What were the facts of the case?

  • On August 4, 2015, Ministry of New and Renewable Energy (MNRE) issued a Scheme for setting up 2000 (two thousand) MW Grid connected Solar PV Projects.
  • Being the nodal agency for the Scheme, Solar Energy Corporation of India Limited (SECI) issued the Request for Selection (RfS), in order to select developers for the development of 500 (five hundred) MW Grid connected Solar PV Projects on Build, Own and Operate basis in the State of Maharashtra.
  • Welspun Energy Private Limited (Welspun) was awarded 100 (one hundred) MW project and signed a power purchase agreement (PPA) with SECI on April 10, 2016.
  • During the course of implementation of the project, disputes arose between Welspun and SECI. Pursuant to this, Welspun filed a petition for resolution of disputes arising out of the PPA.
  • The Central Electricity Regulatory Commission (CERC) passed an order granting an extension for fulfilment of the condition subsequent activities related to financial closure and grid connectivity was granted and the delay in condition subsequent activity related to clear possession and title of land was condoned and the scheduled commercial operation date (SCoD) was extended up to 90 days from the date of issue of the order, subject to payment of a penalty.
  • Aggrieved by the order, SECI filed a review petition before the CERC.

What were the grounds for review?

  • The extension of the SCoD was contrary to the PPA, whereby it was stated that the extension of time in order to satisfy the conditions subsequent must be done without having any impact on the scheduled commissioning date.
  • The PPA did not permit any extension of time for fulfilment of the conditions subsequent on account of "force majeure like" events. Accordingly, the SCod could not be extended due to "force majeure like" events.
  • The SCoD could be extended beyond 25 months from the Effective Date of the PPA. This included non-achievement of SCoD due to force majeure or force majeure like events.
  • Welspun was obligated to maintain the controlling shareholding on the company, for a period of one year from the Commercial Operation Date. The agreement was not permitted to be assigned as per the PPA, unless it was carried out by mutual consent.
  • The de-merger, as carried out by the National Company Law Tribunal (NCLT) could not over-ride the specific contractual obligation as contained in the PPA, whereby assignment of the PPA was prohibited.

What was the CERCs decision?

CERC was of the view that:

  • The contention that non-recognition of "force majeure like events" in PPA and consequent extension of SCoD had already been given due consideration in the order and that SECI was seeking re-agitation on the same issues which was not permissible under review jurisdiction. The decision to extend time was taken after duly considering the PPA, the submissions made by the parties and the legal principles. Accordingly, the CERC held that there was no error apparent on the face of the record and accordingly rejected the review on this aspect.
  • As regards the contention regarding change in the shareholding pattern and substitution of Welspun with Giriraj Renewable Private Limited (and the de-merger), the CERC held that the SECI was re-agitating issues that have already been decided by CERC in the order. Hence, this contention of SECI was also rejected.
  • As regards the subsequent developments, the CERC noted the provisions of Order 47 of Rule 1 of the Code of Civil Procedure, 1908 which state that the only additional evidence that could be considered is material existing at the time of the original proceedings, which after due diligence was not within the knowledge or could not be produced at that time. Accordingly, the CERC observed that it cannot be concerned with nor take cognizance of any subsequent developments.

Our view: The decision reinstates the fundamental principles of the powers of an authority when exercising review jurisdiction over a matter and should come as a relief to power developers.

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