East-North Interconnection Company Limited vs Central Electricity Regulatory Commission & Ors on 8 September 2026

ORDER

PER HON’BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER

1. The present Appeal has been filed against the Order dated 11.08.2022 passed by the Central Electricity Regulatory Commission (“CERC”/ Central Commission”/ Respondent No. 1”) in Petition No. 514/MP/2020, whereby the Central Commission rejected the Appellant’s claims for relief on account of alleged Force Majeure and Change in Law events arising from the collapse of certain transmission towers forming part of the Purnea-Biharsharif 400kV Quad D/C transmission line.

2. Brief facts of the case for the purpose of this order are as follows.

(i) Pursuant to the Tariff Based Competitive Bidding Guidelines notified by the Ministry of Power, Power Finance Corporation Limited was appointed as the Bid Process Coordinator for selection of a

transmission service provider for development of the East-North Interconnection transmission project. Sterlite Technologies Limited emerged as the successful bidder, following which it acquired the Appellant company as its wholly owned subsidiary.

(ii) A Transmission Service Agreement (“TSA”) was executed between the Appellant and the LTTCs. The Central Commission, by orders dated 28.10.2010 passed in Petition Nos.130 of 2010 and 131 of 2010, adopted the transmission charges for the project and granted a transmission licence to the Appellant for construction, operation and maintenance of the Bongaigaon-Siliguri and Purnea-Biharsharif 400 kV transmission lines.

(iii) The Purnea-Biharsharif (PB) Line was commissioned on 13.09.2013 and the Bongaigaon-Siliguri (BS) Line was commissioned on 11.11.2014. The transmission system thereafter remained in operation.

(iv) Long after the transmission lines were commissioned, three towers of the PB Line collapsed on 10.08.2018, 21.08.2018 and 03.10.2018 allegedly due to a change in the course of the River Ganges. The river’s shift is claimed to have caused severe erosion of the soil supporting the tower foundations, resulting in the collapse and burial of the towers in the riverbed.

(v) In order to restore the transmission system, the Appellant claims to have undertaken diversion of a portion of the PB Line, constructed additional transmission towers, installed additional conductors and transmission line and carried out other restoration works. The PB Line was restored and successfully charged on 29.12.2019. According to the Appellant, it incurred an additional expenditure of ₹ 94.58 Crore towards restoration of the PB Line. Out of the said

amount, it received ₹ 12 Crore under its insurance policy and claimed the balance amount of ₹ 82.58 Crore.

3. One of the prayers of the Appellant was for compensation for the additional work purportedly undertaken by it on account of the “force majeure event”. While going through the submissions, we noticed that Appellant has relied upon this Tribunal’s judgement dated 07.07.2025 in Aravali Transmission Service Company Limited vs Rajasthan Electricity Regulatory Commission, Appeal Nos. 59 and 60 of 2016 (“Aravali judgement”) to support its claim of ₹ 82.58 Crore under Force Majeure provision. The relevant paragraphs of the aforesaid judgment are extracted below: “203. The TSA provides for Force Majeure and relief thereto under Article 11.7. Article 11.7 of the TSA provides for relief available for Force Majeure Events. Article 11.7(b) specifies that ‘every Party shall be entitled to claim relief for a Force Majeure Event affecting its performance in relation to its obligations under the Agreement’.

204. Article 11.7(b) of the TSA, which provides for relief for Force Majeure, is a restitutive provision aimed at providing ameliorative relief to the Affected Party suffering from the Force Majeure event. Thus, the relief available to a party affected by a Force Majeure Event has been left to the Appropriate Commission to mould as per the facts and circumstances of the case, as also the applicable laws.

205. In this regard, it is relevant to note that Article 11.7(c) clarifies that relief under Force Majeure (wherein an element is under outage), i.e., computation of Availability will be as per regulations, and only the Non-Escalable Transmission charges, as applicable to such element, will be paid. Thus, we hold that relief under Article 11.7(b) also includes monetary compensation for Force Majeure.”

4. We respectfully disagree with these observations of the Tribunal in the said judgement. In our view, the principle laid down in the aforesaid decision merits reconsideration, as the relevant provisions of the TSA, particularly Article 4.4.2 and the material distinction between the language and scheme of the Force Majeure and Change in Law provisions, do not appear to have been specifically considered by the earlier Bench. In our respectful view, consideration of these provisions in their proper context leads to a conclusion

different from that reached in the aforesaid case. Therefore, in our opinion, this issue needs consideration by the full bench of this Tribunal. In this order, we are not dealing with the other issues raised by the Appellant. Once, judgement of full bench is available, we shall proceed to pronounce the judgement covering all the issues relevant for disposal of this appeal.

5. In order to develop our rationale for not agreeing with the Aravali Judgement, it will be useful to peruse the relevant provisions of the TSA relating to Force Majeure and Change in Law, which are extracted below:

“1.1 Definitions

“Indian Government Instrumentality” shall mean Government of India, Government of any State in India or any ministry, department, board, authority, agency, corporation, commission under the direct or indirect control of Government of India or any State Government or both, any political sub-division of any of them including any court or Appropriate Commission or tribunal or judicial or quasi-judicial body in India but excluding the TSP and Long Term Transmission Customers; “Law” or “Laws” in relation to this Agreement, shall mean all laws including electricity laws in force in India and any statute, ordinance, rule, regulation, notification, order or code, or any interpretation of any of them by an Indian Governmental Instrumentality having force of law and shall include all rules, regulations, decisions and orders of the Appropriate Commission.” … 4.4.2 In the event that an Element or the Project cannot be commissioned by its Scheduled COD on account of any Force Majeure Event as per Article 11, the Scheduled COD shall be extended, by a ‘day for day’ basis, for a maximum period of one hundred and eighty (180) days. In case the Force majeure Event continues even after the maximum period of one hundred and eighty (180) days, the TSP or the Majority Long Term Transmission Customers may choose to terminate the Agreement as per the provisions of Article 13.5.”

….. …..

“11. FORCE MAJEURE ….. 11.2 Affected Party … 11.2.3 Any event of Force Majeure shall be deemed to be an event of Force Majeure affecting the TSP only if the Force Majeure event affects and results in, late delivery of machinery and equipment for the Project or construction, completion, commissioning of the Project by Scheduled COD and/or operation thereafter;

11.3 Force Majeure A `Force Majeure' means any event or circumstance or combination of events and circumstances including those stated below that 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) Natural Force Majeure Events Act of God, including, but not limited to drought, fire and explosion (to the extent originating from a source external to the site), earthquake, volcanic eruption, landslide, flood, cyclone, typhoon, tornado, or exceptionally adverse conditions which are in excess of the statistical measure for the last hundred (100) years. …

11.6 Duty to Perform and Duty to Mitigate To the extent not prevented by a Force Majeure Event, the Affected Party shall continue to perform its obligations as provided in this Agreement. The Affected Party shall use its reasonable efforts to mitigate the effect of any event of Force Majeure as soon as practicable. 11.7 Available Relief for a Force Majeure Event Subject to this Article 11

(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 for a Force Majeure Event affecting its performance in relation to its obligations under this Agreement.

(c) For the avoidance of doubt, it is clarified that the computation of Availability of the Element(s) under outage due to Force Majeure Event, as per Article 11.3 affecting the TSP shall be as per Appendix IV to the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations 2009 as on seven (7) days prior to the Bid Deadline, For the event(s) for which the Element(s) is/are deemed to be available as per Appendix IV to the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations 2009, then only the Non Escalable Transmission Charges, as applicable to such Element(s) in the relevant Contract Year, shall be paid by the Long Term Transmission Customers as per Schedule 5, for the duration of such event(s).

(d) For so long as the TSP is claiming relief due to any Force Majeure Event under this Agreement, the Lead Long Term Transmission Customer may, from time to time on one (1) day notice, inspect the Project and the TSP shall provide the Lead Long Term Transmission Customer's personnel with access to the Project to carry out such inspections, subject to the Lead Long Term Transmission Customer's personnel complying with all reasonable safety precautions and standards. … …..

12. CHANGE IN LAW 12.1 Change in Law 12.1.1 Change in Law means the occurrence of any of the following after the date, which is seven (7) days prior to the Bid Deadline resulting into any additional recurring / non-recurring expenditure by the TSP or any income to the TSP:

• the enactment, coming into effect, adoption, promulgation, amendment, modification or repeal (without re-enactment or consolidation) in India, of any Law, including rules and regulations framed pursuant to such Law;

• a change in the interpretation or application of any Law by any Indian Government Instrumentality having legal power to interpret or apply such Law, or any Competent Court of Law;

• the imposition of a requirement for obtaining any Consents, Clearances and Permits which was not required earlier,

• a change in the terms and conditions prescribed for obtaining any Consents, Clearances and Permits or the inclusion of any new terms or conditions for obtaining such Consents, Clearances and Permits;

• any change in the licensing regulations of the Appropriate Commission, under which the Transmission License for the Project was granted if made applicable by such Appropriate Commission to the TSP;

• any change in the Acquisition Price: or

• any change in tax or introduction of any tax made applicable for providing Transmission Service by the TSP as per the terms of this Agreement.

12.1.2 Notwithstanding anything contained in this Agreement, Change in Law shall not cover any change:

a. on account of regulatory measures by the Appropriate Commission including calculation of Availability; and

b. in any tax applied on the income or profits of the TSP.

12.2 Relief for Change in Law 12.2.1 During Construction Period:

During the Construction Period, the impact of increase/decrease in the cost of the Project in the Transmission Charges shall be governed by the formula given below: For every cumulative increase/decrease of each Rupees Four Crores (Rs.4,00,00,000) in the cost of the Project up to the Scheduled COD of the Project, the increase/decrease in non-escalable Transmission Charges shall be an amount equal to 0.32 percent (0.32%) of the Non-Escalable Transmission Charges. 12.2.2 During the Operation Period: During the Operation Period, the compensation for any increase/decrease in revenues shall be determined and effective from such date, as decided by the Appropriate Commission whose decision shall be final and binding on both the Parties, subject to rights of appeal provided under applicable Law. Provided that the above mentioned compensation shall he payable only if the increase/decrease in revenues or cost to the TSP is in excess of an amount equivalent to one percent (1%) of Transmission Charges in aggregate for a Contract Year. 12.2.3 For any claims made under Articles 12.2.1 and 12.2.2 above, the TSP shall provide to the Long Term Transmission Customers and the Appropriate Commission documentary proof of such increase/decrease in cost of the Project/revenue for establishing the impact of such Change in Law. 12.2.4 The decision of the Appropriate Commission, with regards to the determination of the compensation mentioned above in Articles 12.2.1 and 12.2.2, and the date from which such compensation shall become effective, shall be final and binding on both the Parties subject to rights of appeal provided under applicable Law.”

6. It may be noted that the Article 11.7 of the TSA provides only for relief from the performance of contractual obligations affected by the Force Majeure event. Unlike Change in Law provision, it does not, either expressly or by necessary implication, provide for reimbursement of the costs or expenses incurred by the affected party in mitigating the consequences of such event or restoring the transmission system. This distinction is consistent with the approach generally adopted in electricity infrastructure contracts, which treats Force Majeure and Change in Law as distinct risk- allocation mechanisms. Force Majeure relief is directed principally at

relieving the affected party from the consequences of non-performance caused by the Force Majeure Event, whereas a Change in Law provision may go further by expressly protecting the affected party against the economic consequences of the event through tariff adjustment1.

7. In our opinion, the language of Article 11.7 indicates that the relief contemplated for a Force Majeure Event is essentially directed to the affected Party’s performance of its contractual obligations. Article 11.7(a) protects a Party from being in breach to the extent its performance is prevented, hindered or delayed by an Force Majeure Event, while Article 11.7(b) entitles a Party to claim relief for an Force Majeure Event “affecting its performance in relation to its obligations under this Agreement.” These provisions are general in nature and can operate both during construction and operation. Article 11.6 further requires the affected Party to use reasonable efforts to mitigate the effect of the Force Majeure Event.

8. Article 11.7(c), however, deals with a specific operational consequence of a Force Majeure Event, namely its effect on the computation of Availability and the corresponding Transmission Charges. Where a Force Majeure Event affects the operation of an Element, the clause provides that, in the circumstances specified therein, the Element is deemed to be available for determining the applicable Transmission Charges, and the Non-Escalable Transmission Charges remain payable. Article 11.7(c) thus addresses the contractual consequence of impaired performance during operation. It does not convert the general relief under Article 11.7(a) and (b) into a right to reimbursement or restitution of costs or losses suffered on account of the 1 World Bank, “Power Purchase Agreements (PPAs) and Energy Purchase Agreements (EPAs)”, available at https://ppp.worldbank.org/sector/energy/energy-power-agreements/power-purchase-agreements, last accessed on 14.08.2026

Force Majeure Event.

9. The same understanding is reinforced by Article 4.4.2, which specifically addresses the consequence of a Force Majeure Event during construction. Where commissioning is delayed by an Force Majeure Event, the Scheduled COD is extended on a day-for-day basis, but only up to 180 days, after which the TSP or the Majority LTTCs may exercise the option to terminate the Agreement. Thus, the TSA addresses Force Majeure related delay principally through extension of time and, beyond the prescribed period, through an option for termination, rather than through compensation for the economic consequences of the delay. If the TSP were entitled to recover costs arising from a Force Majeure induced delay, the prescription of a finite 180-day period would serve little purpose, since such costs would, on that interpretation, remain recoverable irrespective of the duration of the delay. The 180-day limit therefore indicates that the TSA consciously limits the TSP’s exposure to the consequences of prolonged Force Majeure by providing a defined period of contractual relief, rather than an open-ended right to recover costs occasioned by the Force Majeure Event.

10. This interpretation is particularly significant when contrasted with the Change in Law provisions. Article 12.2 expressly provides for the economic consequences of a Change in Law. During construction, Article 12.2.1 provides a formula for adjusting Non-Escalable Transmission Charges for an increase or decrease in Project cost. During operation, Article 12.2.2 provides for compensation for an increase or decrease in revenue where the aggregate impact exceeds one per cent of Transmission Charges for the Contract Year. The TSP is also required to furnish documentary proof of the resulting increase or decrease in cost or revenue. Thus, where the parties

intended to provide for economic consequences, they expressly identified the relevant impact, prescribed a mechanism for quantifying it and specified the threshold beyond which an adjustment would arise. No comparable threshold, formula or mechanism for determining Force Majeure-related costs or losses is found in Article 11.

11. The difference in the contractual treatment of Force Majeure and Change in Law is therefore material and supports the conclusion that Force Majeure relief is performance-based rather than restitutionary. In other words, it addresses the consequences of inability, hindrance or delay in performing contractual obligations, rather than restoring the TSP to the economic position it would have occupied had the Force Majeure Event not occurred.

12. The principle that a court cannot supply an omission by interpretation is well settled. In State of Jharkhand v. Govind Singh, Appeal (crl.) 1405 of 2004, decided on 03.12.2004, the Hon’ble Supreme Court held that a casus omissus (an omitted case) cannot be supplied by a court except in a case of clear necessity, where the reason for doing so is found within the four corners of the statute itself. Similarly, in Mukund Dewangan v. Oriental Insurance Co. Ltd., Civil Appeal No. 5826 of 2011, decided on 03.07.2017, the Court observed that what has not been provided in a statute cannot be supplied by the Court merely by interpretation, as doing so would amount to legislation rather than construction.

13. The same principle is relevant here. The question is not whether economic compensation for a Force Majeure Event could have been provided for in the TSA, but whether the TSA has actually provided for it. Article 11 contains no provision identifying Force Majeure related cost or loss

as a compensable item, no mechanism for quantifying such cost or loss, and no threshold or adjustment mechanism for recovering it. In contrast, Article 12.2 expressly provides for economic adjustment in respect of Change in Law. To read a general right of economic restitution into Article 11.7(b), therefore, would not merely interpret the provision; it would add a substantive monetary entitlement which the parties have not stipulated.

14. This approach is also consistent with the principles laid down by the Hon’ble Supreme Court in Energy Watchdog v. Central Electricity Regulatory Commission, (2017) 14 SCC 80. The Hon’ble Supreme Court recognised that a Force Majeure provision operates as a contractual contingency under Section 32 of the Indian Contract Act, 1872, and emphasised that the express terms of a contract cannot be disregarded on a vague plea of equity. The contractual allocation of risk, having regard to the terms of the contract and its context, must govern the consequences of the supervening event.

15. The same principle of giving effect to the parties’ contractual allocation of risk was reiterated by the Hon’ble Supreme Court in Chamundeshwari Electricity Supply Co. Ltd. v. Saisudhir Energy (Chitradurga) Pvt. Ltd., CA No. 6888 of 2018, decided on 25.08.2025. In the context of a PPA resulting from a competitive bidding process and having received regulatory approval, the Hon’ble Court emphasised that the agreement must be construed and enforced in accordance with its express stipulations, and that the contractual allocation of risk cannot be overridden by the regulatory authorities.

16. Having expressed disagreement with the legal principle enunciated by

this Tribunal in the Aravali judgement (supra), the right course of action would be to refer the matter to the Full Bench of the Tribunal for effective adjudication of the controversy.

17. We are conscious of the fact that the forgoing discussion was with reference to a specific TSA, which was based on the model PPA issued as part of the competitive bidding guidelines issued by the Government of India under Section 63 of the Act. However, there is need to make the reference to full bench of this Tribunal much more general in nature. Accordingly, we have identified the following features of an agreement, which when read together, may indicate that the parties did not intend Force Majeure to give rise to monetary compensation or restitution:

(i) The language of the relevant provision of the agreement only talks about relief from contractual obligations under Force Majeure Event.

(ii) There is a specific provision in the agreement dealing with procedure for extension of time but no specific provision about assessing the cost due to Force Majeure Event.

(iii) There is specific provision about impact of cost increase due to some other contingency like Change in Law but not under Force Majeure Event thereby indicating that the latter is not a slip but intentional provision.

(iv) There is option to terminate the agreement if the Force Majeure Event exceeds particular duration thereby indicating intention of the parties to limit the risk without explicit cost compensation.

(v) There is a provision in the agreement to the effect that if Force Majeure Event takes place during operational phase of the project,

the project will be given deemed availability, thereby indicating that the relief is only limited to performance.

18. The issue to be considered and adjudicated upon by the Full Bench is falling as under: - “Whether the word “RELIEF” to which an affected party is entitled under the Force Majeure clause of an Agreement (be it a Power Purchase Agreement or a Transmission Service Agreement etc.) would include monetary compensation also, particularly where the agreement contains the five indicators mentioned in paragraph 17 of this order.”

19. Accordingly, we direct the Registry to place this matter before the Hon’ble Acting Chairperson with the request to constitute a Full Bench of this Tribunal for an authoritative and binding decision on the above issue.

PRONOUNCED IN THE OPEN COURT ON THIS 8th DAY OF SEPTEMBER, 2026.

(Ajay Talegaonkar) Technical Member

(Virender Bhat) Judicial Member

REPORTABLE / NON-REPORTABLE kns/mkj/kks