The court clarified that in public utility projects, liquidated damages may be claimed without proof of actual loss, reinforcing the importance of agreed contractual terms.

JUDGMENT :

ATUL S. CHANDURKAR, J.

1. These cross appeals arise out of the common judgment passed by the Division Bench of the Delhi High Court dated 18.01.2018 in proceedings filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, “the Act of 1996”). Broadly, the dispute between the parties relates to the claim for liquidated damages raised by the employer against the Solar Power Developer on account of delay caused in commissioning a power plant. A three-member Arbitral Tribunal while holding that there was a delay in commissioning the power plant, by majority, awarded an amount of Rs.1.2 crores towards the claim made by the employer. Both parties raised objections under Section 34 of the Act of 1996. A learned Single Judge of the Delhi High Court proceeded to grant an amount of Rs. 27.06 crores to the employer on account of delay on the part of the Solar Power Developer in commissioning the power plant. Both parties further took recourse to of the Act of 1996. By the impugned judgment, the Division Bench modified the order passed under of the Act of 1996 in the matter of grant of liquidated damages and reduced the amount to Rs. 20.70 crores.

2. The facts relevant for considering the challenge as raised by the parties to the aforesaid common judgment are that, in 2010 the Ministry of Power, Government of India, launched the Jawaharlal Nehru National Solar Mission (for short, “the JNNSM”) with the objective of deploying 20000 Mega Watt (MW) of grid connected solar power in three phases by 2022 at a reasonable cost. The JNNSM postulated bundling of solar power alongwith cheaper power from and out of the unallocated quota of central stations and thereafter selling the said bundled power to the State distribution utilities at a regulated price.

3. The Ministry of Power designated NTPC Vidyut Vyapar Nigam Limited (for short, “NVVNL”) as the nodal agency. NVVNL was required to enter into Power Purchase agreements with Solar Power Developers at a fixed rate for twenty-five years. The bundled-up power was to be sold by NVVNL to various distribution utilities at prices determined by the Regulatory Commission. Accordingly, on 24.01.2012, a Power Purchase Agreement (for short, “PPA”) was entered into between M/s Saisudhir Energy Limited (for short, “SEL”) and NVVNL. Under the said agreement, SEL agreed to set up and thereafter supply 20 MW solar power at the rate of Rs. 8.22 per unit, which was a discounted price from the tariff approved by the Regulatory Commission of Rs. 15.39 per unit. Under the said agreement, the date of commissioning supply of 20 MW solar power was 26.02.2013. Clause 4.6 of the PPA provided for liquidated damages in case there was a delay in commencement of supply of solar power to NVVNL. On 30.01.2013, SEL sought extension of time by two months from NVVNL citing various exigencies and invoked the force majeure clause. This request was, however, rejected by NVVNL on 31.01.2013 as notice of seven days as required under Clause 11.5.1 of the PPA was not given. SEL failed to commission its project by 26.02.2013. It commissioned supply of 10 MW power from 26.04.2013, which was after a delay of two months. Thereafter, it commissioned supply for the balance 10 MW power from 24.07.2013, which was after a delay of about five months. SEL, thereafter, moved an application under Section 9 of the Act of 1996 before the Delhi High Court seeking to restrain NVVNL from encashing the bank guarantees furnished by it. The High Court granted interim relief in favour of SEL till the consideration of its prayer for interim relief by t