Radiance Punjab Renewable Private Limited vs Punjab State Electricity Regulatory Commission & Ors on 3 July 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The Appellant, M/s Radiance Punjab Renewable Private Limited is assailing the order dated 4th June, 2018 passed by 1st Respondent Punjab State Electricity Regulatory Commission (hereinafter referred to as "the Commission") passed in Petition No. 24

of 2016 which was filed by M/s. Azure Renewable Energy Pvt. Ltd., (the predecessor in interest of the Appellant herein) seeking extension of the commercial operation date of its solar power generation sites beyond the schedule commercial operation date with further prayer for entitlement to tariff of Rs.7.59 per kWh in terms of the PPA dated 31st March, 2015 executed between the Appellant and the 2nd Respondent Punjab State Power Corporation Limited. Various Force Majeure events were agitated by the Appellant in the petition which, according to it, prevented it from achieving commercial operation on or before the scheduled date. Vide the impugned order, the Commission has condoned delay of only 29 days and has disallowed the claims of the Appellant with regards to the majority of the Force Majeure events and thus tariff for the solar power project sites of the Appellant was reduced from Rs.7.59 per unit to Rs.5.09 per unit. Description of the Parties :-

2. The Appellant is a generating company within the meaning of Section 2(28) of the Electricity Act, 2003 and is a solar power developer. The 2nd Respondent - Punjab State Power Corporation Limited is an unbundled entity of the erstwhile Punjab State Electricity

Board and is vested with the distribution of electricity in the State of Punjab.

3. The 3rd Respondent - Punjab Energy Development Authority is a designated agency in the State of Punjab for development of power projects and was the designated agency to conduct the competitive bidding process on behalf of the 2nd Respondent - PSPCL for procurement of electricity from solar generation projects. Facts of the case

4. The facts and circumstances of the case in which the above said appeal has arisen are noted hereunder.

5. Vide notification dated 26th December, 2012, the Government of Punjab notified the New and Renewable Source of Energy Policy, 2012 (in short NRSE 2012) providing for various incentives and benefits to renewable energy projects to be established in the State of Punjab. The policy provided for the terms and conditions on the basis of which the projects were to be established, the benefits to be granted to the projects and also the tariff at which power was to be procured by the Distribution Licensees i.e. the 2nd Respondent from such projects. It also envisaged that the 3rd Respondent - PEDA to be a nodal agency as a project facilitator for all such projects. PEDA was

given the responsibility of "Single Window Clearance" for all sanctions and clearances from the Government departments within a period of 60 days in order to ensure seamless commissioning of renewable energy power plants.

6. The bids/proposals for establishment of Solar RoofTop Projects under Section 63 of Electricity Act, 2003 were invited against RFP by PEDA in January, 2015 through e-bidding system.

7. The Appellant participated in the bidding in March, 2015 and was declared successful bidder on 25th March, 2015 for capacity of 10 MW solar rooftop power project under category II bidders to establish a power plant and supply power to 2nd Respondent - PSPCL for a period of 25 years at net tariff of Rs.7.59 per kWh in accordance with the provisions of RFP. The Appellant was required to submit performance security by way of irrevocable Bank Guarantee at the rate of Rs.40 lakhs per MW aggregating to Rs.4 crores and to sign the Implementation Agreement (IA) with PEDA within 5 days of the date of the issue of Letter of Award (LoA) and subsequently to sign Power Purchase Agreement (PPA) with 2nd Respondent - PSPCL.

8. The Appellant executed Implementation Agreement with PEDA on 28th March, 2015 and also submitted the required performance

guarantee in the amount of Rs.4 crores to PEDA in terms of Article 6.2(iv) of the IA. As per the terms of RfP & IA, the Solar Rooftop Projects were to be commissioned by the Appellant within 10 months from the date of signing of PPA.

9. The solar power developers including the Appellant were invited by the 2nd Respondent - PSPCL on 31st March, 2015 to sign the PPAs. The PPAs contained a clause No. 35 providing that the PPA shall be effective and binding only upon approval by the Commission and would be subject to the conditions, if any, to be stipulated by the Commission.

10. The 2nd Respondent PSPCL filed Petition No. 23 of 2015 before the Commission seeking approval to procure electricity from the solar power developers as well as to approve the PPAs executed by it with them. The petition was allowed by the Commission on 11th May, 2015 and accordingly the PPAs were approved.

11. Thereafter, the Appellant identified the roofs for the entire 10 MW project and submitted the details to PEDA vide letter dated 26th August, 2015.

12. It appears that PEDA issued a notice dated 3rd September, 2015 to the Appellant for termination of the LOA on the ground of not

providing the list of properties for installing solar power projects as per clause 4.1 (vii) of the Implementation Agreement. The Appellant sent a detailed response dated 29th September, 2015 to the said notice of PEDA mentioning therein the difficulties in identifying the rooftops of which the solar power projects were to be installed.

13. Meanwhile the Appellant, also vide letter dated 4th September, 2015, sought feasibility clearance for the entire power project from the planning department of PSPCL. Vide letter dated 7th September, 2015, the Appellant sought feasibility/technical clearance from PEDA for implementation of the project at nine individual sites.

14. PEDA gave concurrence for setting up of SPV plants identified by the Appellant on 14th October, 2015 copy of which was also marked to PSPCL. The Appellant immediately addressed a letter dated 15th October, 2015 to PSPCL with the request for immediate feasibility/connectivity/ technical approval for evacuation of power from the 10 MW distributed capacity of the rooftop SPV plant at 11KV GSS at various locations.

15. In subsequent letter dated 26th August, 2015, PEDA wrote to PSPCL that at the time of signing of Implementation Agreement, the Company i.e. the Appellant had informed that it has not identified any

location for setting up of the project and now the Appellant has identified the rooftop areas and therefore supplementary PPA for 10 MW rooftop SPV plant has to be signed. Accordingly, the Appellant wrote a letter dated 28th October, 2015 to PSPCL requesting it to execute supplementary PPA with regards to the identified rooftop sites. Instead of executing the supplementary PPA, PSPCL wrote a letter dated 4th November, 2015 to PEDA with the request to first carry out amendment in the Implementation Agreement before supplementary PPA can be executed.

16. On 10th November, 2015, PEDA executed amended Implementation Agreement with the Appellant specifying therein the nine sites identified by the Appellant. This fact was intimated to PSPCL by PEDA vide letter dated 13th November, 2015 with the request to carry out amendments in the PPA with the Appellant.

17. On 13th November, 2015, the Appellant also requested PSPCL to carry out requisite amendment in the PPA so that the Appellant could set up its SPV plant in timely manner. Vide letter dated 18th November, 2015 PSPCL again sought clarification regarding installation of projects at several sites. This position was clarified by PEDA vide letter dated 20th November, 2015 stating that setting up of

the project at different sites was permissible as per the RFP document and again requested PSPCL to carry out the requisite amendment in the PPA.

18. However, PSPCL again, vide letter dated 24th November, 2015, requested PEDA to relook into the matter. Thereafter, vide letter dated 26th November, 2015 PEDA again requested PSPCL to sign the amended PPA with the Appellant clarifying that it was extremely difficult to get a large single rooftop area of one lakh sq. meter in the State of Punjab.

19. Ultimately, the PSPCL carried out necessary amendments in the PPA on 2nd December, 2015 specifying therein the names of identified cites for setting up of the solar power plant by the Appellant. Subsequently, on 7th December, 2015, PSPCL gave technical concurrence for these sites of the Appellant.

20. On 17th December, 2015, the Appellant addressed the letter to PSPCL with the request to expedite the grant of grid connectivity which was required to start the process of execution of the project in the timely manner. This was followed by reminder dated 28th December, 2015. PSPCL gave grid feasibility to two rooftop sites of the Appellant

on the same day i.e. 28th December, 2015 and for seven remaining sites on 31st December, 2015.

21. The Appellant along with other solar power developers sent a representation dated 6th January, 2016 to PEDA mentioning therein the circumstances in which approval of PPA was delayed much, in turn, resulting in delay achieving financial closure as well as disbursement of loan. However, PEDA vide letter dated 18th January, 2016 informed them that there will be no extension in the Schedule Commissioning Date (SCOD) of the power projects.

22. The Appellant received a communication dated 24th February, 2016 from PEDA asking it to intimate the extent of capacity which has been commissioned by the Appellant in the month of February, 2016. PEDA also sought to impose penalty for non-commissioning /short fall in the commissioning of allocated capacity as per clause 3.23 of RFP. The Appellant submitted a detailed response dated 26th February, 2016 to the said letter of PEDA.

23. Thereafter, during 1st February, 2016 to 2nd May, 2016, PSPCL approved the route of transmission lines.

24. In these circumstances, the Appellant approached the Commission with Petition No. 24 of 2016 seeking extension of SCOD

of the solar power project till 31st May, 2016 with applicable tariff of Rs.7.59 per kWh and further direction to PSPCL as well as PEDA not to take any coercive action against the Appellant with regard to the Performance Bank Guarantee deposited by the Appellant. The prayers made in the petition by the Appellant are extracted herein below:- (a) set aside and / or quash the letters dated 18.01.2016 and 24.02.2016 of PEDA; (b) hold and declare that the Commercial Operation Date of the project of the petitioner stands extended till 31.05.2016 in accordance with clause 10 of the PPA read with Article 7.0 of the IA on account of force majeure events which are beyond the control of the petitioner; and further hold and declare that the Commercial Operation Date of the two sites / plants of the petitioner i.e. PSAMB Ludhiana and Canam Consultants stands extended till 8th June, 2016 and 22nd June, 2016 respectively, in accordance with Article 10 of the PPA read with Article 7.0 of the Implementation Agreement on account of Force Majeure events and events which are beyond the control of the petitioner.

(c) hold and declare that the petitioner is entitled to tariff of Rs. 7.59 per kWh (levellised tariff) in terms of the PPA dated 31.03.2015 during the extended COD period; (d) direct PEDA not to invoke the Performance Bank Guarantee, and to not take any coercive actions whatsoever against the petitioner.

25. The petition has been decided by the Commission vide order dated 4th June, 2018 which is impugned in this appeal. Vide the said impugned order, the Commission has condoned the delay of 29 days which had occasioned due to delay on the part of the PSPCL in granting grid feasibility clearance but has rejected the remaining Force Majeure claims of the appellant thereby causing reduction of tariff for the Appellant's solar power project from Rs.7.59 per unit to Rs.5.09 per unit.

26. It is the contention of the Appellant in this appeal that delays on account of following events ought to have been taken into account by the Commission in the impugned order and accordingly, the SCOD of the power project ought to have been extended; (a) Delay of 41 days in approval of PPA.

(b) Delay in grid connectivity and in execution of (b) supplementary PPA.

(c) Delay on account of JAT agitation.

27. We have heard Learned Counsel for the Appellant as well as Learned Counsel for Respondent Nos. 1, 2 & 3. We have also perused the written submissions filed by the Learned Counsels. Relevant contractual clauses :-

28. Before embarking upon to discuss these issues raised in the Appeal by the Appellant, we find it pertinent to refer to various provisions of the RFP document, Implementation Agreement and the PPA/SPPA.

29. Clause 3.2(B) of the RFP document relates to the scope of work and provides that the scope of work for the bidder include identification of buildings/leasing rooftop of buildings, obtaining No Objection Certificate from PSPCL for grid connectivity, complete design, engineering, manufacture, supply, storage, civil work, erection, testing & commissioning of the grid connected rooftop solar PV project including operation of maintenance of the project. Therefore, it was the responsibility of the bidder to identify the rooftops upon which the allocated solar power project was intended to be installed.

30. Clause 3.9 of the RFP is with regards to the Implementation Agreement and is extracted hereinbelow :- "Implementation Agreement (IA)

The terms and condition for Implementation of the project shall be formulized through signing of Implementation Agreement between successful bidder and PEDA. The Solar Project Developer shall be required to pay non refundable facilitation service charges @ 0.5% of the total Project Cost (as per the project cost given in the Detailed Project Report (DPR) submitted by the SPD) with a maximum limit of Rs. 50,00,000/- (Rupees Fifty Lac only) before signing of Implementation Agreement.

The successful bidder shall execute separate Implementation Agreement for each individual projects and shall pay separate facilitation charges.

The detailed project report shall be submitted by the SPD before signing of IA. The IA is attached as Annexure-4.”

31. Clause 3.10 of the RFP provided that the PPA shall be executed between PSPCL and selected bidder within 30 days from the date of signing of the Implementation Agreement and would be valid

for 25 years from the date of commissioning of the complete plant or partial capacity. As per clause 3.23 of the RFP, the Rooftop Solar PV project was to be commissioned within 10 months from the date of signing of the PPA and in case of failure to do so, PEDA was entitled to encash Performance Bank Guarantee in the following manner :- (a) Delay upto one month PEDA will encash 30% of the total Performance Bank Guarantee proportionate to the Capacity not commissioned.

(b) Delay of more than one month and upto two month, PEDA will encash remaining 70% of the total Performance Bank Guarantee proportionate to the Capacity not commissioned.

(c) The penalty on the delay in project commissioning as stated above will be calculated on the number of days for which delay occurs on pro-rate basis.

(d) in case of part commissioning, the penalty shall be calculated on the delay on un-commissioned capacity. In case the commissioning of project is delayed beyond 12 months from the date of signing of PPA, the Project Developer shall pay to PSPCL the Liquidated Damages at a rate of Rs. 20,000/- (Rupees Twenty Thousand Rupees Only) per MW per day for delay in such remaining Capacity which is not commissioned. The maximum time period allowed for

commissioning of the full Project Capacity with encashment of Performance Bank Guarantees and payment of Liquidated Damages shall be limited to 15 months from the date of signing of PPA. The amount of liquidated damages worked out as above shall be recovered by PSPCL from the payments due to the Project Developer on account of sale of solar power to PSPCL. In case, the Commissioning of the Project is delayed beyond 15 months from the date of signing of PPA, the PPA capacity shall stand reduced/amended to the Project Capacity Commissioned and the PPA for the balance Capacity will stand terminated and shall be reduced from the selected Project Capacity. The LOA & IA shall also stand terminated for the balance un-commissioned capacity. Note :-If due to delay COD of the project shifts beyond 31st March 2016 then in accordance to CERC Regulations the tariff shall cease to exist and the project developer should be required to get the tariff afresh by filing the petition in PSERC. Part Commissioning: Part commissioning of the Project shall be accepted by PEDA subject to the condition that the minimum capacity for acceptance of part commissioning shall be 0.501 MW. The PPA will remain in force for a period of 25 years from the date of acceptance of part commissioning of the Project."

32. Article 3 of the Implementation Agreement dated 28th March, 2015 executed between the Appellant and PEDA provides that in case the COD of the project crosses beyond 31st March, 2016 the tariff mentioned in the agreement shall cease to exist and the developer will be bound to get tariff re-determined from the Commission.

33. Article 6 of the IA also is material and is extracted hereinbelow:- "6.1 Obligations of PEDA: PEDA will provide necessary support including Single Window Clearances to facilitate the development of the projects. This may include facilitation in assisting and advising in respect of obtaining various approvals from the Government Departments. However, it will be the sole responsibility of the Company to obtain such Approvals. 6.2 Obligations of Company: i The Company shall act as per the terms and conditions of RfP; ii. In case of Consortium, the share holding pattern and Controlling Shareholding pattern (held by the Lead Member holding more than 50% of the voting rights) shall

not change from the date of submission of RfP up to one year after the commissioning of the Project.

iii. Power Purchase Agreement (PPA): The PPA shall be executed between PSPCL and the Selected Bidder(s), on or before 31st March 2015 after signing of Implementation Agreement. However, PPA will remain in force for 25 (Twenty five) years from the date of Commercial Operation.

iv. Performance Bank Guarantee: The Company has submitted Performance Bank Guarantees(s) of Rs. 40,00,000/- (Rupees Forty Lac Only) per MW for each project at the time of signing of IA as per the Format - 6.3 B of RfP and other terms and conditions mentioned in Section 3 of RfP thereof. The Performance Bank Guarantee shall be valid for a period of 15 months from the date of signing of IA.

v. Technology: The Company shall submit a certificate from the project / its client, situated anywhere in world that the technology proposed to be supplied by the Manufacturer / Technology Provider is in successful operation for at least one year.

The Company shall promote only commercially established and operational technologies to minimize the technology risk and to achieve the timely commissioning of the Projects.

vi. Rooftop for Construction of Solar PV Power Project : The Bidder / SPD shall acquire rooftop on ownership /leasehold basis for 30 years. The rooftop area approximately 100000 Sq. foot per MW shall be in clear possession of the project developer. In this regard the Project Developer shall be required to furnish the documentary evidences i.e. Regd. Sale deed of building showing ownership/regd. Rooftop lease deed of building in the name of SPD to PEDA within 120 days from issue of Letter of Award.

vii. Commissioning of Project: The Rooftop Solar PV Project shall be commissioned within 10 (Ten) months from the date of signing of PPA.

viii. Grid Feasibility Letter from PSPCL: The Company shall obtain and submit to PEDA the grid feasibility letter from PSPCL within 120 days from the date of signing of PPA."

34. Article 10 of the Implementation Agreement defines Force Majeure and provides consequences thereof. The same is extracted hereinbelow:- “ARTICLE 10: FORCE MAJEURE 10.1 Force Majeure Event In this Agreement, Force Majeure means an event occurrence in India of any or all of non-political events described in clause 10.2 and political events described in clause 10.3 respectively hereinafter which prevents the party claiming Force Majeure. (The affected party) from performing its obligations under this agreement and which act or event, i. Is beyond the reasonable control of and not arising out of the fault of the affected party. ii. The affected party has been unable to prevent by the exercise of due diligence and reasonable efforts, skill and care, including through expenditure of reasonable sum of money and iii. Has a materially adverse effect on the project. 10.2 Non-political force majeure events

For the purpose of 10.1 non-political force majeure events shall mean one or more of the following acts or events: i) Acts of God or events beyond the reasonable control of the affected party which could not reasonably have been expected to occur such as extreme adverse weather or environment conditions, lighting, heavy rains, cyclones, tempest, whirlwind, landslides, storms, floods, volcanic, eruptions or fire (to the extent originating from the source external to the site or not designed for in construction works); ii) Radioactive contamination or ionising radiation; iii) An act of war (whether declared of undeclared) invasion, armed conflict or act of foreign enemy, unexpected call up of armed forces, embargo, blockade, rebellion, riot religious strike, bombs or civil commotion, sabotage terrorism; iv) Strikes or boycotts interrupting operations of the project continuing for at least 7 days; v) Any judgement or order of any court of competent jurisdiction or statutory authority in India made against the Company in any proceedings for the reason other than failure of the Company to comply with any applicable law or clearance or

on account of breach thereof, with any applicable law or clearance or on account of breach thereof, or of any contract, or enforcement of this Agreement or exercise of any of its rights under this Agreement by PEDA; or vi) Any other event or circumstances of nature analogues to the foregoing. 10.3 Political Force Majeure Event Political Events shall mean one or more of the following acts or events by or an account of PEDA, GoP, Gol or any other Government Agency or Statutory Authority. i) Change in law. ii) Expropriation or compulsory confiscation, by any Government Agency of any Project Assets-or rights of the Company. iii) The unlawful or un-authorised or without jurisdiction revocation of, or refusal to renew or grant without valid clause any consent or approval required by the Company to perform its obligations under the Agreement (Other than a consent the obtaining of which is a condition precedent) provided that such delay, modification, denial, refusal or revocation did not result from the Company's inability or failure to comply with any

condition relating to grant, maintenance or renewal of such consent or permits. 10.4 Notification obligations If a party is affected by any force Majeure event, the affected party shall give the other parties written notice describing the particulars of the Force Majeure event as soon as reasonably practicable after its occurrence but not later than five days after the date on which such party knew of the commencement of the Force Majeure event or of its effect on such party.”

35. Coming to the Power Purchase Agreement dated 31st March, 2015 executed between the Appellant and PSPCL. It is stated in its preamble that the Implementation Agreement signed between the Appellant and PEDA shall be treated as an integral part of the PPA and all the clauses as well as regulatory norms applicable to the Implementation Agreement shall be unequivocally applicable to the Power Purchase Agreement in letter and spirit. Article 10 of the PPA relates to the commissioning of the power project and is extracted hereinbelow :- “10.0.0 FACILITY COMMISSIONING OF GENERATING FACILITY

10.1.0 The Generating Company shall commission the Generating Facility (which shall be Scheduled Date of Commercial Operation) and synchronize with the PSPCL/PSTCL's Grid within 10 months from the Effective Date i.e. date of signing of this PPA which is 31st March 2015. Therefore, the scheduled date of commissioning for this project is 31st January, 2016. In case of delay after the scheduled date of commissioning within grace period of further two months i.e. 12 months from the date of signing of PPA, with forfeiture of performance B.G. by PEDA, the commissioning date for the project shall be 31 March, 2016. In case of further delay in commissioning beyond 12 months but within 15 months from the date of signing of PPA, with applicable liquidated damages payable to PSPCL as per Clause 10.1.1, the revised commissioning date of the project shall be 31st June, 2016. 10.1.1 In case there is delay in commissioning of project beyond 12 months from the effective date then the project developer shall pay to PSPCL the liquidated damages @ 20,000/- (Rupees Twenty Thousand Only) per MW per day for delay in such capacity which is not commissioned. The amount of liquidated damages worked out as above shall be recovered by PSPCL from the

payments due to the Project Developer on account of sale of solar power to PSPCL. The liquidated damage will be applicable without prejudice to any other penalty imposed for delay in commissioning. In case, the Commissioning of the Project is delayed beyond 15 months from the date of signing of PPA, the PPA capacity shall stand reduced / amended to the Project Capacity Commissioned and the PPA for the balance Capacity will stand terminated and shall be reduced from the selected Project Capacity. The LoA & IA shall also stand terminated for the balance un-commissioned capacity. 10.1.2 This PPA will remain valid for the capacity commissioned within 15 months from the effective date and the capacity for the purpose of this PPA will stand revised accordingly."

36. Article 19 of the PPA specifies the Force Majeure events and its impact upon the rights and liabilities of the parties, the same is extracted hereinbelow :- 19.0.0 FORCE MAJEURE 19.1.0 If any party hereto shall be wholly or partially prevented from performing any of its obligations under this Agreement by reason of or on account of lightning, earthquake, fire, floods, invasion, insurrection, rebellion,

mutiny, civil unrest, riot, epidemics, explosion, the order of any court, judge or civil authority, change in applicable law, war, any act of God or public enemy or any other similar cause or reason reasonably beyond its control and not attributable to any negligent or Intentional act, error or omission, then such party shall be excused of its obligations/ liabilities under this Agreement and shall not be liable for any damage, sanction or loss resulting there from to the other party. 19.2.0 The party invoking this clause shall satisfy the other party of the existence of any Force Majeure event and give written notice within seven (7) days of the occurrence of such Force Majeure event to the other party and also take all reasonable and possible steps to eliminate, mitigate or overcome the effect and consequence of any such Force Majeure event. 19.3.0 In the event of a Force Majeure event or conditions, any payment due under this Agreement shall be made as provided herein and shall not be withheld.

19.4.0 This clause as provided in this PPA will be operative after the project achieves COD. For force majeure events occurring during the commissioning period of the project, provisions of IA will be applicable.”

37. Article 35 of the PPA provides that the PPA shall be effective and binding on the parties only on approval by the Commission and shall be subject to such condition as may be stipulated by the Commission while granting such approvals.

38. Amended/supplementary PPAs dated 10th November, 2015 and 2nd December, 2015 specifies the names of the nine ware houses on the rooftops of which the Appellant proposed to install the solar power project. It is mentioned herein that all other clauses contained in the already executed PPA dated 31st March, 2015 shall remain unchanged. Analysis and findings:

39. Our Analysis and findings (issue wise) is as under :- (a) Delay of 41 days in approval of PPA.

40. It is not disputed that after the execution of the PPA between the Appellant and the 2nd Respondent on 31st March, 2015, the 2nd Respondent filed petition No. 23 of 2015 before the Commission

seeking approval to procure electricity from the solar power developers as well as for approval of the PPAs executed by it with them. The petition was allowed by the Commission on 11th May, 2015 and accordingly the PPA got approved.

41. As per Section 86(1)(b) of the Act, the State Commission is empowered to regulate the electricity purchase and procurement process of the Distribution Licensees including the price at which electricity is procured from the generating companies through power purchase agreement. Therefore, a Distribution Licensee can procure/purchase power only in the manner and at the price as approved by the State Commission upon satisfying the Commission about its requirement for such power. It is for the Commission to determine whether Distribution Licensee actually requires the power for supply to its consumers and whether the rate quoted in the PPA is reasonable as well as in consonance to the market conditions and whether the Distribution Licensee can obtain such power from other cheaper sources. Thus, it is the State Commission which regulates the entire process of purchase and procurement of power by each Distribution Licensee in the State by virtue of power conferred upon it under Section 86(1)(b) of the Electricity Act, 2003. In this regard, we

also find it relevant to refer Regulation 46 of Punjab State Electricity Regulatory Commission (Conduct of Business) Regulations, 2005 which is quoted herein below :-

46. POWER PROCUREMENT AND PURCHASE

1. In accordance with the provisions of the Act and the licence conditions, every Distribution Licensee shall purchase and procure electricity required for the Licensed Business of the Distribution Licensee in an economical and efficient manner and under a transparent power purchase and procurement process and generally based on the principles of purchase of electricity at the least cost.

2. The power purchase by a Distribution Licensee may be classified by the Commission as short term power purchase and long term power purchase on terms as may be decided by the Commission from time to time.

3. The Commission may, from time to time, issue guidelines, practice directions and orders governing the short term purchases and long term purchases which the Distribution Licensee can undertake for the purpose of the Licensed Business.

4. (a) The Distribution Licensee shall satisfy the Commission as to the need for additional power procurement on a long term basis (b) The Distribution Licensee shall not enter into a binding or enforceable contractual commitment of such long term power purchase till the Commission by a general or special order

approves the procurement of electricity by the Distribution Licensee.

5. Unless otherwise approved by the Commission by a general or special order, a long term power purchase or procurement by the Distribution Licensee shall be done through a competitive procurement process approved by the Commission.

6. (a) The Distribution Licensee shall satisfy the Commission that the electricity procured under long term power purchase otherwise than through a competitive bidding process or any short term power purchase is economical in the prevalent circumstances and that the Distribution Licensee has made prudent and best efforts to minimise the cost of purchase.

(b) The Commission may not permit any such long term purchase if the manner or method proposed for such procurement of electricity is not conducive to the objective of least cost purchase or for any other reason the purchase is not economical or efficient………. (Emphasis Supplied)

42. This Regulation also makes it mandatory for Distribution Licensee within the State of Punjab to satisfy the Commission about its need for additional power procurement on a long-term basis and that such procurement is economical and that Distribution Licensee has made prudent and best efforts to minimize the cost of purchase.

43. In Tata Power Company Limited vs. Reliance Energy Limited, (2009) 16 SCC 659, the Hon'ble Supreme Court has held as under:- “108. A generating company, if the liberalization and privatization policy is to be given effect to, must be held to be free to enter into an agreement and in particular long- term agreement with the distribution agency; terms and conditions of such an agreement, however, are not unregulated. Such an agreement is subject to grant of approval by the Commission. The Commission has a duty to check if the allocation of power is reasonable. If the terms and conditions relating to quantity, price, mode of supply, the need of the distributing agency vis-à-vis the consumer, keeping in view its long-term need are not found to be reasonable, approval may not be granted. ………………

115. A PPA may be a long-term one or a short-term one. Regulations have been made by the Commission by making the MERC (Terms and Conditions of Tariff) Regulations, 2005. Short-term power procurement refers to an agreement for procurement of power for a period of less than one year. Regulation 23.1 requires the distribution licensee to prepare a five-year plan inter alia upon taking into consideration the sources for procurement thereof. Regulation 24.1 mandates

obtaining of prior approval of the Commission therefor. Approval by the Commission is granted upon examining the process of procurement having regard to the factors specified in Regulation 24.2. It is in the aforementioned context that grant of approval of PPA by and between TPC (G) on the one hand and BEST and TPC (D), on the other hand, necessitated. The proposal of TPC (G) that Rinfra should enter with it into a long-term agreement assumes significance.” (Emphasis supplied)

44. This Tribunal as in the case of Rithwik Energy Generation Pvt. Limited vs. Karnataka Power Transmission Corp. Limited and others, 2011 ELR (APTEL) 1651 held as under :- “10. Let us take up the first issue regarding the validity of the PPA. 10.1According to the learned counsel for the appellant, the PPA is not enforceable by law as the respondents no. 2 had already exceeded the permissible limit of power purchase from the renewable sources of energy as per the State Commission's Regulations and for this reason the PPA was returned by the State Commission on 6.6.2007. The approval of the State Commission was mandatory under Section 25 (3) of the Karnataka Electricity Reform Act, 1999. The PPA became void on account of the approval not having been given by the State Commission. ………...

10.3. Let us first examine the Section 25(3)(4) of the Karnataka Reform Act referred to by the appellant. The relevant extracts are reproduced below: “25 (3) A holder of a supply or transmission licence may, unless expressly prohibited by the terms of its licence, enter into arrangements for the purchase of electricity from,- (a) The holder of a supply licence which permits the holder of such licence to supply energy to other licensees for distribution by them; and (b) Any person or generating company with the consent of the Commission”.

“25(4) Any agreement relating to any transaction of the nature described in sub-sections (1), (2), or (3) unless made with, or subject to, such consent as aforesaid, shall be void”.

Section 185(3) of the 2003 Act specifically stipulates that the provisions of the enactments specified in the schedule, which includes the Karnataka Reform Act, not inconsistent with the provisions of the 2003 Act, shall apply to the States in which such enactments are applicable.”

10.4. According to Section 86 (b) of the 2003 Act, the State Commission is empowered to requlate

electricity purchase and procurement process of the distribution licensees including the price at which electricity is procured from the generating companies through agreement for purchase of power.

10.5. In view of above, the distribution licensee has to obtain the consent of the State Commission for procurement of power against the PPA. Unless the State Commission gives its consent to the PPA, the distribution licensee cannot procure power under the PPA. Thus, the PPA will come into effect only after obtaining the consent of the State Commission. If the consent is denied by the State Commission, the PPA shall become void as per Section 25(3) of the Karnataka Reform Act and Section 86(b) of the 2003 Act. Accordingly, the second respondent had submitted the PPA dated 3.5.2007 signed with the appellant before the State Commission on 25.5.2007 for its consent. (Emphasis supplied)

45. Again this Tribunal in Appeal No. 41 of 2018 - Hinduja National Power Corporation Limited vs. Andhra Pradesh Electricity Regulatory Commission and others decided on 7th January, 2020 held as under:- “75. If the State Commission fails in discharging its duties by deciding the matter without proper reasoning and

justification, it is nothing but failure of its duty. Since proceedings before the State Commission are not in the nature of a lis as in the case of a Civil Suit, it has to take within its fold the interest of various stakeholders concerned. Therefore, utmost duty of the State Commission while discharging its functions must be public interest and decide the matter on merits so far as adoption of capital cost and Continuation Agreement. The functions provided under Section 86(1)(b) of the Act is not merely a formality to approve the Power Purchase Agreement. In other words, it does not mean one of the parties to the petition can interdict the implementation of Power Purchase Agreement at its whims and fancies totally ignoring the fact that the Commission's duty is to regulate electricity purchase and procurement process of a distribution licensee including the price at which electricity shall be procured from generating companies through agreements. ……………

80. As stated above, so far as the procurement of power is concerned, it must be in the interest of the consumer. Between April 2017 to January 2018 as against the declared capacity, 3273.83 million units were delivered to the Respondent DISCOMs from the Appellant's project. Since it was conducive for AP DISCOMs to schedule and

take delivery of electricity for maintaining the retail supply to its consumers the above number of units was taken by the DISCOMs. To decide the matter pertaining to capital cost or approval of Continuation Agreement, one has to see whether it is in the interest of the consumers at large. The State Commission is the ultimate authority to decide procurement of power including the price, but unfortunately the Commission declined to decide the matter on merits. In this process what Commission ought to have done in OP No. 21 of 2015 is to determine whether the capital cost and resultant tariff would be conducive to the interest of the consumers at large, since it is incumbent to do so as a regulatory authority. Therefore it was possible to first decide O.P. No. 21 of 2015 on merits, and based on its decision it should have proceeded to consider Continuation Agreement instead of passing the impugned order …………………..

99. The Respondents contend that approval of Continuation Agreement so that PPA of 1998 could get revived is based on the principle enunciated in contingent contracts. According to Respondents, the right if any to Appellant gets created only on approval of Continuation Agreement dated 28.04.2016. They contend that happening of approval is happening of some future event, therefore question of neither of parties making

any offer and acceptance would arise. In a contingent contract happening of something marks the moment at which a right is created, so that the contract becomes enforceable. As against this, Appellant contends that no doubt status of agreement dated 28.04.2016 can be treated as a contingent contract. The contract comes in to effect once approval is given by the Commission. It is also not the case of Appellant that approval of the state Commission is unnecessary. It is seen that agreement for the purchase of energy was duly finalised and agreed between the parties, which came in the form of a document pertaining to confirmation of terms agreed. By virtue of this agreement parties agreed to continue the amended and restated PPA dated 15.04.1998 with modifications which are clearly mentioned in the agreement. Parties also had consensus that tariff will be as determined by the State Commission in Petition No. 21 of 2015 filed by the Appellant. The Continuation Agreement in a way becomes concluded terms and conditions subject to approval by the State Commission. It was not an inchoate or incomplete contract as contended by AP DISCOMs." (Emphasis supplied)

46. In Eswari Green Energy LLP Vs. Karnataka Electricity Regulatory Commission and Ors., Appeal No. 180 of 2018 and batch decided on 13th November, 2020, it was held by this Tribunal

"42.We do not agree with the broad argument of the appellants that there is no need for separate approval of the State Commission in respect of initiated PPAs simply because the general format of the PPA had been approved by the Commission on 22.7.2015. It cannot be overlooked that the Commission regulates the purchase and procurement process of each distribution licensee by virtue of the power conferred on it under Section 86(1)(b) of the Electricity Act, 2003. The statute saves the operation of the Karnataka Electricity Reforms Act, 1999 by virtue of Section 185(3). The provision contained in Section 17(1) of the Karnataka Electricity Reforms Act, 1999 reads as under: …………

44. A perusal of the statutory provisions and Rules formulated thereunder shows that the distribution licensee can procure power only in the manner approved and it is required to place a proposed Power Purchase Agreement for approval of the State Commission. The Regulation also prescribes a timeframe for approval of the PPA. It also requires final version of the PPA to be provided to the State Commission ……………..

47. In above context, reference may be made to following observations of the Supreme Court in Tata Power Company Limited vs Reliance Energy reported in (2009) 16 SCC 659, while construing the functions of the Regulatory Commission under Electricity Act, 2003:

……………..

48. The documents produced show that all concerned have throughout been of unanimous view that the power purchase agreements which had been initiated required the approval of the State Commission. Having sought such approval though HESCOM, it is not permissible for the appellants to now contend that no approval was required. There is no doubt that approval of the State Commission in respect of individual PPA is a condition precedent without which the PPA cannot come into existence though, the respondent HESCOM concedes, with post-facto approval the PPA becomes operational retrospectively from the date of the PPA.

49. The respondents are also right in submission that there is no vested right to get approval of the PPA from the Commission which is duty-bound to consider it in light of statutory provisions and within regulatory framework.” (Emphasis supplied)

47. Having regard to the clear legal position indicated by the above noted legal provisions as well as law laid down by this Tribunal as well as by the Hon'ble Supreme Court in the above noted judgement, it cannot be gain said that a PPA become effective only upon getting approval from the State Commission and till then the

parties are incapacitated from enforcing any rights or obligations under the same.

48. Therefore, in this case, since the PPA was approved by the Commission on 11th May, 2015, that day became the effective date as per Article 10 of the PPA and, therefore, the scheduled date of commissioning for the Appellant's power project was 10th March, 2016. The PPA was only a piece of paper till 11th May, 2015 i.e. the date when it got approval from the Commission and, therefore, neither the Appellant nor the 2nd Respondent could have initiated any action on the basis of the PPA prior to the said date. The Appellant was not expected to take any step for the execution of the power project prior to the approval of the PPA by the Commission. Had the Appellant initiated such step and incurred expenditure on the same but later on the PPA was not approved by the Commission, the time, efforts and money spent by the Appellant would have gone into the drain. Therefore, the findings of the Commission in the impugned order that the preliminary/preparatory works for execution of the power project were not hampered for want of approval of the PPA by the Commission, are absolutely unwarranted and perverse.

49. It is argued on behalf of the Respondents that the Appellant has not issued any notice of Force Majeure in respect of the said delay of 41 days on account of lack of approval of the PPA, as required under Article 10.4 of the IA as well as 19.2 of the PPA and, therefore, he is precluded from seeking any benefit of such event. On this aspect, reliance is placed upon the judgements of this Tribunal in Earth Solar Pvt. Ltd. V/s. PSERC & Ors., 2019 SCC Online Aptel 41 & Omega Infra Engineers Pvt. Ltd. V/s. PSERC & Ors., 2019 SCC online Aptel 8 and the Judgement of the Hon'ble Supreme Court in Chamundeshwari Electricity Supply Company Ltd. Vs. Sai Sudhir Pvt. Ltd. 2025 SCC online SC 1816.

50. Concededly, no Force Majeure notice with regards to the delay of 41 days in approval of the PPA has been served by the Appellant upon the respondents. However, we may note here that the main purpose for requirement to issue notice regarding force majeure events by the affected party to the counterparty is to apprise the counterparty of such events which are preventing the affected party from fulfilling its obligations under the contract so that no surprise is sprung upon the counterparty later on when the affected party seeks mitigation of losses on account of those force majeure events.

Generally, the force majeure clauses in the contracts explicitly state that notice must be given within the stipulated timeframe and in a specific manner. Failure to meet those conditions disentitle affected party from claiming benefit under the force majeure clause. A timely force majeure notice creates a contemporaneous record that the disruption was due to a force majeure event and not due to any default on the part of the affected party. A late or a vague notice weakens the credibility of the contentions of the affected party in this regard and provides the counterparty ground to reject the claim on the basis of force majeure events. A proactive notice indicates that the affected party is acting in good faith and is being transparent in the contractual relations with the other party.

51. In the above noted judgments relied upon by the learned counsels for the Respondents, it is found that claim of the affected party was with regards to the force majeure events which were totally external events entirely unconnected with the counterparty and in no manner related to any act, omission or representation of the affected party. In these circumstances, since the counterparty would not have been aware of the occurrence of the force majeure events for which the affected party was claiming relief and

consequently not in a position to take any mitigating steps, this Tribunal denied any relief to the affected party on the ground that no force majeure notice, as stipulated in the contract, had been issued by it.

52. However, in the instant case, it was the obligation of the 2nd Respondent itself, to approach the Commission and seek approval of the PPA. Both Respondent Nos. 2 & 3 were well aware of the fact that even though the PPA has been executed on 31st March, 2015, it got approval from the Commission on 11th May, 2015. Therefore, the period of 41 days, which was consumed by the 2nd Respondent for obtaining approval of the PPA, being the Force Majeure event was clearly within its knowledge as well as in the knowledge of 3rd Respondent - PEDA. It was not an event of such nature about which the Respondent Nos. 2 & 3 can claim ignorance or had occasioned on account of any omission or mis-representation of the Appellant. In such a case Force Majeure notice was only a formality and non issuance of such notice within the stipulated time cannot be held against the affected party i.e. Appellant herein in order to dis-entitle him from claiming benefit under the Force Majeure event. To permit the respondents to rely upon the absence of formal Force Majeure

notice as required under Article 10.4 of the IA and Article 19.2 of the PPA in the instant case would tantamount to allowing them to take advantage of the delay caused by Respondent No. 2 itself. In so far as the judgement of the Hon'ble Supreme Court in Chamundeshwari Electricity Supply Company case (supra) is concerned, no force majeure notice had ever been issued by the affected party and accordingly, it was held by the Apex Court that requirement of issuance of force majeure notice within the stipulated time is not merely directory but is a condition precedent for invoking the force majeure clause. However, in that case also the force majeure events upon which the affected party had based its claims, were not of such nature about which the counter party could be attributed knowledge and awareness in spite of non-service of the force majeure notice.

53. Hence, we are of the opinion that the non-issuance of formal Force Majeure notice by the Appellant with regards to the delay of 41 days in the approval of PPA is not fatal to its claim under this head. The Appellant is entitled to extension of scheduled date of commissioning of its power project by 41 days on account of said delay caused in approval of the PPA which ultimately took place on 11th May, 2015.

(b) Delay in grid connectivity and in execution of supplementary PPA

54. It is argued on behalf of the Appellant that the Appellant initiated the approval process for identifying the project sites on 26th August, 2015 and formally submitted the site details to Respondent No. 3 on 7th September, 2015 which granted concurrence only on 14th October, 2015. Thereafter, the Appellant immediately applied for grid feasibility on 15th October, 2015. It is submitted that in spite of processing the request of Appellant for grid connectivity, Respondent No. 2 raised objections regarding multiple locations leading to insistence on amendment of contractual documents ie. IA and PPA. Thereafter the amendment to the IA as well as the PPA was done on 10th November, 2015 and 2nd December, 2015 respectively. Subsequently, technical concurrence was granted to Appellant's power project on 7th December, 2015 followed by final grid connectivity on 31st December, 2015.

55. Thus, according to the Appellant, there was a delay of 127 days i.e. from 26th August, 2015 to 31st December, 2015 in approval of location for roof top solar sites technical concurrence and grid connectivity which is absolutely attributable to Respondent Nos. 2 &

3. It is argued that the findings of the Commission on this aspect in the impugned order are absolutely erroneous and cannot be sustained.

56. In the impugned order, the Commission has noted that the Appellant submitted lease agreements pertaining to private roof tops on 13th September, 2015 and Respondent No. 3 gave concurrence to the same on 14th October, 2015 for setting up of solar pv power plants on these nine roof top sites identified by the Appellant. Subsequently, IA was amended on 10th November, 2015. The Commission has further noted that thus, Respondent No. 3 has taken 41 days from the date of submission of these agreements by the Appellants to incorporate amendment in the IA which was done on 10th November, 2015. The Commission has observed that two weeks time was reasonable for Respondent No. 3 for giving concurrence for setting up of solar pv power plants on the sites identified by the Appellant and thereafter three weeks time was reasonable for incorporating amendments in this regard in the IA. Accordingly, discounting 35 days from the total number of 41 days from 31st September, 2015 till 10th November, 2015, the

Commission has held Respondent No. 3-PEDA responsible for the delay of 6 days on this account.

57. We are unable to find any fault in these findings of the Commission.

58. Taking note of the fact that subsequent to amendments in the IA on 10th November, 2015, amendment was incorporated in the PPA on 2nd December, 2015 specifying therein the nine locations for setting up of solar pv power plants as finalized by the Appellant and the fact that Respondent No. 2 PSPCL raised frivolous objection regarding multiple locations identified by the Appellant for setting up of solar pv power plants leading to the amendments to be incorporated in the IA as well as PA coupled with the fact that PSPCL ultimately granted feasibility clearance for the two sites on 28th December, 2015 and to the remaining seven sites on 31st December, 2015, the Commission concluded that 48 days were taken by PSPCL for granting feasibility clearance in respect of the two sites and 51 days in respect of the remaining seven sites. According to the Commission, 28 days time was reasonable for the grant of feasibility clearance by PSPCL and, therefore, the Commission held PSPCL responsible for 23 days delay in case of

five sites and 21 days delay in case of two sites for grant of feasibility clearance. In so far as remaining two sites are concerned, the Commission concluded that the delay in feasibility clearance for the same is attributable to the Appellant.

59. Taking into account the delay of six days attributable to Respondent No. 3 - PEDA for giving concurrence for setting up of solar pv power plants, the Commission observed that the delay attributable to Respondent No. 2-PSPCL in respect of grid feasibility clearance for the nine sites identified by the Appellant would be as under :- Sr. No. Rooftop Solar PV Power Plant Site

Delay by PEDA (6 days)/PSPCL (Days)

1. PSAMB, SAS Nagar, (Mohali)

2. Bhagwant Singh & Others, (ITC/Chunni), Fatehgarh Sahib

3. Boss Computers Pvt. Ltd. (Zirakpur)

4. PSAMB Grain Market Mansa

5. CA Vegefruit Stores (Kharar)

6. Skyross enterprises (Pepsi Warehouse/Channo), Sangrur

7. Bhagwant Singh & Kulwinder Kaur, (Reliance Fresh), Kotla Fazal, Teh. Bassi Pathana

8. PSAMB, New Vegetable Market, Ludhiana

9. CANAM Consultants, (Morinda)

60. We are unable to find any error or infirmity in these findings/observations of the Commission on this aspect and therefore affirm the same. (C) Delay on account of JAT agitation

61. It is argued on behalf of the Appellant that the Commission, in the impugned order, has failed to return any findings on the claim of the Appellant regarding Jat agitation as a Force Majeure event which also caused delay in commissioning of the power project. According to the Appellant, said agitation caused delay of 10 days

in procurement activities as during the said period, highways and railway lines were blocked and major part of the State was under curfew thereby hampering the transportation of material for construction of the power project.

62. On this aspect, we find force in the submission of Respondent Nos. 2 & 3 that the Commission has rightly refused to take cognizance of Jat agitation as a Force Majeure event for the reason that the Appellant had not served the requisite Force Majeure notice in this regard upon the respondents.

63. Jat agitation as well as its impact upon the progress of construction work of the solar pv power plants by the Appellant was an external factor about which knowledge can not be imputed to the respondents and therefore the Appellant was required to serve the requisite notice in this regard upon the respondents as mandated under Article 10.4 of the IA and Article 9.2 of the PPA. Since concededly, no such notice has been issued by the Appellant to the Respondents, the law laid down in this regard by the Hon'ble Supreme Court in Chamundeshwari case (supra), squarely applies to this case also. Therefore, the delay if any, in achieving of

scheduled commissioning date of the power project by the Appellant on account of Jat agitation cannot be considered.

Conclusion

64. We summarize our findings on the Force Majeure events agitated by the Appellant in this appeal as under :-

1. Delay of 41 days in approval of PPA

Allowed in favour of the Appellant

2. Delay in grid connectivity in execution of supplementary PPA

Findings/observations of the Commission on this aspect in the impugned order affirmed.

3. Delay on account of Jat agitation

Held that the Appellant is not entitled to any benefit on account of Jat agitation.

65. The case is now remanded back to the Commission for giving benefit to the Appellant of 41 days delay in commissioning of the power project which occurred on account of delay in approval of the

PPA and accordingly, to do a fresh computation of the delay in commissioning of each of nine solar pv power plants due to the stated Force Majeure events and to determine the tariff for the same accordingly.

66. The appeal stands disposed of in these terms. Pronounced in the open court on this 3rd day of July, 2026.

(Virender Bhat)

(Seema Gupta)

Judicial Member

Officiating Chairperson

✓ REPORTABLE / NON REPORTABLE

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