9911796707
TMI Blog2024 (8) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... I of the Contract Act, specifically Section 32. In such cases, the doctrine of frustration in Section 56 does not apply and the court must interpret the force majeure clause contained in the contract. It held that a force majeure clause must be narrowly construed. The entire dispute before the KERC and the APTEL revolves on a question of fact whether the respondents were negligent or not diligent in securing approvals and hence, is the delay in commissioning attributable to them. The KERC s appreciation of the evidence has led it to the conclusion that the delay in commissioning was due to the respondents delay in making the applications, despite the approval of the PPA. However, the APTEL has taken note of certain additional factors affecting the time taken to secure the approvals that were not considered by the KERC. These include the time taken by the government to provide the PTCL that is required for approval of land conversion, and the delay caused by the authority in evacuation approval - there is no error in the APTEL s approach, and it is reasonable in its reappreciation of evidence. The delay is not attributable to the respondents and that the force majeure clause is appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction is a product not only of the statutory preconditions, but also a necessary measure to enable freedom to statutory regulator and Tribunal to develop sectorial laws through a principled and consistent approach. 2. Facts: Since the facts and the PPAs are similar in all three appeals, we will deal with the facts in the lead Civil Appeal No. 7595/2021, where the most relevant facts are as follows: 2.1 State of Karnataka introduced a policy dated 26.08.2014 to identify and promote solar energy projects by land-owning farmers. These solar power plants of 1-3 MW capacity would generate and sell power to the State Electricity (Distribution) Supply Companies5 at the tariff determined by the Karnataka Electricity Regulatory Commission6. 2.2 Respondent no. 2 is one of the many farmers who applied under the policy and is recognised as a solar power developer7 under the policy. Respondent No.1 is a special purpose vehicle to undertake the solar power project in Chitradurga district in Karnataka. 2.3 Pursuant to a Letter of Award dated 28.08.2015, the appellant entered into a PPA with respondent no. 2 on 29.08.2015. This PPA was approved by the KERC on 07.09.2015. The relevant clauses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges only on 27.12.2016, after which it was allowed on 07.01.2017. Hence, the delay in conversion of land use was attributed to the respondent. Third, the delay in disbursement of loan also did not delay the implementation as the respondent had commenced implementation from its own funds. Fourth, the respondent applied for the evacuation approval only on 25.02.2016, and the regular approval was finally granted on 22.08.2016. Hence, the respondent delayed the application and cannot attribute the same to the authorities. Similarly, the KERC also rejected delay on other grounds such as time taken for delivery of the breaker, and inspection of the project and grant of safety approval. 3.1 It also found that the respondents had not submitted a notice as contemplated under Article 8.3(b)(i) and hence, they are not entitled to invoke force majeure and claim an extension of time under Article 2.5. Since the KERC found that the delay in securing approvals and the consequent delay in commissioning was attributable to the respondents, it imposed liquidated damages under Articles 2.2 and 2.5.7 of the PPA. 3.2 Lastly, the KERC reduced the tariff payable to the respondent to Rs. 4.36 per unit fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Technical Committee constituted by it had scrutinised all relevant documents. Hence, the appellant could not take the stance that the respondents were not diligent. Even before the KERC, the appellant had not objected to the grounds raised by the respondents, and hence they could not take a contrary stance at this stage. 4.5 Considering the delay in obtaining the PTCL certificate and approval for land conversion, the approval for evacuation, and construction of the bay, the APTEL found that the respondents had taken all necessary care and caution and acted with due diligence. Hence, it held that the respondents could not be blamed for the delay as the time taken by government authorities to provide approvals was not within their control and they had taken all the measures that they could. Consequently, the APTEL found that the respondents are entitled to the benefit of the force majeure clause and an extension of time, as was already approved by the appellant. The respondents were able to commission the project on 24.08.2017, which falls within the extended period of 24 months from 07.09.2015. 4.6 With regard to the reduction in tariff by the KERC, APTEL considered that the gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll requirements. He therefore submits that the delay is attributable to the respondents and hence, as per Article 8.3(b)(iv), they cannot claim benefit of force majeure. Consequently, the tariff must be reduced as per Article 5.1 as a higher tariff increases the burden on consumers and hence, affects public interest. 5.3 Mr. Das supplemented these submissions by arguing that in Civil Appeal No. 6386 of 2021, the respondents therein had also raised the ground of demonetisation as a reason for delay in commissioning. He submits that Article 8.3 of the PPA does not cover such a ground as a force majeure event. 6. Mr. Patil, appearing for the respondents, has submitted that there are three primary factors, among several others, that caused the delay (i) time taken for converting the land; (ii) time taken for the KERC to approve the PPA; and (iii) time taken for the evacuation approval. He submits that these concerns have been raised by not only the respondents in the present case but in several other cases. Due to the extent to which SPDs were facing these issues, the government directed DISCOMs to set up committees to look into the same and consider the facts of each case individually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 212. It held that this phrase is open textured and must be interpreted by looking at the words in their context13. The relevant portions are extracted: 17. The jurisdiction of the Supreme Court under Section 15Z to consider any question of law arising from the orders of the Tribunal should therefore be seen in the context of the powers and jurisdiction of the Tribunal under Sections 15K, 15L, 15M, 15T, 15U and 15Y of the Act. It is in the functioning of the Tribunal to re-examine all questions of fact at the appellate stage while exercising jurisdiction under Section 15T of the Act. In Clariant and National Securities Depository, this Court had an occasion to examine the jurisdiction of the Tribunal and explain that the Tribunal has wide powers. Being a permanent body, apart from acting as an appellate Tribunal on fact, the Tribunal routinely interprets the Act, Rules and Regulations made thereunder and evolves a legal regime, systematically developed over a period of time. The advantage and benefit of this process is consistency and structural evolution of the sectorial laws. 18. It is in the above-referred context that the Supreme Court while exercising appellate jurisdiction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional considerations which the Supreme Court will keep in mind while exercising its jurisdiction under Section 15Z. 7.3 The above understanding of question of law as a precondition to this Court s exercise of appellate jurisdiction under regulatory statutes is extremely pertinent to the present matter. The Act envisages the establishment of State Electricity Regulatory Commissions and the Central Electricity Regulatory Commission as expert and specialised bodies that discharge advisory, regulatory, and adjudicatory functions.14 It has established the APTEL as an appellate body to hear appeals against orders of the adjudicating officers or the Appropriate Commission.15 Hence, while delineating the contours of this Court s interference in appeal under Section 125, we must be mindful and measured so as to enable a systematic and coherent development of electricity law by the Commissions and the APTEL. 7.4 Having examined the scope of this Court s exercise of appellate jurisdiction when there is a question of law under Section 15Z of the SEBI Act, the position that emerges in this case, it is a little more restrictive as the requirement under Section 125 is not merely a question of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that the lower of Rs. 8.40 per unit and the varied tariff applicable as on the date of commercial operation will apply. A plain reading of Article 5.1 makes it clear that the lower tariff will not apply if there is an extension of time under Article 2.5. 9.3 The relevant clauses of the PPA are reproduced for ready reference: Article 2.1: Conditions Precedent The obligations of BESCOM and the SPD under this Agreement are conditional upon the occurrence of the following in full within 365 days from the effective date. 2.1.1 (i) The SPD shall obtain all permits, clearances and approvals (whether Statutory or otherwise) as required to execute and operate the Protect hereinafter referred to as Approvals ): (ii) The Conditions Precedent required to be satisfied by the SPD shall be deemed to have been fulfilled when the SPD shall submit: a. The DPR to BESCOM and achieve financial closure and provide a certificate to BESCOM from the lead banker to this effect; b. All Consents, Clearances and Permits required for supply of power to BESCOM as per the terms of this Agreement; and c. Power evacuation approval from Karnataka Power Transmission Company Limited or BESCOM, as the case maybe. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of supply of power to BESCOMs. Subject to the other provisions of this agreement, if the SPD is unable to commence supply of power to BESCOM by the scheduled commissioning date, the SPD shall pay to BESCOM, liquidated damages for the delay in such commencement of supply of power as follows: (a) For the delay up to one month-amount equivalent to 20% of the performance security. (b) For the delay of more than one month up to three months-amount equivalent to 40% of the performance security. (c) For the delay of more than three months up to six months-amount equivalent to 100% of the performance security. For avoidance of doubt, in the event of failure to pay the above mentioned damages by the SPD, the BESCOM entitled to encash the performance Security. Article 5: Rates and Charges: 5.1 Tariff payable: The SPD shall be entitled to receive the Tariff of Rs. 8.40 per kwh based on the KERC tariff order S/03/1 dated 10.10.2013 in respect of SPD's Solar PV projects in terms of this agreement for the period between COD and the Expiry Date. However, subject to Clause 2.5, if there is a delay in commissioning of the Project beyond the Scheduled Commissioning Date and during such period su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it shall give the other Party written notice to that effect; (iv) The Force Majeure Event was not caused by the non performing Party's negligent or intentional acts, errors or omissions, or by its negligence/failure to comply with any material Law, or by any material breach or default under this Agreement; (v) In no event shall a Force Majeure Event excuse the obligations of a Party that are required to be completely performed prior to the occurrence of a Force Majeure Event. 10. Re: Applicability of the force majeure clause: The primary issue for our consideration is whether the delay in this case is due to a force majeure event as defined under Article 8.3, and consequently whether the respondents were entitled to an extension of time under Article 2.5. If the answer to these questions is affirmative, the tariff cannot be lowered under Article 5.1 and liquidated damages cannot be imposed under Articles 2.2 and 2.5.7. 10.1 The law on force majeure, specifically in the context of PPAs, has been comprehensively dealt with by this Court in Energy Watchdog v. Central Electricity Regulatory Commission18. The Court delved into contractual jurisprudence on force majeure clauses and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure the approvals that were not considered by the KERC. These include the time taken by the government to provide the PTCL that is required for approval of land conversion, and the delay caused by the authority in evacuation approval. Considering these additional factors, the APTEL has reappreciated the evidence to find that the delay was not attributable to the respondents but to the government bodies and relevant authorities. We find that there is no error in the APTEL s approach, and it is reasonable in its reappreciation of evidence. 10.5 Further, the APTEL also correctly took note of the fact that a large number of SPDs have raised similar issues, and the government has responded to the same by requiring DISCOMs to set-up committees to look into these cases. The large number of cases that raise similar grounds and the government s response show that the delay was not faced by the respondents alone, and hence cannot be entirely blamed on them. The government has itself acknowledged that the land use conversion process is a long and arduous one, which led it to deem conversion for solar power projects under the present scheme. However, due to lapses in the implementation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge to the respondents is unjustified since the same was not pleaded. As we have already held, the APTEL rightly restored the tariff of Rs. 8.4 per unit and directed the appellant to pay the difference amount. The direction to pay the late payment surcharge on this amount is explicitly rooted in the PPA, and hence, is in furtherance of the intention of the parties. There is no reason to set aside the same. 15. With the above reasons, we dismiss the present appeals. 16. No order as to costs. FOOTNOTE 1 Hereinafter SCD . 2 Hereinafter PPA . 3 Hereinafter APTEL . 4 Hereinafter the Act . 5 Hereinafter DISCOMs . 6 Hereinafter KERC . 7 Hereinafter SPD . 8 In Civil Appeal No. 3958/2020; Civil Appeal No. 897/2022; Civil Appeal No. 5134/2021; Civil Appeal Diary Nos. 32980/2022, 33053/2022 and 33572/2022. 9 2020 SCC OnLine APTEL 75. 10 In Civil Appeal No. 3958/2020. 11 2022 SCC OnLine SC 361. 12 Section 15Z of the SEBI Act, 1992 reads: 15Z. Appeal to Supreme Court.-- Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
