NTPC Limited vs West Bengal State Electricity Distribution Company Limited & Ors
- Court
- Appellate Tribunal For Electricity
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.23 OF 2018
Dated: 11.05.2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member
In the matter of:
NTPC Limited
NTPC Bhawan, SCOPE Complex,
7, Institutional Area, Lodhi Road,
New Delhi - 110003 … Appellant
Versus
1. West Bengal State Electricity Distribution Company Limited
Through its Managing Director
Vidyut Bhawan, Block-DJ,
Sector – II, Salt Lake City,
Kolkata - 700091
2. Bihar State Power Holding Company Limited
Through its Managing Director
Vidyut Bhawan, Bailey Road,
Patna - 800001
3. Jharkhand Urja Vikas Nigam Limited
Through its Managing Director
Engineering Bhawan, HEC,
Dhurwa, Ranchi - 834004
4. Damodar Valley Corporation
Through its Chairman
DVC Towers, VIP Road,
Kolkata - 700054
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Appeal No.23 of 2018 Page 1 of 26
5. Power Department
Through its Secretary
Govt. of Sikkim, Kazi Road,
Gangtok, Sikkim - 737101
6. GRIDCO Limited
Through its Managing Director
24, Vidyut Bhawan, Janpath,
Bhubaneswar - 751007
7. Assam Power Distribution Company Limited
Through its Managing Director
Bijulee Bhawan, Paltan Bazar,
Guwahati – 782001
8. Tamilnadu Generation and Distribution Company Limited
Through its Managing Director
NPKRP Maaligail, 144, Anna Salai,
Chennai – 600002
9. Uttar Pradesh Power Corporation Limited
Through its Managing Director
Shakti Bhawan, 14, Ashok Marg,
Lucknow – 226001
10. Power Development Department (J&K)
Through its Secretary
Govt. of J&K Secretariat,
Srinagar – 190009
11. Punjab State Power Corporation Limited
Through its Managing Director
The Mall, Patiala – 147001
12. BSES Rajdhani Power Limited
Through its Managing Director
BSES Bhawan, Nehru Place,
New Delhi – 110019
13. BSES Yamuna Power Limited
Through its Managing Director
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Appeal No.23 of 2018 Page 2 of 26
Shakti Kiran Bldg., karkardooma,
Delhi – 110092
14. Tata Power Delhi Distribution Company Limited
Through its Managing Director
33 KV Sub Station Building,
Hudson Lane, Kingsway Camp,
New Delhi – 110009
15. Haryana Power Purchase Centre
Through its Chief Engineer
Shakti Bhawan, Sector-6,
Panchkula, Haryana – 134109
16. Rajasthan Urja Vikas Nigam Limited
Through its Managing Director
Vidyut Bhawan, Janpath,
Jyoti Nagar, Jaipur – 302005
17. Eastern Regional Power Committee
Through its Member Secretary
14, Golf Club Road, Tollygunje,
Kolkata – 700033
18. Eastern Regional Load Dispatch Center
Through its General Manager
14, Golf Club Road, Tollygunje,
Kolkata – 700033
19. Central Electricity Regulatory Commission
Through its Secretary
3rd & 4th Floor, Chanderlok Building,
36, Janpath, New Delhi - 110001 … Respondent (s)
Counsel for the Appellant(s) : Sanjay Sen, Sr. Adv.
Adarsh Tripathi
Vikram Singh Baid
Ajitesh Garg
for App. 1
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Appeal No.23 of 2018 Page 3 of 26
Counsel for the Respondent(s) : Amit Kapur
for Res. 1
Aashish Gupta
Puneeth Ganapathy
Chiranjeev Singh Marwaha
for Res. 2
Arijit Maitra
for Res. 6
Pradeep Misra
For Res. 9
Raj Bahadur Sharma
Mohit K. Mudgal
Sachin Dubey
For Res. 12 & 13
J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The appellant NTPC Limited has, in this appeal, impugned the order
dated 17.11.2017 passed by respondent no.19, the Central Electricity
Regulatory Commission (hereinafter referred to as the Commission) in
appellant’s petition no.154/MP/2016, wherein the Commission has held that
non-availability of water due to hydrological factors coupled with the
diversion of water to Bangladesh in terms of the Indo-Bangaladesh Water
Sharing Treaty, 1996 did not fall within the scope of “force majeure” as
envisaged in Article 8 of the Power Purchase Agreements executed between
the appellant and the respondent nos.1-18.
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Appeal No.23 of 2018 Page 4 of 26
2. The brief conspectus of the facts of the case giving rise to the instant
appeal are noted hereinbelow.
3. The appellant, a Government of India undertaking and engaged in the
business of generation as well as sale of electricity to various
purchasers/beneficiaries in India, is a generating company as defined under
section 2(28) of the Electricity Act, 2003. It runs various power generating
stations throughout India, one of which is Farakka Super Thermal Power
Station, Stages I & II (1600MW) and Stage-III (500MW), which is the subject
matter of instant appeal and would be hereinafter referred to as the “Farakka
Station”. The electricity generated from the said generating station is
supplied by the appellant to respondent nos.1 to 16 and in this regard the
appellant has entered into Bulk Power Supply Agreements/Power Purchase
Agreements with the respondents.
4. The Farakka Station has the total capacity of 2100MW and comprises
of three units of 200MW each and three units of 500MW each. These units
were commissioned on different dates between the years 1986 and 2012.
5. Water requirement for the said Farakka Station is being met through
Ganga Feeder Canal. Flow of water in the Ganga Feeder Canal is controlled
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Appeal No.23 of 2018 Page 5 of 26
and operated by Farakka Barrage Project Authority, Ministry of Water
Resources, Government of India.
6. On 12.12.1996, a revised treaty was signed between the Government
of People’s Republic of Bangladesh and Government of India regarding
sharing of Ganga water at Farakka for a period of 40 years. In pursuance
to the said treaty, 35000 cusec of water was to be shared by diverting it to
the Bangladesh annually. In order to mitigate the water availability from the
th
Ganga Feeder Canal, the Board of Directors of the appellant in its 288
meeting convened on 26.06.2006, approved the construction of the lift
pumphouse on the Ganga Feeder Canal.
7. On 19.01.2009, the Commission notified Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2009 (hereinafter
referred to as the “Tariff Regulations, 2009”, inter alia, providing for the
norms and parameters for determination of tariff of the thermal generating
stations for the tariff period from 01.04.2009 to 31.03.2014.
8.
In terms of these regulations, appellant NTPC filed petition
no.222/2009 before the Commission for determination of tariff for the said
Farakka Station for the period from 01.04.2009 to 31.03.2014. In the petition,
appellant had projected an additional capitalization of Rs.6810.00 lakhs for
construction of the lift pumps with the following justification: -
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Appeal No.23 of 2018 Page 6 of 26
“To augment water supply to the existing Cooling Water
(CW) system which is unable to cater the CW requirement
of the station due to drop in the water level of source feeder
canal on account of revised Indo-Bangla Ganga water
sharing Agreement. Scheme was agreed in MOP-GOI
review meeting in 16.07.04.”
9. The said petition was disposed of by the Commission vide order dated
14.06.2012 thereby determining the tariff of the Farakka Station for the
period 2009-2014. As regards the capital expenditure on the installation of
lift pumps, the Commission observed as under: -
“(c) Lift pumps
28. The petitioner has claimed expenditure of
Rs.6810.00 lakh during 2013-14 towards lift pumps against
the CEA approved cost of Rs.12840.60 lakh. The petitioner
has submitted that the installation of lift pump is required to
augment water supply to the existing cooling water system
which is unable to cater the cooling water requirement of the
generating station due to drop in water level of source feeder
canal on account of the revised Indo-Bangla Ganga water
sharing agreement and the scheme agreed to by the
Ministry of Power Government of India in its review meeting
on 16.7.2004. As per the Indo-Bangladesh water sharing
treaty, 1996 Bangladesh is given minimum 35000 cusecs of
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Appeal No.23 of 2018 Page 7 of 26
st
water during the lean season (from 1 January to 31st May)
and due to this cooling water supply gets affected during this
period and consequently regular generation loss is being
faced. The respondents GRIDCO, NDPL and UPPCL have
objected to the capitalisation of this asset. The respondent,
BSEB and BRPL have also submitted that the capitalisation
under Regulation 9(2) is permissible only after the
expenditure is incurred by the petitioner. The petitioner in its
rejoinder dated 2.2.2012 to the reply of the respondent,
GRIDCO has submitted that the scheme and investment on
the said asset was in line with the provisions of the 2004
Tariff Regulations and approved during the period 2004-09,
the work was being carried out during the tariff period 2009-
14. It has also submitted that since the requirement of this
work is on account of the treaty of the Government of India,
the expenditure falls under Regulations 9(2)(ii) of the 2009
Tariff Regulations and the same is admissible.
29. We have in this order decided that the additional
capital expenditure projected to be incurred after the cut-off
date, can be considered under Regulation 9(2) of the 2009
Tariff Regulations. Thus, taking into consideration that the
requirement of this work is on account of diversion of water
as per revised Indo-Bangla river water agreement, the
expenditure claimed is allowed under Regulation 9(2)(ii) of
the 2009 Tariff Regulations.”
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Appeal No.23 of 2018 Page 8 of 26
10. Thus, the Commission allowed additional capitalization of the
expenditure related to installation of lift pumps despite the objections raised
by the respondent beneficiaries.
11. On 02.05.2013, the appellant filed petition no.233/2013 seeking
revision of Annual Fixed Charges for the Farakka Station on the basis of
actual capital expenditure incurred for the Financial Years (FYs) 2009-10,
2010-11 & 2011-12 and for approval of projected expenditure for the years
2012-13 and 2013-14 as per Regulation 6(1) of Tariff Regulations, 2009. In
this petition also, the appellant had projected an additional capitalization of
Rs.6810.00 lakhs for installation of lift pumps for the years 2013-14. In the
affidavit dated 28.10.2013 filed in the said petition, appellant stated reasons
for non-capitalization of lift pumps claimed during the FYs 2013-14. The
petition was disposed of by the Commission vide order dated 12.11.2014
thereby revising the tariff for Farakka Station after truing-up. The following
extracted portion of the said order is material as it records the reasons given
by appellant for non-installation of lift pumps: -
"Lift Pumps
19. The petitioner has claimed expenditure of Rs.11.97 in
2009-10, Rs.0.14 lakh in 2011-12 and Rs.6810.00 lakh
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Appeal No.23 of 2018 Page 9 of 26
during 2013-14 towards lift pumps. However, vide affidavit
dated 28.10.2013, the petitioner has not claimed the said
expenditure for the year 2013-14 towards lift pumps.
20. It is observed that the Commission in order dated
14.6.2012 in Petition No. 222/2009 had considered the
claim of the petitioner for capitalization of Rs.6810.00 lakh
during 2013-14 towards Lift pumps and the same was
allowed under Regulation 9(2)(ii) as under:
“29.... Thus, taking into consideration that the
requirement of this work is on account of diversion of
water as per revised Indo-Bangla river water
agreement, the expenditure claimed is allowed under
Regulation 9(2)(ii) of the 2009 Tariff Regulations
21. The petitioner vide affidavit dated 28.10.2013 had
submitted that Lift Pump House is located at the bank of
Ganga Feeder canal, outside the premises of the plant and
in order to facilitate the execution of works of lift pump
house, proper approach road was required for movement
of material/equipments. The petitioner has also submitted
that the above said approach road has been constructed
and capitalized and accordingly, the claim for capitalization
of Rs.11.97 lakh in 2009-10 and Rs.0.14 lakh in 2011-12 is
towards the capitalization of construction of approach road
for Lift Pump house.
22. The petitioner has further submitted that the
expenditure of Rs.6810 lakh was projected to be incurred
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Appeal No.23 of 2018 Page 10 of 26
in 2013-14 towards installation of lift pumps was approved
by the Commission in order dated 14.6.2013 based on the
progress of erection activities. The petitioner has also
submitted that in March 2013 while civil works related to
this package were being carried out, there was sudden
ingress of subsoil water from nearby Farakka feeder canal
to lift pump house area and due to this unforeseen incident
the excavation work of lift pump house was affected
adversely due to flooding and was stopped. The petitioner
has stated that after detailed investigation and deliberation
with M/s IVRCL, the executing agency it was been decided
to modify the deep dewatering system and also provide
one row of sheet pile along feeder canal bank to stop
recurrence of such incidence in future. The petitioner has
submitted that the design of sheet pile are being finalized
and the erection work can start only after dewatering of the
lift pump house area and completion of civil work of lift
pump house. Accordingly, the petitioner has submitted that
the capitalization of lift pump scheme amounting to 6810
lakh may not be possible during 2013-14.
23. We have considered the submissions of the petitioner.
The generating station has been allowed an amount of
2910.00 lakh as Compensation Allowance in terms of
Regulation 19(e) of the 2009 Tariff Regulations, since
many of the units are in operation for more than 10 to 25
years from its COD. As the Compensation allowance
granted to the generating station is for meeting expenses
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Appeal No.23 of 2018 Page 11 of 26
towards assets of capital nature including assets of minor
nature, we are of the view that the expenditure towards
construction of approach road to Lift pump house, even
presuming that the Lift pump would be installed, in future,
should be met from Compensation Allowance allowed to
the generating station. Accordingly the claim of the
petitioner for capitalization of 11.97 lakh in 2009-10 and
0.14 lakh in 2011-12 towards construction of approach
road has not been allowed."
(Emphasis supplied)
12. Subsequently, on 19.08.2014, appellant filed another petition bearing
no.274/2014 for revision of tariff for the Farakka Station for the period
01.04.2009 to 31.03.2014 after the truing-up exercise vide order dated
12.11.2014 passed in previous petition no.233/2013. The said petition
no.274/2014 was disposed of by the Commission vide order dated
06.02.2017 thereby revising the tariff of Farakka Station. It would be
pertinent to state here that the reasons recorded in order dated 12.11.2014
for non-capitalization of lift pumps by the appellant were reiterated in this
order.
13. Thereafter, the Commission notified Central Electricity Regulatory
Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter
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Appeal No.23 of 2018 Page 12 of 26
referred to as the “Tariff Regulations, 2014”) for the tariff period 01.04.2014
to 31.03.2019.
14. It appears that the appellant served letters dated 18.03.2016 upon the
respondent nos.1 to 16 as notices regarding occurrence of force majeure
event on account of unavailability of cooling water in the Farakka Station.
Respondent No.18, the Eastern Regional Power Committee (in short ERPC)
and respondent no.17, the Eastern Regional Load Dispatch Centre (in short
ERLDC) were separately informed about the force majeure events vide
letters dated 12.03.2016 and 11.03.2016 respectively. In these notices, the
appellant contended that during the period from February, 2016 to March,
2016, owing to drastic fall in the water of Ganga Feeder Canal there was
reduction in cooling water availability to the Farakka Station and accordingly
the appellant was constrained to successfully shutdown each of the 06 units
during such period. It was further contended that once the cooling water
became available in the Ganga Feeder Canal, appellant restarted its units
and resumed power generation, but the availability of generating stations (to
be computed on yearly basis) reduced significantly on account of such forced
shutdown of units for reasons beyond the control of the appellant.
Consequently, the Annual Fixed Charges receivable by the appellant for the
year 2015-16 were reduced due to such uncontrollable factors.
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15. The appellant also raised the issue of shortage in cooling water as a
nd
“ force majeure event” in the 32 Commercial Sub-Committee meeting of
rd
ERPC held on 10.06.2016 and 33 meeting of TCC/ERPC held on 25 June
2016.
16. Thereafter, the appellant approached the Commission with petition
no.154/MP/2016 for relief on account of force majeure events affecting
Farakka Station. Prayers made in the petition are extracted hereinbelow: -
“a) Declare that the unavailability of cooling water for the
Petitioner’s generating station at the Ganga Feeder Canal
is a Force Majeure event under the PPAs;
b) Direct the Eastern Regional Power Committee,
Respondent No. 17, and the Eastern Regional Load
Despatch Centre, Respondent No. 18, not to consider the
periods during which the Petitioner’s generating station or
units thereof remained shut-down due to Force Majeure
events for the purpose of calculating the Percent Plant
Availability of the Petitioner’s generating station;
c) Permit the Petitioner to raise revised bills on Respondent
Nos. 1 to 16 on the basis of the Percent Plant Availability
calculated by excluding the days on which the Petitioner’s
generating station remained shut-down due to Force
Majeure events;
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Appeal No.23 of 2018 Page 14 of 26
d) Direct Respondent Nos. 1 to 16 to pay the Petitioner the
difference in tariff calculated on the basis of the revised bills
raised by the Petitioner; and
e) Pass such other and further order(s) and/or directions as
this Hon’ble Commission may deem just, fit and proper in
the facts and circumstances of the case and in the interest
of justice.”
(Emphasis supplied)
17. This petition has been decided by the Commission vide impugned
order dated 17.11.2017 denying any relief to the appellant as sought in the
petition.
18. Accordingly, the appellant is before us in this appeal.
19. We have heard Mr. Sanjay Sen, learned senior counsel appearing for
nd
the appellant, Mr. Chiranjeev Singh Marwaha, learned counsel for the 2
th
respondent, Mr. Arijit Maitra, learned counsel for the 6 respondent, Mr.
th
Pradeep Misra, learned counsel for the 9 respondent and Mr. Sachin
th th
Dubey, learned counsel for the 12 and 13 respondents. We have also
perused the impugned order as well as the written submissions filed on
behalf of appellant, respondent nos.2, 6 and 9.
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Appeal No.23 of 2018 Page 15 of 26
20. The core issue which arises for reconsideration in this appeal is
whether the unavailability of water in the Ganga Feeder Canal on account of
less rains and diversion of water to Bangladesh under water sharing treaty
constitutes a “ force majeure event” as envisaged in Article 8 of the PPAs
executed between the appellant and the respondents.
21. The Commission, in the impugned order, has held that water sharing
treaty with Bangladesh cannot constitute as force majeure event falling
within the scope and definition of the term in the PPAs. It also held that the
appellant should have undertaken measures for installation of lift pumps and
the non-installation thereof being decision of the appellant, and therefore, the
appellant cannot claim shortage of water in Ganga Feeder Canal as force
majeure event under the PPAs.
Our Analysis: -
22. It is the case of the appellant that reduction in water in Ganga Feeder
Canal during the months of February, 2016 and March 2016 was
unprecedented. To buttress its contentions in this regard, appellant has
relied on monsoon reports for the years 2014-15 which provide rainfall data
for the period from the month of June to September 2015, letter dated
15.02.2017 of the Farakka Barrage Authority, and Indo-Bangladesh Water
Treaty, 1996, under which there was diversion of water from the Ganga
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Appeal No.23 of 2018 Page 16 of 26
Feeder Canal. According to the appellant, the drastic reduction in the level
of water in the Ganga Feeder Canal on account of deficient monsoon rains
and diversion of water from the said Canal under the Indo-Bangladesh Water
Treaty constitutes force majeure events due to which the appellant was
constrained to shutdown each of 06 units of its power plant during the above
period.
23. “ Force Majeure” has been defined in Article 8.0 of the PPA dated
13.11.2010 executed between the appellant and the respondents, which is
quoted hereinbelow: -
“8.0 FORCE MAJEURE
Neither party shall be liable for any claim for any loss or
damage whatsoever arising out of failure to carry out the
terms of the Agreement to the extent that such a failure is
due to force majeure events such as war, rebellion, mutiny,
civil commotion, riot, strike, lock-out, forces of nature,
accident, act of God or any other such reason beyond the
control of concerned party. Any party claiming the benefit of
this clause shall reasonably satisfy the other party of the
existence of such an event and give written notice within a
reasonable time to the other party to this effect.
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Appeal No.23 of 2018 Page 17 of 26
Generation/drawal of power shall be started as soon as
practicable by the parties concerned after such eventuality
has come to an end or ceased to exist. ”
24. Thus, the above noted provision in the PPA specifies the events such
as war, rebellion, mutiny, civil commotion, riot, strike, lockout, forces of
nature, accident, act of God or any other such event beyond the control of
affected party which can be termed as force majeure events. Even though,
the appellant has nowhere specified during the hearing of the appeal or in
the written submissions as to under which head does the events projected
by it, fall, yet it can be safely inferred that the force majeure events projected
by the appellant would fall under the heads “ forces of nature” and “act of
God”.
25. An act of God or forces of nature is an event which is direct, violent,
sudden and irresistible act of nature and could not, by any amount of ability,
even foreseen or if foreseen, could not by any amount of human care and
skill have been resisted or prevented. Generally, those acts which are
occasioned by elementary forces of nature unconnected with the agency of
man or other causes will come under the category of “Act of God” e.g. storm,
tempest, lightening, hightide etc. It is important to note here that such an
event should not be unique or ought to have happened for the first time. It
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Appeal No.23 of 2018 Page 18 of 26
is enough that the event is extraordinary and such as could not reasonably
be anticipated or prevented.
26. We may profitably refer to the following observations of the Hon'ble
Supreme Court on this aspect in KSRTC v. Mahadev Shetty, (2003) 7 SCC
197: -
“9. The expression “act of God” signifies the operation of
natural forces free from human intervention, such as
lightning, storm etc. It may include such unexpected
occurrences of nature as severe gale, snowstorms,
hurricanes, cyclones, tidal waves and the like. But every
unexpected wind and storm does not operate as an
excuse from liability, if there is a reasonable possibility
of anticipating their happening. An act of God provides
no excuse unless it is so unexpected that no reasonable
human foresight could be presumed to anticipate the
occurrence, having regard to the conditions of time and
For instance, where by
place known to be prevailing.
experience of a number of years, preventive action can be
taken, Lord Westbury defined the act of God (damnum
fatale in Scotch Laws) as an occurrence which no
human foresight can provide against and of which
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Appeal No.23 of 2018 Page 19 of 26
human prudence is not bound to recognize the
possibility. This appears to be the nearest approach to
the true meaning of an act of God. Lord Blancaburgh
spoke of it as “an irresistible and unsearchable
providence nullifying our human effort”.
27. In the instant case, in so far as the Indo-Bangladesh water sharing
treaty is concerned under which minimum 35000 cusecs of water during the
lean season i.e. from 01 January to 31 May is to be diverted towards
Bangladesh from the Ganga Feeder Canal, is concerned, it is to be noted
that the treaty existed since the year 1996 and was not signed for the first
time in the year 2016. Therefore, the appellant had knowledge that such a
treaty exists under which some minimum amount of water is to be diverted
towards Bangladesh, and therefore, the said treaty cannot be put forth as an
event of force majeure affecting the level of water in the Ganga Feeder Canal
in the year 2016.
28. With regards to the drastic reduction of water in the Ganga Feeder
Canal on account of deficient monsoon rains in the year 2015, it is to be
noted that the appellant seems to have been aware about the deficient water
level in the Gang Feeder Canal and the requirement to augment water supply
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Appeal No.23 of 2018 Page 20 of 26
for cooling water system of the plant as far back as in the year 2009 when it
filed petition no.222/2009 for determination of tariff for the said Farakka
Station for the period from 01.04.2009 to 31.03.2014 in which the appellant
projected an additional capitalization of Rs.6810lakhs for construction of lift
pumps to augment water supply to the existing cooling water system. As
already noted hereinabove, the petition was disposed vide order dated
14.06.2012 thereby allowing such expenditure under Rule 9(2)(ii) of 2009
Tariff Regulations. However, the appellant appears to have given up the
capitalization of lift pump scheme, so allowed by the Commission in the order
dated 14.06.2012, due to some technical problems faced during excavation
work for the same. The reasons for the same have been noted by the
Commission in subsequent order dated 12.11.2014 passed in petition
no.233/2013 and were reiterated in order dated 06.02.2017 passed in
petition no.274/2014.
29. Be that as it may, it is evident that the appellant was fully conscious
about the steps to be taken towards providing contingency for fluctuation in
the water level in the Ganga Feeder Canal and therefore, cannot claim that
such a contingency arose all of a sudden and for the fist time in the year
2016.
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30. It is also manifest that the reduction of the water level in the Ganga
Feeder Canal was well within the knowledge and contemplation of the
appellant at least since the year 2009 when the appellant envisaged
construction of lift pumps to remedy such situation. Even though the
appellant was constrained to abdicate the idea of construction of lift pumps
due to some technical reasons, it appears that no further mitigating steps
were taken by the appellant till the year 2016. We are, therefore, in
agreement with the view taken by the Commission that shutdown of the plant
during the subject period was solely attributable to the delay on the part of
the appellant in constructing the lift pumps or initiating any other mitigating
steps in order to ensure consistent and required supply of the water for the
cooling water system of the power plant. Hence, the appellant cannot be
allowed to take benefit of its own fault. In this regard, we find it apposite to
refer to the following observations of the Delhi High Court in Halliburton
Offshore Services Inc v. Vedanta Limited and Another, 2020 SCC OnLine
DEL 2068: -
“69. The question as to whether Covid-19 would justify non-
performance or breach of a contract has to be examined on
the facts and circumstances of each case. Every breach or
non-performance cannot be justified or excused merely
on the invocation of Covid-19 as a force majeure
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Appeal No.23 of 2018 Page 22 of 26
condition. The court would have to assess the conduct
of the parties prior to the outbreak, the deadlines that
were imposed in the contract, the steps that were to be
taken, the various compliances that were required to be
made and only then assess as to whether, genuinely, a
party was prevented or is able to justify its non-
performance due to the epidemic/pandemic.
70. It is the settled position in law that a force majeure
clause is to be interpreted narrowly and not broadly. Parties
ought to be compelled to adhere to contractual terms and
conditions and excusing nonperformance would be only in
exceptional situations. As observed in Energy Watchdog
(supra) it is not in the domain of courts to absolve parties
from performing their part of the contract. It is also not the
duty of courts to provide a shelter for justifying non-
performance. There has to be a ‘real reason’ and a ‘real
justification’ which the court would consider in order to
invoke a force majeure clause.”
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Appeal No.23 of 2018 Page 23 of 26
31. These observations of the Delhi High Court were quoted with approval
by the Hon'ble Supreme Court in Maharashtra State Electricity Distribution
Co. Ltd. v. Maharashtra Electricity Regulatory Commission, (2022) 4 SCC
657 in the following words.
“186. In Halliburton Offshore Services Inc. v. Vedanta Ltd. to
which reference was made by Ms Anand, the Delhi High
Court aptly remarked that the outbreak of a pandemic
cannot be used as an excuse for nonperformance of a
contract for which the deadlines were much before the
outbreak itself. In the aforesaid case, the Delhi High
Court rightly observed that the court, while considering
the plea of non-performance of the condition due to
outbreak of the Covid-19 pandemic, ought to examine
factors such as the conduct of the parties prior to the
outbreak.
187. Admittedly, the Appellant has landed itself in its present
predicament, due to delay in making timely payments to the
respondent power generating companies. There was no
pandemic at the time of filing of the petition before the MERC
in 2017 and the appeal before the APTEL in 2018. It, cannot,
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Appeal No.23 of 2018 Page 24 of 26
therefore be said that the appellant defaulted in payment of
bills by reason of its financial predicament as a result of the
outbreak of Covid-19 in India, which was in March 2020.”
32. Monsoon reports for the years 2014 and 2015, upon which much
reliance was placed on behalf of the appellant, show that the deficiency in
the rainfall during the months of June to September in these two years was
12% and 14% respectively. Such deficiency in the rainfall can be said to be
only marginal and not a drastic one, as contended by the appellant.
However, the appellant has failed to demonstrate that such a marginal
deficiency was so exceptionally adverse and in excess of statistical levels of
measurement of the last 100 years and therefore, could not have been
anticipated.
33. In the letter dated 15.02.2017 sent by Farakka Barrage Authority to the
appellant, in response to appellant’s letter dated 03.02.2017, it has been
stated that reduction in water level of the Ganga Feeder Canal is a normal
phenomenon of each year. However, it has been stated that during lean
season of 2016 flow of Farakka Feeder Canal reduced exceptionally in
comparison to flow of recent years and such reduction in year 2016 in river
and subsequently in the canal was not usual one, but was significant
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Appeal No.23 of 2018 Page 25 of 26
phenomena in comparison to recent past years. However, no supporting
data or comparative analysis of the data for the past years was produced
before the Commission or before this Tribunal by the appellant in support of
these observations. Therefore, the Commission has rightly discarded such
observations of Farakka Barrage Authority contained in its letter.
Conclusion: -
34. In view of the above discussion, we concur that the findings returned
by the Commission in the impugned order that the unprecedented fall in the
water flow in Ganga Feeder Canal due to hydrological factors coupled with
diversion of water to Bangladesh under the Indo-Bangladesh Water Sharing
Treaty, 1996 did not constitute force majeure event under Article 8 of the
PPAs. Therefore, we do not find any error or infirmity in the impugned order
of the Commission. The appeal is devoid of any merit and is dismissed as
such.
th
Pronounced in the open court on this the 11 day of May, 2026.
(Virender Bhat)
Judicial Member
(Seema Gupta)
Officiating Chairperson
✓
REPORTABLE / NON-REPORATBLE
tp
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Appeal No.23 of 2018 Page 26 of 26