing that the first Respondent had 24 months to commission the project and before the expiry of the same, the Respondent was fully ready to fulfil its obligation. The learned Senior Counsel would also submit that contention of there being disputed questions of fact is premised on red herrings. In this regard he would point out that on 09.07.2017, a notice was issued by the first Respondent to the Appellant calling upon the Appellant to inspect and it would be ready to commission the project and that it was ready to supply power. However, no inspection was carried by the Appellant till 19.04.2018. The competent body namely the CEIG had carried out inspection which spread over a few days. The Body was fully satisfied with the first Respondent being compliant. All that happened was after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrespective of being statutory contract or not, it is but a fact in deciding whether the writ applicant should be relegated to an alternate remedy. The jurisdiction of the High Court Under Article 226 in the overpowering presence of Article 14 would embrace the power to strike at arbitrary action by the State, even in the working out of rights in a non-statutory contract. 13. Shri V. Giri, learned Senior Counsel for Respondent No. 5 would support the Appellant in its stand that the first Respondent was in clear breach of the contract. It is the case of fifth Respondent that there are various steps to be undertaken and completed Under Regulations extant before which commissioning can be permitted. It is the case of the fifth Respondent that the first Respondent could not therefore be said to have acted in compliance with the Regulations and therefore cannot be heard to say that it had commissioned the project. 14. Shri K.M. Natraj, Additional Solicitor General would submit that the judgment of the High court in the first-round litigation left it open to the Appellant to take fresh proceedings under the contract. It is for the said reason that the said judgment was not challenged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Energy? (8) What is the effect of non-compliance of Article 9.1 of the PPA, namely, the effect of Appellant not issuing notice contemplated therein before issuing the impugned termination dated 07.07.2018? (9) What is overwhelming public interest in the context of judicial review in a contractual matter? Is the concept applicable only to cases which involve challenge to award of largesse by the State or is it applicable across the Board irrespective of the stage when the matter arises in relation to a contract? (10) Whether this Court should interfere with the judgment of the High Court in the totality of facts? 16. Before we proceed to consider the question whether what is involved is a statutory contract or not, we may make the following prefatory remarks: Under Article 298 of the Constitution, the Executive Power of the Union and each State, inter alia, extends to making of contracts for any purpose. Article 299 provides for manner in which contracts made in the exercise of the executive power of the Union or the State is to be made. 17. In this case, we are dealing not with a case where a contract has been made by the State in exercise of its executive power within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without constitutional impropriety. At the same time, the revised Article provides that this extended executive power of the Union and of the States will be subject, in the former case, to legislation by the State, and in the latter case, to legislation by Parliament. WHETHER THE PPA IS A STATUTORY CONTRACT? 18. Moving on to the concept of the Statutory Contract, the learned Additional Solicitor General, no doubt, sought to draw considerable support from the judgment of this Court reported in Kerala SEB and Anr. v. Kurien E. Kalathil and Ors. (2000) 6 SCC 293. That was a case, which involved, a Writ Petition filed by a contractor, who was awarded the work of construction of a dam, staking a claim, for enhanced minimum wages, which the contractor claimed, he had paid to his workers. There was no dispute that the workmen were entitled to the enhanced wages under a Notification. The Appellant-Board, however, contended that the Respondent-contractor had failed to prove the payment of the enhanced wages to the workmen. The High Court allowed the Writ Petition and this Court, while setting aside the Judgment, proceeded to make the following statement: 10. We find that there is a merit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies. 19. As to what is a statutory contract, fell for consideration before this Court in the case reported in India Thermal Power Ltd. v. State of M.P. and Ors. (2000) 3 SCC 379. Incidentally, it dealt with generation, distribution and supply of electricity and, what is more, emanated from the State of Madhya Pradesh. While negotiations were going on between the Respondent-State, Electricity Board and independent power producers, on the basis of State inviting offers from potential private investors, for establishing power projects, the Central Government amended the earlier Tariff Notification. The Electricity Board decided to prioritize the projects, which offered the least tariff. The Appellant-independent power producer challenged the said decision in a Writ Petition. It must be noticed that MoU and Power Purchase Agreement had been entered into by the Appellant therein. The Division Bench of the High Court took the view that the PPAs therein were statutory contracts, entered into Under Sections 43 and 43(A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may be, levied therefor. 21. This Court interpreting a contract entered into Under Section 6A in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. v. NBCC (India) Ltd. and Ors. (2022) 1 SCC 401, took the view that the agreement in question did not acquire the status of a statutory contract merely for having been executed in terms of the power Under Section 6A. 22. The contention of the Respondent is that the PPA is a statutory contract since it incorporates essential features such as tariff determined through bidding (paragraph-4.7-CUF, paragraph-4.4-change in law, paragraph-4.5-payment security, paragraph-4.6-and bidding process, paragraphs-5.4 and 5.5-prescribed under the guidelines for tariff based competitive process for grid connected power project based on renewable energy resources issued by the MNRE Under Section 63 of the Act). 23. The Respondent relies on India Thermal Power Ltd. (supra) to contend that if the contract incorporates certain statutory terms and conditions, it is statutory. 24. Section 63 of the Electricity Act, 2003, reads as follows: 63 (Determination of tariff by bidding process) Notwithstanding anything contained in Section 62, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to how the PPA can be described as containing terms and conditions, which are statutory in nature. The expression 'terms and conditions', which are statutory in nature, must be understood as those statutory terms and conditions, which provide for rights and obligations of the contracting parties. Such reference is conspicuous by its absence in the PPA. It is common case that the Appellant is incorporated under the Companies Act. It is not a statutory body or a corporation. Therefore, we would come to the conclusion that we cannot describe the contract as a Statutory Contract. We must also notice that the PPA is not made either in purported compliance with the statutory dictate, either in the form of parent enactment or a subordinate legislation. The terms and conditions of the PPA are not transplanted into the PPA from any Statutory provision. The Appellant being company under the Companies Act, would be free as any other contracting party, subject, no doubt, to its position as an instrumentality of the State Under Article 12 of the Constitution of India and the law otherwise. Moreover, the terms, which are relevant to the lis before us, viz., the Articles relating to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in a writ petition. In Har Shankar and Ors. v. The Dy. Excise and Taxation Commr. and Ors. (1975) 1 SCC 737, a Constitution Bench of this Court observed: The Appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations. 28. The Court also took the view the correct view is that it is the contract and not the executive power regulated by the Constitution which governs the relations of the parties on facts apparent in the case before us . No doubt the learned Additional Solicitor General asserts that the destiny of the appeals before us must be governed by the law laid down in Radhakrishna Agarwal (supra). However, as shall be presently noticed the law has not stood still. 29. In Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 this Court inter alia held as follows: 10. Now, there can be no doubt that what para (1) of the notice prescribed was a condition of eligibility which was required to be satisfied by every person submitting a tender. The condition of eligibility was that the person submitting a tender must be conducting or running a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dministrative Law , 4th Edn. There is no reason why we should hesitate to adopt this Rule as a part of our continually expanding administrative law. Today with tremendous expansion of welfare and social service functions, increasing control of material and economic resources and large scale assumption of industrial and commercial activities by the State, the power of the executive Government to affect the lives of the people is steadily growing. The attainment of socio-economic justice being a conscious end of State policy, there is a vast and inevitable increase in the frequency with which ordinary citizens come into relationship of direct encounter with State power-holders. This renders it necessary to structure and restrict the power of the executive Government so as to prevent its arbitrary application or exercise. Whatever be the concept of the Rule of Law, whether it be the meaning given by Dicey in his The Law of the Constitution or the definition given by Hayek in his Road to Serfdom and Constitution of Liberty or the exposition set forth by Harry Jones in his The Rule of Law and the Welfare State , there is as pointed out by Mathew, J., in his Article on The Welfare State, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings Under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Radha Krishna Agarwal v. State of Bihar [(1977) 3 SCC 457]. It appears to us, at the outset, that in the facts and circumstances of the case, the Respondent company IOC is an organ of the State or an instrumentality of the State as contemplated Under Article 12 of the Constitution. The State acts in its executive power Under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ Under Article 14 can be checked. See Radha Krishna Agarwal v. State of Bihar [(1977) 3 SCC 457] at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the type of the transactions and nature of the dealing as in the present case. 17. We are of the opinion that in all such cases whether public law or private law rights are involved, depends upon the facts and circumstances of the case. The dichotomy between rights and remedies cannot be obliterated by any strait-jacket formula. It has to be examined in each particular case. Mr. Salve sought to urge that there are certain cases Under Article 14 of arbitrary exercise of such power and not cases of exercise of a right arising either under a contract or under a statute. We are of the opinion that that would depend upon the factual matrix. 18. Having considered the facts and circumstances of the case and the nature of the contentions and the dealing between the parties and in view of the present state of law, we are of the opinion that decision of the State/public authority Under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. It is true that there is discrimination between power and right bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee Under Article 14 of non-arbitrariness at the hands of the State in any of its actions. 24. The State cannot be attributed the split personality of Dr Jekyll and Mr. Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms or caprices of the men to whom the governance is entrusted for the time being. It is trite that 'be you ever so high, the laws are above you'. This is what men in power must remember, always. 34. The pronouncement made by this Court would later become the springboard or the charter for the further evolution of the concept of public law element as also premise for the superior courts invoking Article 14 in various contractual matters. 35. In State of U.P. and Ors. v. Bridge and Roof Co. (India) Ltd. (1996) 6 SCC 22, the Court was dealing with a case of a writ petition filed by the Respondent therein which was a public sector corporation and seeking payment allegedly due from the Appellant state. The Court noted that the contract in question contained Articles providing inter alia for settlement of disputes by reference to arbitration. The very resort to Article 226 was found to be misconceived in the circumstances. The Court also laid down as follows: Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or maybe, also by certain provisions of the Sale of Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action arises out of or pertains to contract, brings it within the sphere of public law because the power exercised is apart from contract. The freedom of the Government to enter into business with anybody it likes is subject to the condition of reasonableness and fair play as well as public interest. After entering into a contract, in cancelling the contract which is subject to terms of the statutory provisions, as in the present case, it cannot be said that the matter falls purely in a contractual field. Therefore, we do not think it would be appropriate to suggest that the case on hand is a matter arising purely out of a contract and, therefore, interference Under Article 226 of the Constitution is not called for. This contention also stands rejected. (Emphasis supplied) The basis for interference was located in a statute which made its presence felt. 37. In Binny Ltd. and Anr. v. V. Sadasivan and Ors. (2005) 6 SCC 657, this Court was dealing with termination of services of Respondents who were working as Members of the Management, staff of the Appellant company. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant-writ Petitioner. This Court undertook an elaborate discussion of the earlier case law. We find that this Court dealt with several obstacles which were sought to be posed by the Respondent. They included disputed questions of facts being involved, availability of alternate remedy, and the case involving entertaining a money claim. This Court went on to hold as follows: 27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition: (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable. 41. No doubt, we must also notice para 28 which serves as an admonition against considering the availability of the remedy Under Article 226 as an absolute charter to invoke jurisdiction in all cases. 28. However, while entertaining an objection as to the maintainability of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 44. The court went on to approve of ABL (supra) and observed that this Court had declared that no decision lays down as an absolute Rule that in all cases of disputed questions of fact, the parties should be relegated to a civil Court. We may also notice paragraph 29: 29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. [(2004) 3 SCC 553] each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by fixed rules, procedures, or law. 2. (Of a judicial decision) founded on prejudice or preference rather than on reason or fact. This type of decision is often termed arbitrary and capricious. 20. To the same effect is the meaning given to the expression arbitrary by Corpus Juris Secundum which explains the term in the following words: Arbitrary.--Based alone upon one's will, and not upon any course of reasoning and exercise of judgment; bound by no law; capricious; exercised according to one's own will or caprice and therefore conveying a notion of a tendency to abuse possession of power; fixed or done capriciously or at pleasure, without adequate determining principle, non-rational, or not done or acting according to reason or judgment; not based upon actuality but beyond a reasonable extent; not founded in the nature of things; not governed by any fixed Rules or standard; also, in a somewhat different sense, absolute in power, despotic, or tyrannical; harsh and unforbearing. When applied to acts, 'arbitrary' has been held to connote a disregard of evidence or of the proper weight thereof; to express an idea opposed to administrative, executive, judicial, or leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er therein that it was entitled to the benefit of Section 42 of the Income Tax Act, 1961 which provided for certain deductions. The Petitioner had entered into an agreement with the Respondent, the Government of India. The case of the Respondent, inter alia, was one denying the case of the Petitioner that the omission of Section 42 was by oversight. The prayer in the writ petition itself inter alia was essentially to declare entitlement to the deduction Under Section 42, inter alia. It is while dealing with the said case that this Court no doubt proceeds to, inter alia, lay down as following after adverting to ABL limited (supra) also: 69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, normally , the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business. 70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. 70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing disputed questions of fact. The present case clearly indicates that the factual disputes are involved. 51. Thereafter, the court went on to consider in detail the judgment of this Court in ABL (supra) and found that it was a case where the court granted relief as the facts were absolutely clear from the documentary evidence and it pertained to interpretation of such clauses of the contract of insurance. We need notice only paragraph 20 in M.K. Jose (supra). It reads as under: 20. We have referred to the aforesaid authorities to highlight under what circumstances in respect of contractual claim or challenge to violation of contract can be entertained by a writ court. It depends upon facts of each case. The issue that had arisen in ABL International [(2004) 3 SCC 553] was that an instrumentality of a State was placing a different construction on the clauses of the contract of insurance and the insured was interpreting the contract differently. The Court thought it apt merely because something is disputed by the insurer, it should not enter into the realm of disputed questions of fact. In fact, there was no disputed question of fact, but it required interpretation of the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not statutory in nature, when the offending party is the State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr. Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court's jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary. 54. We may cull out our conclusions in regard to the points, which we have framed: i. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Undoubtedly, while there is no prohibition, in the Writ Court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit. viii. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a Writ Petition (See in this regard, the view of this Court even in ABL (supra) explaining how it distinguished the decision of this Court in State of U.P. and Ors. v. Bridge Roof Co. (1996) 6 SCC 22, by its observations in paragraph-14 in ABL (supra)]. ix. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a Writ Petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant. x. The reach of Article 14 enables a Writ Court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court's approach in dealing with the same, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition. xii. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate Forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (See in this regard Kumari Shrilekha Vidyarthi and Ors. v. State of U.P. and Ors. (1991) 1 SCC 212)). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely malafide, can hardly be described as a fair action and may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 resumed as it were with the present writ petition. We are not oblivious to the fact that the Appellant did not think it fit to challenge the verdict in the first round of litigation. No doubt, the case of the Appellant is that the Appellant was of the view that the court has left it free to the Appellant to take steps under the contract for termination of the contract. It is the case of the Appellant in fact, that the judgment of the High Court in the earlier round would not be an obstacle for the Appellant to revisit and terminate the contract for the reason that the PPA made it incumbent on the Appellant to terminate the contract Under Article 2.1(d) if the contractor did not fulfil the conditions subsequent even after the expiry of 210 days and a further period of nine months after the commencement of PPA. We must examine whether the earlier judgment, in fact, in law permits the Appellant to re-open the said issue. A perusal of the judgment dated 20.6.2017 would reveal that the court was dealing with the challenge to the order dated 11.08.2017. The order dated 11.08.2017 would reveal that the Appellant has found that there is a delay of 54 days in achieving the condition subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude termination of the PPA based on Respondent not commissioning the project within the time but also revisit the aspect relating to non-fulfilment of the conditions subsequent. The Respondent would join issue with the Appellant on the score that judgment of the High Court must be understood as meaning that on the issue relating to non-fulfilment of the conditions subsequent the court made its pronouncement on merits with reference to the decision in Renew Clean Energy. All that was left open was the question related to the delay in commissioning the project. 59. Learned Additional Solicitor General apart from reiterating his contention would point out that the earlier judgment should not be treated as res judicata and the only reason Appellant did not challenge the High court judgment, dated 20.06.2018, was the liberty granted. He would further submit that at any rate even proceeding on the basis that the High court could not revisit the issue of the non-fulfilment of the conditions subsequent, the decision of the High Court would not stand in the way of this Court considering whether the order which is impugned in this case which includes the issue relating to non-fulfilment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states all activities prior to readiness of generator to inject power into the Grid are beyond its purview. The further stand is that none of the regulatory provisions allows it to interfere in pre-requisite regulatory compliance by the generator before injecting of power into the Grid. There is reference to short-term open access for which there are Regulations. In respect of Renewable Energy generators intending to connect with the Grid, certain regulatory requirements, before injecting of power therein, are to be complied with. They are registration, data and speech communication facility, interface metering and communication of meter data through automatic meter reading. Single line diagram indicating connectivity with the grid duly certified by MPPTCL (fourth Respondent), when connected to 132KV and above, inter alia, copy of connection agreement with the fourth Respondent, inter alia, information regarding sale of power under long-term access, medium-term open access or short-term open access, approval of CEIG for construction, operation and maintenance of electrical plans and electrical lines Under Section 73C of the Electricity Act, 2003 and approval of Power, Telecommunica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, required that the telemetry and voice communication from the control centre of the proposed power plant upto Back Up SLDC Bhopal/Sub-LDC Indore/SLDC Jabalpur be arranged before synchronization of your power plant. It may please be noted that synchronization of plant with grid shall not be allowed without commissioning of telemetry and voice communication. It is seen signed by the Superintending Engineer (LD:E T), SLDC, MPPTCL, Jabalpur. As far as the requirement of connection agreement, it has been stated in the reply affidavit of the first Respondent that such connection agreement was, indeed, executed between Respondent No. 1 and Respondent No. 4. The agreement is dated 18.05.2017. At this juncture, we may notice that a Sur-Rejoinder has been filed by Respondent No. 5. Having regard to the connection agreement, all that is stated is, till date, Respondent No. 5 was not provided with a copy by the first Respondent. It is also stated that Respondent Nos. 4 and 5 are two distinct entities and, therefore, it was required for compliance that the same should have been submitted to Respondent No. 5. We have already noticed that letter dated 23.07.2017 is on the same letterh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borate provisions have been made, which would visit the first Respondent with monetary compensation to be paid to the Appellant, in case of breach. Article 9.7 also provides for the obligation of the Appellant to buy power for twenty-five years. It is only if there was refusal or inability to buy by the Appellant, fully or partially, or in the event of default, as per Article 9.5, leading to termination, the first Respondent was left free to sell power to a third party, which sale was to be regulated by certain terms. 65. As regards another requirement, viz., approval of the CEIG for construction, operation and maintenance of the electrical plants and electrical lines, it is the case of the first Respondent that such approval was obtained by letter dated 10.08.2017. It was also marked to Respondent No. 4. CEIG approval for the electrical plant was received on 09.08.2017. Respondent No. 4, it is pointed out, had also, on 24.08.2017, issued a Joint Inspection Report certifying that the project may be charged. In fact, we find, in the Joint Inspection Report issued by the fourth Respondent that: Newly constructed 132KV D.C.D.S. line from 400KV PS Chhegaon to 50MW Pooling Station of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 kV DCDS line is found erected between Pooling Substation to 400 kV Chhegaon (Torni) Substation. One circuit is used for already existing 50 MW plant of M/s. Sky Power and 2nd circuit is proposed to be used for M/s. Sky Power South East Solar India Pvt. Ltd. at village Chirbel, Distt. Khandwa, for which site verification visit is conducted. 68. The next requirement, according to the fifth Respondent was that approval of the PTCC was required. The first Respondent has, in the reply, stated the said requirement was completed on 05.09.2017. We find that Chief Engineer (Procurement) of the fourth Respondent has recorded in the communication dated 05.09.2017 that PTCC had accorded PTCC route approval: With reference to the subject cited above, DET (PTCC), Mumbai has accorded PTCC route approval for charging 132KV DCDS line from 400kV S/s Chhegaon to 100MW Solar Power Project of M/s. Sky Power Solar India M/s. Sky Power Southeast Solar India Pvt. Ltd. Chhirbel, Dist. Khandwa. 69. The fifth Respondent, in the Sur-Rejoinder, in response to the same, would respond by stating that the Respondent No. 4 granting approval, did not mean that the same was issued with the knowledge or concurren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to raise such contentions. Even in the Review Petition, there is only adoption of the contentions of the Appellant. 72. Emphasis is placed on the statement of Respondent No. 5 by Respondent No. 1 wherein it is stated whereas though the generating station is ready for generation of power but the power cannot be evacuated into the grid in the absence of transmission line . This is taken as an admission of the readiness of the first Respondent for generation of power. It is pointed out further that necessary approval was taken before December 2016 to August 2017 for operating the transmission line. Respondent No. 1 was not allowed to commission. Reliance is also placed on the inspection report of the Appellant to show that the transmission line was ready. The examples about other operators are brushed aside as irrelevant. It is the generator's prerogative to sell power in the open market. 73. A Sur-Rejoinder is filed by Respondent No. 5. Therein, it has interestingly produced its return in the review petition filed by the Appellant before the High court. Therein we may notice that it referred to Section 32(2) of the Electricity Act and its functions. Thereafter it has stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2017 as the letter it has sent. The said letter is in the letterhead of the fourth Respondent and therein the name of the fifth Respondent is also shown. It would appear that the fifth Respondent is created Under Section 31 of the Electricity Act, 2003. Section 31 reads as follows: Constitution of State Load Despatch Centres.--(1) The State Government shall establish a Centre to be known as the State Load Despatch Centre for the purpose of exercising the powers and discharging the functions under this Part. (2) The State Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any State Act, as may be notified by the State Government: Provided that until a Government company or any authority or corporation is notified by the State Government, the State Transmission Utility shall operate the State Load Despatch Centre: Provided further that no State Load Despatch Centre shall engage in the business of trading in electricity. 77. Therefore, it would appear to us that actually the fifth Respondent is to be operated by the State Transmission Utility, which is defined in Section 2(67) as the Board (defined as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the case really belongs to the small area with unclear contours where it can be appropriated as a private law dispute. The distinction between public law and private law has concededly been reduced to nearly imperceptible terms but the distinction in law remains. As far as the public law aspect is concerned, we are inclined to take the view that in view of what has been laid down in Shri Vidhyarthi Lekha (supra), the impact of the action in a contractual matter in the facts by public authority is felt in public domain. We are dealing with the action of the Appellant in terminating the contract dealing with the right to generate renewable energy and for supplying it to the consumers. Supply of power and its consumption are imperative and indispensable needs for not only the common man but also for the efficient functioning of trade and industry. Decisions in this domain do impinge on public interest. Therefore, we would not be inclined to shut the doors on the first Respondent in this matter. We also bear in mind that this is the second round of litigation. As noticed already, in the first round, the first Respondent did succeed. 79. Having found that though a non-statutory contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rojects in the year 2017-2018. It was further contended that the daily demand of the Appellant is approximately 15000 megawatts. The quantum of the project of the first Respondent is only 50 megawatts, which constitutes 0.33 per cent of the total demand. Purchasing such a small capacity, in terms of the rate under the PPA, would make no difference to the consumer tariff. This is apart from countenancing the Appellant reneging on a binding contract, which involves reaching a reward for arbitrary State action, besides, destroying an investment of Rs. 331 crores. In this regard, reliance is placed on the judgment of this Court in Vice Chairman Managing Director, City and Industrial Development Corporation of Maharashtra Ltd. and Anr. v. Shishir Realty Private Limited and Ors. (2021) SCC Online SC 1141. Public interest cannot be determined with reference to monetary considerations alone, it is pointed out. 82. As far as All India Power Engineer Federation (supra) is concerned, in fact, the Court was dealing with Civil Appeals, which were filed under the Electricity Act, 2003. The question about public interest arose in the context of the provision in the contract, which provided for wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the legality of the award of contract. [See in this regard Tata Cellular v. Union of India (1994) 6 SCC 651 : (2017) 1 SCC 487 (supra) and Raunaq International Ltd. v. I.V.R. Construction Ltd. and Ors. (1999) 1 SCC 492. 86. In Michigan Rubber (India) Limited v. State of Karnataka and Ors. (2012) 8 SCC 216 after referring to Tata Cellular and Raunaq International Limited (supra), the Court inter alia held as follows: 35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the Appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. 87. In Raunaq International Ltd. v. I.V.R. Construction Ltd. and Ors. (1999) 1 SCC 492 the case involved award of contract for the purpose of Thermal Power Station. In fact, the Appeals in this Court were maintained against the grant of an interim order against the Appellant to whom the contracts stood awarded. The case also involved relaxation of the criteria which was based on valid principles it was found. It was further found that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its joints decides to award a contract, to hold up the matter or to interfere with the same should be accompanied by a careful consideration of the harm to public interest. We do not go on to say that consideration of public interest should not at all enter the mind of the court when it deals with a case involving repudiation of a claim under a contract or for that matter in the termination of the contract. However, there is a qualitative difference in the latter categories of cases. Once the State enters into the contract, rights are created. If the case is brought to the constitutional court and it is invited to interfere with State action on the score that its action is palpably arbitrary, if the action is so found then an appeal to public interest must be viewed depending on the facts of each case. If the aspect of public interest flows entirely on the basis that the rates embodied in the contract which is arbitrarily terminated has with the passage of time become less appealing to the State or that because of the free play of market forces or other developments, there is a fall in the rate of price of the services or goods then this cannot become determinative of the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSIONING In case of Solar Project of capacity up to 50 MW, commissioning of plant shall be within 12 months from the date of financial closure subject to Force Majeure. In case of Solar Project of capacity beyond 50 MW and up to 100 MW, commissioning of plant shall be within 15 months from the date of financial closure subject to Force Majeure For capacity beyond 100 MW, commissioning period shall be within 18 months from the date of financial closure subject to Force Majeure.. In case of failure to achieve this milestone, provision of PPA as mentioned below shall apply: MPPMCL shall encash the CPG in the following manner for the capacity not commissioned, subject to Force Majeure: a) Delay from 0-3 months - 1% per week. b) Delay from 3-6 months - 2% per week for the period exceeding 3 months, apart from (a) above.. c) Delay of more than 6 months - 3% per week for the period exceeding 6 months, apart from (a) and (b) above. Part Commissioning: In case of Solar PV Projects, Part commissioning of the Project shall be accepted by MPPMCL subject to the condition that the minimum capacity for acceptance of part commissioning shall be 5 MW. Or in multiple of 5 MW COD means the commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying power from outside of MP State shall require to obtain long term open access permission as per relevant Regulations of central and state regulators, as the case may be, from the state or regional load dispatch center and/or the state/central transmission utilities. 93. Article 4 deals with System Operations. Article 4.2 deals with system operation and scheduling. We may notice Articles 4.2.1 and 4.2.4. 4.2.1. The State Load Despatch Center shall be the Nodal Agency if the project is located in MP, for system operation, power accounting, scheduling, etc. The foes and charges of SLDC as approved by the MPERC shall be payable by the Seller to the SLDC. In case of the system is located in any other state, the Seller has to follow the Regulations of the particular SLDCIRLDC and the fees and charges shall be payable by the seller accordingly. 4.2.4. SLDCs/Control Centers of the States/UTs/DVC, in which the solar power plant is located, shall provide the 15-minute block-wise data of Schedule and actual generation from Solar Grid Connected Power Plant as recorded in the Energy Meters to the concerned RLDC and NLDC on a weekly basis as per the requirement of SLDCIRLDC/NLDC. All the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has successfully completed the testing of the Plant in accordance with the manufacturer's recommendations and the Seller has obtained and provided to the STU/CTU/Transco/Discom Certificates from the Electrical Inspectorate of GoMP or any other state government authorised agency, and the STU/Transco/Discom's officer as may be designated; in case project is located in MP. In case project is located outside MP, similar certificates be obtained from the concern authority of respective state. b) The Seller has delivered to the Transco/Discom a list of the Plant's equipment, showing the make, model, serial number and certified the installed capacity of the Plant; c) The Plant has achieved initial synchronization with the Transco/Discom's/STU/CTU Grid System and has demonstrated the reliability of its communications systems and communications with the STU/CTU/Transco/Discom; d) The Seller has operated the Plant without experiencing any abnormal or unsafe operating conditions on any interconnected system; e) The Seller shall also have notified the MPPMCL/Transco/Discom/STU/CTU no later than 30 days prior to the Commercial Operations Date that all the Conditions Subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. It reads as follows: 9.7. MPPMCL commits to buy power, as indicated in Article Error! Reference source not found (sic). of PPA, from Seller at Rs. 5.051 per kWh for a period of 25 years from COD. In case MPPMCL refuses or is unable to buy the said power, fully or partially, or there is an event of default as per Clause 9.5 of PPA leading to termination of the PPA, the seller would be free to sell the said power to a Third Party at any rate which will be decided between the Seller and the said Third Party and such sale would be governed by the following principles: (Emphasis supplied) The principles are set out providing for two cases. 98. Article 11.6.3 deals with Change in Law. Article 13 deals with Jurisdiction and Dispute Resolution. Article 13.2.1 reads as follows: 13.2.1. Either Party is entitled to raise any claim, dispute or difference of whatever nature arising under, out of or in connection with this Agreement ( Dispute ) by giving a written notice (Dispute Notice) to the other Party, which shall contain: a description of the Dispute; the grounds for such Dispute; and all written material in support of its claim 13.2.2. The other Party shall, within thirty (30) days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further found that another inspection was done on 19.04.2018 after nine months of the notice of commissioning and the CEIG approval. It is despite the same that the impugned order has been passed. Still further the High court proceeds to find that it is undisputedly established that both the milestones of the project were completed whereas only some of the invertors were stolen for which an FIR was also lodged. It is again found that it is not in dispute that the aforesaid parts have been replaced by the Respondent. Support was drawn from the case of Renew Energy and the courts discretion to interfere in the matter was reiterated. The decision was found to be arbitrary. The court directed the Respondent to file necessary application for statutory sanction for operation of the unit and the Appellant was to decide on the application. To complete the narrative a review petition, was filed by the Appellant. The Appellant sought to project the aspect of fraud. The fraud consisted of the act of the Respondent relying on unique/distinctive serial numbers of the invertors in regard to a number of invertors which were found to be common/duplicate. In other words, the case of the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been observed, whereas, in the case of Renew Clean Energy, they were ready to commission by the scheduled commissioning date. The timeline Under Article 9.1 was not conformed to. After referring to the Order of the High Court, it was found that, with reference to Article 2.5.1(d) and Article 9.1 of the PPA, the PPA was terminated. 104. Let us demystify the case for termination. Apart from non-fulfilment of the condition subsequent, apparently, in tune with the liberty granted by the High Court, the Appellant has set out a case that the last date of commencement of supply was 18.09.2017, and even as on 19.04.2018, the Respondent was not ready for commissioning of the project. With reference to Articles 5.1, 5.2 and 5.3 of the PPA, which consisted of the commercial operation date, pre-commercial operation and notice of commercial operation, it is stated that the Respondent has not intimated regarding the Schedule of commissioning, till the date of the Termination Notice. A distinction is sought to be drawn between Renew Clean Energy and the Respondent, in that the case of the first Respondent, even the first Respondent was not ready to commission the project within the stipulated ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all respects from the side of the Respondent but on account of theft of a very small number of equipment, highlighted by the Appellant in its Inspection Report, the first Respondent had, in the meanwhile ensured to get these miscellaneous equipments and parts reinstalled and the project was complete in all respects as on that date. As far as the theft is concerned, the first Respondent had lodged two FIRs through its EPC Contractor well before the inspection carried out on 19.04.2018. THE ASPECT OF DISPUTED QUESTIONS OF FACTS 106. What are the disputed questions of facts? The most important disputed question of fact is as to whether the first Respondent was, in fact, ready to commission the project by the end of the peremptory date, which was fixed as a period of twenty-four months from the date of the agreement. On the one hand, the Appellant would contend that first Respondent was not ready to commission the project. This is for the reason that in the 9th and the 10th Blocks, certain string invertors were found missing. On the other hand, the case of the Respondent is based on the Report of the CEIG, which would show that the Respondent was ready to commission the project. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 9 with its sub-divisions to provide for events of default and remedies. Under Article 9, the sub-Articles provide for seller's event of default and the Appellant's Event of default. Reading Article 9.1 with Article 9.4 and, more particularly, Article 9.4 (a), which alone is relevant, we understand the following to be what is contemplated by the parties. Article 9.1 begins with the words 'in case of default'. The default in the case of seller's event of default would be the default, which is the subject matter of the termination. Here, we can safely conclude that the seller's event of default, which is apposite, is the failure to commence the supply of power to the Appellant at the contracted capacity, relevant to the scheduled commissioning date by the end of twenty-four months. The words 'scheduled commissioning date', have been defined in the PPA itself, to mean, for solar project of capacity 50MW as per the quantum indicated in LOI, the commissioning period allowed shall be nineteen months from the date of signing of the PPA. The period of twenty-four months must be reckoned from the date of the PPA and, so understood, since the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity from date of PPA) + 3 months (default notice period) + 7 days (termination notice period), from the signing of the PPA have already being exhausted. 22. Whereas, in light of show cause notice issued vide this office letter No. 108 dated 22.02.2017 and liberty granted by Hon'ble Court to MPPMCL, in its order dated 20.06.2018 for issuing fresh order in terms of PPA dated 18.09.2015 to you, in accordance with law, it is evident that you have failed to fulfil your contractual obligation as per PPA executed with you on 18.09.2015. Thus, the PPA qualifies for termination. 23. Therefore, in line and in compliance to the Hon'ble High Court judgment dated 20.06.2018 and pursuant to the provision Under Article-2.5.1(d) along with the consideration of the timeline stipulated in Article 9.1 of the PPA and show cause notice dated 22.02.2017, the PPA signed on 18 Sept. 2015, between Mis Sky Power Southeast Solar India Pvt. Ltd. New -Delhi, (SPV of Parent Company Sky power Southeast Asia Holding 2 Ltd.) and MPPMCL, for supply of Power from the proposed, 50MW. Solar PY plant located at Village-Bedhaya District - Khandwa and subsequently location changed to Village Chhibel, Teb-Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Transco vide letter No.04- 02/PSP-147-LI 1.2/95 7, Jabalpur, dated 19.10.16, which is generally found in order Loan sanction letter of M/s L T finance vide letter No.LTF/89 2567/16- 17 dated 29.08.16, L T INFRA vide letter No. S07201A0/ 16-17, dated 29.08.16, copy of facility Agreement and affecting compliances documents as stated in above letters are require to be submitted 99.06 64.94 HEET, UNDER REGISTERED SALE DEED 34.12 HEET under unregistered sale deed for 12 months only from Sterling Wilson to sky power Out of 34.12 Heet only 7.28 is undue Registered sale deed to Sterling, balance is undue Sauda Raseed to Sterling Wilson on Rs.500/- Stamp Paper. D.G.M. (Commercial-3) R.O., MPPMCL, Bhopal Chief General Manager (Commercial): Block No. 11, Shakti Bhawan, Rampur, Jabalpur (MP) 482008 Tel: 0761-2661245, 2702404, Fax: 0761-2661245, email: [email protected] It needs to be mentioned here that as per provisions of amended Clause 2.1(f) of the PPA pertaining to acquisition of land for the project, Seller shall be required to furnish the following - documentary evidence: Ownership or lease hold right (for at least 30 years) or right to use permission (for revenue land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault notice, could have been issued by the Respondent Under Article 9.1. Apparently, what has happened is the Appellant has combined the default alleged with reference to Article 2.5.1(d), to which, undoubtedly, notice dated 22.02.2017, could be said to be related and has projected the said show-cause notice as the default notice within the meaning of Article 9.1 read with Article 9.4. Article 9.1 contemplates a default, the issuance of default notice and, most importantly, giving a period of three months for the seller (first Respondent) to set right things. It is if the seller does not remedy the matter within three months, that the second notice, which is essentially an Order of termination of the PPA, can be issued. A perusal of the notice dated 22.02.2017 does not make any reference to the seller's event of default contemplated in Article 9.4 (a). The reasons are not far to seek. For the reasons, which we have indicated hereinbefore, the notice could not have been issued based on there being a seller's default within the meaning of Article 9.4 (a) on 22.02.2017. We reiterate that as on 22.02.2017, the seller's event of default Under Article 9.4 (a), could not exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, only permitted the Appellants to invoke the PPA with respect to the lack of commissioning, and moreover, in accordance with law. It becomes clear as day light that since by the date of the Judgment, i.e., 20.06.2018, the period of twenty-four months from the date of the agreement, had expired, and if, in terms of the liberty granted by the High Court, the Appellant was to lawfully terminate the contract, it could not have acted in breach of the mandate of the PPA, which, in fact, the High Court had specifically directed Appellant to comply with. In other words, though nearly nine months had gone by from 18.09.2017, when the High Court pronounced judgment on 20.06.2018, if the Appellant wanted to terminate the agreement, at least under the contract, the Appellant was obliged to issue the default notice. As we have noticed, the Appellant was perhaps persuaded to issue the impugned termination notice on the basis of the earlier notice dated 22.02.2017 as it felt that it was entitled to ask the Court to revisit the issue relating to the non-fulfilment of the condition subsequent as well. The Appellant has, in fact, proceeded in the notice of termination that the three months peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination of the contract dated 11.08.2017 clearly was illegal though it was found later and set aside by judgment dated 20.06.2018. Thus, we cannot also brush aside the complaint of the first Respondent that this is a case where it stood prevented from commencing supply within the meaning of Article 9.4(a). The fact of termination by order dated 11.08.2017 and its invalidation by the High court on 20.06.2018 are again not matters of dispute. 115. There is another aspect to the matter. The termination of a contract, undoubtedly, results in the intrusion into and deprivation of valuable rights, which are vouchsafed to the awardee of the contract. It could be argued that dehors a contractual provision, unless it be that the contract peremptorily provides for the termination of the contract expressly without service of the notice on the occurrence of certain stipulated events, principles of natural justice may not be out of place and under the Theory of Fair State Action, in consonance with Article 14, an opportunity to the awardee as to why the contract should not be terminated, may be just. In this regard, we may recapitulate what this Court in State of U.P. v. Sudhir Kumar Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other forum to seek whatever relief it may be entitled to. If on the other hand, complying with Article 9.1 was, indeed, meaningful and the default (Article 9.4 (a) could have been removed as contemplated Under Article 9.1, then, undoubtedly, it may constitute arbitrariness to deprive the first Respondent of the benefit of a default notice. We cannot be totally unmindful of the fact that such a Clause like Article 9.1 was inserted with the understanding, that, in such large complex projects, involving large sums of money being invested, and furthermore, the successful completion of the project being intended to augment the production of energy, in this case solar energy, there was an element of public interest also involved in not allowing the curtains to be rung down by an abrupt termination without affording an opportunity to the seller to remove the default. Therefore, we would also examine whether there is a case where, it could be said that the case of the first Respondent is totally bereft of bonafides or merit. 117. In this case, on 04.07.2017, the first Respondent addressed what it purports to be the notice of commercial operations within the meaning of Article 5.3. It rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been installed at SLDC-Indore and at the Project. Even, IP scheme for both the routers has been allocated by the SLDC, Jabalpur (through letter No. SE/LD.E T/06, dated 3rd April, 2017). CEIG Certification-We have initiated the process to obtain the CEIG certification, and the CEIG certification is expected by 20th July, 2017. The CEIG certificate shall be produced to MPPTCL as an annexure to obtain the commissioning certificate, as required under the PPA. Considering above facts on project progress we hereby request your kind needful and depute necessary officials and personnels to our site to undertake necessary inspection and testing and help us in the target commissioning dated of 31st July, 2017. In the event, you require any further information from us, we will be happy to provide the same upon your request. (Emphasis supplied) 118. No doubt, Article 5.3 contemplates a notice whereunder the seller specifies that the plant was constructed as per the agreement and it was ready to deliver the solar power in accordance with its terms. Secondly, it must be indicated that all permissions and approvals required for the plant to sell solar power at the rates and terms had been obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, it appears to be dated 09.08.2017. It could no doubt be found that what Article 5.3 notice contemplates is a state of accomplishment of conditions when the notice is sent. However, the notice dated 04.07.2017 promised completion by 31.07.2017. Article 5.3 provides for waiver. If a default notice Under Article 9.1, was given on 07.07.2018, in place of the termination notice, then, with the state of completion attained and, if anything further remained, doing that also, and issuing the notice, if insisted, the defect could have been removed. 120. In this regard, we may notice a significant distinction between Article 2.5.1(d) which was used as the sheet anchor by the Appellant to contend that in the event of non-achievement of condition subsequent termination was mandatory. Article 2.5.1(d) is as follows: d) In case of delay of more than 9 months, MPPMCL shall terminate PPA and release balance amount of CPG. (Emphasis supplied) 121. When it comes to Article 9.1, we have noticed that it contemplates the giving of default notice when an event of default takes place. The seller is given three months' time to set right things fully. Thereafter, Article 9.1 provides that in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, (it was done on 19.04.2018), the Appellant's team also substantially endorsed the Report of the CEIG. However, it was found that a certain number of string inverters inter alia, were not found at many locations in Block Nos. 9 and 10. It was found as follows: 4. Any other specified observation in respect of installation of solar P.V. plant In block 9 and 10, string inverters were not found at many location but those location had solar panels installed interconnections of PV panel (cabling) string work at there location are not found connected with each other Further, at some location the cable and earthing work is observed incomplete suspended. 125. It is here that we must notice the case of the first Respondent to be that though the equipment was installed as certified in the Report of the CEIG and what remained was formal connectivity to the grid upon which commissioning certificate would be issued, the final event remained on account of non-issuance of connectivity code for connection to the grid. It is while so, when the challenge against the first termination notice was under consideration and there was demobilisation of manpower, certain string inverters were stolen, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remained of Respondent No. 5. It could have been pointed out as part of aspect of default if it was so understood. We have also found that the joint inspection of the Respondent No. 4 had found on 24.08.2017 that the line may be charged. What we can find is only that this is not a case where the first Respondent could be said to be in a position where it could be said that it would be unable to comply with the terms of the default notice if it was warranted. In other words, if as on 07.07.2018, instead of issuing a termination notice, if notice had been given within the meaning of Article 9.1, it is quite possible that the first Respondent would have remedied the defect as alleged. We have also noted that even in 2017, no notice was given Under Article 9.1 and even the contract was terminated illegally as found by the High Court by notice dated 11.08.2017. The whole idea behind the default notice Under Article 9.1 was lost sight of by the Appellant. We have unravelled also, the impact of the use of the word 'may' in Article 9.1. The action of the Appellant in departing from unambiguous regime of the PPA without any justification would make its actions arbitrary. 127. The ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it the project site for reissuing/revalidating the approval for commissioning the project, since the validity of the first report dated 09.08.2017 had lapsed. It is specifically contended in the reply to the Review Petition that due to non-cooperation of the Appellant on the excuse of Covid-19, the CEIG inspection could not be undertaken. This stand is reiterated, in fact, in the counter affidavit in this Court also. It would appear that the first Respondent had deposited the inspection fee of Rs. 66,14,000/- which is said to be equipment based meaning thereby that it was paid reckoning all the inverters. It would appear that no inspection has been carried by the CEIG based on the request for revisit. As far as this aspect is concerned, apart from the fact that the CEIG has conducted an inspection and given a Report on 09.08.2017, certifying the readiness of the Unit of the first Respondent, the first Respondent has produced documents like invoices from overseas sellers, bill of entry with the Customs Department and certain lorry receipts. The alleged fraud is the common number found in 186 inverters in the Report of the CEIG. A physical inspection by the CEIG, which was necessitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 had rejected both the option of 'third Party Sale' or, the attempts to reduce tariff specified in Article 9.7 of the PPA, which was discovered through a transparent competitive bidding process. The very fact that the Petitioner had proposed to the Respondent No. 1 to explore sale of power from the Project to third parties is proof enough that the Project was complete and ready for commissioning. In this regard, we may notice paragraph 4 of the minutes of the meeting dated 06.02.2020 which reads as follows: 4. MPPMCL further stated that, as the commissioning of the project has been substantially delayed and, in the meantime solar binding tariffs have been considerable reduced up to Rs. 2.61/Unit for which MPPMCL has already entered into PPAs, therefore MPPMCL offered M/s. Sky Power to supply power at reduced tariff of the project was the lowest in the bid and their investment was made during the FY 2016-2017 therefore, supplying power to MPPMCL at reduced tariff will not be viable hence not possible. We would think that essentially the Appellant's attempt was to secure a reduction in the rate. The rate of the first Respondent was found to be the lowest aft ..... 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