The interpretation of commissioning under a Power Purchase Agreement must adhere strictly to the contractual definitions and contexts, impacting liability for liquidated damages.

JUDGMENT

Vibhu Bakhru, J.

INTRODUCTION

1. The parties have filed the present petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter `the A&C Act') impugning an arbitral award dated 21.10.2019 (hereinafter `the impugned award') delivered by an Arbitral Tribunal comprising of Justice (Retd.) G.N. Ray, Justice (Retd.) Usha Mehra, and Justice (Retd.) G.B. Patnaik as the Presiding Arbitrator (hereinafter `the Arbitral Tribunal').

2. The impugned award was rendered in the context of disputes that have arisen between the parties in connection with a Power Purchase Agreement dated 10.01.2011(hereinafter `the Agreement').

THE CONTROVERSY

3. The controversy in the present petition relates to the question whether there was any delay on the part of DDE Renewable Energy Pvt.Ltd. (hereinafter `DDE') in complying with its obligations under the Agreement and whether it was liable to pay liquidated damages for the said delay, if any. In addition, NTPC Vidyut Vyapar Nigam Limited (hereinafter `NVVNL') had also claimed compensation for shortfall in supply of solar power, which was disputed by DDE.

4. The Arbitral Tribunal found that there was a delay of one day in commissioning the solar project and DDE was liable to pay liquidated damages quantified at 20% of the aggregate amount of the performance bank guarantees. The Arbitral Tribunal further found that DDE was not liable to pay any compensation for any shortfall in supply of energy.

5. Both the parties are aggrieved by the finding of the Arbitral Tribunal regarding the delay in commissioning of the solar power project and the consequent decision regarding levy of liquidated damages. According to NVVNL, the delay is in excess of one month and DDE is liable to pay an additional 40% of the aggregate amount of the Performance Bank Guarantees as liquidated damages. According to DDE, there is no delay in commissioning the solar project in question and therefore, it is also aggrieved by the impugned award. In addition, NVVNL is aggrieved by the decision of the Arbitral Tribunal in absolving DDE of any liability on account of shortfall in supply of solar power. Thus, both the parties have assailed the impugned award to the extent that they are aggrieved.

FACTUAL CONTEXT

6. In the month of July 2010, the Ministry of New & Renewable Energy, Government of India (hereinafter `MNRE') issued certain guidelines for the selection of new grid connected solar power projects. NVVNL was selected as a nodal agency for arranging and purchasing solar power from Solar Power Developers (hereinafter `SPD' in singular and `SPDs' in plural).

7. On 18.08.2010, NVVNL issued a request for selection (hereafter `RFS'), which was followed by a request for proposal (hereafter `RFP') on 29.10.2010.

8. Pursuant to the said RFP, DDE (a SPD) submitted its bid for establishing a solar power project and supplying power. DDE's bid was accepted and NVVNL issued a Letter of Intent dated 11.12.2010 (hereinafter `the LoI') accepting DDE's proposal to set up the power project at Village Askandra, Tehsil Nachna in District Jaisalmer, Rajasthan.

9. Thereafter, on 10.01.2011, the parties entered into the Agreement. In terms of the Agreement, DDE agreed to set up a "Solar Power Project based on Advanced Technology of 5 MW capacity" (hereinafter `the Power Project') and supply power for a period of twenty-five years commencing from the Commercial Operation Date (hereinafter `COD') of the Power Project.

10. In terms of the Agreement, the Scheduled Commissioning Date (hereinafter `SCD') was stipulated as 09.01