Introduction

The case of Hukkeri Solar Power Project LL.P & Anr. v. Hubli Electricity Supply Company Limited & Anr. adjudicated by the Appellate Tribunal for Electricity on August 12, 2021, centers on the dispute arising from delays in commissioning a solar power project. The appellants, Hukkeri Solar Power Project LL.P. and a solar power developer (Appellant No.2), sought an extension of time for the commercial operation of their 2 MW solar power project due to delays primarily caused by governmental approval processes. The respondent, Hubli Electricity Supply Company Limited (HESCOM), and the Karnataka Electricity Regulatory Commission (KERC) maintained that the appellants were not entitled to such an extension, leading to a reduction in the agreed tariff.

Summary of the Judgment

In a comprehensive review, the Appellate Tribunal for Electricity overturned the order of the KERC, which had dismissed the appellants' petition seeking an extension of the commissioning date. The Tribunal found that the delays were attributable to external factors beyond the appellants' control, such as slow governmental processes in land conversion and grid connectivity approvals. Consequently, the Tribunal restored the original tariff rate of Rs. 8.40 per unit as per the Power Purchase Agreement (PPA) dated July 7, 2015, and mandated HESCOM to compensate the appellants for the tariff difference from the commissioning date onwards. Additionally, the Tribunal ruled that the appellants were entitled to late payment surcharges and were not liable for any liquidated damages.

Analysis

Precedents Cited

The Tribunal extensively referenced several Supreme Court rulings emphasizing the principle that a party cannot simultaneously approve and disapprove an agreement. In Shyam Telelink Ltd. v. Union of India and Suzuki Parasrampuria Suitings Private Limited v. Official Liquidator of Mahendra Petrochemicals Limited, the Supreme Court underscored the doctrine of estoppel, preventing parties from taking contradictory stands in the same case. These precedents were pivotal in the Tribunal's decision to reject HESCOM's conflicting actions regarding tariff adjustments and delay penalties.

Legal Reasoning

The Tribunal's core legal reasoning hinged on the interpretation of the PPA clauses related to extensions of time and force majeure. Key points include:

• Force Majeure Clause: The PPA's provisions allowed for extensions in cases where delays were caused by events beyond the developer's control. The Tribunal determined that the delays in obtaining necessary approvals constituted such events.
• Doctrine of Estoppel: Referencing Supreme Court judgments, the Tribunal held that HESCOM's initial approval of the extension barred it from later contesting the same.
• Regulatory Authority: While acknowledging KERC's authority to regulate tariffs, the Tribunal found that KERC erred in reducing the tariff without adequately considering the force majeure factors that justified the delay.

Moreover, the Tribunal criticized KERC for not exercising due diligence in assessing whether the delays were genuinely beyond the appellants' control, thereby overlooking the substantial investments and efforts made prior to encountering bureaucratic hurdles.

Impact

This judgment sets a significant precedent for future disputes involving power purchase agreements and extensions due to force majeure. It reinforces the importance of regulatory bodies respecting contractual extensions granted by counterparties when external delays are uncontrollable. Consequently, solar power developers and other renewable energy stakeholders can anticipate greater contractual stability, encouraging further investment in the sector. Additionally, the ruling emphasizes the need for clearer regulatory guidelines to prevent similar disputes in the future.

Complex Concepts Simplified

Conclusion

The Hukkeri Solar Power Project LL.P & Anr. v. Hubli Electricity Supply Company Limited & Anr. judgment underscores the judiciary's role in upholding contractual obligations, especially in scenarios where delays are precipitated by factors beyond the project's developer. By reversing the KERC's decision, the Tribunal not only affirmed the importance of adhering to agreed-upon terms but also highlighted the necessity for regulatory bodies to thoroughly assess the grounds for tariff adjustments. This ruling is poised to provide greater security and predictability for renewable energy projects, fostering a more conducive environment for sustainable energy development in India.