Case Note & Summary
The Supreme Court of India dismissed appeals by Bangalore Electricity Supply Company Limited (BESCOM) against an order of the Appellate Tribunal for Electricity (APTEL) that had allowed the respondents' claim for force majeure extension and set aside tariff reduction and liquidated damages. The dispute arose from a Power Purchase Agreement (PPA) signed on 29 August 2015 between BESCOM and a solar power developer (SPD) under a Karnataka government policy to promote solar energy projects by farmers. The PPA required commercial operation within 18 months from the effective date, which was defined as the date of signing. However, the respondents faced delays in obtaining land conversion approval, evacuation approvals, and bay construction due to government authorities' inaction. They sought a 6-month extension under Article 2.5, which BESCOM initially approved on 2 March 2017. Later, KERC directed all extensions to be filed before it, and the respondents filed a petition invoking force majeure under Article 8.3. The project was commissioned on 24 August 2017, within the extended period. KERC rejected the force majeure claim, imposed liquidated damages, and reduced tariff from Rs. 8.40 to Rs. 4.36 per unit. APTEL reversed this, holding that the delays were beyond the respondents' control and that the effective date should be the date of KERC approval (7 September 2015), making the project timely. APTEL also directed payment of the original tariff with late payment surcharge. The Supreme Court upheld APTEL's decision, emphasizing the restrictive scope of its appellate jurisdiction under Section 125 of the Electricity Act, 2003, and finding no perversity or error in APTEL's factual findings. The court held that force majeure was correctly applied, the extension was valid, and no tariff reduction or liquidated damages were warranted.
Headnote
A) Electricity Law - Force Majeure - Interpretation of Force Majeure Clause - Power Purchase Agreement, Article 8.3 - The court examined whether delays in obtaining land conversion, evacuation approvals, and bay construction due to government authorities constituted force majeure. Held that the respondents had taken all due diligence and the delays were beyond their control, thus force majeure was applicable (Paras 21-25). B) Electricity Law - Appellate Jurisdiction - Scope under Section 125 of Electricity Act, 2003 - The court held that the restrictive scope of appellate jurisdiction under Section 125 is a product of statutory preconditions and necessary to enable freedom to statutory regulator and Tribunal to develop sectorial laws through a principled and consistent approach (Paras 13-15). C) Electricity Law - Effective Date of PPA - Calculation of Scheduled Commissioning Date - Article 1.1(xxviii) read with Article 4.1(c) - The court approved APTEL's view that the effective date is the date of approval by KERC, not the date of signing, as the PPA becomes effective only upon regulatory approval (Para 23). D) Electricity Law - Extension of Time - Estoppel - The court noted that the appellant had itself approved a 6-month extension after scrutiny by a Technical Committee, and thus could not later contest the delay (Para 24). E) Electricity Law - Tariff Reduction - Not Justified When Delay Not Attributable to Developer - The court upheld APTEL's direction to pay the original tariff of Rs. 8.40 per unit with late payment surcharge, as the delay was due to force majeure and not the respondents' fault (Paras 25-26).
Issue of Consideration
Whether the extension of the Scheduled Commissioning Date was occasioned under the force majeure clause of the Power Purchase Agreement, and consequently, whether the reduction in tariff payable to the respondents is justified.
Final Decision
The Supreme Court dismissed the appeals, upholding APTEL's order. It held that the force majeure clause was correctly applied, the extension of time was valid, and no tariff reduction or liquidated damages were warranted. The appellant was directed to pay the difference in tariff with late payment surcharge as per Article 6.4 of the PPA.
Law Points
- Force majeure clause must be strictly interpreted
- burden of proof on party claiming force majeure
- appellate jurisdiction under Section 125 of Electricity Act
- 2003 is restrictive
- effective date of PPA is date of approval by regulatory commission
- delay caused by government authorities not attributable to developer
- extension of time granted by DISCOM cannot be later contested
- reduction in tariff not justified when delay not attributable to developer
- liquidated damages not imposable when delay due to force majeure.
