Summary
Appeals under Section 125 of the Electricity Act, 2003 lie only on a substantial question of law, and the Supreme Court should be restrained so that regulators and APTEL can develop sector law. APTEL's factual finding that delays in land conversion and evacuation approvals were not attributable to the solar developers, so force majeure under the PPA applied, raised no such question. Restoring the Rs. 8.40 tariff, setting aside liquidated damages and awarding late payment surcharge were upheld.
Issues
- What is the scope of the Supreme Court's appellate jurisdiction under Section 125 of the Electricity Act, 2003 over APTEL's decisions.
- Whether the delay in commissioning the solar projects was covered by the force majeure clause (Article 8.3) of the PPA, entitling the developers to an extension under Article 2.5 and protecting them from reduced tariff and liquidated damages.
- Whether the distribution company, having itself granted a six-month extension, could later dispute force majeure or rely on the absence of a written force majeure notice.
- Whether APTEL could award late payment surcharge on the tariff difference when it had not been specifically pleaded.
Provisions considered
- Section 125, Electricity Act, 2003The section, quoted in the judgment, allows an appeal to the Supreme Court from APTEL only on the grounds in Section 100 CPC, that is, a substantial question of law. The Court held this scope narrower than the 'question of law' standard explained for Section 15Z of the SEBI Act in SEBI v. Mega Corporation. Restraint is needed so that the expert Commissions and APTEL can develop electricity law coherently. No substantial question of law arose here. (¶¶ 1, 7, 7.1, 7.3, 7.4, 8.1, 13)
- Section 100, Code of Civil Procedure, 1908Incorporated into Section 125 of the Electricity Act. The Court explained that it has two requirements: there must be a question of law, and that question must be substantial. (¶¶ 7.1, 7.4)
- Sections 32 and 56, Indian Contract Act, 1872Following Energy Watchdog, the Court noted that where a contract has an express force majeure clause the matter falls under Section 32 rather than the doctrine of frustration in Section 56, and the clause is construed narrowly. The PPA here contained an express clause in Article 8.3. (¶¶ 10.1, 10.2)
- Articles 2.1, 2.2, 2.5, 5.1 and 8.3, Power Purchase Agreement dated 29.08.2015 (contractual clauses)Read together, Article 8.3(a)(vi) (inability to obtain approvals despite complying with all legal requirements) and Article 8.3(b)(iv) (no force majeure if caused by the party's own negligence or omission) protect the developer where approvals could not be obtained without fault on its part. An extension under Article 2.5 excludes liquidated damages under Articles 2.2 and 2.5.7 and the lower tariff under Article 5.1. (¶¶ 9, 9.1, 9.2, 10, 10.2, 10.3, 12)
Held
- Under Section 125 the Supreme Court may interfere with APTEL's decision only on a substantial question of law, a narrower test than the question of law test for SEBI Act appeals. The Court must be measured in its approach so that the Commissions and APTEL, as expert bodies, can develop electricity law in a principled and consistent way. (¶¶ 1, 7.3, 7.4)
- The appellant proposed no substantial question of law and argued only facts. Whether the developers were negligent in obtaining approvals is a question of fact. (¶¶ 8.1, 10.4)
- Under Article 8.3(a)(vi) read with Article 8.3(b)(iv), the developer gets force majeure protection where it cannot obtain the required approvals despite complying with legal requirements, provided its own negligence or omission did not cause the inability. (¶ 10.3)
- APTEL reasonably reappreciated the evidence. It took account of factors the KERC had not considered, namely the government's delay in issuing the PTCL certificate needed for land conversion and delays in evacuation approval and bay construction. The government's own response to widespread delays, including committees for extension requests and an ineffectively implemented deemed land conversion, showed the delay could not be blamed on the developers. (¶¶ 10.4, 10.5)
- The appellant granted a six-month extension by letter dated 02.03.2017 after examining the developers' case through a committee set up on the government's direction, and did not dispute their grounds before the KERC. Having accepted their entitlement under Article 2.5 read with Article 8.3, it could not at the appellate stage argue that the delay was attributable to them or that the written notice under Article 8.3(b)(i) was not given. (¶ 11)
- Since force majeure applied and the project was commissioned within the extended period, APTEL rightly held that neither liquidated damages under Articles 2.2 and 2.5.7 nor a reduced tariff under Article 5.1 could be imposed. (¶¶ 12, 13)
- The late payment surcharge on the tariff difference was rooted directly in the PPA and gave effect to the parties' intention, so it was rightly awarded even though it was not separately pleaded. (¶ 14)
Result
Appeals dismissed and APTEL's order of 12.08.2021 upheld, including restoration of the Rs. 8.40 per unit tariff, payment of the difference with late payment surcharge, and the setting aside of liquidated damages. No order as to costs.