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Informist, Wednesday, Aug 28, 2024

 

NEW DELHI – The Supreme Court has upheld the extension of the scheduled commissioning date for the commercial operation of a solar power project in Karnataka, rejecting the Bangalore Electricity Supply Co Ltd's challenge against the order of Appellate Tribunal for Electricity.

 

The top court said that the tribunal had rightly restored the tariff of 8.4 rupees per unit from 4.36 rupees per unit and directed Bangalore Electricity Supply to pay the farmers the difference in per unit tariff along with the late payment surcharge. "The direction to pay the late payment surcharge on this amount is explicitly rooted in the PPA (power purchase agreement), and hence, is in furtherance of the intention of the parties," said the court.

 

Further, the apex court agreed with the tribunal's order to set aside the imposition of liquidated damages by the petitioner under the agreement after finding that there was no delay in securing approvals and commissioning the project. "In light of the above findings of fact by the APTEL that the delay is not attributable to the respondents and that the force majeure clause is applicable, it rightly held that the extension of time under Article 2.5 is warranted and the commissioning of the project on Aug 24, 2017 is within the extended period of 24 months," said the court.

 

In 2014, the Karnataka government had introduced a policy to identify and promote solar energy projects by land-owning farmers. These solar power plants of 1-3 MW capacity would generate and sell power to the State Electricity (Distribution) Supply Companies at the tariff determined by the Karnataka Electricity Regulatory Commission.

 

Some of the farmers had applied under the policy and were termed as solar power developers. Hirehalli Solar Power Project LLP was a special purpose vehicle to undertake the solar power project in Chitradurga district in Karnataka. In 2015, the petitioner entered into a power purchase agreement with farmers. In the agreement, the solar power project was to commence its commercial operation within 18 months.

 

Several farmers raised concerns regarding delays in the execution of the project on account of delays in getting land, evacuation approvals, demonetisation, and other reasons. The farmers requested a six-month extension which was approved by the petitioner in 2017. However, through a letter Karnataka Electricity Regulatory Commission said that all extension requests should be filed to it. 

 

Consequently, the farmers moved the Karnataka electricity body and sought extension and invoked "force majeure" clause under the agreement. During the pendency of the case, the solar power project was commissioned in Aug 2017 within the extended period of 24 months. However, in 2018, the Karnataka commission rejected various causes of delay put forth by the farmers and held that the force majeure clause must be strictly interpreted. It also reduced the tariff payable to the farmers to 4.36 per unit and imposed liquidated damages on them. In this order's appeal, the electricity tribunal favoured the farmers.  End

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

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