The Supreme Court has upheld the Appellate Tribunal for Electricity's (APTEL) decision to grant a six-month extension under the force majeure clause of a Power Purchase Agreement (PPA) for a solar power project in Karnataka. The respondents, who faced delays due to land use conversion, evacuation approvals, and demonetization, were initially granted an extension by the distribution company (DISCOM). However, the Karnataka Electricity Regulatory Commission (KERC) later rejected this extension and reduced the tariff payable to the respondents from Rs. 8.40 to Rs. 4.36 per unit. APTEL overturned KERC's decision, reinstating the original tariff and setting aside the imposition of liquidated damages. The Supreme Court confirmed APTEL’s ruling, emphasizing the proper application of the force majeure clause and the lack of a substantial question of law for interference.

1. Introduction

• The appeals concerned the applicability of the force majeure clause in a PPA and the legality of a tariff reduction by KERC after the respondents faced delays in commissioning a solar power project in Karnataka.

2. Background

• Respondent No. 2, a farmer recognized as a solar power developer, entered into a PPA with a DISCOM under a Karnataka Government policy promoting solar energy.
• The project was delayed due to land use conversion issues, evacuation approval processes, and demonetization.
• The respondents sought and were granted a six-month extension under the force majeure clause by the DISCOM.

3. KERC’s Decision

• KERC rejected the force majeure claim, attributing the delays to the respondents and reduced the tariff from Rs. 8.40 to Rs. 4.36 per unit.

4. APTEL’s Ruling

• APTEL overturned KERC’s decision, finding that the delays were due to government actions beyond the respondents' control.
• It reinstated the original tariff and removed the liquidated damages, applying the force majeure clause correctly.

5. Supreme Court’s Analysis

• The Supreme Court considered the scope of its appellate jurisdiction under Section 125 of the Electricity Act, emphasizing that only substantial questions of law justify interference.
• The Court found no substantial question of law in the DISCOMs' appeal, affirming APTEL’s findings on the force majeure clause's applicability and the reinstated tariff.

6. Conclusion

• The Supreme Court's judgment underscores the importance of correctly applying force majeure clauses in PPAs and the limited scope of appellate review in cases involving specialized regulatory bodies like KERC and APTEL.