Introduction

The case of Shapoorji Pallonji Infrastructure Capital Company Private Limited [Through Its Authorized Signatory] (S) v. Power Grid Corporation Of India Limited (Now Central Transmission Utility Of India Ltd.) And Another was adjudicated by the Appellate Tribunal for Electricity on April 12, 2022. This appeal pertains to the dispute over the discharge and return of Connectivity Bank Guarantees (CBGs) provided by the appellant in the context of Stage-II connectivity granted for two solar power projects. The primary parties involved are Shapoorji Pallonji Infrastructure Capital Company as the appellant, and Power Grid Corporation of India Limited along with the Central Electricity Regulatory Commission (CERC) as respondents.

Summary of the Judgment

The appellant, Shapoorji Pallonji, sought the discharge and return of two CBGs amounting to ₹5 crore each, which were provided to the respondent Power Grid Corporation of India Limited (PGCIL) as part of the Stage-II connectivity granted for their solar projects in Tuticorin and Anantpur. The CERC, in its original order, had allowed the partial return of the CBGs while directing the forfeiture of ₹50 lakh from each. Shapoorji Pallonji challenged this order, and the Appellate Tribunal ultimately set aside the CERC's decision. The Tribunal ordered the full return of the CBGs, concluding that there was no procedural or substantive basis for the partial forfeiture imposed by the CERC.

Analysis

Precedents Cited

The judgment primarily references provisions within the Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations, 2009, specifically focusing on the Detailed Procedure and its revised amendments. There were no external judicial precedents cited; the decision hinged on the interpretation and application of the existing regulatory framework.

Legal Reasoning

The core issue revolved around the applicability of the Revised Detailed Procedure introduced on February 20, 2021, to ongoing agreements and revoked Stage-II connectivity. The CERC applied the revised procedure, thereby mandating the forfeiture of ₹50 lakh from each CBG based on the updated regulations. The Tribunal, however, found that since the revocation of Stage-II connectivity and the appellant's request for return of CBGs occurred before the Revised Detailed Procedure came into force, the pre-revised procedure should govern. Moreover, PGCIL had not initiated any action to encash the CBGs, indicating no incurred loss or non-compliance that would warrant forfeiture. The Tribunal emphasized that the requirement for CBGs was contingent upon the commencement of power evacuation, which did not materialize due to mutual termination of the PPAs.

Impact

This judgment reinforces the principle that regulatory procedures must be applied based on the timeline of events rather than their chronological order relative to regulatory updates. It underscores the importance of clear guidelines for the handling of CBGs, especially in scenarios involving revocation of connectivity grants. Future cases involving similar disputes may reference this decision to argue for the application of procedures relevant to the time when key actions (like revocation) were initiated, rather than the current regulatory framework.

Complex Concepts Simplified

Connectivity Bank Guarantees (CBGs)

CBGs are financial securities provided by a party (in this case, the appellant) to the transmission utility to ensure compliance with contractual obligations, such as timely completion of transmission connectivity. They serve as a safeguard against potential losses incurred by the utility due to delays or defaults.

Stage-II Connectivity

Stage-II connectivity refers to the second phase of connecting a power project to the transmission grid. It typically involves more extensive infrastructure development and is contingent upon the successful completion of Stage-I connectivity.

Revised Detailed Procedure

This refers to the updated set of regulations issued by the CERC in February 2021, which amended the previous Detailed Procedure for granting connectivity to renewable energy projects. The revisions introduced new clauses governing the treatment of CBGs in cases of revocation or non-compliance.

Conclusion

The Appellate Tribunal for Electricity delivered a pivotal decision in the Shapoorji Pallonji case, emphasizing the temporal applicability of regulatory procedures concerning Connectivity Bank Guarantees. By overturning the CERC's partial forfeiture of CBGs, the Tribunal highlighted the necessity for regulatory bodies to adhere to the chronology of procedural actions. This judgment not only provides clarity on the handling of CBGs upon revocation of connectivity grants but also sets a precedent for future interpretations of procedural laws within the electricity sector.