SEI Diamond Vs KERC (APTEL)

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Judgment in Appeal No.

374 of 2019

THE APPELLATE TRIBUNAL FOR ELECTRICITY


AT NEW DELHI

(APPELLATE JURISDICTION)

APPEAL NO. 374 OF 2019 &


IA NO. 1938 OF 2019 and IA NOS. 391 & 675 OF 2020

Dated: 14th July, 2021

Present: Hon’ble Mrs. Justice Manjula Chellur, Chairperson


Hon’ble Mr. Ravindra Kumar Verma, Technical Member

In the matter of:-

1 SEI Diamond Private Limited


Menon Eternity, 10th Floor, New #165 (Old #110)
St. Mary’s Road, Alwarpet
Chennai 600018

2 SEI Venus Private Limited


Menon Eternity, 10th Floor, New #165 (Old #110)
St. Mary’s Road, Alwarpet
Chennai 600018 …Appellants
Versus

1. Karnataka Electricity Regulatory Commission


Through its Secretary
912, 6&7thFloor, Mahalakshmi Chambers,
Mahatma Gandhi Road,
Bengaluru, Karnataka – 560001

2. Bangalore Electricity Supply Company Limited,


Through its Managing Director,
K.R. Circle, Bangalore – 560001

3. Hubli Electricity Supply Company Limited,


Through its Managing Director,
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Judgment in Appeal No. 374 of 2019

P.B. Road, Navanagar,


Hubballi-580025
4. Karnataka Power Transmission Corporation Limited,
Through its Managing Director
Cauvery Bhavan,
K.G. Road,
Bengaluru – 560009 ... Respondents

Counsel for the Appellant(s) : Mr. Sajan Pooovayya Sr. Adv.


: Mr. Shri Venkatesh
: Ms. Nishtha Kumar
: Mr. Somesh Srivastava
: Mr. Vikas Maini
: Mr. SuhaelButtan
: Mr. Krishnesh Bapat
: Ms. Rivanta Solanki
: Ms. LasyaPamidi
for Appellant-1 & 2

Counsel for the Respondent(s) : Mr. S. Sriranga Subbanna


: Mr. Balaji Srinivasan
: Ms. Medha M. Puranik
: Ms. Aishwarya Choudhary
: Ms. Sumana Naganand
: Ms. Anini Debbarman
: Ms. Garima Jain
: Ms. Pallavi Sengupta for R-2 & 4

ORDER

(PER HON’BLE MRS. JUSTICE MANJULA CHELLUR, CHAIRPERSON)

This Appeal is preferred by the Appellants – M/s SEI Diamond

Private Limited and SEI Venus Pvt. Ltd. (hereinafter referred to as

“Appellants”) challenging the legality, validity and propriety of the order

dated 26.09.2019 in O.P. No. 213 of 2017 passed by Karnataka Electricity


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Judgment in Appeal No. 374 of 2019

Regulatory Commission (hereinafter referred to as

“KERC/Commission/Respondent No.1”), whereby the Respondent

Commission erroneously held that the non-availability of the evacuation

system of the Karnataka Power Transmission Corporation Limited-

Respondent No.4 on or after the Scheduled Commissioning Date

(“SCOD”) cannot be treated as a Force Majeure event in commissioning

the Appellants’ Power Project, and accordingly reduced the tariff

applicable from Rs. 6.92 per unit to Rs. 6.83/- per unit for the energy

supplied under the PPA from the date of commissioning of the Project.

2. Facts which led to filing of Appeal in brief are as under:

Appellants are Solar Power Developers having generating capacity

of 30 MW each. Appellants have established their Solar Projects in

Nelagettanahatty Village, Challakere Taluk, Chitradurga District,

Karanataka. Respondent No.2-Bangalore Electricity Supply Company

Limited (“BESCOM/Respondent No.2”) is the distribution licensee

operating in the State of Karnataka and is a Government of Karnataka

undertaking. Respondent No.3-Hubli Electricity Supply Company Limited

(“HESCOM/Respondent No.3”) is also one of the distribution licensees

operating in the State of Karnataka and is a Government of Karnataka

undertaking. Respondent No.4-Karnataka Power Transmission Company

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Judgment in Appeal No. 374 of 2019

Limited (“KPTCL/ Respondent No. 4”) is the Intra State Transmission

Licensee in the State of Karnataka.

3. On 30.05.2014, the Karnataka Renewable Energy Department Ltd.

(“KREDL”), on behalf of the Government of Karnataka invited proposals

for undertaking development of 500 MW of Solar Power Energy in the

State of Karnataka from private parties vide its Request for Proposal

(“RfP”). After receiving the Proposals from certain bidders, including M/s.

SunEdison Energy Holding (Singapore) Pvt. Ltd., the KREDL on

19.11.2014 accepted five different bids of SunEdison Energy Holding

(Singapore) Pvt. Ltd., for development of five Solar PV Power Projects of

30 MW capacity each in Chellakere Taluk, Chitradurga District. Thereafter,

separate Letters of Award (“LoA”) dated 19.11.2014 were issued to M/s.

SunEdison Energy Holding (Singapore) Pvt. Ltd for five Solar PV Power

Projects of 30 MW each. Subsequently, in terms of RfP, M/s SunEdison

Energy Holding (Singapore) Pvt. Ltd. promoted and incorporated five

Special Purpose Vehicles (“SPVs”), namely SEI Aditi Power Private

Limited, SEI Bheem Private Limited, SEI Suryashakti Power Private

Limited, SEI Diamond Private Limited and SEI Venus Private Limited.

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Judgment in Appeal No. 374 of 2019

4. M/s. SunEdison Energy Holding (Singapore) Pvt. Ltd vide its letter

dated 10.12.2014 requested the Distribution Licensees concerned to

accept the SPVs as the Developers of the different Solar Power Projects

and also requested to execute the PPAs with them. Meanwhile, on

08.12.2014, the Appellants submitted Performance Bank Guarantees

(“PBGs”) to the tune of Rs. 3 crores (Three Crore Only) each for

performance of their obligations under their respective PPA’s and the said

PBGs were to be kept in force till the commissioning of the Project.

5. On 18.12.2014, Respondent Nos.2 & 3 – BESCOM & HESCOM

executed a PPA with the Appellants for development of Solar Power

Projects in the State of Karnataka having the capacity of 30 MW each at a

tariff of Rs. 6.92 and Rs. 6.83 per unit, respectively. Scheduled

Commissioning Date was 17.06.2016, i.e. 18 months from the Effective

date. The PPA was approved by the Respondent-Commission on

04.05.2015.

6. On 28.05.2015, Respondent No. 4 granted tentative evacuation

approval, and clause 12 of the said approval clearly mentioned that the

proposed evacuation of power will commence only after commissioning of

proposed 220 kV DC line from the 400 kV PGCIL Hiriyur sub-station to the

220 kV Thallakku sub-station. However, it did not specify the time within
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Judgment in Appeal No. 374 of 2019

which the said proposed 220 kV DC line from the 400 kV PGCIL Hiriyur

sub-station to the 220 kV Thallakku sub-station would be ready.

Thereafter, Respondent No. 4-KPTCL vide its letter dated 10.06.2015,

accorded regular evacuation approval to the Appellants, and Respondent

No. 4 agreed to develop 220 kVDC line from the 400 kV PGCIL Hiriyur

sub-station to the 220 kV Thallakku sub-station. The evacuation approval

was conditional inasmuch as in clause 6 of this regular evacuation

approval it was again clearly specified that the proposed evacuation of

power will commence only after commissioning of proposed sub-station.

However, in the said proposal it was provided that the said proposal will

remain valid upto 17.06.2016 only i.e., the date of SCOD.

7. Apparently, the Appellants were given a common evacuation

approval by Respondent No. 4 from 220kV DC line from the 400 kV PGCIL

Hiriyur sub-station to the 220 kV Thallakku sub-station (for short

“transmission line”) to facilitate interconnectivity of the Appellants’ Project.

However, Respondent No.4’s substation and the associated transmission

lines were imminently delayed due to various reasons like Right of Way

(“RoW”) issues at different locations which were allegedly beyond the

reasonable control of Respondent No. 4 also. Therefore, on 02.03.2016

and 02.05.2016, Respondent Nos. 2& 3 vide their letters extended the

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Judgment in Appeal No. 374 of 2019

SCOD of the Appellants’ projects from 17.06.2016 to 16.09.2016 and

17.09.2016 respectively.

8. On 08.03.2016, vide its letter Respondent No.4 informed that the

Appellant No.1’s Project was withdrawn from the comprehensive

evacuation scheme under its letter dated 10.06.2015 and a fresh tentative

evacuation scheme was approved by Respondent No.4 for them, which

was also conditional like the earlier one.

9. From 17.09.2016 to 09.02.2017, various letters were sent by the

Appellants to Respondent Nos.2 & 3 apprising that the work of

construction of the power plants is almost completed and they are ready to

interconnect their solar power projects to the grid. It was informed that

due to the delay in completion of power evacuation related works of

Respondent No.4-KPTCL, commissioning of their projects would be

delayed. Therefore, in terms of Article 14.3.1(e) of PPA, the Appellants

sought for extension of SCOD on the ground of force majeure events.

10. On 10.01.2017, Respondent No.4 vide its letter issued regular

evacuation approval to the Appellants, which again is a conditional

approval. Respondent No.4 in response to the letters issued by Appellant

on 27.12.2016 and 19.01.2017 informed the Appellants that the works

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Judgment in Appeal No. 374 of 2019

relating to transmission line would likely to be completed by 31.03.2017.

The Appellants were continuously following up with Respondent No. 3 for

the provision of start- up Power and connectivity for evacuating power

from their Power Projects through other available lines.

11. After repeated requests by the Appellants, vide letter dated

24.03.2017 Respondent No. 4 granted alternative evacuation facility and

further granted provisional interconnection approval vide its letter dated

28.03.2017. On that day, the Appellants commissioned the power projects.

12. Admittedly, from the date of achieving COD i.e., from April 2017 the

Appellants raised invoices against Respondent No.2 for the energy

supplied from 28.03.2017 in terms of PPA. Respondent Nos. 2 & 3

requested the Appellants to extend the PBGs and keep them in force

although the same were not required to be kept in force after

commissioning of the Projects. The Appellants approached Respondent

Nos. 2 & 3 to modify the PPA, inter-alia, to reflect the revised SCOD as

28.03.2017. The Appellants had been generating power since the COD as

per PPA subject to evacuation constraints imposed and has been

supplying power to Respondent No.2 & 3.

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Judgment in Appeal No. 374 of 2019

13. Appellants vide various letters from April 2017 to November 2018

requested Respondent Nos.2 & 3 to make payments towards supply of

energy for the aforesaid months. On 24.07.2017 and 01.08.2017,

Respondent Nos.2 & 3 sent letters to the Respondent Commission

requesting for approval of extension of SCOD on the ground of force

majeure, since the delay was solely attributable to Respondent No. 4 in

completing the power evacuation works.

14. Respondent Nos.2 & 3 directed the Appellants to file a Petition

before the Respondent Commission for approval of SCOD as 28.03.2017

vide its letter dated 11.09.2017. Accordingly, on 03.11.2017, the

Appellants filed a Petition being O.P. No. 213 of 2017 before the State

Commission seeking approval of SCOD as 28.03.2017.

15. Thereafter, it is submitted that in spite of repeated requests by the

Appellants, Respondent Nos.2 & 3 did not choose to make any payment

rather informed the Appellants that the payments will not be made until

disposal of the petitions by the State Commission. The Appellants were

asked to maintain the PBG’s in force.

16. On 10.04.2018, Respondent Nos.2 & 3 filed its Statement of

Objections, wherein the Respondent Nos.2 & 3 had clearly admitted that

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Judgment in Appeal No. 374 of 2019

vide its letter dated 24.3.2017 it had recommended the Respondent

Commission to extend SCOD of the Appellants’ Projects to 28.03.2017 on

account of delay in transmission works by Respondent No.4, treating the

same as Force Majeure. However, Respondent Nos.2 & 3 also made

contradictory averments to the effect that the Appellants’ projects were not

ready for commissioning and that the delay in the commissioning of the

Projects was for reasons attributable to Appellants. According to the

Appellant, it is an afterthought and is false and aimed at depriving the

legitimate dues of the Appellants towards energy supplied under the PPA.

17. On 09.01.2019, Respondent No.2 taking undue advantage of the

pendency of the proceedings before the Respondent Commission, issued

a letter to the HDFC bank seeking invocation of the PBG’s submitted by

the Appellants’ in terms of clause 4.4. of the PPA, without any prior notice

to the Appellants. Aggrieved by the said action of Respondent No.2,

Appellant No.1, on 16.01.2019, had filed a Writ Petition being W.P. (C)

2354 – 57 of 2019 before the Hon'ble Karnataka High Court seeking stay

of the aforesaid action of Respondent No.2. On 17.01.2019, the Hon'ble

High Court passed Interim Order directing Respondent No.2 not to take

any precipitative action in terms of the letter dated 09.01.2019 issued by

Respondent No.2.

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Judgment in Appeal No. 374 of 2019

18. As there was no response from Respondent No.2 in spite of

repeated requests for payment of outstanding dues, on 29.01.2019, the

Appellants filed an IA being I.A. No. 01 of 2019 before the Respondent

Commission, inter alia, seeking payment of 50% of the outstanding

amount due to them, without paying requisite court fee. Appellants filed

another IA being IA No. 2 of 2019 inter-alia, seeking exemption from

payment of fee in filing IA No. 1 of 2019. However, when the Respondent

Commission refused to entertain IA No.2 of 2019 and insisted for the

payment of stipulated fees for hearing the IA No. 1 of 2019, the Appellants

filed a withdrawal memo seeking withdrawal of the aforesaid IAs, with a

liberty to file a fresh IA, so that hearing of the main Petition can be

expedited.

19. Subsequently, Respondent No.4 filed its Statement of Objections

and additional objections stating that Appellants’ Power Projects were not

ready for commissioning before the stipulated time. Therefore, the

Appellants herein cannot claim the benefit of the Force Majeure events

and are liable to pay Liquidated Damages in terms of Article 4.3 and 5.8 of

the PPA.

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Judgment in Appeal No. 374 of 2019

20. On 26.09.2019, the Respondent Commission passed the Impugned

Order holding that the non-availability of the evacuation system of

Respondent No. 4, on or after the SCOD, cannot be treated as a Force

Majeure event, therefore, the SCOD cannot be extended up to

28.03.2017. That apart, the Respondent Commission while passing the

Impugned Order has reduced the tariff applicable from Rs. 6.92 and Rs.

6.83 per unit to Rs. 6.51/- per unit for the energy supplied under the PPA

from the date of Commissioning of the Project.

21. Aggrieved by the Impugned Order, the Appellants are filing the

instant Appeal seeking for the following reliefs:

“ (a) That this Hon’ble Tribunal may be pleased to allow the present

Appeal and set aside the Impugned Order dated 26.09.2019 in

terms of the grounds raised above;

(b) Grant all the reliefs claimed in OP No. 212 and 213/2017 before the

Karnataka Electricity Regulatory Commission.

(c) Declare that the claims of Respondents 2 & 3 against the

Appellants towards alleged liquidated damages are not tenable in

law and are illegal as they are not in accordance with the provisions

of the PPA.

(d) Declare that the Appellants are entitled to extension of SCOD to

28.3.2017 without levy any penalty / LD’s;


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Judgment in Appeal No. 374 of 2019

(e) Declare that the actions of Respondents 2 and 3 in withholding the

legitimate dues of the Appellants are arbitrary and illegal and

therefore the Respondents 2 & 3 be directed to pay the amount of

Rs. 106,57,25,399/- forthwith to the Appellants;

(f) Declare that Appellants are entitled to interest on the aforesaid

outstanding amount till the principal amount is paid.

(g) For such other relief as circumstances and nature of the case may

require.”

22. Learned counsel for Respondent No.2 has filed reply, the gist of

which, in brief, is as under:

A perusal of the prayers sought in the Appeal indicates that

the prayers with regard to the issue of liquidated damages and

interest are outside the scope of original proceedings.

23. While supporting the findings of the State Commission in

the impugned order, with regard to the grounds in the instant

appeal, Respondents submit as under:

24. The contention of the Appellants that the non-availability of

evacuation line by KPTCL was a force majeure event as contemplated

under the PPA and the same has not been appreciated by the State

Commission, suffers from serious anomalies and it seems to be


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Judgment in Appeal No. 374 of 2019

stemming from misreading of provisions of PPA and obligations

of the parties stipulated in the PPA. Initially, the Appellants

intended to evacuate power from P.D.Kote. Thereafter, the

Appellants sought to evacuate power from Thallak Substation.

The said change sought by the Appellants was granted.

Therefore, location of plant was the choice of the Appellants.

Article 4 specifically deals with Condition Precedents and it is

stipulated therein that these conditions are to be satisfied

within a period of 365 days from effective date i.e. date of

signing of the PPA. In the instant case, many of the conditions

have not been fulfilled on the stipulated date such as conversion

of land, title of land, evacuation approval, approval of CEIG etc.,

25. Further, according to the Respondents, the delay in

completion of work pertaining to 220Kv DC line from 400kV

PGCIL Hiryur Substation to 220kV Thallaku substation

should not be construed as a force majeure event, as alleged by

the Appellants since the obligation was on the Appellants to

obtain evacuation approval from the State Transmission Utility

and that the Respondents had no role to play.

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Judgment in Appeal No. 374 of 2019

26. Appellants obtained regular evacuation approval on

10.01.2017 from KPTCL, which was conditional. Due to the

delay in completion of sub-station, the Appellants choose to

seek revised evacuation approval from KPTCL only on

16.03.2017. There is no explanation as to why the Appellants

accepted conditions in evacuation scheme and also reason for

not seeking alternative evacuation approval, when it was within

the knowledge of the Appellants that the evacuation to

designated station was not possible because of delay. It was

well within the hands of the Appellants to obtain revised

evacuation approval and achieve scheduled commissioning

date in terms of PPA. In the circumstances, question of invoking

Article 14.3.1 and terming the events to be force majeure does

not arise. Not only Article 4.2(e) which remained unfulfilled but

also various other conditions precedent also remained unfulfilled

as on the date of SCOD. In the light of these undisputed facts,

the conclusions arrived at by the State Commission do not

require inference.

27. Respondent No.2 further states that non-availability of evacuation

system of Respondent No.4 on or after SCOD be treated as a force

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Judgment in Appeal No. 374 of 2019

majeure event, which is incorrect. Respondents submit that the

amendment to definition of force majeure and non-completion of

construction of sub-station would amount to force majeure

event, is contrary to law as well as on facts. The very fact that

there was an alternative evacuation was available and the same

has been used for subsequent evacuation, would take away the

non-availability of original evacuation scheme outside the

purview of Article 14. Respondent No.4, at no point of time, did

assure availability of the substation by a specified date. Having

accepted such a conditional approval and being aware of the

delays caused in completion of said sub-station work, question

of the Appellants treating the same as a force majeure event as

such event being out of the control of the Appellants, would not

arise.

28. It is further stated that by misreading the communication of

Respondent No.2 dated 24.07.2017, the Appellants treated the

contention in the letter that there was delay on the part of

KPTCL, as an opinion expressed and that the contention of the

Appellants that there was recommendation to extend SCOD up

to 30.03.2017 on force majeure condition is denied. In the

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Judgment in Appeal No. 374 of 2019

circumstances, the contention of the Appellant that the State

Commission came to a wrong conclusion in holding that there

was no force majeure event is wholly misconceived and

untenable. Further, there was no force majeure notice by the

Appellants as contemplated under Article 14 within 7 days of

force majeure event, which would also disentitle the Appellants

from claiming benefit of force majeure. The contention that by

virtue of force majeure event the Appellants were to be absolved

of condition precedent while other party to the contract would be

bound by the provisions of PPA, is a contention which deserves

to be rejected. The decision of this Tribunal dated 21.03.2018 in

Appeal No.176 of 2015 on which heavy reliance has been placed

by the Appellants is a subject matter of Civil Appeal 6888/2018

which is pending adjudication before the Hon'ble Supreme Court.

Therefore, the said judgment has not attained finality.

29. With regard to another ground of challenge by the Appellants

that the Appellants cannot be penalised for fault on the part of

Respondent No.4. Respondent No.4 in the objections before the

State Commission has specifically stated that the approvals

granted by it were conditional and the said conditions were

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Judgment in Appeal No. 374 of 2019

accepted by the Appellants. There was no specific commitment

with regard to date of completion of 220Kv DC line from 400kV

PGCIL Hiryur Substation to 220kV Thallaku substation by the

Respondent No.4. There was no explanation either in the

original petition or in the present proceedings as to why the

Appellants did not seek evacuation through an alternate scheme

before the SCOD, therefore, in the circumstances, the

contentions raised in support of this ground are entirely

misconceived, untenable and deserve rejection.

30. Request of Appellants for extension of SCOD was placed

before the State Commission, vide its letter dated 16.08.2017

the State Commission had indicated that a petition seeking such

approval has to be filed before the State Commission. The

Appellant has accepted the same and submitted itself to the

jurisdiction of the State Commission by filing an Original Petition

in O.P.No. 213 of 2017 by invoking Section 86(l)(b) read with

Section 86(l)(e) and Section 86(l)(f) of the Electricity Act, 2003

seeking approval to amend the PPA dated 18.12.2014.

Therefore, after having submitted itself to the jurisdiction of the

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Judgment in Appeal No. 374 of 2019

State Commission and after having sought to invoke dispute

resolution mechanism contemplated under the Electricity Act,

2003, the question of urging such ground does not arise.

31. With regard to the ground raised by the Appellants that

BESCOM is stopped by the doctrine of promissory estoppel, it is

pointed out that the letter of Respondent No.2-BESCOM dated

24.07.2017 narrated all the events which had taken place till

such date and also adverted to the request of the Appellants

seeking extension of SCOD based on contention of occurrence

of force majeure event. All the reasons assigned by the

Appellants for seeking SCOD were placed before the State

Commission, with a request to consider the same, therefore

there was no approbation and reprobation by Respondent No.2.

Placing of all facts and contentions before the Regulator for the

purpose of seeking approval, cannot be construed as

acceptance of the contentions of the Appellants. A distribution

company is bound to seek approval of the State Commission in

respect of every PPA and its modifications. It is also submitted

that there can be no estoppel against law. In the circumstances,

according to Respondent No.2 the contentions and legal

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Judgment in Appeal No. 374 of 2019

proposition in this regard have no application to the facts of

present case.

32. So far as the ground raised by the Appellants that the

evacuation approval dated 10.06.2015 granted by Respondent No.4

was co-terminous with commercial operation date is concerned, it is

stated that a contention was raised by the Appellants that

Respondent No.4 was obliged to complete the transmission line

within SCOD i.e. 17.06.2016 as the Respondent No.4 was aware

of the SCOD. However, the Appellants lost sight of the fact that

the evacuation approval granted was conditional and subject to

completion of sub-station. The fact that the Appellants were

aware of delay being caused in completion of sub-station work

and transmission line and the fact that subsequently the

Appellants sought alternate evacuation, would indicate that

contentions being raised are baseless and untenable. A perusal

of the general terms and conditions of evacuation approval dated

08.03.2016 indicates that the facility will be ready after

completion of evacuation line work and the Appellants have to

approach transmission utility seeking synchronization of

generating project with the grid along with statutory clearance

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Judgment in Appeal No. 374 of 2019

and compliances. In the circumstances, it is stated that the

contentions to the contrary are wholly untenable and deserves

to be rejected.

33. It is further stated that the Appellants are trying to enrich

themselves at the cost of public interest. It is settled law that

larger public interest should always prevail over private interest.

Respondent No.2 and 4 are independent companies and are

Board managed companies. Both companies have specified

obligations imposed upon them as per the provisions of the

Electricity Act, 2003. Therefore, the grounds urged on such

erroneous assumptions deserve to be rejected.

34. The State of Karnataka is a renewable rich state and the

generation capacity developed by the State of Karnataka is one

of the highest in India. In view of the same, the allegation that the

actions of the Commission not being in consonance with the

objectives of Section 86(1)(e) is wholly untenable and these

statements are made with sole intention of causing prejudice

against the Respondents. It can only lead to enrichment of the

Appellants at the cost of power consumers of Karnataka. The

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Judgment in Appeal No. 374 of 2019

contentions in this regard are totally misplaced and liable to be

discarded.

35. Respondents further submit that the contentions raised in the

present appeal which deal with correctness or otherwise of

liquidated damages cannot be subject matter of the present

appeal. Therefore, all contentions on levy of liquidated damages

are liable to be discarded.

36. Respondents further submit that the reliance placed by

the Appellants on the judgment of this Tribunal dated 21.03.2018

in “CESC vs Sai Sudhir Energy (Chitrdurga) Pvt Ltd” (Appeal

No.176 of 2015) is wholly misconceived and untenable since the

facts in the case of Sai Sudhir are totally at variance from the

facts of the present case. Further, it is settled law that a

judgment is a precedent for the facts it decides and even minute

differences in facts can make sea change to the decision to be

made. In the circumstances, question of applying the judgment in

Sai Sudhir to the facts of the present case, would not arise.

37. Respondents submit that the Appellants are indulging

in forum shopping. The Appellants have instituted Writ

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Judgment in Appeal No. 374 of 2019

Petition No.2354-57 of 2019 before the Hon'ble High Court of

Karnataka seeking protection from invocation of bank

guarantee issued in pursuance to the PPA in question. The

said petition is pending adjudication before the Hon'ble

High Court of Karnataka. The Respondents are contesting

the said proceedings. The entity indulging in such forum

shopping is not entitled to any discretionary reliefs by this

Tribunal.

38. The Appellants have filed rejoinder, the gist of which, in brief, is

as under:

The Impugned Order has completely glossed over the 1st extension

granted by Respondent No.2. According to the terms of PPA, initially the

SCOD was to be achieved by 17.06.2016, but the same was extended by

Respondent No.2 for three months i.e., till 17.09.2016 by exercising its

power under Article 5.7.3 of the PPA. In view thereof, the SCOD has to be

taken as 17.09.2016. A reading of the letter dated 11.09.2017 makes it

clear that Respondent No.2 based on the approval of its Board had made

a request to the Respondent Commission for extension of time but the

Respondent Commission vide its letter dated 16.08.2017 instructed that

the Appellants must file a Petition before the Respondent Commission.

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Judgment in Appeal No. 374 of 2019

Hence, the Appellants approached the Respondent Commission. The

extension of SCOD by volition of parties granted upto 17.09.2016 had

attained finality as the same has been acted upon by the parties and the

Impugned Order does not set aside the said extension. However,

Respondent No.2 has illegally recovered Liquidated Damages (“LD’s”)

from the Appellants without factoring the 1st extension of 3 months granted

by it. The said action of Respondent No.2 is an abuse of power and

perverse.

39. In the present case on hand, the Respondent Commission had

already approved the PPA enabling extension in exercise of power under

Section 86 (1)(b) read with Section 63 of the Act. Therefore, Sasan

Judgment has been incorrectly applied in the Impugned Order and is

wrongly being relied upon by the Respondent No.2. Further, this Tribunal

in “Azure Sunrise Private Limited vs. CESCOM & Ors” (Appeal No 340

of 2016 dated 28.02.2020) while interpreting an identical PPA has

distinguished the Sasan Judgment and has held that the Sasan Judgment

is inapplicable in cases when the extension is granted within the

framework of the PPA such as the present case.

40. According to Respondent No.2, non-Availability of the evacuation

line by Respondent No.4 cannot be treated as Force Majeure Event as the


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Judgment in Appeal No. 374 of 2019

Appellants themselves have failed to fulfil the Conditions Precedent as per

Article 4. According to the Appellant, this contention is baseless and

devoid of any merit.

41. It is the contention of Respondent No.2 that placing of all the facts

and contentions before the Regulator for the purpose of seeking approval,

cannot be construed as acceptance of the contention of the Respondents

but the said contention is incorrect.

42. Respondent No.2 being an Instrumentality of the State must act in

free, fair and transparent manner and should not enrich itself for the

inactions on the part of another instrumentality of the State i.e.

Respondent No.4-KPTCL.

43. The State Commission gave a finding that the liquidated damages

cannot be recovered in the present proceedings by Respondent Nos.2 &

3. No appeal is filed by Respondent Nos.2 & 3 against such finding. The

imposition of LDs is an afterthought inasmuch as the Respondent No.2 if

intended to impose LDs on the delay, then it ought to have first called

upon the Performance Security furnished by the Appellant No.1 under the

PPA. Hence, this illegal action of Respondent No.2 is contrary to the PPA

25
Judgment in Appeal No. 374 of 2019

as well as the Order of the Respondent Commission, which has not been

assailed till date by Respondent No.2.

44. It is pointed out that LDs cannot be recovered unless there is an

adjudication by a competent court or authority. Respondent Nos.2 & 3

cannot become the authority to determine that there is a breach and

determine the extent of damages and then recover the damages. In

support of his contention, the Appellants relied upon the decision of the

Hon’ble Supreme Court in “State of Karnataka Vs. Rameshwar Rice

Mills” (1987) 2 SCC 160.

45. It is further submitted that the Respondents have no lien over monies

payable to the Appellant No.1. It is submitted that Respondent No. 2 has

no right to withhold the amount payable to Appellant No.1 towards the

monthly energy invoices raised by Appellant No.1. The act of withholding

the monthly energy bills by Respondent No. 2 is in teeth of provisions of

Section 171 of the Indian Contract Act, 1872.

46. With these submissions, the Appellants seeks for allowing of the

appeal as prayed for.

47. Appellants have filed written submissions and the gist is as

under:
26
Judgment in Appeal No. 374 of 2019

Learned counsel contends that the Respondent Commission while

passing the impugned Order has wrongly held the 1st Extension of SCOD

from 17.06.2016 to 17.09.2016 granted by Respondent Nos.2 &

3/BESCOM & HESCOM to be Non-est for the following reasons:

i) On 18.12.2014, Appellants entered into PPA with Respondent

No.2-BESCOM and Respondent No.3-BESCOM and as per

Article 3.1 of the PPA, SCOD was 18 months from the

Effective date i.e. date of execution of the PPA. However, the

PPA did not come into force immediately inasmuch as the

statutory approval of the Respondent Commission under

Section 86 (1)(b) of the Act was granted only on 04.05.2015

i.e. after a lapse of almost 5 months. Therefore, as per Article

3.1 of the PPA, the SCOD of the Appellants Project was

automatically extended by 5 months i.e. to 17.11.2016 i.e. 18

months from 4.5.2015. The delay from the date of signing of

the PPA till the Regulatory Commission grants its approval has

been considered as Force Majeure by this Tribunal in its

Judgment dated 28.02.2020 passed in Appeal No. 340 of 2016

– “Azure Sunrise Private Limited vs. CESCO & Anr.”

27
Judgment in Appeal No. 374 of 2019

ii) The Appellant No.1 vide its letter dated 09.02.2016 requested

Respondent No.2-BESCOM to grant extension of SCOD by 3

more months i.e. from 17.06.2016 upto 17.09.2016. The said

extension was granted by BESCOM vide letter dated

02.03.2016 by exercising its power under Article 5.7.3 of PPA.

Similarly, Respondent No.3-HESCOM also granted extension

of SCOD to Appellant No. 2 up to 17.09.2016. Therefore, the

Revised SCOD as agreed by BESCOM & HESCOM was

17.09.2016.

iii) However, the Respondent Commission while passing the

Impugned Order has completely disregarded the said

extension on the premise that BESCOM & HESCOM had no

power/authority to issue such an extension erroneously relying

on the Judgment of the Hon’ble Supreme Court in “All India

Power Engineers Federation & Ors. v. Sasan Power

Limited & Ors” (2017) 1 SCC 487.

iv) According to the Appellants the said finding of the

Respondent-Commission is erroneous due to the following

reasons:
28
Judgment in Appeal No. 374 of 2019

The extension granted by BESCOM & HESCOM vide its letters

dated 02.03.2016 and 02.05.2016, respectively, was never

questioned by BESCOM & HESCOM. Further, the PPA which

grants power/authority to BESCOM & HESCOM to extend the

SCOD on account of force majeure conditions has been duly

approved by Respondent Commission vide its letter dated

04.05.2015. Therefore, there is no need for Respondent Nos.2

& 3-BESCOM & HESCOM to approach the Respondent-

Commission again for any extension of time under Article 5.7.3

of the PPA. As a matter of fact, once the PPA is approved by

the Respondent-Commission, all other extensions or actions in

terms of the PPA are to be taken by the parties by mutual

consent. Hence, the finding of the Respondent-Commission

violates the very approval granted by it under Section 86(1)(b)

of the Act.

v) Relying on the Judgment of this Tribunal in Azure Sunrise

Private Limited’s case, learned counsel points out that in the

said judgment this Tribunal has already held that an extension

granted in pursuance of Article 5.7.3 cannot be struck down by


29
Judgment in Appeal No. 374 of 2019

the Respondent Commission on an erroneous interpretation of

the judgment in All India Power Engineers Federation.

Therefore, it is submitted that the SCOD stood extended to

17.09.2016 by volition of the parties as per the PPA. Therefore, the

finding in impugned Order, in this regard, is liable to be set aside.

48. Appellant further contends that the delay on the part of Respondent

No.4-KPTCL in completing its transmission lines and sub-station is a force

majeure event, and, therefore, SCOD ought to have been extended by the

Respondent-Commission. In this regard, it is submitted that though the

Appellants’ Solar Power Projects were ready as early as in September

2016 for interconnecting to the grid, they could be commissioned on

account of force majeure events, which had constrained the Appellants to

approach the Respondent Commission seeking extension of SCOD.

However, the Respondent Commission held that non-availability of the

evacuation system of KPTCL cannot be treated as force majeure event

and the same is contrary to the settled legal position.

49. Appellant No.1

i) Appellant No.1 submits that initially KPTCL has granted tentative

evacuation approval vide its letter dated 28.05.2015 and regular


30
Judgment in Appeal No. 374 of 2019

evacuation approval was issued by KPTCL vide its letter dated

10.01.2017. In both the approvals it is the condition that “the

evacuation of 30 MW Solar Power from your project is

feasible only after commissioning of 220 kV DC line from 400

kV PGCIL Hiriyur substation to 220 kV Thallaku substation by

KPTCL.” However, KPTCL had not given any firm date of

completion of aforesaid substation. Appellant by letter dated

19.02.2017 informed BESCOM that Appellant No.1 would be

able to commission its project and achieve SCOD only after

completion of power evacuation works by KPTCL. On

14.03.2017, Appellant No.1 issued a letter to KPTCL pointing out

that M/s Sagittarius had been accorded 200 MW Evacuation

approval out of which only 80 MW was being used therefore, the

balance capacity ought to be granted to the Appellants.

Thereafter, since the transmission lines related works were

incomplete, KPTCL vide its letter dated 24.03.2017 accepted the

request of the Appellant for alternate evacuation by permitting the

Appellants to evacuate power without commissioning of 220 kV

DC Line 400KV PGCIL Hiriyur substation to 220 kV Thallaku

substation by KPTCL. Therefore, the solar power plant of

Appellant No.1 could commission only on 28.03.2017.


31
Judgment in Appeal No. 374 of 2019

ii) Further, vide its letter dated 24.07.2017, BESCOM gave a

detailed account of the delays occurred in the works of KPTCL to

complete said transmission lines, to the Respondent Commission

stating that transmission works of KPTCL likely to be completed

by August 2017 and also recorded that Appellant No. 1 was ready

as early as September 2016 and also put forth the request of the

Appellant No. 1 to extend SCOD without any penalty as the delay

was entirely due to Force Majeure events. Accordingly, BESCOM

recommended Respondent Commission to approve the extension

of SCOD up to 28.03.2017 on account of Force Majeure

conditions. In view of the above, on 03.11.2017, the Appellants

had filed the Original Petition being O.P. No. 213 of 2017 before

the Respondent Commission.

50. Appellant No.2

iii) Pursuant to the application of Appellant No. 2 seeking for grant of

evacuation approval in November, 2015, KPTCL, vide its letter

dated 08.03.2016 approved the tentative evacuation scheme for

30 MW Solar Power Plant of the Appellants near


32
Judgment in Appeal No. 374 of 2019

Neelagettanahatty village, NayakanahattyHobli, Challakere Taluk

, Chitradurga District with the condition that same would only be

feasible after commissioning of 220 kV DC line from 400kV

PGCIL Hiriyur substation to 220 kV Thallakusubstation by KPTCL.

Vide its letters dated 17.09.2016 to 17.10.2016 Appellant No.2

apprised HESCOM that the construction work of their Projects

were almost completed and ready to interconnect the Solar Power

Project to the grid. KPTCL, vide its letter dated 10.01.2017

issued regular evacuation approval with the same condition

mentioned above. Thereafter, in its letter dated 19.01.2017,

KPTCL has accepted that the works relating to transmission line

are incomplete and would likely to complete by 31.03.2017.

However, alternative evacuation was provided to Appellant No.2

with Appellant No.1 from the same line without commissioning of

the 220 kV DC Transmission Line from 400 KV PGCIL Hiriyur

substation to 220 KV Thallaku Substation by KPTCL on

28.03.2017. Accordingly, the solar power plant of Appellant No.2

could commission only on 28.03.2017.

iv) Vide its letter dated 01.08.2017 issued to the Respondent

Commission, HESCOM acknowledged that, earlier, Appellant


33
Judgment in Appeal No. 374 of 2019

No.2 was granted extension of SCOD upto 16.09.2016 by it on

the ground of Force Majeure. Further, in the said letter HESCOM

admitted that Appellant No. 2 had complied with the condition

precedents as provided in Article 4.2 of the PPA and was ready in

all aspects to commission its power plant. In the said letter,

HESCOM also gave a detailed accounts of the delays occurred

in the works of KPTCL and sought approval of the SCOD in so far

as Appellant No.2 is concerned on account of Force majeure.

v) BESCOM and HESCOM vide their letters dated 11.09.2017 and

28.09.2017 directed the Appellants to file a Petition before the

Respondent Commission in light of Respondent Commission’s letter

dated 16.08.2017. The Appellants had filed the Original Petition

being O.P. No. 213 of 2017 before the Respondent Commission.

However, the Respondent Commission arbitrarily rejected the

ground of Force Majeure holding that the Appellants were not

prudent and have not taken adequate steps to seek a clarification

from Respondent No.3- KPTCL at the time when the conditional

approval was granted by KPTCL, and hence the Appellants are

disentitled to seek relief of Force Majeure.

34
Judgment in Appeal No. 374 of 2019

vi) It is pointed out that the definition of ‘Force Majeure’ as provided in

the PPA was amended by the Respondent Commission vide its

Order dated 04.05.2015 to “include” all the events which were

beyond the control of the parties. Any event or circumstance which

wholly or partly prevents or unavoidably delays an affected party in

the performance of its obligation. Therefore, the delay on the part of

the Respondent No.4-KPTCL in laying down the 220 kV DC

Transmission Line from 400 KV PGCIL Hiriyur substation to 220 KV

Thallaku Substation on the stipulated date is a Force Majeure event

as per Article 14.3.1 (e) of the PPA. However, the Respondent-

Commission while passing the Impugned Order has erroneously

rejected the plea of force majeure opining that the tentative

evacuation approval being granted on 08.03.2016 and whereas the

regular evacuation approval being granted on 10.01.2017 i.e. after

the lapse of SCOD, therefore a prudent developer ought to have

sought an assurance from KPTCL after submitting its evacuation

application, hence, the Appellants themselves have invited Force

Majeure. This finding, according to the Appellants, is erroneous

since the evacuation approval was coterminous and there was no

occasion for the Appellants to approach KPTCL for a clarification as

held by the Respondent Commission in the impugned Order.


35
Judgment in Appeal No. 374 of 2019

KPTCL, a state instrumentality in its actions if delays performance of

its obligation envisaged under the PPA, the Appellants cannot be

held responsible.

vii) Drawing our attention to the term “Prudent utility practices” defined

under the PPA, the Appellants contend that the said definition is

entirely in relation to development of a project and does not in any

manner transcend beyond the action of the developer/ i.e. the

Appellants. However, in the present case it is an admitted fact that

Respondent No.4-KPTCL has delayed creation of evacuation

infrastructure, therefore, the Appellants cannot be held “imprudent”

for the delay caused by KPTCL.

viii) The Respondent Commission by the Impugned Order has rendered

the entire PPA redundant. Hence, the reliance on the exception

provision of Force Majeure Article by the Respondent Commission is

erroneous and the Impugned Order is liable to be set aside on this

ground alone.

ix) According to the Appellants, another ground on which the

Respondent Commission has erroneously rejected the Appellants

36
Judgment in Appeal No. 374 of 2019

contention of Force Majeure is that the Chief Electrical Inspector’s

Safety Certificate was issued only on March, 2017, therefore, the

Appellants’ Projects cannot be considered to be ready in

September, 2016, since through various letters, the Appellants

informed Respondents-BESCOM & HESCOM about the readiness of

their project and the Respondents at no point of time refuted the

same. In such circumstances, it is unbelievable as to how the

Respondent Commission held that the Appellants were not ready at

the relevant point in time. Hence, it is submitted that there was no

admission on non-readiness by the Appellants and the Impugned

Order is passed on a completely false premise.

x) Further, as far as the approval of Chief Electrical Inspector is

concerned, it is submitted that the CEIG approval dated 28.03.2017

was issued under Regulation 32 and Regulation 43 of the CEA

(Measures relating to Sage of Electric Supply) Regulations, 2010.

Regulation 43, relevant principle provision, comes into play at the

time when the power supply is about to commence and when the

installation of the Supplier is made with the Licensee. Admittedly this

could only happen in the case of the Appellants when the requisite

line was made ready by KPTCL. Hence, the CEIG Certification in no


37
Judgment in Appeal No. 374 of 2019

way demonstrates the readiness or non-readiness of any generating

unit as it only comes into play when the Licensee’s works are

connected with the works of a generating company. It is established

that the delay in commissioning of solar power projects i.e. from

17.09.2016 to 28.03.2017 was solely due to ‘Force Majeure’

conditions as defined in the PPA.

xi) It is further submitted that the Hon’ble Supreme Court as well as this

Tribunal have time and again upheld and affirmed that in case of

untoward event or change of circumstances, which totally upset the

very foundation upon which the parties rested their bargain, then the

performance of the contract becomes impossible and the parties can

be absolved from further performance of the contract. On this

aspect, learned counsel relies on several case laws.

51. Relying on the decision of this Tribunal in the case of

Chamundeshwari, learned counsel contends that the KPTCL’s failure to

keep the transmission line ready amounts to force majeure event, but the

Respondent Commission while passing the Impugned Order has not

returned any finding on the said Judgment. However, the finding/

38
Judgment in Appeal No. 374 of 2019

conclusion on Force majeure in the case of Chamundeshwari is wholly

applicable to the present case.

52. Since the ratio of the aforesaid Judgment is squarely applicable to

the case on hand, the Respondent Commission ought to have held that

the failure on the part of Respondent No.3-KPTCL to create evacuation

infrastructure is a force majeure event as the same was conclusively held

by this Tribunal in Chamundeshwari’s case. Therefore, on this ground, the

impugned order is liable to be set aside.

53. Pointing out the conduct of Respondents-BESCOM & HESCOM,

learned counsel submits that in OP No. 213 of 2017 filed before the

Respondent Commission seeking extension of SCOD, Respondents-

BESCOM & HESCOM on 10.04.2018 and 30.10.2018 filed Statement of

Objections, wherein they clearly admitted that BESCOM had addressed a

letter to Respondent Commission and requested for approval for extension

of SCOD upto 28.03.2017 on force majeure conditions, and further

HESCOM had written a letter to Respondent Commission on 01.08.2017

for approval of the revised SCOD on account of Force Majeure event.

However, Respondent No.2-BESCOM in the instant Appeal has taken

completely a divergent position stating that the letter dated 24.07.2017

39
Judgment in Appeal No. 374 of 2019

was not an admission of Force Majeure but only a device to place all facts

for consideration of the Respondent Commission. Having accepted the

fact that there was a force majeure condition, which resulted in delay, at a

belated stage it had taken a belligerent view by disputing its earlier stand

by stating that there is no force majeure event and consequently, the

Appellants are not entitled to get the extension of SCOD up to 30.03.2017.

It is settled legal position that when a party has admitted a particular fact

scenario, it is bound by those statements and an adjudicating body such

as the Respondent Commission ought to have taken note of admissions to

determine a dispute between the parties. In this regard reliance is placed

on the Judgment of the Hon’ble Supreme Court Judgment in “Divisional

Manager, United Insurance Co. Ltd. &Ors. Vs. Samir Chandra

Chaudhary,” (2005) 5 SCC 784 – Para 11.

54. Apart from the above, it is also well settled principle of law that a

party who has taken a position cannot approbate and reprobate at the

same time. In this regard, the following judgments are relied:

(a) Amar Singh vs Union of India (2011) 7 SCC 69– Para 50;
(b) Joint Action Committee of Air Line Pilots’ Assn. of India v.
DGCA (2011) 5 SCC 435- Para 12;

40
Judgment in Appeal No. 374 of 2019

(c) Suzuki ParasrampuriaSuitings (P) Ltd. V. Official Liquidator,


(2018) 10 SCC 707- Para 12 to 14;
(d) PR Deshpande Vs MarutiBalaramHaibatti (1998) 6 SCC 507-
Para 8 and 9;
(e) Mumbai International Airport Pvt. Ltd. Vs Golden Chariot
Airport &Ors (2010) 10 SCC 422- Para 55-65.

55. Therefore, Respondent No.2-BESCOM is estopped from taking a

position contrary to its earlier stand. BESCOM cannot on one hand take a

clear stand that there is a Force Majeure event and on the other hand take

a completely contradictory position that there is no Force Majeure event,

on the same set of facts. The principles of estoppel clearly bar such an

action.

56. It is submitted that the Impugned Order at para 23 holds that LD’s

cannot be recovered in the present proceedings by BESCOM & HESCOM.

In this regard, it is submitted that since the Respondents did not make

payment of invoices of the Appellants from the date of CoD despite

repeated requests, on 29.01.2019, the Appellants filed IA No.1 of 2019 in

the Petition pending before the Respondent Commission for payment of

Tariff as per the PPA. In the said IA there was no whisper of payment of

LDs as at that point of time BESCOM had also not urged that it is either

going or is presently setting off LDs. Ultimately, the said IA was withdrawn.
41
Judgment in Appeal No. 374 of 2019

However, in the Statement of Objection and additional statement of

objection, HESCOM, KPTCL and BESCOM raised the issue that the

Appellants are liable to pay LDs for delay in achieving SCOD, but at no

point, the HESCOM & BESCOM have ever stated that it has adjusted/ set

off LDs against the invoices of the Appellants. Till date, the Respondents

have not filed an Appeal against the said finding of the Respondent

Commission

57. However, in the proceedings before this Tribunal, for the first time,

BESCOM has tried to paint a completely new picture by contending that in

the Statement of Objection it stated that it has been setting off LDs against

the invoices of the Appellants since March, 2017. It is submitted that in

the proceedings before the Respondent Commission, the BESCOM has

categorically averred that the Appellants are liable to pay LDs but at no

point it stated that it has already adjusted LDs against the invoices of the

Appellants. Admittedly, no such prayer was made by the Appellants as

no such letter/ demand was ever issued by BESCOM.

58. It is further submitted that unilateral adjustment/set off by BESCOM

is in contravention to the procedure stipulated in Article 13.3.2 of the PPA.

The said Article states that in case the amounts claimed by BESCOM, if

42
Judgment in Appeal No. 374 of 2019

any, from the Appellants through an invoice and which is not disputed by

the Appellants within 15 days of the receipt of the said invoice, then such

deduction or set-off to the extent of the amounts not disputed can be

carried out by BESCOM only after the expiry of the said period of 15 days

but this procedure has not been adhered to by BESCOM.

59. Reiterating the contention in the rejoinder that the Respondents have

no lien over monies payable to it, the Appellants further submits as under:

Even the PPA executed between the Appellants and

BESCOM/HESCOM do not in any manner permit BESCOM/HESCOM to

enjoy any lien over the monies payable to Appellants, and if at all, the

money can only be set off as per the procedure provided under the PPA

i.e. Article 13.3.2.

60. BESCOM and HESCOM vide its letter dated 24.07.2017 and

01.08.2017 respectively had agreed and accepted that the delay on the

part of the Appellants in commissioning of the Project is due to Force

Majeure events. However, in the instant case, BESCOM/HESCOM have

failed to show that they have suffered any loss owing to purported delay

caused by the Appellants. Therefore, it is submitted that LDs illegally

43
Judgment in Appeal No. 374 of 2019

recovered by BESCOM/HESCOM ought to be reimbursed to the

Appellants with applicable interest/ carrying cost.

61. Further, when the Appellants filed their Petition before Respondent

Commission the parties were at consensus that there is force majeure

event. However, during the proceedings, BESCOM stopped making

payments to the Appellants and did not whisper about the set off of LDs.

However, after the instant appeal has been filed, Respondent no.2-

BESCOM took a plea that it has been adjusting LDs from the invoices of

the Appellants. Since the illegal recovery of LDs/ non-payment of

legitimate dues of the Appellants is a consequence of the principle relief of

Force Majeure, the said issue ought to be considered by this Tribunal in

the instant appeal. For this, reliance is placed on Adani Power

Maharashtra Limited vs. MERC wherein this Tribunal categorically has

held that the Tribunal has the power to grant a relief which is not earlier

prayed for, in the interest of justice.

62. On the pretext of delay in achieving the SCOD on the part of the

Appellants for its Solar Power Projects, tariff was reduced to Rs.6.51/- per

unit. But this reasoning of the Respondent Commission is contrary to the

express mandate of the Constitution of India, the Act, Policy, Judgments of

the Hon’ble Supreme Court and of this Tribunal for the following reasons:-
44
Judgment in Appeal No. 374 of 2019

(i) In consequence with the mandate of the Constitution, the Electricity

Act 2003, National Electricity Policy and the Tariff Policy mandate

the Respondent Commission for providing concessions and other

promotional measures for promoting generation of electricity from

non-conventional sources of energy. Solar power generation is an

important avenue for promotion of non-conventional sources of

energy. The relevant provisions of the Electricity Act 2003, National

Electricity Policy and the Tariff Policy established the fact that

promotion of RE Generation is the Statutory Duty and Obligation of

the Respondent Commission.

(ii) Section 61 of the Act provides that the State Commission must

specify the terms and conditions for determination of tariff and in

doing so it should be guided by promotion of co-generation and

generation of electricity from renewable sources of energy. Section

86(1) (e) of the Act specifically mandates and provides that the State

Commission must promote co-generation and generation of

electricity from renewable sources of energy by providing suitable

measures for connectivity to the grid and sale of electricity to any

person, and specify for purchase of electricity for such sources, a


45
Judgment in Appeal No. 374 of 2019

percentage of total consumption of electricity in the area of

Distribution Licensee. Further, clause 5.12.1, 5.12.2 & 5.12.3 of the

National Electricity Policy clearly indicates that the emphasis on the

intention behind Section 86(1)(e) is to promote generation and co-

generation from non-conventional and renewable sources of energy.

Clause 6.4 of the Tariff Policy mandates the State Commission to fix

a purchase obligation for procurement of energy from non-

conventional sources thereby promoting generation and

procurement of non-conventional sources of energy. Further, this

Tribunal in catena of Judgments has time and again held that

generation of power from renewable energy sources need to be

promoted under Section 86(1)(e) of the Act.

iii) In view of the above, it is clear that in terms of the mandate of

Section 86 (1) (e) of the Act it is the statutory as well as incumbent

duty of the State Commission to promote generation of electricity

from renewable source of energy. For this purpose, the State

Commission has to provide incentives, concessions and grid

connectivity to RE Generators. Therefore, when such is the intent of

the legislature, Respondent Commission cannot reduce the tariff, for

the reasons not attributable to the Appellants. The said finding of the

Respondent Commission in fact resulting in reading down Section 86


46
Judgment in Appeal No. 374 of 2019

(1) (e) of the Act and such power is not vested with the State

Commission as it is a creature of the very same statute. Further, the

Hon’ble Supreme Court in catena of judgments has held that quasi-

judicial body like the State Commissions, which is the creature of

statute, is bound by its provisions. Its duties and functions are

defined and circumscribed by the Act and the Commission should

necessarily act within the parameters prescribed by the Act creating

it.

(iv) Therefore, the Impugned Order, which seeks to undermine the

mandate of the Act is ultra vires the scheme of the Act read with

Electricity Rules and the Policies cited above, and if it is permitted to

stand, it would render the scheme of the applicable law governing

renewable generation otiose.

With these submissions, Appellants seek for allowing the appeal by

setting aside the impugned Order passed by the Respondent Commission.

63. Learned counsel appearing for Respondent Nos.2 & 3 has filed

written submissions, the gist of which is as under:

As regards the contention of the Appellants that BESCOM had

accepted that non-existence of the sub-station as a force majeure event, it


47
Judgment in Appeal No. 374 of 2019

is submitted that the Appellants have relied upon a letter issued by

BESCOM to Respondent Commission seeking approval to grant extension

but the entire letter has not been read out. Only parts of this letter have

been read. A complete reading of the letter makes the position clear that

all aspects, which have been brought to the notice of BESCOM have been

placed before the State Commission. These are not the statements made

by BESCOM. In the letter dated 09.02.2017, there is reference to projects

seeking extension and there are various reasons adverted to as the

reasons to construe the delay as a force majeure event. It is also clarified

that Appellant No.1 had issued letter dated 27.3.2017 requesting for NOC

for commissioning of the project and that BESCOM granted NOC on

28.3.2017 without altering any of the terms of the PPA. Further, there is

reference to the communication of the Respondent Commission for the

purpose of seeking extension, the project proponent had to approach the

Commission. After narrating the entire background, the issue is placed

before the KERC for approval of SCOD up to 30.3.2017 based on force

majeure condition. Therefore, it is clear that the said document can, by no

stretch of imagination, be construed as any admission by BESCOM.

Therefore, this argument deserves to be rejected and consequently the

entire argument with regard to force majeure which is mainly based on the

so-called admission of BESCOM also fails.


48
Judgment in Appeal No. 374 of 2019

64. With regard to the contention of the Appellants that delay in

commissioning of the 220/66kv proposed sub-station constitutes force

majeure event is concerned, it is submitted that in the absence of the sub-

station, even if the project was ready and all other conditions precedent

were fulfilled, it would have been no avail and therefore the fact that the

projects were not complete and available on the date of SCOD would be of

no consequence. This argument is wholly fallacious and deserves

rejection.

65. Further, it is submitted that it is an admitted fact that the project was

originally envisaged to be set up at Challakere Taluk, Chitradurga District,

but at the request of the Appellants, to suit its own convenience, the

location of the project has been shifted to Pavagada, which is the present

location of the project. It is the Appellants, who chose the location for the

project and also chose the proposed 220 Station and Terminal Bay

situated at Madhugiri to be the location from which the Appellants were to

evacuate the power generated. It is significant to mention that the

identification of the sub-station was based on the specific request to

provide approval for evacuation from the very same location, as per letter

dated 6.3.2015. Thereafter, both tentative and regular evacuation

49
Judgment in Appeal No. 374 of 2019

approvals were granted subject to commissioning of the 220 KV sub-

station. Since the Appellants were specifically seeking evacuation

approval through the specified proposed sub-station, conditional approval

has been granted. Therefore, in view of the fact that the Appellants

themselves sought approval of a specific sub-station for evacuation

scheme, the Appellants cannot find fault with the action of KPTCL in

granting conditional approval.

66. It is submitted that Respondent No.3-KPTCL is neither a party to the

PPA nor is there any other contractual obligation on it to provide

evacuation in a particular manner. The obligations under Article 5.3 and

5.4 regarding connectivity with the Grid, are solely with the Appellants.

However, an alternate approval as sought by the Appellants on 19.8.2016

has been granted. In fact, even though the sub-station was actually

commissioned on 30.11.2018, the projects of the Appellants were

commissioned prior to the same. Therefore, the Appellants are not

permitted to contend that the station not being ready left them in a

situation of force majeure and no alternative was available.

67. Apart from the above, it is submitted that Article 14, which deals

with force majeure, also contemplates the manner in which force majeure

is to be invoked. Article 14 contemplates a process of notice of occurrence


50
Judgment in Appeal No. 374 of 2019

of a force majeure event as well as notification of seizing of such event

and the exclusion of the time in between. In the present case, no such

notice was issued by the Appellants. It is settled law that when there is no

notice as contemplated under the contract to invoke force majeure, the

question of invoking the same other than in a manner contemplated in the

contract, would not arise. Reliance in this regard is placed on the decision

of the Hon’ble Supreme Court in “Himachal Sorang Power Ltd vs CERC

& Ors” reported in SCC Online APTEL 148.

68. A perusal of Article 14.3.1 of the PPA makes it clear that a situation

should have arisen in spite of the party taking reasonable care or complied

with prudent utility practices. In the present case,

when Respondent No.3-KPTCL had repeatedly indicated that there will be

delay in commissioning of the sub-station, the Appellants should have

taken reasonable care to look for alternative ways of evacuation as it

ultimately did on 16.3.2017. Having regard to the same, by no stretch of

imagination it would be possible to contend or construe that delay in

execution of the sub-station by KPTCL would amount to a force majeure

event.

69. As far as the contention of the Appellants that in terms of Article 5.7,

extension of time ought to have been granted is concerned, it is submitted


51
Judgment in Appeal No. 374 of 2019

that if the said clause is invoked, Article 5.7.3 would also get attracted.

However, for these Articles to get attracted, Article 14.5 has to be fulfilled.

It is not the case of the Appellants that there is compliance of Article 14.5.

The specific case made out by the Appellants is non-availability of the

transmission line resulted in force majeure event. However, in view of the

fact that an alternate was available, and with reasonable care such

alternate could have been availed by the Appellants, Article 14.4 would get

attracted. A perusal of the said Article indicates that when non-

performance is connected to negligent or intentional act, error or omission

of the party, such a party cannot claim force majeure. Further, a party

affected by force majeure event has to take steps to prevent the force

majeure event. In this regard, Article 14.6 clearly cast an obligation on the

Appellant to make reasonable efforts to mitigate the effect of force majeure

as soon as practicable. No such effort has been made by the Appellants.

Therefore, the question of invoking Article 5 of the PPA would not arise.

Apart from this, the factual matrix would show that the inspection by CEIG

was done only on 28.3.2017, pursuant to which synchronization has taken

place. The correspondence till then indicates that the project was almost

ready. However, the project being almost ready was a ruse to contend that

the project was ready in all respects within the stipulated date. Therefore,

52
Judgment in Appeal No. 374 of 2019

the question of the Appellants being entitled to the extended time frame

without tariff implication would not arise.

70. It is submitted that the Appellants have repeatedly contended during

their submissions that there was violation on the part of Respondent No.3-

KPTCL, which led to force majeure event. It was the Appellant who

specifically sought permission to evacuate power through the proposed

station. At no point of time, KPTCL had given any assurance to the

Appellants that it would complete its sub-station by a particular date.

Therefore, the submissions with regard to violation of KPTCL’s obligation

have no relevance.

71. Learned counsel for Respondents submits that having regard to the

pleadings and submissions made by the parties, the State Commission

has framed the issues. Therefore, the allegations with regard to

incorrectly framing issues for consideration are wholly untenable.

72. Learned counsel further contends that a perusal of Annexures

would clearly indicate that the projects in question were almost ready.

However, only after the expiry of scheduled commissioning date, the

correspondence indicates that the project was ready to be connected to

the Grid. The change in the expressions used by the Appellants


53
Judgment in Appeal No. 374 of 2019

themselves would show that the project was not ready at the relevant point

of time. Therefore, it is clear that the project was not ready on time.

Hence the contention that the project was in fact ready before the

Scheduled Commercial Operation Date but the delay was only on account

of non-commissioning of the line is not tenable.

73. Article 5.8 deals with the aspect of liquidated damages. According to

the Respondents, the procedure being stated, as required to be followed in

the submissions of the Appellants, is not found in Article 5.8. In view of

the admitted fact that SCOD could not be achieved, as per the provisions

of Article 5.8, liquidated damages were levied and deducted. Aggrieved

by the same, the Appellants filed an application seeking to challenge the

levy of liquidated damages. The application is at Annexure A-25. In view of

the fact that fee had to be paid to maintain such a prayer, the Appellants

withdrew the said application. The liberty sought to make the challenge

afresh was removed before filing of the Memo. With the same, the

challenge to the question of levying liquidated damages has come to an

end. However, in view of the rival submissions in the pleadings, the State

Commission had formulated a question as to whether the issue of

liquidated damages can be considered in the present proceedings at all. In

answering the said question, the State Commission has concluded that the

54
Judgment in Appeal No. 374 of 2019

issue cannot be gone into in the present proceedings. This is in the

context of the direction sought. At any rate, having withdrawn the

application unconditionally, the Appellants are precluded from seeking any

relief with regard to liquidated damages. In the circumstances, the

question of acceding to the oral request of the Appellants’ counsel to pass

orders to reverse the liquidated damages is wholly untenable and liable to

be rejected.

74. The Appellants have contended that the issue with regard to non-

availability of transmission line being a force majeure event has been dealt

with in detail by this Hon’ble Tribunal in the matter of “CESC vs. Sai

Sudhir Energy Ltd” in Appeal 176 of 2015. On this aspect, it is submitted

that no reliance can be placed on the said decision for two reasons. Firstly,

the said judgement is subject matter of appeal in C.A.No 6888/2018, which

is presently pending adjudication. Therefore, the order has not attained

finality. Secondly, a judgement is a precedent for only what it decides and

it cannot be applied as a precedent without reference to the factual

background in which the decision has been rendered. The facts in case of

Sai Sudhir’s case cannot be compared to the facts in the present case. It

is settled law that existence of even one additional factor or the absence

thereof, may change the outcome of a proceedings completely. Reliance

55
Judgment in Appeal No. 374 of 2019

in this regard is placed on the judgement of the Hon’ble Supreme Court in

the matter of “Padma Sundar Rao vs State of Tamil Nadu” (2002 (3)

SCC 533 at para 9). The existence of an alternate for evacuation of

power and availing the same by the generator and the fact that such an

alternate was always existed, are factors, which exist in the present case

and did not exist in the judgement sought to be relied upon. Therefore,

the decision of Sai Sudhir cannot be applied as a precedent and the same

is distinguishable on facts.

75. The Appellants while dealing with the decision rendered in the case

of All India Power Engineer Federation vs Sasan Power Limited & Ors

reported in (2017) 1 SCC 487, submitted that the State Commission could

not have gone into the question of correctness or otherwise of extension of

time granted by BESCOM, as the grant or otherwise of extension has no

repercussion on the public at large and the issue involved in that case was

one of waiver, which is absent herein. The Appellants contended that the

said decision is in applicable in the facts of the present case. In this

regard, it is submitted that the ratio laid down in the said judgement is

clear and categorical. Where the issue relating grant of extension has

repercussions on the tariff payable by the consumer at large, the Hon’ble

56
Judgment in Appeal No. 374 of 2019

Apex Court has held that in such cases, it is the State Commission alone

which can go into the correctness or otherwise of such extension.

76. Admittedly, in the instant case, there has been delay in

commissioning and such delay has financial repercussions as can be seen

from Article 12 of the PPA. The contention of the Appellants that the State

Commission has wrongly placed reliance on the decision in the case of

Sasan Power is untenable. The judgement in Sasan Power applies with

full force and the State Commission is justified in examining the validity of

the claim made by the Appellants seeking extension.

77. Contending that the Appellants have made a passing reference to

the judgement rendered in the matter of Energy Watchdog v. CERC 2017

(14) SCC 80, and no specific finding in the said judgement was pointed

out, it is submitted that the said judgement furthers the case of the

Respondents inasmuch as the Hon'ble Supreme Court has construed that

the existence of an alternate would be a factor to consider a situation

being a force majeure event or otherwise. The Hon’ble Supreme Court

was pleased to examine the increase in cost of coal from Indonesia and

held that merely because the contract has become onerous to perform, it

cannot be construed to be a force majeure event especially when

alternative modes of performance of contract was available. Therefore, in


57
Judgment in Appeal No. 374 of 2019

the present case, the Appellants have not explored alternative modes of

evacuation in timely manner and on their own delayed the commissioning

of the plant. Therefore, contention of the Appellants that they are affected

by a force majeure event is untenable.

78. The Appellants have also placed reliance on the decision rendered

in the matter of Azure Sunrize Pvt Ltd vs CESC & Ors. (Appeal No

340/2016 dated 28.02.2020), to contend that the Effective date is to be

construed as the date on which the PPA is approved by the State

Commission. In this regard it is submitted that a holistic reading of the

decision rendered by this Tribunal nowhere comes to the conclusion that

the Effective date is to be construed as the date of approval of the PPA by

the State Commission.

79. Learned counsel for Respondent Nos.2 to 4 has filed additional

written submissions on 14.10.2020 alleging that since certain new

contentions which had not been urged during the oral hearing are found in

the written submissions filed by the Appellant, it has filed an application for

expunging of the additional statements, which had been newly raised in

the written submissions of the Appellant. Learned counsel is restricting

his arguments to the new documents, contentions and judgments being

relied upon by the Appellants.


58
Judgment in Appeal No. 374 of 2019

80. As regards the letters dated 14.03.2017 and 24.03.2017, which have

been produced as Annexures by the Appellants, learned counsel submits

that vide letter dated 14.03.2017, the Appellants requested KPTCL to

provide alternative means of evacuation in view of non commissioning of

220 Kv DC Line from 400 Kv PGCIL Hiriyur Substation to 220kV Tahallaku

substation and by letter dated 24.03.2017 KPTCL has allowed the

Appellants to evacuate power without commissioning of the said line. As

has been pointed out earlier, the location of the project was changed

according to the convenience of the Appellant and the point for evacuation

was also chosen by the Appellant. Therefore, from the very beginning, the

Appellant knows the fact that the sub-station was not complete, and it was

a proposed sub-station. Further, KPTCL has also made it clear that

evacuation is possible only when the sub-station is ready. It is a fact that

when alternate evacuation approval was sought, such approval was

provided. Therefore, the delay in obtaining the alternate evacuation

approval by the Appellants is the mistake on the part of the Appellants. It

is further submitted that obtaining of approval of CEIG is an event which

has to precede the commissioning of the plant. The CEIG Regulations as

well as the provision of the PPA require the safety approvals to be in place

before the commissioning. The entire case of the Appellants in this regard
59
Judgment in Appeal No. 374 of 2019

is belied by the dates mentioned in the Report itself. The date of

completion of work as reported by the Appellant itself is 04.03.2017. The

scheduled commissioning date was 17.6.2016. Therefore, it is evident that

the work of the project was not even complete within the scheduled

commissioning date.

81. Learned counsel points out that although during the oral hearing, 3

judgments were not cited, they have been referred to and produced in the

written synopsis. At any rate, these judgments do not apply to the facts of

the present case. These judgments are dealt with hereunder:

a) SatyabrataGhose v. MugneeramBangur& Co. [AIR 1954


SC 44]

In this case, the Hon’ble Supreme Court has dealt with frustration of

contract as per Section 56 of Contract Act and held that doctrine of

frustration of contract cannot be invoked when parties are aware of

intervening circumstance that affects the performance of contract. In the

present case, the Appellant was aware of the fact that only after the

Kottagudda sub-station was ready, it would be permitted to evacuate

power. Therefore, onus was on the Appellant to approach the KPTCL in a

timely manner to seek alternative options to evacuate power. In these

circumstances, the Appellant cannot invoke doctrine of frustration.

60
Judgment in Appeal No. 374 of 2019

b) NTPC v. Central Electricity Regulatory Commission

It is submitted that the above mentioned case is not applicable to the

facts and circumstance of the present case as it pertains to tariff

determination exercise conducted by CERC.

c) Rising Sun Energy v. NTPC Ltd,


MANU/CR/0114/2019

In the aforementioned case, the Central Electricity Regulatory

Commission has granted extension of time on account of delay in

allotment of land and non-availability of transmission system. It is

submitted that above mentioned case is not applicable to the present case

as the Appellant herein was not ready to commission the plant within the

Scheduled Commissioning Date dehors the availability of evacuation of

facility.

82. So far as the new allegations made with regard to the conduct of

BESCOM and HESCOM are concerned, it is submitted that the answering

Respondent has acted in terms of the PPA, and as directed by the State

Commission, the ESCOM is bound to do so as per the statutory

framework. Even if it is admitted for the sake of argument that BESCOM

61
Judgment in Appeal No. 374 of 2019

and HESCOM had agreed to the existence of a force majeure situation,

but the Appellant himself has approached the State Commission seeking

adjudication of the very same issue. The Appellant having suffered an

order is contending that the answering Respondent had admitted the

position and therefore the State Commission should not have decided

otherwise. The following judgments referred to by the Appellant seem to

be squarely based on the wrong premise that there is an admission of

force majeure by BESCOM and HESCOM in earlier communications.

However, the same is untenable.

a) Amar Singh vs Union of India (2011)7 SCC 59

b) Joint Action Committee of Airline Pilots Assn of India vs DGCA

(2011) 5 SCC 435

c) Suzuki ParasrampuriaSuitings Pvt Ltd vs Official Liquidator

(2018) 10 SCC 707

d) P.R.Deshpande vs MaruthiBalaramHaibatti (1998) 6 SCC 507

e) Mumbai International Airport Pvt Ltd vs Golden Chariot Airport

and Ors (2010) 10 SCC 422

83. Referring to the new argument on unjust enrichment, which is raised

by the Appellant in the written submissions, it is submitted that the said

issue has been raised in the context of levy and deduction of liquidated

62
Judgment in Appeal No. 374 of 2019

damages. Since the said issue was raised and withdrawn by the Appellant

before the State Commission, the State Commission has not gone into the

issue of liquidated damages and therefore the question of deciding what

has already been given up by the Appellant in the original proceedings

would not arise.

84. Learned counsel contends that the contention raised by the

Appellant with regard to cross objections is not permissible before this

Tribunal. In this regard, the Appellant has placed reliance on the

judgement in Appeal no 100/2013. However, it is settled law that when a

party is not aggrieved by the final order, the question of challenging a

finding does not arise, and such contentions can be raised in an appeal

where successful party is arrayed as a Respondent.

85. As regards the contention that the impugned order is in the teeth of

Section 86(1)(e) of the Act, learned counsel submits that the State

Commission has adopted a policy of encouraging non-conventional energy

sources through various policies and also by imposing RPO obligations.

The State of Karnataka is a renewable rich state, which is a direct

consequence of policies formulated in furtherance of Section 86(l)(e) of the

Act. The generation capacity developed in the State of Karnataka is one of

the highest in India. In view of the same, the allegation that the actions of
63
Judgment in Appeal No. 374 of 2019

the Commission not being in consonance with the objectives of Section

86(1)(e) is wholly untenable and these statements are made with sole

intention of causing prejudice against the Respondents. Providing of

higher tariff to the Appellant contrary to the provisions of the PPA and

placing a premium on the defaults of the Appellants, cannot be construed

as being in furtherance of policy to encourage non-conventional energy

sources. It can only lead to enrichment of the Appellants at the cost of

power consumers of Karnataka. Therefore, the contentions in this regard

are totally misplaced and liable to be discarded.

86. Viewed from any angle, the new contentions raised in the written

submissions do not further the case of the Appellant and they are liable to

be rejected.

87. Learned counsel for the Appellant has filed short note of

submissions, which is as under:

It is submitted that the Written Submissions filed by the Appellants

were strictly in terms of the arguments addressed by the counsel for the

Appellants from time to time and the memorandum of the Appeal. For the

kind convenience of this Tribunal, the table depicting the similarity

between the averments made by the Respondent No. 2 and 3 in the

instant Application vis-à-vis the contentions raised in the memorandum of


64
Judgment in Appeal No. 374 of 2019

the Appeal and the Written Submissions filed by the Appellants are

mentioned hereunder:

S.NO. AVERMENTS MADE BY RESPONSE TO THE


RESPONDENTS AVERMENTS
1. WS (1) Colly, i.e. letter Letter dated 14.03.2017
dated 14.03.2017 has been issued by the Appellant
introduced for the first time. No.1 was the part of the
records before the
Respondent Commission,
however, the same was
inadvertently missed while
filing the present Appeal.
In so far as letter dated
24.03.2017 is concerned,
the same was part of the
Appeal. However,
inadvertently an incomplete
copy of the said letter was
filed at the time of filing of
the Appeal.
Accordingly, the complete
copy of the said letter has
been filed along with the
WS.
2. Contention at e(ii) qua The contention qua CEIG
CEIG approval has been approval had already been
65
Judgment in Appeal No. 374 of 2019

raised for the first time raised in the Rejoinder


through the written dated 19.03.2020 filed by
synopsis. the Appellants.
3. In Para 10.6 of the WS @ (i) Satyabrata Ghose Vs.
Pg. 23 and Pg. 24, three of Mugneeram [AIR 1954
the Judgments cited, were SC 44] has been cited.
not cited during the (ii) Energy Watchdog vs.
hearing. CERC [(2017) 14 SCC
80 has been cited.
(iii) Gujarat Urja Vikas
Nigam Limited vs.
GERC &Ors.
(iv) Chamundeshwari
Electricity Supply
Company Ltd. (CESC)
Vs. Saisudhir Energy
(Chitradurga) Pvt. Ltd
&Ors. has been cited.
(v) NTPC limited vs CERC
– ELR (APTEL) 1096
has been cited.
(vi) Rising Sun Energy
Private Limited and
Others vs NTPC limited
& others – MANU/CR /
0114/2019 has been
cited.

66
Judgment in Appeal No. 374 of 2019

4. New allegations have been (i) In so far as Para 11.3


raised in Para 11.3 and and 11.4 of the WS is
11.4, 12.2 (c), 12.3, 12.7, concerned qua
12.10 (f), 13.1 and 13.3 of Respondents
the WS. approbating and
reprobating, the same
has already been raised
in the Appeal
(ii) In so far as 12.2 (c) is

concerned, the same has


already been raised at
(iii) In so far as Para 12.7 is

concerned, qua LD, the


same has already been
raised by the Appellants
in the Rejoinder dated
19.03.2020.
(iv) In so far as Para 13.1

and 13.3 is concerned,


the same has been
raised in the Appeal
itself.

88. Learned counsel for the Appellant has also filed additional written

submissions on 15.02.2021, in brief as under:

67
Judgment in Appeal No. 374 of 2019

The State Commission did not have jurisdiction to review the

extension of time already granted by the Respondents-

BESCOM/HESCOM. On this aspect, learned counsel submits that in terms

of the Act, the State Commission is required to discharge the following

functions.

(a) A Regulatory role under section 61, 62, 63 and 64 of the Act

(b) An adjudicatory role when a dispute arises between licensees

and Generating companies in terms of Section 86 (1) (f) of the

Act

(c) An advisory role under Section 86 (2) of the Act

89. However, once a PPA is signed and has been granted approval by

the appropriate commission, then from a regulator perspective it has been

signed, sealed and accordingly the parties have to adhere to it. It is only

when a dispute arises between the parties to the PPA/contract, then under

Section 86 (1) (f) of the Act, the appropriate commission has jurisdiction to

take cognisance of the same. But when there is no dispute and parties are

acting in compliance of the terms of the PPA, the appropriate commission

cannot proceed to take cognizance of the PPA. Moreover, once the PPA is

approved by the appropriate Commission, all other extensions or actions

in terms of the PPA are to be taken by the Parties by mutual consent.


68
Judgment in Appeal No. 374 of 2019

90. In the instant case, on 18.12.2014, Appellants entered into PPA with

BESCOM and HESOCM. However, the Statutory approval of the State

Commission was granted on 04.05.2015 i.e., after a lapse of almost 5

months . Further, Respondents/BESCOM& HESCOM vide its letter dated

02.03.2016 and 02.05.2016 extended time up to 3 months till 17.09.2016

in terms of Article 5.7.3 of the PPA, which empowered

BESCOM/HESCOM to extend SCOD on account of Force Majeure events.

However, the State Commission while passing the Impugned Order at

Para 16 has completely disregarded the said extension on erroneous

premise that BESCOM/HESCOM had no power/ authority to issue such an

extension while placing reliance on the Judgment of the Hon’ble Supreme

Court in the case of “All India Power Engineers Federation & Ors. v. Sasan

Power Limited & Ors” (2017) 1 SCC 487, which according to the

Appellants is bad in law and is in teeth of the Judgments rendered by this

Tribunal wherein this Tribunal has categorically held that an extension

granted in pursuance of Article 5.7.3 cannot be struck down by the State

Commission. In this regard, learned counsel places reliance on the

following judgments, wherein this Tribunal has categorically held that

although an appropriate commission being a State Regulator has

jurisdiction to look into the activities of Distribution Companies, but cannot

69
Judgment in Appeal No. 374 of 2019

meddle with the terms and conditions duly approved by the commission

itself which has crystallised the rights of the parties.

(a) Judgment dated 28.02.2020 passed in Appeal No. 340 of 2016

titled as Azure Sunrise Private Limited vs. CESCO & Anr.

[Para 4 (iii) (v) and 11.6 of the Judgment].

(b) Judgment dated 14.09.2020 passed in Appeal No. 351 of 2018

titled as Chennamangathihalli Solar Power Project LL.P & Anr.

vs. BESCOM & Anr. [Para 8.8, 8.11 and 9.1 of the Judgment]

91. Moreover, it is submitted that as per Section 63 of the Act, the role of

Appropriate Commission is limited only to adoption of tariff and to evaluate

whether the said tariff has been discovered through transparent process of

bidding. Further, the Hon’ble Supreme Court in the case of “Gujarat Urja

Vikas Nigam Limited v Solar Semiconductors Power Company (India)

Private Limited” reported as (2017) 16 SCC 498 has emphasized on the

sanctity of the PPAs entered into between the generator and the procurer

of electricity to be maintained. The same principle has also been upheld in

the case of “Gujarat Urja Vikas Nigam Limited v Emco Limited & Anr.”

(2016) 11 SCC 182 and in “Gujarat Urja Vikas Nigam Limited v Acme

Solar Technologies (Gujarat Pvt.) Limited & Ors”. (2017) 11 SCC 801.

Therefore, from a conjoint reading of the aforesaid Judicial Precedents


70
Judgment in Appeal No. 374 of 2019

with the facts and circumstances of the present case, it is clear that the

approval granted by the State Commission did not require

BESCOM/HESCOM to approach the State Commission again for any

extension of time under Article 5.7.3 of the PPA as once the PPA is

approved by the State Commission, all other extensions or actions in

terms of the PPA are to be taken by the Parties by mutual consent.

92. Heard both the parties at length and perused written submissions as

well.

ANALYSIS & CONCLUSION

93. The Appellants are SEI-Diamond and SEI-Venus. Both have

established solar project of 30 MWs at Chellakere Taluk in Chitradurga

District of Karnataka. Apparently, one SunEdison Energy Holding

(Singapore) Pvt. Ltd. promoted and incorporated five Special Purpose

Vehicle (SPVs) as developers of five separate projects. The Appellants are

two SPVs out of five. Appellant No.1-Diamond entered into Power

Purchase Agreement with Respondent No.2- BESCOM on 18.12.2014 for

a period of 25 year at Rs.6.92 per unit. In terms of PPA, the Schedule

Commissioning Date (SCOD) was 18 months from the effective date i.e.

17.06.2016.
71
Judgment in Appeal No. 374 of 2019

94. The Appellant No.2-Venus also entered into Power Purchase

Agreement on the very same date i.e., on 18.12.2014 with Respondent

No.3- HESCOM for purchase of power from 30 MW solar project at

Rs.6.83 per unit. This was also for 25 years and the SCOD is also 18

months from the effective date i.e. 17.06.2016. These two projects had to

be setup in Chellakere Taluk in Chitradurga District initially, however in

March 2015 the location of both the projects was shifted from Chellakere

Taluk to Pavagada Taluk in Tumakuru District.

95. The PPAs executed between the parties were duly approved after a

lapse of 6 months i.e. on 04.05.2015. It is not in dispute that there is the

provision of extension of SCOD to be granted by Respondent No.2-

BESCOM. It is also not in dispute that in the approval of PPA the

definition of ‘force majeure’ was also modified and it was made as an

inclusive clause. Hence, it becomes exhaustive clause to include many

events as force majeure.

96. KPTCL issued a tentative evacuation approval to Appellant No.1-

Diamond, and at clause 12 of the same it was mentioned that evacuation

of power will be commenced after commissioning of proposed 220 kV

Kotaguda (Pavagada) DC line. It is noticed that there was no specific time

72
Judgment in Appeal No. 374 of 2019

line within which the above DC line would be ready. This was on

28.05.2015. Subsequently, regular evacuation approval to Appellant No.1-

Diamond was granted on 10.06.2015 wherein the approval was indicated

as valid up to 17.06.2016. KPTCL undertook to develop this line.

Admittedly, supplemental PPAs came to be executed incorporating the

changes so far as Appellant No.2-Venus. On 25.06.2015 the location of

both the projects of the Appellants again got changed from Pavagada

Taluk to Chellakere Taluk in Chitradurga District. Appellant No.2 sought

tentative approval for the proposed solar plant situated at

Neelagettanahatty of Chellakere Taluk. It is not in dispute that both the

Respondents -BESCOM and HESCOM extended the SCOD to 17.09.2016

without any objection.

97. On account of change in location, KPTCL by addressing a letter to

Appellants-Diamond and Venus dated 08.03.2016 withdrew the earlier

evacuation scheme and further proposed a new scheme. Even in terms of

this new evacuation scheme, KPTCL informed that evacuation of power

would be feasible only after commissioning of 220 kV DC line (from 400kV

PGCIL Hiriyur sub-station to 220 kV Thallakku sub-station). Both the

Appellants informed respective DISCOMs by letter dated 17.09.2016,

17.10.2016 and 09.02.2017 that the construction of the projects were


73
Judgment in Appeal No. 374 of 2019

nearly completed and are ready to get interconnected with the Powergrid

(transmission). They also requested Respondent–DISCOMs to extend

SCOD of the project on account of delay caused by KPTCL in completing

the transmission lines.

98. On 27.12.2016, both the Appellants addressed letters to KPTCL

requesting them to provide status of the project and also the likely date of

completion of the proposed line (220 kV line).

99. It is not in dispute that on 10.01.2017, KPTCL issued regular

evacuation scheme to Appellant No.2 again indicating that evacuation of

power would be possible only after commissioning of 220 kV DC line, as

stated above. On 19.01.2017, KPTCL informed that transmission line is

likely to be completed by end of March 2017. Based on this letter dated

19.01.2017, both the Appellants addressed letters to respective DISCOMs

on 03.02.2017 and 09.02.2017 seeking extension of SCOD till 31.03.2017.

They also informed that the projects were almost ready for interconnecting

to the Grid and requested the DISCOMs to intimate KPTCL for facilitating

the same by completing the construction of transmission line.

74
Judgment in Appeal No. 374 of 2019

100. Meanwhile, Respondent-Commission directed all DISCOMs not to

allow any extension of time beyond stipulated SCOD of the project without

obtaining its prior approval.

101. In the meantime, KPTCL granted alternative evacuation facility to

both the Appellants-Diamond and Venus and revoked the condition in the

regular evacuation approval on account of non-commissioning of 220 kV

DC line. This was on 24.03.2017 and 28.03.2017 respectively.

Commissioning certificates were also issued on 28.03.2017 and

38.03.2017 respectively. Both the Appellants raised invoices for supplying

energy for the months of May 2017 to November 2018.

102. So far as Respondents-BESCOM and HESCOM are concerned, on

24.07.2017 and 01.08.2017 requested Respondent-Commission to

approve the extension of SCOD to 28.03.2017 stating that delay in

completion of 220 kV transmission line work as an event of force majeure.

However, Respondent-Commission directed the Respondents-BESCOM

and HESCOM to advise both the Appellants-Diamond and Venus to file

Petitions before the Commission for extension of SCOD in terms of force

Majeure clause of the PPAs. Accordingly, in terms of advice by the

DISCOMs, the Appellants filed common petition on 03.11.2017 in OP

No.213 of 2017 seeking approval of change of SCOD as 28.03.2017.


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Judgment in Appeal No. 374 of 2019

103. Respondents-BESCOM and HESCOM filed objection statements

stating that there was no evidence to prove that projects were ready for

commissioning within the SCOD de hors the availability of evacuation

facility. Meanwhile, Respondent-BESCOM invoked the performance bank

guarantee of the Appellant-Diamond. Aggrieved by the said action, Writ

Petitions were filed before the High Court of Karnataka seeking stay of the

action of the Respondent-BESCOM. An interim order was granted

directing the Respondent-BESCOM not to take any precipitative action.

104. Ultimately, on 20.06.2019, O.P. No. 213 of 2017 filed by the

Appellants was disposed of opining that non-availability of evacuation

system of KPTCL, on or after SCOD, cannot be treated as force majeure

event, therefore, the question of extending the SCOD up to 28.03.2017

was rejected. Further, the tariff applicable to Appellant No.1-Diamond was

reduced to Rs.6.51 per unit from Rs.6.92 per unit and so far as Appellant

No.2-Venus, it was also reduced to Rs.6.51 per unit from Rs.6.83 per unit.

105. Apart from the above reduction of tariff, the Respondent-Commission

rejected the claim of Respondent-BESCOM for payment of liquidated

damages opining that in the said Petition the same cannot be entertained.

According to the Appellants though Respondent-BESCOM claimed

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Judgment in Appeal No. 374 of 2019

liquidated damages before the Commission, but at no point of time

Respondent-BESCOM issued any communication either to Appellant

No.1-Diamond or Appellant No.2-Venus demanding liquidated damages.

Only after passing of the impugned order, for the first time, Respondent-

BESCOM stated that it has set off LCs against the invoices of Appellants-

Diamond and Venus during the pendency of this appeal. Appellants

contend that arbitrarily and illegally Respondent-BESCOM adjusted about

Rs. 38.27 Crores belonging to Appellant No.1. Similarly, on 21.03.2020,

Respondents-BESCOM and HESCOM issued letter to Appellant-Venus

stating that they have adjusted a sum of Rs.10.50 Crores towards alleged

liquidated damages from the energy bills issued by Appellant-Venus.

106. We have to first see “whether Respondent-Commission was

justified in opining that extension of SCOD from 17.06.2016 to

17.09.2016 granted by both the DISCOMS to be non-est in the eyes of

law”?

107. The Appellants and the DISCOMs entered into PPAs on 18.12.2014.

Initially, it was for 18 months from the effective date. SCOD has to happen

by 18 months from the date of signing of the PPA. Approval of PPA

happened only on 04.05.2015, almost after lapse of five months from the

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Judgment in Appeal No. 374 of 2019

date of presenting the signed PPA. We refer to Article 3.1 of PPA which

reads as under:

“3.1 Effective date


This Agreement shall co me into effect from the date of its execution
by both the parties and such date shall eb referred to as the Effective
Date.”

In terms of this, automatically the SCOD date gets extended to

17.11.2016 i.e. 18 months from 04.05.2015.

108. Now it is well settled by the Judgment of this Tribunal, which is

affirmed by Judgments of this Tribunal as well as Hon’ble Supreme Court

that untoward event or change of circumstances which totally upsets the

very foundation upon which the parties restated their bargain, then the

performance of the contract becomes impossible and the parties can be

absolved from further performance of the contract. The Appellant places

reliance on the following judgments, which are referred to as under:

(a) The Hon’ble Supreme Court Judgment in Satyabrata Ghose


Vs. Mugneeram [AIR 1954 SC 44] - Para 9;
(b) The Hon’ble Supreme Court Judgment in Energy Watchdog vs.
CERC [(2017) 14 SCC 80 – Para 45;
(c) This Hon’ble Tribunal’s Judgment in Gujarat Urja Vikas Nigam
Limited vs. GERC &Ors. [Judgment dated 04.02.2014 passed
in Appeal No. 123 of 2012] – Para 55;

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Judgment in Appeal No. 374 of 2019

(d) This Hon’ble Tribunal’s Judgment in Chamundeshwari


Electricity Supply Company Ltd. (CESC) Vs. Saisudhir Energy
(Chitradurga) Pvt. Ltd &Ors. [Judgment dated 21.03.2018
passed in Appeal No. 176 of 2015]- Para 10.
(e) This Hon’ble Tribunal’s Judgment in NTPC limited vs CERC –
ELR (APTEL) 1096 – para 41 & 45;
(f) Rising Sun Energy Private Limited and Others vs NTPC limited
& others – MANU/CR / 0114/2019 – para 170

109. Appellants placed reliance on the judgment of this Tribunal in the

case of Chamundeshwari Electricity Supply Company Limited to

substantiate their contention that it was the failure of the KPTCL to keep

transmission ready , the force majeure event had occurred. The

Respondent in its impugned order has not referred to this finding of the

Tribunal in Chamundeshwari’s Case. In Chamundeshwari’s case, this

Tribunal opined as under:

“10 (ii) We have also gone through the provisions of the PPA,
communications exchanged between the Respondent No. 1 and
KPTCL and between Respondent No. 1 and the Appellants. We
observe that the initial scheduled commissioning date of the Solar
Project was on or before 28.1.2014 and the conditions precedent were
to be fulfilled in 240 days from the execution of the PPA. The
Appellants on the request of the Respondent No. 1 has extended the
commercial operation date of the Solar Project till 27.9.2014 on the
ground of non-commissioning of the said 220 kV lines by KPTCL.
However, due to delay in the execution/commissioning of the said 220
kV lines by KPTCL and conditional evacuation permission given by
KPTCL vide letter dated 6.2.2014 the condition precedent as per
Article 4.2 (e) of the PPA i.e. ‘obtained power evacuation approval from
Karnataka Power Corporation Ltd. (KPTCL)/ CESXC Mysore, as the
case may be cannot be termed as fulfilled. Further, on enquiry by the

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Judgment in Appeal No. 374 of 2019

Respondent No. 1, KPTCL intimated that the said 220 kV evacuation


lines are likely to be commissioned in August 2015.
…..
…..
(v) From the above it becomes clear that under the facts and
circumstances of the case on hand there is no legal infirmity in the
decision of the State Commission, terming the
nonavailability/non-commissioning of the said 220 kV lines as a
Force Majeure event and performance of the contract has become
impossible.

110. In Appeal No.340 of 2016 in the case of Azure Sunrise Pvt. Ltd. vs

Chamundeshwari Electricity Supply Corporation Limited & Anr this

Tribunal opined that the effective date would be not signing of the PPA but

when PPA becomes implementable. It is seen that in terms of Article 5.7.3

of the PPA, Respondent-BESCOM extended the time for SCOD up to

17.09.2016 so also Respondent-HESCOM granted extension up to

17.09.2016. The Respondent Commission was not justified in totally

ignoring the approved PPA, therefore, the revised SCOD has to be

17.09.2016. Article 5.7.3 of PPA read as under:

“5.7.3 In case of extension due to reasons specified in Article


5.7.1(b) and (c), any of the dates specified therein can be
extended, subject to the condition that the Scheduled
Commissioning Date would not be extended by more than 6 (six)
months.”

111. It is seen that Respondents-BESCOM & HESCOM in terms of their

letters dated 02.03.2016 and 02.05.2016 extended the date of SCOD.

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Judgment in Appeal No. 374 of 2019

Article 5.7.3 of the PPA was approved by approving the PPA. Therefore, it

was not correct on the part of the Commission to ignore this fact. The

specific Article 5.7.3 of the PPA was approved empowering DISCOMs to

extend the SCOD on account of force majeure event. Once the PPA was

approved including the clause 5.7.3 there was no requirement for

Respondents-BESCOM&HESCOM to approach Respondent-Commission

for extension of time. The said extension of time in terms of the above

specific Article 5.7.3 becomes an agreement between the parties by

mutual consent. Once PPA was approved in terms of Section 86 (1) (b) of

the Act, the Respondent – Commission has no power to strike down the

extension granted by DISCOMs totally ignoring the judgment of this

Tribunal in Azure Sunrise Power Limited’s case. Till the judgment of

Azure’s case is set aside/modified, the Respondent-Commission is bound

to apply the law declared by this Tribunal as an Appellate Authority. As a

matter of fact, in Azure Sunrise Power Limited’s case also the Respondent

thereunder relied upon the judgment in “All India Power Engineers

Federation” (2017 (1) SC 487). In Azure Sunrise Power Limited’s case at

Para 11.6 this Tribunal distinguished the judgment of All India Power

Engineers Federation judgment as follows:

“11.6 We have perused the relevant portion of the above judgement


relied upon by the learned counsel for the Answering Respondent
and note that the said judgement is distinguishable to the facts of
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Judgment in Appeal No. 374 of 2019

the case in hand due to the fact that the said case was pertaining to
a deviation in carrying out the commissioning test at MCR as
defined in the PPA whereas in the instant case the extension of
time has been granted by CESCOM under the relevant clause of
the PPA approved by the State Commission. In the case of All India
Power Engineers Federation & Ors. v. Sasan Power Limited & Ors.,
there was a clear impact on the tariff to be borne by the
beneficiaries and in turn, consumers whereas in the present case
the terms of tariff were not disturbed beyond the scope of approved
PPA.”

112. Therefore, as contended by the Appellant the SCOD by mutual

consent was in fact extended till 17.9.2016. Therefore, we are of the

opinion, the authority of BESCOM and HESCOM to extend SCOD in terms

of approved PPA being valid is no more res integra.

113. “Whether the delay caused by KPTCL in completing the DC line

required, as stated above, amounts to force majeure or not?”

114. Appellants contended that they were ready with the project as early

as September 2016 for interconnecting their respective solar plants to the

Grid. Letter dated 17.09.2016 filed as Annexure-A.7 is perused. According

to the Respondent Commission which is also the argument of the

DISCOMs before us that non-availability of evacuation system of KPTCL

cannot be treated as force majeure since the Appellants themselves were

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Judgment in Appeal No. 374 of 2019

not ready with their plants within the timeframe, therefore, they had

indicated that they were almost ready in their letters addressed to

Respondent No.2 & 3.

115. In terms of revised and approved PPA having the seal of

Commission on 04.05.2015, it is ‘all inclusive clause’, which would mean

that all the events which are beyond the control of the parties or preventing

partly or wholly to commission the project.

116. “Whether due to this unavoidable delay on account of non-

completion of DC line by KPTCL, the affected party should suffer”?

“Was it responsible for the said delay, and if it is not the affected

party who is responsible for the said delay?

“whether the commission is justified in opining that delay on

the part of KPTCL would not amount to force majeure”?

117. It is noticed that it is the responsibility of the Appellants to get

evacuation facility. It is not in dispute that Appellants did not approach the

transmission utility for such facility. KPTCL is also a statutory authority

which has to grant evacuation/evacuation clearance approval. What we

have to see is whether the Appellant’s obligation to perform its part of the

contract was hampered by delaying granting of evacuation facility. Initially

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Judgment in Appeal No. 374 of 2019

the evacuation facility was from Kotagudda Power Station. The same was

valid up to 17.06.2016. Subsequently on 08.03.2016, the tentative

evacuation system was approved by KPTCL when the location was

changed to Neelagettanahatty of Chellakere Taluk since the earlier

evacuation scheme pertaining to Kotagudda was withdrawn. Pertaining to

this Chellakere evacuation line, the regular evacuation was issued by

KPTCL on 10.01.2017. This letter of 10.01.2017 clearly indicated that the

evacuation of power from the Appellants project is possible only after

commissioning of 220 kV DC line of Thallaku substation. However, there

was no certainty within what time this line would be completed. As a

matter of fact, Appellant No.1 informed BESCOM on 17.09.2016 that its

power project was in advance stage of implementation and only on

account of delay till completion of evacuation system, the project

commissioning was delayed. The Appellant – Diamond informed BESCOM

on 09.02.2017 that on account of force majeure event and on account of

delay on the part of KPTCL, Appellant No.1 is not able to commission its

project to achieve SCOD. On account of exorbitant delay, Appellant No.1

demanded KPTCL by letter dated 14.1.2017 that though M/s Sagittarius

was accorded evacuation but only 80 MW was being used out of 200 MW

evacuation approval, therefore, the balance capacity could be granted to

Appellant. It is noticed that this letter was in fact placed before Respondent
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Judgment in Appeal No. 374 of 2019

Commission but inadvertently missed out while filing the appeal. However,

this must be within the knowledge of Respondent-DISCOM. Therefore,

they cannot submit that the said letter was introduced for the first time

before the Appellate Authority. So far as letter dated 24.03.2017 wherein

KPTCL did acknowledge that Solar power project of the Appellant was

ready for commissioning but on account of non-completion of transmission

lines of KPTCL and also related works, the power could not be evacuated.

Indicating the same, KPTCL accepted the request of the Appellant and

provided alternate evacuation by permitting the Appellants to evacuate

power without commissioning of 220 kV DC line at Thallaku sub-station.

Thus, the solar power plant of Appellant No.1 was commissioned on

28.03.2017 which was certified by Respondent No.2 BESCOM by issuing

Commissioning Certificate dated 30.03.2017.

118. It is noticed from the letter dated 19.06.2017 addressed by

Respondent No.2 BESCOM that it has acknowledged that solar power

plant of the Appellant was subject to completion of 220 kV transmission

line as stated above. It is relevant to point out that in this letter they further

acknowledged that Appellants were ready in all aspects to commission its

power plant and requested for startup power. Respondent-BESCOM

further appreciated the persistent follow up made by Appellant No.1 with

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Judgment in Appeal No. 374 of 2019

KPTCL for providing alternate evacuation connectivity, which was

ultimately granted on 24.03.2017 by KPTCL. It is further noticed that in the

letter addressed to the Commission by Respondent No.2 –BESCOM all

the details enumerating the delay occurred in the work of KPTCL to

complete Kotagudda sub-station and transmission lines were mentioned.

They also informed Respondent Commission that the transmission works

were likely to be completed by August 2017. BESCOM recorded that

Appellant No.1 was ready as early as September 2016. They also

acknowledge in this letter that the request for Appellant No.1 to extend

SCOD without any penalty as the delay was inordinate due to force

majeure events. In fact, BESCOM recommended to the Commission to

approve the extension of SCOD up to 28.3.2017 on account of force

majeure issues. In fact, in the objections statement to OP No.213 of 2017

filed before the Respondent Commission, BESCOM clearly admitted that it

had addressed a letter to Respondent Commission and requested for

approval for extension of SCOD up to 28.03.2017.

119. So far as Appellant No.2 is concerned, Appellant No.2 sought for

grant of evacuation approval way back in November 2015, to which

KPTCL responded only on 8.3.2016 stating that the tentative evacuation

scheme was approved by KPTCL so far as Appellants near

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Judgment in Appeal No. 374 of 2019

Neelagettanahatty Village of Chellakere Taluk. They also highlighted the

fact that feasibility of evacuation would be only after commissioning of 220

KV DC line i.e. Hiriyur to Thallaku sub-station. According to the Appellants,

this approval was made co-terminus with the SCOD of the project. Like

Appellant No.1, Appellant No.2 also informed HESCOM that their power

projects were in advance stage of completion and only due to delay in

completion of evacuation related works by KPTCL, the commissioning of

the projects may be delayed, therefore, according to the Appellant, clause

14.3.1 comes into play. Respondent No.2 by letters dated 17.9.2016 and

17.10.2016 apprised Respondent No.3 – HESCOM that construction work

of their projects was almost completed and ready to interconnect the solar

power project to the grid and the same was getting delayed on account of

delay in completing the evacuation system. According to the Appellant in

terms of Article 14.3.1 extension of SCOD were invoked on account of

force majeure events. KPTCL, in fact, by letter dated 10.01.2017 granted

regular evacuation approval.

120. In respect of both the Appellants the condition was that the

evacuation of power from both the Appellants is feasible only after

completion of 220 KV DC line from Hiriyur sub-station to Thallaku sub-

station by KPTCL. Till then KPTCL did not say when 220 kV DC line is

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Judgment in Appeal No. 374 of 2019

likely to be ready. Only by letter dated 19.01.2017 for the first time KPTCL

informed the appellants that the DC line works would be completed by

31.03.2017 and they accepted the delay in execution of the said

transmission line. As in the case of Appellant No.1 alternative evacuation

was provided to Appellant No.2 also from the same line without

commissioning of 220 kV DC line from Hiriyur to Thallaku. Ultimately, from

this provisional evacuation approval on 28.3.2017, evacuation of power

from solar plant of Appellant No.2 was commissioned. Commissioning

certificate is dated 30.03.2017. HESCOM also issued a letter dated

01.08.2017 to Respondent Commission acknowledging that the extension

of SCOD was up to 16.9.2016 by HESCOM on the ground of force

majeure events. They further acknowledged that Appellant No.2 has

complied with all the requirements in terms of Article 4.2 of the PPA. Like

BESCOM, HESCOM also acknowledges that appellant was ready in all

respects and it sought for startup power also. They also acknowledged

that Appellant No.2 was persisting with KPTCL to provide alternate power

evacuation connectivity which was explored by KPTCL. In this letter dated

01.08.2017 HESCOM narrated all the details pertaining to delays occurred

in the works of KPTCL, therefore, it sought the approval of extension of

SCOD on account of force majeure.

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Judgment in Appeal No. 374 of 2019

121. Impugned order was a result of filing OP before the Respondent

Commission as directed by the Respondent Commission through

BESCOM and HESCOM. HESCOM also filed statement of objections

wherein it admitted at Para 15 addressing a letter to the Respondent

Commission requesting for approval for extension of SCOD up to

28.03.2017 on account of force majeure conditions.

122. The Appellants had to file OP before the Commission though

BESCOM and HESCOM had categorically accepted that the delay was a

force majeure event. The Respondent Commission however, firstly

directed the appellants to file petitions before the Commission and later

rejected the force majeure on the ground that the Appellants were not

prudent and had not taken adequate steps to seek clarification from

KPTCL at the time when conditional approval was granted by KPTCL.

123. “Whether this approach of the Respondent Commission

rejecting the force majeure is correct or whether the finding is

perverse, arbitrary and contrary to the admitted factual position and

settled law”?

124. It is noticed that force majeure clause was amended by order dated

04.05.2015 to include all the events which are beyond the control of the

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Judgment in Appeal No. 374 of 2019

parties as an event of force majeure. The delay or failure on the part of

KPTCL in providing evacuation system to the Appellants on account of

non-completion of 220 KV line as stated above would amount to force

majeure or not in terms of Article 4.3.1(e). The Respondent Commission

so far as conditional evacuation approval opined that it was an imprudent

decision. According to the Respondent Commission, the Appellants were

not justified to plead force majeure placing reliance on tentative evacuation

approval granted on 08.03.2016 since the regular evacuation approval

being granted on 10.01.2017 which happens to be after the lapse of

SCOD. According to the Respondent Commission the Appellants should

have been prudent developers and they ought to have sought an

assurance from KPTCL after submitting application for evacuation.

125. “Whether the Respondent Commission in justified in saying

that non-availability of evacuation of KPTCL on or after scheduled

commissioning date cannot be treated as force majeure event”?

126. According to us this finding of the Commission is not justified for the

following reasons:

(a) Article 4.2 (e) of the two PPAs in question are identical.
(b) As in the instant case also, Article 4.1 of the PPA clearly states
that respective rights and obligations of the parties shall be

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Judgment in Appeal No. 374 of 2019

subject to satisfaction in full of Condition Precedent as


envisaged in Article 4.2 of the PPA.
(c) Further, at Para 9(e) of the Chamundeshwari’s case refers to
Evacuation approval similar to Clause 9 of the Evacuation
approval dated 10.06.2015 issued to the Appellants.
(d) As per Chamundeshwari’s case obtaining power evacuation
approval comes within the ambit of the words “subject to” in the
recital Para F of the PPA and, therefore, Clause 6 and Clause
9 of the Evacuation Approval in the present case being similar
to Evacuation Approval as found in Para 9(e) of the Judgment.
(e) It was incumbent upon the appellants to obtain evacuation
approval by approaching KPTCL in terms of clause 4.2 (e)
after approval of PPA. Apparently, one cannot expect the
appellants to physically complete the transmission line work
themselves since such work is within the domain of KPTCL.
(f) In fact when tentative approval was granted on 08.3.2016, it
was co-terminus with the SCOD of the project, therefore, there
was no occasion for the appellants to think that evacuation
work would not be completed by SCOD as envisaged in the
PPA.

(g) Since, it was co-terminus with the SCOD, no occasion arose


for appellants to approach KPTCL seeking clarification as
opined by the Commission in the impugned order.

(h) We do not find any adverse opinion being expressed against


the appellant indicating laxity on their part in their application
for evacuation. After submission of valid application, one would

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Judgment in Appeal No. 374 of 2019

expect that SCOD would be adhered to by KPTCL since


tentative evacuation was co-terminus with the SCOD.

(i) We also note that the Appellants addressed several letters to


licensees i.e. 19.08.2016, 09.09.2016, 14.09.2016,
01.10.2016, 17.10.2016, 16.11.2016, 27.12.2016 and
09.02.2017 again and again informing respondent – BESCOM
and HESCOM about their readiness and complained that delay
being caused by KPTCL in completing the evacuation system.
We also note that neither BESCOM nor HESCOM refuted the
said complaint of delay of KPTCL made by the Appellants or
their statement of readiness to generate power. In fact, the
letters already referred to above i.e. 19.06.2017, 24.07.2017
and 01.08.2017 both respondent no. 2&3 admitted readiness
of the solar plants, therefore, there was no justification on the
part of the Respondent Commission to opine that the
appellants were imprudent. It is clear that none of these letters
and content seems to be considered by the Respondent
Commission.

(j) We also note that KPTCL being a State instrumentality is an


independent utility functioning without any influence or
interference. The appellants definitely cannot interfere or step
into the shoes of KPTCL to complete the evacuation system
except requesting KPTCL to complete the evacuation system
or to provide provisional evacuation benefit. If KPTCL has not
completed its obligation of keeping the evacuation system
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Judgment in Appeal No. 374 of 2019

ready knowing fully well that date of SCOD, one cannot blame
the appellants to shoulder them with the responsibility of
completing the evacuation infrastructure. What Appellants
could have done was to keep following up requesting the
utilities to perform their duties. The Respondent Commission
totally ignored this aspect.

(k) It is also seen that Respondent Commission opined that, since


the appellants did not seek clarification from KPTCL after
evacuation approval was granted, makes the action of the
appellants imprudent by referring to prudent utility practices.
The definition of prudent utility practice defined under PPA
read as under:

“Prudent Utility Practices” shall mean the practices,


methods and standards that are generally accepted
internationally from time to time by electric utilities for the
purpose for ensuring the safe, efficient and economic
design, construction , commissioning, operation and
maintenance of power generation equipment and which
practices, methods and standards shall be adjusted as
necessary, to take account:
a) Operation and maintenance guidelines recommended
by the manufacturer of the plant and equipment to be
incorporated in the Power Project;
b) The requirements of Indian law; and
The physical conditions at the site of the Power Project”

l) The above definition clearly indicates that prudent utility practice


is wholly in relation to development of a project and it does not in
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Judgment in Appeal No. 374 of 2019

any manner refer to action of the developer. KPTCL is


responsible to create evacuation infrastructure. In what way the
appellants can be blamed for not maintaining prudent utility
practices as a developer. Therefore, we are of the opinion that
the Respondent Commission was incorrect in opining that the
appellants were imprudent for the delay caused by KPTCL.

m) If the opinion of the Commission about imprudence of the


Appellants is accepted, the very meaning of the force majeure
would change and would in fact become redundant. In terms of
PPA untoward incidents are force majeure and have to be beyond
the control of the parties as well as the third parties. Therefore,
the Respondent Commission was not justified to place reliance
on the exceptional provision of the force majeure articles.

127. In Chamundeshwari’s case the evacuation approval referred to is

similar to Clause 9 of evacuation approval and pertaining to Appellant

No.1, clause 2 (f) of the approval pertaining to Appellant No.2. In this

case, it was opined that power evacuation approval comes within the

ambit of words “subject to” in para (f) of the PPAs, therefore, clause 6 and

clause 9 of the evacuation approval in the present case squarely falls

within the opinion expressed in Chamundeshwari’s case. Therefore,

failure of the KPTCL to create evacuation infrastructure is a force majeure

event like in the case of Chamundeshwari. Article 4.1 of the PPA reads as

under:
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Judgment in Appeal No. 374 of 2019

“4.1 Conditions Precedent


Save and except as expressly provided in Articles 4, 14, 18, 20 or
unless the context otherwise requires, the respective rights and
obligations of the Parties under this Agreement shall be subject to the
satisfaction in full of the conditions precedent specified in this Clause 4
(the “Conditions Precedent”) by the Developer within 365 (Three
Hundred and Sixty Five) days from the Effective Date, unless such
completion is affected by any Force Majeure event, or if any of the
activities is specifically waived in writing by ESCOM.”

128. This clearly states that respective rights and obligations of the

parties is subject to satisfaction of all condition precedent as envisaged in

Article 4.2, which reads as under:

“4.2. Conditions Precedent for the Developer


The Conditions Precedent are required to be satisfied by the
Developer shall be deemed to have been fulfilled when the
Developer shall have:
a) Obtained all Consents, Clearances and permits required for supply
of power to ESCOM as per the terms of this Agreement;
b) Made adequate arrangements for water required for the Solar
Thermal Project and submitted the documentary evidence in the
form of an approval from the competent state/local authority for the
quantity of water required for the power station;
c) Achieved Financial Closure and provided a certificate to ESCOM
from the lead banker to this effect;
d) Made adequate arrangements to connect the power project
switchyard with the Interconnection Facilities of the Delivery Point;

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Judgment in Appeal No. 374 of 2019

e) Obtained power evacuation approval from Karnataka Power


Transmission Company Limited (“KPTCL”) / ESCOM, as the case
may be;
f) Produced as per the requirements set out in Schedule 1, the
documentary evidence of having the clear title and possession of
the land required for the Project in the name of Developer;
g) Fulfilled Technical Requirements for Solar PV Project as per the
format provided in Schedule 2 and also provides the documentary
evidence for the same;
h) Delivered to ESCOM from the Single Business Entity confirmation,
in original, of compliance with the equity lock in condition set out in
5.2; and
i) Delivered to ESCOM a legal opinion from the legal counsel of the
Developer with respect to the authority of the Developer to enter
into this Agreement and the enforceability of the provisions
thereof.”

129. Reading of Article 4.2 clause 4.2 (e) clearly indicate that evacuation

approval from KPTCL is a condition precedent. Such delay of evacuation

on the part of KPTCL has been held as force majeure in

Chamundeshwari’s case.

130. Then coming to the observations of the Respondent Commission

that appellants not being ready for commissioning of the solar power

plants, it opined that by letters dated 03.02.2017 and 09.02.2017 the

appellants have admitted that projects were almost ready for

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Judgment in Appeal No. 374 of 2019

interconnections. Since electrical safety approval of CEIG was granted on

25.03.2017, the plants can be taken as completed as 25.03.2017.

131. It is noticed that the Commission also referred to the Chief Electrical

Inspector’s certification being March 2017, therefore, the appellants plants

were not ready either in August or September. Both the appellants and

respondents addressed lengthy arguments on this issue. Apparently, the

evacuation line itself was not ready with reference to revised SCOD,

therefore the appellant being ready would not be of any consequence. On

the other hand, in the letters addressed to BESCOM and HESCOM, as

stated in the above paragraphs, the appellants repeatedly informed that

they were ready for commissioning the projects. At no point of time this

was refuted by the Respondents BESCOM and HESCOM. On the other

hand, the letters addressed by BESCOM and HESCOM, the licensees, in

fact agreed for extension of SCOD to be granted to the appellant by

explaining all the reasons for delays and appreciating the persisting and

persuasive approach of the appellants for completion of the evacuation

infrastructure. The parties to the contract i.e. PPA are distribution licensee

and the generators. If the licensee accepted the explanation offered by

the appellants for not commissioning the solar plant within the SCOD on

account of delay of 200 kV DC lines by KPTCL, we fail to understand how

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Judgment in Appeal No. 374 of 2019

the respondent Commission can conceive a thought and express in its

impugned order that the appellants were not ready. In fact, both the

licensee and KPTCL in the proceedings before the Respondent

Commission have agreed with the contentions raised by the appellants in

the OP before the Commission.

132. It is relevant to refer to conduct of the BESCOM and HESCOM in the

entire proceedings before the Tribunal and the Commission. As already

stated above, from 19.08.2016 onwards up to 09.02.2017 almost every

month time and again Appellants kept on informing BESCOM and

HESCOM about the delay of KPTCL in creating the evacuation

infrastructure. At no point of time this was refuted by the licensees. On the

other hand, accepting the reasons of delay caused to the Appellants as

force majeure, requested the Commission to extend SCOD of the

Appellant till 28.03.2017. At that point of time as stated above,

Respondent Commission directed the Appellants to approach the

Commission for seeking extension through the licensees. Apparently, the

Appellants filed Petitions and in the statement of objections filed by

BESCOM and HESCOM they clearly admitted letters being addressed to

them by the Appellants explaining the delay of the KPTCL to complete the

evacuation infrastructure. On these grounds alone, licensees sought

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Judgment in Appeal No. 374 of 2019

extension of time. In fact, Respondent Commission referred to letters

dated 24.07.2017 and 01.08.2017. The relevant extracts of the Impugned

Order are being reproduced as follows: -

“10) The other material facts relating to OP

No.213/2017 may be stated as follows::

….

(h) The Petitioners requested the 1st Respondent

(BESCOM) and the 2nd Respondent (HESCOM) to

insert the Scheduled Commissioning Date as

’28.03.2017’ in the PPAs of the Petitioners, by

extending the time, on the ground of the Force Majeure

Event. The 1st Respondent, in turn, vide letter dated

24.07.2017 (ANENXURE-F) and the 2nd Respondent

(HESCOM), vide letter dated 01.08.2017 (ANNEXURE-

F), addressed to this Commission, requested this

Commission for approval of the extension of the

Scheduled Commissioning Date till 28.03.2017, on the

ground of the Force Majeure Event, as there was delay

in completing the 220 kV Transmission Line from the

400 kV PGCIL Hiriyur Sub-Station to the 220 kV

Thallakku Sub-Station.

….

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Judgment in Appeal No. 374 of 2019

15) From the pleadings and the submissions of the

parties in both the Petitions, the following issues would

arise, for our consideration:

(1) Whether this Commission has jurisdiction to call

upon the Petitioners to prove the Force Majeure events,

relied upon by them, by filing a Petition, urging the

relevant grounds and producing proper evidence, for

the scrutiny of the Commission, inspite of the

Respondents admitting or not denying the

occurrence of the Force Majeure Events, alleged by

the Petitioners?

16…

(iv) Therefore, the BESCOM and the HESCOM

already extending the time of the Scheduled

Commissioning Date for a period of three months or

they having no objection to extend the time for a further

period, till the Scheduled Commissioning Dates of the

Projects, is of no relevance in the eye of law.”

133. Therefore, in principle the impugned order also records that the

principle contention of the Appellants that on account of force majeure

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Judgment in Appeal No. 374 of 2019

event its projects were delayed and licensees sought approval of the

extended SCOD but BESCOM and HESCOM have totally taken a ‘U’ turn

in the present appeal. Therefore, we are of the opinion that the

Respondent Commission was not justified in opining that the appellants

were not ready in August / September 2016 to commission the power

plants.

134. So far as the CEIG approval, the respondent Commission took this

approval dated 28.03.2017 as the date of readiness of the appellants. It

is noticed that CEIG is a statutory authority in terms of Section 162 of the

Act. In terms of regulation 32 and 43 of CEA (measures relating to safety

of electric supply) Regulations of 2010, approval has to be granted.

Regulation 43 reads as under:

“43. Approval by Electrical Inspector: -


(1) Voltage above' which electrical installations will be required to
be inspected by the Electrical Inspector before commencement
of supply or recommencement after shutdown for six months
and above shall be as per the notification to be issued by the
Appropriate Government, under clause (x) of sub-section (2) of
section 176, and sub-section (1) of section 162 of the Act.

(2) Before making an application to the Electrical Inspector for


permission to commence or recommence supply after an
installation has been disconnected for six months and above at
voltage exceeding 650 V to any person, the supplier shall
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Judgment in Appeal No. 374 of 2019

ensure that electric supply lines or apparatus of voltage


exceeding 650 V belonging to him are placed in position,
properly joined and duly completed and examined and the
supply of electricity shall not be commenced by the supplier for
installations of voltage needing inspection under these
regulations unless the provisions of regulations 12 to 29, 33 to
35, 44 to 51 and 55 to 77 have been complied with and the
approval in writing of the Electrical Inspector has been obtained
by him:

Provided that the supplier may energise the aforesaid electric


supply lines or apparatus for the purpose of tests specified in
regulation 46
(3) The owner of any installation of voltage exceeding 650 V shall,
before making application to the Electrical Inspector for approval
of his installation or additions thereto, test every circuit of
voltage exceeding 650 V or additions thereto, other than an
overhead line, and satisfy him self that they withstand the
application of the testing voltage set out in sub-regulation (1) of
regulation 46 and shall duly record the results of such tests and
forward them to the Electrical Inspector:

Provided that an Electrical Inspector may direct such owner


to carry out such tests as he deems necessary or accept the
manufacturer's certified tests in respect of any particular
apparatus in place of the tests required by this regulation
(4) The owner of any installation of voltage exceeding 650 V who
makes any addition or alteration to his installation shall not
connect to the supply his apparatus or electric supply lines,
comprising the said alterations or additions unless and until

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Judgment in Appeal No. 374 of 2019

such alteration or addition has been approved in writing by the


Electrical Inspector.”

135. In terms of regulation 43, the main provision which comes into play

only at the time of commencement of supply of power. This can be

achieved only when the required transmission line (either provisional or

regular line) is kept ready i.e. evacuation system. Therefore, the certificate

of CEIG has nothing to do or it does not demonstrate the readiness or

non-readiness of any generating unit. At the most it can be one of the

ways to indicate that generators were ready to inject power. Even if the

solar plant of appellants were to be ready to inject power, if the evacuation

line is not available, at that point of time the question of CEIG report or

safety of the supply of power would not come into picture. This certificate

comes into play only when distribution system gets connected with the

works of the generating company. Therefore, based on this report in

peculiar facts of the present case the Respondent Commission was not

justified to opine that CEIG approval also indicate the deficits of the

appellants being ready to commission its plants.

136. The conduct of BESCOM cannot be appreciated for the following

reasons:

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Judgment in Appeal No. 374 of 2019

In terms of Article 6.1.3, BESCOM was required to extend all the

support to the generator to complete the solar power plant. By September

2016 it was obvious that there was delay on the part of KPTCL substation

works so as to evacuate power from the solar plants of the Appellants.

Various letters as already indicated were addressed to both BESCOM and

HESCOM right from August 2016. Whenever the Appellants seeking

connectivity request to KPTCL, copies were addressed to both BESCOM

and HESCOM. At no point of time, both licensees found fault with the

Appellants. On the other hand, in June 2017, BESCOM records that the

Appellants projects were ready in all respects and only on account of

inaction on the part of KPTCL to complete the transmission line, delay has

happened. After acknowledging and accepting the said delay on the part

of KPTCL, BESCOM issued letters to the Respondent Commission to alter

the SCOD on the ground of force majeure. HESCOM address such letter

on 01.08.2017. Surprisingly BESCOM now takes altogether a different

stand from its earlier stand. Before the Respondent Commission

BESCOM admitted on oath that it has requested approval or extension of

SCOD up to 30.03.2017 on the ground of force majeure. Having admitted

so on earlier occasion, it is not open to the BESCOM to take a different

stand. A party cannot escape its earlier admissions. Strangely,

Respondent Commission has totally ignored this fact while determining the
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Judgment in Appeal No. 374 of 2019

dispute between the parties. We rely on the Judgment of the Hon’ble

Supreme Court in “Divisional Manager, United Insurance Co. Ltd. &Ors.

Vs. Samir Chandra Chaudhary,” (2005 (5) SCC 784). It is well settled that

a party cannot approbate and reprobate at the same time. Reliance is

placed on the following judgments.

(f) Amar Singh vs Union of India (2011) 7 SCC 69– Para 50;
(g) Joint Action Committee of Air Line Pilots’ Assn. of India v.
DGCA (2011) 5 SCC 435- Para 12;
(h) Suzuki ParasrampuriaSuitings (P) Ltd. V. Official Liquidator,
(2018) 10 SCC 707- Para 12 to 14;
(i) PR Deshpande Vs Maruti BalaramHaibatti (1998) 6 SCC 507-
Para 8 and 9;
(j) Mumbai International Airport Pvt. Ltd. Vs Golden Chariot
Airport &Ors (2010) 10 SCC 422- Para 55-65.

137. In the light of this conduct, Respondent Nos.2 and 3 are estopped

from taking altogether a contrary stand. As contended by the Appellant,

the principles of Estoppel apply to the action of the Respondent-

Licensees.

138. In the light of above discussion and reasoning we are of the opinion

that the delay in commissioning of solar plant of the appellants between

17.09.2016 and 28.03.2017 falls within the domain of force majeure event

as defined in the PPA.

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Judgment in Appeal No. 374 of 2019

139. From the stand taken in the above proceedings, initially in the

Objection Statement filed on 02.12.2019, BESCOM submits it has set-off

LDs against invoices of the Appellants since March 2019. Again in the

Objection Statement dated 09.12.2019, its stand is that it has been setting

off Liquidated Damages right from March 2017. The Appellants did

contest the alleged set-off of LDs by filing IA No. 01/2019 before the

Respondent Commission and have withdrawn the said IA. Therefore,

according to Respondents, the Appellants cannot seek any positive

direction from the Tribunal.

140. According to Appellants, the said stand of the Respondent Nos. 2 &

3 on different occasions amounts to capricious action, and it is with the

intention of enriching themselves unjustly without following the procedure

contemplated. At no point of time, the Respondents had issued letters to

the Appellants demanding Liquidated Damages. As on today, there is

rejection of the claim of Respondent Nos. 2 & 3 so far as LD charges.

Respondent Nos. 2 & 3 have not filed cross objection on Appeal

challenging the rejection of LD claim in terms of the impugned order.

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Judgment in Appeal No. 374 of 2019

141. It is also seen that in terms of the procedure contemplated under

PPA, deduction or set-off can be done by the DISCOMS only in terms of

Article 13.3.2 which reads as under:

“13.3.2 All payments required to be made under this Agreement


shall also include any deduction or set off for:

a) deductions required by the law; and

b) Amounts claimed by BESCOM, if any, from the Developer,


through an invoice to be payable by the Developer, and not
disputed by the Developer within fifteen (15) days of receipt of the
said invoice, and such deduction or set-off shall be made to the
extent of the amounts not disputed. It is clarified that BESCOM
shall be entitled to claim any set off or deduction under this
Article, after expiry of the said fifteen (15) days period.

The Developer shall open a bank account at Bengaluru (the


Developer’s Designated Account’) for all Tariff Payment s
(including Supplementary Bills) to be made by BESCOM to the
Developer, and notify BESCOM of the details of such account at
least 90 (ninety) days before the dispatch of the first monthly bill.”

142. It is seen they cannot simply ask for Liquidated Damages in terms of

the Article. If BESCOM claims any amount from the Appellant through

invoice to be payable by the Appellant, and if it is not disputed by the

Appellant within 15 days of the receipt of the said invoice, then such

deduction or set-off to the extent of the amounts undisputed can be

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Judgment in Appeal No. 374 of 2019

undertaken by the BESCOM. There is specific mentioning that unless 15

days of period expires, the BESCOM is not entitled to claim any deduction

or set-off. Apparently, no such procedure was ever complied with by the

BESCOM. On the other hand, only in the proceedings before the

Commission on different occasions at different point of time, they came out

with the defence of set-off of LD charges against the payment in respect of

supply of energy.

143. Then coming to the issue pertaining to the liquidated damages,

whether Respondent nos. 2 and 3 were justified to recover/adjust the

alleged liquidated damages contrary to the directions issued in the

impugned order and so also in total violation of terms of PPA pertaining to

recovery of liquidated damages.

144. The Petition was filed in pursuance of directions of the Commission

itself through the licensees seeking extension of SCOD. This was almost

seven months after the SCOD. Apparently, Respondent Nos. 2 and 3 did

not honour the invoices raised by the Appellants making payments right

from the date of COD in spite of several requests and demands. The

Respondent Commission at at Para 23 of the impugned order opined that

liquidated damages cannot be recovered in the said proceedings by

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Judgment in Appeal No. 374 of 2019

BESCOM and HESCOM. The Appellants have sought for tariff as agreed

between the parties in the PPAs. An application came to be filed for this

relief. Surprisingly, in the said application, which was pending, the

Respondent-Discoms never even whisper adjustment of liquidated

damages against the invoices raised by the Appellants. In other words,

they did not even express their intention of setting of liquidated damages

against the bills raised by the Appellants. Apparently, the said application

was withdrawn before the Commission since the Appellants were

apprehending inordinate delay for disposal of the petitions pending before

the Commission. In the statement of objections, HESCOM raised the

payment of LD and BESCOM raised such objection in its additional

statement filed on 09.07.2019. Surprisingly KPTCL who was responsible

for the delay also supported Respondents claim pertaining to liquidated

claim. All along after the Respondent BESCOM has been contending that

it is liable to receive LD from the Appellant that at no point it has stated

that they are adjusting or setting off LDs against invoices of the Appellants.

145. In the above circumstances, in the impugned order at Para 22 and

23, Respondent-Commission opined as under:

“(i) In the above background the Impugned Order was passed


wherein the Respondent Commission inter-alia held as
follows: -

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Judgment in Appeal No. 374 of 2019

“22) ISSUE No.(7): Whether there can be a direction in the


present proceedings, for payment of the Liquidated
Damages, as per Articles 4.3 and 5.8 of the PPAs?
(a) The Respondents claim that, there should be a
direction for payment of the Liquidate Damages, as per
Articles 4.3 and 5.8 of the PPAs. The Petitioners have
contended that, in the present proceedings, there cannot be
any direction for payment of the Liquidated Damages, unless
the Respondents have made any counter-claim for the
Liquidated Damages. The scope of the Petitions filed by the
Petitioners does not cover the issue relating to the liability for
payment of the Liquidated Damages, under the terms of the
PPAs. The respective contentions of the parties, in this
regard, are kept open.
(b) For the above reasons, we hold that, there can be no
direction against the Petitioners, for payment of the
Liquidated Damages, in these proceedings. Therefore,
we answer Issue No.(7) in the negative.
….
23….

(c) The claims of the Respondents, for award of the


Liquidated Damages against the Petitioners, cannot be
entertained in these proceedings ..……”

146. We are of the opinion that such action of the Respondent Nos. 2 & 3

is contrary to the terms of PPA and the Respondent Commission was

justified in rejecting the same. Respondent Nos. 2 & 3 were not justified in

withholding the amounts payable to Appellants towards the monthly


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Judgment in Appeal No. 374 of 2019

energy invoices and the same amounts to contrary to the procedure. The

Respondents cannot exercise lien over the moneys payable to the

Appellants unless they follow the procedure contemplated. None of the

terms of PPA gives such right to them; on the other hand Article 13.3.2 is

the only procedure by which adjustment / set-off can be invoked after strict

compliance of the procedure.

147. We are of the opinion that the commissioning of the project was

delayed on account of force majeure event. The letters dated 24.07.2017

and 01.08.2017 written by Respondent Nos. 2 & 3 make it crystal clear

that both the licensees accepted that the delay on the part of the

Appellants in commissioning of the project was on account of non-

completion of evacuation infrastructure by KPCTL and therefore, it is an

event of force majeure. If the Appellants were not responsible for the

delay in commissioning the project, question of payment of Liquidated

Damages would not arise. As already stated above, there is no

adjudication of such LD charges till date.

148. In the reply filed by the Respondent BESCOM to the Appeal, they

have taken a stand that the relief sought by the Appellants seeking

payment of interest / carrying cost on the amounts withheld by

Respondent Nos. 2 & 3 is beyond the scope of the reliefs. It is seen that
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Judgment in Appeal No. 374 of 2019

when the Appellant filed petition before the Respondent Commission, the

parties were at consensus ad idem so far as force majeure. During the

proceedings pending before the Commission, BESCOM stopped making

payments and they did not even whisper about the possibility of set-off.

After filing the Appeal, BESCOM has taken up plea of adjusting the dues

towards LDs from the invoices of the Appellants. Non-payment of the

legitimate dues to the Appellants is strictly connected to the issue of force

majeure event. This Tribunal in Appeal No. 241 of 2016 in the Judgment

dated 31.05.2019 in the case of Adani Power Maharashtra Limited vs.

MERC opined that the Tribunal has ample power to grant relief which was

not earlier sought for, if ends of justice demands such relief. Paragraphs

152 to 160 of the said Judgment are relevant, which read as under:

“152. With regard to discretionary powers of Appellate Tribunal for


Electricity, there cannot be a doubt that this Tribunal is a Court of first
Appeal to consider orders of various State Commissions as well as
CERC. Whether this Tribunal has discretionary power to mould relief, if
specifically not sought for is one of the arguments addressed before us.
It is well settled by various judgments of the Hon’ble Apex Court that if
a plea is not specifically made and yet it is covered by an issue by
implication and the parties knew that the said plea was involved in the
trial, then the mere fact that such plea was not expressly taken in the
pleadings would not necessarily disentitle a party from relying upon if it
is satisfactorily proved by evidence. What Court has to consider for such

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Judgment in Appeal No. 374 of 2019

situation is whether the parties knew that the matter in question


involved in the trial and they brought to the notice of the trial court
about the same? Then it is purely a formality.
153. In order to grant relief on equities by keeping justice, equity and
good conscience at the back of the mind, the Tribunal can shape the
relief consistent with facts and circumstances established in a given
cause of action. The Tribunal feels moulding of relief is necessary to
meet ends of justice, after taking all facts and circumstances into
consideration, can mould the relief by exercising discretionary power.
154. Order 41 Rule 25 empowers Appellate Court to frame an issue and
remit it for trial which has been omitted to be framed and tried by the
Trial Court which appears to the Appellate Court essential to the right
decision of the case. For such circumstances, the Court should exercise
powers of remand under Order 41 Rule 25 read with Rule 23(A) of CPC.
155. If new facts comes into existence after litigation has come to Court
and the same has impact on the right to relief or the manner of
moulding the relief and if it is diligently brought to the notice of the
Tribunal, such fact has to be taken into consideration since equity
justifies such action.
156. The exercise of Appellate jurisdiction includes not only to correct
error in the judgment under challenge but also such disposition of the
case as justice requires. Therefore, the Appellate Court is bound to
consider any change, either in fact or in law, which has come into
existence after the impugned judgment.
157. The court of appeal has to take notice of events which have come
into existence after the institution of the suit and afford relief to the

113
Judgment in Appeal No. 374 of 2019

parties by considering changed circumstances if such changed


circumstances would do complete justice between the parties.
158. If there is an important question which needs to be determined
having reasonably wide ramifications, in such circumstances the parties
must be allowed to raise such points on a remand made to the trial
court, so that both parties may take up all points for fresh hearing and
dispose of the matter.
159. If new plea is raised and the Court is satisfied that such new plea
deserves to be considered especially if it was raised in the trial court but
not considered, the same has to be taken into account.
160. The above principles are narrated from the following judgments:
(a) Bhagwati Prasad vs. Chandramaul (1966) 2 SCR 286
(b) Hindalco Industries Ltd. vs. Union of India and Ors. (1994) 2 SCC 594
(c) REMCO Industrial Workers House Building Cooperative Society vs.
Lakshmeesha M. & Ors. (2003) 11 SCC 666
(d) PasupuletiVenkateswarlu vs. The Motor & General Traders, (1975) 1
SCC 770
(e) Shikharchand Jain vs. Digamber Jain PrabandKarini Sabha and Ors.
(1974) 1 SCC 675
(f) Otis Elevator Company (India) Limited vs Commissioner of Central
Excise (2016) 16 SCC 461
(g) Jute Corporation of India Limited v. Commissioner of Income Tax &
Anr. 1991 Supp. (2) SCC 744.”

149. Therefore, we are of the opinion that in the circumstances of the

case, if any relief is to be granted in the interest of justice, this Tribunal is

empowered to consider the same.

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Judgment in Appeal No. 374 of 2019

150. Apparently, the Respondent Commission has reduced the tariff to

Rs.6.51 on the ground of alleged delay of SCOD on the part of the

Appellants. We have already stated how the Respondent Commission

has erred in giving such opinion.

151. In terms of Section 86 (1) (e) of the Act, one has to encourage and

promote renewable energy. The National Electricity Policy and Tariff

Policy do provide several concessions and promotional measures so far

as promoting potential non-conventional source of energy. Potential non-

conventional source of energy in this country is solar power. Promotion of

renewable energy generation is the statutory duty and obligation of the

Respondent Commission. It is relevant to refer to the Judgment of

Hindustan Zinc Ltd. v. Rajasthan Electricity Regulatory

Commission,[(2015) 12 SCC 611]. In several Judgments of this Tribunal,

time and again, we opined that generation of power from renewable

energy source needs to be promoted. One of such Judgments is Rithwik

Energy vs. Transmission Corporation of Andhra Pradesh [2008 (ELR)

(APTEL) 237] - Para 34 which reads as under:

“34. A distinction, however, must be drawn in respect of a case, where


the contract is re-opened for the purposes of encouraging and
promoting renewable sources of energy projects pursuant to the
mandate of Section 86(1)(e) of the Act, which requires the State

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Judgment in Appeal No. 374 of 2019

Commission to promote cogeneration and generation of electricity from


renewable sources of energy.”

152. The State Commission being a quasi judicial body, a creature of the

Statute is bound by the provisions of the Act and national policy. It is

required to function and discharge its duties within the parameters

prescribed by the Act. We refer to the following Judgments on this aspect

of the matter:

(a) Manish Goel v. Rohini Goel: (2010)4 SCC 393 (Para 14)
(b) N.C. Dhoundial v. UOI & Ors.: (2004)2 SCC 579 (Para 14)
(c) State of Punjab & Ors. v. Renuka Singla & Ors.: (1994) 1 SCC
175 (Para 8)

153. In the proceedings before it, the Respondent Commission totally

ignoring the conduct of the Respondents in approbating and reprobating

on different occasions, has acted contrary to the duties to be exercised by

the Commission totally ignoring its obligation to promote renewable energy

generation. On the pretext of protecting the consumer, it totally abdicated

its duties and obligations and proceeded to pass the impugned order

undermining and circumventing the mandate of the Act.

154. It is seen that Respondent Commission has totally ignored the fact

that in terms of PPA Respondent BESCOM is authorised to extend SCOD

for about six months. In fact, BESCOM extends SCOD by three months.
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Judgment in Appeal No. 374 of 2019

Therefore, SCOD will be 17.09.2016. After this date, according to

Appellants BESCOM accepting the reasons for the delay caused to

Commission the plant was the delay on the part of the KPTCL to complete

the evacuation system addressed a letter. However, this was denied by

BESCOM. Letter dated 24.07.2017 addressed to State Commission,

according to Appellants, refer to the delay caused by KPTCL in completing

the transmission line.

155. Contents of Letter dated 24.07.2017 is perused. Last paragraph do

state that delay in commissioning the plant was because of force majeure.

156. The fact remains that whether the acceptance of Force Majeure

event being the cause of delay on the part of the BESCOM alone is

relevant. Definitely, it cannot be. As stated above, BESCOM has taken

different stand at different point of time. We have to see whether the

Appellants were responsible for the delay in question. At no point of time,

prior to SCOD, Respondents did not attribute anything against the

Appellants, not even in the letter of 24.07.2017. In fact, alternative line

was requested way back on 19.08.2016 before 17.09.2016 The alternative

line was given because some other plant could not inject 100% power

generated by them. Such availability of alternative line because of non-

utilisation of complete capacity was brought to the notice of KPTCL by


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Judgment in Appeal No. 374 of 2019

Appellants themselves. It is nobody’s case that KPTCL proposed earlier

for any alternate evacuation of power. In fact, as stated above, BESCOM

changes its stand. Last line as reported by concerned engineer in the

letter dated 24.07.2017 refers to the cause being ‘force majeure event’.

The facts and circumstances clearly indicate, within the time allowed for

SCOD, the transmission/evacuation of energy infrastructure was not

ready. The Appellants have informed Escoms/Discoms persistently that

evacuation of power was not possible for want of infrastructure being kept

ready by KPTCL.

157. Therefore, we are of the opinion that the Appeal deserves to be

allowed. Accordingly, we set aside the impugned order dated 26.09.2019

and pass the following directions:

(i) The first Appellant is entitled at Rs. 6.92 per unit and the

second Appellant is entitled at Rs.6.83 per unit as energy charge in

terms of the PPA.

(ii) Respondent Nos. 2 & 3 are directed to refund the amounts

withheld by them by adjusting the same towards Liquidated

Damages.

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Judgment in Appeal No. 374 of 2019

(iii) The Appellants are entitled for carrying cost on the amounts

delayed and so also on the amounts withheld in accordance with the

procedure contemplated.

158. In view of the disposal of the appeal, IAs pending if any, shall stand

disposed of. No order as to costs.

159. Pronounced in the Virtual Court on this the 14th day of July, 2021.

Ravindra Kumar Verma Justice Manjula Chellur


[Technical Member] [Chairperson]

Dated: 14th July, 2021

REPORTABLE/NON-REPORTABALE

Ts/tpd

119

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