M/s ACME Kudligi Solar Energy Private Limited vs Karnataka Electricity Regulatory Commission & Ors on 9 September 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The appellant, a solar power developer in the State of Karnataka, is aggrieved by the order dated 11.06.2021 passed by the 1st respondent

Karnataka Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in appellant’s petition bearing O.P. No.37/2020 thereby dismissing the petition wherein the appellant had sought extension of Scheduled Commercial Operation Date (in short “SCOD”) of its solar power project on account of force majeure events and a declaration that the appellant is not liable to bear any liquidated damages as well as reduction in tariff or any contractual penalty for delay in commissioning of project. The Commission, in the said impugned order, has held that the case of the appellant is not covered by the force majeure clause contained in the Power Purchase Agreement executed by it with the 3rd respondent Bangalore Electricity Supply Company Limited (in short “BESCOM”) and further held the appellant entitled to reduced tariff as well as liable to pay liquidated damages for delay in supply of energy beyond the scheduled commissioning date in terms of the Power Purchase Agreement.

Description of Parties: -

2. The appellant is a generating company within the meaning of the term in Section 2(28) of the Electricity Act, 2003 and also is a Special Purpose Vehicle (in short “SPV”) incorporated by M/s ACME Solar Holdings Private

Limited for setting up of 20MW solar power project in Kudligi Taluka, Bellary District, Karnataka.

3. The 2nd respondent Karnataka Power Transmission Corporation Limited (in short “KPTCL”) was incorporated in 1999 upon unbundling of erstwhile Karnataka Electricity Board with the responsibility of transmission of power across the State of Karnataka along with construction/maintenance/development of transmission assets and lines and other requisite infrastructure for transmission of electricity. It has duly been granted a transmission license by the Commission vide order dated 06.12.2000 and thus, is discharging the functions of a transmission licensee.

4. The 3rd respondent Bangalore Electricity Supply Company Limited (in short “BESCOM”) is wholly owned by the Government of Karnataka and is solely responsible for power distribution in various areas in the State of Karnataka. The 4th respondent Karnataka Renewable Energy Development Limited (in short “KREDL”) is an organization working under the purview of Energy Department, Government of Karnataka with the objective of promoting renewable energy and to ensure all necessary actions for energy conservation in the State.

Facts and circumstances of the case in brief: -

5. The 4th respondent KREDL had issued a notification dated 07.12.2017 inviting Request for Proposal (RFP) for developing 860 MW grid connected solar power projects in 43 Talukas in the State of Karnataka, one of them being Kudligi Taluka. In pursuance to the said notification, KREDL received proposals from various bidders including the appellant. After evaluation of the parties, KREDL accepted the bids of the appellant for setting up of solar power projects in Guledagudda, Kittur, Kudligi and Sidlaghatta Talukas with the capacity of 15MW, 15MW, 20MW and 20MW respectively. Accordingly, separate Letters of Award (LOAs) dated 08.02.2018 were issued to the appellant for setting up of these four power projects. The LOAs were accepted by the appellant vide letter dated 12.02.2018.

6. In accordance with the RFS notification, the appellant and 2nd respondent BESCOM entered into Power Purchase Agreements with the appellant for purchase of power generated from these four solar power projects. Since we are, in this appeal, concerned with only the 20MW solar power project of the appellant at Kudligi, we may note that the Power Purchase Agreement (PPA) dated 22.03.2018 was entered into between

BESCOM and the appellant with respect to the power to be generated in the said solar power project to be set up at Kudligi.

7. Subsequent to the signing of the PPA, the appellant applied for connectivity of the project to 220/66kV Kudligi sub-station on 02.05.2018.

8. The PPA dated 22.03.2018 executed between the parties received approval from the Commission on 04.05.2018. Since Article 3.1 of the PPA provided that the “effective date” on which the agreement shall come into effect will be the date of getting concurrence from KERC, the appellant was required to achieve commercial operation of the power project within 18 months from 04.05.2018 i.e. the date when the PPA was approved by the Commission. Therefore, the SCOD of the project was 03.11.2019. The 2nd respondent KPTCL issued tentative evacuation scheme approval to the appellant on 06.10.2018 which was accepted by the appellant vide letter dated 09.10.2018. Thereafter, KPTCL issued regular evacuation scheme for the proposed 220MW solar power project at Kudligi on 19.11.2018.

9. Since the appellant sensed delay in the completion of 220/66kV Kudligi sub-station as well as upstream transmission line, through which it had to evacuate power, it addressed a letter dated 07.02.2019 to the General Manager, BESCOM, conveying that any delay in completion of line being constructed on the upstream of Kudligi sub-station, would have impact on

the commissioning schedule of the power project as envisaged under the PPA and further, upon invoking Article 14.3.1 of the PPA (force majeure clause), the appellant requested BESCOM for appropriate extension of time for commissioning of the power project equivalent to such delay. Vide letter dated 11.03.2019, the appellant reiterated the assertions made in previous letter dated 07.02.2019 and requested KPTCL to furnish the present status and definitive timeline for completion as well as commissioning of 220/66kV Kudligi sub-station and upstream transmission lines from the same within seven days of the receipt of the letter.

10. In its response dated 21.03.2019 to the appellant’s communication dated 11.03.2019, KPTCL gave the probable date of commissioning of 220kV Kudligi sub-station as 30.04.2019 and that of incoming line & terminal bay as 30.06.2019.

11. The appellant, vide letter dated 12.07.2019, again requested KPTCL to confirm the present status of commissioning of 220kV Kudligi sub-station as well as 220kV Kudligi upstream transmission line. Similar request was made by appellant in the subsequent two letters dated 29.08.2019 and 31.08.2019.

12. It appears that since no such confirmation was received by the appellant from KPTCL, it filed a petition before the Commission seeking

directions to KPTCL to commission the Kudligi sub-station at the earliest. Some other reliefs were also claimed in the petition. However, the petition was withdrawn by the appellant on 31.12.2019 with liberty to approach the Commission after the commissioning of Kudligi sub-station and its own power project. Vide letter dated 30.09.2019, BESCOM reminded the appellant that in view of the provisions of the RFP, it was the responsibility of the project developer i.e. the appellant to obtain power evacuation approval for the power project to the nearest sub-station/delivery point as mentioned in the PPA, and accordingly, appellant was advised to approach KPTCL to obtain clarification regarding the present status of commissioning of 220kV Kudligi sub-station as well as 220kV Kudligi upstream transmission line.

13. The appellant contends that as per the suggestion of BESCOM, it again approached KPTCL and was informed that Kudligi sub-station will not be available for evacuation of power by the SCOD of the appellant’s power project i.e. 03.11.2019.

14. Thereafter, the appellant issued force majeure notice dated 23.10.2019 to the BESCOM saying that the power project of the appellant could not be commissioned on account of delay on the part of KPTCL in commissioning the Kudligi sub-station as well as upstream transmission line

thereby affecting its performance under the PPA. Accordingly, request was made to provide extension of the SCOD of the power project in view of the said force majeure event and not to take any coercive action against the appellant.

15. On the same very day i.e. 23.10.2019, Chief Electrical Inspectorate to the Government of Karnataka issued approval of electrical installations in the power project of the appellant (CEIG approval). PTCC approval was also issued by the Divisional Engineer, Telecom, Power Telecommunication Coordination Committee on the same day i.e. 23.10.2019.

16. In pursuance to the said CEIG approval, appellant applied for regular interconnection approval to KPTCL vide letter dated 28.10.2019 for interconnecting the solar power plant with 220kV Kudligi sub-station so that the power project may be commissioned. KPTCL responded to the same on 06.01.2020 stating that 66kV terminal bay work was pending at both 220/66kV Kudligi sub-station end and at the end of power project. The appellant was asked to complete the same. Vide letter dated 29.01.2020. appellant informed KPTCL that all such work within its scope was already competed and only cable termination at Kudligi sub-station was pending due to various reasons which included lack of support from KPTCL officials.

17. Vide subsequent letters dated 13.02.2020 and 19.02.2020, appellant requested KPTCL to take immediate steps to complete and charge 220kV Kudligi sub-station and also sought support of its officials for the pre- commissioning testing of the power project. Since, the appellant appears to have not received any response from KPTCL, it wrote to the State Government on 26.02.2020 with the request to intervene and advise KPTCL to take immediate steps to charge the said Kudligi sub-station and to extend requisite support to the appellant for conducting the pre-commissioning testing.

18. Thereafter, the appellant received letter dated 12.03.2020 from KPTCL stating that a few activities at bay end of the Kudligi sub-station are pending and also sought certain documents from the appellant for consideration of its request of interconnection approval. This was responded to by the appellant vide letter dated 17.03.2020.

19. It appears that some progress was made in the work at the end of KPTCL for charging 220kV Kudligi sub-station but the work was again put on hold due to countrywide lockdown on account of spread of Covid-19.

20. Ultimately, Electrical Inspectorate, Government of Karnataka provided provisional approval for electrical installations pertaining to 220kV DC line

from existing 400/220kV Jagalur KPTCL sub-station to existing 220/66kV Kudligi sub-station on 20.04.2020. On the same day, Electrical Inspectorate also provided provisional approval for electrical installation pertaining to 220/66kV Kudligi sub-station.

21. In pursuance to these approvals, the EPC contractor of KPTCL consented to charge the 220/66kV Kudligi sub-station. Thereafter, requisite pre-commissioning test for Kudligi sub-station was carried on from 27.05.2020 to 30.05.2020 and the same was test charged on 30.05.2020 at 5:31 P.M.

22. Commissioning certificate for the solar power project in question was issued by KPTCL to the appellant on 02.06.2020 declaring the same as commissioned and interconnected to KPTCL Grid situated at 220/66kV Kudligi on 30.05.2020 at 1900 Hrs. Thus, the 20MW solar power project of the appellant achieved Commercial Operation (Commercial Operation Date) on 30.05.2020.

23. In view of these facts and circumstances, the appellant filed petition no.37/2020 before the Commission seeking extension of SCOD of the power project from 03.11.2019 to 30.05.2020 on account of force majeure events not attributable to the appellant and a declaration that the appellant will not

be liable to bear any liquidated damages, reduced tariff and other contractual penalties for delay in commissioning of the project. The petition has been dismissed by the Commission vide impugned order dated 11.06.2021 thereby denying all the reliefs sought by the appellant.

24. Accordingly, the appellant is before us in this appeal challenging the observations and findings of the Commission in the impugned order.

Findings of the Commission in the impugned order: -

25. We may note that the Commission had framed following eight issues for its consideration: - “Issue No.1: Whether on or before the Scheduled Commissioning Date (SCD), construction works of the Solar Power Project of the Petitioner was completed and the said Project was ready for commissioning?

Issue No.2: If Issue No.1 is held in negative, on which date the Solar Power Project was ready for commissioning?

Issue No.3: Whether in the facts and circumstances of the present case, the acceptance of conditional evacuation scheme approval by the Petitioner precludes it from claiming any relief under Force Majeure event for the period during which the evacuation system of 2nd Respondent

(KPTCL) was not made available for evacuation of power from the Solar Power Project?

Issue No.4: Whether in the facts and circumstances of present case, the Petitioner had the obligation to go for alternative methods of evacuation of power?

Issue No.5: Whether delay in commissioning of Kudligi Sub- station would fall under the definition of Force Majeure as per Article 14 of the PPA?

Issue No.6: Whether the 1st Respondent (BESCOM) is entitled to claim Liquidated Damages at the rates specified in Article 5.8 of the PPA?

Issue No.7: To which reliefs the parties are entitled to?

Issue No.8: What Order?”

26. issue no.1 has been decided in appellant’s favour. The Commission has held that the appellant had completed the construction works of the solar power project well before its SCOD i.e. 03.11.2019 and accordingly did not find it necessary to return any findings on issue no.2.

27. On issue no.3, the Commission has opined that the appellant is precluded from invoking the force majeure clause of the PPA and its case falls under the “force majeure exclusions” stated in article 14.4 of the PPA.

28. Issue no.4 has been decided in favour of the appellant stating that the appellant had no obligation for alternative methods of evacuation of power at any stage before the commissioning of the Kudligi sub-station.

29. The issue no.5 was also decided by the Commission in negative holding that the delay in commissioning of Kudligi sub-station would not fall under the definition of “force majeure” as per Article 14 of the PPA.

30. On issue no.6, the Commission has held the 2nd respondent BESCOM entitled to claim liquidated damages as per Article 5.8 of the PPA.

31. On issue no.7, the Commission has held appellant liable for reduced tariff as per Article 12.2 of the PPA as well as for payment of liquidated damages for delay in supply of energy beyond the Scheduled Commissioning Date.

32. Accordingly, the petition was dismissed.

Contentions/submissions of the parties: -

33. We have heard Mr. Aniket Prasoon, learned counsel for the appellant, as well as Mr. S. Sriranga, learned senior counsel appearing on behalf of the 2nd and 3rd respondents. We have also perused the written submissions filed by the learned counsels.

34. According to the appellant, the impugned order of the Commission is not legally sustainable for the following reasons: - (a) The power project of the appellant was granted approval by the Chief Electrical Inspectorate and the power Telecommunication Coordination Committee on 23.11.2019 which evidences that the appellant was ready to commission its project prior to SCOD and despite accepting such factual position, the Commission has given contrary findings holding the appellant liable for reduced tariff as well as for payment of liquidated damages for delay in commissioning of the power project; (b) The Commission has not considered the express provision of the PPA pertaining to extension of time on account of force majeure event particularly Article 5.7.1 which required the appellant to first commission the project and then seek for extension of time/condonation of delay on account of being impacted by force majeure event;

(c) The Commission has not considered the fact that KPTCL, vide its letter dated 21.03.2019, had intimated the appellant that the works pertaining to 220kV Kudligi sub-station and associated transmission

line would be completed by 30.04.2019 which was subsequently revised on 30.06.2019 and the appellant had no reason to foresee any delay in their commissioning; (d) The Commission has selectively applied the provisions of the PPA and has not considered that the claim for liquidated damages made by BESCOM was a sheer afterthought and the counterblast to the petition filed by the appellant as the same was raised much after the commissioning of the power project of the appellant.

35. All these grounds of challenge to the impugned order raised on behalf of the appellant have been strongly refuted on behalf of the 2nd and 3rd respondents stating that: - (a) Appellant is bound by contractual obligations enumerated in the RFP as well as PPA, according to which the project developer is responsible to evacuate power from the power plant to the nearest sub- station/delivery point and to obtain all clearances/consents including evacuation approval; (b) The appellant’s power project was not ready for commissioning within the SCOD which is evident from the letter dated 30.11.2019 issued by

BESCOM stating that the appellant had not completed all works at its end on the SCOD;

(c) Appellant had knowledge, which stems from the KPTCL’s communication dated 06.10.2018 and 19.11.2018, that evacuation of power would be possible only after commissioning of proposed 220/66kV Kudligi sub-station, which condition was unhesitatingly accepted by the appellant and therefore, the appellant is disentitled from contending that it was prevented from commissioning of the power project within SCOD; (d) The appellant has failed to establish any force majeure event which prevented it from commissioning the power project within SCOD; (e) The appellant has failed to follow the procedure set out in the PPA for invocation of force majeure clause; (f) The appellant had failed to fulfill the conditions precedent within the stipulated time which is evident from the letter dated 31.03.2020 of the BESCOM; (g) Liquidated damages and reduction in tariff are contractual consequences arising from the delay on the part of the appellant in commissioning the power project by the SCOD; and

(h) The instant case is squarely covered by the judgment of the Supreme Court in Chamundeshwari Electricity Supply Company Limited v. Saisudhir Energy (Chitradurga) Private Limited & Anr (2026) 1 SCC

799. Our analysis: -

36. We find that Articles 5.7, 5.8 and 14 of the PPA dated 22.03.2018 executed between appellant and 2nd respondent are material for our discussion and therefore, are extracted hereinbelow: - “5.7. Extensions of Time 5.7.1. In the event that the Developer is prevented from achieving the progress in fulfilling the Conditions Precedent within the time stipulated in the PPA, the BESCOM may grant extension of time, not more than 4 (four) months for fulfilling the Conditions Precedent. Such extension of time by BESCOM shall not affect the commissioning of the Project within the scheduled commissioning date.

In the event that the Developer is prevented from commissioning of the Project within the time stipulated in the PPA due to:

a) Any BESCOM Event of Default; or

b) Force Majeure Events affecting BESCOM; or

c) Force Majeure Events affecting the Developer, the Developer shall commission the Project and thereafter may file a petition before KERC, seeking approval for condoning the delay in commissioning the Project urging any of the grounds mentioned in (a), (b), (c) above. Such petition shall be deemed to be a dispute under Article 18.3.

5.7.2. After hearing the Parties and considering the merits of the grounds urged, KERC may condone the delay in commissioning of the Project on any of the grounds stated by the Developer.

5.7.3. In case KERC condones the delay, the scheduled commissioning date and the expiry date shall be deemed to be extended by the period for which the delay is condoned by KERC.

5.7.4. In the event that the Developer is prevented from achieving the progress in fulfilling the Condition Precedent or commissioning the Project for the reasons specified in the Article 5.7.1 (a), (b), (c) and if such events continue even after a maximum period of 4 (four) months, any of the Parties may terminate the agreement as per the provisions of Article

16.

5.8. Liquidated Damages for delay in commencement of supply of power to BESCOM

5.8.1. If the Developer is unable to commence supply of power to BESCOM by the Scheduled Commissioning Date other than for the reasons specified in Clause 5.7.1, the Developer shall pay to BESCOM, Liquidated Damages for the delay in such commencement of supply of power and making the Contracted Capacity available for dispatch by the Scheduled Commissioning Date as per the following:

a. For the delay up to one month an amount equivalent to 20% of the Performance Security.

b. For the delay of more than one (1) month and upto two months an amount equivalent to 40% of the total Performance Security.

c. For the delay of more than two and upto three months an amount equivalent to 40% of the Performance Security.

For avoidance of doubt, in the event of failure to pay the above mentioned damages by the Developer entities the BESCOM to encash the Performance Security.

5.8.2. In case the Developer delays the achievement of Commercial Operation Date beyond 3 (three) months, the Developer shall pay to BESCOM, the Liquidated Damages at rate of INR 50,000/- (Rupees Fifty Thousand only) per MW per day of delay for the delay in such commissioning. Provided that the Developer shall be required to make such payments to BESCOM in advance on a week to week basis for the period of delay.

5.8.3. The maximum time period allowed for achievement of Commercial Operation Date with payment of Liquidated Damages shall be limited to 22 (twenty two) months from the Effective Date. In case, the achievement of COD is delayed beyond 22 (twenty two) months from the Effective Date, it shall be considered as an Developer's Event of Default and provisions of Article 16 shall apply and the Power Project shall be removed from the list of selected projects in the event of termination of this Agreement.

ARTICLE 14: FORCE MAJEURE

14.1. Definitions

14.1.1. In this Article, the following terms shall have the following meanings:

14.2. Affected Party

14.2.1. An Affected Party means BESCOM or the Developer whose performance has been affected by an event of Force Majeure.

14.3. Force Majeure

14.3.1. A 'Force Majeure' means any event or circumstance or combination of events those stated below which wholly or partly prevents or unavoidably delays an Affected Party in

the performance of its obligations under this Agreement, but only if and to the extent that such events or circumstances are not within the reasonable control, directly or indirectly, of the Affected Party and could not have been avoided if the Affected Party had taken reasonable care or complied with Prudent Utility Practices:

a) act of God, epidemic, extremely adverse weather conditions, lightning, earthquake, landslide, cyclone, flood, volcanic eruption, chemical or radioactive contamination or ionising radiation, fire or explosion (to the extent of contamination or radiation or fire or explosion originating from a source external to the Site); b) an act of war (whether declared or undeclared), invasion, armed conflict or act of foreign enemy, blockade, embargo, riot, insurrection, terrorist or military action, civil commotion or politically motivated sabotage;

c) compulsory acquisition in national interest or expropriation of any Project Assets or rights of the Developer or of the Contractors; d) any judgment or order of any court of competent jurisdiction or statutory authority made against the Developer in any proceedings for reasons other than (i) failure of the Developer to comply with any Applicable Law

or Applicable Permit, or (ii) on account of breach of any Applicable law or Applicable Permit or of any contract, or

(iii) enforcement of this Agreement, or (iv) exercise of any of its rights under this Agreement by the Government or e) unlawful or unauthorized or without jurisdiction revocation of, or refusal to renew or grant without valid cause, any clearance, license, permit, authorization, no objection certificate, consent, approval or exemption required by the Developer or any of the Contractors to perform their respective obligations under this Agreement and the Project Agreements; provided that such delay, modification, denial, refusal or revocation did not result from the Developer's or any Contractor's inability or failure to comply with any condition relating to grant, maintenance or renewal of such clearance, license, authorization, no objection certificate, exemption, consent, approval or permit.

14.4. Force Majeure Exclusions

14.4.1. Force Majeure shall not include (i) any event or circumstance which is within the reasonable control of the Parties and (ii) the following conditions, except to the extent that they are consequences of an event of Force Majeure:

a) Unavailability, late delivery, or changes in cost of the plant, machinery, equipment, materials, spare parts or consumables for the Power Project, b) Delay in the performance of any Contractor, sub- Contractor or their agents; c) Non-performance resulting from normal wear and tear typically experienced in power generation materials and equipment; d) Strikes at the facilities of the Affected Party; e) Insufficiency of finances or funds or the agreement becoming onerous to perform; and f) Non-performance caused by, or connected with, the Affected Party's:

i. Negligent or intentional acts, errors or omissions;

ii. Failure to comply with an Indian Law; or

iii. Breach of, or default under this Agreement.

iv. If the Developer did not get NA conversion (deemed conversion) of the ‘purchased’ or 'leased and sub-leased’ land after obtaining the ownership or lease hold rights In the name of the Developer, then such delay due to the above event shall be considered under force majeure, subject to approval from KERC. In this regard, the developer shall substantiate the above delay with sufficient documentary proof including but not limited to the application, payment of necessary fee/charges, fulfilment of clarification

sought from/ by the respective revenue authorities. The decision of KERC shall be final and governing on both the Parties.

14.5. Notification of Force Majeure Event

14.5.1. The Affected Party shall give notice to the other Party of any event of Force Majeure as soon as reasonably practicable, but not later than seven (7) days after the date on which such Party knew or should reasonably have known of the commencement of the event of Force Majeure. If an event of Force Majeure results in a breakdown of communications rendering it unreasonable to give notice within the applicable time limit specified herein, then the Party claiming Force Majeure shall give such notice as soon as reasonably practicable after reinstatement of communications, but not later than one (1) day after such reinstatement.

Provided that such notice shall be a pre-condition to the Affected Party's entitlement to claim relief under this Agreement. Such notice shall include full particulars of the event of Force Majeure, its effects on the Party claiming relief and the remedial measures proposed. The Affected Party shall give the other Party regular (and not less than monthly) reports on the progress of those remedial measures and such other information at

the other Party may reasonably request about the Force Majeure Event.

14.5.2. The Affected Party shall give notice to the other Party of (i) the cessation of the relevant event of Force Majeure, and (ii) the cessation of the effects of such event of Force Majeure on the performance of its rights or obligations under this Agreement, as soon as practicable after becoming aware of each of these cessations.

14.6. Duty to Perform and Duty to Mitigate 14.6.1. To the extent not prevented by a Force Majeure Event pursuant to Article 14.3, the Affected Party shall continue to perform its obligations pursuant to this Agreement. The Affected Party shall use its reasonable efforts to mitigate the effect of any Force Majeure Event as soon as practicable.

14.7. Available Relief for a Force Majeure Event Subject to this Article 14:

a) no Party shall be in breach of its obligations pursuant to this Agreement except to the extent that the performance of its obligations was

prevented, hindered or delayed due to a Force Majeure Event; b) every Party shall be entitled to claim relief in relation to a Force Majeure Event in regard to its obligations, including but not limited to those specified under Article 5.7.1; c) For avoidance of doubt, neither Party's obligation to make payments of money due and payable prior to occurrence of Force Majeure events under this Agreement shall be suspended or excused due to the occurrence of a Force Majeure Event in respect of such Party. d) Provided that no payments shall be made by either Party offered by a Force Majeure Event for the period of such event on account of its inability to perform its obligations due to such Force Majeure Event.”

37. A combined reading of clause 5.7 and 5.8 of the PPA would reveal that in case a project developer fails to commission the power project by the Scheduled Commissioning Date (SCOD) thereby resulting in delay in commencement of supply of power to BESCOM, the developer would be liable to pay liquidated damages to BESCOM for such delay in supply of power in the amount as specified in clauses (a), (b) and (c) of Article 5.8.1 corresponding to the period of delay. However, where the delay is caused

for the reasons specified in clause 5.7.1, the project developer shall not be liable to pay any such liquidated damages to BESCOM.

38. Clause 5.7.1 provides that in case the delay in commissioning of the project within SCOD is due to any event of default on the part of BESCOM or any force majeure event affecting BESCOM or any force majeure event affecting the developer, the developer shall commission the project and thereafter approach the Commission with a petition seeking approval for condonation of delay in commissioning the project on these grounds. It further provides that in case the Commission condones the delay, the SCOD of the project shall be deemed to be extended by the period for which the delay is condoned by the Commission.

39. Force majeure and its consequences are specified in Article 14 of the PPA. Article 14.3.1 specifies certain events which would constitute force majeure only where such events prevent the affected party in the performance of its obligations under the PPA or unavoidably delayed such performance wholly or partly and to the extent such events and circumstances are not within the reasonable control, directly or indirectly, of the affected party or could not have been avoided even if reasonable care was taken or prudent utility practices were complied with by the affected party. Article 14.4.1 enumerates certain events which do not constitute force

majeure events. Article 14.5.1 makes it obligatory upon the affected party to give notice to the other party of any such force majeure event as soon as practicable but not later than seven days after the date on which such party knew or should or should have reasonably known the commencement of the force majeure event.

40. In the instant case, we have already noted that the Commission has held in the impugned order that the appellant had completed the construction works of the solar power project well before its SCOD i.e. 03.11.2019. Such finding of the Commission is primarily based upon the CEIG approval and PTCC approval, both dated 23.10.2019, accorded to the appellant’s power project by Chief Electrical Inspectorate, Government of Karnataka and Divisional Engineer, Telecom, Power Telecommunication Coordination Committee respectively. Learned counsel for the respondent nos.2 & 3 drew our attention to letter dated 30.11.2019 addressed by BESCOM to the appellant and argued vehemently that the contents of this letter show that the appellant had not completed all works at its end on the SCOD of the project. Reliance is also placed upon letters dated 06.01.2020 and 12.03.2020 issued by KPTCL to the appellant.

41. We may note that he Commission has, in the impugned order, referred to the BESCOM letter dated 30.11.2019 wherein certain works have been

mentioned which had not been completed in the power project of the appellant. However, the Commission has observed that these pending works shown in the said letter are only finishing works, which, at best, could have been completed within 3 to 4 days. The CEIG report also confirms the fact that the power project of the appellant was ready by 23.10.2019.

42. These findings of the Commission have not been assailed in any manner on behalf of respondent nos.2 & 3. It was not even argued by the learned counsel for these two respondents that these findings of the Commission in the impugned order are erroneous and contrary to the material on record. Even nothing in this regard has been stated in the written submissions filed on behalf of these respondents. Therefore, it does not lie in the mouth of these respondents to contend that the power project of the appellant was not ready for commissioning on the scheduled date of commissioning.

43. The Commission has concluded that the case of the appellant falls under the “force majeure exclusions” as stated in Article 14.4 of the PPA and thus, not entitled to the benefit of force majeure clause for the period of delay during which evacuation system was not made available to its power project due to non-commissioning of Kudligi sub-station on the ground that the appellant itself had been negligent in pursuing the concerned authorities for

obtaining evacuation route for its power project. It has been observed by the Commission in this regard that:

(a) The appellant must have been aware about the progress of the work of Kudligi sub-station as well as upstream transmission line connecting the sub-station before applying for evacuation scheme for evacuation of power to Kudligi sub-station; (b) The appellant failed to obtain the probable or definite timeline for completion of Kudligi sub-station as well as upstream transmission line before giving its consent to the terms and conditions given in the tentative evacuation scheme approval;

(c) In the letters dated 07.02.2019 and 11.03.2019, the appellant did not make it clear that in the event of Kudligi sub-station not being ready within the SCOD of its power project, it would think of alternative course to be adopted; (d) The appellant took the risk of accepting provisional evacuation scheme approval which can be termed as an intentional act or at least an error or omission on the part of appellant; and (e) The non-availability of sub-station of KPTCL cannot be termed as “any BESCOM event of default” as specified in Article 5.7.1(a) of the PPA and the “KPTCL’s event of default” is not included in any of the

provisions of the PPA as a ground for extension in favour of the developer.

44. In our view, these observations/findings of the Commission in the impugned order are not sustainable as the same are not borne out from the record.

45. The tentative evacuation scheme for the power project of the appellant was approved by KPTCL vide communication dated 06.10.2018 which was followed by the approval of regular evacuation scheme vide communication dated 19.11.2018. It is true that in both these communications, KPTCL has stated that the evacuation of the proposed 20MW power will commence only after the completion and commissioning of the proposed 220/66kV Kudligi sub-station. It is to be noted that these approvals were given by the KPTCL while having knowledge that the appellant has executed a PPA dated 22.03.2018 with BESCOM whereby the appellant is required to achieve commercial operation of the power project by 03.11.2019. There is nothing in these communications to suggest that the proposed 220/66kV Kudligi sub- station along with associated upstream transmission line would not be available on or before 03.11.2019. Therefore, in the month of October/November, 2018, when these communications were addressed by KPTCL to the appellant, there was nothing to indicate to the appellant that

he may not be in a position to evacuate power from its power project by 03.11.2019 and there may be delay in supply of power by the appellant from its power project to BESCOM under the PPA dated 22.03.2018.

46. It appears that in the month of February, 2019, the appellant sensed that there might be delay in completion of the said Kudligi sub-station as well as upstream transmission line through which it was to evacuate power. Accordingly, the appellant addressed letter dated 07.02.2019 to the BESCOM conveying that delay in completion of the sub-station as well as transmission line would impact the commissioning schedule of the power project. The appellant also invoked Article 14.3.1 of the PPA (force majeure clause) and requested BESCOM for appropriate extension of time for commissioning of the power project equivalent to such delay. The appellant also addressed letter dated 11.03.2019 to KPTCL reiterating these assertions that the request to furnish present status and definitive timeline for completion as well as the commissioning of the 220/66kV Kudligi sub- station as well as upstream transmission line.

47. What is material from the perspective of the appellant is that vide response dated 21.03.2019 to the appellant’s communication dated 11.03.2019, KPTCL gave the probable date of commissioning of the 220kV Kudligi sub-station as 30.04.2019 and that of incoming line as well as

terminal bay as 30.06.2019. Evidently, both these dates were prior to the SCOD of the appellant’s power project i.e. 03.11.2019, and therefore, the appellant cannot be expected to have presaged that these assets would not be available for evacuation of power by 03.11.2019. The fact that KPTCL had stated in the said communication that all the electrical equipment, erection work, cable termination work and control room work has been completed and testing/scheme checking work is under progress, would have lent assurance to the appellant that the work of the sub-station/transmission line is progressing satisfactorily and the assets are likely to be completed/commissioned very soon.

48. Despite such belief got by the appellant through the said communication dated 21.03.2019 from KPTCL, the appellant did not remain complacent and addressed letter dated 12.07.2019 to KPTCL requesting it to confirm the present status of commissioning of the sub-station as well as upstream transmission line. As the appellant does not appear to have received any response from KPTCL to the said letter, it sent another letter dated 29.08.2019 with similar request, which was followed by third communication dated 31.08.2019 in this regard. Since, no confirmation of the completion/commissioning dates of the Kudligi sub-station as well as upstream transmission line was given by KPTCL, the appellant approached the Commission by way of a petition seeking direction to the KPTCL to

commission the said sub-station at the earliest. However, the petition was withdrawn by the appellant on 31.12.2019 with liberty to approach the Commission after commissioning of the Kudligi sub-station and its own power project. This was in line with the Article 5.7.1 of the PPA which provided that in case the developer is prevented from commissioning of the project within the time stipulated in the PPA due to force majeure events stated therein, the developer shall commission the project and thereafter file a petition before the Commission for approval or condoning the delay in commissioning of the project.

49. Meanwhile, the BESCOM vide letter dated 30.09.2019 reminded the appellant that in view of the provisions of RFP, it was the responsibility of the project developer i.e. the appellant to obtain power evacuation approval for the power project to the nearest sub-station/delivery point as mentioned in the PPA and accordingly, appellant was advised to approach KPTCL to obtain clarification regarding the present status of commissioning of 220kV Kudligi sub-station as well as upstream transmission line. As per the said suggestion of the BESCOM, the appellant again approached KPTCL and it was informed by KPTCL that the Kudligi sub-station will not be available for evacuation of power by the SCOD of the appellant’s power project i.e. 03.11.2019.

50. At this juncture, the appellant has issued a second force majeure notice dated 23.10.2019 to BESCOM saying that the power project could not be commissioned on account of delay on the part of the KPTCL in commissioning the Kudligi sub-station as well as upstream transmission line thereby affecting its performance under the PPA. A request was made to the BESCOM to provide extension of the SCOD of the power project in view of the said force majeure event and not to take any coercive action against the appellant.

51. In these facts and circumstances of the case, it cannot be said that the appellant could have gained knowledge much prior to October, 2019 that there was no prospect of the completion/commissioning of the Kudligi sub- station as well as upstream transmission line by 03.11.2019. On one hand, the KPTCL gave a probable date of commissioning of the Kudligi sub-station as 30.04.2019 and that of incoming line as well as terminal bay as 30.06.2019 and in spite of being unable to adhere to these timelines, it maintained mischievous silence on the subsequent letters dated 12.07.2019, 29.08.2019 and 31.08.2019 of the appellant whereby appellant sought confirmation about the present status of the commissioning of the sub-station as well s the upstream transmission line. It was in the month of October, 2019 that KPTCL informed the appellant that Kudligi sub-statin will not be available for evacuation of power from appellant’s power project by

03.11.2019. Therefore, the finding of the Commission in the impugned order that the appellant did not make any attempt to obtain the probable or definitive timeline for completion of Kudligi sub-station as well as upstream transmission line or that the appellant had been negligent in pursuing the KPTCL in this regard, are erroneous and cannot be sustained.

52. We are also unable to concur with the findings of the Commission that the case of the appellant falls under the “force majeure exclusions” as stated in Article 14.4 of the PPA and thus, the appellant is not entitled to benefit of force majeure for the period of delay during which evacuation system was not made available to its power project due to non-functioning of the Kudligi sub-station. Article 14.4 has already been extracted in Paragraph no.36 hereinabove. None of the clauses from (a) to (f) of this Article are applicable to the case of the appellant. In our opinion, the case of the appellant is squarely covered by clause (e) of Article 14.3.1 of the PPA which we find pertinent to extract hereinbelow at the cost of repetition: - “e) unlawful or unauthorized or without jurisdiction revocation of, or refusal to renew or grant without valid cause, any clearance, license, permit, authorization, no objection certificate, consent, approval or exemption required by the Developer or any of the Contractors to perform their respective obligations under this Agreement and the

Project Agreements; provided that such delay, modification, denial, refusal or revocation did not result from the Developer's or any Contractor's inability or failure to comply with any condition relating to grant, maintenance or renewal of such clearance, license, authorization, no objection certificate, exemption, consent, approval or permit.”

53. The words “permit”, “authorization” and “consent” used in this clause of the PPA are material in the context of the present case. The appellant could not have commissioned its power project, even though it was ready for commissioning by the SCOD, unless it got permission or authorization or consent from KPTCL which was to be given as soon as the KPTCL completed and commissioned the Kudligi sub-station as well as the upstream transmission line. Since no such permission/authorization/consent came from KPTCL on account of delay in completion/commissioning of the said sub-station as well as transmission line beyond the SCOD of the appellant’s power project, the same qualifies as a force majeure event which was undoubtedly beyond the control of the appellant and could not have been presaged by the appellant in view of the correspondences exchanged between appellant and KPTCL, as discussed hereinabove. Further, KPTCL, being a government controlled company, the appellant does not have any control over its functioning. The appellant could, at best, pursue KPTCL to

expedite the completion/commissioning of the said sub-station as well as transmission line which it did but still these two assets could not be commissioned by or before the SCOD of appellant’s power project. The delay in completion/commissioning of these two assets is attributable solely to the KPTCL for which appellant cannot be held responsible.

54. Further, even otherwise also, we are of the opinion that even if KPTCL’s event of default is not specifically stated in the PPA as a ground for extension in favour of the project developer, the same can be read into the PPA in order to lend business efficacy to the provision of the PPA. We are conscious of the fact that this Tribunal cannot add anything to the terms of a PPA which has duly been agreed to as well as signed between the parties and also approved by the regulatory Commission. However, the terms of the PPA be construed in a way which advances the rights and interests of both the parties and does not put any of the parties in any detrimental or prejudicial situation for which the affected party is not to blame.

55. On this aspect, we find it relevant to refer to the judgment of the Hon’ble Supreme Court in Nabha Power Limited v. Punjab State Power Corporation Limited (2018) 11 SCC 508, wherein the apex court had the occasion to interpret the terms of the commercial contract by looking inter alia into the

definition clause and has laid down guiding principles on how the terms of commercial contracts should be interpreted. It has been held: - “It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know what they are getting into. Thus, normally a contract should be read as it reads, as per its express terms. The implied terms is a concept, which is necessitated only when the Penta-test referred to aforesaid comes into play. There has to be a strict necessity for it.”

56. The “Penta-test” as referred by the Hon’ble Supreme Court in the above judgment to ascertain implied terms while interpreting commercial contracts is as under: - “(1) it must be reasonable and equitable;

(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) it must be so obvious that "it goes without saying";

(4) it must be capable of clear expression;

(5) it must not contradict any express term of the contract.”

57. In the instant case, it is necessary to keep in mind that as per the findings of the Commission itself in the impugned order, the appellant had completed the construction of the project prior to its SCOD. However, it was unable to commission the project on account of lack of evacuation facility for the reason that there was delay on the part of KPTCL in completion/commissioning of the Kudligi sub-station as well as upstream transmission line through which the appellant was required to evacuate power from its power project to be supplied to BESCOM. In case, the findings of the Commission to the effect that KPTCL’s event of default cannot be made a ground for extension of SCOD in favour of the appellant is accepted then we shall be putting the appellant in a situation where the commissioning of its power project was delayed on account of acts attributable to the KPTCL and not to the appellant but for which the appellant would be made to suffer the consequences. That clearly would not have been the intendment of the parties at the time of execution of the PPA, and also by no stretch of imagination makes any business sense. Such an interpretation would make the PPA absolutely inequitable, unconscionable as well as unreasonable and therefore, the provision of the PPA related to extension of time as well as force majeure need to be interpreted in such a manner to lend business efficacy to the PPA in accordance with the real intention of the parties at the time of its execution.

58. A meaningful perusal of the relevant provisions of the PPA in this regard would lead to inevitable conclusion that the intention of the parties at the time of execution of the PPA was that any delay in commissioning of the appellant’s power project, not attributable to the appellant and caused on account of default of KPTCL in commissioning the associated evacuation assets within the assured timelines, shall also constitute force majeure event envisaged under Article 14.3.1 of the PPA, thereby entitling the appellant for extension of SCOD as per the Article 5.7 of the PPA. Such interpretation of the relevant clauses of the PPA is not only obvious but also most reasonable and equitable. It would be absolutely unreasonable and inequitable to penalize the appellant for the delay in commissioning of its power project caused by a government agency i.e. KPTCL.

59. With regards to the arguments on behalf of the respondents that the appellant has failed to follow the procedure set out in the PPA for invocation of force majeure clause i.e. issuance of seven days prior notice for obtaining the benefit of the force majeure events is concerned, we may note that the appellant has issued first force majeure notice as early as in the month of February, 2019, when it sensed that there might be delay on the part of KPTCL in completion of Kudligi sub-station as well as upstream transmission line. The said notice is dated 07.02.2019. However, it lost its relevance

when the KPTCL, vide communication dated 21.03.2019, intimated the appellant that the probable date of commissioning of 220kV Kudligi sub- station would be 30.04.2019 and that of incoming line as well as terminal bay would be 30.06.2019. The appellant had all the reasons to believe these assurances on the part of KPTCL and proceeded with its power project. However, when in the month of October, 2019, KPTCL informed the appellant that he Kudligi sub-station will not be available for evacuation of power by 03.11.2019, the appellant immediately issued a fresh force majeure notice dated 23.10.2019. Therefore, it cannot be said that the appellant has not complied with the requirements under the PPA for invocation of force majeure clause.

60. Learned counsel for the respondent nos.2 and 3, relying upon the judgment of the Hon'ble Supreme Court in Chamundeshwari Electricity Supply Company Limited v. Saisudhir Energy (Chitradurga) Private Limited & Anr (2026) 1 SCC 799, argued that the delay in evacuation facilities by the transmission licensee does not constitute a force majeure event under Article 14.3.1 of the PPA. These arguments are result of complete misreading of the said judgment of the Hon'ble Supreme Court. In Paragraph no.38 of this judgment, the Hon'ble Supreme Court has observed that contractual framework does not operate on automaticity and the project developer cannot claim automatic extension of contractual schedule even if the delay

in achieving commissioning of the project was beyond its control. It has been held that the relief under force majeure clause is conditional upon the project developer seeking and obtaining an extension under the relevant clause of the PPA, which had not been done in that case. However, the same has been duly done by the appellant in the present case. Further, there are other dissimilarities between the facts of the case before the Hon'ble Supreme Court and the facts of the instant case. In that case, the readiness of project developer to supply power to the Discom by the SCOD of the project was in dispute and the developer had sought extension of time by six months beyond the date of commissioning of 220kV line. However, in the case at hand, the appellant had completed the construction of the power project and was ready for commissioning by the SCOD of the power project and had sought extension of SCOD of the power project equivalent to the delay caused by KPTCL in commissioning of the Kudligi sub-station as well as upstream transmission line. Therefore, the findings of the Hon'ble Supreme Court in the above noted judgment on the basis of the facts and circumstances of that case are not applicable to the instant case.

Conclusion: -

61. Having regard to the above discussion, the impugned order of the Commission cannot be sustained. The same is hereby set aside. We hold

that the delay in commissioning of the power project of the appellant was on account of the reasons not attributable to the appellant and the commissioning of the power project was affected by the force majeure event envisaged under Article 14.3.1 of the PPA i.e. non-commissioning/non- availability of 220kV Kudligi sub-station including incoming lines and terminal bays by KPTCL. Accordingly, the SCOD of the power project of the appellant is hereby extended from 03.11.2019 to 30.05.2020 i.e. the actual date of commissioning and synchronization of the power project with 220kV Kudligi sub-station of KPTCL.

62. We further hold that as a consequence, the appellant will not be liable to bear any liquidated damages, reduction in tariff and/or any contractual penalty for not commissioning its power project as per the Scheduled Commercial Operation Date under the PPA.

63. Accordingly, the appeal stands allowed in above terms. All pending applications, if any, also stand disposed of.

Pronounced in the open court on this the 09th day of September, 2026.

(Virender Bhat) Judicial Member

(Seema Gupta) Technical Member (Electricity)

REPORTABLE / NON-REPORTABLE

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