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Karnataka High Court · body

2019 DIGILAW 1886 (KAR)

Asian Fab Tech Limited v. Chamundeshwari Electricity Supply Corporation Limited

2019-08-27

B.VEERAPPA

body2019
JUDGMENT : B. Veerappa J. The petitioner filed the present writ petition seeking to quash the communication dated 06.09.2016 issued by the first respondent vide Annexure-M and consequently to direct the respondents to grant extension of three months time to the petitioner for achieving Commercial Operation Date (COD) in respect of petitioner's 5 MW Solar Project at Sira Taluk, Tumakuru District. 2. It is the case of the petitioner that, by way of Request for Proposal (RFP) dated 30.05.2014, the Karnataka Renewable Energy Development Limited (KREDL) invited applications for setting up and development of Solar Thermal and Solar PV Power Plants in the State of Karnataka. In response to the same, petitioner submitted its bid for establishment of a 5 MW Solar PV Power Plant with a tentative location of Sira taluk and District. In response to the said bid, a letter of award dated 19.11.2014 was issued to the petitioner No.1 by KREDL stating that the tariff submitted by the petitioner No.1 for the project has been accepted. After completion of formalities, Power Purchase Agreement (PPA) dated 12.01.2015 was entered into between the petitioner and the respondent No.1. The same was approved by the respondent No.2 on 04.05.2015 with certain modifications. In view of delay in granting of KERC approval, on 01.03.2016, the petitioner sought for extension of six months time for fulfillment of conditions precedent. The same was acceded to by first respondent and approved by second respondent. Accordingly, the earlier time limit of 3654 days which would expire on 11.01.2016 was extended to 03.07.2016 and in that regard, a supplement agreement dated 21.04.2016 was entered into between the petitioner and first respondent. 3. It is further case of the petitioner that, after fulfillment of the conditions precedent, the petitioner intimated the same to the first respondent by communication dated 05.05.2016. The petitioner completed all the civil works and installation of equipments and the project was ready for commissioning. In the meantime, as the COD as per PPA was 18 months from effective date which expired on 11.07.2016, the petitioner by communication dated 21.06.2016 sought for extension of scheduled commissioning date by three months. The said request was again renewed on 29.06.2016. In the meantime, the petitioner requested the first respondent for deputing the officers concerned for inspection. In the meantime, as the COD as per PPA was 18 months from effective date which expired on 11.07.2016, the petitioner by communication dated 21.06.2016 sought for extension of scheduled commissioning date by three months. The said request was again renewed on 29.06.2016. In the meantime, the petitioner requested the first respondent for deputing the officers concerned for inspection. However, on 17.09.2016, petitioner received an e-mail from the first respondent with the subject 'Invoking BGs' without any text containing attachment. The said attachment was a scanned copy of communication dated 06.09.2016 issued by the first respondent stating that as per the directions of second respondent, the request for extension of commissioning date has been rejected and it was stated that as per clauses 5.8.1. liquidated damages of Rs.50 lakhs is being levied on the petitioner payable within seven days, failing which, the performance guarantee of Rs.50 lakhs given by the petitioners would be invoked. It was also stated that the tariff has been revised from Rs.6.94 per unit to Rs.6.51 per unit as per Article 12.2 of the PPA. Therefore, petitioner is before this Court for the relief sought for. 4. The first respondent filed objections and contended that any dispute between the parties, the petitioner ought to have approached the second respondent for consideration of the dispute under clause 18 of PPA entered into between the parties. Inspite of extension of time on earlier two occasions, petitioner has not completed the project and therefore, on the directions issued by the second respondent, the impugned Order came to be passed and therefore, sought to dismiss the writ petition. 5. I have heard the learned counsel for the parties to the lis. 6. Sri Reuben Jacob, learned counsel for the petitioner contended that the impugned communication of the first respondent on the basis of the directions issued by the second respondent is erroneous and contrary to the material on record. Since PPA has been entered into between the petitioner and first respondent, the first respondent ought to have considered the representation made by the petitioner for extension of time independently without being influenced by the directions of the second respondent and therefore, same cannot be sustained. Since PPA has been entered into between the petitioner and first respondent, the first respondent ought to have considered the representation made by the petitioner for extension of time independently without being influenced by the directions of the second respondent and therefore, same cannot be sustained. He further contended that when an application is filed for extension of time, it is the duty of the first respondent to consider the same in terms of clause 5.7.1 which clearly depicts that in the event of developer being prevented from performing its obligations under clause 5.1 by the scheduled commissioning date due to: a. any CESC Mysore Event of Defulat; or b. Force Majeure Events affecting CESC Mysore; or c. Force Majeure Events affecting the Developer. the Scheduled Commissioning Date and the Expiry Date shall be deferred, subject to the limit prescribed in Clause 5.7.2 and Clause 5.7.3 for a reasonable period but not less than 'day for day' basis, to permit the Developer or CESC Mysore through the use of due diligence, to overcome the effects of the Force Majeure Events affecting the Developer or CESC Mysore, or till such time such Event of Default is rectified by CESC Mysore. Therefore, the first respondent has to independently decide on the representation for extension of time and cannot proceed to reject the application on the basis of the directions issued by the second respondent which is impermissible as per PPA. 7. Per contra, Smt. Rithika Ravikumar for Sri Nikhilesh M. Rao, learned counsel for the first respondent sought to justify the impugned Order and contended that first of all, writ petition filed without approaching the second respondent for amicable settlement and for dispute resolution, is not maintainable. Earlier, on two occasions, petitioner's request was considered by the first respondent and time was extended and the same was approved by the second respondent. Inspite of granting time, the petitioner has not completed the project within the stipulated time and therefore, sought to dismiss the writ petition. 8. Earlier, on two occasions, petitioner's request was considered by the first respondent and time was extended and the same was approved by the second respondent. Inspite of granting time, the petitioner has not completed the project within the stipulated time and therefore, sought to dismiss the writ petition. 8. Sri B.N.Prakash, learned counsel for the second respondent sought to justify the impugned order passed by the first respondent and contended that to resolve any dispute between the petitioner and first respondent, in all fairness, the petitioner ought to have approached the second respondent for amicable settlement and for dispute resolution, in view of clause 18.2 of the PPA entered into between the petitioner and respondent No.1. Inspite of granting sufficient time, petitioner has not completed the project, Therefore, sought to dismiss the writ petition. 9. Having heard the learned counsel for the parties, it is undisputed fact that on the basis of the RFP made by KREDL inviting applications for setting up and development of Solar Thermal and Solar PV Power Plants in the State of Karnataka, petitioner filed application and were successful in the bid and accordingly, PPA came to be entered into between the petitioner and the first respondent on 12.01.2015. The PPA was approved by the second respondent on 04.05.2015. It is also not in dispute that on earlier two occasions, application filed by the petitioner for extension was considered by the first respondent and the same was approved by the second respondent. 10. The petitioner made third representation requesting for extension of COD for three months, for development of 5 MW solar PV Power Project in Karnataka giving detailed reasons for delay in meeting the scheduled commissioning date and it was contended that they have successfully completed 90% of the project and are in the advanced and final stage of commissioning. Therefore, sought three months extension from the scheduled commissioning date. Therefore, sought three months extension from the scheduled commissioning date. The letter at Annexure-M dated 06.09.2016 written by the first respondent clearly depicts that first respondent has not independently passed the Order in terms of clause 5.7.1 of the PPA dated 12.01.2015 which reads as under: "5.7.1 In the event of developer being prevented from performing its obligations under clause 5.1 by the scheduled commissioning date due to: (a) any CESC Mysore Event of Defulat; or (b) Force Majeure Events affecting CESC Mysore; or (c) Force Majeure Events affecting the Developer the Scheduled Commissioning Date and the Expiry Date shall be deferred, subject to the limit prescribed in Clause 5.7.2 and Clause 5.7.3 for a reasonable period but not less than 'day for day' basis, to permit the Developer or CESC Mysore through the use of due diligence, to overcome the effects of the Force Majeure Events affecting the Developer or CESC Mysore, or till such time such Event of Default is rectified by CESC Mysore." 11. A careful perusal of the impugned Order depicts that the said Order passed by the first respondent on the basis of the directions issued by the second respondent which reads as under: "The direction of KERC relevant to the request for extension by M/s Asian Fab Tec Ltd. Is reproduced as below: As regards, the request of the developer for extension of time by three months for achieving COD, I am directed to inform that, none of the provisions of the PPA envisage any such extension for the reasons stated by the developer. Hence, there is no case for the Commission issuing any direction for extension of time. Further, depending up on the actual Commercial Operation Date (COD), the CESC has to enforce the terms of PPA regarding the applicable tariff, recovery of liquidated damages due to delay in achieving the COD and other related aspects". 12. It is also stated in the Order that the letter shall be treated as final notice and amount of Rs.50,00,000/- shall be paid to CESC, Mysuru, as liquidated damages within seven days. 13. A careful perusal of the contents of PPA between the petitioner and first respondent provides for extension of time. It is for the first respondent to consider independently without seeking any direction or opinion from the second respondent who is the approving authority. 13. A careful perusal of the contents of PPA between the petitioner and first respondent provides for extension of time. It is for the first respondent to consider independently without seeking any direction or opinion from the second respondent who is the approving authority. After considering the material, it is for the first respondent to pass appropriate Orders and it is for the second respondent to approve the decision taken by the first respondent. Admittedly, the first respondent has not applied its mind independently in terms of the clauses mentioned in the PPA and proceeded to pass the impugned Order based on the directions issued by the second respondent, which is impermissible. 14. It is also brought to the notice of this Court that after passing of the impugned Order by the first respondent, petitioners have completed the project and Commissioning Survey is also issued. The submission is placed on record. 15. In view of the aforesaid reasons, the impugned Order passed by the first respondent rejecting the extension of time based on the directions issued by the second respondent cannot be sustained. Accordingly writ petition is allowed. The impugned Order passed by the first respondent rejecting the extension of time is hereby quashed. The matter is remanded to the first respondent to consider the petitioner's representation for extension of time and pass appropriate orders, independently, in terms of clauses of the PPA entered into between the parties, strictly in accordance with law. Ordered accordingly.