VSR Solar Power Private Limited vs Tamil Nadu Electricity Regulatory Commission & Ors

IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
Court-1
APPEAL No. 214 of 2021
st
Dated : 31 July, 2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member

In the matter of:

VSR Solar Power Private Limited
No.5, RavaGounder Street, Naduvoor,
Jolarpettai, Vellore District,
Tamil Nadu – 635 851
Email: [email protected] … Appellant

Versus

1. Tamil Nadu Electricity Regulatory Commission
Through its Secretary
th
4 Floor, SIDCO Corporate Office Building,
Thiru Vi Ka Industrial Estate,
Guindy, Chennai – 600032
Email: [email protected]

2. Tamil Nadu Generation and Distribution Corporation Limited
Through its Chairman
No. 144, Anna Salai, Chennai – 600002
Email: [email protected]

3. The Chief Engineer
NCES – TANGEDCO
No. 144, Anna Salai, Chennai – 600002
Email: [email protected]


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4. The Chairman,
NCES – TANGEDCO
No. 144, Anna Salai, Chennai – 600002
Email: [email protected]

5. The Superintending Engineer
General Construction Circle
Madurai – 625007
Email: [email protected] … Respondent (s)

Counsel on record for the Appellant(s) : Aditya K. Singh
Anukriti Jain
Pratiksha Chaturvedi
Ashly Cherian
Abhilasha Sharma
Siddarth Mehra
Vinit Kumar for App. 1

Counsel on record for the Respondent(s) : Anusha Nagarajan
for Res. 2-5


J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

nd
1. In this appeal, the Appellant has assailed the order dated 2
st
February, 2021 passed by the 1 Respondent – Tamil Nadu Electricity
Regulatory Commission (hereinafter referred to as “the Commission”) in
DRP No. 7 of 2020 filed by the Appellant thereby refusing to grant project
specific extension of the Commercial Operation Date (COD) of the
Appellant’s solar power project. The Commission has also held that since
the Appellant’s power project was not commissioned within 22 months
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nd nd
from 22 March, 2018 (date of signing of the PPA between it and the 2
nd
Respondent), the PPA stood automatically terminated and the 2
Respondent is entitled to relief provided under Article use 14 of the PPA
to the extent of non-commissioning of the power project by the Appellant.
2. The Appellant is a company registered under Companies Act, 2013
and is engaged in the business of solar power generation as well as other
allied activities.
3. Respondent No. 2 – Tamil Nadu Generation and Distribution
Corporation Limited (TANGEDCO) is the sole distribution licensee in the
State of Tamil Nadu.
4. Brief facts of the case, relevant for the disposal of the instant
nd
appeal, are that 2 Respondent – TANGEDCO issued a tender in the
year 2017 for procurement of total capacity of 1500 MW of solar power
from the developers on long-term basis. The tender was prepared and
issued in line with the “Guidelines for tariff based competitive bidding
process for procurement of power from grid connected solar PV power
rd
projects, 2017” dated 3 August, 2017 issued by the Ministry of Power,
Government of India as a guiding principle.
5. The Appellant also participated in the tender and was declared L-1
nd
bidder. Accordingly, Letter of Intent (LOI) dated 2 January, 2018 was
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nd
issued by 2 Respondent to the Appellant. As required under clause 5.0
of the LOI, the Appellant furnished two Performance Bank Guarantees
for a total amount of Rs.10 crores and also entered into Power Purchase
nd nd
Agreement dated 22 March, 2018 with the 2 Respondent –
TANGEDCO for a period of 25 years.
6. As per clause 14 of the PPA, the Appellant had to commission its
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power project by 21 March, 2019 i.e. within 12 months from the date of
the signing of the PPA.
7. Subsequent to signing of the PPA, the Appellant finalized its
location for its solar power project at Vilathikulam Tuticorim District, Tamil
Nadu and purchased the site land and also registered the same in its
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name on 26 April, 2018. Immediately, thereafter, the Appellant
commenced the ground work for establishing the power project i.e.
cleaning of land, bush removal etc.
th
8. The Appellant communicated its acceptance of LOI on 25 July,
2018 and at the same time requested for change of location of the power
project from Virudhunagar District (as identified earlier by the Appellant)
nd
to Vilathikulum Taluk, which request was accepted by 2 Respondent –
TANGEDCO. Accordingly, a certificate in this regard was issued to the
Appellant certifying that the solar plant can be interfaced to Vilathikulum
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110/33-11 KV SS at 110 KV level through a dedicated 110 KV power
evacuation line.
th
9. Vide notification dated 30 July, 2018, the Ministry of Finance
imposed a “Safeguard Duty” (in short “SGD”) on the modules and solar
panels to be imported from all developed countries such as China,
Taiwan and Malaysia. The notification imposed safeguard duty beyond
25% on the advolerum value of the modules thereby increasing the price
of modules by 25%.
10. The Ministry of Power, Government of India took note of the impact
of the levy of SGD upon the upcoming solar power projects and
accordingly issued under Section 107 of the Electricity Act to the Central
st
Commission on 21 August, 2018 stating that the solar power generators
can be duly compensated as a pass through for sudden levy of SGD as
the same amounts to a change in law situation.
11. The Cyclone Gaja accompanied by heavy rains are stated to have
hit the coast of Tamil Nadu in December, 2018 due to which Appellant’s
project was severely affected. There was severe water logging at the site
and the Appellant has to restart the preliminary work that had already
been completed. This severely impacted the viability of the entire project
of the Appellant and resulted in an increased overall project cost by 17%.
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th
12. Accordingly, Appellant wrote a letter dated 18 December, 2018 to
nd
2 Respondent – TANGEDCO stating these reasons and seeking an
extension of the Scheduled Commercial Operation Date (SCOD) of the
st st
power project by four months i.e. from 21 March, 2019 to 21 July, 2019.
However, the TANGEDCO rejected the said request of the Appellant vide
th
letter dated 7 January, 2019 stating that as per the commercial schedule
in the tender specification, the Appellant could commission the project on
st
or before 21 January, 2020 subject to the conditions mentioned therein.
13. A memorandum of understanding is stated to have been executed
between the Appellant and the Government of Tamil Nadu represented
th
by TANGEDCO on 24 January, 2019 during Global Investor Meet
whereby TANGEDCO agreed to provide infrastructural and regulatory
support to facilitate the project in view of substantial investment being
made by the Appellant. In view of the assurances, the Appellant placed
th th
two purchase orders dated 6 February, 2019 and 10 February, 2019
upon M/s DK Solar Projects & Ventures Pvt. Ltd. for a complete EPC
package for 53 MWp solar power project and for sub-station
components.
14. At the same time, TANGEDCO addressed the communication
rd
dated 3 September, 2019 to the Appellant as well as to the bankers of
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the Appellant seeking to invoke the Performance Bank Guarantee
furnished by the Appellant to the tune of Rs.10 crores citing the delay in
commissioning of the project. Thereafter, the Performance Bank
Guarantee for a sum of Rs.5.10 crores was encashed by TANGEDCO
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on 7 September, 2019 to which the Appellant strongly objected.
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15. Vide letter dated 27 October, 2019, the Appellant requested
TANGEDCO to refrain from forfeiting the Performance Bank Guarantee
furnished by it with further request to allow the Appellant to complete the
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project by 26 June, 2020. However, no response was received by the
Appellant to the said communication.
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16. Vide letter dated 5 December, 2019, the Respondent No. 3 denied
Appellant’s request for extension of COD and stating that the Appellant
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was required to furnish the commissioning of the power plant by 21
th
January, 2020. Vide another letter dated 20 December, 2019,
Respondent No. 3 directed the Appellant to furnish a fresh Performance
Bank Guarantee to a tune of Rs.7.60 crores for the delay of five months
in commissioning of the project.
nd
17. Feeling aggrieved by the refusal of the 2 Respondent –
TANGEDCO in granting the extension of SCOD of the power project or
approving the part commissioning of the project despite Appellant having
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taken active steps to complete the project and having expressed
willingness to perform its obligations under the PPA, the Appellant
approached the Commission by way of the petition being DRP No. 7 of
2020 seeking following prayers :-
“a) Grant the Petitioner a project specific extension of the COD
by eighteen months i.e. 21.3.2019 to 21.9.2020 in respect of the
Petitioner's SPG under PPA dated 22.03.2018 and
consequently quash the letters dated 05.12.2019.
st nd
b) Direct the 1 and 2 Respondents not to enforce any
security including bank guarantees and allow for its
continuance pending disposal of this petition upon such terms
as the Commission may deem fit in the facts and circumstances
of the case; and
c) Direct the 1st and 2nd Respondent to repay a sum of
Rs.5,10,00,000/ collected under Bank Guarantee dated
21.03.2018 in order that the Petitioner cam reinstate such bank
guarantee and keep it alive in terms of the PPA dates
22.03.2018 and upon such terms as the Commission deems
fit.”

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18. The petition has been disposed of by the Commission vide the
nd
order dated 2 February, 2021 which has been impugned in this appeal.
The Commission vide the impugned order, has not only refused to grant
extension of COD to the power project of the Appellant but has also held
that the PPA stood terminated automatically as the Appellant did not
commission the power project within the stipulated 22 months from the
date of signing of the PPA and also held the Respondent – TANGEDCO
entitled to invocation of the Performance Bank Guarantee submitted by
the Appellant as well as the liquidated damages as provided under clause
14 of the PPA.
19. We have heard Shri Aditya Singh, Learned Counsel for the
Appellant and Ms. Anusha Nagarajan, Learned Counsel for Respondent
Nos. 2 to 5. We have also perused the written submissions filed by the
Learned Counsel.
20. From the submission of the Learned Counsel for the Appellant, it
appears that the primary grievance of the Appellant is that the
Commission, in the impugned order, has over-looked the impact of the
cyclone and heavy rain on the development of the power project as
contended by the Appellant in its pleadings. It is argued that neither is
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there discussion on this aspect in the entire impugned order nor have
any findings been returned by the Commission on the same.
21. We note that the Appellant had specifically pleaded in paragraph
No. 23 of the petition filed before the Commission that its project was
severely affected by unforeseen natural disaster i.e. cyclone that hit the
cost of Tamil Nadu during the month of November, 2018. In paragraph
No. 29 of the petition, the Appellant had stated that it wrote two letters to
the Respondents seeking extension of COD of the power project on the
ground of natural disaster and low bank credit rating of TANGEDCO.
These paragraphs of this petition are extracted hereinbelow :-
"23. The Petitioner submits that vide letter dated
18.12.2018, the Petitioner intimated to the 2nd
Respondent that due to the unforeseen natural disaster
that hit the coast Of Tamil Nadu during November, 2018,
the Petitioner's project was severely affected and the
Petitioner was set back in project development by four
months. In light of the same, the Petitioner sought COD
extension by 4 months, i.e. from 21.03.2019 to
21.07.2019. TO this letter, the 2nd Respondent
TANGEDCO replied stating that the Petitioner had time
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till 21-01.2020 to commission its power plant, as per the
PPA dated 22.03.2018, during Which time the
TANGEDCO will be entitled to invoke the bank guarantee
for every day's delay.
29. The petitioner wrote two letters to the Respondent
Seeking extension COD on the ground of natural disaster
and low bank credit rating of TANGEDCO by the
Petitioner dated 18.12.2018 and 22.10.2019. However,
the Petitioner has received response from the
Respondent dated 07.01.2019 and 05.12.2019, in which,
the Respondent denied the extension of COD stating not
feasible."
nd
22. The 2 Respondent – TANGEDCO had in paragraph No. 29 of its
reply to the petition referred to and responded to these assertions of the
Appellant. The said paragraph of the reply of TANGEDCO filed before
the Commission is extracted hereinbelow :-
"29. It is respectfully submitted that the petitioner in para
23 of its petition has stated that they have been prevented
from developing and commissioning the solar power plant
at Tuticorin district because of natural disaster that hit the
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coast of Tamil Nadu in November 2018. Further 5
developers have commissioned solar power plants of
combined capacity of 500 MW within scheduled date of
commissioning at Tuticorin district under this scheme and
they have not claimed any time extension due to the
reasons stated above by the petitioner company. Hence
the reason stated by the petitioner is not acceptable and
justifiable and such a reason is stated to cover up his
commissions and omissions in pursuing the contract
conditions."
23. In paragraph No. 7 of the rejoinder filed by the Appellant, it
reiterated its assertions with regards to the complete inundation of the
project site due to heavy rains that had hit the coast of Tuticorim in
November, 2018. The said paragraph of the rejoinder is extracted
hereinbelow:-
"7. Further, the Respondent has failed to consider that in
November 2018, when heavy rains hit the coast of
Tuticorin, the Petitioner's project site was completely
inundated owing to which the Petitioner's personnel were
unable to access the project site. The Respondent has
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not taken cognizance of the fact that the Petitioner's
project site consists of black cotton soil which is more
susceptible to rain water stagnation, consequently, due to
the stagnation, the Petitioner was unable to carry out any
work. The contention of the Respondent that the other
developers have not cited the heavy rains to seek
extension of time is misplaced in as much as the
Respondent has failed to take cognizance of the nature
and location of the project site, which are facts peculiar
and unique to the Petitioner's project. Pertinently, in
response to the Petitioner's letter dated 18.12.2018,
seeking an extension of time for delay owing to the above
mentioned unforeseen rain and cyclone, the Respondent
has categorically stated in its letter dated 7.01.2019 that
the Petitioner had time until 21.01.2020 to commission
the power plant. Further, the 2nd Respondent had also
reiterated that the Petitioner had time till 21.01.2020, to
commission the project, in its letter dated 05.12.2020.
That being so, the Respondent cannot at this juncture
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retract its stand and claim that the PPA had terminated on
21.08.2019."
24. In paragraph No. 3.10 of the impugned order, the Commission has
taken note of these averments of the Appellant contained in the petition.
The said paragraph of the impugned order is reproduced hereinbelow:-
“3.10. Vide letter dated 18.12.2018, the Petitioner intimated
to the 2nd Respondent that due to the unforeseen natural
disaster that hit the coast of Tamil Nadu during December,
2018, the Petitioner's project was severely affected and the
Petitioner suffered set back in project development by four
months and sought COD extension by 4 months, i.e. from
21.03.2019 to 21.7.2019. To the same, the 2nd Respondent
TANGEDCO replied stating that the Petitioner had time till
21.01.2020 to Commission its power plant, as per the PPA
dated 22.03.2018, during which time the TANGEDCO
would be entitled to invoke the bank guarantee for every
day's delay.”
25. The response of the TANGEDCO to these averments of the
Appellant have been noted in paragraph No. 4.26 of the impugned order
which is reproduced hereinbelow:-
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“4.26. The petitioner in para 23 of its petition has stated
that it has been prevented from developing and
commissioning the solar power plant at Tuticorin district
because of natural disaster that hit the coast of Tamil
Nadu in December 2018. Further 5 developers have
commissioned solar power plants of combined capacity
of 500 MW within scheduled date of commissioning at
Tuticorin district under this scheme and they have not
claimed any time extension due to the reasons stated
above by petitioner company. Hence the reason stated by
the petitioner is not acceptable and justifiable and such a
reason is stated to cover up its commissions and
omissions in pursuing the contract conditions.”
26. We have minutely perused the entire impugned order of the
Commission. At no place in the order has the Commission discussed the
impact of cyclone and heavy rains on the development of the power
project of the Appellant. As such no findings have been returned by the
Commission on this aspect in the order. In fact, we may, record that the
findings of the Commission contained in paragraph No. 6 of the impugned
order begin with paragraph No. 6.1, contents of which indicate that the
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Commission has proceeded to discuss and examine the assertions of the
Appellant only with regards to the imposition of safeguard duty by the
Ministry of Finance, Government of India. The said paragraph of the
impugned order is extracted hereinbelow :-
“6.1. The instant petition is being filed seeking an
extension of the date of Commissioning (COD) by 18
months from 21-03-2019 to 21-09-2020 in respect of the
Petitioner's 50 MW power plant in respect of which the
Petitioner entered into a power purchase agreement
st
(PPA) dated 22.03.2018 with the 1 Respondent herein
due to a substantial change in law in respect of levy of
Safeguard Duty (SGD) by the Ministry of Finance,
st nd
Government of India and also to direct the 1 and 2
respondent to repay a sum of Rs.5,10,00,000/- collected
under Bank Guarantee dated 21-03-2018 in order that the
petitioner can reinstate such bank guarantee and keep it
alive in terms of the PPA dated 22-03-2018.”
27. We are unable to understand as to how the Commission chose not
to discuss the impact of the cyclone and the consequently heavy rains
upon the progress of the power project of the Appellant despite their
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being ample pleadings before it in this regard. Therefore, the impugned
order is not only erroneous but also atrocious as it fails to dwell upon and
address one of the primary grievance with which the Appellant has
approached the Commission.
28. The Commission had even framed four issues for its consideration,
one of which related to the scope of Force Majeure and is extracted
hereinbelow:-
“Whether there has been a substantial change in law
which falls within the scope of Force Majeure as
contemplated under clause 16 of the PPA?”
29. In the discussion under the said issue, the Commission has
referred to and discussed only the impact of the levy of the safeguard
duty by the Central Government and has held that such levy does not fall
within the Force Majeure clause of the PPA. There is no reference to the
cyclone and the consequential heavy rains in the entire discussion under
this issue which also had been projected by the Appellant as Force
Majeure event affecting the progress of the power project.
30. Once, a statement of facts is made in the petition by the petitioner
upon which the relief claimed in the petition is founded, the same having
been denied in the reply of the respondent and re-affirmed by the
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petitioner in the rejoinder, the Commission was bound to take note of the
same, discuss the same and return its findings on the same in the final
order by which the petition is disposed of. In the instant case, the
Commission has completely over-looked issue of cyclone and
consequential rainfall as agitated by the Appellant as a ground for
claiming extension of SCOD of the power project. Such non-
consideration of one of the material issue in the impugned order is merely
reflects failure on the part of the Commission to properly adjudicate the
disputes between the parties, which has rendered the impugned order
unsustainable and liable to set aside.
31. The fact that Commission has passed the impugned order in a
cavalier fashion without application of mind to the contractual provisions,
is evident from bare reading of paragraphs 6.17.11 and 6.17.12 of the
order in which the Commission has extracted and discussed clause 14
of PPA of some other project developers and not of the PPA executed
between the Appellant and TANGEDCO in this case. In fact, concluding
paragraph No. 6.17.13 of the impugned order also refers to the timelines
of some other PPA and not the timelines specified in the PPA executed
in this case being a party. This factual mis-match also renders the
impugned order unsustainable and liable to set aside.
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32. We refrain from returning any findings on the issue of entitlement
of TANGEDCO to encash the Bank Guarantee submitted by the
Appellant and the liability of the Appellant to pay liquidated damages to
TANGEDCO, as directed by the Commission in the impugned order, as
any decision of these two issues would depend upon the findings to be
returned by the Commission with regards to the impact of Force Majeure
event i.e. cyclone along with consequential heavy rains upon the
construction of the power project of the Appellant.
33. Having regard to above discussion, we are unable to sustain the
impugned order of the Commission and the same is hereby set aside.
The case is remanded back to the Commission for fresh consideration
with regards to the impact of cyclone and the consequential heavy rains
that are stated to have hit the coast of Tamil Nadu in November, 2018,
upon the progress of the power project by the Appellant as a Force
Majeure event as contemplated under clause 16 of the PPA executed
between the parties as also upon the consequential issues related to
entitlement of TANGEDCO for encashing the Bank Guarantees
submitted by the Appellant and liability of the Appellant to pay liquidated
damages to TANGEDCO. The Commission shall render its fresh decision
after affording reasonable opportunity of hearing to all the parties and
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while keeping in mind the observations of this Tribunal in the judgement
th
dated 29 July, 2026 in Appeal No. 151 of 2021 which also had arisen in
almost similar factual context and identical order passed by the
Commission. Needless to say that the Commission shall endure to pass
fresh order within three months from the date of receipt of this judgement.
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Pronounced in the open court on this 31 day of July, 2026.


(Virender Bhat) (Seema Gupta)
Judicial Member Officiating Chairperson

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REPORTABLE / NON REPORTABLE

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