Waiver of Force Majeure through invocation of alternative supply clause upheld; Open Access Charges not claimed or directed, set aside.

M/s Shree Cement Limited ("Appellant") was the successful bidder for procurement of 500 MW Round-The-Clock (RTC) power for distribution licensees

A Letter of Award (LOA) dated 11.11.2017 was issued, allocating 100 MW of power

The Appellant commenced supply from its Rajasthan-based generating unit on 16.11.2017

On 17.11.2017, the Supreme Court banned the use of Pet-coke in the National Capital Region and certain states, including Rajasthan

As the Appellant used Pet-coke, it discontinued supply from 18.11.2017, 23:30 hours

The Appellant informed Respondent No. 2 (PCKL) on 17.11.2017, citing force majeure and stating efforts to arrange an alternate source

The Appellant furnished a Contract Performance Guarantee on 21.11.2017

executed a Power Purchase Agreement (PPA) with Respondent Nos. 3 to 7 on 24.11.2017

PCKL subsequently claimed liquidated damages ("LD") of Rs. 60,50,077/-, later revised to Rs. 29,72,647/-, for short supply in November 2017

The Appellant filed a petition (O.P. No. 22 of 2019) before the Karnataka Electricity Regulatory Commission ("State Commission") seeking withdrawal of the LD claim and refund

The State Commission dismissed the petition, upholding the deduction of LD for 22.11.2017 23.11.2017 and additionally held the Appellant liable for Open Access Charges of Rs. 12,81,0101

Aggrieved, the Appellant filed the present appeal

The court applied Section 111 of the Electricity Act, 2003, for the appeal jurisdiction

It relied on Clause 7.1 and 7.2 of the Power Purchase Agreement (PPA) concerning Force Majeure events and the duty to mitigate

Clause 5.1.4 of the PPA, pertaining to supply from an alternate source, was also central to the determination of liability

The principle of implied waiver, where invoking a contractual remedy inconsistent with another leads to the waiver of the latter, was applied

Regulation 5(4) of the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010, regarding PoC charges for Short-Term Open Access transactions, was considered for Open Access charges

The Tribunal found that the Appellant, by invoking Clause 5.1.4 of the PPA to arrange supply from an alternate source, had effectively elected not to rely on the Force Majeure clause (Clause 7.1)

Clause 5.1.4 explicitly applies when the seller is unable to supply power "except due to a Force Majeure Event"

This choice constituted an implied waiver of its right to plead Force Majeure, as the two clauses are mutually exclusive

Therefore, the State Commission's rejection of the Force Majeure claim was upheld

Regarding liquidated damages, the Tribunal noted that for 22.11.2017 and 23.11.2017, the Appellant had not identified an alternate source nor processed an Open Access application, unlike for the period 24.11.2017 to 30.11.2017, where an Open Access application was processed, which led the State Commission to allow "deemed availability" for that later period

Thus, the communication for 22.11.2017 and 23.11.2017 was not considered a valid or substantiated offer

The Tribunal affirmed the State Commission's decision to uphold liquidated damages for non-supply from 19.11.2017 to 23.11.2017

As for Open Access Charges, the Tribunal found no specific or categorical direction in the Impugned Order for the Appellant to pay these charges

Furthermore, the Respondents had not raised any claim for Open Access Charges either before or after the Impugned Order

Therefore, the liability for Open Access Charges could not be sustained

The Tribunal upheld the calculation of liquidated damages as determined by the State Commission

However, the Impugned Order was modified by setting aside the liability imposed on the Appellant for Open Access Charges for Rs. 12,81,0101

The Tribunal directed Respondent No. 2 to refund any extra amount withheld on account of liquidated damages, over and above the upheld amount, along with simple interest at the SBI Prime Lending Rate

The Appellant was directed to raise an invoice within four weeks, and Respondent No. 2 to make payment within four weeks thereafter