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2025 Supreme(Online)(APTEL) 7
APPELLATE TRIBUNAL FOR ELECTRICITY
Ramesh Ranganathan, Chairperson, Ajay Talegaonkar, Technical Member
Sharada Doddi – Appellant
Versus
Gulbarga Electricity Supply Company Limited – Respondent
APPEAL No. 418 of 2023
For the Appellants/Petitioners: S. Suraj Kaushik
For the Respondents: Arunav Patnaik, Bhabna Das
Delay in land conversion for a solar project due to administrative confusion by government authorities constitutes a force majeure event under a PPA, justifying an extension of time for commissioning and precluding the imposition of damages on the developer.
Headnote:(A) Electricity Act, 2003 - Sections 62, 82, and 111(1) - Karnataka Solar Power Policy 2014-2021 - Force Majeure - Delay in commissioning due to land conversion delays by government authorities - The principle that delay caused by administrative uncertainty in land conversion, which is beyond the control of a farmer-developer, constitutes a force majeure event under Article 8.3(a)(vi) of the PPA, able to support an extension of time. (Paras 71, 74, 77-79, 84-86)
(B) Contract Interpretation - Power Purchase Agreement - Extension of Time - A distribution licensee (ESCOM) which itself granted an extension and executed a supplemental agreement supporting the developer's timeline cannot later take a contrasting stand against the same extension in proceedings before the regulatory commission. (Para 71)
(C) Regulation of Tariff - Article 5.1 of PPA - Tariff reduction for delayed commissioning - Where a project commissions after the Scheduled Commissioning Date (SCD) and the applicable tariff has changed, the tariff payable is the lower of the agreed tariff and the tariff prevailing on the actual commissioning date, unless the capital cost was crystallised before the SCD, in which case the agreed tariff may be protected to ensure a harmonious interpretation of the contract and regulatory framework. (Paras 89-91, 93)
(D) Procedural Compliance - Notice of Force Majeure - A farmer-developer's letters to the ESCOM communicating anticipated delays due to land conversion issues, even without expressly using the term 'force majeure,' should be considered sufficient notice, given the substance of the communication and the developer's status. (Para 83)
Facts of the case:
The Appellant, a farmer, was awarded a Letter of Award under the Karnataka Solar Power Policy 2014-2021 to establish a 1 MW solar project. A PPA was executed on 01.07.2015 with the scheduled commissioning date (SCD) being 01.01.2017. The Appellant applied for land conversion on 17.07.2015, but the process was delayed due to administrative confusion among government departments regarding the applicable statutory framework, including issues related to Inam land and the PTCL Act. The land conversion order was issued on 01.09.2016. The Appellant was granted a 6-month extension by the Respondent No. 1 (GESCOM), extending the SCD to 30.06.2017, and the project was commissioned on 29.04.2017. The Karnataka Electricity Regulatory Commission (KERC), in its impugned order, disallowed the extension, imposed damages, and reduced the tariff from Rs. 8.40/kWh to Rs. 4.36/kWh, against which the Appellant appealed.
Findings of Court:
The Appellate Tribunal for Electricity allowed the appeal in part, setting aside KERC's order on the extension and damages. It held that the delay in land conversion was beyond the Appellant's control and constituted a force majeure event, justifying the extension granted by GESCOM. The Tribunal remanded the matter to KERC on the issue of tariff, directing KERC to ascertain if the capital cost had crystallised before the original SCD (01.01.2017), and, if so, to fix the tariff at Rs. 8.40/kWh; otherwise, the lower tariff would apply. No interest was to be paid for the period of delay in filing the appeal.
Issues: 1. Was KERC justified in not approving the extension of time granted by Respondent No. 1, and consequently imposing damages for the delay? 2. Was KERC justified in reducing the tariff from Rs. 8.40/kWh to Rs. 4.36/kWh for the delayed commissioning of the project?
Ratio Decidendi: The Tribunal concluded that delays in government land conversion approvals, which were systemic and not specific to the Appellant, constituted a force majeure event under the PPA. Consequently, the extension granted by the ESCOM was valid, and the subsequent imposition of damages was unjustified. Regarding tariff, the Tribunal held that while Article 5.1 of the PPA generally mandates the application of the lower tariff on the actual commissioning date in case of delay, this must be read harmoniously with the regulatory intent to protect crystallised capital costs. The matter was remanded to KERC for a factual determination of when capital costs were crystallised, with the tariff outcome hinging on that finding. The monetary consequence of the delayed filing of the appeal was also addressed.
Result: Appeal allowed partially. Impugned order set aside on extension of time and damages. Matter remanded to KERC for fresh consideration on tariff. Period: Delays in land conversion approval by government authorities.
| Table of Content |
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| 1. this group introduces the parties and the nature of the appeal under the electricity act, 2003. (Para 1 , 2 , 3 , 4) |
| 2. this group sets out the factual background, including the solar policy, ppa terms, and the timeline of events leading to the appeal. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 3. this group presents the appellant's arguments, focusing on delays in land conversion and the applicability of force majeure. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48) |
| 4. this group presents the respondent no. 1's arguments, focusing on the appellant's responsibility for delays and the applicability of the reduced tariff. (Para 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65) |
| 5. this group contains the tribunal's analysis on issue no. 1, concluding that the delay in land conversion was a force majeure event, thus the extension of time should be approved. (Para 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86) |
| 6. this group contains the tribunal's analysis on issue no. 2, finding that the tariff issue requires a remand to kerc for determining the timing of capital cost crystallisation. (Para 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95) |
JUDGEMENT
PER HON’BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER
1. The present Appeal has been filed by Smt. Sharada Doddi (“Appellant”) under Section 111(1) of the Electricity Act, 2003, challenging the Impugned Order dated 21.02.2019, passed by the Karnataka Electricity Regulatory Commission (in short “KERC” or “Respondent No. 2”) under Section 62 of the Electricity Act, 2003 in Original Petition No. 122/2017.
Description of the Parties
2. The Appellant is a land-owning farmer who established a project under the Solar Power Policy, 2014-2021 notified by the Government of Karnataka.
3. The Respondent No. 1, Gulbarga Electricity Supply Company Limited (in short “GESCOM” or “Respondent No. 1”), is one of the distribution licensees in the state of Karnataka.
4. The Respondent No. 2 is KERC, established under Section 82 of the Electricity Act, 2003.
Factual Matrix of the Case
5. Under Segment-1, Category-1 of the Solar Power Policy, 2014-2021 notified by the Government of Karnataka, individual farmers owning land were encouraged to establish solar power generation plants with a minimum capacity of 1 MWp and a maximum capacity of 3 MWp for the purpose of selling electricity to the Electricity Supply Companies (ESCOMs) operating within the State.
6. The Appellant applied under this policy for establishment of a solar power project of 1 MW capacity. Pursuant to the Appellant’s participation under the policy, the Karnataka Renewable Energy Development Limited (KREDL), the nodal agency responsible for facilitation of renewable energy projects in the State, issued a Letter of Award (LoA) dated 16.03.2015 bearing No. REG No. 273/807 in favour of the Appellant.
7. By the said LoA, the Appellant was required to complete the formalities necessary for executing a Power Purchase Agreement (PPA) with the Respondent No. 1, within a period of 120 days.
8. A Power Purchase Agreement (PPA) dated 01.07.2015 was executed between the Appellant and Respondent No. 1, thereby formalizing the contractual arrangement for procurement of solar energy from the project to be developed by the Appellant.
9. The Effective Date as per Article 1 of the PPA was defined as the date of signing of the Agreement, i.e. 01.07.2015. The Scheduled Commissioning Date (SCD) was defined as 18 months from the Effective Date which works out to be 01.01.2017.
10. The Solar Power Plant was proposed to be established in the land bearing Sy. No. 97/3, measuring approximately 5 acres and 24 guntas, situated at Hamilapur Village, Bidar Taluk. On 17.07.2015, the Appellant applied before the Deputy Commissioner, Bidar, seeking conversion of
