Failure to adjudicate a pleaded Force Majeure event renders the regulatory order unsustainable.

TANGEDCO issued a 2017 tender for procurement of 1,500 MW of solar power. VSR Solar Power Private Limited was declared the L-1 bidder, furnished performance bank guarantees totalling ₹10 crores, and executed a 25-year Power Purchase Agreement (PPA) with TANGEDCO on 22 March 2018.

The Appellant subsequently selected and purchased project land at Vilathikulam, Tuticorin District, and commenced preliminary development work.

It contended that the imposition of safeguard duty on imported solar modules, followed by Cyclone Gaja and heavy rains in November–December 2018, adversely affected the project, including through waterlogging and inaccessibility of the site.

The Appellant sought extension of the scheduled commercial operation date (SCOD), but TANGEDCO declined the request and later invoked and encashed a performance bank guarantee of ₹5.10 crores.

The Appellant filed DRP No. 7 of 2020 before the Tamil Nadu Electricity Regulatory Commission (TNERC), seeking extension of COD, protection against enforcement of securities, and repayment of the encashed amount.

By order dated 2 February 2021, TNERC refused the extension, held that the PPA had automatically terminated upon non-commissioning within the stipulated period, and upheld TANGEDCO’s entitlement to invoke the bank guarantee and claim liquidated damages.

The Appellant challenged that order before APTEL.

The Tribunal applied the contractual framework governing the parties, particularly Clause 14 of the PPA concerning commissioning timelines, termination, performance security and liquidated damages, and Clause 16 concerning Force Majeure.

It held that where a material factual ground is specifically pleaded, denied by the opposite party, and reaffirmed in rejoinder, the adjudicating authority must consider it, analyse the applicable contractual provision, and record findings on it in the final order.

An order that fails to decide a material issue or proceeds on the basis of contractual terms belonging to another agreement reflects non-application of mind and is liable to be set aside.

The Tribunal also directed the Commission to keep in view its judgment dated 29 July 2026 in Appeal No. 151 of 2021, arising in a similar factual and procedural context.

Although the Appellant expressly pleaded that the cyclone and heavy rains inundated the project site, prevented access, and delayed construction, and although TANGEDCO disputed that assertion, TNERC merely recorded the parties’ pleadings without determining whether the event occurred, whether it affected this particular project, or whether it fell within Clause 16 of the PPA.

TNERC’s discussion under the Force Majeure issue addressed only the safeguard duty and omitted the alleged natural disaster altogether.

The Tribunal held that the Commission was required to adjudicate this material issue before deciding COD extension, termination, bank-guarantee invocation or liquidated damages.

Further, TNERC had relied on Clause 14 and commissioning timelines from other PPAs, rather than the Appellant’s PPA, demonstrating a material factual and contractual mismatch.

Since the consequences of delay depended on the unresolved Force Majeure question, the Tribunal declined to decide the bank-guarantee and liquidated-damages issues itself.

The matter was remanded to TNERC for fresh consideration of the effect of the cyclone and consequential heavy rains under Clause 16 of the PPA, along with the consequential issues concerning COD extension, termination, encashment of performance bank guarantees and liquidated damages.

TNERC was directed to provide all parties a reasonable opportunity of hearing and pass a fresh order within three months from receipt of the judgment, while considering APTEL’s observations in Appeal No. 151 of 2021.