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SUPREME COURT OF INDIA
L. NAGESWARA RAO, VINEET SARAN, JJ.
Bangalore Electricity Supply Company Limited (BESCOM). - Appellant(s)
Versus
E.S. Solar Power Pvt. Ltd. & Ors. - Respondent (s)
Civil Appeal No. 9273 of 2019 With Civil Appeal No. 9274 of 2019
Decided On : 03-05-2021
(A) Interpretation of Agreement – Duty of Court is not to delve deep into intricacies of human mind to explore undisclosed intention, but only to take meaning of words used (expressed intentions) – In seeking to construe a clause in a Contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean – Exercise which has to be undertaken is to determine what words used mean – It can happen that in doing so one is driven to the conclusion that clause is ambiguous, and that it has two possible meanings – In those circumstances, Court has to prefer one above the other in accordance with settled principles – If one meaning is more in accord with what Court considers to underlined purpose and intent of contract, or part of it, than other, then court will choose former or rather than later – Intention of parties must be understood from language they have used, considered in light of surrounding circumstances and object of contract – Every contract is to be considered with reference to its object and whole of its terms and accordingly whole context must be considered in endeavouring to collect intention of parties, even though immediate object of inquiry is meaning of an isolated clause. (Para 16)
(B) Government Contract – Power Purchase Agreements (PPAs) – Reduction of applicable tariff is permissible under Article 12.2 of PPA only when there is delay in commissioning of Project beyond Scheduled Commissioning Date – Scheduled Commissioning date shall be 12 months from effective date – A month shall mean either 30 days where applicable or a Calendar month – 12 Calendar months have to be taken into account for determining Scheduled Commissioning Date – Crucial expression in definition of ‘Month’ is “excluding date of event” – There is a specific mention of ‘twelve months’ in definition of ‘SCOD’ and Article 1.2.1 (k) categorically provides that any reference to a ‘Month’ shall be a calendar month – Applicability of Article 1.2.1 (k) excludes operation of Article 1.2.1 (m) to facts of this case – Power was injected from solar plants on 17.10.2017 – Judgment of Appellate Tribunal upheld. (Paras 20, 21 and 22)
Facts of the case:
Instant appeals arise out of a judgment of the Appellate Tribunal for Electricity at Delhi by which the order passed by Karnataka Electricity Regulatory Commission (KERC) was reversed. Dispute in these Appeals is whether Respondents did not commission Solar Projects before expiry of 12 months from 17.10.2016 which is date of approval of PPA by KERC – Conflicting views of parties relate to computation of 12 months for the purpose of determining whether Scheduled Commissioning Date is 16.10.2017 or 17.10.2017. Other issue that falls for consideration is whether injection of power is a pre-requisite for deciding the Date of Commissioning of the Projects and whether ‘Commercial Operation Date’ and ‘Commissioning Date’ are one and the same.
Findings of Court:
There is a specific mention of ‘twelve months’ in definition of ‘SCOD’ and Article 1.2.1 (k) categorically provides that any reference to a ‘Month’ shall be a calendar month. Applicability of Article 1.2.1 (k) excludes operation of Article 1.2.1 (m) to the facts of this case.
Result : Appeals dismissed.
JUDGMENT
L. NAGESWARA RAO, J.
1. These appeals arise out of a judgment of the Appellate Tribunal for Electricity at Delhi by which the order passed by the Karnataka Electricity Regulatory Commission (KERC) was reversed.
2. The facts that are necessary for adjudication of the dispute in these appeals are as follows:
(a) Karnataka Renewable Energy Development Limited (KREDL) issued a Request for proposal on 20.11.2015 from bidders for undertaking development of Solar PV ground mount Power Plants in Karnataka pursuant to a decision taken by the State Government for development of 1200 MWA of Solar power to be implemented in 60 Taluks through private sector participation. Emmvee Photovoltaic Power Private Limited, the second Respondent herein, incorporated two Special Purpose Vehicles (SPV) in accordance with the terms of the Request for Proposal and submitted its bid for acceptance by the first Appellant, Bangalore Electricity Supply Company Limited.
(b) Respondent No. 1 in Civil Appeal 9273 of 2019 is a special purpose vehicle constituted by Respondent No. 2 for setting up a Solar PV ground mount Project with a capacity of 10 MWA (AC) in Bidar Rural Taluk, Bidar District, Respondent No. 1 in Civil Appeal 9274 of 2019 is a special purpose vehicle for setting up a 20 MWA (AC) capacity Solar PV ground mount Project in Bagepalli Taluk, Chikkaballapura.
(c) The Projects were awarded to the Respondents on 31.03.2016. Power Purchase Agreements (PPAs) were entered into between the parties on 23.05.2016. The Power Purchase Agreements were approved by Karnataka Electricity Regulatory Commission (KERC) on 17.10.2016. Supplementary Power Purchase Agreements were entered into between the parties on 17.12.2016 incorporating the modifications suggested by the Karnataka Electricity Regulatory Commission on 07.12.2016.
(d) In respect of the Bidar Project, a Commissioning Certificate was issued on 25.10.2017 by KPTCL on the basis of minutes of meeting that was held on 16.10.2017. The Commissioning Certificate for Bagpalli Project was also issued on 23.11.2017.
3. Original Petition (OP) No. 18 of 2018 was filed by the Respondents in Civil Appeal 9274 of 2019 aggrieved by the reduction of the tariff payable by Appellant No. 1 from Rs. 6.10/kWh to Rs. 4.36/kWh and imposition of damages of Rs. 20,00,000/- (Rupees Twenty Lakhs only) for delay in commissioning the plant.
4. Apart from others, the main ground taken in the Original Petition by the Respondents is that Commissioning of the Project took place on 16.10.2017 which is clear from the Minutes of meeting drawn by the Officials of KPTCL. The meeting was attended by officers of KPTCL, officers of GSCOM and representatives of the Respondents. It was contended by the Respondents that the Project commenced its operations within 12 months from the date of approval of the PPA by the Karnataka Electricity Regulatory Commission and the imposition of damages and reduction of tariff payable by the Appellant was contrary to the provisions of the agreement.
5. Original Petition No. 19 of 2018 was filed by the Respondents in Civil Appeal 9273 of 2019 in respect of the Solar PV ground mount Power Project in Bidar for reliefs similar to those claimed in OP 18 of 2018.
6. The Karnataka Electricity Regulatory Commission by its Order dated 23.10.2018 dismissed OP No. 18 of 2018 and OP No. 19 of 2018. The Karnataka Electricity Regulatory Commission framed four issues for consideration which are as follows:
(i) ‘Whether the Scheduled Commissioning date’ of the Solar Power Projects in question would fall in 16.10.2017 or 17.10.2017.
(ii) On what date the Solar Power Projects in OP No. 18 of 2018 and OP 19 of 2018 have started injection of power into the Grid.
(iii) Whether injection of power into the State Grid from a Solar Power Project is essential in order to declare that a Project is commissioned.
(iv) ‘Whether Commissioning of the Project’ and ‘Commercial Operation of the Project’ are one and the same or different concepts
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