The word 'may' in Regulation 12(5) of the Connectivity Regulations, 2009 is directory, not mandatory. Nodal agency has discretion to encash an LTA bank guarantee based on facts of each case, including genuine hardship.

JUDGMENT

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The order dated 8^th March, 2017 passed by 2^nd Respondent – Central Electricity Regulatory Commission (in short “Commission” or “CERC”), vide which it held that as per Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Mid-term Open Access in the Inter-State Transmission and related matters) Regulations, 2009, (herein after referred to as “Connectivity Regulations”), the Long-term access applicant being effected by Force Majeure or reasons beyond its control cannot be a ground for non- signing of the Long Term Access Agreement and the failure to sign the LTA agreement within the stipulated period would necessarily result in encashment of Bank Guarantee submitted along with LTA application, has been assailed in this appeal.

2. The brief facts of the case which are necessary for the disposal of the instant appeal are that the Appellant proposed to set up 2x600 MW sub-critical thermal plant at Erukkatanchery, Kazhippanallur and Manickapangu villages in Tharangambadi Taluk of Nagapattinam district in Tamil Nadu. The project was scheduled to be commissioned in the year 2015. The Appellant applied for connectivity on 23^rd September 2010 and for Long-Term Access (LTA) on 15^th February, 2011 for 1110 MW. The application was accompanied by a Bank Guarantee of 1.10 crores in accordance with the connectivity Regulations. In the 13^th meeting of the Southern Region Constituents (SRC) regarding connectivity and LTA applications, the Appellant was granted connectivity as well as LTA for 1110 MW and was advised by the 1^st Respondent Power Grid Corporation of India Limited (now CTUIL i.e. the Central Transmission Utility India Limited), vide letter 23^rd December, 2011, to sign the LTA agreement within a period of 30 days from the date of the letter. The Appellant was granted environmental clearance for the power project on 20^th January, 2011 on the basis of the recommendations of Environment and Assessment Committee, Ministry of Environment and Forests, Government of India. The said environmental clearance was challenged before National Green Tribunal (NGT) and vide order dated 30^th May, 2012, NGT observed that the Appellant was in substantial compliance and directed the Appellant to rectify certain procedural errors. Upon compliance with these directions of the NGT, Ministry of Environment and Forest (MoEF) issued a corrigendum dated 13^th June, 2013 to the environment clearance granted to the Appellant. Even the said corrigendum dated 13^th June, 2013 was challenged by certain organizations before NGT Southern Zone. The matter was transferred to the NGT, Principal Bench and was numbered as Appeal No. 87 of 2014. The matter is still stated to be subjudice before NGT.

3. Meanwhile, in the 17^th Meeting of Southern Region Constituents held on 31^st July, 2014, the Appellant and CTUIL agreed that CTUIL may encash the Bank Guarantee of the Appellant on or after 1^st February, 2015 if the Appellant did not get environmental clearance from NGT by that date. The relevant portion of the said meeting is extracted herein below :-

“6.5 DGM (CTU) informed that LTA was granted to Chettinad Power Corporation Ltd. (2x600 MW) ON 27.12.2011 but the generation developer failed to sign LTA agreement and furnish Bank Guarantee till date. The representative from Chettinad Power Corporation informed that they have received all necessary clearances but the final hearing of NGT order on environment clearance for their project has not yet received and so, they requested for time extension of six months for execution of the LTA Agreement and furnishing of construction stage BG. In this regard, Director, CEA suggested that Chettinad Power may submit a letter within say one week mentioning that CTU may encash their BG on after 1.2.2015 if they still do not get environmental clearance from NGT, which was agreed by CTU and M/s Chettinad Power.

4. In pursuance to the discussion held in the s