Case Note & Summary
The Supreme Court heard a civil appeal concerning a dispute over delay condonation in the commissioning of a wind power project under Power Purchase Agreements. The appellant, Solar Energy Corporation of India Limited (SECI), challenged an order dated 11.01.2022 by the Appellate Tribunal for Electricity (APTEL) which had allowed an appeal by respondent Wind Four Renergy Private Limited (WFRPL). The APTEL directed that a 132-day delay condonation period would commence from the date of its judgment. The background involved five PPAs dated 21.07.2017 between WFRPL and Power Trading Company India Limited, with SECI as the implementing agency. The Scheduled Commercial Operation Date was 04.10.2018, with a maximum commissioning period until 05.07.2019. Delays occurred as the required Long Term Access was operationalised only on 14.04.2019. The Ministry of New & Renewable Energy granted a 60-day extension post-LTA operationalisation via a letter dated 22.10.2019. WFRPL approached the Central Electricity Regulatory Commission (CERC), which by order dated 08.03.2021 granted an extension of 132 days, pushing the revised commissioning date to 23.10.2019, which SECI accepted. However, WFRPL appealed to APTEL, which issued the impugned direction. The legal issue was whether APTEL's direction to compute the 132-day period from its judgment date was rational and consistent with the PPA scheme. The Court heard arguments from both sides. In its analysis, the Court noted that WFRPL had written letters in March and April 2019 indicating project readiness and commissioning timelines, but the 5th unit remained unoperationalised. The Court found APTEL's direction irrational as it disregarded the actual sequence of events and the objective of ensuring early green energy supply. The Court emphasized that timelines are crucial for reducing carbon footprint and noted that green energy tariffs have substantially decreased. Consequently, the Court set aside the APTEL judgment, restored the CERC order dated 08.03.2021, and directed that it would bind the parties. Additionally, the Court addressed financial repercussions: SECI had refunded Rs. 10 crores to WFRPL after encashing a performance bank guarantee under the impugned order. The Court held that SECI is entitled to recover this amount with simple interest at 12% per annum from the payment date. If not refunded within six months, the amount would be treated as electricity dues recoverable under the Electricity Act, 2003. The appeal was allowed and disposed of accordingly.
Headnote
A) Electricity Law - Power Purchase Agreements - Delay Condonation and Extension Periods - Electricity Act, 2003 - The Supreme Court examined the Appellate Tribunal for Electricity's order directing that a 132-day delay condonation period should commence from the date of its judgment (11.01.2022) for a wind power project. The Court found this direction irrational and contrary to the Power Purchase Agreement scheme, as it disregarded the actual timelines and the purpose of ensuring early green energy supply. Held that the order was unsustainable and restored the Central Electricity Regulatory Commission's earlier order which had properly computed the extension periods based on operational realities (Paras 9-13). B) Contract Law - Performance and Commissioning Deadlines - Computation of Extension Periods - Not mentioned - The dispute involved five Power Purchase Agreements for 50 MW wind power units with a Scheduled Commercial Operation Date of 04.10.2018 and maximum commissioning period till 05.07.2019. Delays occurred due to late operationalisation of Long Term Access on 14.04.2019. The Court considered extensions granted: 60 days per government letter dated 22.10.2019 and 132 days as condoned by CERC. Held that these extensions should be computed from the actual events (LTA operationalisation) rather than from the APTEL judgment date to maintain contractual integrity (Paras 2-7, 12). C) Remedies - Recovery of Payments and Interest - Electricity Dues - Electricity Act, 2003 - Following the setting aside of the APTEL judgment, the Court addressed consequential financial matters. The appellant had refunded Rs. 10 crores to the respondent after encashing a performance bank guarantee pursuant to the impugned order. Held that the appellant is entitled to recover this amount with simple interest at 12% per annum. Further directed that if not refunded within six months, the amount would be treated as electricity dues recoverable under the Electricity Act, 2003 (Paras 14-15).
Issue of Consideration
Whether the Appellate Tribunal for Electricity's direction that the condoned delay period of 132 days should commence from the date of its judgment (11.01.2022) was sustainable and rational in light of the Power Purchase Agreements and the scheme for renewable energy projects.
Final Decision
The appeal is allowed. The impugned judgment dated 11.01.2022 passed by the Appellate Tribunal for Electricity is set aside. The order dated 08.03.2021 passed by the Central Electricity Regulatory Commission is restored and will operate and bind the parties. The appellant is entitled to recover Rs. 10 crores refunded to WFRPL along with simple interest at 12% per annum from the date of payment. If not refunded within six months, the amount will be treated as electricity dues recoverable under the Electricity Act, 2003.
Law Points
- Interpretation of Power Purchase Agreements
- condonation of delay in project commissioning
- computation of extension periods
- irrationality of judicial orders
- recovery of electricity dues under the Electricity Act
- 2003
