BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR
Petition No.1596/2016
In the Matter of:
Petition under Section 86 (1) (f) of the Electricity Act, 2003 read with Regulation 61 of the GERC (Conduct of Business) Regulations, 2004 for adjudication of the disputes arising out of PPA dated 20.01.2011 and subsequent amendments thereto between TPL and KECPL
Petitioner : M/s. Kindle Engineering and Construction Pvt. Limited Regd. Office at 616 A, Devika Tower, Nehru Place, New Delhi.
Represented By : Learned Advocate Shri Hemant Sahai with Advocate Puja Priyadarshini and Ms. Minni Kataria
V/s.
Respondent : Torrent Power Limited Electricity House, Lal Darwaja, Ahmedabad.
Represented By : Learned Advocate Ms. Deepa Chawan with Advocate Reshma Nathani and Shri Chetan Bundela
CORAM:
Shri Anand Kumar, Chairman
Shri K. M. Shringarpure, Member
Shri P. J. Thakkar, Member
Date: 20/10/2018
ORDER
1. The present petition has been filed seeking following reliefs:
(i) Hold and declare that deductions made by the Respondent to the tune of
Rs. 18,65,53,217/- up to April 2016 is illegal;
1
(ii) Direct the Respondent to make payment to the Petitioner of the balance
amount of Rs. 18,65,53,217/- on account of wrongful deductions made
by it along with interest thereon as applicable under the PPA;
(iii) Direct the Respondent to continue to pay the Petitioner at
the rate of Rs. 10.5869/unit for energy supplied to it in terms of the
agreement under the Minutes of Meeting dated 23.03.2015 after April
2016;
2. The facts of the case mentioned in the Petition are as under:
2.1. The present petition is filed for adjudication of disputes arising out of Power
Purchase Agreement dated 20.01.2011 between the Respondent Torrent Power
Limited and the Petitioner KECPL.
2.2. The Petitioner is a generating company as defined under Section 2(28) of the
Electricity Act, 2003 and incorporated under the Companies Act, 1956 and a
Special Purpose Vehicle ("SPV") created by M/s. Hindustan Clean Energy Ltd.
(formerly known as M/s. Moserbaer Clean Energy Ltd.) for setting up a 50 MW
solar PV power project for exclusive supply to the Respondent M/s. Torrent Power
Ltd. as per PPA dated 20.01.2011 for a period of 25 years. The Respondent is a
distribution licensee and supplying the electricity to the consumers in its license
areas of Ahmedabad, Gandhinagar and Surat.
2.3. Government of Gujarat promulgated the Solar Power Policy, 2009 dated
06.01.2009 which encourages power generation from Solar Power Projects in the
State of Gujarat by providing various incentives to the Solar Power Generators.
2
Torrent Power Limited had issued a Letter of Intent (LoI) on 23.12.2010 to M/s.
Moserbaer Clean Energy Ltd. for setting up a 50 MW solar PV power project for
exclusive supply to the Respondent TPL, a distribution licensee.
2.4. In the said PPA, provision regarding the tariff was as follows: -
"5.2 TPL shall pay the fixed tariff mentioned hereunder for the period of 25 years
for all the scheduled Energy/ Energy injected as certified in the monthly SEA by SLDC
- Tariff for Solar Photovoltaic project:
o Rs. 15/unit - for First 12 years and thereafter
o Rs. 5/unit - from 13th year to 25th year
Above tariff is as per tariff order no.2 of 2010 in the matter of Determination
of tariff for Procurement of Power by the Distribution Licensees and others
from Solar Energy Projects issued by GERC dated 29-01-2010 ("Tariff Order").
In case, Commissioning of Solar Power Project is delayed beyond the date of
applicability of the Tariff Order, then TPL shall pay the Tariff determined by
the Hon'ble GERC for Solar Projects effective on the date of Commissioning of
Solar Power Project, or the abovementioned Tariff, whichever is lower."
2.5. Subsequently, a dispute arose between the parties pertaining to termination of
PPA, extension of SCOD etc. for which the Petitioner had earlier filed a Petition
No. 1200 of 2012 and the Commission passed the order on 18.01.2013. In
compliance of the directions issued by the Commission in the said Order, the
Petitioner and the Respondent entered into Supplementary PPA dated
28.02.2013 according to which the SCOD was extended by 680 days (i.e. the
original SCOD was 28.01.2012 and the revised SCOD was 08.12.2013) as the
3
Commission had waived, i.e. excluded from the specified time limit and directed
that milestone dates for all activities shall commence from the date of this order.
Subsequently, the project site was changed from Village-Gosa, Porbandar to Solar
Park, Charanka. Thereafter the Petitioner and the Respondent entered into
Second Supplemental PPA dated 11.05.2013 and Third Supplemental PPA dated
17.12.2013.
2.6. The 50 MW project was finally commissioned in three parts (i) 29.993 MW on
31.03.2014 (i.e. in FY 2013-14) (ii) 15 MW on 27.01.2015 and (iii) 5 MW on
04.02.2015. There arose a dispute between the Petitioner and the Respondent on
mainly 2 issues- (i) As a result of the commissioning of the plant in parts, whether
the commissioning of project in parts is permitted under the PPA or should
commissioning be reckoned for all purposes (including the year of applicable
tariff) when entire 50 MW is commissioned and (ii) regarding the applicable tariff
as a result of extension of 680 days granted by the Commission.
2.7. Both the above mentioned disputes were finally settled between the parties after
exchange of various letters and recorded under the Minutes of Meeting dated
23.03.2015, whereby part commissioning of the project, and its consequential
implications, was accepted by TPL. The tariff was agreed by both the parties to be
the tariff for projects not availing Accelerated Depreciation as provided in the
applicable tariff order during the concerned period i.e. prevailing as on the date
of commissioning of that capacity. Accordingly, a weighted average tariff of Rs.
10.5869/unit was agreed w.e.f. 04.02.2015. It is pertinent to note that the said
MoM clearly and unambiguously recorded the agreement between the parties on
the tariff to be adopted under the PPA for supply of power.
4
2.8. After the settlement dated 23.03.2015, in light of the aforesaid understanding,
KECPL started raising invoices in terms of Article 6 of the PPA based on the rate of
Rs.10.5869/unit agreed between the parties without any reservation and TPL also
paid the Petitioner as per the said agreement and under such invoices without
demur or objection for almost a year. Thus, the Respondent acted in accordance
with the understanding reached under the settlement dated 23.03.2015 and paid
the agreed rates.
2.9. Subsequently the Respondent on 15.02.2016 wrote to the Petitioner averring that
in light of the Hon'ble Supreme Court's judgment dated 02.02.2016 in Civil Appeal
No. 1220 of 2015, the Petitioner's Project is eligible for the tariff for the project
availing Accelerated Depreciation i.e. Rs. 9.64/unit for the part of the project
commissioned in FY 2013-14 and Rs. 8.82/unit for the part of the project
commissioned in FY 2014-15, i.e. a revised weighted average tariff of Rs.
9.311/unit instead of agreed tariff of Rs. 10.5869/unit. Accordingly, the
Respondent requested the Petitioner to reimburse an amount of Rs.
15,01,00,107/- for invoices till December 2015 paid by the Respondent to the
Petitioner under the Tariff Order dated 27.01.2012 read with Order dated
07.07.2014/11.07.2014 issued by the Commission.
2.10. Having agreed to a tariff for the project ‘not availing accelerated depreciation' for
the present PPA, the Respondent is now trying to resile from the agreed rates on
the pretext of the Hon’ble Supreme Court's judgment, which is clearly not
applicable to the present Petition. The Petitioner, vide letter dated 22.02.2016
replied to and disputed the stance adopted by the Respondent in its letter dated
15.02.2016. Without responding, the Respondent not only unilaterally started
5
deducting the disputed amount of Rs. 15,01,00,107/- from the invoices raised by
the Petitioner @ Rs. 10.5869/unit but also considered lower invoice amount
worked out @ Rs. 9.311/unit. The Respondent, vide letters dated 11.03.2016 and
18.03.2016 reiterated the contentions raised earlier in the letter dated
15.02.2016 and continued to deduct payments due to the Petitioner. The
Petitioner disputed above action of the Respondent vide letter dated 08.04.2016.
Subsequently, through letter dated 02.05.2016, the Respondent raised a demand
of Rs. 2,08,68,341/- on the Petitioner towards interest on the disputed excess
amount paid by the Respondent.
2.11. The present dispute arose between the parties regarding payment of Rs.
15,01,00,107/- (relating to Invoices till December, 2015) deducted by the
Respondent and Rs. 3,64,53,110/- being the differential amount between Rs.
10.5869/unit and Rs. 9.311/unit tariffs not paid by the Respondent for invoices
raised by the Petitioner from January to April 2016 totalling to Rs. 18,65,53,217/-
. Article 6.6 of the PPA clearly provides the manner in which the Respondent can
raise objections in regard to invoices raised by the Petitioner.
2.12. The Respondent without adhering to such process of making payment of 85% of
disputed amount as per Article 6.6 of the PPA has in fact in a high handed manner
proceeded to deduct the entire amount that it now wrongly claims to have been
overpaid/over invoiced.
2.13. The Respondent's stance that as per the Supreme Court judgment dated
02.02.2016 in Civil Appeal No. 1220 of 2015, the Petitioner's project is eligible for
tariff for 'projects availing accelerated depreciation', is totally baseless,
6
misconceived, contrary to facts and based upon an erroneous understanding of
the Supreme Court judgment dated 02.02.2016 in Civil Appeal No. 1220 of 2015
which is inapplicable in the present facts and circumstances. The same is in clear
contradiction to the position duly agreed and signed by and between the parties
which is unequivocally recorded in the Minutes of Meeting dated 23.03.2015.
2.14. On 27.01.2012, the Commission issued Tariff Order No. 1 of 2012 and determined
the following tariff for solar power projects commissioned between 29.01.2012
to 31.03.2015:
Period 29 Jan.'12 to 31 1 Apr.'13 to 31 1 Apr.'14 to 31 Mar.'13 Mar.'14 Mar.'15 For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for Rs. 9.28 per kWh Rs. 8.63 per kWh Rs. 8.03 per kWh 25 years For first 12 years Rs. 9.98 per kWh Rs. 9.13 per kWh Rs. 8.35 per kWh For subsequent Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh 13 years For megawatt-scale photovoltaic projects not availing accelerated depreciation Levelized Tariff for Rs. 10.37 per kWh Rs. 9.64 per kWh Rs. 8.97 per kWh 25 years For first 12 years Rs. 11.25 per kWh Rs. 10.30 per kWh Rs. 9.42 per kWh For subsequent 13 Rs. 7.50 per kWh Rs. 7.50 per kWh Rs. 7.50 per kWh years For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for Rs. 11.14 per kWh Rs. 10.36 per kWh Rs. 9.63 per kWh 25 years For kilowatt-scale photovoltaic projects not availing accelerated depreciation Levelized Tariff for Rs. 12.44 per kWh Rs. 11.57 per kWh Rs. 10.76 per kWh 25 years
2.15. Thereafter, on 07.07.2014/11.07.2014, the Commission in suo motu
proceedings initiated in pursuance of the Order dated 17.04.2014 passed by
Hon'ble APTEL in Appeal No. 75 of 2012 revised the tariff determined in Tariff
Order 2012 as follows-
Period January 29, 2012 April 1, 2013 to April 1, 2014 to to March 31, 2013 March 31, 2014 March 31, 2015
For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 9.70 per kWh Rs. 9.02 per kWh Rs. 8.39 per kWh years
7
For first 12 years Rs. 10.52 per kWh Rs. 9.64 per kWh Rs. 8.82 per kWh For subsequent 13 Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh years For megawatt-scale photovoltaic projects not availing accelerated depreciation Levelized Tariff for 25 Rs. 10.92 per kWh Rs. 10.15 per kWh Rs. 9.44 per kWh years For first 12 years Rs. 11.97 per kWh Rs. 10.96 per kWh Rs. 10.03 per kWh
For subsequent 13 Rs. 7.50 per kWh Rs. 7.50 per kWh Rs. 7.50 per kWh years For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 11.64 per kWh Rs. 10.82 per kWh Rs. 10.07 per kWh years For kilowatt-scale photovoltaic projects not availing accelerated depreciation Levelized Tariff for 25 Rs. 13.10 per kWh Rs. 12.18 per kWh Rs. 11.33 per kWh years Levelized Tariff for Solar Thermal Projects availing accelerated depreciation With accelerated depreciation benefit Rs. 11.83 per kWh for 25 years Levelized Tariff for Solar Thermal Projects not availing accelerated depreciation Without accelerated depreciation benefit Rs. 13.23 per kWh for 25 years
2.16. In view of the agreement in MoM dated 23.03.2015 between the parties, the 2012
Tariff Order (as revised on 07.07.2014/11.07.2014) was relevant for working out
the tariff for the purpose of the PPA.
2.17. The Tariff Order allowed generating companies to adopt either tariff i.e. with
accelerated depreciation or without accelerated depreciation depending upon
whether they wanted to avail accelerated depreciation in law. Pursuant to the
revised 2012 Tariff Order, the Petitioner and Respondent have agreed that the
tariff determined by the Commission under Tariff Order 2012 for 'projects not
availing accelerated depreciation' is applicable to the Petitioner's Project. Having
unequivocally and clearly agreed to the 'tariff for Projects not availing accelerated
depreciation' and having acted upon such agreement and having thereafter made
payments for over a year on the basis of such understanding, the Respondent is
unfairly trying to take advantage of the Supreme Court order dated 02.02.2016
and renege from its contractual commitment. The Respondent, knowing fully well
that the Petitioner's Project is not availing accelerated depreciation and,
therefore, having agreed to 'tariff for project not availing accelerated
8
depreciation', which is also reflected in the settlement dated 23.03.2015, is now
seeking to contend that the Petitioner's Project is entitled only to the 'tariff for
Projects availing accelerated depreciation'.
2.18. The judgment dated 02.02.2016 of the Hon'ble Supreme Court in Civil Appeal
No. 1220 of 2015 is totally inapplicable to the present case having regard to the
fact that the parties have expressly and unequivocally agreed to the tariff
applicable without considering accelerated depreciation. The Tariff Order 2012
clearly provides for two options - (i) tariff for projects availing accelerated
depreciation; and (ii) tariff for projects not availing accelerated depreciation.
Once the parties have clearly agreed on the 'tariff for projects not availing
accelerated depreciation' and have proceeded on such basis of their own
volition, it is not open to TPL to resile from the agreed terms. Further, the
Judgment of the Hon'ble Supreme Court was based on the facts of the case
before it, wherein having regard to the dispute between GUVNL and the project
developers regarding applicable tariff, the Hon'ble Supreme Court has given
interpretation of merely clause 5.2 of the PPA of GUVNL which provided “for
the tariff stated in aforesaid PPA shall apply for solar projects commissioned on
or before 31st December 2011. In case, commissioning of Solar Power Project
is delayed beyond 31st December 2011, GUVNL shall pay the tariff as
determined by Hon'ble GERC for Solar Projects effective on the date of
commissioning of solar power project or above mentioned tariff, whichever is
lower.”
2.19. Clause 5.2 that was considered by the Hon'ble Supreme Court is, however, not
available under the PPA between the Petitioner and the Respondent as (i) the
9
reference to the 2010 Tariff Order in the first part of the clause is no longer
relevant or material in the present PPA in view of the MoM dated 23.03.2015; and
(ii) under the second part the parties vide the afore-mentioned Minutes of
Meeting dated 23.03.2015 have clearly adopted the tariff determined under the
revised 2012 Tariff Order for 'projects not availing accelerated depreciation',
which has been acted upon by the parties for a long period. This adoption was not
done in case of GUVNL. Therefore, any view taken by the Hon'ble Supreme Court,
becomes irrelevant in the facts of the present case. The terms agreed on
23.03.2015 are final and binding on both the Petitioner and the Respondent and
cannot be reopened.
2.20. The terms of MoM dated 23.03.2015, clearly convey the intent of the parties to
be bound by the terms agreed between themselves. Having so agreed to such
unambiguous terms and having acted pursuant thereto, it is not open to either
party to now resile from the terms of the Minutes of Meeting. It is not open for
the Respondent to now aver that the terms of settlement as reflected in the
Minutes of Meeting dated 23.03.2015 are not binding.
2.21. It is clear on the face of the Minutes of Meeting dated 23.03.2015 itself that the
parties while deciding on the tariff applicable for the projects commissioned
during different tariff periods had taken note of and agreed on the tariff for
'projects not availing accelerated depreciation' as specified under the Tariff Order
2012 without any reservation. The Petitioner and the Respondent have, thus,
voluntarily chosen to be contractually bound by the tariff for 'projects not availing
accelerated depreciation' and any attempt on the part of the Respondent to
contend otherwise is nothing but an attempt on its part to wriggle out of its
10
contractual obligations. It is submitted that once the parties have agreed on the
applicable tariff, the Supreme Court judgment would not be of any relevance and
is completely inapplicable in the present facts and circumstances.
2.22. It is submitted that the judgment of Hon'ble Supreme Court cannot be applied in
the instant facts and circumstances since the facts of the instant case are clearly
distinguishable from the facts surrounding the judgment dated 02.02.2016 of the
Hon'ble Supreme Court. The Hon'ble Supreme Court in a catena of judgments has
upheld the principle that blind reliance upon judgements without considering the
fact situation is improper. In this regard, the Petitioner relied upon the judgment
of the Hon’ble Supreme Court in the case of Ashwani Kumar Singh Vs. U.P. Public
Service Commission (2003) 11 SCC 584 which has also been upheld by the Hon’ble
Supreme Court in the case of Bharat Petroleum Corporation Ltd. v. N.R.Vairamani
(2004) 8 SCC 579.
2.23. It is trite law that a decision is an authority for what it actually decides and that
an order of a Court has to be read in its entirety and not in parts to understand
the true intent of the Order having due regard to the facts and circumstances in
which it was passed. In this regard, the Petitioner relied upon the judgment of the
Hon’ble Supreme Court in Isalmic Academy of Education and Anr. Vs. State of
Karnataka and Ors. (2003) 6 SCC 697 and submitted that the Respondent is trying
to avoid its contractual commitments by wrongly placing reliance upon the ratio
in the judgment dated 02.02.2016 passed by the Hon’ble Supreme Court in Civil
Appeal No. 1220 of 2015.
11
2.24. It is settled that the parties have to stand by the terms of the contract and must
accept a document as a whole. While the Respondent accepts that a settlement
was arrived between the parties in respect of part commissioning which is duly
recorded in the Minutes of Meeting dated 23.03.2015, it is approbating and
reprobating and totally subverting the fact that the same document witnesses an
express understanding between the parties with respect to tariff as well. The
settled position of law that the clauses of an agreement cannot be read in isolation
and these must be read harmoniously to gather the true intention of the parties
to the agreement has been upheld by the Hon’ble Supreme Court in catena of
cases, including
(i) Khardah Company Ltd. Vs. Raymon & Co. (India) Pvt. Ltd.,
AIR 1962 SC 1810 (Para 18);
(ii) State Bank of India Vs. Mula Sahakari Sakhar Karkhana Ltd.,
(2006) 6 SCC 293 (Para 22, 23 and 32)
The Minutes of Meeting dated 23.03.2015 embodies a full and final settlement of
all pending disputes between the Petitioner and the Respondent and cannot be
bifurcated, as sought by the Respondent, to give effect to certain parts of it in
isolation.
2.25. In light of the above, the Petitioner submitted that the deductions made by the
Respondent to the tune of Rs. 18,65,53,217/- is totally illegal and the same must
be reimbursed to the Petitioner with further interest thereon in light of Article 6.4
of the PPA dated 20.01.2011 read with its subsequent amendments.
12
2.26. The unilateral deduction of Rs. 18,65,53,217/- by the Respondent is clearly
inconsistent with the express terms of the PPA. Therefore, the said amount is
liable to be returned in toto to the Petitioner along with the applicable interest.
2.27. The Petitioner, on several occasions, promptly, equitably and in good faith has
tried to settle the dispute in complete earnest through mutual negotiation by way
of communication with the Respondent. Further, efforts were made to resolve
the dispute amicably and a meeting was held on 07.05.2016 between the parties.
However, no consensus could be reached and hence, the Petitioner filed this
present petition.
3. The Respondent, Torrent Power Limited filed its reply stating that despite being
the SCA No. 16058 of 2011 filed by the Petitioner, wherein Kindle Engineering
and Construction Pvt. Ltd. (KECPL) had sought relief in terms of permissions,
approvals for setting up the power project and TPL was impleaded as a party
Respondent. Later on the Petitioner filed Petition No. 1200 of 2012 before the
Commission challenging default notices issued by the Respondent TPL due to
failure of KECPL to achieve the SCoD and adhere to the conditions of the PPA
dated 20.01.2011 inter-alia on the ground of delay in execution of the project by
the Respondent, TPL. Thereafter, dispute arose between the parties in relation
to the date of commissioning of the project by KECPL in view of the part
commissioning of the project on three (3) different dates and applicability of
tariff consequently as per the date of commissioning. The Commission had
passed the order dated 08.08.2013 in Petition No.1270 of 2012 in the matter of
M/s. EMCO Vs. GUVNL, wherein the Commission considered the Order No.1 of
13
2012 dated 27.01.2012 which envisaged tariff for project availing accelerated
depreciation and tariff for project not availing accelerated depreciation benefit.
3.1. In this order the Commission held that M/s. EMCO’s project was not availing
accelerated depreciation and was entitled to tariff at Rs.11.25/Unit for the first
twelve (12) years of the project and Rs.7.50/unit for subsequent thirteen (13)
years. GUVNL was also directed to pay M/s. EMCO Ltd. the amount of difference
between the tariff applicable to projects which are availing accelerated
depreciation and the projects which are not availing accelerated depreciation.
The Commission held in the said order that its’ earlier Order No. 1 of 2012 dated
27.01.2012 also decided the Tariff for Solar Projects not availing the benefit of
accelerated depreciation. Further, the Commission made the said Order
applicable for other Solar Projects in the state. The order dated 27.01.2012 was
also modified by further Orders dated 07.07.2014 and 11.07.2014.
3.2. The Petitioner had vide e-mail dated 21.11.2014 claimed relief of the Tariff
relying on the Order dated 08.08.2013. This order has been subjected to further
Appeals under the provisions of the Electricity Act, 2003. This is clear from the
Order dated 20.11.2014 passed by the Hon’ble Appellate Tribunal for Electricity
(APTEL) and order dated 02.02.2016 passed by the Hon’ble Supreme Court.
3.3. The dispute between the parties is therefore whether the order dated
02.02.2016 passed by the Hon’ble Supreme Court would govern the Tariff
payable by the Respondent TPL as the Order dated 08.8.2013 in Petition No.1270
of 2012 of M/s. EMCO Ltd. which made the Tariff Order dated 27.01.2012
applicable to the subject power procurement has been set aside.
14
3.4. The Petitioner has suppressed vital facts in the Petition and on this ground alone
the Petition deserves to be rejected in limine. On 20.01.2011, PPA was entered
into between the Petitioner and the Respondent, for procurement of power
generated from 50 MW solar power plant of the Petitioner. Article 5 of the said
PPA titled Rates and Charges clearly provided for payment of tariff in accordance
with Tariff Order dated 29.01.2010 passed by the GERC. It further provided that
in case the commissioning of the Solar Project was delayed, the Tariff as
determined by the Commission for Solar Projects effective on the date of
commissioning or the above mentioned tariff whichever is lower would be
applicable.
3.5. The Commission passed Order No.1 of 2012 on 27.01.2012 and decided the tariff
for Solar Projects as under:
29 Jan. ’12 to 1 Apr. ’13 to 1 Apr. ’14 to Period 31 Mar. ’13 31 Mar. ’14 31 Mar. ’15 For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 9.28 per kWh Rs. 8.63 per kWh Rs. 8.03 per kWh years For first 12 years Rs. 9.98 per kWh Rs. 9.13 per kWh Rs. 8.35 per kWh For subsequent 13 Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh years For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 11.14 per kWh Rs. 10.36 per kWh Rs. 9.63 per kWh years
Levelized Tariff for Solar Thermal Projects With accelerated depreciation benefit: Rs. 11.55 per kWh for 25 years
3.6. On 18.01.2013, the Commission passed an Order in Petition No. 1200 of 2012
filed by the Petitioner wherein the Commission treated the period from
15
24.01.2011 to 18.01.2013 as a force majeure event and excluded the same from
the specified time limits for execution of the project under the PPA dated
20.01.2011. Both the parties were directed to sign the Supplemental PPA to give
effect to the revised Scheduled Date of Commissioning and change in site of the
Project.
3.7. On 28.02.2013 the Supplemental PPA for 50 MW Solar Power was entered into
between the Petitioner and the Respondent wherein SCOD was extended as
stated therein. As per this Supplemental PPA, the consequent time frames were
altered as stated therein. The project site was altered from District Porbandar to
District Surendranagar.
3.8. On 11.05.2013, 2nd Supplemental PPA for 50 MW Solar Power was entered into
between the Petitioner and the Respondent, at the request of the Petitioner the
Project site was altered from Dist. Porbandar to Solar Park, Charanka. On
08.08.2013 the Commission passed an Order in Petition No. 1270 of 2012. This
Petition was filed by M/s. EMCO Ltd. contending that it is entitled to claim the
tariff applicable to MW Scale Solar Photo Voltaic (PV) Power Project not availing
of accelerated depreciation as per the Tariff Order No.1 of 2012 dated
27.01.2012.
3.9. On 17.12.2013, 3rd Supplemental PPA for 50 MW Solar Power was entered into
between the parties, wherein the Project was to be commissioned for
commercial operation by 09.02.2014 failing which the Respondent was entitled
to recover liquidated damages in accordance with the relevant clause of the
PPA.
16
3.10. On 14.03.2014, the Petitioner addressed a letter claiming to be a notice under
Clause 1.1 of the PPA dated 20.01.2011. The notice intimated that the Project
is scheduled for commissioning partly on 27.03.2014 and partly on 30.03.2014
at Charanka.
3.11. On 21.03.2014, the Respondent disputed the contention of the Petitioner that
the Agreement was supposed to be effective in respect of the entire project
and therefore the notice dated 14.03.2014 could not be treated as a notice
under Article 1.1 of the PPA. TPL also pointed out that the Project means the
entire 50 MW project. The PPA does not provide for commissioning in parts and
hence, there cannot be more than one Commercial Operation Date for any
purpose under the PPA.
3.12. On 24.03.2014, TPL wrote a letter to GEDA forwarding KECPL’s letter dated
14.03.2014 and TPL’s letter dated 21.03.2014 to KECPL.
3.13. On 28.03.2014 letter wrote by GEDA mentioning that GEDA shall take up
commissioning of the solar power plant of KECPL, for the capacity that would
be certified by the Chief Electrical Inspector for charging of the solar power
plant on or before 31.03.2014.
3.14. On 29.03.2014 the Petitioner informed that part commissioning of the project
is targeted at noon on 31.03.2014.
3.15. On 31.03.2014 out of the 50MW conceived in the Project, the solar plant was
commissioned for 29.9399 MW only.
17
3.16. KECPL vide its email dated 12.05.2014 mailed the Commissioning Certificate
dated 09.05.2014 issued by GEDA certifying commissioning of 29.9399MW with
effect from 31.03.2014.
3.17. On 15.05.2014 the Petitioner, through email, informed that the Petitioner has
commissioned 29.9399 MW from 31.03.2014 and requested to adjust the
excess amount paid for Liquidated Damages (LD) for future invoices.
3.18. On 19.05.2014 TPL replied to the Petitioner’s email that PPA does not provide
for commissioning in parts and hence, there cannot be more than one
Commercial Operation Date for any purpose under the PPA. Therefore, the LD
and Transmission Charges (TC) are payable for entire 50 MW.
3.19. On 20.05.2014 the Petitioner replied to the Respondent’s letter dated
21.03.2014 stating that TPL is subservient to regulatory regime of the
Commission and its tariff orders/regulations. GUVNL has allowed part
commissioning of the projects. The contentions of TPL in letter dated
21.03.2014 are not correct and part commissioning is in compliance of the
provisions of the PPA.
3.20. On 22.05.2014 TPL replied to KECPL’s letter dated 20.05.2014 mentioning that
part commissioning is not allowed as per the provisions of the PPA.
3.21. On 23.05.2014 KECPL addressed a letter enclosing invoice for the month of April
2014 at the Tariff applicable for project commissioned in FY 2012-13.
3.22. On 27.05.2014 TPL addressed a letter to KECPL stating that TPL is making
payment at provisional rate for the project commissioned in FY 2014-15 subject
18
to the adjustment based on the final Tariff as applicable on the date of the
commissioning of the project. TPL also mentioned that payment is subject to
outcome of appeal filed against the Commission’s order dated 8.08.2013 in
Case No.1270 of 2012 in EMCO matter.
3.23. On 02.06.2014, TPL forwarded to the Petitioner GETCO’s invoice for
transmission charges for payment.
3.24. On. 04.06.2014, KECPL sent a letter in response to TPL’s email dated
02.06.2014, wherein it is stated that KECPL paid the transmission charges for
entire 50MW to TPL, KECPL stated that it was committed to make payment of
transmission charges w.e.f 15.03.2014 upto the date the Project was fully
commissioned in proportion to the capacity not commissioned. It was the
contention of the KECPL that transmission charges are payable only on the
balance capacity from 31.03.2014 as they had only commissioned 29.9399MW
of the Project on 31.03.2014.
3.25. On 06.06.2014, TPL responding to KECPL’s letter dated 04.06.2014 stated that
part commissioning is not allowed as per the provisions of the PPA and hence
KECPL is required to pay transmission charges for the entire 50 MW.
3.26. On 09.06.2014, an email was received by TPL from KECPL stating that they are
making payments of GETCO invoice without prejudice.
3.27. Separately, a letter dated 09.06.2014 was also received by TPL from the
Petitioner, KECPL pointing out that the Project of KECPL had not availed the
benefit of accelerated depreciation. The said letter referred to the Order No.1
of 2012 dated 27.01.2012 passed by the Commission. The letter went on to
19
enclose an invoice claiming Tariff @ Rs.11.25/ Unit relying on the said Order
No.1 of 2012 dated 27.01.2012. This vital letter which sheds light on the dispute
has been suppressed by the petitioner from the Commission.
3.28. On 11.06.2014, TPL addressed a “without prejudice” letter to KECPL stating that
TPL is making payment at provisional rate for the project commissioned in FY
2014-15 subject to the adjustment based on the final Tariff as applicable on the
date of commissioning of the project. TPL also mentioned that payment is
subject to outcome of appeal filed against the Commission’s Order in Case
No.1270 of 2012.
3.29. On 17.06.2014, the Petitioner KECPL addressed a letter to TPL relating to the
part commissioning of its Project. It is contended that part commissioning was
permissible under the PPA. In this letter which relates to the issue of part
commissioning, the Petitioner, KECPL also relied on the Order No.1 of 2012
dated 27.01.2012 in support of its contentions relating to part commissioning.
3.30. Separately, by another letter of the same date the Petitioner claimed that the
applicable Tariff would be as per Tariff Order No.1 of 2012 dated 27.01.2012
for the part capacity of 29.9399 MW commissioned on 31.03.2014.
3.31. On 07.07.2014, further and consequential Orders were passed by the
Commission after conducting a re-hearing in Order No.1 of 2012 for
determination of Tariff for procurement by the Distribution Licensees and
others from Solar Energy Projects, as per the directions of the Hon’ble APTEL in
the judgment dated 17.04.2013 in Appeal No.75 of 2012. The Commission gave
its dispensation in relation to the invertor cost and particularly the O & M
20
charges. Accordingly, the operative order in respect of the Solar Energy Projects
was passed.
3.32. On 11.07.2014, Additional Order was passed by the Commission as
corrigendum to Order dated 07.07.2014 in Order No.1 of 2012 for
determination of Tariff for Procurement by the Distribution Licensees and
others from Solar Energy Projects, as per directions of the Hon’ble APTEL in the
judgment dated 17.04.2013 in Appeal No.75 of 2012.
3.33. On 14.07.2014, TPL addressed a letter to KECPL being letter no.
TPL/Kindle/60/2014, on the issue of part commissioning of Solar Project at
Charanka.
3.34. On 17.07.2014, TPL addressed a letter to KECPL being letter No.
TPL/Kindle/62/2014, on the issue of the applicable Tariff for the power
procured from KECPL. TPL also sought revision of invoices in accordance with
the Order No.1 of 2012 dated 27.01.2012 in Petition No.1270 of 2012 for the
month of April to June, 2014. Thus, both the parties had in respect of their
diverse contentions time and again referred to and relied upon the Order No.
1 of 2012 dated 27.01.2012 in Petition No. 1270 of 2012.
3.35. On 17.07.2014, KECPL vide its email forwarded the subsequent Orders of the
Commission relating to upward Tariff revision in the proceedings wherein the
Commission had conducted re-hearing in the matter of Order No.1 of 2012
dated 27.01.2012 in Petition No.1270 of 2012.
3.36. On 22.07.2014, KECPL forwarded supplementary invoice for generation during
the months of April to June 2014 and sought difference due to the revised Tariff
21
pursuant to the revised Tariff Orders dated 07.07.2014 and 11.07.2014 passed
by the Commission.
3.37. On 25.07.2014, TPL made without prejudice payment of supplementary
invoices raised for the months of April to June 2014 at the revised Tariff as per
the Orders dated 07.07.2014 and 11.07.2014 passed by the Commission in
furtherance of the earlier Order dated 27.01.2012 in Petition No.1270 of 2012.
3.38. It is clear from the said letter, the dispute relating to commissioning of the plant
partly qua the control period was a distinct dispute from the applicability of the
Order dated 27.01.2012 in Petition No. 1270 of 2012.
3.39. TPL continued to make payment of monthly invoices to KECPL. In all letters for
April to October 2014 invoices, TPL has mentioned that Payment is subject to
outcome of appeal filed against the Commission’s order in Case No 1270 of
2012.
3.40. On 21.11.2014, KECPL sent an email to TPL stating that the Hon’ble APTEL has
pronounced order in the matter relating to M/s. EMCO Ltd. in Case No.1270 of
2012 (supra) being Order dated 20.11.2014 in Appeal No. 252 of 2013. The
Hon’ble APTEL upheld the Order dated 08.08.2013 passed by the Commission.
3.41. On 10.12.2014, TPL replied to the KECPL’s e-mail dated 21.11.2014 by an email
mentioning that “If the APTEL Order is challenged in a higher forum, the
decision of the higher forum would be binding on both the parties.”
3.42. On.10.12.2014, KECPL replied to TPL’s e-mail dated 10.12.2014 by an email
accepting that “if the APTEL Order is challenged in a higher forum, the decision
22
of the higher forum would be binding on both the parties by responding as
“OK.”
3.43. On 13.12.2014, TPL made without prejudice payment of the invoices for the
month of November 2014 raised by KECPL on 09.12.2014 in accordance with
the Commission’s Orders dated 07.07.2014 and 11.07.2014 revising the Tariff.
3.44. On 16.01.2015, TPL made without prejudice payment of the invoice for the
month of December 2014 raised by KECPL on 09.01.2015 in accordance with
the Commission’s Orders dated 07.07.2014 and 11.07.2014 revising the Tariff.
3.45. On 27.01.2015, KECPL part commissioned further 15.0118 MW of the 50 MW
Project. Thus, with 29.9399 MW being commissioned on 31.03.2014 an added
part commissioning of 15.0118 MW took place on the said date.
3.46. On 04.02.2015, KECPL finally commissioned further 5.17924 MW of the 50 MW
Project. Thus, with 29.9399 MW being commissioned on 31.03.2014, an added
part commissioning of 15.0118 MW on 27.01.2015 and the final commissioning
of 5.17924 MW on 04.02.2015, the entire 50 MW commissioning took place on
the said date. On 7.02.2015 a certificate of commissioning of 15.0118 MW and
5.17924 MW was issued by GEDA to KECPL.
3.47. On 16.02.2015, TPL made “without prejudice” payment of the invoice for the
month of January 2015. It is once again seen that part commissioning was
mentioned in the letter in addition to payment in accordance with the
Commission’s Orders dated 07.07.2014 and 11.07.2014.
23
3.48. On 19.02.2015, KECPL vide its letter requested for a meeting to explore
addressing the part commissioning and Tariff related issues through mutual
negotiations and settlement of disputes. Clearly, these Tariff related issues
were incidental and consequential to the part commissioning issues.
3.49. On 23.03.2015, a meeting was held for amicable settlement of the part
commissioning issue along with the liquidated damages, transmission charges
and tariff, in relation thereto. The said dispute relating to and arising from the
part commissioning was discussed and an agreement was reached between the
parties in respect of the CODs for the capacity of the commissioning. The
Minutes of the Meeting were signed by both the parties.
3.50. It is seen that the issue which was settled was in respect of part commissioning
of the Project on different dates by KEPCL and the consequential and incidental
issues relating to the part commissioning namely liquidated damages,
transmission charges and tariff. These incidental and consequential issues have
also been elaborated in the Minutes of the Meeting and clearly reveal that all
these incidental issues have been resolved in relation to the “date on which the
capacity was commissioned”. The Minutes of the Meeting only relate to the
specific matter arising out of part commissioning of the project of 50 MW by
KECPL on various dates namely 31.03.2014, 27.01.2015 and 04.02.2015. This
exercise is clearly at the invitation of KECPL vide their letter dated 19.02.2015,
which has not been placed on record.
3.51. The issue of tariff was thus decided only with respect to the weighted average
rate applicable due to the separate commissioning date for part capacities of
solar project of the Petitioner.
24
3.52. On 24.03.2015, TPL made one-time payment as per Minutes of the Meeting
and started paying monthly invoices as per weighted average tariff worked out
in the Minutes of Meeting.
3.53. On 02.02.2016, the Hon’ble Supreme Court passed its judgment and Order in
Civil Appeal No.1220 of 2015, Hon’ble APTEL’s order dated 20.11.2014 in
Appeal No.252 of 2013 being challenged by GUVNL, allowing GUVNL’s plea that
the solar developer who had signed PPA in earlier control period, i.e. as per
Order 2 of 2010, but commissioned the project in next control period will not
become directly eligible for the tariff without AD and set aside the order dated
08.08.2013.
3.54. On 15.02.2016, TPL addressed a letter to KECPL pursuant to the aforesaid
decision of the Hon’ble Supreme Court, working out the excess payment made
to KECPL on account of differential tariff as per the said judgment and adjusted
the same against the invoice for the month of January 2016. TPL also requested
KECPL to raise future invoices at the tariff as stipulated in the judgment.
3.55. On 22.02.2016, KECPL disputed and objected to TPL acting in accordance with
the Judgment and Order of the Hon’ble Supreme Court mischievously
contending that the Minutes of Meeting would obviate the necessity of
factoring in the said judgment.
3.56. On 11.03.2016, TPL addressed a letter pointing out the correct factual matrix
and objected to the Minutes of Meeting being widened in their scope when the
Minutes of Meeting dated 23.03.2015 were confined to the issue of part
25
commissioning of the project on three different dates and the consequential
and incidental issues arising therefrom.
3.57. The subsequent correspondence which includes various letters exchanged
between the parties starting from 18.03.2016 to 22.05.2016 reveals that the
intent of the Petitioner were to negate the applicability of the decision dated
02.02.2016 passed by the Hon’ble Supreme Court.
3.58. The Respondent TPL states that it is clear from the factual matrix as detailed
above that the Petitioner KECPL has clearly suppressed vital and important facts
which reveal that the dispute which had been settled between the parties on
23.03.2015 as per the Minutes of Meeting, related to the part commissioning
of the project on various dates by KECPL and consequent and incidental issues
thereto leading to liquidated damages, transmission charges and tariff
difference. On the issue of “Tariff”, different aspects and issues arose between
the parties. The scope of the Minutes of Meeting is sought to be mischievously,
illegally and untenably widened to deny the applicability of the judgment and
order of the Hon’ble Supreme Court dated 02.02.2016, to the power purchase
transaction between the parties. The crucial facts relating to the parties
factoring in the judgment and order of the Commission dated 08.08.2013 in
Petition No.1270 of 2012 which inter-alia relied on the Order No.1 of 2012 read
with further Orders dated 07.07.2014 and 11.07.2014 passed by the
Commission have been clearly suppressed. The Agreement between the parties
to factor in the decisions of the Higher Courts arrived at on 10.12.2014 has also
been suppressed. On this ground alone, the Petition deserves to be dismissed
with exemplary costs.
26
3.59. It is emphatically denied that disputes which had not arisen and issues which
had already been separately agreed were discussed, dealt with and finalized
under the Minutes of Meeting dated 23.03.2015. The Tariff issue, which was
incidental to the part commissioning of the project on various dates, related to
Tariff applicability qua the date agreed to be the Commissioning date by both
the parties. In respect of the part commissioning of the project to the extent of
29.9399 MW, the Tariff was to be paid for the said capacity being treated as a
capacity commissioned in FY 2013-14 and for the other two part commissioning
the Tariff was to be paid as the part commissioning having taken place in F.Y.
2014-15. As TPL had earlier paid for the energy received by it @ Rs.10.03 per
unit, the differential payment was also computed. This issue had no nexus to
the applicability of the Order dated 08.08.2013 which had been acted upon and
given effect to by both the parties and which stood set aside by the Order dated
02.02.2016 passed by the Hon’ble Supreme Court. The parties could never have
entered into any Agreement freezing the applicability of the judgments of
Appellate Adjudicating Forums including the Hon’ble Supreme Court. Such an
Agreement would be void and contrary to law. Such an Agreement would also
be contrary to the provisions of the Electricity Act, 2003. Such an Agreement is
also not contemplated by the Minutes of Meeting dated 23.03.2015.
3.60. The Minutes of Meeting dated 23.03.2015 did not concern or relate to other
Tariff related aspects. Further, the Minutes cannot be read to restrain the
applicability of Section 86 of the Electricity Act, 2003 and the Regulatory regime
of Tariff which contemplates a hierarchy of Adjudicating Authorities including
the Hon’ble Supreme Court. The interpretation advanced by the Petitioner to
27
the subject Minutes of Meeting cannot render infructuous a decision of the
Hon’ble Supreme Court.
3.61. There cannot be any agreement restricting any stakeholder regulated under the
Electricity Act, 2003 from the applicability of the decision of the Hon’ble
Supreme Court as sought to be interpreted by the Petitioner. No Agreement in
the Regulatory Regime of the Electricity Act, 2003 can render Section 86 of the
Electricity Act, 2003 and other provisions of the Act as inapplicable in any
context.
3.62. Further, the Petitioner had sought to increase the rates of tariff as per the
Commission’s order dated 08.08.2013 and Hon’ble Tribunal’s order dated
20.11.2014. These orders have now been set aside by the Hon’ble Supreme
Court vide judgment dated 02.02.2016 wherein the tariff now stands reduced.
It should never be the case that any party is allowed to selectively adopt only
those judgments which are beneficial to its interest. In this case the Petitioner,
by not adopting the Hon’ble Supreme Court’s judgment, is selectively trying to
interpret and adopt impact of only those judgments which is beneficial to its
interest. If the tariff was agreed to be adopted at increased rates as per the
Commission and Hon’ble Tribunal’s judgment then the same should stand
reduced, as is being the case here, when the same judgments are being set
aside by the Hon’ble Supreme Court. Thus, it is all the more imperative that the
findings by the Hon’ble Supreme Court are adopted in the matter as the
judgments set aside by the Hon’ble Supreme Court were readily adopted by
both the parties.
28
3.63. The Minutes of Meeting did not deal with or address an issue which was already
agreed upon by the parties separately on 10.12.2014. TPL upon passing of the
Order dated 08.08.2013 in furtherance of the directions issued in Paragraph 8
had applied the Order No.1 of 2012 dated 27.01.2012 to the Petitioner as well.
3.64. The Hon’ble Supreme Court order dated 02.02.2016 in Civil Appeal No.1220 of
2015 is binding on both the parties. The principles of the issues in dispute
before the Hon’ble Supreme Court in said judgement are squarely applicable to
the present case. If the tariff was agreed to be adopted at increased rates as
per the Commission and Hon’ble Tribunal’s judgment then the same should
stand reduced, as is being the case here, when the same judgments are being
set aside by the Hon’ble Supreme Court. The Respondent TPL had rightly sought
reimbursement of the amount from the Petitioner relying on the judgment and
Order dated 02.02.2016 of Hon’ble Supreme Court.
3.65. The contention of the Petitioner is that the Minutes of Meeting were terms of
settlement which specified a specific rate which was agreed between the
parties and is not subject to any legal proceedings. The other contention of the
Petitioner is that TPL had made payments post the Minutes of Meeting dated
23.03.2015 in accordance with the rates agreed therein. KECPL also raised a
contention that the judgment of the Hon’ble Supreme Court was applicable to
the PPA of GUVNL and the Clause 5.2 of the PPA stood modified by the Minutes
of Meeting dated 23.03.2015 and TPL has agreed to a tariff for project not
availing accelerated depreciation. These contentions of the Petitioner are
legally untenable. Minutes of a Meeting cannot override a PPA entered into
between the parties which contain a standard Article 5.2 which is pari materia
29
with Article 5.2 of the GUVNL PPA considered by the Hon’ble Supreme Court.
The contentions raised by the Petitioner also seek to obviate and simply wish
away the directions issued by the Commission in Paragraph 8 of the Order date
08.08.2013 in Petition No.1270 of 2012. The contentions of the Petitioner
clearly disregard the Agreement reached between the parties on 10.12.2014
which is in consonance with law and relates to applicability of the decision of
the Hon’ble Supreme Court. As there was no dispute post 10.12.2014 on the
issue of applicability of the Hon’ble Supreme Court decision, the question of
holding a meeting to arrive at an amicable settlement on this issue and TPL
agreeing to tariff for ‘project not availing accelerated depreciation’ never arose.
3.66. The questions of payments, etc., post the Minutes of Meeting on 23.03.2015,
and mentioning the qualification in correspondence or otherwise are irrelevant
factors, as both the parties have agreed on 10.12.2014 to factor in the decision
of the Hon’ble Supreme Court. This decision of the parties on 10.12.2014 is also
in consonance with law. It is not disputed that the parties had given effect to
the Orders dated 27.01.2012 read with Orders dated 07.07.2014 and
11.07.2014, consequent upon the Commission making the said applicable to all
the projects vide Paragraph 8 of the Order dated 08.08.2013 in Petition
No.1270 of 2012. Now findings of the same judgment are being set aside by the
Hon’ble Supreme Court vide its judgment dated 02.02.2016 then the same
becomes directly applicable to the present case in similar manner. The
contentions raised by the Petitioner and the present proceedings are therefore
an abuse of the process of the Court.
30
3.67. Article 5.2 of the GUVNL PPA is pari materia with Article 5.2 of the present PPA
dated 20.01.2011 executed by the parties. That being the case the Petitioner
has rightly forwarded the Hon’ble APTEL judgment to the Respondent TPL for
factoring in the same when the said decision was holding the field and was in
operation. The contents of Article 5.2 of the GUVNL PPA are pari materia with
the contents of Article 5.2 of the present PPA. The manner of placing of the
contents does not make them distinct and diverse. The lay out of the contents
is not a distinguishing feature legally, permitting the Petitioner to contend that
the said provisions are separate and distinct. In case of GUVNL the case has also
been considered by the Hon’ble Apex Court in light of the Order dated
27.01.2012 in Petition No.1270 of 2012.
4. The matter was kept for hearing on 26.07.2016, 15.10.2016, 3.12.2016,
26.12.2016 and finally on 24.03.2017.
5. Learned Advocate Shri Hemant Sahai, on behalf of the Petitioner, reiterated the
facts stated in para 2 above. He further submitted that the PPA dated 20.01.2011
signed between the parties was approved by the Commission vide order dated
24.04.2013 in Petition No. 1205 of 2012. There arose a dispute amongst the
parties regarding the part commissioning of the plant as to whether it is
permissible or not and what is the tariff payable to the Petitioner for the energy
generated from such plant.
5.1 He further submitted that the Respondent has primarily put forth the following
averments:
31
(i) Only the dispute relating to part commissioning of the Project was
resolved in accordance with the Minutes of Meeting dated
23.03.2015;
(ii) The judgment dated 02.02.2016 rendered by the Hon’ble Supreme
Court in the case of GUVNL vs EMCO Ltd. Civil Appeal No.1220 of
2015 squarely applies to the present facts and circumstances;
(iii) The Power Purchase Agreement executed between the parties
dated 20.01.2011 has been amended/altered vide Supplementary
Power Purchase Agreements dated 28.02.2013, 11.05.2013 and
17.12.2013 only. There cannot be any bilateral
modifications/alterations in the tariff approved in the PPA without
regulatory overview. The MoM dated 23.03.2015 has not been
approved by the Commission, and hence, it does not amend the
PPA dated 20.01.2011;
(iv) It was agreed between the parties vide the e-mails exchanged
between them dated 10.12.2014 that the parties will factor in the
decision of the Hon’ble Supreme Court and such agreement arrived
between the parties is in consonance with law and relates to the
applicability of the decision of the Hon’ble Supreme Court.
(v) The Petitioner is guilty of suppressing vital facts.
5.2 The Petitioner submitted that there is no merit in the submission of Respondent
since the averments and contentions of the Respondent are baseless and
misconstrued.
32
5.3 He submitted that the crux of the dispute is relating to the applicability of the
Supreme Court judgment dated 02.02.2016 in Civil Appeal No.1220 of 2015. While
the Respondent is erroneously canvassing that the said judgment dated
02.02.2016 is applicable, it is the case of the Petitioner that the judgment of the
Hon’ble Supreme Court dated 02.02.2016 is not applicable in the present facts
and circumstances, primarily because of three reasons, viz.,
(i) The parties mutually arrived at a separate settlement vide MoM
dated 23.03.2015 which distinguishes the present case from the
facts involved in the GUVNL- EMCO case
(ii) The settlement arrived at between the parties constitutes a
comprehensive full and final settlement which puts to an end all
the pending disputes between the parties, including tariff; and
(iii) The MoM has unconditionally been signed by both parties without
any reservations regarding the applicability of the Supreme Court
judgment.
5.4 As regards the contention of the Respondent that the settlement related to only
one matter namely part commissioning and its incidental impact on the tariff
applicable for parts commissioned in different years, it is noteworthy that the
settlement arrived at between the parties was a full and final settlement in the
context and background of all pending disputes including the applicable tariff not
only related to part commissioning but also relating to the issue of extension of
applicability of previous control period and the applicable tariff on the basis
whether the project is or is not availing accelerated depreciation.
33
5.5 He further submitted that the settlement dated 23.03.2015 is a comprehensive
settlement between the Petitioner and the Respondent and finally settles all the
dispute between the parties. It is pertinent to note that under the MoM dated
23.03.2015, the agreements are recorded separately for part-commissioning and
other issues including tariff with the respective financial implications.
5.6 The above agreements clearly show that the intention of the parties was to deal
with all issues and not only the issue of part-commissioning. Further, while
comprehensively settling all the issues between them, the parties arrived at a
specific understanding relating to the tariff payable for the procurement of power
from the power plant of the Petitioner and supplied to the Respondent. After due
deliberation, it was specifically clarified in the MoM dated 23.03.2015 that all the
future invoices from March,2015 will be payable @ Rs.10.5869 per unit till the
completion of 12th year of COD of respective capacity. It is most humbly submitted
that the expression “for the avoidance of doubt” clearly manifests the intention
of the parties to conclusively decide on the issue of tariff.
5.7 The MoM dated 23.03.2015 was a package deal covering all the outstanding
disputes with either party taking final position on all the issues per se. There
cannot be pick and choose an issue in isolation and that too out of context. It is
borne out from the bare perusal of the MoM that it settles all issues related to
tariff also, i.e. applicable year of approved tariff on the CoD including control
period issue as well as tariff applicable for the project not availing accelerated
depreciation. There is no mention in the MoM that previous understanding on
tariff arrived at via the said e-mail dated 10.12.2014 would continue. On the
34
contrary, the MoM stipulates it to be full and final settlement, thereby
superseding all previous understandings.
5.8 The express understanding between the parties that the settlement arrived at
between them is full and final and all the claims are finally settled is explicitly
documented within the MoM dated 23.03.2015 itself.
5.9 Interpreting the expression “full and final settlement”, the Hon’ble Supreme Court
in the case of Cauvery Coffee Traders, Mangalore Vs. Hornor Resources (Intern.)
Company Ltd. [2011 (10) SCC 420] has observed as under:
“30. In case, final settlement has been reached amicably between the
parties even by making certain adjustments and without any
misrepresentation or fraud or coercion, then, acceptance of money as full
and final settlement/issuance of receipt or vouchers etc. would conclude
the controversy and it is not open to either of the parties to lay any
claim/demand against the other party.
34. A party cannot be permitted to “blow hot and cold”, “fast and loose”
or “approbate and reprobate”. Where one knowingly accepts the benefits
of a contract or conveyance or an order, is estopped to deny the validity
or binding effect on him of such contract or conveyance or order.
5.10 He also relied upon the Hon’ble Supreme Court judgment in the case of
R.N.Gosain v. Yashpal Dhir (AIR 1993 SC 352) where the Hon’ble Supreme Court
has observed the following on the Doctrine of Elections held as under:
35
“Law does not permit a person to both approbate and reprobate. This
principle is based on the doctrine of election which postulates that no party
can accept and reject the same instrument.”
5.11 He further submitted that post MoM dated 23.03.2015, the Respondent
submitted its application for true-up before the Commission for the year 2014-15
and the power purchase expense claimed by the Respondent included the cost of
purchase from Petitioner at tariff as per MoM dated 23.03.2015. The Respondent
did not, and rightly so, disclose to the Commission that the purchase cost from
the Petitioner is provisional and subject to final outcome of higher court’s
decision. This was obviously because the Respondent had also accepted and acted
upon the MoM dated 23.03.2015 as final. The claimed power purchase expense
for Renewable Energy has been approved by the Commission in the Tariff Order
dated 31.03.2016 (including True Up for FY 2014-15) for the Respondent. Since
true-up is the final adjustment of expenses/revenues of the Respondent, if
Respondent’s understanding was that this expense is not final, it ought to have
specified in the True Up Application before the Commission about provisionality
of the power purchase cost. Thus, it is wrong to contend that understanding at
the time of MoM dated 23.03.2015 was that tariff is subject to outcome of EMCO’s
case.
5.12 The amount of Rs.142.69 crores claimed by TPL against purchase from renewable
sources (which during FY 2014-15 included only one source i.e.KECPL) has been
approved as it is without any reservations.
36
5.13 The Petitioner and the Respondent mutually agreed to the terms of the MoM
dated 23.03.2015 and affixed their signature to the same, therefore, it is clear that
the transaction stood concluded between the parties, not on the account of
unintentional error, but after extensive and exhaustive bilateral deliberation with
a clear intention to bring quietus to the dispute. While TPL is not disputing the
validity or existence of the MoM dated 23.03.2015, it is refusing to be bound only
by a part of it.
5.14 The acceptance of the parties to be bound by the terms of the MoM is also
evidenced by the conduct of the parties who have acted upon it for a period of
about one year without any protest. The parties are bound by the doctrine of
election. The doctrine of estoppel by election is one of the species of estoppels in
pais, which is the rule in equity. By that law, a person may be precluded by his
actions or conduct or silence when it is his duty to speak, for asserting a right
which he otherwise would have had. In the present case, once the parties have
mutually elected to be bound by the terms of the MoM and have acted upon it
without protest, the Respondent is estopped from approbating and reprobating
on the same document.
5.15 Both the Petitioner and the Respondent were aware that the option of availing or
not availing AD, once exercised, is final and cannot be changed during the lifetime
of the Project. The MoM dated 23.03.2015, therefore, puts the issue of not
availing AD to rest as it is not subject to change later on. The Respondent alleged
that while the Petitioner claimed an increase in tariff as per the Commission’s
order dated 08.08.2013 and the Hon’ble Tribunal’s order dated 20.11.2014, the
Petitioner is now refusing to be bound by the judgment dated 02.02.2016
37
rendered by the Hon’ble Supreme Court which set aside the aforesaid orders
dated 08.08.2013 and 20.11.2014.
5.16 He further submitted that the aforesaid contention of the Respondent is totally
baseless and misconceived. The Petitioner had claimed an increase in tariff, but
the same was not based upon either the Commission’s Order dated 08.08.2013 or
the Hon’ble Tribunal’s judgment dated 20.11.2014 in the EMCO case. The claims
of the Petitioner to tariff for project not availing accelerated depreciation right
from CoD was based on the Commission’s Tariff Order dated 27.01.2012 and later
an increased tariff (again for projects not availing AD) was sought in compliance
of the Commission’s order dated 07.07.2014 and 11.07.2014 vide which the
Commission has amended the earlier Tariff Order of 2012.
5.17 It was recorded in the MoM that it is the full and final settlement of all pending
issues between the parties including part commissioning, tariff payable under the
PPA and arrears, etc. and supersedes all previous correspondence and
negotiations between the parties. It is submitted that the “full and final
settlement” once arrived at between the parties neither party can raise any plea
against the same. In support of the said contention he relied upon the judgment
of the Hon’ble Supreme Court in the case of Cauvery Coffee Traders, Manglore Vs.
Hornor Resources (Intern) Company Limited reported as 2011 (10) SCC 420. He
further submitted that Section 91, 92 and 94 of the Evidence Act, 1872 provide
that the true intention of the parties can only be deduced from the document
itself and not be explained or interpreted by the antecedent communications
which lead up to it. He relied upon the judgment of the Hon’ble Supreme Court in
38
the case of Tamilnadu Electricity Board & Anr. v/s N. Raju Reddiar & Anr. Reported
as (1996) 4 SCC 551.
5.18 He submitted that the PPA dated 20.01.2011 was approved by the Commission
vide Order dated 24.04.2013 in Petition No. 1205 of 2015. The MoM does not
deviate from the PPA and merely records the tariff payable under Article 5.2 of
the said PPA. Hence, this MoM does not require a separate formal approval. He
submitted that, the tariff incorporated under the MoM has tacitly been approved
by the Commission in the true-up proceedings. In support of his argument he
relied upon the judgment dated 11.08.2014 passed by the APERC in O.P.Nos. 14
to 25 of 2012.
He further submitted that the said MoM dated 23.03.2015 has been –
(1) agreed and voluntarily signed between the parties without any caveats or reservations; (2) acted upon by the parites- a. Post MoM, TPL has paid the Petitioner as per the MoM rates, b. TPL has cleared the arrears, c. TPL has presented the MoM tariff figures before the Commission in the true up proceedings and got them approved as final.
5.19 The Judgment dated 2.02.2016 passed by the Hon’ble Supreme Court in the EMCO
case is not applicable in the present facts and circumstances as it is-
(1) An after-thought
(2) An attempt on TPL’s part to wriggle out of its contractual obligations;
(3) The EMCO judgment has been passed in the facts of that case which are
completely different from the present facts. Hon’ble Supreme Court has
interpreted the PPA signed between GUVNL and EMCO, conduct of the
parties therein and correspondence exchanged between GUVNL and EMCO.
39
Hence, it is an adjudication of a contract dispute between GUVNL and EMCO
and does not have universal application. The primary difference between the
EMCO case and the present case is as under:
I. In EMCO’s judgment dated 02.02.2016, the Supreme Court records that
the option to avail or not to avail AD is an option which rests with the
Developer. However, EMCO had not duly exercised such option and tariff
clause remained unaltered. In contrast, in the present case, by signing the
MoM dated 23.03.2015, the parties have duly entered into an agreement
to pay the “Tariff Without AD” as determined by the Commission under
the Tariff Order 2012.
II. In the EMCO case GUVNL had throughout maintained the stand that it
had not signed PPAs with the developers who did not avail AD. Such is not
the case of TPL. In fact, TPL unequivocally agreed in MoM to be bound by
the Tariff without AD.
III. GUVNL throughout paid Tariff with AD to EMCO. However, TPL has paid
Tariff Without AD benefit to the Petitioner.
IV. EMCO’s judgement is not a tariff appeal but it is an adjudication of
contractual disputes between GUVNL and EMCO. Hence, it does not have
universal application. The only limited generic issue or issue in rem
involved in the EMCO matter is whether the Commission, under the Tariff
Order 2012, determined two tariffs or one tariff.
5.20 The Supreme Court Judgment dated 02.02.2016 is inapplicable to the present
case. The factual matrix of the case of GUVNL v. EMCO Ltd. in Civil Appeal No.1220
of 2015 in which the Supreme Court has passed the judgment dated 02.02.2016
is completely different and has no connection with the present case. While in
40
GUVNL’s case, EMCO had never entered into any documentation/contract to
fortify its right/option to not avail AD, in the present case, the parties, being ad
idem on the issue, mutually agreed to reduce their understanding into writing by
signing the MoM dated 23.03.2015. Once the parties have agreed between
themselves that the applicable tariff shall be the tariff provided for projects not
availing accelerated depreciation and have, thus, proceeded to act on such basis
(on their own volition) by not only making future payments on the basis of the
MoM but have also gone ahead to clear all arrears based on this understanding,
it is not open for the Respondent to resile from the agreed terms. Moreover,
another point of difference between the GUVNL-EMCO case and the present case
is that while in the GUVNL- EMCO case, GUVNL had throughout maintained its
stand that it had not signed any PPAs with Developers not availing AD, the same
is not the position in the present case.
5.21 The Petitioner and the Respondent have, thus, voluntarily chosen to be
contractually bound by the tariff for projects not availing accelerated
depreciation. The reliance placed by the Respondents upon the judgment dated
02.02.2016 is further misplaced as it violates the settled law on the principle of
“fence sitting”. In support of above he relied upon the judgment of the Hon’ble
Supreme Court in the case of M/s Rup Diamonds and Ors. Vs. Union of India and
Ors. [1989 (2) SCC 356] wherein the Hon’ble Supreme Court has held as under:
“Petitioners are re-agitating claims which they had not pursued for several years.
Petitioners were not vigilant but were content to be dormant and chose to sit on
the fence till somebody else’s case came to be decided. Their case cannot be
considered on the analogy of one where a law had been declared unconstitutional
41
and void by a Court, so as to enable persons to recover monies paid under the
compulsion of a law later so declared void.”
5.22 He further submitted that the Respondent is paying the Tariff without AD to the
generating company which is a sister company of the Respondent. Thus, the
contention of the Petitioner that the burden of higher tariff on the consumers is
not legal and valid. Further, the Petitioner had already paid the tariff as well as
the differential amount of Rs. 4,46,07,874 as agreed between the parties as per
MoM dated 23.03.2015 without protest. Hence, the said settlement has attained
the finality and cannot be disputed by the Respondent.
5.23 He submitted that the Respondent voluntarily agreed in MoM and not disputed
validity of MoM which was concluded as full and final settlement between the
parties. The Respondent cannot now resile from the understanding embodied
under the MoM. Thus, the doctrine of election which is based on rule of estoppel
is also applicable in the present case. The principle that one cannot approbate and
reprobate inheres in it. Thus, the Respondent cannot go beyond the terms of
MoM. He further submitted that the tariff order of the Commission provides that
the distribution licensee can sign PPAs at the tariff determined by the Commission
in its order. Hence, once the Commission has decided the tariff of the projects
availing AD benefit and the projects which are not availing the AD benefit and the
parties to the PPA agreed for it, it cannot be disputed later on by either parties.
5.24 He further submitted that as per the mutual settlement recorded in MoM dated
23.03.2015 the parties agreed and decided that Kindle is entitled to tariff without
AD, which is as per the tariff order No. 1 of 2012 dated 27.01.2012 and PPA had
42
earlier been approved by the Commission as per the Commission order, no
separate regulatory approval is required. He further submitted that after having
agreed to a particular tariff and after having paid the amount, the Respondent is
not entitled to rescind the MoM.
5.25 He referred Regulation 11 of Guidelines for Procurement of Power by Distribution
Licensees notified by the Commission vide notification No. 2 of 2013 dated
7.08.2013 and submitted that the aforesaid Regulation provides that so long as
the agreement between the renewable energy generators and distribution
licensees is in line with the model PPA, no specific approval of the Commission is
mandatory. He further submitted that the PPA is in conformity with the model
PPA. Pursuant to signing of MoM the Respondent paid all arrears, as the MoM
dated 23.03.2015 operates retrospectively and reduces the understanding of
parties right from inception into writing. The MoM is not a departure from the
tariff order but it is contractually binding the parties within the boundaries
prescribed by the Commission.
5.26 The judgment dated 02.02.2016 in the GUVNL-EMCO case is applicable to those
power producers who were parties to the case having an agreement with GUVNL
and is based on an interpretation of the tariff clause in GUVNL’s agreement and
the conduct of the parties in that particular case. The application of this case
cannot be extended to power producers who have not signed a PPA with GUVNL.
It may kindly be noted that while the Respondent had initially made payments
right from first Invoice at the tariff for ‘projects not availing AD’ under protest, but
on its own accord it did not choose to contest Petitioner’s claim or Hon’ble
Commission’s/Hon’ble Tribunal’s Order on this issue.
43
5.27 The Respondent alleged primarily to justify its stand, that there cannot be bilateral
modifications/alterations in the tariff approved in the PPA without regulatory
overview. The aforesaid contention is contradicted by the Respondent’s own
contentions and conduct. While on one hand, the Respondent is relying upon the
MoM dated 23.03.2015 to aver that it has been validity executed and settles all
disputes relating to part commissioning including the tariff payable, it is strange
that on the other hand, the Respondent is claiming that for the purposes of
settling the issue regarding availing/not availing AD, the MoM dated 23.03.2015
requires regulatory approval.
5.28 There is no discrepancy or illegality relating to the tariff adopted under the MoM
as it strictly complies with the Tariff Order 2012 and the tariffs determined
thereunder by the Commission. Vide the MoM the parties have only firmed up
their stand and duly exercised their option to be bound by the tariff approved by
the Commission “for Projects Not Availing AD”. It is not open to the Respondent
to claim that the terms of settlement reflected in MoM dated 23.03.2015 are
irrelevant to the issue on hand and cannot be relied upon as it lacks regulatory
approval.
5.29 It is the Distribution Licensee who has to approach the Commission for approval
of the Power Purchase Agreement with the generator. Therefore, if at all so
considered by the Respondent, it was the responsibility of the Respondent itself
to approach the State Commission for the approval of the amendment in the
Power Purchase Agreement that was mutually agreed between the parties vide
MoM dated 23.03.2015. The settlement dated 23.03.2015 was voluntarily
entered into by the Respondent with the Petitioner, upon renegotiation of Clause
44
5.2 of the PPA dated 20.01.2011 and further was duly signed and acted upon by
both parties. It is pertinent to note that since the Petitioner and the Respondent
have voluntarily decided to amicably settle their difference/disputes on
23.03.2015, at this stage, it is not open for the Respondent to aver that the terms
of settlement as reflected in the MoM dated 23.03.2015 are wholly irrelevant to
the issue on hand.
5.30 The Petitioner’s e-mail dated 10.12.2014 accepting that the decision of higher
forum shall be binding on both the parties cannot be relied upon by the
Respondent for the following reasons:
(i) The said acceptance on the part of the Petitioner dates prior to
the settlement dated of 23.03.2015, which supersedes all such
previous understandings since, without any ambiguity, the
settlement records it to be full and final settlement.
(ii) The said acceptance is to be seen in context in which it was
given. The Judgment dated 20.11.2014 (in Appeal No.217 of
2013) sent to the Respondent on 21.11.2014 related to appeal
by GUVNL in EMCO Case against the Order dated 08.08.2013 in
Petition No. 1270 of 2012 issued by the Commission. In this
case, two main issues were involved viz. (a) whether EMCO is
entitled to tariff for projects not availing accelerated
depreciation under the terms of the PPA signed with GUVNL and
(b) whether the Commission has determined only one tariff for
projects availing accelerated depreciation. While first issue was
case specific involving the interpretation of the contract
between GUVNL and EMCO based on the terms of contract and
45
the conduct of both parties, the other issue was on
interpretation of generic tariff order dated 27.01.2012, i.e.
whether only one or two tariffs have been determined under it.
Thus, the acceptance with regard to applicability of decision of
higher forum was and can only be to the extent it applies to
interpretation of generic Tariff Order, whether 2 tariffs are
determined under it or not. It cannot by any stretch of
imagination be construed to mean that decision on facts and
contractual terms of other unrelated parties would also be
binding on either the Petitioner or the Respondent for the
matter.
5.31 The Petitioner only forwarded the judgment of the Hon’ble APTEL in EMCO case
to highlight that there were two tariffs determined under the Tariff Order 2012.
The Respondent on its own decided to drop this reservation thereafter and did
not make any reservation even in the MoM or any time thereafter till the decision
of Hon’ble Supreme Court. Now, after signing the MoM dated 23.03.2015 without
any reservations, it is not open for the Respondent to look back and try to reverse
its position when the Petitioner has also agreed to all other things keeping in mind
the final offers by the Respondent.
5.32 The settlement dated 23.03.2015 is final and binding both on the Respondent and
Petitioner and puts to rest all existing differences and future claims of the parties.
It is submitted that the Respondent has wrongly contended that the settlement
related to only one matter namely part commissioning and its incidental impact
46
on the applicable tariff for parts commissioned in different years. It is pertinent to
note that the settlement was achieved in the context and background of all
pending disputes including the applicable tariff.
5.33 He further submitted that the Hon’ble Supreme Court in catena of judgments has
upheld the principle that blind reliance upon judgments without considering the
factual situation is improper and in support thereof he relied upon the judgement
of the Hon’ble Supreme Court in case of Ashwini Kumar Singh Vs. U.P.Public
Service Commission reported as (2003) 11 SCC 584.
6. Learned Advocate Ms. Deepa Chawan, on behalf of the Respondent, reiterated
the facts stated in para 3 above. She further submitted that the tariff determined
by the SERCs is also amenable to Appellate Jurisdiction by the Hon’ble Appellate
Tribunal and the Hon’ble Supreme Court and that the parties cannot enter into
any agreement to the effect that tariff and related orders would not be applicable
to them if reversed and modified in Appeal.
6.1 It is an admitted position that at the time of entering into PPA dated 20.01.2011
the Petitioner had opted for a generic tariff applicable to solar generators availing
the AD benefit. Thus the option was exercised by the Petitioner while entering
into the PPA.
6.2 The Commission vide order dated 8.08.2013 in Petition No. 1270 of 2012
permitted the applicability of the said order to other projects as well. The
Petitioner’s plant was commissioned on 31.03.2014, 27.01.2015 and 4.02.2015.
The Petitioner through mail dated 21.11.2014 forwarded a copy of the judgment
of the Hon’ble APTEL in Appeal No. 217 of 2014 in which the Hon’ble APTEL upheld
47
the Order of the Commission. Two subsequent mails exchanged between the
Petitioner and the Respondent dated 10.12.2014 reveal that it was clearly agreed
between the parties that if the order passed by the Hon’ble APTEL is challenged
before the Hon’ble Supreme Court, the decision of Hon’ble Supreme Court would
be binding on both the parties. Therefore, it was admitted and agreed upon by
the parties that the judgment of the Hon’ble Supreme Court is binding to both the
parties. Therefore, there was no dispute on this issue to be considered for
settlement arrived at between the parties on 23.03.2015 when the issues of part
commissioning of the project and tariff related to part commissioning of the
project were amicably settled by and between the parties.
6.3 The Annual Revenue Requirement of the licensee is determined by the
Commission on estimate basis, while in the True up proceedings, the
determination of tariff and approval of the Commission is based on audited
figures. Further, the power purchase cost considered during true up is a basket of
power purchase from various sources by the licensees. Thus, the true up
proceedings are different and distinct from the approval of the PPA. The
Commission approved the PPA vide its Order dated 24.04.2013 in Petition No.
1205 of 2012. The MoM dated 23.03.2015 was never placed before the
Commission for approval, bonafide and honestly believing that the MoM is
confined to part commissioning of the project and tariff issues arising from part
commissioning of the project. There cannot be any deviation in PPA without
approval of the Commission. The pleas of Petitioner that the true up of TPL for a
particular financial year having taken place amounts to approval of the PPA is
contrary to the provisions of law. The true up exercise is carried out by the
48
Commission to fill up the gap between the actual expenses at the end of the year
and estimated expenses in the beginning of the year.
6.4 The MoM dated 23.03.2015 have no nexus to the present case. The Petitioner,
having subsequently altered its choice of availing tariff with AD, relying on the
Order dated 08.08.2013 was bound by the decision of the Hon’ble APTEL in Appeal
No. 217 of 2014 and thereafter Civil Appeal No. 1220 of 2015. The Hon’ble
Supreme Court had considered that the right of the generator not to avail the
benefit of accelerated depreciation flows from Income Tax Act. Only the first tariff
order dated 29.01.2010 gives an option to the power producer not to sale the
power produced by it at the price specified in the tariff order but seek the
determination of project specific tariff. Such a right and option is available to the
power producer only when the power producer is not inclined to avail the benefit
of AD. The Hon’ble Supreme Court, therefore, considers the question in terms of
the point of time at which a power producer can exercise such a right to seek
determination of separate tariff.
6.5 The MoM dated 23.03.2015 addressed the issue and arrived at certain terms in
respect of dispute between the parties relating to the part commissioning of the
project and the tariff payable in view of the part commissioning in different
financial years. The Petitioner desires to take undue advantage of the settlement
of some of the other disputes.
6.6 She further submitted that the Petitioner in its letter dated 17.06.2014 admitted
about applicability of the Order No. 2 of 2010 dated 29.01.2010 and Order No. 1
of 2012 dated 27.01.2012 and subsequent orders. The emails dated 21.11.2014
49
and 10.12.2014 also confirm about the applicability of the subsequent orders of
the Hon’ble APTEL and Hon’ble Supreme Court in case of EMCO Ltd vs. GUVNL.
6.7 The Petitioner had filed Petition No. 1200 of 2012 in which the Commission passed
the order dated 18.01.2013 and decided the period from 24.01.2011 to
18.01.2013 as a force majeure event and excluded the same from the specified
time limit for execution of the project under PPA dated 20.01.2011. Accordingly,
both the Petitioner and the Respondent signed supplemental PPA dated
28.02.2013 and a revised the SCOD and place of the project. The Commission
passed an order dated 24.04.2013 in Petition No. 1205 of 2012 and approved the
PPA in the present case signed between the parties.
6.8 The Petitioner has supressed the vital and important facts which reveal that the
dispute which had been settled between the parties on 23.03.2015 as per MoM,
related to part commissioning of the project on different dates and consequent
and incidental issues thereto leading to liquidated damages, transmission charges
and tariff differences. The agreement between the parties to factor in the decision
of the Higher Courts arrived at on 10.12.2014 has also been supressed by the
Petitioner. On this ground alone the present petition deserves to be dismissed.
6.9 The order dated 8.08.2013 in Petition No. 1270 of 2012 is applicable to the project
developers who are situated similarly to EMCO and therefore, the Petitioner who
is situated similar to EMCO, the judgment of the Hon’ble Supreme Court is also
applicable to the Petitioner. Therefore, it is incorrect to contend that the EMCO
Judgment has no applicability to the present case. The issue of option being
available to the developer to avail or not to avail AD is not the issue. The issue is
once the option is exercised while signing the PPA, he cannot alter the same.
50
6.10 The reliance of the tariff proceedings of TPL to contend that the MoM dated
23.03.2015 stands approved by the Commission in view of tariff Order dated
31.03.2016 is not only misplaced but baseless. The MoM were not placed on
record before the Commission at any juncture. The contention of the Petitioner
would mean that as the power purchase cost of the utility has been considered by
the Commission in accordance with the then prevailing solar tariff order in the
proceedings of the distribution licensee, even the subsequent order of higher
court altering the Commission’s said solar order cannot applied to it.
6.11 The present case concerns the factual matrix relating to Minutes of Meeting dated
23.03.2015. This has no nexus with a generator exercising its choice for tariffs with
or without AD. The issue has been deliberately raised by KECPL to mislead and
confuse the matter in hand. The factual matrix completely suppressed in the
Petition clearly reveals that there was no dispute between the parties on the issue
of the applicability of the order dated 08.08.2013 passed by the Commission
which was subject matter of Appeal No.217 of 2014 and subsequent Civil Appeal
No.1220 pf 2015 before the Hon’ble Supreme Court. The emails dated 21.11.2014
and 10.12.2014 as well as the Petitioner’s letter dated 17.06.2014 are a clear
pointer to the fact that there was no dispute between the parties on the
applicability of the order dated 08.08.2013 passed by the Commission and the
subsequent proceedings in respect of the order namely, the Hon’ble APTEL
decision dated 20.11.2014 in Appeal No.217 of 2014 and the Hon’ble Supreme
Court decision in Appeal No.1220 of 2015 therefrom.
6.12 The Minutes of Meeting dated 23.03.5015 are a full and final settlement of the
particular matters as dealt with therein. The scope of the Minutes cannot be
51
widened to exclude the applicability of the decision of the Hon’ble APTEL and the
Hon’ble Supreme Court in EMCO case (supra).
6.13 The Petitioner has in a motivated manner sought to raise the issue relating to
applicability of Tariff of FY 2014-15 or weighted average rate of FY 2013-14 & FY
2014-15 due to part commissioning in different financial years as Tariff issues. The
tone, tenor and terms of the Minutes of Meeting dated 23.03.2015 are very clear.
It is seen that the Minutes deal with the issue of part commissioning of the 50 MW
Solar Project. The issue related to eligible Tariff (Tariff Difference) in the Minutes
has been considered in light of the capacity commissioned for a particular
financial year. Further, the Minutes clearly record as being the full and final
settlement of all claims pertaining to “this matter”. Thus, the dispute relating to
part commissioning had Tariff related issues also.
6.14 The question of the Petitioner taking advantage of payments being under protest
or otherwise is highlighted from the conduct of the Petitioner. There was no
question of marking any payment under protest as there was a clear agreement
between the parties vide the mails dated 21.11.2014 and 10.12.2014 about
factoring in the decisions of the higher judicial forums in respect of the
Commission’s Order dated 08.08.2013. In TPL’s letter dated 11.03.2016 TPL has
clearly stated that the Commission had made the Order applicable to all the Solar
Projects. TPL had also pointed out that Tariff change pursuant to the
Commission’s Orders had been factored in by the parties. The Order dated
08.08.2013 clearly stated that the Tariff Order dated 27.01.2012 decided the Tariff
for projects commissioned or likely to commission during the Control Period
which are not availing the benefit of accelerated depreciation. In Paragraph 8 of
52
the Order the said Order was made applicable to other developers. When the
project of the Petitioner was commissioned, this Order was duly factored in by
the Parties. As such the Order dated 20.11.2014 passed in Appeal No.217 of 2014
and the Order dated 02.02.2016 in Appeal No.1220 of 2015 by the Hon’ble
Supreme Court are also applicable to the project of the Petitioner.
6.15 TPL having disputed the applicability of the MOM dated 23.03.2015 to issues
other than the part commissioning dispute between the parties, the case law
relied upon by the Petitioner namely, Cauvery Coffee Traders, Mangalore Vs.
Hornor Resources (Intern.) Company Ltd., 2011 (10) SCC 420 and R.N. Gosain Vs.
Yashpal Dhir – AIR 1993 SC 352, is irrelevant. The factual matrix of the Minutes of
Meeting dated 23.03.2015 cannot be lost sight of. In fact, the Petition is bereft of
any factual details in respect of the same. Both the judgments which deal with a
party not being permitted to resile from a concluded contract have no relevance
in a case where the ambit of the agreement is disputed. The factual matrix would
also reveal that not only the ambit of the Minutes of Meeting is disputed but the
earlier agreement which is in consonance with the Electricity Act, 2003 and
effected vide exchange of mails dated 21.11.2014 and 10.12.2014 and as reflected
in the Petitioner’s letter dated 17.06.2014 and duly suppressed by the Petitioner
is clear on the aspect of the Order dated 08.08.2013 passed by the Commission.
In fact, the Petitioner has admitted to TPL making payments during the pendency
of the Appeal No.217 of 2014 under protest till the Agreement vide the subject
mails was reached between the parties. TPL having elected to conclude dispute
amicably only in terms of the part commissioning, the contentions raised by KECPL
relating to doctrine of election and estoppel are not relevant.
53
6.16 The decision of the Andhra Pradesh Electricity Regulatory Commission in OP No.
14 to 25 of 2012 (Suo Motu) has only a persuasive value before the Commission.
The decision of APERC relied upon by the Petitioner, also does not deal with the
deviations in approved PPAs. In the instant case, the PPA dated 20.01.2011 was
approved by the Commission vide Order dated 24.04.2013. That being the case,
the question of deviation not being approved relying on a decision of APERC is
untenable. The Petitioner has itself approached the Commission for approval of
the PPA in Case No.1200 of 2012. Further, the Supreme Court decision dated
02.02.2016 and applicability thereof is the issue in the present case, the same
cannot be agreed between the parties setting at naught the regulatory regime.
Without prejudice to the preceding submission it is submitted that the ambit of
true-up is markedly different from determination of Tariff. The question is not
whether the understanding between the parties at the time of MOM dated
23.03.2015 was whether the tariff would be subject to the Order of EMCO, but
the question is when the project was commissioned post passing of the Order
dated 08.08.2013, whether the order dated 08.08.2013 had been factored in by
the parties in their transactions and was applicable to the project of the
Petitioners. The question of any formal approval of the MOM dated 23.03.2015
did not arise nor was resorted to by both the parties in view of the MOM settling
the disputes between the parties relating to part commissioning of the project
alone. There can be no Agreement between the parties in respect of payment of
tariff de-hors the Regulatory overview and orders. The feeble attempt on the part
of the Petitioner, KECPL to wriggle out of the predicament of regulatory
compliances by relying on the true up exercise is bereft of any plausible rationale
and is contrary to the very aspect of truing up.
54
6.17 It is denied that there was any re-negotiation of Clause 5.2 of the PPA dated
20.01.2011 as alleged. KECPL has not denied that the Commission had been
approached earlier for approval of the original PPA. It is in this context that any
deviation in the PPA would then have to be approved. Therefore, it is the
contention of TPL that the MOM dealt with and settled only the part
commissioning dispute between the parties and tariff issues related to part
commissioning. Therefore, the parties had rightly not approached the
Commission for approval of the MOM dated 23.03.2015.
6.18 The emails exchanged between the parties on 21.11.2014 and 10.12.2014 were
suppressed in the original Petition filed on 04.06.2016. However, the Petitioner
has since admitted the existence of the mails during deliberations and in the
Written Submissions. The agreements arrived at in the mails dated 21.11.2014
and 10.12.2014 are sought to be glossed over as negotiations and being
superseded by MOM dated 23.03.2015. The contentions are factually and legally
untenable. The issues agreed in the exchange of mails not being in dispute were
not open for negotiation on 23.03.2015. In light of the entire factual matrix it is
clear that the MOM dated 23.03.2015 is unrelated to the issue agreed in the mails
exchanged on 21.11.2014 and 10.12.2014. In view of the said matter the decision
of the Hon’ble Delhi High Court in M/s. Ratna Commercial Enetrprises Ltd., Vs.
Vasu Tech Ltd., is clearly distinguishable. The inapplicability of the Sections 91, 92
and 94 of the Evidence Act and the decisions of the Hon’ble Supreme Court in
Tamil Nadu Electricity Board & Anr. Vs.N.Raju Reddiar – 1996 (4) SCC 551 and
State Bank of India Vs. Mula Sahakari Sakhar Karkhana Ltd. – 2006 (6) SCC 293 and
Bomanji Ardeshir Wadia Vs. Secretary of State of India Council – AIR 1929 PC 34,
55
to the case espoused by the Petitioner is clear from the facts elucidated by the
Respondent and the documents brought on record by the Respondent. The said
judgments and the statutory provisions in fact support the agreement between
the parties as per the mails exchanged and the regulatory mandate of the order
dated 08.08.2013.
6.19 The decision of the Commission dated 08.08.2013 being applicable to the project
of the Petitioner, subsequent judicial pronouncements in respect of the said order
in the hierarchy of redress contemplated under the Electricity Act, 2003 are a sine
qua non.
6.20 In the present case the project has been admittedly commissioned post passing
of the order dated 08.08.2013 by the Commission. The parties have acted upon
the said order dated 08.08.2013 which was then binding upon the parties, as the
Commission had made it applicable to all the projects. When this order dated
08.08.2013 has been subjected to Statutory Appeals under Section 111 and
thereafter under Section 125 of the Electricity Act, 2003, a final order of the
Hon’ble Supreme Court is not only applicable but the order dated 08.08.2013 has
merged in the order of the Hon’ble Supreme Court. In this regard reliance is placed
on the decision of the Hon’ble Supreme Court in Kunhayammed & Ors. Vs. State
of Kerala & Anr. 2000 (6) SCC 359 wherein the doctrine of merger is considered.
6.21 The Petitioner has admittedly delayed the commissioning of the project. Under
the circumstances, the decision of the Hon’ble Supreme Court in relation to the
point of time at which the Power Producer can exercise the option to supply
electricity at tariff rate with or without accelerated depreciation benefit is at the
56
time of entering into PPA. Having exercised the option, the right of Power
Producer is extinguished.
6.22 The reliance by the Petitioner on MoM dated 23.03.2015 to refute the
applicability of EMCO Judgment is misplaced as the applicability or otherwise of
the judgment has to be determined on the basis of judgment and the earlier
orders passed by the Hon’ble APTEL and the Commission. Hon’ble Supreme Court
in EMCO case interprets the stipulation in the PPA relating to Article 5.2
incorporating therein the agreement of the parties in the event the
commissioning of the project is delayed. The issue involved in the present case is
the same.
6.23 The MoM dated 23.03.2015 related to the applicability of tariff of FY 2014-15 or
FY 2013-14 and FY 2014-15 on account of part commissioning of the project and
provided for full and final settlement in the said matter. Therefore, any contention
other than above raised by the Petitioner is not valid. There was agreement
between the parties as regards the applicability of the Hon’ble APTEL and the
Hon’ble Supreme Court decision qua the order of the Commission dated
8.08.2013. The reliance on tariff proceedings of TPL to contend that MoM dated
23.03.2015 stand approved by the Commission in view of tariff order dated
31.03.2016 is not only misplaced but baseless.
6.24 The MoM dated 23.03.2015 has no nexus with a generator exercising its choice
for tariffs with or without AD. The issue has been deliberately raised by the
Petitioner to mislead and confuse the matter by ignoring the decision of Hon’ble
APTEL and Hon’ble Supreme Court. The contention of the Petitioner to extend the
57
scope of MoM and exclude the applicability of the Hon’ble APTEL and the Hon’ble
Supreme Court judgement in EMCO case is not permissible. It is denied that the
parties renegotiated Clause 5.2 of the PPA dated 20.01.2011 as alleged by the
Petitioner. The Petitioner has not denied that the Commission had been
approached earlier for approval of the original PPA. It is in this context that any
deviation in the PPA would then have to be approved. The MoM dealt with and
settled only the part commissioning dispute between the parties and tariff issues
related to part commissioning and therefore, the parties had not approached the
Commission for approval of the MoM dated 23.03.2015.
7. Based on the submissions made by both the parties following issues emerged
before the Commission for decision:
i. Whether the judgment dated 2.02.2016 of the Hon’ble Supreme Court
in Civil Appeal No. 1220 of 2015 in the case of GUVNL and EMCO
Limited is applicable to the present case or not?
ii. Whether the MoM dated 23.03.2015 which covers full and final
settlement of tariff is valid and legal?
8. We have considered the submissions made by the parties. It is undisputed
between the parties that the Petitioner is the solar generator who has set up 50
MW Solar PV Plant. The Petitioner and the Respondent have signed Power
Purchase Agreement dated 20.01.2011. As per the PPA the SCOD of the plant was
to be 21.01.2012. The Petitioner was unable to achieve the SCOD of 21.01.2012
due to various reasons. There was also a dispute between the parties and the
Petitioner had filed Petition No. 1200 of 2012, seeking extension of SCOD, waiver
58
of liquidated damages etc. In the said Petition, the Commission passed the order
dated 18.01.2013 and extended SCOD by 680 days and also directed the parties
to sign the supplemental PPA accordingly. Further, the Petitioner had also filed
Petition No. 1205 of 2012 for approval of PPA dated 20.01.2011 signed between
the parties, and the Commission approved the PPA vide order dated 24.04.2013.
8.1 After passing the order dated 18.01.2013 in Petition No. 1200 of 2012, the
Petitioner and the Respondent signed the supplemental PPA dated 28.02.2013.
The Petitioner and the Respondent also executed second and third supplemental
PPA dated 11.05.2013 and 17.12.2013, with regard to change in the site of the
project.
8.2 It is admitted by the parties that the 50 MW project was commissioned in three
phases as follows:
1) 29.9399 MW on 31.03.2014;
2) 15.0118 MW on 27.01.2015;
3) 5.17924 MW on 4.02.2015.
8.3 It is undisputed between the parties that the plant was commissioned in the
control period (29th January, 2012 to 31st March, 2015) of Order No. 1 of 2012
dated 27.01.2012 and the tariff has been paid by the Respondent as agreed
between the parties.
8.4 The Respondent paid the tariff considering the applicability of the Commission’s
Order dated 18.01.2013 that the Petitioner is not availing the benefit of
accelerated depreciation. The Respondent also paid the arrears amount to the
Petitioner. However, later on the said tariff was revised as per the tariff
59
determined by the Commission in Order No. 1 of 2012 dated 07.07.2014 and
Order dated 11.07.2014 corrigendum to Order No. 1 of 2012 dated 07.07.2014.
8.5 The issue emerged for the decision of the Commission as stated in Para 7 above
are interconnected and therefore we decide to deal with them together. The main
dispute in this matter is that whether the tariff payable by the Respondent TPL to
the Petitioner should be with AD or without AD. It is therefore necessary to
examine the issue in light of the Hon’ble Supreme Court’s judgement in EMCO
case, their agreement through MOM dated 23.03.2015 and whether the tariff
determination can be done in isolation by the seller and the buyer or it requires
regulatory approval.
8.6 The Petitioner and the Respondent entered into PPA dated 20.01.2011 and
agreed tariff in the said PPA is stated in Article 5.2 which is reproduced below:
“5.2 TPL shall pay the fixed tariff mentioned hereunder for the period of 25 years for all the scheduled Energy/Energy injected as certified in the monthly SEA by SLDC - Tariff for Solar Photovoltaic Project: * Rs.15/- unit for First 12 years and thereafter * Rs.5/- unit from 13th year to 25th Year Above tariff is as per tariff order no.2 of 2010 in the matter of Determination of tariff for Procurement of Power by the Distribution Licensees and others from Solar Energy Projects issued by GERC dated 29-01-2010 (“Tariff Order”). In case, Commissioning of Solar Power Project is delayed beyond the date of applicability of the Tariff Order, then TPL shall pay the Tariff determined by the Hon’ble GERC for Solar Projects effective on the date of Commissioning of Solar Power Projects, or the abovementioned Tariff, whichever is lower.”
8.7 As per the aforesaid Clause 5.2 of the PPA, it is admitted by the parties that the
Petitioner is entitled to tariff of Rs. 15 per unit for first 12 years and thereafter,
Rs. 5 per unit from 13th year to 25th year. It is also agreed between the parties that
60
in case the project is not commissioned during the control period of Order No. 2
of 2010 and commissioned later on in the control period of other order of the
Commission, the tariff applicable to the Petitioner’s project shall be lower of the
tariff as per Order No. 2 of 2010 or subsequent tariff order issued by the
Commission.
8.8 The Clause related to aforesaid tariff agreed between the parties as determined
by the Commission in Order No. 2 of 2010 which is relevant in this case is
reproduced below:
5. Tariff for Solar PV and Solar Thermal Power Projects
“Based on the various parameters as discussed above, the levelised tariff including RoE of Solar PV power generation, using a discounting rate of 10.19% works out to Rs. 12.54 per kWh and levelised tariff using the same discounting factor for Solar Thermal Power generation works out to Rs.9.29 per kWh. However, the Commission feels that it would be appropriate to determine tariff for two sub-periods: 12 years and 13 years instead of the same tariff for 25 years. Hence, the Commission determines the tariff for generation of electricity from Solar PV Power project at Rs.15 per kWh for the initial 12 (twelve) years starting from the date of Commercial operation of the project and Rs.5 per kWh from the 13th (Thirteenth) year to 25th (twenty fifth) year. The Commission also determines the tariff for generation of electricity from Solar Thermal Power project at Rs.11 per kWh for the initial 12 (twelve) years starting from the date of Commercial operation of the project and Rs.4.00 per kWh from the 13th (Thirteenth) year to 25th (twenty fifth) year.
The above tariffs take into account the benefit of accelerated depreciation under the Income Tax Act and Rules. For a project that does not get such benefit, the Commission would, on a petition in that respect, determine a separate tariff taking
into account all the relevant facts.”
61
8.9 In the aforesaid order, the Commission has decided that the said tariff has been
determined taking into account (net of) the benefit of accelerated depreciation
and that the projects which are not availing the benefit of accelerated
depreciation are required to file separate petition before the Commission for
determination of tariff.
8.10 The Commission has thereafter, determined the tariff for solar PV project vide
Order No. 1 of 2012 dated 27.01.2012. The summary of tariffs for solar
photovoltaic power plants commissioned between 29th January, 2012 to 31st
March, 2015 is reproduced below:
29 Jan. ’12 to 1 Apr. ’13 to 1 Apr. ’14 to Period 31 Mar. ’13 31 Mar. ’14 31 Mar. ’15 For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 9.28 per kWh Rs. 8.63 per kWh Rs. 8.03 per kWh years For first 12 years Rs. 9.98 per kWh Rs. 9.13 per kWh Rs. 8.35 per kWh For subsequent 13 years Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh For megawatt-scale photovoltaic projects not availing accelerated depreciation Levelized Tariff for 25 Rs. 10.37 per kWh Rs. 9.64 per kWh Rs. 8.97 per kWh years For first 12 years Rs. 11.25 per kWh Rs. 10.30 per kWh Rs. 9.42 per kWh For subsequent 13 years Rs. 7.50 per kWh Rs. 7.50 per kWh Rs. 7.50 per kWh For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 11.14 per kWh Rs. 10.36 per kWh Rs. 9.63 per kWh years
Levelized Tariff for Solar Thermal Projects With accelerated depreciation benefit: Rs. 11.55 per kWh for 25 years
8.11 Based on the technical and financial parameters, the levelized tariff including
return on equity for megawatt-scale solar photovoltaic power projects availing
62
accelerated depreciation was determined Rs. 9.28 per kWh, while the tariff for
similar projects not availing accelerated depreciation is calculated at Rs. 10.37 per
kWh for projects commissioned during the period from 29th January 2012 to 31st
March, 2013. The Commission also determined the tariff for two sub-periods. For
megawatt-scale photovoltaic projects availing accelerated depreciation, the tariff
for the first 12 years shall be Rs. 9.98 per kWh and for the subsequent 13 years
shall be Rs. 7 per kWh, while for megawatt-scale photovoltaic projects not availing
accelerated depreciation, the tariff for the first 12 years shall be Rs. 11.25 per kWh
and for the subsequent 13 years shall be Rs. 7.50 per kWh for projects
commissioned during the period from 29th January, 2012 to 31st March, 2013.
8.12 The said order of the Commission was challenged by the Solar Energy Association
before the Hon’ble APTEL by filing Appeal No. 75 of 2012. Hon’ble APTEL passed
the Order dated 17.04.2013 and remanded the matter back to the Commission
for reconsideration and passing consequential order. The Commission passed
consequential order vide Order dated 07.07.2014 and corrigendum to the said
Order vide Order dated 11.07.2014 determining the tariff for Solar Power PV
projects as under:
29 Jan. ’12 to 1 Apr. ’13 to 1 Apr. ’14 to Period 31 Mar. ’13 31 Mar. ’14 31 Mar. ’15 For megawatt-scale photovoltaic projects availing accelerated depreciation Levellised Tariff for 25 Rs. 9.70 per kWh Rs. 9.02 per kWh Rs. 8.39 per kWh years For first 12 years Rs. 10.52 per kWh Rs. 9.64 per kWh Rs. 8.82 per kWh For subsequent 13 Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh years For megawatt-scale photovoltaic projects not availing accelerated depreciation Levellised Tariff for 25 Rs. 10.92 per kWh Rs. 10.15 per kWh Rs. 9.44 per kWh years
63
For first 12 years Rs. 11.97 per kWh Rs. 10.96 per kWh Rs. 10.03 per kWh For subsequent 13 Rs. 7.50 per kWh Rs. 7.50 per kWh Rs. 7.50 per kWh years For kilowatt-scale photovoltaic projects availing accelerated depreciation Levellised Tariff for 25 Rs. 11.64 per kWh Rs. 10.82 per kWh Rs. 10.07 per kWh years For kilowatt-scale photovoltaic projects not availing accelerated depreciation Levellised Tariff for 25 Rs. 13.10 per kWh Rs. 12.18 per kWh Rs. 11.33 per kWh years
Levellised Tariff for Solar Thermal Projects availing accelerated depreciation With accelerated depreciation benefit: Rs. 11.83 per kWh for 25 years Levellised Tariff for not Solar Thermal Projects not availing accelerated depreciation Without accelerated depreciation benefit: Rs. 13.23 per kWh for 25 years
8.13 The Petitioner’s project was commissioned in three phases, and the Petitioner
and the Respondent have signed three supplemental PPAs after signing the
original PPA, which are also relevant in this case.
The first supplemental PPA was signed by the parties on 28.02.2013 in which it was
agreed between the parties as under:
“The TPL and KECPL are individually referred to as “Party” and collectively referred to as “Parties” .
Whereas, TPL and KECPL have entered into a Power Purchase Agreement on 20th January 2011, (hereinafter referred to as “the Agreement” or “PPA”), setting out the terms and conditions of the sale of entire electrical energy, so produced from the Project, to be set up by the KECPL to TPL.
Whereas Hon’ble Gujarat Electricity Regulatory Commission (Hon’ble Commission) vide its Order dated 18.01.2013 (Order) in Petition No.1200/2012 has directed the parties to sign a Supplemental PPA to give effect to the revised Scheduled
64
Commercial Operation Date (SCOD) and the change in site of the Project as defined in the Agreement.
Whereas in compliance of the above, the Parties have agreed to suitably amend the following provisions of the Agreement, as mentioned specifically hereinafter, on the date of this Supplemental Agreement:
a. The Scheduled Commercial Operation Date and other milestones b. The Project Site c. Other modifations
NOW THEREFORE, in consideration of the premises, mutual agreements, covenants and conditions set forth in this Supplementary Agreement, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
1. This Supplemental PPA shall be deemed to be effective from 28th February 2013 (Effective date), i.e. the date of signing of this Supplemental PPA. 2. All capitalised terms unless specifically defined in this Supplemental Agreement shall have the meaning ascribed to them respectively in the Agreement. 3. The Agreement shall stand modified as under: a. The words “Village Gosa, Taluka- Porbandar, District Porbandar” shall be replaced with the words “ Project Site as given in Schedule 6” at the following places in the PPA. i. First para of the Rectical ii. The definition of “Project” in Article 1.1 iii. The definition of “Project Site” in Article 1.1 b. The date mentioned in second para of the recital of the PPA, i.e. 31st December, 2011” shall be replaced with the revised date 283 Days from the Effective Date” c. The date “31-03-2012” appearing in the definition of “Construction Default” shall be replaced with the revised date “346 Days from the Effective Date”. d. The words “ commence construction within Six (6) months from execution of this Agreement” in the definition of “Construction
65
Default” shall be replaced with “commence construction within Six (6) months from the Effective Date”. e. The date mentioned in the definition of “Scheduled COD” in Article 1.1 of the PPA, i.e. “28-01-2012” shall be replaced with the revised date “283 Days from the Effective Date”. f. Article 2.2.1 of the Agreement, shall be substituted by Prior to signing of the Agreement, Power Producer had submitted the Bank Guarantee of Rs 50 Lakhs per MW for 50 MWp i.e. Rs.25 Crores vide BG No.08240100000019 dated 20-01-2011 in agreed format as Performance Bank Gurarantee from Axis Bank in favour of TPL valid upto 31-03-2012 and thereafter the validity was extended to 30-06-2012 and was further extended to 31-03-2013. The Power Producer undertakes to extend the validity of the Performance Bank Gurantee till 436 Days from the Effective Date. In case of the delay as per last quarterly progress report of the project, the Power Producer shall arrange the renewal of the Performance Bank Guarantee at its own costs, for such further period as intimated by the TPL at least 15 days before the expiry of the Performance Bank Guarantee. In case the Power Producer fails to achieve the Scheduled COD as mentioned in this Supplemental Agreement, without prejudice to other rights and remedies, the TPL shall have the right to encash the Performance Bank Guarantee and adjust it against Liquidated Damages payable by Power Producer as per clause 4.3 of the Agreement as amended by this Supplemental Agreement. In case of successful Commissioning of the Project on or before Scheduled COD, TPL shall return/release the Performance Bank Guarantee within 30 days from Commercial Operation Date. g. Sub-Article(a) of Article 2.3.1 of the Agreement shall be substituted by (a) The Power Producer has obtained the valid approval from GEDA/GoG for implementation of the Project on 18.01.2012.” h. The words “six (6) months from the date of execution of this Agreement” in sub-Article (b), (c) and (d) of Article 2.3.1 of the
66
Agreement shall be substituted by “ninety one (91) days from the Effective Date.” i. In Article 4.3.1 of the Agreement the date “31.03.2012” shall be substituted by “346 days from the Effective Date.” j. In schedule 6 of the Agreement, the words “Village Gosa, Taluka- Porbandar, District Porbandar” shall be replaced with the words “The Project will be set up in District Surendranagar, Gujarat”
All other terms and conditions of the Agreement shall remain unchanged and binding on the parties.
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED THIS SUPPLEMENTARY AGREEMENT ON THE DAY, MONTH AND YEAR FIRST WRITTEN ABOVE THROUGH THEIR AUTHORISED REPRESENTATIVE(S) AT AHMEDABAD.”
8.14 As per aforesaid supplemental PPA, the parties have agreed to make changes in
the definition of the project, project site, effective date, construction default
commencement of construction, SCOD, Article 2.2.1, Sub-Article (a) of Article
2.3.1, Sub-Article (b), (c) and (d) of Article 2.3.1, Article 4.3.1 and Schedule 6 of
original PPA dated 20.01.2011. It is also agreed between the parties that the other
terms and conditions of the Original PPA, which includes the tariff stated in Article
5.2 shall remain unchanged and shall be binding on the parties.
8.15 The second supplemental PPA was signed between the parties on 11.05.2013. The relevant portion of the second supplemental PPA is reproduced below:
“NOW THEREFORE, in consideration of the premises, mutual agreements, covenants and conditions set forth in this Second Supplemental Agreement, IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: 1. All capitalised terms unless specifically defined in this Second Supplemental Agreement shall have the meaning ascribed to them respectively in the Agreement or Supplemental Agreement.
2. Clause 3(j) of the Supplemental PPA shall be replaced with the following:
67
j) In Schedule 6 of the Agreement, the words “Village Gosa, Taluka- Porbandar, District Porbandar” shall be replaced with the words “The Project will be set up in Solar Park, Charanka” All other terms and conditions of the Agreement and Supplemental Agreement shall remain unchanged and binding on the Parties.”
8.16 In the said Second Supplemental PPA, the parties have agreed to change the site
of the project from Village Gosa, Tal. Porbandar, Dist. Porbandar to Solar Park,
Charanka, while retaining all other terms & conditions of the original PPA and the
Supplemental PPA.
8.17 The third supplemental PPA was signed between the parties on 17.12.2013. The
relevant portion of the said agreement is reproduced below:
“….Whereas KECPL vide its letter no KECPL/GETCO/4 dated 13.11.2013 to Gujarat Energy Transmission Corporation Limited (GETCO) has conveyed that the date of commissioning of the project be taken as 15th March 2014 and accordingly, the transmission charges need to be levied from the said date. KECPL has also agreed to bear the transmission charges levied by GETCO in case of slippage in Commercial Operation Date beyond 15th March 2014 till actual Commercial Operation Date of the Project. In consideration of the above premises, this Third Supplemental PPA is entered between the Parties to affirm that KECPL’s selection of 15th March 2014 as the start date for levy of transmission charges in BPTA shall not mean that TPL has agreed to any modification in the Scheduled COD of 8th December 2013 as defined in the Supplemental PPA dated 28th February 2013 or any change in the terms and conditions of the PPA/Supplemental PPAs and hence, it shall not prejudice TPL’s any existing rights as per the respective Agreements. Kindle shall obtain the approval of GETCO to specify the aforementioned date i.e. 15th March, 2014 in the BPTA as the start date for levy of transmission charges. For avoidance of doubt, it is clarified that all the rights of the Parties under the PPA dated 20.01.2011 and Supplemental PPAs dated 28.02.2013 and 11.05.2013 shall remain unaffected including the right of TPL to recover Liquidated Damages, if the Project is not commissioned for commercial operation by 09.02.2014 in accordance with clause 4.3.1 of the PPA. All the terms and conditions of PPA and Supplemental PPAs shall remain unchanged and binding on the Parties….”
68
8.18 As per the aforesaid third Supplemental PPA, it was agreed between the parties
that the Petitioner has communicated to GETCO that date of commissioning of
the project be taken as 15.03.2014 and accordingly, the transmission charges are
to be levied by GETCO from that date and that the Petitioner has also agreed to
bear the transmission charges in case of delay in commercial operation date
beyond 15.03.2014 till actual commercial operation date of the project. It was also
agreed between the parties that the selection of 15.03.2014 by the Petitioner as
the start date for levy of transmission charges in BPTA shall not mean that the
Respondent has agreed to modification of SCOD of 08.12.2013 as defined in the
supplemental PPA dated 28.02.2013 or any change in the terms and conditions of
the PPA/Supplementary PPAs and hence, it shall not prejudice TPL’s any existing
rights. It was also agreed that all other terms and conditions of the original PPA
and Supplemental PPAs shall remain unchanged.
8.19 Thus, it is apparent that the tariff which was agreed and mentioned in the original
PPA dated 20.01.2011 continues to remain in force for the Petitioner’s project as
none of the supplemental PPAs modified the terms and conditions relating to
tariff.
8.20 The Petitioner’s plant was commissioned on three different dates in two different
financial years of the control period of the Order No. 1 of 2012 resulting two
separate tariffs for the respective capacities commissioned in the respective year
against the PPA capacity of 50 MW.
8.21 We note that the Petitioner and the Respondent entered into correspondence
with regard to the tariff payable to the Petitioner’s plant commissioned in parts
69 on different dates. The Petitioner addressed a letter dated 23.05.2014, to the
Respondent wherein it is stated as under:
“…..Since we shall not be availing the benefit of Accelerated Depreciation(AD), we are entitled for the tariff, for the capacity commissioned on 31.03.2014, of Rs.11.25/kWh for first 12 years and Rs.7.50/kWh for subsequent 13 years as approved by Hon’ble GERC in Order No. 1 of 2012 dated 27.01.2012. Accordingly, we have raised the enclosed invoice as per the said GERC approved tariff of Rs.11.25/unit. In this regard, an undertaking is enclosed for your kind information and records.
Further, since the Liquidated Damage (LD) for uncommissioned capacity payable for your invoices upto 19.05.2014 works out to be Rs. 79,97,179/- (calculation enclosed as Annexure – I), you are requested to adjust this amount from our invoice and make payment of balance amount to us as per the terms of the PPA. The payment may be made through RTGS in our United Bank of India A/c, details of which have already been communicated to you through our e-mail dated 13.02.2014 and are reproduced below:
Account Name: Kindle Engineering and Construction Private Limited TRA A/c
Account No. : 0276050415873
Bank: United Bank of India
Branch: Connaught Circus Branch, New Delhi
IFSC Code: UTBI0CON702 (Fifth and Tenth character are Zero)
Yours faithfully
For Kindle Engineering and Construction Private Limited,
Sd/-
Jayesh Rathi
Associate Vice Prisedent
(Authorized Signatory)…..”
UNDERTAKING
70
“….. We kindle Engineering and Construction Private Limited, hereby affirm that we have neither claimed nor shall be claiming in future the benefit of accelerated depreciation under section 32 of Income Tax Act, 1961 for our Solar PV project at Charanka- Gujarat so that we are entitled to claim the GERC approved tariff for Solar PV projects not availing accelerated depreciation.
In the circumstances, the discount of 2.8% will be admissible in this tariff as per the terms of the PPA with TPL.”
As per the aforesaid letter the Petitioner has informed the Respondent that they
are not availing the benefit of accelerated depreciation and therefore, they are
entitled to the tariff for the capacity commissioned on 31.03.2014 of Rs. 11.25 per
kWh for first 12 years and Rs. 7.50 per kWh for subsequent 13th year to 25th year
as per Order No. 1 of 2012 dated 27.01.2012. The Petitioner has also submitted
an undertaking dated 23.05.2014 stating that they have neither claimed nor they
shall be claiming in future the benefit of accelerated depreciation under Section
32 of Income Tax Act for their Solar PV project at Charanka so they are entitled to
the Commission approved tariff for Solar PV projects not availing Accelerated
Depreciation.
8.22 We note that the Respondent in response to the aforesaid letter replied vide letter
dated 27.05.2014 stating that as per Clause 5.2 of the Article 5 of the PPA, the
tariff applicable is the tariff determined by the Commission for the Solar Projects
effective on the date of commissioning of the project and the project defined
under PPA means the entire 50 MW. Hence, tariff would be decided when the
entire project is commissioned and that the Invoice is not as per the provisions of
the PPA. Further, it is stated that the Commission vide order dated 18.01.2013 in
Petition No. 1200 of 2012 has not extended the time limit for applicable tariff. It
is also stated that pending finalization of tariff, payment of the said invoice is being
71
made at the provisional rate of Rs. 9.42/Unit (rate of project commissioned in FY
2014-15 as per the Commission’s Order dated 27.01.2012 in Petition No.
1270/2012) subject to adjustment based on the final tariff as applicable on the
date of commissioning of the project and outcome of appeal filed against Order
in Petition No. 1270/2012. It is also stated that as the LD for full 50 MW is payable
till the time entire project is commissioned, LD amount of Rs. 3.15 Crores upto
25.05.2014 is adjusted from the invoice and an amount of Rs. 1,29,82,548/- is
shown as payable for 4,918,707 units net of discount @ 2.8% as per PPA and
Rebate.
8.23 We note that on 17.06.2014, the Petitioner wrote two letters bearing No.
KECPL/TPL/15 and KECPL/TPL/16. In the first letter the Petitioner requested the
Respondent to accept part commissioning as certified by GEDA, return of BG
corresponding to the capacity already commissioned, refund of LD recovered for
the capacity commissioned and refund of excess payment of transmission
charges. The second letter is about the payment against invoice for the month of
April 2014 stating that the Petitioner is entitled to a tariff of Rs. 11.25 and Rs. 7.50
per unit as the part capacity of the project was commissioned on 31.03.2014. It is
also stated that since the Petitioner has disputed the payment by the Respondent
at the provisional rate of Rs. 9.42 per unit and the recovery of disputed LD
amount, the Respondent is liable to make payment of 85% of disputed amount as
per the terms of the PPA pending resolution of dispute and such unilateral
deductions from invoice would amount to non-payment of invoice.
8.24 We note that in response to the aforesaid letter No. KECPL/PPA/15 dated
17.06.2014, the Respondent replied vide letter No. TPL-Kindle/60/2014 dated
72
14.07.2014 stating that the SCOD of the plant needs to be considered as the date
on which the whole plant capacity is commissioned. It is also submitted that it is
a settled law that the intention of the parties can be ascertained from (i) the
express words used in the contract, (ii) the nature of the contract, (iii) the
surrounding circumstances and (iv) the meaning commonly given to terms and
expressions in the trade concerned. It is also stated that in the present case, the
express words used in the contract between the parties do not show that the
parties intended partial commissioning of the project. The nature of the contract
also does not permit partial commissioning in view of the fact that in Order to
meet the technical and safety requirements, the entire project has to be
commissioned before the electricity can be supplied. It is a settled law that
construction of the written instruments has to be interpreted with consideration
of grammatical and ordinary sense of the words so as to avoid absurdity and
inconsistency. Therefore, the meaning of “scheduled commercial operation date”
has to be given its grammatical and ordinary meaning which is that there is only
one date of commissioning. The Respondent TPL also refuted the various
judgments referred to by the Petitioner.
8.25 The Respondent TPL also vide letter No. TPL/Kindle/62/2014 dated 17.07.2014,
replied to the Petitioner about the tariff applicable to the Petitioner’s plant,
stating that the tariff for the part capacity of 29.9399 MW commissioned on
31.03.2014 would not be the tariff prevailing on 31.03.2014 as per Order No.1 of
2012 dated 27.01.2012 of the Commission because as per the PPA terms only one
SCOD is permissible. It is also stated that in view of provisions of PPA and the
Supplemental PPAs, the applicability of the tariff is not subject to part
commissioning but subject to commissioning of the entire project. Since, the
73
entire project will be commissioned after 31.03.2014, the applicable tariff will be
as per Order No.1 of 2012 passed by the Commission and would be based on 7%
year to year reduction for the 25 year applicable tariff which would be determined
when the project is commissioned. The Respondent requested the Petitioner to
withdraw the invoices for the month of April, May and June 2014 and issue revised
invoices based on the provisional rate of Rs. 9.42/Unit. As regards the payment to
be made @ 85% of the disputed amount, the Respondent mentioned that since
the tariff of Rs. 11.25/Unit claimed by the Petitioner is itself in dispute, and the
Respondent is making payment @ Rs. 9.42/Unit which is approx. 84% of Rs.
11.25/Unit, no further amount is payable by the Respondent.
8.26 Petitioner vide e-mail dated 17.07.2014 forwarded to the Respondent the related
orders/decisions of Hon’ble APTEL and the Commission for upward revision of
solar tariff. The Petitioner vide letter No. KECPL/TPL/18 dated 22.07.2014 raised
supplementary invoice for the difference due to revision in tariff as per the
Commission’s orders dated 07.07.2014 and 11.07.2014 in respect of generation
during the month of April, May and June, 2014 with a request to make payment
through RTGS for credit to their bank account.
8.27 The Respondent vide letter No. TPL/Kindle/63/2014 dated 25.07.2014 disputed
the amount claimed by the Petitioner through supplementary invoice for the
month of April, May and June 2014. The Respondent reiterated that the tariff
prevailing on the date of commissioning of 50 MW project shall be applicable. It
is also stated that the Commission has in the Order dated 18.01.2013 in Petition
No.1200 of 2012 has not extended the time line for applicability of tariff. It is also
stated that pending finalization of tariff, payment has been made at the
74
provisional rate of Rs. 9.42/Unit and the corresponding rate for the project
commissioned in FY 2014-15 as per the Commission’s Order dated 7.07.2014 read
with Order dated 11.07.2014 is Rs. 10.03/Unit. Accordingly, the payment of
supplementary Invoice at the differential tariff of Rs. 10.03/Unit and Rs. 9.42/Unit
subject to adjustment on finalization of tariff as applicable on the date of
commissioning of the project and outcome of the appeal filed against the
Commission’s Order in Petition No. 1270/2012 is due to the Petitioner. The
Respondent also disputed the Delayed Payment Interest claimed by the Petitioner
on the supplementary claim.
However, it is observed that the Petitioner had claimed that they are entitled to
the tariff of Rs. 11.97 per unit and accordingly they had raised the supplementary
invoice for the difference being the tariff of Rs. 11.25/Unit claimed earlier for April
to June, 2014 and the said applicable tariff. It is also observed that the said
supplementary bill is raised by the Petitioner on the ground that the Petitioner is
not availing the benefit of accelerated depreciation, as is apparent from the tariff
of Rs. 11.97/Unit claimed by the Petitioner.
8.28 It is necessary to refer the Petitioner’s email dated 21.11.2014, Respondent’s
response thereto vide e:mail dated 10.12.2014 and the Petitioner’s reply to the
Respondent e:mail dated 10.12.2014 vide e:mail dated 10.12.2014, which are
reproduced below:
From : jayesh.rathi [mailto:[email protected]] Sent : Friday, November 21, 2014 2:58 PM To: NISARG B SHAH/ACCOUNTS/TORRENTPOWER/AHMEDABAD Subject : FW: In Re: Appeal No.217 of 2014 GUVNL vs. GERC
75
Dear Nisargbhai, Please find attached the Order of APTEL in EMCO case. They have allowed tariff without AD (for projects not availing AD) to all projects. GUVNL’s appeal stands dismissed and GERC’s EMCO order is upheld.
Regards Jayesh Rathi Associate Vice President HINDUSTAN POWER PROJECTS PVT LTD 235 Phase III Okhla Industrial Estate New Delhi – 110020 Mob + 91 9898010033” From : nisargshah@ TORRENTPOWER.COM [mailto: nisargshah@ TORRENTPOWER.COM] Sent : Wednesday, December 10, 2014 2:23 PM To : jayesh.rathi Subject : FW: In Re: Appeal No. 217 of 2014 GUVNL vs. GERC Dear Jayeshbhai, We thank you for sending us the Aptel Order. If the Aptel Order is challenged in a higher forum, the decision of the higher forum would be binding on both the parties.
With Regards, ------Nisarg Shah Torrent Power Ltd Naranpura Zonal Office, Sola Road, Ahmedabad- 380013 Phone- 07927492222 Ext:5816 ------“From : jayesh.rathi [mailto:[email protected]] Sent : Wednesday, December 10, 2014 3:44 PM To : NISARG B SHAH/ ACCOUNTS/TORRENTPOWER/ AHMEDABAD Subject : [spam] RE: In Re: Appeal No.217 of 2014 GUVNL vs. GERC Ok.
76
As per aforesaid emails, it transpires that the Petitioner intimated the outcome of
the Hon’ble APTEL’s judgment in Appeal No. 217 of 2014 filed by GUVNL against
the Commission’s Order in Petition No. 1270 of 2013 to the Respondent and the
Respondent responded that if the APTEL order is challenged in a higher forum, the
decision of the higher forum would be binding on both the parties, which is
confirmed by the Petitioner by email dated 10.12.2014 stating “OK”. Thus, it was
agreed between the parties that the decision of the higher forum shall be binding
on both the parties, if the APTEL Order is challenged in higher forum.
8.29 We also note that the Respondent vide its letter No. TPL/Kindle/76/2014 dated
13.12.2014 intimated the Petitioner about the payment of invoice for the month
of November 2014. In the said letter the Respondent once again disputed the
tariff payable on part commissioning of the project and stated that the
Respondent is making payment of the said invoice on provisional basis at the rate
of Rs. 10.03 per unit as per revised order dated 7.7.2014 read with order dated
11.07.2014 passed by the Commission after adjusting the liquidated damages
amount as per the request of the Petitioner. Similar correspondence was also
exchanged between the Respondent and the Petitioner for the payment of invoice
for the month of December 2014 and January, 2015. However, against the invoice
for January, 2015, the Respondent also adjusted the transmission charges in
addition to the liquidated damages.
8.30 The Petitioner thereafter vide letter No. KECPL/TPL/24 dated 19.02.2015
informed the Respondent about full commissioning of their 50 MW plant and also
requested to accept the part commissioning of project and tariff related issues
and assist in resolving the said disputes promptly and equitably. It is also stated
77 that this communication be treated as a communication under Clause 10.1, 10.2 and 10.3 of the PPA for initiation of mutual negotiations for settlement of disputes that have arisen between KEPCL and TPL. It is, therefore, necessary to refer the said letter which is reproduced below:
“KECPL/TPL/24 dated 19.02.2015 To, Shri Sudhir Shah Executive Director Electricity House, Lal Darwaja Ahmedabad – 380001 Phone No. : 079-25502881/25510490 Subject: Commissioning of our 50 MW Solar PV Project at Charanka Re: Our letter No. KECPL/TPL/18 dated 14.01.2015; E:mails dated 23.01.2015 and 28.01.2015; and Your letter dated 14.07.2014. Sir, We are pleased to inform you that we have, on 04.02.2015, commissioned the balance capacity of our 50 MW Solar PV Project at Charanka (“Project”) (Certificate from GEDA enclosed as Annexure A). In furtherance thereof, we request you to address the pending issues relating to part commissioning and applicable tariff, and accept our submissions made through out letter nos. KECPL/TPL/16 and KECPL/TPL/17 dated 17.06.2014 in this regard. As regards the concerns raised by you in letter dated 14.07.2014, we reiterate that our Power Purchase Agreement dated January 20, 2011 (“PPA”) permits part commissioning of the Project and there is no express prohibition and/or bar against part commissioning. Furthermore, as you are well aware, the PPA has been approved by the Gujarat Electricity Regulatory Commission (“Commission”) and its’ execution is subservient to the Regulatory Regime of the Ld. Commission. It is trite to point out that our PPA is also consistent, in language, intent and interpretation, with the PPAs executed by GUVNL and Ld. Commission has consistently recognized and permitted part commissioning of projects. As regards
78
the issue of applicable tariff we reiterate the stand taken by us in our letter dated 17.06.2014. Since the Project stands completely commissioned, we urge you to accept our requests on part-commissioning and tariff related issues and thereby, assist us in resolving the said disputes promptly and equitably. In case of divergence of views on any of these issues, we request you to communicate the same to us and pursuant thereto, to suggest a convenient date for a meeting for an amicable resolution of such issues. Please treat the instant letter as a communication under Clauses 10.1,10.2, and 10.3 of the PPA for initiation of mutual negotiations for settling of the disputes that have arisen between KEPCL and TPL. Warm Regards, For KECPL Sd/- (Pankaj Prakash) Encl: As above.”
8.31 Thus, vide aforesaid letter Petitioner has invoked the provisions of Article 10 of
the PPA to resolve the dispute. It is, therefore, necessary to refer Clauses 10.1,
10.2 and 10.3 of Article 10 of the PPA, which are reproduced below:
“10. 1 All disputes or differences between the Parties arising out of or in connection with this Agreement shall be first tried to be settled through mutual negotiation.
10.2 The Parties hereto agree to attempt to resolve all disputes arising hereunder promptly, equitably and in good faith.
10.3 Each Party shall designate in writing and communicate to the other Party its own representative who shall be authorised to resolve any dispute arising under this Agreement in an equitable manner and, unless otherwise expressly provided herein, to exercise the authority of the Parties hereto to make decisions by mutual agreement.
79
It is apparent from the above that a mechanism for resolution of dispute between
the parties is provided in the PPA.
8.32 We note that the Petitioner invoked the provisions of Article 10 of the PPA to
resolve the dispute pertaining to part commissioning of the project as well as the
tariff applicable on such part commissioning of the project. However, there is no
evidence on record to substantiate that both the parties have designated their
representatives and authorised them to negotiate and mutually resolve the
dispute.
8.33 We also note that pursuant to the Petitioner’s letter dated 19.02.2015 a meeting
was held between the representatives of both the parties on 23.03.2015 and the
minutes of meeting was drawn, which is reproduced below:
Minutes of Meeting
Participants : Kindle Engineering and Construction Private Torrent Power Limited (TPL) Limited (Kindle)
Shri Rajyawardhan Ghei, Director Shri Sudhir Shah, Executive Director Shri Pankaj Prakash, AVP Shri Nisarg Shah, General Manager
Subject: 50 MW Solar Project of Kindle Engineering and Construction Private Limited at Solar Park, Charnka Ref: Power Purchase Agreement dated 20.01.2011 and Supplemental PPAs dated 28.02.2013, 11.05.2013 and 17.12.2013
Location : Torrent Power Limited, Electricity House, Ahmedabad
Date of meeting : 23rd March 2015
The Scheduled COD of the 50 MW solar project of Kindle Engineering and Construction Private Limited (KECPL) at Solar Park Charnka was 8th December
80
2013 as per the Power Purchase Agreement dated 20.01.2011 read with Supplemental PPAs dated 28.02.2013, 11.05.2013 and 17.12.2013. KECPL Commissioned the 50 MW solar project in three parts as under: - 29.9399 MW on 31st March 2014 - 15.0118 MW on 27th January 2015 - 5.17924 MW on 04th February 2015
On request of Kindle, TPL agreed to consider respective COD for the capacities commissioned as above i.e. for 29.9399 MW as 2013-14 and for balance as 2014-15.
The settlement with reference to Liquidated Damages, Transmission Charges and Tariff is as under:
1. Liquidated Damages: Torrent Power Limited (TPL) will refund amount of Rs.13,93,75,256 to KECPL with reference to Liquidated Damages pertaining to 29.9399 MW commissioned on 31st March 2014. 2. Transmission Charges : Torrent Power Limited (TPL) will refund amount of Rs.1,29,06,243 to KECPL with reference to Transmission Charges. 3. Tariff Difference : It was agreed that KECPL will be eligible for tariff of Rs.10.96 per unit for the capacity commissioned in FY.2013-14 and tariff of Rs.10.03 per unit for the capacity commissioned in FY 2014- 15. The weighted average rate works out to Rs.10.5869 per unit. TPL was making payment @ Rs.10.03 per unit KECPL till invoice of February 2015. As agreed TPL will pay Rs.4,46,07,874/- on account of tariff difference till the invoice of February 2015. All future invoices from March 2015 will be payable @ Rs. 10.5869 per unit till completion of 12th year of COD of respective capacity. For avoidance of doubt, the weighted average rate payable would be as follow:
Upto 31.3.2026 Rs.10.5869 per unit From 01.04.2026 to 27.01.2027 Rs. 8.5153 per unit From 28.01.2027 to 04.02.2027 Rs.7.7557 per unit From 05.02.2027 till completion of Rs. 7.50 per unit 25 years of respective capacity
4. Payment: TPL will make payment of the difference to Kindle latest on 24th March, 2015
This is the full and final settlement and all claims pertaining to this matter are fully settled and neither party will be entitled to claim anything in future on this account.”
81
8.34 It is a fact that the aforesaid minutes of meeting was drawn subsequent to the
emails dated 21.11.2014 and 10.12.2014 exchanged between the parties with
regard to the tariff payable to the Petitioner.
8.35 We note that the Respondent vide letter dated 15.02.2016 intimated the
Petitioner about change in applicability of tariff pursuant to Supreme Court order
dated 2.02.2016 in Civil Appeal No. 1220 of 2015 and stating that the Petitioner is
not eligible to the tariff which has been agreed between the parties as per MoM
but the Petitioner is eligible for the tariff for the project availing the benefit of
accelerated depreciation. The Respondent also stated that TPL was, subject to the
decisions of the Hon’ble Supreme Court in the matter, paying tariff for the project
not availing accelerated depreciation and has accordingly worked out the excess
payment of Rs. 15,01,00,107/- till December, 2015 to be refunded by the
Petitioner. The aforesaid letter and three Annexures enclosed with the said letter
are reproduced below:
“TPL/Kindle/159/2016 15th February 2016
Mr. R.W.Ghei Director Kindle Engineering and Construction Private Limited 239, Okhla Industrial Estate, Phase III, New Delhi 110 020
Subject : Change in applicability of tariff pursuant to Hon’ble Supreme Court order Ref: Power Purchase Agreement between Torrent Power Limited (TPL) and Kindle Engineering and Construction Private Limited (KECPL) dated 20th Jan 2011.
Sir,
This is reference to the Power Purchase Agreement between TPL and KECPL wherein TPL is procuring power from KECPL’s 50 MW solar power project at Solar Park, Charnka. The schedule COD of the project was 28.01.2012. The applicable tariff for the control period in which PPA was signed was Rs.15 per unit for first 12
82
years and Rs.5 per unit from 13th year till 25th year. This tariff was prescribed for the project availing Accelerated Depreciation. However, the project was commissioned in next control period in three parts on 31.03.2014, 27.01.2015 and 04.02.2015.
As per the Hon’ble GERC’s order in case no 1270/2012 dated 08.08.2013, TPL was paying tariff applicable for the project not availing benefit of Accelerated Depreciation. TPL was paying this tariff under protest as GERC’s order was challenged in a higher forum. As agreed, the decision of the higher forum would be applicable to both the parties.
Recently, the Hon’ble Supreme Court vide its order in civil appeal no.1220 of 2015 dated 02.02.2016 has set aside Hon’ble GERC’s order in case no.1270/2012 dated 08.08.2013 (Copy of Supreme Court Order enclosed). Supreme Court order will also apply to PPA between KECPL and TPL as Hon’ble GERC had generalized its order and had decided to give benefit to all Solar Generators to avoid multiplicity of proceedings.
Accordingly, KECPL’s project is eligible for the tariff for the project availing Accelerated Depreciation i.e. Rs.9.64 per unit for the part of project commissioned in FY 2013-14 and Rs.8.82 per unit for the part of the project commissioned in FY 2014-15. The weighted average tariff works out to Rs 9.3110 per unit till the end of 12th year. However, TPL was, subject to the Hon’ble Supreme Court decision in the matter, paying tariff for the project not availing Accelerated Depreciation i.e. Rs.10.96 per unit for the part of project commissioned in FY 2013-14 and Rs.10.03 per unit for the project commissioned in FY 2014-15. TPL was paying weighted average tariff of Rs.10.5869 per unit once the entire project (50MW) was commissioned.
We enclose herewith the working of excess amount of Rs.15,01,00,107/- till December 2015 paid to KECPL by TPL on account of differential tariff in Annexure 1 . We will intimate you the interest component related to the said excess amount for the tariff differential period in due course.
We are adjusting Rs.6,49,29,556/- payable towards Jan 2016 invoice from this amount. The amount payable for Jan 2016 invoice at new rate of Rs.9.3110 is attached herewith in Annexure 2. We request you to pay the balance amount of Rs.8,51,70,551/- within one week, after which Late Payment charge shall be applicable as per PPA.
We also request KECPL to henceforth invoice as per below table (working attached in Annexure 3):
Period Applicable tariff per unit Upto 31.03.2026 Rs. 9.3110 From 01.04.2026 to 27.01.2027 Rs. 7.7302
83
From 28.01.2027 to 04.02.2027 Rs. 7.1838 From 05.02.2027 till completion of 25 years of respective capacity Rs. 7.0000 Thanking Your, Yours faithfully Sd/- Nisarg Shah General Manager (Commercial)
84
Annexure-1 (Calculation of Tariff Difference) Rate per unit Weighted avg Rate Particular (April to Dec per unit (from Jan Date of commissioning MW 2014) 2015) Tariff paid (Without AD) 10.96 10.5869 31.03.2014 29.9399 Tariff payable (With AD) 9.64 9.3110 27.01.2015 15.0118 Differential rate per unit 1.320 1.2759 04.02.2015 5.0483
Tariff difference Particulars Units Rate Particulars Jan-15 Feb-15 amount Upto Dec 2014 4,04,38,776 1.3200 5,33,79,184 Units injected 49,32,798 7100934 Jan-15 48,92,733 1.3141 64,29,367 Less: power drawn 40,065 39708 Feb-15 70,61,226 1.2767 90,14,941 Net Units 48,92,733 7061226 March 15 to Dec 15 (NOTE 2) 6,70,90,278 1.2749 8,56,00,486 Differential Rate per unit 1.3141 1.2767 Total 11,94,83,013 15,44,23,978 Amount 64,29,367 9014941 2.8% Discount 43,23,871 Receivable after discount 15,01,00,107
NOTE 1 27/1/15 TO 31/01/2015 (OLD) MW Rate Amount MW Rate Amount FY 2013-14 29.94 10.96 328 FY 2013-14 29.94 9.64 289 FY 2014-15 15.01 10.03 151 FY 2014-15 15.01 8.82 132 Weighted Avg rate 45 10.6494 479 Weighted Avg rate 45 9.3662 421
Note 2 4/2/2015 to 28/2/2015(OLD) MW Rate Amount MW Rate Amount FY 2013-14 29.94 10.96 328 FY 2013-14 29.94 9.64 289 FY 2014-15 20.06 10.03 201 FY 2014-15 20.06 8.82 177 Weighted Avg rate 50 10.5869 529 Weighted Avg rate 50 903110 466
85
Annexure-2 Calculation of Jan 2016 invoice at new rate
Description Units Rate Amount Sale of power for the month of Jan 2016 7302342 9.311 6,79,92,106 Less: Purchase of power by KECPL at Solar Park, Charanka 42597 9.311 3,96,621 Bill Amount 6,75,95,486 Less: Discount as per Tariff Clause in PPA 2.80% 18,92,674 Amount payable after discount 6,57,02,812 Less: Rebate as per Clause 6.5 of the PPA (Ref Note) 1.1769 7,73,256 Net amount payable towards Jan 2016 invoice 6,49,29,556
Note: (Base Rate 9.3% + 6%)/52 * 4 weeks = 1.1769% rebate
Annexure – 3 (Calculation of tariff payable in future)
Date of commissioning MW 31-03-2014 29.9399 27-01-2015 15.0118 04-02-2015 5.0483
01-04-2026 to 27-01-2027
29.9399 7.00 210 20.0601 8.8200 177 Weighted Avg rate 50.00 7.7302 387
28-01-2027 to 04-02-2027
49.9517 7.00 315 5.0483 8.8200 45 Weighted Avg rate 50.00 7.1838 359
From 05-02-2027 till 7.00 completion of 25 years of respective capacity
8.36 The aforesaid letter written by the Respondent after the judgment dated
2.02.2016 passed by the Hon’ble Supreme Court in Civil Appeal No. 1220 of
86
2015 in the case of GUVNL Vs. EMCO Ltd. and others does not have any
reference to the agreement arrived at between the parties through the MoM
dated 23.03.2015, which is a matter of the present dispute.
8.37 The disputes between the parties were pertaining to (i) the part commissioning
of the project, (ii) scheduled commercial operation dates, (iii) applicable tariff
on part commissioned projects, (iv) the benefit of accelerated depreciation
and, (v) the tariff applicable to the Petitioner. Further, there were disputes
pertaining to (a) liquidated damages and (b) transmission charges payable by
the Petitioner.
8.38 The issue first arose between the parties when the Respondent TPL vide letter
dated 21.03.2014 denied to accept part commissioning of the project.
Thereafter, the Respondent disputed the invoices raised by the Petitioner for
sale of power generated from solar plant since April, 2014. During the period
various correspondence was exchanged between the parties as recorded in
earlier para of this order.
8.39 We note that the Petitioner has invoked the provisions of Article 10 of the PPA
between the parties and invited the Respondent for mutual negotiation as per
the provisions of PPA to resolve the disputes after exchange of emails between
the parties vide letter No. KECPL/TPL/24 dated 19.02.2015. In the said letter
87
the Petitioner has specifically raised the issue of (i) part commissioning of the
project and (ii) tariff payable by the Respondent. In response to the aforesaid
letter, the representatives of both parties held a meeting on 23.03.2015 and
recorded the minutes of meeting wherein both the parties agreed to consider
respective CoD for the capacities commissioned on different dates, Liquidated
Damages, Transmission Charges, Tariff and Payment. We also note that it is
recorded in the MoM that it is a full and final settlement between the parties
and all claims pertaining to the matter are fully settled and neither party will
be entitled to claim anything in future on this account.
8.40 We note that after signing of the aforesaid MoM, the Respondent acted upon
it till 15.02.2016. The Respondent wrote a letter to the Petitioner on
15.02.2016 disputing the tariff payable to the Petitioner in view of the Hon’ble
Supreme Court Judgment dated 2.02.2016 in Civil Appeal No. 1220/2015 in
case No. 1270/2012 of GUVNL V/s. EMCO Ltd. and others.
8.41 We note that the parties to the PPA have from time to time amended either
the agreement or arrived at mutual settlement to resolve the disputes amongst
them and that no party ever approached the Commission either for the dispute
resolution or for approval of the mutual settlement of disputed issues.
88
8.42 We note that the Petitioner has contended that once the parties to the
contract have arrived at some settlement based on the documents exchanged
between them and the evidence have been created by way of such exchange
between the parties as per Sections 91, 92 and 94 of the Evidence Act, 1872,
the true intention of the parties is deduced from it. It is necessary to refer the
aforesaid Sections which are reproduced below:
“91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document. –– When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.”
“92. Exclusion of evidence of oral agreement. –– When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms:
89
Proviso (1). –– Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law.
Proviso (2). ––The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this proviso applies, the Court shall have regard to the degree of formality of the document.
Proviso (3). ––The existence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved.
Proviso (4). ––The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents.
Proviso (5). –– Any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved: Provided that the annexing of such incident would not be repugnant to, or inconsistent with, the express terms of the contract.
90
Proviso (6). –– Any fact may be proved which shows in what manner the language of a document is related to existing facts.”
“94. Exclusion of evidence against application of document to existing facts –– When language used in a document is plain in itself, and when it applies accurately to existing facts, evidence may not be given to show that it was not meant to apply to such facts.”
The aforesaid Sections state about the documents/evidences which are
required to be considered while interpreting the contracts and necessity of
such documents while deciding the case.
8.43 The Petitioner has relied on the aforesaid provisions and contended that the
Hon’ble Supreme Court has in the following Judgements decided that when an
agreement/contract has been arrived at between the parties, it is not open to
the parties to prove the terms of the contract:
1) Tamilnadu Electricity Board & Anr. V.N. Raju Reddiar & Anr. reported as (1996) 4 SCC 551 2) State Bank of India v. Mula Sahakari Sakhar Karkhana Ltd. reported as (2006)6 SCC 293 3) Bomanji Ardheshir Wadia & Ors. (Plaintiffs) v. Secretary of State of India in Council (Defendant) reported as AIR 1929 PC 34. 4) Rickmers Verwaktung GMBH v. Indian Oil Corporation Limited. 5) Ashwini Kumar Singh Vs. U.P.Public Service Commission reported as (2003) 11 SCC 584
91
6) Cauveri Coffee Traders, Mangalore vs. Hornor Resources (Intern) Co. Ltd. reported in 2011 (10) SCC 420 7) R.N. Gosain Vs. Yashpal Dhir – AIR 1993 SC 352
These judgments are dealt with hereunder:
1) Tamilnadu Electricity Board & Anr. V. N. Raju Reddiar & Anr. Reported as (1996) 4 SCC 551
It is necessary to refer the relevant portion of the said judgement which is reproduced below: “…… 7. At the outset it must be borne in mind that the agreement between the parties was a written agreement and therefore the parties are bound by the terms and conditions of the agreement. Once a contract is reduced to writing, by operation of Section 91 of the Evidence Act, 1872 it is not open to any of the parties to seek to prove the terms of the contract with reference to some oral or other documentary evidence to find out the intention of the parties. Under Section 92 of the Evidence Act where the written instrument appears to contain the whole terms of the contract then parties to the contract are not entitled to lead any oral evidence to ascertain the terms of the contract. It is only when the written contract does not contain the whole of the agreement between the parties and there is any ambiguity then oral evidence is permissible to prove the other conditions which also must not be inconsistent with the written contract. The case in hand has to be adjudged bearing in mind the aforesaid principles and the plaintiffs being conscious of this position along with the tender appended a letter and in that letter inserted certain terms by writing in ink to establish the case that the acceptance of the plaintiffs’
92 tender would tantamount to the acceptance to the terms contained in the letter in which there was insertion in writing to the effect that it was on multi-slab basis. It is in this context the question whether such handwritten portion was originally there or was subsequently inserted assumes great significance. We are unable to accept the stand taken by the learned counsel for the respondents that there was no such issue on this question inasmuch as this question was considered by the learned trial Judge while discussing Issue 1 on the basis of evidence laid and the trial Judge had given a finding in favour of the plaintiffs. The said finding, however, on the face of it appears to us to be wholly unsustainable. As has been stated earlier there was no signature either by the persons submitting the tender or by the persons receiving the same on the handwritten portion of the letter. The learned trial Judge had noticed that the certified copy which was issued by the Board on 11-7-1978 of the aforesaid letter clearly contains the handwritten portion and therefore he came to the conclusion that the handwritten portion was there at the time of submission of the tender. The tender itself was submitted on 12-7-1978 and we fail to understand how the Board could grant a certified copy of the letter on 11-7-1978 when the plaintiffs’ case itself is that along with the tender he had appended the letter in question. On this ground alone it can be safely held that handwritten portion in Exhibit P-1 was not there at the time of submission of the tender but was subsequently inserted obviously with the connivance of the officers of the Board. The Board in its rejoinder-affidavit filed in this Court has stated that the attested copy was actually received on 28-12-1978, much later than the finalisation of the tenders and agreement and in order to build up a case the aforesaid interpolation has been made. In the facts and circumstances of the present
93
case the aforesaid stand of the Board appears to us to be wholly justified and at any rate we have no hesitation to come to the conclusion that the handwritten portion in Exhibit P-1 was not there initially and has been inserted subsequently. The main basis of the plaintiffs’ case on which a multi-slab rate was claimed therefore fails. The written agreement between the parties nowhere indicates that the rate to be paid to the plaintiffs was on multi-slab basis and the terms and conditions of the written contract is not susceptible of such a construction. …..”
In the aforesaid judgement Hon’ble Supreme Court held that once written agreement is made by the parties consisting of terms and conditions, the parties are bound by the terms and conditions of the agreement. It is not open to any of the parties to seek to prove the terms of contract with reference to some oral or other documentary evidence to find out the intention of the parties.
2) State Bank of India v. Mula Sahkari Sakhar Karkhana Ltd. reported as (2006) 6 SCC 293: It is necessary to refer the relevant paras of the said judgement, which are reproduced below:
“......
22. A document, as is well known, must primarily be construed on the basis of the terms and conditions contained therein. It is also trite that construing a document the court shall not supply words which the author thereof did not use.
94
23. The document in question is a commercial document. It does not on its face contain any ambiguity. The High Court itself said that ex facie the document appears to be a contract of indemnity. Surrounding circumstances are relevant for construction of a document only if any ambiguity exists therein and not otherwise.
30. The High Court proceeded on the basis that Section 92 of the Evidence Act would be attracted in the instant case but despite the same it referred to the oral evidence so as to find out the purported circumstances surrounding the transaction, which in our view, was not correct.
31. In P. L. Bapuswami relied upon by Mr. Naphade, this Court was concerned with a question as to whether Ext. B-1 therein was a transaction of mortgage by conditional sale or a sale with a condition of retransfer in the light of Section 58(c) of the Transfer of Property Act. We are not concerned with such a case here.
32. It is one thing to say that the nature of a transaction would be judged by the terms and conditions together with the surroundings and/or attending circumstances in a case where the document suffers from some ambiguities but it is another thing to say that the court will take recourse to such a course, although no such ambiguity exists.
...... ”
The Hon’ble Supreme Court had in the aforesaid judgement upheld that a document be construed on the basis of the terms and conditions of the document. Further, while construing the document, the Court shall not supply any words which are not used by the author. The surrounding circumstances
95 are relevant for construction of a document only if any ambiguity exists therein and not otherwise.
3) Bomanji Ardheshir Wadia & Ors. (Plaintiffs) v. Secretary of State of India in Council (Defendant) reported as AIR 1929 PC 34.
“......
Nothing is better settled than that when parties have entered into a formal contract that contract must be construed according to its own terms and not be explained or interpreted by the antecedent communings which led up to it. There even, if there has been a formal antecedent contract, that contract cannot be looked at to control the terms of the conveyance; much less can mere communings which could only show what parties meant to do but cannot show what they did.”
(Emphasis supplied)
In the aforesaid judgement, it is held that the contract must be construed according to its own terms and it cannot be explained or interpreted by the antecedent’s communes which led to it even if there has been a formal antecedent contract that contract cannot be looked at to control the terms of the conveyance.
4) Rickmers Verwaltung GMBH vs. Indian Oil Co. Ltd. The relevant portion of the said judgement is reproduced below: “ 13. In this connection the cardinal principle to remember is that it is the duty of the court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of mind
96
between the parties, which would create a binding contract between them but the court is not empowered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate implications of law to be drawn. Unless from the correspondence, it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence, The court is required to review what the parties wrote and how they acted and from that the material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there has been meeting of mind between the parties and they had actually reached an agreement upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence.” (Emphasis supplied)
In the aforesaid it is held that it is the duty of the Court to construe the correspondence between the parties with a view to arrive at the conclusion as to whether there was any meeting of mind between the parties which would create a binding contract between them but the Court is not empowered to create a contract for the parties by going outside the clear language used in the contract. Further, the intention of the parties is to be
97 gathered only from the expressions used in the correspondence and meaning it conveys and it shows there has been meeting of mind between the parties and they had actually reached an agreement and converted in a binding contract.
5) Ashwini Kumar Sinh vs. UP Public Service Commission and others: It is necessary to refer the relevant portion of the said judgement which is reproduced below:
10. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are not to be read as Euclid’s theorems nor as provisions of the statute. These observations must be read in the context in which they appear. Judgements of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark upon lengthy discussions, but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgements. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. V. Horton2 (AC at p. 761) Lord McDermott observed: (All ER p. 14 C-D) “The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate
98 thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished Judge...” 11. In Home Office v. Dorset Yacht Co.3 Lord Reid said, “Lord Atkin’s speech ... is not to be treated as if it were a statutory definition. It will require qualification in new circumstances” (All ER p. 297 g-h). Megarry, J. In Shepherd Homes Ltd. V. Sandham (No. 2)4 observed: (All ER p. 1274d-e) “One must not, of course, construe even a reserved judgment of even Russel, L.J. as if it were an Act of Parliament;” In Herrington v. British Rlys. Board Lord Morris said: “There is always peril in treating the words of speech or a judgment as though they were words in a legislative enactment , and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case.” 12. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 13. The following words of Hidayatullah, J in the matter of applying precedents have become locus classicus: (Abdul Kayoom v. CIT, AIR p. 688, para 19) “... 19. .... Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To
99
decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.” “Precedent would be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches, else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it.”
In the aforesaid judgement it is held that Courts should not place reliance on decision without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are not to be read as Euclid’s theorems nor as provisions of the statute. These observations must be read in the context in which they appear. Judgements of the Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark upon lengthy discussions. but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgements. They interpret words of statutes; their words are not to be interpreted as statutes.
Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.
100
6) Cauveri Coffee Traders, Mangalore vs. Hornor Resources (Intern) Co. Ltd. reported in 2011 (10) SCC 420:
The relevant portion of the said judgment is reproduced below:
“………30. In view of the above, the law on the issue stands crystallised to the effect that, in case the final settlement has been reached amicably between the parties even by making certain adjustments and without any misrepresentation or fraud or coercion, then, the acceptance of money as full and final settlement/issuance of receipt or vouchers, etc. would conclude the controversy and it is not open to either of the parties to lay any claim/demand against the other party. ….
34. A party cannot be permitted to “blow hot and cold”, “fast and loose” or “approbate and reprobate”. Where one knowingly accepts the benefits of a contract or conveyance or an order, is estopped to deny the validity or binding effect on him of such contract or conveyance or order. This rule is applied to do equity, however, it must not be applied in a manner as to violate the principles of right and good conscience 35. Thus, it is evident that the doctrine of election is based on the rule of estoppel—the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppels in pais (or equitable estoppel), which is a rule in equity. By that law, a person may be precluded by his actions
101
or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had.
36. In the facts and circumstances of the case, as the respondents resorted to Clause 5 of the purchase agreement dated 28-6-2008, regarding price adjustment and the offer so made by the respondents has been accepted by the applicants and agreed to receive a particular sum offered by the respondents as a full and final settlement, the dispute comes to an end. The applicants cannot take a complete somersault and agitate the issue that the offer made by the respondents had erroneously been accepted.
In the aforesaid judgment, it is held that whenever any settlement is reached amicably between the parties without any misrepresentation, fraud or collusion then the acceptance of money as full and final settlement/issuance of receipts or voucher would conclude the controversy and is not open to either of the parties to lay any claim/demand against the other party.
7) R. N. Gosain vs. Yashpal Dhir reported in AIR 1993 SC 352:
The relevant portion of the said judgment is reproduced below:
“……..10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that “a person cannot say at one time that a transaction is valid and
102
thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage”. [See : Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd., Scrutton, L.J.] According to Halsbury’s Laws of England, 4th Edn., Vol. 16, “after taking an advantage under an order (for example for the payment of costs) a party may be precluded from saying that it is invalid and asking to set it aside….”
In the aforesaid judgment it is held that law does not permit a person both to approbate and reprobate. The principle of doctrine of election postulates that no party can accept and reject the same instrument and that a person cannot say at one point of time that a transaction is valid and thereby obtain some advantage and then say it is void for securing some other benefits.
8) Bharat Petroleum Corpn. Ltd. v. N.R. Vairamani, (2004) 8 SCC 579:
It is necessary to refer the relevant para of the said judgement which is
reproduced below:
‘…………8. As rightly submitted by learned counsel for the appellants, provisions similar to Sections 3 and 9 of the Tenants Act were not under consideration in Hindustan Petroleum case. 9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are neither to be read as Euclid’s theorems nor as provisions of a statute and that too taken out of their context.
103
These observations must be read in the context in which they appear to have been stated. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (AC at p. 761) Lord MacDermott observed: (All ER p. 14 C-D) “The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge,…” 10. In Home Office v. Dorset Yacht Co. (All ER p. 297g-h) Lord Reid said, “Lord Atkin’s speech … is not to be treated as if it were a statutory definition. It will require qualification in new circumstances”. Megarry, J. in Shepherd Homes Ltd. v. Sandham (No. 2) observed: “One must not, of course, construe even a reserved judgment of Russell, L.J. as if it were an Act of Parliament.” And, in Herrington v. British Railways BoardLord Morris said: (All ER p. 761c) “There is always peril in treating the words of a speech or a judgment as though they were words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case.” 11. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.
104
12. The following words of Hidayatullah, J. in the matter of applying precedents have become locus classicus: (Abdul Kayoom v. CIT, AIR p. 688, para 19) “19. … Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.” * * * “Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it.”…….”
8.44 The judgments as stated above relied upon by the Petitioner are not applicable
in the present case as the claim of the Petitioner of having full and final
settlement is solely based on an MOM dated 23.03.2015 signed between the
two parties. Since tariff of the retail consumers depends upon the power
purchase cost of the distribution licensees, the same cannot be agreed
between the generator and the licensee without getting approval of the
Commission under the Electricity Act, 2003. In the absence of proper approval
of the Minutes of Meeting by the Commission, the same cannot be put into
105
operation by the parties. Hence, the contentions of the Petitioner are not valid
and are rejected.
8.45 The Respondent relied upon the judgement of the Hon’ble Supreme Court in
the case of Kunhayammed and others vs. State of Kerala and others reported
in 2000(6) SCC 359 and submitted that as per the doctrine of merger the parties
have acted upon the decision of the Commission dated 08.08.2013 which was
then binding upon the parties as the Commission had made it applicable to all
the projects. When this order has been subjected to statutory appeals under
Section 111 and thereafter under Section 125 of the Act, the final order of the
Hon’ble Supreme Court is not only applicable but also order dated 08.08.2013
has merged in the order of the Hon’ble Supreme Court. It is therefore
necessary to refer relevant part of the said judgement which is reproduced
below:
“12. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. When a decree or order passed by inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way –whether the decree or order under appeal is set aside or modified
106 or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid shall have to be kept in view. Stage of SLP and post-leave stage ......
44. To sum up, our conclusions are:- (i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirsms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.
......
(iii) Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercisesd by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable
107
of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal . The doctrine of merger can therefore be applied to the former and not to the latter.
......
(vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation...... ”
In the aforesaid judgment the Hon’ble Supreme Court has held that the doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine on principles of proprietary in the hierarchy of justice delivery system. It is held that the logic underlying the doctrine of merger is that there cannot be more than one decree or operative order governing the same subject matter at a point of time. When a decree or order passed by an Inferior Court, Tribunal or
Authority is subjected to a remedy available under the law before Superior
108
Forum then, though the decree or Order under challenge continues to be
effective and binding nevertheless its finality is put in jeopardy. It is also held
that the doctrine is not of universal or unlimited application. The nature of
jurisdiction exercised by the Superior Forum and the content of or subject
matter of challenge laid or which could have been laid shall have to be kept
in view.
8.46 The Respondent has relied upon the judgment dated 02.02.2016 of the Hon’ble
Supreme Court in Civil Appeal No. 1220 of 2015 in the case of EMCO, the
relevant portion of which is reproduced below:
“……….
The second respondent herein, the Gujarat Electricity Regulatory Commission is a body constituted under Section 82 of the Electricity Act, 2003 (hereinafter referred to as “the Act”). In exercise of its statutory powers under Sections 61(h), 62(1)(a) and 86(1)(e) of the Act the second respondent issued Order No. 2 of 2010 dated 29-1-2010 (hereinafter referred to as “the First Tariff Order”) determining the tariff for procurement of power by the distribution licensees in Gujarat from solar energy projects. ……….. 3. However, after entering into the abovementioned PPA, respondent no.1 decided to change the PROJECT’s location. Therefore, a Supplemental Agreement was entered into between the appellant and respondent no. 1 on
109
07.05.2011 making appropriate and necessary modifications to the PPA dated 09.12.2010. However, Articles 5.1 and 5.2 of the original PPA remained unaltered. 4. 2nd respondent passed another order dated 27-1-2012 (hereinafter referred to as the “2nd Tariff Order”) determining the tariff applicable to the PROJECTS to be commissioned on or after 29.01.2012. The tariff fixed under the said order for the PROJECTS generating electrical Energy through Solar Photovoltaic (SPV) Technology “availing the benefit of accelerated depreciation under the Income Tax Act” is less favourable to the power producers and the tariff payable by the appellant to the power producers which do not avail “the benefit of accelerated depreciation” under the Income Tax Act is more favourable to such power producers. 5. The 1st respondent commissioned its PROJECT only on 2.3.2012, i.e., beyond the “control period6” of tariff specified under the 1st Tariff Order. The said “control period” ended on 28.01.2012. The 1st respondent admittedly did not avail the accelerated depreciation under Section 32 of the Income Tax Act. 6. The 1st respondent, therefore, filed a petition no. 1270 of 2012 before the State Commission invoking Section 86(1)(f) of the Act praying: “(A) This Hon’ble Commission be pleased to hold and declare that the Petitioner is entitled to claim the tariff applicable to megawatt scale solar photovoltaic projects not availing of accelerated depreciation as per tariff order dated 27.1.2012; and (B) This Hon’ble Commission be pleased to quash and set aside the decision of the Respondent taken in letters dated 20.4.2012, 22.6.2012 and 20.11.2012 for denying the tariff applicable to megawatt scale solar photovoltaic projects not availing of accelerated depreciation as per tariff order dated 27.1.2012 to the Petitioner and direct the Respondent to forthwith make payment of a sum of Rs
110
59,50,260/- to the Petitioner being the differential amount of invoices which is unpaid by the Respondent;” 7. The 2nd respondent by its order dated 08.08.2013 held that the 1st respondent is entitled for the benefit of the tariff specified in the 2nd Tariff Order dated 27-1-20127. The 2nd respondent also held that the benefit of its adjudicatory order should not only go to the 1st respondent but also to others who have commissioned their PROJECTS subsequent to the 2nd Tariff Order: Para 8. Before parting with the judgment, we would like to observe that the issue raised in the present petition is in fact on interpretation of Order No. 1 of 2012 dated 27.01.2012; and hence the decision in this case would impact not only the petitioner, but also other developers who have either commissioned or are likely to commission their Projects within the control period of the said order. Some of such developers might not avail the benefits of accelerated depreciation and it would be unfair if all of them are required to file separate petitions to seek justice, especially when we have already decided that in the Order No. 1 of 2012, the Commission has determined separate tariff for such projects. We, therefore, in the interest of justice and fairness, decide that the present order shall be applicable in all such cases. The onus of proof regarding non-availing of accelerated depreciation shall, however, be on such developers. 8. Aggrieved by the order dated 08.08.2013, the appellant herein preferred an appeal before the Appellate Tribunal for Electricity (hereinafter referred to as “the Appellate Tribunal”), constituted under Section 110 of the Act invoking its jurisdiction under Section 111 of the Act. 9. By the impugned order dated 20.11.2014, the Appellate Tribunal confirmed the order of the 2nd respondent: “Para 62. Summary of Findings:
111
(a) The PPA dated 19.12.2010 entered into between the appellant and Respondent No. 1 provided for tariff as determined by the State Commission vide order dated 30.01.2010, viz. Rs 15 per kWh for first 12 years and thereafter Rs 5 per kWh from 13th year to 25th year, provided the Solar Project is commissioned on or before 31st December 2011. However, in case commissioning of the project is delayed beyond 31st December 2011, the Appellant has to pay the tariff as determined by the State Commission effective on the date of commissioning of Solar Power Project. The Solar Project of the Respondent No.1 was commissioned on 2.3.2012. Therefore, the tariff as determined by the State Commission by the order dated 27.1.2012 for the next control period from 29.1.2012 to 31.3.2015 will be applicable to the Respondent No.1. (b) In order dated 27.1.2012, the State Commission has determined the tariff for Solar Project availing accelerated depreciation and without availing the accelerated depreciation. As the Respondent No. 1 has not availed the accelerated depreciation, the tariff determined without accelerated depreciation in the order dated 27.1.2012 will be applicable in terms of the PPA and the tariff order of the State Commission dated 27.1.2012. (c) Complete reading of the Tariff Order dated 27.1.2012 clearly indicates that the State Commission has determined tariff for both the projects availing accelerated depreciation and those not availing accelerated depreciation. The order gives a choice to the Solar Developer to avail or not to avail the benefit of accelerated depreciation.” ……… ……..16. The argument of the first respondent throughout has been that the stipulation in the 1st Tariff Order that “a project that does not get such a benefit….” only means that the tariff propounded under the said order does not
112 apply to PROJECTS which do not choose to exercise the option to be governed by the scheme under Section 32 of the Income Tax Act. On the other hand, the argument by the appellant throughout has been that such a clause only implies that the tariff under the 1st Tariff Order is not applicable to those power generating PROJECTS which by operation of law (but not because of the violation of the assessees) are not entitled to claim the benefit of the scheme under Section 32(1)(i) of the Income Tax Act. ………………. ……….20. These questions were raised and argued before the 2nd respondent but unfortunately the issue was unnecessarily complicated by the arguments based on promissory estoppel10. After noticing the issue, the appellate tribunal elaborately extracted from the order of the 2nd respondent dated 8.8.2013. The relevant part of which reads as under: “6.16. However, it is also a fact that the parties to the above PPA agreed in the second para of the Article 5.2 of the PPA that if the project of the Petitioner is not commissioned during the control period of the Order No.2 of 2010 dated 29.1.2010, either the tariff that was agreed in Article 5.2 of the PPA or the tariff determined by the Commission as on the date of commissioning of the project, whichever is lower, will be applicable. Thus, the aforesaid PPA recognizes the two tariffs applicable to the Petitioner case. As the Petitioner’s project was commissioned on 2.3.2012, it falls under the control period of Order No.1 of 2012 dated 27.01.2012, for tariff purposes, relevant para of which is reproduced below: xxx xxx xxx xxx The above table reveals that both the tariffs i.e. one for the project availing the benefit of Accelerated Depreciation and another for the project not availing the benefit of accelerated Depreciation is allowed by the
113
Commission for the projects commissioned during the control period of 29.01.2012 to 31.03.2015. Such being the case, on the cogent reading of the Article 5.2 of the PPA and the tariff Order No.1 of 2012 dated 27.01.2012, we are of the view that the Principle of Promissory Estoppel is not applicable in the present case.” [Extracted portion of the order of the 2nd respondent in the impugned order]
It can be seen from the above that the 2nd respondent noticed the stipulation in the PPA that if the 1st respondent does not commission the PROJECT during the control period specified under the 1st Tariff Order: “… either the tariff that was agreed … or the tariff determined by the Commission … whichever is lower will be applicable but reached a conclusion that … on a cogent reading of Article 5.2 … and the tariff order No. 1 of 2012 dated 27.01.2012, we are of the view that the Principle of Promissory Estoppel is not applicable in the present case.” The 2nd respondent noticed the stipulation of the PPA regarding the applicable tariff in the event of the 1st respondent not commissioning the PROJECT would be the lower of the two tariffs. Without examining the legal effect of such stipulation, the 2nd respondent went into the analysis of the 2nd Tariff Order which is neither necessary (nor called for) for determining the legal effect of the stipulation of the PPA. 21. The Appellate Tribunal after noticing the issue and the elaborate consideration bestowed on it by the 2nd respondent did not record in the impugned order its view regarding the correctness of the above extracted conclusion of the 2nd respondent. We can only presume that the appellate tribunal approved the reasoning and the conclusion of the 2nd respondent since it did not reverse the 2nd respondent’s order.
114
22. One of the submissions of the 1st respondent which was accepted by the Tribunal is that the issue is covered by an earlier judgment of the Tribunal in Appeal No. 111 of 2012 dated 30th April 201311, pertaining to Rasna Marketing Services LLP v. Gujarat Urja Vikas Nigam Ltd. (hereinafter referred to as “RASNA case”)…. …24. The Tribunal rejected the said objection of GUVNL13 In substance, the conclusion of the Tribunal in RASNA case was that the execution of the PPA does not put any embargo on the right of Rasna to seek the determination of a specific tariff. The tribunal’s reasons for such a conclusion are that: (i) the 1st Tariff Order recognises the right of the power producers like Rasna either to opt for or not to opt for the benefit of accelerated depreciation; (ii) there is no specific stipulation in the Tariff Order that the power producers like Rasna which do not wish to avail the benefit of accelerated depreciation should intimate the same to the appellant before entering into the PPA; (iii) nor there is any obligation under any law by which Rasna is bound to disclose the fact before signing the PPA that it would not avail the benefit of accelerated depreciation. 25. Relying on the judgment of RASNA case, the Tribunal recorded a conclusion in the impugned order: “32. In the present case, the Solar Project could not be commissioned during the control period specified in the State Commission’s Order dated 29.1.2010. Therefore, in terms of the PPA, Respondent No. 1 is entitled to tariff as determined by the State Commission in the subsequent order dated 27.1.2012.” We do not wish to make any comment on the correctness of the order of the tribunal in RASNA case. We are not sure whether the order has become final. But we are of the opinion that the reliance by the tribunal in the instant case on RASNA case order is clearly wrong. In RASNA case, the prayer was for the
115 determination of a separate tariff applicable to it. In the instant case, the prayer of the 1strespondent is not for fixation of separate tariff but for a declaration that the 1st respondent is entitled for claiming the benefits of the tariff determined under the 2nd Tariff Order. ……. 26. Apart from that, the conclusion of the Tribunal in the instant case is wrong. First of all the PPA does not give any option to the respondent to opt out of the terms of the PPA. It only visualises a possibility of the producer not commissioning its PROJECT within the “control period” stipulated under the 1st Tariff Order and provides that in such an eventuality what should be the tariff applicable to the sale of power by the 1st respondent. Secondly, the PPA does not ‘entitle’ the 1st respondent to the “tariff as determined by the” 2nd respondent by the 2nd Tariff Order. On the other hand, the PPA clearly stipulates that in such an eventuality; “Above tariff shall apply for solar projects commissioned on or before 31st December 2011. In case, commissioning of Solar Power Project is delayed beyond 31st December 2011, GUVNL shall pay the tariff as determined by Hon’ble GERC for Solar Projects effective on the date of commissioning of solar power project or above mentioned tariff, whichever is lower.” The right of the 1st respondent not to avail the “benefit of accelerated depreciation” flows from the Income Tax Act. It is only the 1st Tariff Order which gives an option to the 1st respondent (for that matter to all the power producers who are similarly situated as the 1st respondent) not to sell the power produced by it at the price specified in the 1st Tariff Order but seek the determination of a separate tariff. Such a right and option is available to the power producers only in one contingency i.e. that they are not inclined to avail the “benefit of accelerated depreciation”.
116
………..” 33. For all the above-mentioned reasons, we are of the opinion that the
impugned order cannot be sustained and the same is therefore set aside. As a
consequence, the order of the 2nd respondent dated 8.8.2013, which was the
subject matter of appeal in the impugned order, is also set aside.
………”
In the aforesaid judgment, the Hon’ble Supreme Court has set aside the order
dated 08.08.2013 passed by the Hon’ble APTEL in Appeal No. 217 of 2013 and
held that as the Solar Generator was not able to commission the plant within
control period of the 1st Tariff Order and commissioned the project in the control
period of the 2nd Tariff Order, hence, as per the PPA, the Solar Generator is
entitled to receive lower of the two tariffs i.e. the tariff as determined by the
Commission for Solar Projects effective on the date of commissioning of solar
power project or the tariff mentioned in the PPA.
8.47 The Respondent has contended that the MOM dated 23.03.2015 between the
parties cannot be considered as the full and final settlement as far as the issue
of tariff is concerned on the following grounds:
1) The decision of the Hon’ble Supreme Court dated 02.02.2016 in the case
of GUVNL V/s. EMCO Limited is applicable in the present case because
the Hon’ble Supreme Court has decided that once the option of tariff is
117
exercised at the time of signing of the PPA, then it cannot be altered later
on. The Petitioner agreed to a tariff which is determined by the
Commission for the projects availing AD benefit in the tariff order dated
29.01.2010, when the PPA was signed.
2) The Hon’ble Supreme Court has in the order dated 02.02.2016 set aside
the Commission’s order dated 08.08.2013 which had already been made
applicable by the Commission to other developers to allow the tariff
without AD if they do not avail the AD benefit.
3) The reliance on the Minutes of Meeting dated 23.03.2015 by the
Petitioner stating that the judgement of the Hon’ble Supreme Court in
case of GUVNL V/s. EMCO Limited in Civil Appeal No. 1220 of 2015 is not
applicable is not correct because the tariff is decided based on the
Commission’s as well as APTEL’s judgements in the case of GUVNL V/s.
EMCO Limited in Petition No. 1270 of 2012 before the Commission and
Judgment dated 20.11.2014 in Appeal No. 252 of 2014 before the
Hon’ble APTEL.
4) The contention of the Petitioner that the MOM dated 23.03.2015 has
been approved by the Commission in view of the tariff order dated
31.03.2016 is misplaced and baseless.
118
5) The judgements relied upon by the Petitioner are having different facts
and are distinguishable and hence, the same are not applicable.
8.48 The Respondent contended that the Petitioner is not eligible for revision of
tariff other than agreed in the PPA.
8.49 We note that the Petitioner has claimed the settlement as per Article 10 of the
PPA where both the parties can settle any difference or dispute among
themselves and accordingly they have settled all the disputes at the meeting
dated 23.03.2015. The Commission before parting any decision in the present
petition, would like to examine the validity of such settlement in light of the
Apex Court’s order. It is therefore, necessary to refer Para 26 to 33 of the
Hon’ble Supreme Court’s order dated 02.02.2016 as reproduced below
wherein certain important issues were decided by the Hon’ble Supreme Court:
‘26. Apart from that, the conclusion of the Tribunal in the instant case is wrong. First of all the PPA does not give any option to the respondent to opt out of the terms of the PPA. It only visualises a possibility of the producer not commissioning its PROJECT within the “control period” stipulated under the 1st Tariff Order and provides that in such an eventuality what should be the tariff applicable to the sale of power by the 1st respondent. Secondly, the PPA does not ‘entitle’ the 1st respondent to the “tariff as determined by the” 2nd respondent by the 2nd Tariff Order. On the other hand, the PPA clearly stipulates that in such an eventuality;
119
“Above tariff shall apply for solar projects commissioned on or before 31st December 2011. In case, commissioning of Solar Power Project is delayed beyond 31st December 2011, GUVNL shall pay the tariff as determined by Hon’ble GERC for Solar Projects effective on the date of commissioning of solar power project or above mentioned tariff, whichever is lower.”
The right of the 1st respondent not to avail the “benefit of accelerated depreciation” flows from the Income Tax Act. It is only the 1st Tariff Order which gives an option to the 1st respondent (for that matter to all the power producers who are similarly situated as the 1st respondent) not to sell the power produced by it at the price specified in the 1st Tariff Order but seek the determination of a separate tariff. Such a right and option is available to the power producers only in one contingency i.e., that they are not inclined to avail the ‘benefit of accelerated depreciation’.
27. The real question is: what is the point of time at which the power producer can exercise such right to seek the determination of a separate tariff.
28. The Income Tax Act gives an option to the producers of power either to avail the ‘benefit of the accelerated depreciation’ or not. It also specifies the point of time at which such an option could be exercised. The right to exercise such option at a point of time specified in the 2nd proviso to Rule 5(1A) is limited only for the purpose of availing the benefits flowing from the Income Tax Act. The PPA does not make any reference to the “benefits of accelerated depreciation”. It simply specified the price to be paid by the appellant for the power purchased by it from the 1st respondent. The appellant determined the said price after taking into consideration various factors. One of them happened to be that the Power Producers are entitled to certain ‘benefits’ under the Income Tax Act. The
120 availability of such ‘benefit’ is dependent upon the option of the power producers. Though the 1st Tariff Order employs the expression ‘benefit’ in the context of the AD Scheme under Section 32 of the IT Act, the applicability of the provision to a power producer depends upon the choice of the power producer. Whether the availability of the AD Scheme is beneficial to the power producer or not in a given case depends on various factors the details of which we do not propose to examine. It is for the power producer to make an assessment whether the availing of the AD is beneficial or not will take a decision if the scheme under Section 32 IT Act should be availed or not.
29. But the availability of such an option to the power producer for the purpose of the assessment of income under the IT Act does not relieve the power producer of the contractual obligations incurred under the PPA. No doubt that the 1st respondent as a power producer has the freedom of contract either to accept the price offered by the appellant or not before the PPA was entered into. But such freedom is extinguished after the PPA is entered into.
30. The 1st respondent knowing fully well entered into the PPA in question which expressly stipulated under Article 5.2 that “the tariff is determined by Hon’ble Commission vide tariff order for solar based power project dated 29.1.2010”
31. Apart from that both the respondent No. 2 and the appellate tribunal failed to notice and the 1st respondent conveniently ignored one crucial condition of the PPA contained in the last sentence of para 5.2 of the PPA:-
“In case, commissioning of Solar Power Project is delayed beyond 31st December 2011, GUVNL shall pay the tariff as determined by Hon’ble GERC for Solar Projects effective on the date of commissioning of solar power project or above mentioned tariff, whichever is lower.”
121
The said stipulation clearly envisaged a situation where notwithstanding the contract between the parties (the PPA), there is a possibility of the first respondent not being able to commence the generation of electricity within the “control period” stipulated in the 1st tariff order. It also visualised that for the subsequent control period, the tariffs payable to a PROJECTS/power producers (similarly situated as the first respondent) could be different. In recognition of the said two factors, the PPA clearly stipulated that in such a situation, the 1st respondent would be entitled only for lower of the two tariffs. Unfortunately, the said stipulation is totally overlooked by the second respondent and the appellate tribunal. There is no whisper about the said stipulation in either of the orders.
32. The 1st respondent created enough confusion. While on one hand the 1st respondent asserted a right to seek determination of a separate tariff independent of the tariff fixed under the 1st Tariff Order in view of the stipulation contained in the 1st Tariff Order that “for a project that does not get such benefit, the Commission would, on a petition in that respect, determine a separate tariff taking into account all the relevant facts” did not seek a relief before the 2nd respondent to determine a separate tariff but claimed the benefit of the 2nd Tariff Order. Assuming for the sake of argument that the petition filed by the 1st respondent (1270/2012) is to be treated as an application for determination of separate tariff which would be identical with the tariff fixed under the 2nd Tariff Order, whether the 1st respondent would be entitled for such a relief depends, if at all he is entitled to seek such a determination, on a consideration of “all the relevant facts” but not by virtue of the operation of the 2nd Tariff Order.
33. For all the above-mentioned reasons, we are of the opinion that the impugned order cannot be sustained and the same is therefore set aside. As a
122
consequence, the order of the 2nd respondent dated 8.8.2013, which was the subject matter of appeal in the impugned order, is also set aside.”
8.50 Now the issue before us is whether the above judgement of the Hon’ble
Supreme Court is also applicable in the present case. We are aware that law of
precedent has already been elaborated by the Hon’ble Supreme Court in
Bharat Petroleum Corporation Vs. N.R. Vairamani And Anr.(2004) and other
similar matters by stating that the Court should not place reliance on decisions
without discussing as to how the factual situation fits in with the fact situation
of the decision on which reliance is placed. Therefore, it is necessary to see
how the EMCO’s matter is either similar to the present matter or connected
with the same issue. We are aware that the only difference in EMCO’s matter
and the present matter is that in case of EMCO, GUVNL was not ready to give
the tariff with the AD benefit to EMCO and has no agreement with the
generator (EMCO) on this issue. However, in the present matter there was an
agreement with the Respondent TPL under the Minutes of Meeting dated
23.03.2015 on the tariff without AD. The Commission has to see whether such
agreement between two parties made through minutes of meeting is valid and
legal.
8.51 The Hon’ble Supreme Court has decided in the EMCO matter that availing or
not availing AD under Income Tax Act is a choice that vests with the Power
123
Producer. But the availability of such an option to the Power Producer does not
relieve them of contractual obligations incurred in PPA. The Hon’ble Supreme
Court has held that the developer has the freedom to choose this option and
accept the price before the PPA was entered into. But such freedom is
extinguished after the PPA is entered into. The Hon’ble Supreme Court has
also held that EMCO knowing fully well, entered into the PPA which expressly
stipulated under Article 5.2 that the tariff is determined by the Commission
vide tariff order for solar power projects dated 29.01.2010.
8.52 Now, in order to see the similarities between EMCO and Kindle it is necessary
to compare Article 5.2 (tariff) of the PPAs of EMCO and Kindle as under:
Article EMCO Kindle 5.2 Rates and charges Rates and charges GUVNL shall pay the fixed tariff TPL shall pay the fixed tariff mentioned mentioned hereunder for the period of hereunder for the period of 25 years for all 25 years for all the Scheduled the scheduled Energy/ Energy injected as Energy/Energy injected as certified in certified in the monthly SEA by SLDC the monthly SEA by SLDC. - Tariff for Solar Photovoltaic project: The tariff is determined by Hon’ble o Rs. 15/unit - for First 12 Commission vide Tariff Order for Solar years and thereafter based power project dated 29.01.2010. o Rs. 5/unit - from 13th year to 25th year Tariff for Photovoltaic Project: Above tariff is as per tariff order no.2 of 2010 Rs.15/kWh for First 12 years in the matter of Determination of tariff for and Thereafter Rs.5/kWh from 13th Procurement of Power by the Distribution Year To 25th Year. Licensees and others from Solar Energy
124
Above tariff shall apply for solar projects Projects issued by GERC dated 29.01.2010 commissioned on or before 31st ("Tariff Order"). December 2011.
In case, commissioning of Solar Power In case, Commissioning of Solar Power Project is delayed beyond 31st Project is delayed beyond the date of December 2011, GUVNL shall pay the applicability of the Tariff Order then TPL shall tariff as determined by Hon’ble GERC for pay the Tariff determined by the Hon'ble Solar Projects effective on the date of GERC for Solar Projects effective on the date commissioning of solar power project or of commissioning of Solar Power Project, or above mentioned tariff, whichever is the abovementioned Tariff, whichever is lower.” lower."
8.53 From the above, it is apparent that the tariff provision at Article 5.2 in the PPAs
of both the parties i.e. EMCO and Kindle is similar as both the parties agreed to
a tariff which was with AD benefits as per the GERC Order dated 29.01.2010
for projects commissioned on or before 31.12.2011 and also agreed that if the
commissioning of the project is delayed beyond 31.12.2011 then they shall be
paid such tariff as determined by the GERC for Solar plants effective on date of
commissioning of plant or the aforesaid tariff as per tariff order dated
29.01.2010, whichever is lower. As per the Tariff Order, it was valid from
29.01.2010 to 31.12.2011.
8.54 As per the terms of the PPA signed between EMCO & GUVNL, due to delay in
the commissioning, EMCO approached the Commission to get the solar tariff
125 effective on the date of commissioning as determined by the Commission in the order dated 27.1.2012 applicable for solar plants commissioned during the period from 2012 to 2015. The Commission approved the tariff without AD benefit to EMCO on the ground that EMCO did not avail AD benefit as per the
Income Tax Act. The Commission also decided that same treatment should also be given to similarly placed solar plants operating in the State. GUVNL challenged this order in an appeal before the Hon’ble APTEL, however Hon’ble
APTEL upheld the Commission’s order. After this event the Petitioner approached the Respondent TPL to allow them also, the tariff without AD.
Since GUVNL challenged the APTEL order in the Supreme Court, TPL agreed to the tariff without AD subject to final outcome of the Supreme Court. However, in a meeting held on 23.03.2015, both the parties did not mention that Hon’ble
Supreme Court’s Order shall be binding on them and agreed on tariff without
Accelerated Depreciation. Now, the question before us is that whether any agreement between the parties is legal and valid when the Hon’ble Supreme
Court has categorically mentioned in the Order dated 2.02.2016 in the matter of EMCO Vs. GUVNL that after signing of PPA no change in the tariff shall be allowed. After going through the details of the case, we feel that when the
Hon’ble Supreme Court has also set-aside the Commission’s order and APTEL
‘s order on the similar issue, the question of similar relief stands extinguished
126
and there is no validity of such tariff which is without the approval of the
Commission.
8.55 In the present case, both the Petitioner and the Respondent made a
modification in the original tariff through a MOM dated 23.3.2015, which may
be seen in line with the Indian Contract Act 1872 for change in the contract and
agreed between both the parties. However, since this modification is to
incorporate a change in tariff figure in the PPA itself, it needs to be examined
as to whether the MOM dated 23.03.2015 is legal and valid or not. Since, the
Hon’ble Supreme Court has already held that the PPA does not give any option
to the party to opt out of the terms of the PPA and the PPA does not entitle
EMCO to the tariff determined by the GERC in its 2nd tariff order automatically,
the MOM dated 23.03.2015 is held as not legal as far as tariff is concerned.
8.56 Further, we also note that the Petitioner and the Respondent have agreed vide
emails exchanged between the parties dated 10.12.2014 that the decision of
the Hon’ble APTEL in Appeal No. 217 of 2014 filed by GUVNL against the
Commission’s order in Petition No. 1270 of 2012 is acceptable to both the
parties subject to the decision of the higher forum on the decision of the
Hon’ble APTEL in aforesaid appeal. Thus, the Petitioner and the Respondent
have admitted and agreed to be bound by the decision of the higher court on
the Hon’ble APTEL’s order in Appeal No. 217 of 2014. Therefore, the Petitioner
127
cannot say that the decision dated 02.02.2016 of the Hon’ble Supreme Court
in C.A. No. 1220 of 2015 is not binding to the Petitioner when the Petitioner
and the Respondent have agreed vide emails dated 10.12.2014 that the
decision of the higher forum on the decision of Hon’ble APTEL in Appeal No.
217 of 2014 is binding.
8.57 In addition to above, we also note that the Petitioner and the Respondent have
agreed on various disputes between them vide MoM dated 23.03.2015 which
include the issues pertaining to liquidated damages, transmission charges and
tariff differences, tariff rates etc. However, the said MoM were never placed
before the Commission for approval as per the requirement of Commission’s
Order No. 2 of 2010 which provides that the plants not availing AD benefit have
to approach the Commission for determination of separate tariff. Therefore,
though both the parties have mutually agreed on change in tariff, but the same
cannot be treated as valid and legal in the absence of the Commission’s
approval.
8.58 We have also noted that the Hon’ble Supreme Court has decided that once the
Solar power project developer, EMCO while signing of PPA with GUVNL, agreed
and stated that it is availing the benefit of accelerated depreciation and
accordingly signed the PPAs, the solar project developer, EMCO is not entitled
128
to say that it is not availing the benefit of accelerated depreciation. We also
note that the present Petitioner has also signed the agreement with the
Respondent TPL accepting tariff applicable to the projects availing accelerated
depreciation. Hence, later on the Petitioner is not eligible to say that as the
Petitioner is not availing the benefit of accelerated depreciation so he is
entitled for the tariff determined by the Commission for the solar power
projects not availing the benefit of accelerated depreciation. The MoM dated
23.03.2015 signed between the parties, for the tariff applicable for the projects
which are not availing the benefit of accelerated depreciation is against the
decision of the Hon’ble Supreme Court dated 2.02.2016 in C.A No 1220 of 2015.
8.59 The Commission is also of the view that any amendment in the tariff which
affects consumers’ tariff cannot be made by mutual agreement of the two
parties in isolation but needs approval of the Commission before
implementation. Therefore, MOM dated 23.03.2015 cannot be held valid to
the extent of amendment in tariff after the Hon’ble Supreme Court’s judgment
setting aside the Commission’s order in EMCO matter.
8.60 The Petitioner has contended that the Respondent has signed the agreement
with its sister company which is a generating company and agreed upon to pay
the tariff as the generating company is not availing the benefit of the
129
accelerated depreciation as determined by the Commission vide Order No. 1
of 2012 dated 27.01.2012. We note that the said matter is not a subject matter
of the present Petition and therefore, the contention of the Petitioner against
the same is not admissible and the same is rejected.
8.61 The contention of the Petitioner that the tariff agreed in the MoM paid by the
Respondent is also reflected in the Tariff Orders and the expenses for purchase
of renewable energy has been approved by the Commission in its Tariff Order
dated 31.3.2016 (including true-up for 2014-15) for the Respondent. In this
regard, it is clarified that the True-up proceedings are different and distinct
from the approval of PPA and to be dealt with separately. Hence, the
contention of the Petitioner is not acceptable.
9. We, therefore, decide that the present Petition is devoid of merits and the
same is dismissed.
10. We order accordingly.
11. With this order the present petition stands disposed of.
Sd/- Sd/- Sd/- [P. J. THAKKAR] [K. M. SHRINGARPURE] [ANAND KUMAR] MEMBER MEMBER CHAIRMAN
Place: Gandhinagar. Date: 20/10/2018
130