ASSAM POWER DISTRIBUTION COMPANY LTD. vs ONGC TRIPURA POWER COMPANY LIMITED & Ors on 6 April 2026

JUDGEMENT

PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON

1. The present Appeal No. 334 of 2017 has been filed by Assam Power Distribution Company Limited under Section 111 of the Electricity Act, 2003 challenging the Corrigendum order dated 03.05.2017 (Impugned Order) read with order dated 30.03.2017 passed by the Central Electricity Regulatory Commission in Petition No. 129/GT/2015.

Description of Parties

2. The Appellant, Assam Power Distribution Company Ltd. is a public limited company fully owned by the Government of Assam undertaking registered under Companies Act, 1956, and came into existence after unbundling of Assam Electricity Board into different corporate Entities, to undertake distribution of Electricity in the State of Assam.

3. The Respondent No.1, i.e. ONGC Tripura Power Company Limited (hereinafter referred as “OTPC”) is a joint venture company primarily owned by ONGC (50%), GAIL (26%), and the Government of Tripura (0.5%).

4. The Respondent No.2 is the Central Electricity Regulatory Commission (hereinafter referred as “ Central commission/ CERC”)

5. Respondent Nos. 3 to 8 are the distribution licensees responsible for supplying electricity in the State of Arunachal Pradesh, Nagaland, Imphal, Mizoram, Meghalaya & Tripura respectively. Brief facts of the case, relevant for disposal of the present Appeal are summarized hereunder :

6. On 18.09.2008, a Shareholders’ Agreement was executed amongst ONGC Tripura Power Company Limited (OTPC), Oil and Natural Gas Corporation (ONGC), Infrastructure Leasing & Financial Services (IL&FS), and the Government of Tripura for the purpose of setting up a generating station named “Palatana” with an installed capacity of 726.6 MW, comprising two Gas Turbine (GT) units of 232.39 MW each and two Steam Turbine (ST) units of 130.91 MW each. OTPC was incorporated as a joint venture of ONGC, IL&FS (through its

affiliate IEDCL), and the Government of Tripura, with shareholding structured as follows: ONGC (50%), IEDCL (26%), Government of Tripura (0.5%), and residual equity (23.5%), for development of the project. Out of the total installed capacity, 628 MW was allocated to the beneficiary States of the North Eastern Region, and the balance 98 MW was earmarked for merchant sale.

7. In 2013, Petition No. 199/GT/2013 was filed by OTPC for determination of tariff of the Palatana generating station, in which on 31.08.2015, the Central Commission determined the tariff of Block-I of the generating station for the period from 04.01.2014 to 31.03.2014.

8. Subsequently, Block-II of the generating station was declared under commercial operation on 24.03.2015, whereupon OTPC filed Petition No. 129/GT/2015 seeking determination of tariff for Blocks I and II of the generating station for the control period 2014–19 in accordance with the provisions of the 2014 Tariff Regulations. Further, OTPC requested the Commission to relax operational norms under Regulation 54 of the 2014 Tariff Regulations considering the insufficient gas supply and approve NAPAF of 68% from the Commercial Operation Date (COD) of Unit II till the full gas is made available by the fuel supplier, i.e. ONGC. Central Commission, passed the Order on 30.03.2017 and relaxed the NAPAF, for recovery of fixed cost from 85 % ( as envisaged in 2014 Tariff Regulations ) to 76 %.

9. On 03.05.2017, Central commission passed the corrigendum order in connection with the order dated 30.03.2017, due to certain inadvertent error in the calculation.

10. Aggrieved by the determination of the Normative Annual Plant Availability Factor (NAPAF) by the CERC in the Impugned Order dated 30.03.2017 (read with Corrigendum dated 03.05.2017), Appellant has preferred this Appeal and

submitted that by virtue of such relaxation, OTPC was permitted to recover an additional sum of Rs. 282.43 Crore for the relevant period. DISCUSSION AND ANALYSIS

11. Heard Mr Avijit Roy, learned counsel for the Appellant and Mr Parinay Deep Shah, learned counsel for the Respondent No 1, and perused the Impugned Order, the written submissions filed by the parties and other documents placed on record. The main contention raised by the Appellant pertains to relaxation in NAPF from 85% to 76% for the Palatana Project of OTPC in the Impugned Order on account of shortage in gas supply, while there is a fuel gas supply agreement with ONGC, which is also the majority stake holders in the subject project, and OTPC did not invoke the provisions under the Gas Fuel supply Agreement with ONGC. The Appellant has also alleged diversion of supply of gas to Monarchak project by ONGC which accentuated the shortage of gas supply to Palatana Project.

12. Per Contra, learned Counsel for the Respondent has made elaborate submissions contending that the shortage of gas for the Palatana project, is beyond the control of OTPC and it does not exercise control over the operations of ONGC for prioritisation of gas supply to Palatana project. The submissions of the parties, insofar as they are relevant for the disposal of the present Appeal, are summarised hereinafter: SUBMISSIONS URGED ON BEHALF OF APPELLANT

13. It is submitted that Central Commission, ought not to have granted relaxation to OTPC in NAPAF from 85% to 76%, especially when ONGC, the main shareholder of Respondent No. 1 i.e. OTPC, owns the entire gas and petroleum fields in the South Zone of the North Eastern Region (NER) as well as major areas in the remaining parts of the NER, and it is the fuel gas supplier to

the generating station. Responsibility for procurement of basic raw materials i.e. gas in the present case, cannot, in law or in equity, be passed on by OTPC to the beneficiaries without first exhausting its legal remedies under the Gas Sale & Purchase Agreement ( GSPA) dated 18.09.2008 executed with ONGC. A conjoint reading of Clause 8.1(a)(i), Clause 9.1(c), Clause 5.4(b), Clause 15 (Seller’s Liquidated Damages) read with Clause 17 (Force Majeure) of the GSPA clearly establishes that ONGC is obligated to ensure supply of gas to the power plant, and is restrained from unreasonably exercising its voting rights so as to impede enforcement of supply obligations, and is liable for any seller’s shortfall in supply in accordance with the agreed terms. In fact as per Clause 17.3 of the GSPA, any event of Force Majeure was required to be promptly notified by the fuel supplier, ONGC to Respondent No. 1, and in no case later than 48 hours from the occurrence of such event; however, no such notice, as contemplated was ever placed on record by Respondent No.1; instead, it merely relied upon certain communications issued by ONGC in response to its queries, which do not qualify as a valid Force Majeure notice in terms of the contractual stipulations. Consequently, the reduction in NAPAF on grounds allegedly beyond the scope of the GSPA has unjustly enriched OTPC and, indirectly, its fuel supplier, the 50% stakeholder, ONGC. It is further submitted that ONGC in its letter dated 12.07.2018 addressed to OTPC, stated that the decline in gas production was common in exploration and production operations and was industry-wide prevalent, which itself belies the claim of a Force Majeure event.

14. Though Respondent No.1 has contended that no claim for liquidated damages was raised on the ground that the reduction in supply was attributable to force majeure, the Central Electricity Regulatory Commission has overruled such contention in the absence of documentary evidence. Therefore, in the event of any shortfall in gas supply, it was incumbent upon Respondent No.1 to enforce its contractual rights and initiate appropriate recovery proceedings against

ONGC, however, no material has been placed on record either before the Central Commission or this Tribunal

15. It is submitted that with effect from 28.11.2015, ONGC reduced fuel supply to the Palatana Generation Project by 10,00,000 Standard Cubic Meter per Day (SCMD) in order to cater to the Monarchak Project of North Eastern Electric Power Corporation Limited (NEEPCO), resulting in a reduction of approximately 200 MW generation at the Palatana Project. Such diversion of gas not only curtailed availability of cheaper power to the North Eastern States but also adversely impacted supply in the region. The issue of reduced gas supply was raised at various levels, including through letters dated 18.12.2015 and February 2016 issued by Respondent No.1 and the Office of the North Eastern Council Secretariat, Shillong, Government of India; however, no effective response was forthcoming from ONGC, notwithstanding its 50% shareholding in Respondent No.1.

16. This Tribunal, in its judgment dated 30.04.2013 passed in Appeal No. 110 of 2012 in the matter of “NTPC Limited vs. Central Electricity Regulatory Commission & Ors”., has held that coal, being the primary raw material for generation of electricity, must be procured by the generating company at its own responsibility, and that such obligation cannot, under any circumstances, be shifted onto the beneficiaries. This Tribunal further held that non-availability of sufficient fuel, unless attributable to events strictly falling within the recognized parameters of Force Majeure—such as war, rebellion, civil commotion, lockouts, accidents, or acts of God etc, cannot be brought within the ambit of a Force Majeure event merely on the ground that the same was beyond the control of the generating company. So, for inability to arrange adequate fuel by NTPC, the beneficiaries cannot be held responsible for the same.

SUBMISSIONS URGED ON BEHALF OF RESPONDENT OTPC

17. It is submitted that subsequent to the commissioning of Unit II on 24.03.2015, the generating station was severely impacted by acute shortage of fuel gas, and consequently, OTPC invoked Regulation 54 of the 2014 Regulations and sought relaxation of the Normative Annual Plant Availability Factor (NAPAF) from 85% to 68% and CERC, granted partial relief by relaxing the NAPAF from 85% to 76% for the period from 24.03.2015 to 30.09.2018 as a one-time dispensation and further directed that any incentive earned by OTPC would be adjusted against the differential Annual Fixed Charges (AFC) until full recovery. It is further submitted that despite such relaxation, the actual Plant Availability remained substantially below 76% due to continued gas shortages, resulting in under-recovery of Annual Fixed Charges.

18. The Appellant has never disputed the factum of gas shortage; its case rests solely on the assertion that OTPC ought to have “pressurised” ONGC to supply more gas on account of ONGC’s shareholding and ownership of major gas fields in the North-Eastern Region. This premise is untenable. OTPC and ONGC are distinct entities. ONGC acts separately as shareholder and as supplier under the GSPA. Shareholding cannot override contractual rights. Clause 9.1(c) of the Shareholders’ Agreement and Clause 142 of OTPC’s Memorandum of Association prevent ONGC from interfering in OTPC’s enforcement of GSPA rights. These provisions unequivocally demonstrate that ONGC’s shareholding does not translate into control over OTPC’s contractual actions under the GSPA, nor does it confer upon OTPC any legal authority to dictate ONGC’s allocation of gas across consumers or any priority right over production from ONGC’s fields. The Appellant cannot, under the guise of tariff proceedings, invite this Tribunal to adjudicate upon ONGC’s internal commercial or management decisions or the

internal affairs of OTPC, particularly when ONGC is not even a party to the present proceedings.

19. It is submitted that the Impugned Order, upon examination of the material placed by OTPC, records a categorical finding that OTPC was not receiving adequate gas to achieve the normative availability of 85% and that such shortfall was not attributable to OTPC; the shortage stood established on the basis of actual supply figures and was independent of any allegation concerning Monarchak. The subject project is located in a remote region, unconnected to the national gas grid, with no APM allocation, no access to RLNG/ spot market/ or alternate fuel. It is wholly dependent on ONGC, like other projects in the North-East. The Ministry of Petroleum in its communication dated 14.03.2012 and CERC in its Order dated 09.05.2013 in Petition Nos. 127/2012 and 128/2012, acknowledged nationwide domestic gas shortages affecting multiple existing and upcoming plants.

20. The sectoral position has also been judicially recognised. Judgement in “North Eastern Electric Power Corporation Limited v. APDCL & Ors.” 2022 SCC OnLine APTEL 69 (Appeal No. 121 of 2019) dated 04.08.2022, this Tribunal, , while dealing with NEEPCO’s Assam Gas-Based Power Plant, held that the shortage of gas was beyond the generator’s control and remanded the matter to the CERC for reconsideration of relaxation under Regulation 54 and pursuant to the remand, the CERC, by order dated 29.04.2023 in Petition No. 225/MP/2017, acknowledged that NEEPCO was unable to achieve the normative availability of 72% during FY 2016–17 solely because adequate gas could not be supplied by Oil India Limited and that arranging spot gas or any alternate fuel in the remote North-Eastern Region was not feasible; accordingly invoking Regulation 54 granted relaxation of NAPAF.

21. Consistent with this backdrop, Clause 14.3 of the GSPA provides for pro-rata supply in case of reduced production, recognizing possible shortfall. Allocation of reduced output is ONGC’s contractual prerogative. OTPC cannot compel prioritization, of supply in its favour nor can shortage be attributed to a deliberate act or omission on OTPC’s part. In this context, this Tribunal in “Tata Power Company Limited v. Jharkhand State Electricity & Tata Steel Ltd.,” 2012 SCC OnLine APTEL 155, has held that it cannot exercise appellate jurisdiction to substitute one subjective satisfaction with another in the absence of valid grounds.

22. Appellant’s Contention that since the CERC rejected OTPC’s plea of non- availability of gas as a Force Majeure event for the purpose of time overrun, it could not thereafter relax NAPAF on the ground of inadequate gas supply, is wholly misconceived. The Force Majeure claim dealt in paragraph 37 of the Impugned Order pertained exclusively to time overrun in achieving the COD of Unit II for the period 04.01.2014 to 10.10.2014 (279 days), wherein CERC held that notwithstanding the blockades, sufficient gas was available during substantial portions of the said period to enable declaration of COD of Unit II, and that no Force Majeure condition prevented conduct of the trial run; it accordingly declined to condone the time overrun and held the delay attributable to OTPC. Whereas, the relaxation of NAPAF granted by the CERC for the period 24.03.2015 to 30.09.2018 was founded on an entirely distinct event, namely unanticipated adverse gas reservoir behaviour affecting availability of gas in the relevant fields an operational, post-COD phenomenon differing in time, cause and character from the earlier construction-phase blockades.

23. The Appellant’s contention that, by reason of ONGC’s shareholding, the Project was conceived on the premise of assured gas and that OTPC is therefore precluded from relying on non-availability of gas is misconceived. Gas allocation

to the Project was made pursuant to directions issued by the Ministry of Petroleum and Natural Gas, which by Order dated 07.10.2004 directed allocation of 4 MMSCMD, along with any additional gas up to a total of 5 MMSCMD, from Tripura fields for the Project through the State utility. In furtherance thereof, a GSPA dated 29.09.2008 was executed between ONGC and OTPC on an arm’s- length basis.

24. The Appellant’s reliance on this Tribunal’s Judgment dated 30.04.2013 in NTPC Limited v. CERC & Ors., Appeal No. 110 of 2012, is misplaced. In that case, NTPC operated three generating stations despite having insufficient coal linkage for all three and chose to commission and operate the third plant by diverting coal from the first two, resulting in none of the stations achieving normative availability; In the present case, by contrast, OTPC and ONGC are distinct legal entities, and ONGC has concurrent and independent contractual obligations to supply gas to both Palatana and Monarchak under separate agreements; there is no question of OTPC diverting fuel from one plant to another. Unlike NTPC, OTPC has no comparable alternative—ONGC is the sole gas supplier in Tripura, there is no pipeline connectivity from the mainland, and gas from other regions cannot be transported to the Project. Additionally, in NTPC the governing contract did not treat fuel unavailability as a Force Majeure event, whereas here Clause 17.1(c) of the GSPA expressly recognizes unanticipated reservoir behavior as a Force Majeure event. The factual and contractual matrix in NTPC is thus materially distinct and affords no assistance to the Appellant.

25. The Appellant has also assailed the Corrigendum Order dated 03.05.2017; however, the said Corrigendum was issued by CERC upon OTPC’s request for clarification and is confined solely to correction of inadvertent arithmetical and linkage errors in the computation of Return on Equity and Interest on Loan

contained in the Impugned Order. It neither introduces any new reasoning nor records any fresh findings germane to the issues raised in the present Appeal, and merely rectifies computational errors in exercise of powers under Regulation 111 read with Regulation 103 A of the Conduct of Business Regulations, 1999. The challenge to the Corrigendum is, therefore, wholly devoid of merit. CONSIDERATION AND OUR VIEW

26. At the outset, we find merit in the submissions advanced by the Respondent that ONGC Tripura Power Company Limited (OTPC) and Oil and Natural Gas Corporation Limited (ONGC) are distinct legal entities. The mere fact of ONGC’s shareholding in OTPC does not, in law, obliterate the separate corporate personality of either entity. ONGC, in its capacity as shareholder, stands on a footing entirely different from its role as supplier under the Gas Sale and Purchase Agreement (GSPA). The contractual rights and obligations arising under the GSPA are enforceable independently of ONGC’s equity interest, and OTPC cannot, by virtue of such shareholding, assert any priority claim over ONGC’s production or dictate the allocation of gas across ONGC’s consumers.

27. It is apposite, in this context, to advert to the clause 9.1(c) of Shareholders’ Agreement, as reproduced hereunder, which clearly delineates the respective rights and obligations of the parties. The said Agreement stipulates that the rights conferred upon OTPC as a shareholder are confined to governance and participation in corporate decision-making, and do not extend to interference with ONGC’s operational or commercial decisions in its capacity as a supplier. The contractual framework thus preserves the autonomy of ONGC in matters relating to production and allocation, while safeguarding OTPC’s rights strictly within the contours of the GSPA. Thus, the contractual obligations under the GSPA are not overridden or diluted by reference to ONGC’s shareholding in OTPC.

9.1 (c) Decisions of the Board Subject to the provisions of Clause 12, all decisions of the Board shall be made by simple majority. The Chairman shall have a casting vote in relation to all decisions of the Board with the exception of all decisions related to Reserved Matters, as detailed in Annexure-3. The Board shall have the power to delegate its powers to any person or a sub-committee, subject to the provisions of the Act. Notwithstanding anything to the contrary contained in this Agreement, both the Parties agree that (i) the Chairman of the Board of the Company shall not have any "Casting Vote" right (referred to herein above under clause 9.1(c)) in respect of any matter related to or arising out of Gas Sale and Purchase Agreement and further (ii) ONGC shall not unreasonably use its voting rights to defer, delay, vary or block any Board resolution proposed in connection with the exercise of the Company rights, power and privileges, reserved under Gas Sale and Purchase Agreement to seek enforcement of any supply or pay obligations or termination proceedings in accordance with the terms and conditions of the Gas Sale and Purchase Agreement.

28. It is to further state that this Tribunal neither exercise jurisdiction over ONGC’s internal commercial and management decisions nor ONGC is a party in the present proceedings, we shall therefore limit our deliberations with regard to provisions of GSPA executed between OTPC, the respondent, and ONGC.

29. The learned Counsel on behalf of Respondent No.1- OTPC has contended that Appellant confined its case on one contention that ONGC being shareholder of OTPC could have ensured adequate supply and relied upon the letter dated 18.12.2015 issued by OTPC to CEA to allege that gas was diverted to Monarchak project. Though the said letter was submitted along with the Appeal, however, it was not placed before the commission when reply was filed by Appellant to them on 12.02.2016. With regard to admissibility of such document at Appellant stage, without an application and with no specific order by this Tribunal, it has been submitted that it cannot form part of the evidentiary record for examining the

correctness of the Impugned Order and there is procedural bar under Order XLI Rule 27 of CPC 1908.

30. In this context, it is noted that Respondent No.1-OTPC, in its reply dated 03.04.2018 before this Tribunal has referred to the same letter dated 18.12.2015 to submit that OTPC has actively pursued with CEA apprising them about the shortage of gas supply at its Palatana Project and respondent has not placed any evidence that it had, at any stage, questioned the admissibility of such document at Appellate Stage. It is well settled that proceedings before this Tribunal are governed by the provisions of the Electricity Act, 2003 and the Regulations framed thereunder. The Code of Civil Procedure, 1908 (CPC), in its strict sense, does not apply to proceedings before this Tribunal. While principles of natural justice and certain procedural safeguards embodied in the CPC may be invoked for guidance, the rigours of the CPC cannot be imported at a belated stage of appellate adjudication. In the present matter, the Respondent has sought to raise objections regarding the admissibility of a document on the ground that it was not filed before the State Commission, particularly at a stage when the Appeal is being finally heard in later part of year 2025, is untenable. The Tribunal, exercising appellate jurisdiction under Section 111 of the Electricity Act, is not bound by the technicalities of the CPC. The Tribunal is empowered to examine the correctness of the Impugned Order on the basis of the material placed before it, and once both parties have themselves relied upon the document in question, the objection to its admissibility loses all force. Accordingly, this Tribunal holds that the provisions of the CPC cannot be pressed into service at such a belated stage to defeat substantive justice. The objection raised by the Respondent is, therefore, rejected.

31. OTPC, Respondent No. 1, and ONGC has entered into GSPA on 29.09.2009. The said agreement has a basic Term of 15 years with years, with

FY 2008-09 to be the base year. Relevant clauses of GSPA are reproduced hereunder for ready reference : “5.4 Failure to take delivery of, or supply, Gas (a) …….

(b) The Seller shall be liable for Seller’s Shortfall in accordance with Clause 15, with effect from the Commercial Supply Date, in the event of:

(i) the Seller’s failure to tender for delivery Gas as is scheduled for delivery in accordance with tis Agreement or

(ii) any other breach by the Seller of its obligations in accordance with this Agreement.” The clause 15 of GSPA provides for the Seller’s Liquidated damages in the event of shortfall in supply, in which clause 15.1 (a) defines the Supply Deficiency Quantity as A – B- C, where: “ A is the 90% of the aggregated Nominated DCQs during such Contract Year and B is sum of the aggregated quantities of Gas supplied in accordance with the Agreement for such Contract Year and any quantity of Gas which the Seller is excused from delivering under this Agreement including because of Force Majure under (clause 17 and Buyer Quantity Deficiency under Clause 8. C is Seller’s Carry Forward accumulated as specified under clause 8.5.” Clause 15.1 (b), provides for compensation by seller, in the event of shortage of supply as reproduced below: “(b) The Seller shall compensate the Buyer for any Supply Deficiency Quantity during any Contract Year in accordance with the following formula: CA = [X%] CP x SDQ Where: X% is the percentage of CP X = 85 from 1st to 5th year from Commercial Supply Date, 55 from 6th to 10th year from Commercial Supply Date

35 from 11th to 15th year from Commercial Supply Date CA is the compensation amount CP is the applicable Contract Price for the year SDQ is the Supply Deficiency Quantity” The compensation amount so worked out has been agreed as reasonable pre estimate of losses as mentioned in clause 15.3: “15.3 Genuine pre-estimate The Seller and the Buyer specifically agree and acknowledge that the compensation to the Buyer under this Clause 15.2 in respect of a Supply Deficiency Quantity shall be by way of liquidated damages and such damages as a result of Seller’s failure to make Gas available for delivery hereunder constitute a genuine and reasonable pre-estimate of losses which Buyer shall incur on account of such Supply Deficiency Quantity.” The clause 17 of the GSPA provides for the force majeure under which several events have been included as force majeure events like, fire, flood, war, act of government agency, as well as unanticipated adverse behaviour of Sellers Gas reservoir. In the event of any such force majeure event, the affected party shall provide notice promptly but not later than 48 hours after the occurrence of the event of Force Majeure, the relevant clause 17.3 is reproduced below: “17.3Notice and resumption of normal performance (a) In the event of Force Majeure, the affected Party shall provide notice promptly and but not later than [48] hours after the occurrence of event of Force Majeure, the other Party will respect to the ongoing Force Majeure event giving full particulars of the Force Majeure the estimate duration thereof, the obligation affected and the reasons of its suspension and the affected Party’s ability in recommence performance of its obligations under the Agreement as soon as possible.

(b) The Party asserting the claim of Force Majeure shall have the burden of proving the circumstances constitute valid grounds of Force Majeure under

this clause and that such Party has exercised reasonable diligence and efforts to remedy the cause of any alleged Force Majeure.”

32. From the reading of various clauses, as referred above, the GSPA provides for compensation by the fuel supplier i.e. ONGC, in case there is deficiency in gas supply except force majeure, however for claiming relief under force majeure, the party claiming force majeure has to give appropriate notice and shall have the burden for proving the circumstances forming valid ground of force majeure in accordance with the terms of the agreement.

33. Our attention has been brought to the letter dated 18.12.2015, from OTPC addressed to the Chairman, CEA, with regard to shortage of gas supply to its Palatana Project, submitting that the said project is quite efficient as compared to other gas power stations in North Eastern Region and requested for suitable measures to make it run at full capacity. Further the Secretary, North Eastern Council Secretariat vide its letter dated February 2016 addressed to Secretary Power has raised the issue of shortage of gas supply to Palatana Project, which is the cheapest power available to all the seven North Eastern States and has also raised the issue of diversion of gas meant for Palatana Project to Monarchak generation project and requested for Ministry of Power intervention for stopping diversion of gas from Palatana Project and to provide Palatana Project the desired quantum of fuel. Perusal of these letters establish that shortage of gas supply to Palatana Project, and diversion of gas meant for it to Monarchak generation project has been discussed in the various meetings of North Eastern region, and OTPC being fully aware of the reasons for shortage, also apprised to Ministry of Power and CEA seeking their intervention; however, no material has been placed before this Tribunal to indicate that Respondent No. 1, OTPC, had taken up the matter with the fuel supplier, namely ONGC, for seeking

compensation on account of short supply of gas in accordance with the relevant provisions of the GSPA.

34. We take note that ONGC vide its letter dated 18.03.2016, in response to the letter of OTPC 09.03.2016 has stated the inherent risk of unexpected reservoir behaviour as one of the reason for short supply of power to Palatana Project and referred to clause 17.1(c ) ( the force Majeure clause ) under the GSPA between ONGC and OTPC.

35. In the Impugned Order, considering the submissions advanced by OTPC, that due to unexpected reservoir behaviour of reservoir as submitted by ONGC, which is covered under Force majeure under article 17.1 (c) of the GSPA, fuel shortage was held to be beyond control of OTPC and relaxation in NAPAF was allowed from 85 % to 76 % during the period from 24.03.2015 to 30.09.2018, albeit same was considered as a onetime relaxation.

36. The Appellant has placed reliance on the judgment of this Tribunal dated 30.04.2013 in Appeal No. 110 of 2012, NTPC Limited vs. Central Electricity Regulatory Commission & Ors., wherein it was held that the responsibility for arranging fuel supply rests with the generating company and the beneficiaries cannot be held accountable and non-availability of sufficient fuel does not fall under the purview of the force majeure event and relaxation in the NAPAF was not granted to the generator. In the referred case, the issue pertained to diversion of coal supply from mines linked to Farakka and Kahalgaon Stage I projects to the Kahalgaon Stage II project, subsequent to its commissioning, which resulted in lower plant availability of Farakka and Kahalgaon -I project seeking relaxation in NAPAF. This Tribunal, in these circumstances, held that NTPC is responsible for ensuring adequate supply to its generating stations as diversion was held to be instituted by NTPC itself, as all three projects were connected to the same coalfields through the Merry-Go-Round system for transportation of coal.

37. Per Contra, Respondent -OTPC has contended that the said judgment is not applicable to the present case. Unlike coal, which can be transported through multiple modes including rail and road and can be diverted among projects connected to the same source, natural gas presents a fundamentally different logistical reality. In the present matter, no diversion of gas has been undertaken by OTPC. Rather, the supply of gas to the project is entirely dependent on ONGC, which is the sole supplier of natural gas in the state of Tripura. There is no pipeline connectivity from the mainland to Tripura, and gas sourced from other regions cannot be transported to the project site. Unlike coal, natural gas cannot be transported by road or rail; it requires designated pipeline infrastructure, which in this case does not exist beyond the local supply arrangements. At first instance, there appears to be some merit in the submissions advanced on behalf of the Respondent. However, upon a closer examination of the contractual framework, it becomes clear that the responsibility of arranging fuel lies squarely with the generator. In the present case, OTPC has assumed this responsibility and, in discharge thereof, has entered into a Gas Sale and Purchase Agreement (GSPA) with ONGC. The existence of such an agreement underscores that the generator itself is entrusted with securing the requisite fuel supply, and cannot shift this burden onto any other entity. The implications of the said GSPA are deliberated upon in the subsequent portions of this judgment.

38. Respondent- OTPC placing reliance on the judgement dated 04.08.2022 of this Tribunal in North Eastern Electric Power Corporation Limited v. APDCL & Ors.,; 2022 SCC OnLine APTEL 69, submitted that while dealing with NEEPCO’s Assam Gas-Based Power Plant, this Tribunal held that the shortage of gas was beyond the generator’s control and remanded the matter to the CERC for reconsideration of relaxation under Regulation 54. In the said judgement, this Tribunal took note of the fact that the supply of gas to the NEEPCO project was reduced in view of the directive of Central Govt conveyed

vide letter dated 17.08.2016 & 31.10.2016, and noting that relief being sought by Appellant (NEEPCO) could have been claimed under the GSPA and directed against the gas supplier, however taking cognizance of the direction of central govt, vis-à-vis obligations of gas supplier to supply as per that, resulted in reduction of supply for the Appellant Project. Since Central commission has not examined the issue in this perspective, this Tribunal without expressing any opinion on the merit of the case, remanded the matter to Central commission for fresh consideration from that perspective. In our view, this judgement cannot be construed to be holding that arranging fuel is not the responsibility of generator and it is entitled to relaxation in NAPAF in case of shortage of supply. The shortage in supply of gas for the subject project in the referred judgement was considering the directives of Govt, while no such Govt directive have been referred in the present case, which mandates ONGC to divert the supply elsewhere. Thus, the facts in the present case are different than the case referred and accordingly reliance placed on this judgement by Respondent is of no avail. We further observe that the Respondent has sought to place reliance upon the order passed by the Central Electricity Regulatory Commission (CERC) pursuant to the remand directions issued by this Tribunal in the aforesaid matter. In our considered view, such reliance is misplaced. This Tribunal, being a statutory appellate forum, is bound by the pronouncements of superior judicial fora and not by the orders of the regulatory commission, which is subordinate in the judicial hierarchy. While the orders of the Commission may provide administrative context or factual narration, they do not constitute binding precedent upon this Tribunal. The jurisprudential discipline requires us to follow the ratio laid down by higher courts, and not to be guided by regulatory directions issued in the course of remand proceedings. Accordingly, the order passed by the CERC upon remand cannot be treated as determinative for the present adjudication and does not need consideration by us.

39. Having observed as above, it is important and relevant to deliberate the present case vis- a- vis provisions of GSPA, which OTPC has with the gas supplier ONGC. As noted above, the Respondent OTPC has acknowledged shortage of gas for their Palatana Project by their gas supplier and sought relaxation in NAPAF for the period from 24.03.2015 till September 2018, after which period gas supplier has assured full supply. Through the communications referred above, shortage in gas supply to Palatana project has been referred to the diversion of gas by their supplier i.e ONGC to another project i.e Monarchak and have sought intervention of Ministry of Power, Govt of India for impressing upon ONGC to supply requisite gas for the Palatana Project. However, OTPC, in their submissions before CERC have indicated the shortage in supply of gas on account of force majeure event of gas supplier. We note that on the basis of such contentions, it has been held in the Impugned Order that OTPC is not getting enough gas supply and relaxed the NAPAF, however CERC while according such a relaxation has not examined the provisions of GSPA and whether the submissions made by OTPC would constitute a force majeure, to constrain OTPC to avail liquidated damages from the gas supplier in terms of GSPA. In our considered view, such an approach is legally unsustainable.

40. We note that GSPA expressly stipulates a specific procedure and timeline for issuance of notice upon occurrence of a Force Majeure event, such contractual requirement is required to be complied with both in letter and in spirit. While OTPC has claimed shortage of supply from 24.03.2015 and claimed relaxation in NAPAF since then, the letter of ONGC, to be reckoned as a force majeure notice, as no other letter from gas supplier has been referred to us, is dated 18.03.2016, almost after a year of such occurrence of gas shortage for which relaxation in NAPAF is sought. The notice contemplated under the force majeure clause is not an idle formality or a mere procedural ritual; rather, it constitutes the contractual mechanism that sets the claim in motion and enables

the counter-party to take necessary mitigating and administrative measures. This Tribunal in its judgement dated 07.11.2017 in “Maruti Clean Coal and Power Limited v. Power Grid Corporation of India Limited and Anr.” 2017 SCC OnLine APTEL 70 has emphasized that compliance with the notice requirement, where made a condition precedent, is mandatory for availing relief under the force majeure clause. Therefore, where the contract makes issuance of notice within a stipulated period or reasonable time, a condition precedent, strict adherence thereto is mandatory, and failure to comply would disentitle the affected party from seeking the contractual relief. Similar position has been held in the judgement of this Tribunal in “Punjab State Power Corporation Limited v. Punjab State Electricity Regulatory Commission & Ors.”, Appeal No. 316 of 2018. In view of the settled position of law, the letter issued by ONGC dated 18.03.2016 cannot be construed as a valid force majeure notice for the purposes of the GSPA. Neither OTPC has claimed liquidated damages from the gas supplier in terms of provision of GSPA, nor the Central commission has examined, the provisions relating to liquidated damages in the GSPA, which the OTPC may be entitled from its gas supplier but by relaxing the NAPAF, the consequences of not achieving the stipulated NAPAF of 85 %, has been passed on to the beneficiaries beyond NAPAF of 76%. As already stated above, no documentary evidence has been placed by OTPC with regard to taking measures for pursuing with ONGC, the gas supplier, with regard to compliance of provisions of GSPA and to claim liquidated damages.

41. It is also relevant to note that OTPC was fully aware that there is statutory requirement of achieving NAPAF of 85% for the Palatana project and under clause 15.3 of the GSPA, the calculation of LD as calculated in clause 15.2 has been estimated to be the reasonable estimate for compensation of loss, which may accrue on account of less supply. It is not even the case of OTPC that liquidated damages calculated under clause 15.2 is not sufficient to cover the

losses on account of less recovery of fixed costs and need relaxation in NAPAF to bridge the gap. Thus, even it is held that shortage of supply in gas to Palatana project is beyond the control of OTPC, and they are not able to recover its fixed cost, we find OTPC has failed in exercising its claim under the GSPA upon ONGC, the fuel supplier for shortage in supply and has rather sought to shift entire obligation upon the beneficiaries i.e. the consumers. It is also pertinent to note that on one hand ONGC, the gas supplier has not met its supply commitments as per the GSPA to OTPC, and no claim has been levied upon them by OTPC with regard to shortage of gas supply leading to non-achieving of stipulated NAPAF. The relaxation in NAPAF from 85 % to 76 % has effectively resulted in conferring an undue benefit upon the gas supplier i.e ONGC as well, which holds a 50% shareholding in the project, thereby allowing the consequences of supply failure to be passed on to the beneficiaries instead of the defaulting fuel supplier. Respondent No.1 - OTPC has placed reliance upon Clause 14.3 of GSPA to contend that this clause provides for pro-rata allocation of gas supply in case of reduced production, recognizing possible shortfall and allocation of reduced output is ONGC’s contractual prerogative. It has been contended that OTPC cannot compel prioritization, of supply in its favour nor can the shortage be attributed to a deliberate act or omission on OTPC’s part. The clause 14.3 of the GSPA, as relied upon by OTPC, is reproduced hereunder: “14.3 Reduction of Gas production In the event of any reduction in the production of Gas in the Gas Supply Area’s), the Seller shall take all effective steps to fulfil its supply obligations under this Agreement. In any event. the Seller shall at least make available the quantities of Gas to Buyer from Gas Supply Area(s) pro rata of DCQs.”

42. This clause stipulates that, in the event of a reduction in production, the seller shall be entitled to supply only the pro rata share of the Daily Contract Quantity (DCQ). This provision is designed to safeguard the seller against liability

where the shortfall arises directly from diminished production capacity on day to day basis. However, Clause 15 of the GSPA expressly provides for the levy of liquidated damages in the event of failure by the seller to deliver the agreed quantity of gas over a Contract year. A plain reading of Clause 15 clearly demonstrates the intention of the parties to hold the seller accountable for any shortfall in supply during a year. Therefore, any interpretation of the pro rata supply clause under clause 14.3 as conferring a blanket exemption from liability for undersupply would render Clause 15 otiose and defeat the commercial purpose of the agreement. As such, no exceptions have been carved out in clause 15 for pro rata supply of DCQ under clause 14.3. In such circumstances, Clause 14.3 cannot be construed in a manner that absolves the gas supplier, i.e., ONGC, from its contractual obligations under Clause 15.

CONCLUSION

43. In view of the above deliberations, we set aside the CERC Order dated 30.03.2017 with regard to relaxation in the NAPAF from 85 % to 76 % for the period from 24.03.2015 to 30.09.2018 and any consequential effect it has had on the calculation in corrigendum order dated 03.05.2017, which is also impugned in the present Appeal, shall stand annulled to that extent.

44. Accordingly, the Captioned Appeals is allowed in above terms and all pending IAs, if any, are disposed off in these terms. PRONOUNCED IN THE OPEN COURT ON THIS 06th OF APRIL, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE