Delay in land acquisition due to uncontrollable factors and force majeure warrants condonation of time overruns.

In brief

The question

1. Whether the CERC erred in refusing to condone the time over-run caused by administrative delays in the land acquisition process and unprecedented weather conditions.

The court held

The Tribunal upheld the non-condonation of 3 months and 23 days for Assets 1-4 but condoned the remaining delays for all assets. For Assets 5-8, it condoned the entire period of time over-run.

It also directed

The Tribunal allowed the appeal in part and the matter was remanded to the CERC to recompute IDC and IEDC based on the fresh condonation periods within three months.

01Facts

The Appellant, Power Grid Corporation of India Limited (PGCIL), was entrusted with the Eastern Region Strengthening Scheme-III (ERSS-III) involving eight transmission assets.

¶ 3-4

The Investment Approval (IA) dated July 7, 2010, set a commissioning schedule of 28 months (by November 6, 2012).

¶ 3-4

Actual commissioning was delayed by 16 to 36 months due to land acquisition hurdles and monsoon-related flooding.

¶ 4, 16

The Central Electricity Regulatory Commission (CERC), via an order dated February 24, 2017, only partially condoned these delays, disallowed a portion of Interest During Construction (IDC) and Incidental Expenditure during Construction (IEDC), and subsequently dismissed a Review Petition on March 13, 2019.

¶ 1, 8

The Appellant challenged these orders before the Appellate Tribunal for Electricity (APTEL).

02Issues

i.1. Whether the CERC erred in refusing to condone the time over-run caused by administrative delays in the land acquisition process and unprecedented weather conditions.

¶ 9-10

ii.2. Whether Regulation 12 of the CERC Tariff Regulations, 2014, categorically bars land acquisition issues from being treated as "uncontrollable factors" for the purpose of condoning delays.

¶ 42-43

iii.3. Whether the CERC failed to maintain judicial consistency by ignoring its own precedent in a similar matter (Petition No. 278/TT/2015) involving the same project site.

¶ 18, 40

03Law Applied

Regulation 11 and 12 of the CERC (Terms and Conditions of Tariff) Regulations, 2014, regarding the capitalization of IDC and IEDC.

¶ 44

The Statement of Reasons (SoR) for Regulation 12 clarifies that delays in land acquisition arising from uncontrollable events may be considered on a case-to-case basis through a "prudence check".

¶ 45-46

Provisions in the judgment · 6

Land Acquisition Act, 1894 Section 4Section 6Section 7Section 17Section 9Section 11

04Reasoning

The Tribunal found that while PGCIL failed to explain the initial delay between August and December 2010, the CERC ignored substantial evidence showing PGCIL’s vigorous tracking of the land acquisition process thereafter, which involved several statutory stages beyond the licensee's control.

¶ 24, 26

Regarding Assets 1-4, the Tribunal noted that the CERC overlooked IMD rainfall data proving September-October 2012 rains were 60% higher than average, constituting a condonable delay.

¶ 30

Regarding Assets 5-8 (Chaibasa), the Tribunal underscored a lack of judicial consistency; the CERC had condoned the entire delay for balance assets at the same site in a different petition (278/TT/2015) based on the same facts, yet reached a contradictory conclusion in the impugned order.

¶ 39-40

The Tribunal held that land acquisition is not a blanket "controllable factor" if the delay results from administrative externalities or Force Majeure.

¶ 46

05Holding

The Tribunal upheld the non-condonation of 3 months and 23 days for Assets 1-4 but condoned the remaining delays for all assets. For Assets 5-8, it condoned the entire period of time over-run.

¶ 48

The Tribunal allowed the appeal in part and the matter was remanded to the CERC to recompute IDC and IEDC based on the fresh condonation periods within three months.

¶ 49, 50

LawLens.Appellate Tribunal For Electricity

Original Court PDF