Summary
Adani validly terminated the power purchase agreement under its specific clause governing unfulfilled conditions subsequent when the contemplated GMDC fuel-supply agreement did not materialise. Requiring the procurer’s agreement to the failure would impermissibly rewrite the contract; the specific termination provision operated independently of general default provisions. Compensatory tariff for electricity supplied after termination was left to CERC, with adjustments for prior payments and ₹100 crore liquidated damages.
Issues
- Whether the PPA permitted the seller to terminate for failure to execute the contemplated fuel-supply agreement without the procurer’s agreement to that failure.
- How the specific conditions-subsequent clause related to general default provisions.
- What payment relief followed for electricity supplied after valid termination.
Held
- Express commercial terms control; an implied term must satisfy the business-efficacy requirements and cannot contradict the written agreement. Requiring mutual agreement before invoking Article 3.4.2 failed those tests and rewrote the parties’ bargain. (¶ 15–26)
- Article 3.4.2 specifically allowed either party to terminate for the specified non-fulfilment, with liquidated damages payable by the seller. The general defaults in Article 14 could not render that specific right ineffective. (¶ 27–34)
- The bid documents and correspondence established that the parties and Government understood the bid to depend on GMDC’s indigenous-coal commitment. Its failure to execute the FSA justified the seller’s invocation of the contractual termination provision. (¶ 35–44)
- For subsequent supply under the regulatory orders, compensatory tariff required CERC’s determination, considering project costs, financing and operating expenditure and the interest aspects identified by the Court. Prior payments and recoverable liquidated damages were adjustable. (¶ 45–51)
Result
Appeal allowed; notice valid and PPA declared terminated from 4 January 2010. Seller permitted to seek CERC determination of compensatory tariff from electricity supply, including paragraph 49 factors; CERC to decide within three months of approach and procurer to pay within three months thereafter. Prior payments and the recoverable balance of ₹100 crore liquidated damages adjustable. No costs.