Jayamal Energy LLP vs Bangalore Electricity Supply Company Limited & Anr
- Court
- Appellate Tribunal For Electricity
Court-1
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.78 OF 2023
Dated: 26.10.2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member
In the matter of:
Jayamal Energy LLP
Represented by Authorized Signatory / Partner
Mr. Swapnil R. Bora,
No. 47, Ground Floor, N S Iyengar Street,
Opp. Deepak Cable (India) Ltd.,
Seshadripuram, Bengaluru – 560 020
Email: [email protected] … Appellant
Versus
1. Bangalore Electricity Supply Company Limited
Through its Managing Director
K R Circle, Bangalore – 560001
Email: [email protected]
2. Karnataka Electricity Regulatory Commission
Through its Secretary
No. 16, C-1, Millers Tank Bed Area,
Vasant Nagar, Bengaluru – 560 052
Email: [email protected] … Respondent (s)
Counsel for the Appellant(s) : Basava Prabhu Patil, Sr. Adv.
Bharat Deep Singh
Karthiga M for App. 1
____________________________________________________________________________________
Appeal No.78 of 2023 Page 1 of 32
Counsel for the Respondent(s) : Shahbaaz Husain
V.M. Kannan
Harimohana N
Stephania Pinto
Yeshwanth M Comar
Lalit Rajput
Aanshika Bhushan for Res. 1
J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The appellant, having been formed as a Special Purpose Vehicle to
undertake a solar power project in District Tumkur, State of Karnataka, had
submitted an application for participation in the development of renewable
energy in the State and its proposal to set up a solar power project with
capacity of 2MW at village Shyasamaru, District Tumkur was approved by
the Karnataka Renewable Energy Development Limited (in short “KREDL”).
A Letter of Award (LOA) was duly issued to the appellant for the said power
project. Subsequently, a Power Purchase Agreement (PPA) was executed
st
between the appellant and the 1 respondent Bangalore Electricity Supply
Company Limited (in short “BESCOM”) on 02.07.2015. As per the provisions
of the PPA, the Scheduled Commercial Operation Date (SCOD) of the
project had to be achieved within 18 (eighteen) months of the effective date
i.e. by 01.01.2017. However, due to certain purported force majeure events,
____________________________________________________________________________________
Appeal No.78 of 2023 Page 2 of 32
as agitated by the appellant, the power project could not be commissioned
on or before SCOD. Considering the force majeure events and other
st
circumstances faced by the appellant, the 1 respondent approved extension
of time of the power project vide Office Memorandum dated 16.06.2017 upto
01.07.2017 and thereafter, the power project came to be ultimately
commissioned by the appellant on 31.08.2017. A commissioning certificate
dated 19.10.2017 has been duly issued by the Karnataka Power
Transmission Company Limited.
2. In these circumstances, the appellant had approached the
Commission with the petition bearing OP No.230/2017 praying as under: -
“(a) Approve the extension of time, granted by the
Respondent, to the new scheduled commissioning
date, viz., 01.10.2017, for its Solar Power Project. vide
Official Memorandum dated 30.08.2017;
(b) Direct the Respondent to make payment for the
delivered energy under the Power Purchase Agreement
(PPA) dated 02.07.2015 at Rs.8.40 per unit, from the
commercial operation date of the Petitioner’s Project,
for the entire term of the PPA; and,
(c) Pass such other and incidental Orders, including an
Order as to costs, as may be deemed appropriate under
the facts and circumstances of the case.”
____________________________________________________________________________________
Appeal No.78 of 2023 Page 3 of 32
3. The petition has been rejected by the Commission vide order dated
29.11.2018 holding the appellant not entitled to any relief. The appellant has
also been held entitled to tariff of Rs.4.36/unit i.e. the varied tariff as
applicable on the date of commissioning of the appellant’s power plant as
determined by the Commission in the order dated 12.04.2017. The appellant
has also been held liable to pay damages as provided under Article 2.2 and
2.5.7 to the PPA.
4. The appellant has, accordingly, approached this Tribunal by way of
instant appeal against the said order dated 29.11.2018 of the Commission.
5. We have heard Mr. Basava Prabhu Patil, learned senior counsel
appearing on behalf of the appellant and Mr. Shahbaaz Hussain, learned
st nd
counsel for the 1 respondent. The 2 respondent i.e. the Commission has
not contested the appeal. We have also perused the impugned order as well
as the written submissions filed by the learned counsels.
6. The Commission in the impugned order has framed following issues
for its consideration: -
“(1) Whether this Commission has jurisdiction, to call
upon the Petitioner to prove the Force Majeure Events,
relied upon by him by filing a Petition, urging the
____________________________________________________________________________________
Appeal No.78 of 2023 Page 4 of 32
relevant grounds and producing proper evidence, for
the scrutiny of the Commission, inspite of the
Respondent admitting or not denying the occurrence of
such Force Majeure Events?
(2) Whether the Petitioner has made out a case for
deferment or extension of the Scheduled
Commissioning Date of its Plant?
(3) What should be the tariff for the Project, for the term
of the PPA?”
7. In answering Issue No.(1) in affirmative, the Commission has relied
upon its previous order dated 07.08.2018 passed in OP No.65/2017 whereby
the Commission had held that it has the exclusive jurisdiction to consider the
validity of extension of time granted by the discom to a power generator,
when it affects the tariff payable to a generating company which has
ultimately to be passed on to the consumers.
8. The Issue No.(2) has been answered in negative by the Commission
on the ground that no force majeure notice as contemplated under the PPA
st
has been issued by the appellant to the 1 respondent and the reasons for
delay in commissioning of the power plant given by the appellant did not
constitute force majeure events as contemplated under the PPA. Thus, the
____________________________________________________________________________________
Appeal No.78 of 2023 Page 5 of 32
appellant was held not entitled to extension of time in commissioning of the
power project.
9. On Issue No.(3), the Commission has observed that since the power
project was commissioned on 31.08.2017 when the generic tariff order dated
12.04.2017 was applicable, the appellant’s power project is entitled to tariff
of Rs.4.36/unit as determined in the said order. Further, while relying upon
the judgment of the Supreme Court dated 05.04.2018 in Civil Appeal
No.3600/2018 MP Power Management Company v. Renew Clean Energy
Pvt. Ltd. and Anr., the Commission has held the appellant liable to pay
st
damages to the 1 respondent BESCOM as per Articles 2.2 and 2.57 of the
PPA for delay in achieving the conditions precedents as well as the SCOD.
st
10. It is not in dispute that the rights and liabilities of the appellant and 1
respondent BESCOM inter-se are governed by the PPA dated 02.07.2015
executed between them. Article 1.1(xiii) of the PPA provides that “effective
date” shall mean date of signing of the agreement by the parties. As per
Article 2.1 of the PPA, the appellant was required to fulfil all the conditions
precedent within 365 days from the effective date. These included all the
permits, clearances and approvals (whether statutory or otherwise) as
required to execute and operate the project. Article 1.1(xxix) provides that
____________________________________________________________________________________
Appeal No.78 of 2023 Page 6 of 32
the Scheduled Commissioning Date shall mean 18 months from the effective
date.
11. Thus, as per these provisions of the PPA, the appellant was required
to fulfil the conditions precedent before 01.07.2016 and to commission the
power project by 01.01.2017.
12. It is argued on behalf of the appellant that the “effective date” indicated
in a PPA has to be the date on which the PPA is approved by the
Commission, which, in the present case happened on 25.08.2015, and
therefore, the SCOD of the project shall have to be taken as 25.02.2017 (18
months from 25.08.2015). It is submitted that upon doing so, the effective
delay in commissioning of the project comes to 06 months and 06 days only.
On this aspect, reliance is placed upon the judgment of this Tribunal dated
12.08.2021 in Sirwar Renewable Energy Pvt. Ltd. v KERC and Ors. appeal
no.245/2019 wherein it has been held as under: -
“ 80. It is well settled now in the light of the opinion
expressed by this Tribunal in the Judgments of Azure
Sunrise Private Limited in Appeal No. 340 of 2016 dated
28.02.2020, SEI Aditi Power Private Limited in Appeal No.
360 of 2019 dated 14.07.2021, SEI Diamond Private
Limited in Appeal No. 374 of 2019 dated 14.07.2021, and
____________________________________________________________________________________
Appeal No.78 of 2023 Page 7 of 32
so also Chennamangathihalli Solar Power Projects LLP.
Vs. Bangalore Electricity Supply Company Limited in
Appeal No. 351 of 2018 dated 14.09.2020 that it is the
date of approval of the PPA which becomes effective date
and not the date on which parties put their signatures to
the PPA. The PPA becomes implementable only when it
is approved by the appropriate Commission. Even the
Appellants for that matter any generator cannot approach
any authority for sanction, approval, permissions, grants,
loans without the PPA being approved by the concerned
Commission. Therefore, date of the approval of the PPA
becomes a relevant fact. ”
(Emphasis supplied)
13. We concur with the legal position expounded by this Tribunal in the
above noted judgment. The parties to a PPA cannot be expected to
discharge their respective obligations under the same unless it is approved
by the appropriate Commission. Section 86(1)(b) of the Electricity Act, 2003
makes it mandatory for a distribution company to seeks approval of the
Commission for any purchase of power. Therefore, unless the PPA gets
approval of the Commission, none of its clauses can be enforced or acted
upon.
14. In Tata Power Company Limited vs. Reliance Energy Limited, (2009)
16 SCC 659, the Hon’ble Supreme Court has held as under :-
____________________________________________________________________________________
Appeal No.78 of 2023 Page 8 of 32
“108. A generating company, if the liberalization and
privatization policy is to be given effect to, must be held to
be free to enter into an agreement and in particular long-
term agreement with the distribution agency; terms and
conditions of such an agreement, however, are not
unregulated. Such an agreement is subject to grant of
approval by the Commission. The Commission has a
duty to check if the allocation of power is reasonable. If
the terms and conditions relating to quantity, price,
mode of supply, the need of the distributing agency vis-
à-vis the consumer, keeping in view its long-term need
are not found to be reasonable, approval may not be
granted.
………………
115. A PPA may be a long-term one or a short-term one.
Regulations have been made by the Commission by making
the MERC (Terms and Conditions of Tariff) Regulations,
2005. Short-term power procurement refers to an agreement
for procurement of power for a period of less than one year.
Regulation 23.1 requires the distribution licensee to prepare
a five-year plan inter alia upon taking into consideration the
sources for procurement thereof. Regulation 24.1
mandates obtaining of prior approval of the
Commission therefor. Approval by the Commission is
granted upon examining the process of procurement
having regard to the factors specified in Regulation
____________________________________________________________________________________
Appeal No.78 of 2023 Page 9 of 32
24.2. It is in the aforementioned context that grant of
approval of PPA by and between TPC (G) on the one hand
and BEST and TPC (D), on the other hand, necessitated.
The proposal of TPC (G) that Rinfra should enter with it into
a long-term agreement assumes significance.”
(Emphasis supplied)
15. This Tribunal as in the case of Rithwik Energy Generation Pvt. Limited
vs. Karnataka Power Transmission Corp. Limited and others, 2011 ELR
(APTEL) 1651 held as under: -
“10. Let us take up the first issue regarding the validity of the
PPA.
10.1 According to the learned counsel for the appellant, the
PPA is not enforceable by law as the respondents no. 2 had
already exceeded the permissible limit of power purchase
from the renewable sources of energy as per the State
Commission’s Regulations and for this reason the PPA was
returned by the State Commission on 6.6.2007. The
approval of the State Commission was mandatory under
Section 25 (3) of the Karnataka Electricity Reform Act, 1999.
The PPA became void on account of the approval not having
been given by the State Commission.
…………
____________________________________________________________________________________
Appeal No.78 of 2023 Page 10 of 32
10.3. Let us first examine the Section 25(3)(4) of the
Karnataka Reform Act referred to by the appellant. The
relevant extracts are reproduced below:
“25 (3) A holder of a supply or transmission licence may,
unless expressly prohibited by the terms of its licence, enter
into arrangements for the purchase of electricity from,-
The holder of a supply licence which permits the holder of
such licence to supply energy to other licensees for
distribution by them; and
Any person or generating company with the consent of the
Commission”.
“25(4) Any agreement relating to any transaction of the
nature described in sub-sections (1), (2), or (3) unless made
with, or subject to, such consent as aforesaid, shall be void”.
Section 185(3) of the 2003 Act specifically stipulates that the
provisions of the enactments specified in the schedule,
which includes the Karnataka Reform Act, not inconsistent
with the provisions of the 2003 Act, shall apply to the States
in which such enactments are applicable.”
10.4. According to Section 86 (b) of the 2003 Act, the
State Commission is empowered to regulate electricity
purchase and procurement process of the distribution
licensees including the price at which electricity is
____________________________________________________________________________________
Appeal No.78 of 2023 Page 11 of 32
procured from the generating companies through
agreement for purchase of power.
10.5. In view of above, the distribution licensee has to
obtain the consent of the State Commission for
procurement of power against the PPA. Unless the State
Commission gives its consent to the PPA, the
distribution licensee cannot procure power under the
PPA. Thus, the PPA will come into effect only after
obtaining the consent of the State Commission. If the
consent is denied by the State Commission, the PPA
shall become void as per Section 25(3) of the Karnataka
Reform Act and Section 86(b) of the 2003 Act.
Accordingly, the second respondent had submitted the PPA
dated 3.5.2007 signed with the appellant before the State
Commission on 25.5.2007 for its consent.
(Emphasis supplied)
16. Again, this Tribunal in Appeal No. 41 of 2018 - Hinduja National Power
Corporation Limited vs. Andhra Pradesh Electricity Regulatory Commission
th
and others decided on 7 January, 2020 held as under: -
“75. If the State Commission fails in discharging its duties by
deciding the matter without proper reasoning and
justification, it is nothing but failure of its duty. Since
proceedings before the State Commission are not in the
nature of a lis as in the case of a Civil Suit, it has to take
____________________________________________________________________________________
Appeal No.78 of 2023 Page 12 of 32
within its fold the interest of various stakeholders concerned.
Therefore, utmost duty of the State Commission while
discharging its functions must be public interest and
decide the matter on merits so far as adoption of capital
cost and Continuation Agreement. The functions
provided under Section 86(1)(b) of the Act is not merely
a formality to approve the Power Purchase Agreement.
In other words, it does not mean one of the parties to the
petition can interdict the implementation of Power Purchase
Agreement at its whims and fancies totally ignoring the fact
that the Commission’s duty is to regulate electricity
purchase and procurement process of a distribution
licensee including the price at which electricity shall be
procured from generating companies through
agreements.
…………….
80.As stated above, so far as the procurement of power is
concerned, it must be in the interest of the consumer.
Between April 2017 to January 2018 as against the declared
capacity, 3273.83 million units were delivered to the
Respondent DISCOMs from the Appellant’s project. Since it
was conducive for AP DISCOMs to schedule and take
delivery of electricity for maintaining the retail supply to its
consumers the above number of units was taken by the
DISCOMs. To decide the matter pertaining to capital
cost or approval of Continuation Agreement, one has to
see whether it is in the interest of the consumers at
____________________________________________________________________________________
Appeal No.78 of 2023 Page 13 of 32
large. The State Commission is the ultimate authority to
decide procurement of power including the price, but
unfortunately the Commission declined to decide the
matter on merits. In this process what Commission ought
to have done in OP No. 21 of 2015 is to determine whether
the capital cost and resultant tariff would be conducive to the
interest of the consumers at large, since it is incumbent to
do so as a regulatory authority. Therefore it was possible to
first decide O.P. No. 21 of 2015 on merits, and based on its
decision it should have proceeded to consider Continuation
Agreement instead of passing the impugned order
…………………
99.The Respondents contend that approval of Continuation
Agreement so that PPA of 1998 could get revived is based
on the principle enunciated in contingent contracts.
According to Respondents, the right if any to Appellant gets
created only on approval of Continuation Agreement dated
28.04.2016. They contend that happening of approval is
happening of some future event, therefore question of
neither of parties making any offer and acceptance would
arise. In a contingent contract happening of something
marks the moment at which a right is created, so that the
contract becomes enforceable. As against this, Appellant
contends that no doubt status of agreement dated
28.04.2016 can be treated as a contingent contract. The
contract comes in to effect once approval is given by
the Commission. It is also not the case of Appellant that
____________________________________________________________________________________
Appeal No.78 of 2023 Page 14 of 32
approval of the state Commission is unnecessary. It is seen
that agreement for the purchase of energy was duly finalised
and agreed between the parties, which came in the form of
a document pertaining to confirmation of terms agreed. By
virtue of this agreement parties agreed to continue the
amended and restated PPA dated 15.04.1998 with
modifications which are clearly mentioned in the agreement.
Parties also had consensus that tariff will be as determined
by the State Commission in Petition No. 21 of 2015 filed by
the Appellant. The Continuation Agreement in a way
becomes concluded terms and conditions subject to
approval by the State Commission. It was not an inchoate
or incomplete contract as contended by AP DISCOMs.”
(Emphasis supplied)
17. In Eswari Green Energy LLP Vs. Karnataka Electricity Regulatory
th
Commission and Ors., Appeal No. 180 of 2018 and batch decided on 13
November, 20202, it was held by this Tribunal
“42.We do not agree with the broad argument of the
appellants that there is no need for separate approval of
the State Commission in respect of initialed PPAs
simply because the general format of the PPA had been
approved by the Commission on 22.7.2015. It cannot be
overlooked that the Commission regulates the purchase and
procurement process of each distribution licensee by virtue
of the power conferred on it under Section 86(1)(b) of the
____________________________________________________________________________________
Appeal No.78 of 2023 Page 15 of 32
Electricity Act, 2003. The statute saves the operation of the
Karnataka Electricity Reforms Act, 1999 by virtue of Section
185(3). The provision contained in Section 17(1) of the
Karnataka Electricity Reforms Act, 1999 reads as under:
……………….
44.A perusal of the statutory provisions and Rules
formulated thereunder shows that the distribution licensee
can procure power only in the manner approved and it is
required to place a proposed Power Purchase Agreement
for approval of the State Commission. The Regulation also
prescribes a timeframe for approval of the PPA. It also
requires final version of the PPA to be provided to the State
Commission
………………
47.In above context, reference may be made to following
observations of the Supreme Court in Tata Power Company
Limited vs Reliance Energy reported in (2009) 16 SCC 659,
while construing the functions of the Regulatory Commission
under Electricity Act, 2003:
………………….
48.The documents produced show that all concerned
have throughout been of unanimous view that the
power purchase agreements which had been initialed
required the approval of the State Commission. Having
sought such approval though HESCOM, it is not permissible
for the appellants to now contend that no approval was
required. There is no doubt that approval of the State
____________________________________________________________________________________
Appeal No.78 of 2023 Page 16 of 32
Commission in respect of individual PPA is a condition
precedent without which the PPA cannot come into
existence though, the respondent HESCOM concedes,
with post-facto approval the PPA becomes operational
retrospectively from the date of the PPA.
49.The respondents are also right in submission that there
is no vested right to get approval of the PPA from the
Commission which is duty-bound to consider it in light of
statutory provisions and within regulatory framework.”
(Emphasis supplied)
18. In view of the clear law laid down by this Tribunal and the Hon’ble
Supreme Court in the above noted judgements, there is no escape from well-
founded conclusion that a PPA becomes effective only upon getting approval
from the State Commission and till then the parties are precluded from
enforcing any rights or obligations under the same.
19. Hence, in the instant case, the effective date under the PPA has to be
taken as 25.08.2015 i.e. the date on which the PPA was accorded approval
by the Commission. The SCOD of the power project would, therefore, be
25.02.2017 as rightly contended by the appellant.
____________________________________________________________________________________
Appeal No.78 of 2023 Page 17 of 32
20. It is not in dispute that as per the request of the appellant vide letters
dated 03.01.2017, 09.01.2017 and 06.03.2017 seeking extension of
commissioning date of the power project in terms of Article 2.5 of the PPA,
st
the 1 respondent BESCOM vide its communication dated 16.06.2017
extended the date of commissioning of the project till 01.07.2017 subject to
the condition that tariff applicable and the Liquidated Damages to be paid by
the appellant, if any, would be subject to the approval of the
Commission/Govt. of Karnataka. Vide communication dated 24.08.2017, the
appellant again sought further extension of the commissioning date of the
st
power project by another 03(three) months which was acceded to by the 1
respondent BESCOM in its communication dated 30.08.2017 and
accordingly, the commissioning date of the project was extended till
01.10.2017 subject to the condition that (i) tariff applicable is as per Article
5.1(ii) of PPA; (ii) Liquidated Damages as per clauses 2.2.1 and 2.5.7 of the
PPA are applicable; and (iii) contract performance guarantees to be
extended up to 31.12.2017.
21. It is on account of all these extensions in the SCOD of power project
st
of the appellant granted by 1 respondent BESCOM that Issue No.(1) as
noted in Paragraph No.6 hereinabove was framed by the Commission for its
consideration. Relying upon its previous decision dated 07.08.2018 in OP
____________________________________________________________________________________
Appeal No.78 of 2023 Page 18 of 32
No.65/2017, the Commission has held that it has the exclusive jurisdiction to
consider the validity of extension of time granted by the discom and
accordingly ruled that the appellant has not made out any case for deferment
of extension of SCOD of the power project.
22. Learned counsel for the appellant vehemently argued that the decision
of the Commission in OP No.65/2017 has been reversed by this Tribunal in
judgment dated 12.08.2021 in Appeal no.322/2018 titled Madamageri Solar
Power Projects LLP v. HESCOM and Ors. in which it has been held that the
Commission was not justified in examining the validity of the extension of
SCOD granted by HESCOM under the PPA, the terms of which had been
approved by the Commission itself. Paragraphs 126 and 127 of the said
judgment are material and are extracted hereinbelow: -
“126. The 1st Respondent based on the various problems
faced by the solar developers granted extension of
COD by six months. Within the said six months’
extended period, the grid connectivity was obtained
after safety approval certificate issued by CEIG. The
Petition came to be filed by the Appellant only on
account of direction of the Commission to approach the
Commission seeking approval of extension of time.
Having approved the clause in the PPA that HESCOM
could extend COD by six months period, in the facts and
____________________________________________________________________________________
Appeal No.78 of 2023 Page 19 of 32
circumstances discussed above, we are of the opinion
that the Respondent Commission was not justified in
opining that extension of six months’ time for COD was
not on account of force majeure event as pleaded by
the Appellant.
127. It is relevant to point out the conduct of the HESCOM.
During the entire process of securing these approvals
by the Appellant, the Solar Developer has brought to
the notice of the HESCOM the obstacles faced and at
no point of time, there was any note of caution or
objection finding fault with the pace at which the Solar
Developer was pursuing the execution of the solar
plant. In fact, after accepting the reasons for the delay
being force majeure event in terms of PPA, the
HESCOM did extend time for commissioning of the
plant by six months. Subsequently, the conduct of the
HESCOM is very surprising. It started finding fault with
the Appellant contesting the matter seriously
questioning the reasons for delay as force majeure
event. We are of the opinion that the Respondent
HESCOM cannot approbate and reprobate.”
(Emphasis supplied)
23. In view of the said clear ruling of the Tribunal, the Commission was
precluded from examining the validity of the extension of SCOD of the
____________________________________________________________________________________
Appeal No.78 of 2023 Page 20 of 32
appellant’s power project granted by the BESCOM from time to time. Once,
st
the 1 respondent BESCOM acknowledged that the commissioning of the
power project of the appellant has got delayed on account of force majeure
events claimed by the appellant and extended the commissioning date of the
project till 01.10.2017, the Commission was not justified in reopening the
st
issue of such extension granted by 1 respondent and observing that the
appellant has not made out any case for deferment or extension of the SCOD
of the power project.
24. This settled legal position has not been countered by the learned
st
counsel for the 1 respondent either in his oral arguments at the time of
hearing of the appeal or in the written submissions filed by it.
st
25. What is contended on this aspect on behalf of the 1 respondent
BESCOM is that the extensions of commissioning date granted to the
appellant was not unconditional and it was subject to payment of Liquidated
Damages and applicability of the lower tariff i.e. the generic tariff determined
by the Commission for the tariff year in which the power project gets
commissioned. We do not find any infirmity in these submissions made on
st
behalf of the 1 respondent. The extension of the SCOD granted to the
appellant would be governed by the conditions put forth in the
communications by which the extension was accorded. We have already
____________________________________________________________________________________
Appeal No.78 of 2023 Page 21 of 32
st
noted hereinabove that the extension of SCOD was approved by the 1
respondent BESCOM subject to the condition that Liquidated Damages as
per Article 2.2 and 2.5.7 of the PPA would be payable and the tariff as per
the prevalent tariff order of the Commission would be payable.
26. On this aspect, we may also note that the extension of time in achieving
SCOD is governed by Article 2.5 of the PPA executed between the parties.
Articles 2.5.1, 2.5.2, 2.5.3, and 2.5.4 are relevant and are extracted
hereinbelow: -
“2.5 Extension of Time
2.5.1 In the event that the SPD is prevented from
performing its obligations under Clause 4.1 by the
Scheduled Commissioning Date due to:
a. Any BESCOM Event of Default; or
b. Force Majeure Events affecting BESCOM; or
c. Force Majeure Events affecting the SPD,
2.5.2 The Scheduled Commissioning Date and the Expiry
Date shall be deferred, subject to the reasons and
limits prescribed in Clause 2.5.1 and Clause 2.5.3
for a reasonable period but not less than ‘day for
day’ basis, to permit the SPD or BESCOM through
the use of due diligence, to overcome the effects of
the Force Majeure Events affecting the SPD or
____________________________________________________________________________________
Appeal No.78 of 2023 Page 22 of 32
BESCOM, or till such time such Event of Default is
rectified by BESCOM.
2.5.3 In case of extension occurring due to reasons
specified in clause 2.5.1 (a), any of the dates
specified therein can be extended, subject to the
condition that the Scheduled Commissioning Date
would not be extended by more than 6 (six) months.
2.5.4 In case of extension due to reasons specified in
Article 2.5.1 (b) and (c), and if such Force Majeure
Event continues even after a maximum period of
3(three) months, any of the Parties may choose to
terminate the Agreement as per the provisions of
Article 9. ”
(Emphasis supplied)
27. Upon perusal of these provisions of the PPA, it is manifest that the
SCOD of the power project could be extended for a maximum period of 06
(six) months in case the default is on account of reasons specified in clause
2.5.1(a) i.e. any event of default on the part of BESCOM and for maximum
period of 03 (three) months in case of reasons specified in Article 2.5.1(b)
and (c) i.e. force majeure events affecting BESCOM or the appellant. In the
instant case, undisputedly, the appellant had sought extension of SCOD of
its power project on account of force majeure events affecting the progress
____________________________________________________________________________________
Appeal No.78 of 2023 Page 23 of 32
of the power project and not because of any default on account of BESCOM.
st
Therefore, the extensions granted by 1 respondent BESCOM were under
Article 2.5.4 and the maximum period of extension could have been only 03
(three) months. However, the extension granted to the appellant’s power
project by BESCOM is 09 (nine) months, which is patently contrary to the
above noted clause of the PPA and thus, cannot be accepted. We make it
clear here that we are not disputing the competence of the BESCOM in
granting extension of time to the appellant for commissioning of its power
project but have only said that in doing so, the Commission cannot ignore
the upper limits of such extension of time specified in the PPA. Any time
extension beyond the limit set in the PPA would be invalid and thus, cannot
be countenanced.
28. Considering the SCOD of the project to be 25.02.2017 i.e. 18
(eighteen) months reckoned from the date of approval of the PPA and the
st
extension of 03 (three) months which could have been granted by the 1
respondent BESCOM in accordance with the relevant clauses of the PPA,
the SCOD of the power project stood extended till 25.05.2017. Any
extension by BESCOM beyond the said date, being violative of the
provisions of the PPA, cannot be considered.
____________________________________________________________________________________
Appeal No.78 of 2023 Page 24 of 32
29. The project was commissioned by the appellant on 31.08.2017 with a
delay of 03 (three) months and 06 (six) days.
30. Therefore, the prayer of the appellant to consider and approve the
extension of SCOD of the power project till 01.10.2017 as approved by the
st
1 respondent BESCOM vide Office Memorandum dated 30.08.2017 has no
merit and deserved to be rejected.
31. Article 5.1 of the PPA assumes relevance in this situation, which is
extracted hereinbelow: -
“ 5.1 Tariff payable:
The SPD shall be entitled to receive the Tariff of Rs.8.40
per kWh based on the KERC tariff order S/03/1 dated
10.10.2013 in respect of SPD's Solar PV projects in terms
of this agreement for the period between Commercial
Operation Date and the Expiry Date. However, subject to
Clause 2.5, if there is a delay in commissioning of the
Project beyond the Scheduled Commissioning Date and
during such period such period there is a variation in the
KERC Tariff, then the applicable Tariff for the projects
shall be the lower of the following:
i. Rs.8.40 per kwh
ii. Varied tariff applicable as on the date of Commercial
Operation.”
____________________________________________________________________________________
Appeal No.78 of 2023 Page 25 of 32
32. Perusal of the said clause of the PPA reveals that in case, the
commissioning of the power project is delayed beyond the extension granted
under Article 2.5 of the PPA and there has been variation in the tariff
determined by the Commission during that period, the applicable tariff for
such power project would be lower of (i) Rs.8.40/kWh as stated in the PPA
and (ii) varied tariff applicable as on date of commercial operation of the
project.
33. In the instant case, as explained hereinabove, there has been delay of
three months and six days on the part of appellant to commission its power
project beyond the extension granted by the BESCOM as permissible under
the Article 2.5 of the PPA. The project has been commissioned on
31.08.2018 whereas the SCOD, as discussed in foregoing paragraphs, was
25.02.2017. It is to be noted that prior to the commissioning of the project
by the appellant on 31.08.2017, the Commission had issued tariff order dated
12.04.2017 applicable for grid connected solar power project in which the
tariff has been fixed for the project at Rs.4.36/unit. Considering these factual
aspects and placing reliance upon the previous judgment of this Tribunal in
Appeal no.221/2016 Savitha Oil Technologies Ltd v. KERC& Anr decided on
07.05.2018, the Commission has held the appellant entitled to lower tariff of
____________________________________________________________________________________
Appeal No.78 of 2023 Page 26 of 32
Rs.4.36/unit as per the generic tariff order dated 12.04.2017 prevalent on the
date of commissioning of the power project.
34. On this aspect, we find it profitable to refer to the recent judgment of
this Tribunal dated 04.12.2025 in Appeal no.418/2023 Smt. Sharada Doddi
v. Gulbarga Electricity Supply Company Limited & Anr., the facts of which
were absolutely identical to the facts of the instant case. In that case, LOA
dated 16.03.2015 had been issued to the appellant for establishment of
01MW solar power project and a PPA dated 01.07.2015 had been executed
st
between the appellant and the 1 respondent i.e. the Karnataka discom. All
the clauses of the said PPA including Article 5.1 are identical to the clauses
of the PPA dated 02.07.2015 executed in this case between the appellant
st
and the 1 respondent. The SCOD of the power project of the appellant in
that case was 01.01.2017, however, on account of certain events, the power
project was not commissioned by the said SCOD and upon consideration of
appellant’s representations under Articles 2.5 and 8 of PPA, the respondent
GESCOM had granted extension of 06 months for commissioning of the
project. The commissioning of the project occurred within the extended
period but approximately four months after the original SCOD. The Project
had been commissioned on 29.04.2017 i.e. subsequent to the issuance of
generic tariff order dated 12.04.2017 by the Commission. The petition filed
____________________________________________________________________________________
Appeal No.78 of 2023 Page 27 of 32
by the power generator for confirmation of the extension granted by the
respondent discom was dismissed by the Commission vide order dated
21.02.2019 while holding it liable to pay damages and entitled to reduced
tariff of Rs.4.36/unit being the tariff applicable as per the Commission’s
generic tariff order dated 12.04.2017 on the actual commissioning date of
the project.
35. One of the grounds raised in the appeal in that case before this
Tribunal was that the Commission was not justified in reducing the tariff from
Rs.8.40/kWh as fixed in the PPA to Rs.4.36/kWh. This Tribunal observed
that capital cost is the single most important factor affecting annual cost such
as Return on Equity, Interest on Loan, Depreciation etc. and accordingly, the
tariff. It was, thus, held that if the appellant had crystalized capital cost before
01.01.2017 (SCOD in that case) in anticipation of timely availability of all the
permissions, the tariff of Rs.8.40/kWh needs to be protected. However,
noting that the material on record does not show whether the capital cost of
the project had got crystalized before the SCOD i.e. 01.01.2017, this Tribunal
remanded the case to the Commission for fixation of tariff afresh on the basis
of necessary documents in this regard. We quote relevant paragraphs of the
said judgment hereunder: -
____________________________________________________________________________________
Appeal No.78 of 2023 Page 28 of 32
“93. From the above-mentioned submissions of the
Appellant, it is difficult to conclude as to whether the capital
cost got crystallised before SCD i.e. 01.01.2017. We
therefore consider it appropriate to remand the matter
to KERC to ascertain this aspect. We make it clear that
the only aim of this exercise by KERC shall be to
establish if capital cost got crystallised before
01.01.2017. If that turns out to be the case, the tariff shall
be fixed at ₹ 8.40 per kWh, else the tariff applicable as
per actual date of commissioning will be applicable. We
make it clear that if in this process, actual capital cost
gets discovered, it will have no bearing on tariff as this
is not intended to be an exercise for tariff determination
on cost plus basis in a strict sense. The KERC will be
free to call for all the necessary documents and this
exercise will be done uninfluenced by previous
proceedings in the matter and observations, if any of
this Tribunal. ”
36. We see no reason to differ with the above noted observations/findings
of this Tribunal in Smt. Sharada Doddi case. In case, a power generator
incurs entire expenditure on the capital cost of the power project before its
SCOD, an order directing payment of PPA tariff to the power generator
despite delay in commissioning of the power project would be justified.
____________________________________________________________________________________
Appeal No.78 of 2023 Page 29 of 32
37. In the instant case, neither were any submissions made by the learned
counsels on the aspect as to whether the capital cost had got crystalized
before SCOD of the project of the appellant i.e. 25.02.2017 nor has anything
been stated in this regard in the written submissions filed by the learned
counsels. Even the material on record also does not shed any light on this
fact. Therefore, we find it expedient to remit the case back to the
Commission for an inquiry on this aspect and to determine the tariff payable
to the appellant afresh in terms of the conclusion to be reached in the inquiry.
If it turns out that the appellant had crystalized the entire capital cost before
25.02.2017, the tariff shall be fixed at Rs.8.40/kWh as stated in the PPA.
38. In so far as the claim of the appellant that the delay in commissioning
of the power project was on account of the force majeure events, is
concerned, we concur with the finding of the Commission that the appellant
is precluded from claiming relief under any such force majeure event for the
reason that no prior notice of those force majeure events had been served
st
upon the 1 respondent BESCOM. On this aspect, reference can be
profitably made to Article 8.3(b)(i) of the PPA which envisaged that the party
claiming to be affected by any force majeure event shall give the other party
a written notice describing the particulars of force majeure event as soon as
practicable after the occurrence of those events. Concededly, no such notice
____________________________________________________________________________________
Appeal No.78 of 2023 Page 30 of 32
st
has been served by the appellant upon the 1 respondent BESCOM. The
Hon'ble Supreme Court in a recent judgment dated 25.08.2025 passed in
Civil Appeal No.6888/2018 Chamundeshwari Electricity Supply Company
Limited v. Saisudhir Energy (Chitradurga) Pvt. Ltd. and Anr. has held that
requirement of prior notice of force majeure events as envisaged under the
relevant clause of the PPA is not mere directory and it is a condition
precedent for invoking the force majeure clause. Therefore, in view of the
dictum of the said judgment, since no such prior force majeure notice was
st
served by the appellant upon the 1 respondent, the appellant is precluded
from claiming any relief under the force majeure events. For the same
reason, no fault can be found in the impugned order of the Commission
holding the appellant liable to pay damages under Article 2.2 and 2.5.7 of
the PPA.
Conclusion: -
39. In the light of the above discussion, we affirm the impugned order of
the Commission in so far as it holds the appellant liable to pay damages to
st
the 1 respondent BESCOM as provided under Articles 2.2 and 2.5.7 of the
PPA. However, on the aspect of tariff payable to the appellant by the
respondent BESCOM, the case is remitted to the Commission for a fresh
hearing in terms of Paragraph No.37 hereinabove. The Commission shall
____________________________________________________________________________________
Appeal No.78 of 2023 Page 31 of 32
call for the requisite documents in this regard from the parties and conclude
the inquiry within one month from the date of this judgment. In case, on the
basis of the findings of the inquiry, the tariff gets fixed at Rs.8.40/kWh (as
mentioned in the PPA), same shall be applicable from the date of actual
commissioning of the power project and shall be payable to the appellant
along with applicable carrying cost.
40. The appeal stands partly allowed in above terms. All pending IAs, if
any, also stand disposed of.
th
Pronounced in the open court on this the 26 day of October, 2026.
(Virender Bhat) (Seema Gupta)
Judicial Member Officiating Chairperson
REPORTABLE / NON-REPORTABLE
tp
____________________________________________________________________________________
Appeal No.78 of 2023 Page 32 of 32