SC upholds force majeure clause in Power Purchase Agreement, dismissing appeal on project commissioning delays

The SC dismissed an appeal regarding force majeure application in a Power Purchase Agreement. The dispute centered on whether delay in project commissioning was attributable to the power producer, affecting tariff reduction and liquidated damages. KERC found the respondents negligent in securing approvals, but APTEL considered additional factors including government delays in providing PTCL and evacuation approval delays. The SC upheld APTEL's factual finding that delays were not attributable to respondents, making the force majeure clause applicable. Consequently, the 24-month extension was warranted, commissioning on 24.08.2017 was within extended period, and no liquidated damages or tariff reduction was justified.

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Issues Involved:
1. Applicability of the force majeure clause under the Power Purchase Agreement (PPA).
2. Extension of the Scheduled Commissioning Date (SCD).
3. Reduction in tariff payable to the respondents.
4. Imposition of liquidated damages.
5. Scope of Supreme Court's appellate jurisdiction under Section 125 of the Electricity Act, 2003.

Issue-wise Detailed Analysis:

1. Applicability of the Force Majeure Clause:
The primary issue is whether the delay in project commissioning falls under the force majeure clause of the PPA. Article 8.3(a)(vi) of the PPA covers the inability to obtain necessary approvals despite complying with all legal requirements. The KERC held that the respondents were negligent in securing approvals, attributing the delay to them. However, the APTEL reappreciated the evidence, considering additional factors such as delays in government-issued PTCL certificates and evacuation approvals, concluding that the respondents were not at fault. The Supreme Court upheld APTEL's findings, noting that the delay was not due to respondents' negligence and thus, the force majeure clause was applicable.

2. Extension of the Scheduled Commissioning Date (SCD):
Article 2.5 of the PPA allows for an extension of the SCD due to force majeure events. The APTEL found that the respondents acted diligently and the delays were beyond their control, thus warranting an extension. The Supreme Court agreed, noting that the appellant had already granted a 6-month extension and did not challenge the respondents' contentions before the KERC. Hence, the commissioning of the project on 24.08.2017 was within the extended period of 24 months from 07.09.2015.

3. Reduction in Tariff Payable to the Respondents:
KERC reduced the tariff from Rs. 8.40 to Rs. 4.36 per unit due to the delay in commissioning. However, APTEL restored the original tariff, considering the government scheme aimed at benefiting farmers and the substantial investments made. The Supreme Court upheld this decision, noting that the respondents were entitled to the original tariff as the delay was covered under the force majeure clause.

4. Imposition of Liquidated Damages:
KERC imposed liquidated damages under Articles 2.2 and 2.5.7 of the PPA, attributing the delay to the respondents. APTEL set aside this imposition, finding no delay attributable to the respondents. The Supreme Court agreed, stating that with the extension of time being justified under the force majeure clause, there was no basis for liquidated damages.

5. Scope of Supreme Court's Appellate Jurisdiction under Section 125:
The Supreme Court emphasized that its jurisdiction under Section 125 of the Electricity Act is limited to substantial questions of law. The Court found that the appellants did not propose any substantial question of law but rather argued on facts. The APTEL's findings were based on a reappreciation of evidence and were neither illegal nor unreasonable, thus not warranting interference by the Supreme Court.

Conclusion:
The Supreme Court dismissed the appeals, upholding APTEL's findings that the delay in commissioning was due to factors beyond the respondents' control and covered under the force majeure clause. Consequently, the extension of time was justified, the original tariff was restored, and the imposition of liquidated damages was set aside. The Court also upheld the direction to pay the late payment surcharge as per the PPA terms. No substantial question of law was found to warrant interference.

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