M/s ACME Kudligi Solar Energy Private Limited vs Karnataka Electricity Regulatory Commission & Ors
- Court
- Appellate Tribunal For Electricity
Court-1
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.225 OF 2021
Dated: 09.09.2026
Present: Hon’ble Ms. Seema Gupta, Technical Member (Electricity)
Hon’ble Mr. Virender Bhat, Judicial Member
In the matter of:
M/s ACME Kudligi Solar Energy Private Limited
Through its Authorized Signatory
Plot No. 152, Sector – 44, Gurgaon,
Haryana - 122022 … Appellant
Versus
1. Karnataka Electricity Regulatory Commission
Through its Secretary
16, C-1, Millers Tank Bund RD, Yellappa Garden,
Bed Area, Vasanth Nagar,
Bengaluru, Karnataka – 560052
[email protected]
2. Karnataka Power Transmission Corporation Limited
Through its Managing Director
nd
2 Floor, KPTCL, Kaveri Bhavan,
Bangalore – 560009
[email protected]
3. Bangalore Electricity Supply Company Limited
Through its Managing Director
K.R. Circle, Bengaluru,
Karnataka – 560001
[email protected]
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Appeal No.225 of 2021 Page 1 of 45
4. Karnataka Renewable Energy Development Limited
Through its Managing Director
39, ‘Shanti Gruha’, Bharath Scouts & Guides Building,
Opp. The Chief Post Master General Office,
Palace Road, Bengaluru – 560001
[email protected] … Respondent (s)
Counsel for the Appellant(s) : Aniket Prasoon
Shweta Vashist
Akanksha Tanvi
Priya Dhankar
Akash Lamba
Shubham Mudgil
Rishabh Bhardwaj
Anandini Thakre
for App. 1
Counsel for the Respondent(s) : S. Sriranga, Sr. Adv.
Sumana Naganand
Garima Jain
Nidhi Gupta
Tushar Kanti Mohindroo
Arnav Khanna
for Res. 2
S. Sriranga, Sr. Adv.
Sumana Naganand
Garima Jain
Nidhi Gupta
Tushar Kanti Mohindroo
for Res. 3
Sharanagouda Patil
For Res. 4
J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The appellant, a solar power developer in the State of Karnataka, is
st
aggrieved by the order dated 11.06.2021 passed by the 1 respondent
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Karnataka Electricity Regulatory Commission (hereinafter referred to as “the
Commission”) in appellant’s petition bearing O.P. No.37/2020 thereby
dismissing the petition wherein the appellant had sought extension of
Scheduled Commercial Operation Date (in short “SCOD”) of its solar power
project on account of force majeure events and a declaration that the
appellant is not liable to bear any liquidated damages as well as reduction in
tariff or any contractual penalty for delay in commissioning of project. The
Commission, in the said impugned order, has held that the case of the
appellant is not covered by the force majeure clause contained in the Power
rd
Purchase Agreement executed by it with the 3 respondent Bangalore
Electricity Supply Company Limited (in short “BESCOM”) and further held
the appellant entitled to reduced tariff as well as liable to pay liquidated
damages for delay in supply of energy beyond the scheduled commissioning
date in terms of the Power Purchase Agreement.
Description of Parties: -
2. The appellant is a generating company within the meaning of the term
in Section 2(28) of the Electricity Act, 2003 and also is a Special Purpose
Vehicle (in short “SPV”) incorporated by M/s ACME Solar Holdings Private
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Limited for setting up of 20MW solar power project in Kudligi Taluka, Bellary
District, Karnataka.
nd
3.
The 2 respondent Karnataka Power Transmission Corporation
Limited (in short “KPTCL”) was incorporated in 1999 upon unbundling of
erstwhile Karnataka Electricity Board with the responsibility of transmission
of power across the State of Karnataka along with
construction/maintenance/development of transmission assets and lines and
other requisite infrastructure for transmission of electricity. It has duly been
granted a transmission license by the Commission vide order dated
06.12.2000 and thus, is discharging the functions of a transmission licensee.
rd
4. The 3 respondent Bangalore Electricity Supply Company Limited (in
short “BESCOM”) is wholly owned by the Government of Karnataka and is
solely responsible for power distribution in various areas in the State of
th
Karnataka. The 4 respondent Karnataka Renewable Energy Development
Limited (in short “KREDL”) is an organization working under the purview of
Energy Department, Government of Karnataka with the objective of
promoting renewable energy and to ensure all necessary actions for energy
conservation in the State.
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Facts and circumstances of the case in brief: -
th
5. The 4 respondent KREDL had issued a notification dated 07.12.2017
inviting Request for Proposal (RFP) for developing 860 MW grid connected
solar power projects in 43 Talukas in the State of Karnataka, one of them
being Kudligi Taluka. In pursuance to the said notification, KREDL received
proposals from various bidders including the appellant. After evaluation of
the parties, KREDL accepted the bids of the appellant for setting up of solar
power projects in Guledagudda, Kittur, Kudligi and Sidlaghatta Talukas with
the capacity of 15MW, 15MW, 20MW and 20MW respectively. Accordingly,
separate Letters of Award (LOAs) dated 08.02.2018 were issued to the
appellant for setting up of these four power projects. The LOAs were
accepted by the appellant vide letter dated 12.02.2018.
nd
6. In accordance with the RFS notification, the appellant and 2
respondent BESCOM entered into Power Purchase Agreements with the
appellant for purchase of power generated from these four solar power
projects. Since we are, in this appeal, concerned with only the 20MW solar
power project of the appellant at Kudligi, we may note that the Power
Purchase Agreement (PPA) dated 22.03.2018 was entered into between
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BESCOM and the appellant with respect to the power to be generated in the
said solar power project to be set up at Kudligi.
7. Subsequent to the signing of the PPA, the appellant applied for
connectivity of the project to 220/66kV Kudligi sub-station on 02.05.2018.
8. The PPA dated 22.03.2018 executed between the parties received
approval from the Commission on 04.05.2018. Since Article 3.1 of the PPA
provided that the “effective date” on which the agreement shall come into
effect will be the date of getting concurrence from KERC, the appellant was
required to achieve commercial operation of the power project within 18
months from 04.05.2018 i.e. the date when the PPA was approved by the
nd
Commission. Therefore, the SCOD of the project was 03.11.2019. The 2
respondent KPTCL issued tentative evacuation scheme approval to the
appellant on 06.10.2018 which was accepted by the appellant vide letter
dated 09.10.2018. Thereafter, KPTCL issued regular evacuation scheme for
the proposed 220MW solar power project at Kudligi on 19.11.2018.
9.
Since the appellant sensed delay in the completion of 220/66kV Kudligi
sub-station as well as upstream transmission line, through which it had to
evacuate power, it addressed a letter dated 07.02.2019 to the General
Manager, BESCOM, conveying that any delay in completion of line being
constructed on the upstream of Kudligi sub-station, would have impact on
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the commissioning schedule of the power project as envisaged under the
PPA and further, upon invoking Article 14.3.1 of the PPA ( force majeure
clause), the appellant requested BESCOM for appropriate extension of time
for commissioning of the power project equivalent to such delay. Vide letter
dated 11.03.2019, the appellant reiterated the assertions made in previous
letter dated 07.02.2019 and requested KPTCL to furnish the present status
and definitive timeline for completion as well as commissioning of 220/66kV
Kudligi sub-station and upstream transmission lines from the same within
seven days of the receipt of the letter.
10. In its response dated 21.03.2019 to the appellant’s communication
dated 11.03.2019, KPTCL gave the probable date of commissioning of
220kV Kudligi sub-station as 30.04.2019 and that of incoming line & terminal
bay as 30.06.2019.
11. The appellant, vide letter dated 12.07.2019, again requested KPTCL
to confirm the present status of commissioning of 220kV Kudligi sub-station
as well as 220kV Kudligi upstream transmission line. Similar request was
made by appellant in the subsequent two letters dated 29.08.2019 and
31.08.2019.
12. It appears that since no such confirmation was received by the
appellant from KPTCL, it filed a petition before the Commission seeking
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directions to KPTCL to commission the Kudligi sub-station at the earliest.
Some other reliefs were also claimed in the petition. However, the petition
was withdrawn by the appellant on 31.12.2019 with liberty to approach the
Commission after the commissioning of Kudligi sub-station and its own
power project. Vide letter dated 30.09.2019, BESCOM reminded the
appellant that in view of the provisions of the RFP, it was the responsibility
of the project developer i.e. the appellant to obtain power evacuation
approval for the power project to the nearest sub-station/delivery point as
mentioned in the PPA, and accordingly, appellant was advised to approach
KPTCL to obtain clarification regarding the present status of commissioning
of 220kV Kudligi sub-station as well as 220kV Kudligi upstream transmission
line.
13. The appellant contends that as per the suggestion of BESCOM, it
again approached KPTCL and was informed that Kudligi sub-station will not
be available for evacuation of power by the SCOD of the appellant’s power
project i.e. 03.11.2019.
14. Thereafter, the appellant issued force majeure notice dated
23.10.2019 to the BESCOM saying that the power project of the appellant
could not be commissioned on account of delay on the part of KPTCL in
commissioning the Kudligi sub-station as well as upstream transmission line
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thereby affecting its performance under the PPA. Accordingly, request was
made to provide extension of the SCOD of the power project in view of the
said force majeure event and not to take any coercive action against the
appellant.
15. On the same very day i.e. 23.10.2019, Chief Electrical Inspectorate to
the Government of Karnataka issued approval of electrical installations in the
power project of the appellant (CEIG approval). PTCC approval was also
issued by the Divisional Engineer, Telecom, Power Telecommunication
Coordination Committee on the same day i.e. 23.10.2019.
16. In pursuance to the said CEIG approval, appellant applied for regular
interconnection approval to KPTCL vide letter dated 28.10.2019 for
interconnecting the solar power plant with 220kV Kudligi sub-station so that
the power project may be commissioned. KPTCL responded to the same on
06.01.2020 stating that 66kV terminal bay work was pending at both
220/66kV Kudligi sub-station end and at the end of power project. The
appellant was asked to complete the same. Vide letter dated 29.01.2020.
appellant informed KPTCL that all such work within its scope was already
competed and only cable termination at Kudligi sub-station was pending due
to various reasons which included lack of support from KPTCL officials.
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17. Vide subsequent letters dated 13.02.2020 and 19.02.2020, appellant
requested KPTCL to take immediate steps to complete and charge 220kV
Kudligi sub-station and also sought support of its officials for the pre-
commissioning testing of the power project. Since, the appellant appears to
have not received any response from KPTCL, it wrote to the State
Government on 26.02.2020 with the request to intervene and advise KPTCL
to take immediate steps to charge the said Kudligi sub-station and to extend
requisite support to the appellant for conducting the pre-commissioning
testing.
18. Thereafter, the appellant received letter dated 12.03.2020 from KPTCL
stating that a few activities at bay end of the Kudligi sub-station are pending
and also sought certain documents from the appellant for consideration of its
request of interconnection approval. This was responded to by the appellant
vide letter dated 17.03.2020.
19. It appears that some progress was made in the work at the end of
KPTCL for charging 220kV Kudligi sub-station but the work was again put on
hold due to countrywide lockdown on account of spread of Covid-19.
20. Ultimately, Electrical Inspectorate, Government of Karnataka provided
provisional approval for electrical installations pertaining to 220kV DC line
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from existing 400/220kV Jagalur KPTCL sub-station to existing 220/66kV
Kudligi sub-station on 20.04.2020. On the same day, Electrical Inspectorate
also provided provisional approval for electrical installation pertaining to
220/66kV Kudligi sub-station.
21. In pursuance to these approvals, the EPC contractor of KPTCL
consented to charge the 220/66kV Kudligi sub-station. Thereafter, requisite
pre-commissioning test for Kudligi sub-station was carried on from
27.05.2020 to 30.05.2020 and the same was test charged on 30.05.2020 at
5:31 P.M.
22. Commissioning certificate for the solar power project in question was
issued by KPTCL to the appellant on 02.06.2020 declaring the same as
commissioned and interconnected to KPTCL Grid situated at 220/66kV
Kudligi on 30.05.2020 at 1900 Hrs. Thus, the 20MW solar power project of
the appellant achieved Commercial Operation (Commercial Operation Date)
on 30.05.2020.
23. In view of these facts and circumstances, the appellant filed petition
no.37/2020 before the Commission seeking extension of SCOD of the power
project from 03.11.2019 to 30.05.2020 on account of force majeure events
not attributable to the appellant and a declaration that the appellant will not
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be liable to bear any liquidated damages, reduced tariff and other contractual
penalties for delay in commissioning of the project. The petition has been
dismissed by the Commission vide impugned order dated 11.06.2021
thereby denying all the reliefs sought by the appellant.
24. Accordingly, the appellant is before us in this appeal challenging the
observations and findings of the Commission in the impugned order.
Findings of the Commission in the impugned order: -
25. We may note that the Commission had framed following eight issues
for its consideration: -
“Issue No.1: Whether on or before the Scheduled Commissioning
Date (SCD), construction works of the Solar Power
Project of the Petitioner was completed and the said
Project was ready for commissioning?
Issue No.2: If Issue No.1 is held in negative, on which date the
Solar Power Project was ready for commissioning?
Issue No.3: Whether in the facts and circumstances of the present
case, the acceptance of conditional evacuation scheme
approval by the Petitioner precludes it from claiming any
relief under Force Majeure event for the period during
which the evacuation system of 2nd Respondent
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(KPTCL) was not made available for evacuation of
power from the Solar Power Project?
Issue No.4: Whether in the facts and circumstances of present
case, the Petitioner had the obligation to go for
alternative methods of evacuation of power?
Issue No.5: Whether delay in commissioning of Kudligi Sub-
station would fall under the definition of Force Majeure
as per Article 14 of the PPA?
Issue No.6: Whether the 1st Respondent (BESCOM) is entitled to
claim Liquidated Damages at the rates specified in
Article 5.8 of the PPA?
Issue No.7: To which reliefs the parties are entitled to?
Issue No.8: What Order?”
26. issue no.1 has been decided in appellant’s favour. The Commission
has held that the appellant had completed the construction works of the solar
power project well before its SCOD i.e. 03.11.2019 and accordingly did not
find it necessary to return any findings on issue no.2.
27. On issue no.3, the Commission has opined that the appellant is
precluded from invoking the force majeure clause of the PPA and its case
falls under the “ force majeure exclusions” stated in article 14.4 of the PPA.
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28. Issue no.4 has been decided in favour of the appellant stating that the
appellant had no obligation for alternative methods of evacuation of power
at any stage before the commissioning of the Kudligi sub-station.
29. The issue no.5 was also decided by the Commission in negative
holding that the delay in commissioning of Kudligi sub-station would not fall
under the definition of “ force majeure” as per Article 14 of the PPA.
nd
30. On issue no.6, the Commission has held the 2 respondent BESCOM
entitled to claim liquidated damages as per Article 5.8 of the PPA.
31. On issue no.7, the Commission has held appellant liable for reduced
tariff as per Article 12.2 of the PPA as well as for payment of liquidated
damages for delay in supply of energy beyond the Scheduled
Commissioning Date.
32. Accordingly, the petition was dismissed.
Contentions/submissions of the parties: -
33. We have heard Mr. Aniket Prasoon, learned counsel for the appellant,
as well as Mr. S. Sriranga, learned senior counsel appearing on behalf of the
nd rd
2 and 3 respondents. We have also perused the written submissions filed
by the learned counsels.
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34. According to the appellant, the impugned order of the Commission is
not legally sustainable for the following reasons: -
(a) The power project of the appellant was granted approval by the Chief
Electrical Inspectorate and the power Telecommunication
Coordination Committee on 23.11.2019 which evidences that the
appellant was ready to commission its project prior to SCOD and
despite accepting such factual position, the Commission has given
contrary findings holding the appellant liable for reduced tariff as well
as for payment of liquidated damages for delay in commissioning of
the power project;
(b) The Commission has not considered the express provision of the PPA
pertaining to extension of time on account of force majeure event
particularly Article 5.7.1 which required the appellant to first
commission the project and then seek for extension of
time/condonation of delay on account of being impacted by force
majeure event;
(c) The Commission has not considered the fact that KPTCL, vide its letter
dated 21.03.2019, had intimated the appellant that the works
pertaining to 220kV Kudligi sub-station and associated transmission
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line would be completed by 30.04.2019 which was subsequently
revised on 30.06.2019 and the appellant had no reason to foresee any
delay in their commissioning;
(d) The Commission has selectively applied the provisions of the PPA and
has not considered that the claim for liquidated damages made by
BESCOM was a sheer afterthought and the counterblast to the petition
filed by the appellant as the same was raised much after the
commissioning of the power project of the appellant.
35. All these grounds of challenge to the impugned order raised on behalf
nd rd
of the appellant have been strongly refuted on behalf of the 2 and 3
respondents stating that: -
(a) Appellant is bound by contractual obligations enumerated in the RFP
as well as PPA, according to which the project developer is responsible
to evacuate power from the power plant to the nearest sub-
station/delivery point and to obtain all clearances/consents including
evacuation approval;
(b) The appellant’s power project was not ready for commissioning within
the SCOD which is evident from the letter dated 30.11.2019 issued by
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BESCOM stating that the appellant had not completed all works at its
end on the SCOD;
(c) Appellant had knowledge, which stems from the KPTCL’s
communication dated 06.10.2018 and 19.11.2018, that evacuation of
power would be possible only after commissioning of proposed
220/66kV Kudligi sub-station, which condition was unhesitatingly
accepted by the appellant and therefore, the appellant is disentitled
from contending that it was prevented from commissioning of the
power project within SCOD;
(d) The appellant has failed to establish any force majeure event which
prevented it from commissioning the power project within SCOD;
(e) The appellant has failed to follow the procedure set out in the PPA for
invocation of force majeure clause;
(f) The appellant had failed to fulfill the conditions precedent within the
stipulated time which is evident from the letter dated 31.03.2020 of the
BESCOM;
(g) Liquidated damages and reduction in tariff are contractual
consequences arising from the delay on the part of the appellant in
commissioning the power project by the SCOD; and
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(h) The instant case is squarely covered by the judgment of the Supreme
Court in Chamundeshwari Electricity Supply Company Limited v.
Saisudhir Energy (Chitradurga) Private Limited & Anr (2026) 1 SCC
799.
Our analysis: -
36. We find that Articles 5.7, 5.8 and 14 of the PPA dated 22.03.2018
nd
executed between appellant and 2 respondent are material for our
discussion and therefore, are extracted hereinbelow: -
“5.7. Extensions of Time
5.7.1. In the event that the Developer is prevented from achieving
the progress in fulfilling the Conditions Precedent within the
time stipulated in the PPA, the BESCOM may grant
extension of time, not more than 4 (four) months for fulfilling
the Conditions Precedent. Such extension of time by
BESCOM shall not affect the commissioning of the Project
within the scheduled commissioning date.
In the event that the Developer is prevented from
commissioning of the Project within the time stipulated in the
PPA due to:
a) Any BESCOM Event of Default; or
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b) Force Majeure Events affecting BESCOM; or
c) Force Majeure Events affecting the Developer,
the Developer shall commission the Project and thereafter
may file a petition before KERC, seeking approval for
condoning the delay in commissioning the Project urging
any of the grounds mentioned in (a), (b), (c) above. Such
petition shall be deemed to be a dispute under Article 18.3.
5.7.2. After hearing the Parties and considering the merits of the
grounds urged, KERC may condone the delay in
commissioning of the Project on any of the grounds stated
by the Developer.
5.7.3. In case KERC condones the delay, the scheduled
commissioning date and the expiry date shall be deemed to
be extended by the period for which the delay is condoned
by KERC.
5.7.4. In the event that the Developer is prevented from achieving
the progress in fulfilling the Condition Precedent or
commissioning the Project for the reasons specified in the
Article 5.7.1 (a), (b), (c) and if such events continue even
after a maximum period of 4 (four) months, any of the Parties
may terminate the agreement as per the provisions of Article
16.
5.8. Liquidated Damages for delay in commencement of
supply of power to BESCOM
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5.8.1. If the Developer is unable to commence supply of power to
BESCOM by the Scheduled Commissioning Date other than
for the reasons specified in Clause 5.7.1, the Developer
shall pay to BESCOM, Liquidated Damages for the delay in
such commencement of supply of power and making the
Contracted Capacity available for dispatch by the Scheduled
Commissioning Date as per the following:
a. For the delay up to one month an amount equivalent to 20% of
the Performance Security.
b. For the delay of more than one (1) month and upto two months
an amount equivalent to 40% of the total Performance Security.
c. For the delay of more than two and upto three months an amount
equivalent to 40% of the Performance Security.
For avoidance of doubt, in the event of failure to pay the above
mentioned damages by the Developer entities the BESCOM to
encash the Performance Security.
5.8.2. In case the Developer delays the achievement of Commercial
Operation Date beyond 3 (three) months, the Developer shall pay
to BESCOM, the Liquidated Damages at rate of INR 50,000/-
(Rupees Fifty Thousand only) per MW per day of delay for the
delay in such commissioning. Provided that the Developer shall
be required to make such payments to BESCOM in advance on
a week to week basis for the period of delay.
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5.8.3. The maximum time period allowed for achievement of
Commercial Operation Date with payment of Liquidated
Damages shall be limited to 22 (twenty two) months from the
Effective Date. In case, the achievement of COD is delayed
beyond 22 (twenty two) months from the Effective Date, it shall
be considered as an Developer's Event of Default and provisions
of Article 16 shall apply and the Power Project shall be removed
from the list of selected projects in the event of termination of this
Agreement.
ARTICLE 14: FORCE MAJEURE
14.1. Definitions
14.1.1. In this Article, the following terms shall have the following
meanings:
14.2. Affected Party
14.2.1. An Affected Party means BESCOM or the Developer
whose performance has been affected by an event of
Force Majeure.
14.3. Force Majeure
14.3.1. A 'Force Majeure' means any event or circumstance or
combination of events those stated below which wholly or
partly prevents or unavoidably delays an Affected Party in
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the performance of its obligations under this Agreement,
but only if and to the extent that such events or
circumstances are not within the reasonable control,
directly or indirectly, of the Affected Party and could not
have been avoided if the Affected Party had taken
reasonable care or complied with Prudent Utility
Practices:
a) act of God, epidemic, extremely adverse weather
conditions, lightning, earthquake, landslide, cyclone,
flood, volcanic eruption, chemical or radioactive
contamination or ionising radiation, fire or explosion (to
the extent of contamination or radiation or fire or explosion
originating from a source external to the Site);
b) an act of war (whether declared or undeclared), invasion,
armed conflict or act of foreign enemy, blockade,
embargo, riot, insurrection, terrorist or military action, civil
commotion or politically motivated sabotage;
c) compulsory acquisition in national interest or
expropriation of any Project Assets or rights of the
Developer or of the Contractors;
d) any judgment or order of any court of competent
jurisdiction or statutory authority made against the
Developer in any proceedings for reasons other than (i)
failure of the Developer to comply with any Applicable Law
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or Applicable Permit, or (ii) on account of breach of any
Applicable law or Applicable Permit or of any contract, or
(iii) enforcement of this Agreement, or (iv) exercise of any
of its rights under this Agreement by the Government or
e) unlawful or unauthorized or without jurisdiction revocation
of, or refusal to renew or grant without valid cause, any
clearance, license, permit, authorization, no objection
certificate, consent, approval or exemption required by the
Developer or any of the Contractors to perform their
respective obligations under this Agreement and the
Project Agreements; provided that such delay,
modification, denial, refusal or revocation did not result
from the Developer's or any Contractor's inability or failure
to comply with any condition relating to grant,
maintenance or renewal of such clearance, license,
authorization, no objection certificate, exemption,
consent, approval or permit.
14.4. Force Majeure Exclusions
14.4.1. Force Majeure shall not include (i) any event or
circumstance which is within the reasonable control of
the Parties and (ii) the following conditions, except to
the extent that they are consequences of an event of
Force Majeure:
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a) Unavailability, late delivery, or changes in cost of
the plant, machinery, equipment, materials, spare
parts or consumables for the Power Project,
b) Delay in the performance of any Contractor, sub-
Contractor or their agents;
c) Non-performance resulting from normal wear and
tear typically experienced in power generation
materials and equipment;
d) Strikes at the facilities of the Affected Party;
e) Insufficiency of finances or funds or the agreement
becoming onerous to perform; and
f) Non-performance caused by, or connected with,
the Affected Party's:
i. Negligent or intentional acts, errors or
omissions;
ii. Failure to comply with an Indian Law; or
iii. Breach of, or default under this Agreement.
iv. If the Developer did not get NA conversion
(deemed conversion) of the ‘purchased’ or
'leased and sub-leased’ land after obtaining the
ownership or lease hold rights In the name of the
Developer, then such delay due to the above
event shall be considered under force majeure,
subject to approval from KERC. In this regard,
the developer shall substantiate the above delay
with sufficient documentary proof including but
not limited to the application, payment of
necessary fee/charges, fulfilment of clarification
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sought from/ by the respective revenue
authorities. The decision of KERC shall be final
and governing on both the Parties.
14.5. Notification of Force Majeure Event
14.5.1. The Affected Party shall give notice to the other Party
of any event of Force Majeure as soon as reasonably
practicable, but not later than seven (7) days after the
date on which such Party knew or should reasonably
have known of the commencement of the event of
Force Majeure. If an event of Force Majeure results in
a breakdown of communications rendering it
unreasonable to give notice within the applicable time
limit specified herein, then the Party claiming Force
Majeure shall give such notice as soon as reasonably
practicable after reinstatement of communications, but
not later than one (1) day after such reinstatement.
Provided that such notice shall be a pre-condition to the
Affected Party's entitlement to claim relief under this
Agreement. Such notice shall include full particulars of
the event of Force Majeure, its effects on the Party
claiming relief and the remedial measures proposed.
The Affected Party shall give the other Party regular
(and not less than monthly) reports on the progress of
those remedial measures and such other information at
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Appeal No.225 of 2021 Page 25 of 45
the other Party may reasonably request about the Force
Majeure Event.
14.5.2. The Affected Party shall give notice to the other Party
of (i) the cessation of the relevant event of Force
Majeure, and (ii) the cessation of the effects of such
event of Force Majeure on the performance of its rights
or obligations under this Agreement, as soon as
practicable after becoming aware of each of these
cessations.
14.6. Duty to Perform and Duty to Mitigate
14.6.1. To the extent not prevented by a Force Majeure Event
pursuant to Article 14.3, the Affected Party shall
continue to perform its obligations pursuant to this
Agreement. The Affected Party shall use its reasonable
efforts to mitigate the effect of any Force Majeure Event
as soon as practicable.
14.7. Available Relief for a Force Majeure Event
Subject to this Article 14:
a) no Party shall be in breach of its obligations
pursuant to this Agreement except to the extent
that the performance of its obligations was
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Appeal No.225 of 2021 Page 26 of 45
prevented, hindered or delayed due to a Force
Majeure Event;
b) every Party shall be entitled to claim relief in
relation to a Force Majeure Event in regard to its
obligations, including but not limited to those
specified under Article 5.7.1;
c) For avoidance of doubt, neither Party's obligation
to make payments of money due and payable
prior to occurrence of Force Majeure events under
this Agreement shall be suspended or excused
due to the occurrence of a Force Majeure Event
in respect of such Party.
d) Provided that no payments shall be made by
either Party offered by a Force Majeure Event for
the period of such event on account of its inability
to perform its obligations due to such Force
Majeure Event. ”
37. A combined reading of clause 5.7 and 5.8 of the PPA would reveal that
in case a project developer fails to commission the power project by the
Scheduled Commissioning Date (SCOD) thereby resulting in delay in
commencement of supply of power to BESCOM, the developer would be
liable to pay liquidated damages to BESCOM for such delay in supply of
power in the amount as specified in clauses (a), (b) and (c) of Article 5.8.1
corresponding to the period of delay. However, where the delay is caused
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Appeal No.225 of 2021 Page 27 of 45
for the reasons specified in clause 5.7.1, the project developer shall not be
liable to pay any such liquidated damages to BESCOM.
38. Clause 5.7.1 provides that in case the delay in commissioning of the
project within SCOD is due to any event of default on the part of BESCOM
or any force majeure event affecting BESCOM or any force majeure event
affecting the developer, the developer shall commission the project and
thereafter approach the Commission with a petition seeking approval for
condonation of delay in commissioning the project on these grounds. It
further provides that in case the Commission condones the delay, the SCOD
of the project shall be deemed to be extended by the period for which the
delay is condoned by the Commission.
39. Force majeure
and its consequences are specified in Article 14 of the
PPA. Article 14.3.1 specifies certain events which would constitute force
majeure only where such events prevent the affected party in the
performance of its obligations under the PPA or unavoidably delayed such
performance wholly or partly and to the extent such events and
circumstances are not within the reasonable control, directly or indirectly, of
the affected party or could not have been avoided even if reasonable care
was taken or prudent utility practices were complied with by the affected
party. Article 14.4.1 enumerates certain events which do not constitute force
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Appeal No.225 of 2021 Page 28 of 45
majeure events. Article 14.5.1 makes it obligatory upon the affected party
to give notice to the other party of any such force majeure event as soon as
practicable but not later than seven days after the date on which such party
knew or should or should have reasonably known the commencement of the
force majeure event.
40. In the instant case, we have already noted that the Commission has
held in the impugned order that the appellant had completed the construction
works of the solar power project well before its SCOD i.e. 03.11.2019. Such
finding of the Commission is primarily based upon the CEIG approval and
PTCC approval, both dated 23.10.2019, accorded to the appellant’s power
project by Chief Electrical Inspectorate, Government of Karnataka and
Divisional Engineer, Telecom, Power Telecommunication Coordination
Committee respectively. Learned counsel for the respondent nos.2 & 3 drew
our attention to letter dated 30.11.2019 addressed by BESCOM to the
appellant and argued vehemently that the contents of this letter show that
the appellant had not completed all works at its end on the SCOD of the
project. Reliance is also placed upon letters dated 06.01.2020 and
12.03.2020 issued by KPTCL to the appellant.
41. We may note that he Commission has, in the impugned order, referred
to the BESCOM letter dated 30.11.2019 wherein certain works have been
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Appeal No.225 of 2021 Page 29 of 45
mentioned which had not been completed in the power project of the
appellant. However, the Commission has observed that these pending works
shown in the said letter are only finishing works, which, at best, could have
been completed within 3 to 4 days. The CEIG report also confirms the fact
that the power project of the appellant was ready by 23.10.2019.
42. These findings of the Commission have not been assailed in any
manner on behalf of respondent nos.2 & 3. It was not even argued by the
learned counsel for these two respondents that these findings of the
Commission in the impugned order are erroneous and contrary to the
material on record. Even nothing in this regard has been stated in the written
submissions filed on behalf of these respondents. Therefore, it does not lie
in the mouth of these respondents to contend that the power project of the
appellant was not ready for commissioning on the scheduled date of
commissioning.
43. The Commission has concluded that the case of the appellant falls
under the “force majeure exclusions ” as stated in Article 14.4 of the PPA and
thus, not entitled to the benefit of force majeure clause for the period of delay
during which evacuation system was not made available to its power project
due to non-commissioning of Kudligi sub-station on the ground that the
appellant itself had been negligent in pursuing the concerned authorities for
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Appeal No.225 of 2021 Page 30 of 45
obtaining evacuation route for its power project. It has been observed by the
Commission in this regard that:
(a) The appellant must have been aware about the progress of the work
of Kudligi sub-station as well as upstream transmission line connecting
the sub-station before applying for evacuation scheme for evacuation
of power to Kudligi sub-station;
(b) The appellant failed to obtain the probable or definite timeline for
completion of Kudligi sub-station as well as upstream transmission line
before giving its consent to the terms and conditions given in the
tentative evacuation scheme approval;
(c) In the letters dated 07.02.2019 and 11.03.2019, the appellant did not
make it clear that in the event of Kudligi sub-station not being ready
within the SCOD of its power project, it would think of alternative course
to be adopted;
(d) The appellant took the risk of accepting provisional evacuation scheme
approval which can be termed as an intentional act or at least an error
or omission on the part of appellant; and
(e) The non-availability of sub-station of KPTCL cannot be termed as “any
BESCOM event of default” as specified in Article 5.7.1(a) of the PPA
and the “KPTCL’s event of default” is not included in any of the
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Appeal No.225 of 2021 Page 31 of 45
provisions of the PPA as a ground for extension in favour of the
developer.
44. In our view, these observations/findings of the Commission in the
impugned order are not sustainable as the same are not borne out from the
record.
45. The tentative evacuation scheme for the power project of the appellant
was approved by KPTCL vide communication dated 06.10.2018 which was
followed by the approval of regular evacuation scheme vide communication
dated 19.11.2018. It is true that in both these communications, KPTCL has
stated that the evacuation of the proposed 20MW power will commence only
after the completion and commissioning of the proposed 220/66kV Kudligi
sub-station. It is to be noted that these approvals were given by the KPTCL
while having knowledge that the appellant has executed a PPA dated
22.03.2018 with BESCOM whereby the appellant is required to achieve
commercial operation of the power project by 03.11.2019. There is nothing
in these communications to suggest that the proposed 220/66kV Kudligi sub-
station along with associated upstream transmission line would not be
available on or before 03.11.2019. Therefore, in the month of
October/November, 2018, when these communications were addressed by
KPTCL to the appellant, there was nothing to indicate to the appellant that
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Appeal No.225 of 2021 Page 32 of 45
he may not be in a position to evacuate power from its power project by
03.11.2019 and there may be delay in supply of power by the appellant from
its power project to BESCOM under the PPA dated 22.03.2018.
46. It appears that in the month of February, 2019, the appellant sensed
that there might be delay in completion of the said Kudligi sub-station as well
as upstream transmission line through which it was to evacuate power.
Accordingly, the appellant addressed letter dated 07.02.2019 to the
BESCOM conveying that delay in completion of the sub-station as well as
transmission line would impact the commissioning schedule of the power
project. The appellant also invoked Article 14.3.1 of the PPA ( force majeure
clause) and requested BESCOM for appropriate extension of time for
commissioning of the power project equivalent to such delay. The appellant
also addressed letter dated 11.03.2019 to KPTCL reiterating these
assertions that the request to furnish present status and definitive timeline
for completion as well as the commissioning of the 220/66kV Kudligi sub-
station as well as upstream transmission line.
47. What is material from the perspective of the appellant is that vide
response dated 21.03.2019 to the appellant’s communication dated
11.03.2019, KPTCL gave the probable date of commissioning of the 220kV
Kudligi sub-station as 30.04.2019 and that of incoming line as well as
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Appeal No.225 of 2021 Page 33 of 45
terminal bay as 30.06.2019. Evidently, both these dates were prior to the
SCOD of the appellant’s power project i.e. 03.11.2019, and therefore, the
appellant cannot be expected to have presaged that these assets would not
be available for evacuation of power by 03.11.2019. The fact that KPTCL
had stated in the said communication that all the electrical equipment,
erection work, cable termination work and control room work has been
completed and testing/scheme checking work is under progress, would have
lent assurance to the appellant that the work of the sub-station/transmission
line is progressing satisfactorily and the assets are likely to be
completed/commissioned very soon.
48. Despite such belief got by the appellant through the said
communication dated 21.03.2019 from KPTCL, the appellant did not remain
complacent and addressed letter dated 12.07.2019 to KPTCL requesting it
to confirm the present status of commissioning of the sub-station as well as
upstream transmission line. As the appellant does not appear to have
received any response from KPTCL to the said letter, it sent another letter
dated 29.08.2019 with similar request, which was followed by third
communication dated 31.08.2019 in this regard. Since, no confirmation of
the completion/commissioning dates of the Kudligi sub-station as well as
upstream transmission line was given by KPTCL, the appellant approached
the Commission by way of a petition seeking direction to the KPTCL to
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Appeal No.225 of 2021 Page 34 of 45
commission the said sub-station at the earliest. However, the petition was
withdrawn by the appellant on 31.12.2019 with liberty to approach the
Commission after commissioning of the Kudligi sub-station and its own
power project. This was in line with the Article 5.7.1 of the PPA which
provided that in case the developer is prevented from commissioning of the
project within the time stipulated in the PPA due to force majeure events
stated therein, the developer shall commission the project and thereafter file
a petition before the Commission for approval or condoning the delay in
commissioning of the project.
49. Meanwhile, the BESCOM vide letter dated 30.09.2019 reminded the
appellant that in view of the provisions of RFP, it was the responsibility of the
project developer i.e. the appellant to obtain power evacuation approval for
the power project to the nearest sub-station/delivery point as mentioned in
the PPA and accordingly, appellant was advised to approach KPTCL to
obtain clarification regarding the present status of commissioning of 220kV
Kudligi sub-station as well as upstream transmission line. As per the said
suggestion of the BESCOM, the appellant again approached KPTCL and it
was informed by KPTCL that the Kudligi sub-station will not be available for
evacuation of power by the SCOD of the appellant’s power project i.e.
03.11.2019.
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Appeal No.225 of 2021 Page 35 of 45
50. At this juncture, the appellant has issued a second force majeure
notice dated 23.10.2019 to BESCOM saying that the power project could not
be commissioned on account of delay on the part of the KPTCL in
commissioning the Kudligi sub-station as well as upstream transmission line
thereby affecting its performance under the PPA. A request was made to
the BESCOM to provide extension of the SCOD of the power project in view
of the said force majeure event and not to take any coercive action against
the appellant.
51. In these facts and circumstances of the case, it cannot be said that the
appellant could have gained knowledge much prior to October, 2019 that
there was no prospect of the completion/commissioning of the Kudligi sub-
station as well as upstream transmission line by 03.11.2019. On one hand,
the KPTCL gave a probable date of commissioning of the Kudligi sub-station
as 30.04.2019 and that of incoming line as well as terminal bay as
30.06.2019 and in spite of being unable to adhere to these timelines, it
maintained mischievous silence on the subsequent letters dated 12.07.2019,
29.08.2019 and 31.08.2019 of the appellant whereby appellant sought
confirmation about the present status of the commissioning of the sub-station
as well s the upstream transmission line. It was in the month of October,
2019 that KPTCL informed the appellant that Kudligi sub-statin will not be
available for evacuation of power from appellant’s power project by
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Appeal No.225 of 2021 Page 36 of 45
03.11.2019. Therefore, the finding of the Commission in the impugned order
that the appellant did not make any attempt to obtain the probable or
definitive timeline for completion of Kudligi sub-station as well as upstream
transmission line or that the appellant had been negligent in pursuing the
KPTCL in this regard, are erroneous and cannot be sustained.
52. We are also unable to concur with the findings of the Commission that
the case of the appellant falls under the “ force majeure exclusions” as stated
in Article 14.4 of the PPA and thus, the appellant is not entitled to benefit of
force majeure for the period of delay during which evacuation system was
not made available to its power project due to non-functioning of the Kudligi
sub-station. Article 14.4 has already been extracted in Paragraph no.36
hereinabove. None of the clauses from (a) to (f) of this Article are applicable
to the case of the appellant. In our opinion, the case of the appellant is
squarely covered by clause (e) of Article 14.3.1 of the PPA which we find
pertinent to extract hereinbelow at the cost of repetition: -
“e) unlawful or unauthorized or without jurisdiction revocation
of, or refusal to renew or grant without valid cause, any
clearance, license, permit, authorization, no objection
certificate, consent, approval or exemption required by the
Developer or any of the Contractors to perform their
respective obligations under this Agreement and the
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Appeal No.225 of 2021 Page 37 of 45
Project Agreements; provided that such delay,
modification, denial, refusal or revocation did not result
from the Developer's or any Contractor's inability or failure
to comply with any condition relating to grant,
maintenance or renewal of such clearance, license,
authorization, no objection certificate, exemption,
consent, approval or permit.”
53. The words “permit”, “authorization” and “consent” used in this clause
of the PPA are material in the context of the present case. The appellant
could not have commissioned its power project, even though it was ready for
commissioning by the SCOD, unless it got permission or authorization or
consent from KPTCL which was to be given as soon as the KPTCL
completed and commissioned the Kudligi sub-station as well as the
upstream transmission line. Since no such permission/authorization/consent
came from KPTCL on account of delay in completion/commissioning of the
said sub-station as well as transmission line beyond the SCOD of the
appellant’s power project, the same qualifies as a force majeure event which
was undoubtedly beyond the control of the appellant and could not have
been presaged by the appellant in view of the correspondences exchanged
between appellant and KPTCL, as discussed hereinabove. Further, KPTCL,
being a government controlled company, the appellant does not have any
control over its functioning. The appellant could, at best, pursue KPTCL to
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Appeal No.225 of 2021 Page 38 of 45
expedite the completion/commissioning of the said sub-station as well as
transmission line which it did but still these two assets could not be
commissioned by or before the SCOD of appellant’s power project. The
delay in completion/commissioning of these two assets is attributable solely
to the KPTCL for which appellant cannot be held responsible.
54. Further, even otherwise also, we are of the opinion that even if
KPTCL’s event of default is not specifically stated in the PPA as a ground for
extension in favour of the project developer, the same can be read into the
PPA in order to lend business efficacy to the provision of the PPA. We are
conscious of the fact that this Tribunal cannot add anything to the terms of a
PPA which has duly been agreed to as well as signed between the parties
and also approved by the regulatory Commission. However, the terms of the
PPA be construed in a way which advances the rights and interests of both
the parties and does not put any of the parties in any detrimental or
prejudicial situation for which the affected party is not to blame.
55. On this aspect, we find it relevant to refer to the judgment of the Hon’ble
Supreme Court in Nabha Power Limited v. Punjab State Power Corporation
Limited (2018) 11 SCC 508, wherein the apex court had the occasion to
interpret the terms of the commercial contract by looking inter alia into the
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Appeal No.225 of 2021 Page 39 of 45
definition clause and has laid down guiding principles on how the terms of
commercial contracts should be interpreted. It has been held: -
“It should certainly not be an endeavour of commercial
courts to look to implied terms of contract. In the current
day and age, making of contracts is a matter of high
technical expertise with legal brains from all sides
involved in the process of drafting a contract. It is even
preceded by opportunities of seeking clarifications and
doubts so that the parties know what they are getting
into. Thus, normally a contract should be read as it
reads, as per its express terms. The implied terms is a
concept, which is necessitated only when the Penta-test
referred to aforesaid comes into play. There has to be a
strict necessity for it.”
56. The “Penta-test” as referred by the Hon’ble Supreme Court in the
above judgment to ascertain implied terms while interpreting commercial
contracts is as under: -
“(1) it must be reasonable and equitable;
(2) it must be necessary to give business efficacy to the
contract, so that no term will be implied if the contract is
effective without it;
(3) it must be so obvious that "it goes without saying";
(4) it must be capable of clear expression;
(5) it must not contradict any express term of the
contract.”
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Appeal No.225 of 2021 Page 40 of 45
57. In the instant case, it is necessary to keep in mind that as per the
findings of the Commission itself in the impugned order, the appellant had
completed the construction of the project prior to its SCOD. However, it was
unable to commission the project on account of lack of evacuation facility for
the reason that there was delay on the part of KPTCL in
completion/commissioning of the Kudligi sub-station as well as upstream
transmission line through which the appellant was required to evacuate
power from its power project to be supplied to BESCOM. In case, the
findings of the Commission to the effect that KPTCL’s event of default cannot
be made a ground for extension of SCOD in favour of the appellant is
accepted then we shall be putting the appellant in a situation where the
commissioning of its power project was delayed on account of acts
attributable to the KPTCL and not to the appellant but for which the appellant
would be made to suffer the consequences. That clearly would not have
been the intendment of the parties at the time of execution of the PPA, and
also by no stretch of imagination makes any business sense. Such an
interpretation would make the PPA absolutely inequitable, unconscionable
as well as unreasonable and therefore, the provision of the PPA related to
extension of time as well as force majeure need to be interpreted in such a
manner to lend business efficacy to the PPA in accordance with the real
intention of the parties at the time of its execution.
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Appeal No.225 of 2021 Page 41 of 45
58. A meaningful perusal of the relevant provisions of the PPA in this
regard would lead to inevitable conclusion that the intention of the parties at
the time of execution of the PPA was that any delay in commissioning of the
appellant’s power project, not attributable to the appellant and caused on
account of default of KPTCL in commissioning the associated evacuation
assets within the assured timelines, shall also constitute force majeure event
envisaged under Article 14.3.1 of the PPA, thereby entitling the appellant for
extension of SCOD as per the Article 5.7 of the PPA. Such interpretation of
the relevant clauses of the PPA is not only obvious but also most reasonable
and equitable. It would be absolutely unreasonable and inequitable to
penalize the appellant for the delay in commissioning of its power project
caused by a government agency i.e. KPTCL.
59. With regards to the arguments on behalf of the respondents that the
appellant has failed to follow the procedure set out in the PPA for invocation
of force majeure clause i.e. issuance of seven days prior notice for obtaining
the benefit of the force majeure events is concerned, we may note that the
appellant has issued first force majeure notice as early as in the month of
February, 2019, when it sensed that there might be delay on the part of
KPTCL in completion of Kudligi sub-station as well as upstream transmission
line. The said notice is dated 07.02.2019. However, it lost its relevance
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Appeal No.225 of 2021 Page 42 of 45
when the KPTCL, vide communication dated 21.03.2019, intimated the
appellant that the probable date of commissioning of 220kV Kudligi sub-
station would be 30.04.2019 and that of incoming line as well as terminal bay
would be 30.06.2019. The appellant had all the reasons to believe these
assurances on the part of KPTCL and proceeded with its power project.
However, when in the month of October, 2019, KPTCL informed the
appellant that he Kudligi sub-station will not be available for evacuation of
power by 03.11.2019, the appellant immediately issued a fresh force
majeure notice dated 23.10.2019. Therefore, it cannot be said that the
appellant has not complied with the requirements under the PPA for
invocation of force majeure clause.
60. Learned counsel for the respondent nos.2 and 3, relying upon the
judgment of the Hon'ble Supreme Court in Chamundeshwari Electricity
Supply Company Limited v. Saisudhir Energy (Chitradurga) Private Limited
& Anr (2026) 1 SCC 799, argued that the delay in evacuation facilities by the
transmission licensee does not constitute a force majeure event under Article
14.3.1 of the PPA. These arguments are result of complete misreading of
the said judgment of the Hon'ble Supreme Court. In Paragraph no.38 of this
judgment, the Hon'ble Supreme Court has observed that contractual
framework does not operate on automaticity and the project developer
cannot claim automatic extension of contractual schedule even if the delay
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Appeal No.225 of 2021 Page 43 of 45
in achieving commissioning of the project was beyond its control. It has been
held that the relief under force majeure clause is conditional upon the project
developer seeking and obtaining an extension under the relevant clause of
the PPA, which had not been done in that case. However, the same has
been duly done by the appellant in the present case. Further, there are other
dissimilarities between the facts of the case before the Hon'ble Supreme
Court and the facts of the instant case. In that case, the readiness of project
developer to supply power to the Discom by the SCOD of the project was in
dispute and the developer had sought extension of time by six months
beyond the date of commissioning of 220kV line. However, in the case at
hand, the appellant had completed the construction of the power project and
was ready for commissioning by the SCOD of the power project and had
sought extension of SCOD of the power project equivalent to the delay
caused by KPTCL in commissioning of the Kudligi sub-station as well as
upstream transmission line. Therefore, the findings of the Hon'ble Supreme
Court in the above noted judgment on the basis of the facts and
circumstances of that case are not applicable to the instant case.
Conclusion: -
61. Having regard to the above discussion, the impugned order of the
Commission cannot be sustained. The same is hereby set aside. We hold
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Appeal No.225 of 2021 Page 44 of 45
that the delay in commissioning of the power project of the appellant was on
account of the reasons not attributable to the appellant and the
commissioning of the power project was affected by the force majeure event
envisaged under Article 14.3.1 of the PPA i.e. non-commissioning/non-
availability of 220kV Kudligi sub-station including incoming lines and terminal
bays by KPTCL. Accordingly, the SCOD of the power project of the appellant
is hereby extended from 03.11.2019 to 30.05.2020 i.e. the actual date of
commissioning and synchronization of the power project with 220kV Kudligi
sub-station of KPTCL.
62. We further hold that as a consequence, the appellant will not be liable
to bear any liquidated damages, reduction in tariff and/or any contractual
penalty for not commissioning its power project as per the Scheduled
Commercial Operation Date under the PPA.
63. Accordingly, the appeal stands allowed in above terms. All pending
applications, if any, also stand disposed of.
th
Pronounced in the open court on this the 09 day of September, 2026.
(Virender Bhat)
Judicial Member
(Seema Gupta)
Technical Member (Electricity)
REPORTABLE / NON-REPORTABLE
tp
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