In a major administering, the Indian Incomparable Court has confirmed the choice of the Re-appraising Tribunal for Power within the case of Bangalore Power Supply Company Constrained vs. Hirehalli Sun oriented Control Venture LLP & Others. The center of the case was on deciding in case the delay of beginning a sun based control extend was satisfactory based on the force majeure clause within the Control Buy Understanding (PPA) and in the event that the duty cut upheld by the Karnataka Power Administrative Commission (KERC) was legitimized.
Case Background
The arrangement in Karnataka energizes land-owning agriculturists to take an interest in sun based vitality ventures by permitting them to deliver and offer power at a rate set by the KERC. Respondent No. 2, who could be a agriculturist, collaborated with Hirehalli Sun powered Power Project LLP (Respondent No. 1), which may be a uncommon reason vehicle (SPV) set up to carry out a sun powered control venture in Chitradurga area.
The struggle happened due to delays in arrive transformation, obtaining clearing endorsements, and other authoritative forms confronted by the SPV. The Respondents utilized the force majeure clause in the PPA to request an extension of the Scheduled Commissioning Date (SCD). Even though BESCOM allowed a six-month extension at first, KERC later mandated that all requests for extensions must be submitted to them, resulting in more legal disputes.
Decisions made by KERC and APTEL.
In a decision on September 18, 2018, KERC dismissed the Respondents' force majeure claims, stating that the delays were their responsibility. As a result, KERC decreased the payment amount owed to the Respondents and enforced liquidated damages.
Yet APTEL overturned this ruling, stating that the government's slow approval processes were largely responsible for the delays and that the Respondents had worked diligently. APTEL also reinstated the initial charge of ₹8.40 per unit and nullified the penalties enforced by KERC.
Decision from the highest court
The Supreme Court confirmed APTEL's discoveries regarding its appellate jurisdiction as per Section 125 of the Electricity Act, 2003.The Court emphasized that its jurisdiction in such appeals is limited to substantial questions of law and that factual determinations by the lower tribunals should not be interfered with unless they are perverse or patently illegal.
The Court observed:
"We disagree with the appellant's argument that force majeure is not relevant in this situation. Based on the findings from APTEL that the delay was not the fault of the respondents and that the force majeure clause applies, it was correctly determined that an extension of time under Article 2.5 is justified, allowing the project to be commissioned within the extended 24-month period as of 24.08.2017".
Further, addressing BESCOM’s argument against the payment of a late payment surcharge, the Court noted: "The direction to pay the late payment surcharge on this amount is explicitly rooted in the PPA, and hence, is in furtherance of the intention of the parties. There is no reason to set aside the same."
Conclusion
The ruling from the Supreme Court reinforces the idea that delays resulting from administrative inefficiencies, especially when admitted by the government, should not be unjustly punished. The Court's decision to support APTEL's judgment guarantees that developers won't be deterred by unexpected delays out of their control under comparable schemes.
The Supreme Court has brought clarity to the interpretation of force majeure clauses in PPAs and emphasized the significance of due diligence and fairness in regulatory practices in the power sector.
TAGS: Supreme Court BESCOM Hirehalli Solar Power force majeure Power Purchase Agreement APTEL KERC tariff reduction late payment surcharge renewable energy
