Summary
The Supreme Court upheld the setting aside of termination of a solar power purchase agreement, while requiring the developer to pay Rs. 11,95,54,200 as contractual penalty within four weeks. The approved relocation, difficulties accessing the original site, substantial investment and advanced commissioning stage made termination arbitrary on these facts. The circumstances were expressly not treated as force majeure, and the developer remained liable for delay under clause 2.5.1. The disputed computation of the delay was left undecided.
Issues
- Whether termination was fair after approved relocation and substantial development of the solar project.
- Whether delay-related penalty remained payable despite setting aside termination.
Held
- Resistance at the original allotted site and the approved change of location affected the time needed for acquisition and construction. Although those circumstances were not force majeure, they had to be considered in assessing delay. Given the substantial investment and advanced commissioning stage, termination was unfair and arbitrary. (¶¶ 5, 6, 10, 11, 12)
- The Court declined to determine the competing accounts of how the sixteen-day delay related to the contractual nine-month period. Setting aside termination did not eliminate liability for the contractual delay penalty. (¶¶ 9, 12)
- Following the interim restitution of the invoked bank guarantee amount, justice required the developer to pay the imposed penalty of Rs. 11,95,54,200 to the appellant within four weeks. (¶¶ 13, 14)
Result
Appeal dismissed without costs; termination remains set aside, but developer directed to pay Rs. 11,95,54,200 penalty within four weeks.