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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri Sanjay Sen, Senior Advocate, GCEL
  • Shri Hemant Singh, Advocate, GCEL
  • Shri Lakshyajit Singh, Advocate, GCEL
  • Ms. Suparna Srivastava, Advocate, PGCIL
  • Ms. Nehul Sharma, Advocate, PGCIL
  • Dr. V.N. Paranjape, PGCIL
  • Ms. Jyoti Prasad, PGCIL
Judges
  • P.K. Pujari
  • Chairperson
  • Dr. M.K. Iyer, Member
  • I.S. Jha, Member
Acts
  • Section 79(1)(c) of the Electricity Act, 2003 (hereinafter referred to as the Act) read with Regulation 32of the Central Electricity Regulatory Commission
  • provisions of Clauses 9 and 5 of the BPTA read with Regulation 18 of the Connectivity Regulations
  • Central Electricity Regulatory Commission Regulations, 2009 and Electricity Act 2003
  • ENVIRONMENT PROTECTION ACT 1986
  • section 73 and 74 of the Indian Contract Act,
  • ELECTRICITY ACT 2003
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri Sanjay Sen, Senior Advocate, GCEL
  • Shri Hemant Singh, Advocate, GCEL
  • Shri Lakshyajit Singh, Advocate, GCEL
  • Ms. Suparna Srivastava, Advocate, PGCIL
  • Ms. Nehul Sharma, Advocate, PGCIL
  • Dr. V.N. Paranjape, PGCIL
  • Ms. Jyoti Prasad, PGCIL
Judges
  • P.K. Pujari
  • Chairperson
  • Dr. M.K. Iyer, Member
  • I.S. Jha, Member
Acts
  • Section 79(1)(c) of the Electricity Act, 2003 (hereinafter referred to as the Act) read with Regulation 32of the Central Electricity Regulatory Commission
  • provisions of Clauses 9 and 5 of the BPTA read with Regulation 18 of the Connectivity Regulations
  • Central Electricity Regulatory Commission Regulations, 2009 and Electricity Act 2003
  • ENVIRONMENT PROTECTION ACT 1986
  • section 73 and 74 of the Indian Contract Act,
  • ELECTRICITY ACT 2003
See more information ...
Smart Summary

Structured Summary of the Opinion — Petition No. 11/MP/2017 (GMR Chhattisgarh Energy Limited v. CTU / PGCIL)

Factual and Procedural Background

The petitioner, GMR Chhattisgarh Energy Limited (GCEL), a generating company, set up a 1,370 MW coal-based power plant in Raipur, Chhattisgarh. GCEL applied (letter dated 30.8.2008) for long term access (LTA) in the inter-State transmission system to evacuate up to 1,215 MW, and was ultimately granted 816 MW of LTA (386 MW to Western Region; 430 MW to Northern Region) and entered into a Bulk Power Transfer Agreement (BPTA) with CTU dated 31.3.2010. The Petitioner furnished a bank guarantee (BG) of Rs. 40.08 crore under the BPTA. Unit 1 and Unit 2 achieved commercial operation on 1.6.2015 and 31.3.2016 respectively.

The Petitioner later contended it could not secure firm long-term PPAs for parts of the generation (alleging refusal by Chhattisgarh State Power Trading Company to offtake 35% and limited bidding by distribution licensees). The Petitioner informed CTU on 7.12.2016 seeking surrender of the 386 MW (Western Region) and deferment/relief with respect to the 430 MW (Northern Region), and on 17.5.2017 sought relinquishment of 430 MW in NR. CTU refused to accept force majeure-based relinquishment without compliance with contractual clauses and Regulations, demanded opening of an LC, and indicated relinquishment charges may apply.

GCEL filed the present petition under Section 79(1)(c) of the Electricity Act, 2003 read with Regulation 32 of the CERC Connectivity Regulations, 2009 seeking:

  • declarations that inability to secure PPAs was a force majeure relieving GCEL of liabilities under the BPTA;
  • annulment of the BPTA without liability;
  • or, alternatively, that the two LTAs (386 MW and 430 MW) were relinquished on specific dates (7.12.2016 and 17.5.2017 respectively) without liability;
  • return of the BG of Rs. 40.08 crore.

The matter was heard with written submissions, rejoinder and oral arguments. The Commission framed issues and issued a reasoned order disposing of the petition.

Legal Issues Presented

  1. Whether Clause 9 (force majeure) of the BPTA is an omnibus provision that extinguishes liabilities under other clauses (including payment of transmission charges and relinquishment charges under Clauses 2, 3 and 5), or whether it is a standalone, temporally limited provision applicable only to temporary disruption of injection/drawal of power.
  2. Whether the Petitioner's factual situation (inability to secure long‑term PPAs; refusal by a State entity to offtake; annulment of bids) falls within Clause 9 force majeure of the BPTA.
  3. What is the appropriate date(s) of relinquishment under the BPTA for the surrender requests made by the Petitioner?
  4. What reliefs, if any, are admissible to the Petitioner in terms of its prayers (annulment, discharge from liability, return of BG, etc.)?

Arguments of the Parties

Petitioner (GCEL) — principal arguments

  • The BPTA was executed under and subject to the Connectivity Regulations, but once contractual clauses (Clauses 1–11) exist, their terms (including force majeure in Clause 9 and relinquishment provisions) must control application of Regulation 18; a contract-specific interpretation is required.
  • Non-availability of firm long‑term PPAs (due to refusal by CSPTCL to offtake and limited bids from Discoms; annulment of UPPCL bids) are events beyond the Petitioner's control and therefore constitute force majeure under Clause 9, discharging the Petitioner from obligations including payment of relinquishment or transmission charges.
  • Grant of LTA did not guarantee flow or operationalization of LTA absent a firm PPA; Clause 7.1 of the BCD Procedure and related Commission orders show a PPA is necessary for scheduling/operationalisation.
  • CTU/PGCIL planned/constructed transmission corridors without regard to the Petitioner being a target beneficiary — the Petitioner should not bear relinquishment costs for capacity it did not cause CTU to create for its benefit.
  • Regulation 18 (relinquishment charges) either cannot be applied where force majeure prevents performance, or, if applied, CTU must prove existence of stranded capacity and methodology; since no reliable methodology was available earlier, imposition of charges would be arbitrary.
  • Statutory limits: the Act prescribes transmission/open‑access charges; the Petitioner relied on a Supreme Court decision (Bharathidasan University v. AICTE [(2001) 8 SCC 676]) and an APTEL decision (Damodar Valley Corporation v. CERC & Ors.) to argue that the Commission cannot introduce charges not sanctioned by the parent statute.
  • Requested return of BG (relying also on Commission precedent that BG must be returned where construction obligations are fulfilled).

Respondent (CTU / PGCIL) — principal arguments

  • LTA and BPTA create statutory/contractual obligations to pay transmission charges; Clause 2 obliges payment irrespective of actual commissioning, and Clause 5 restricts relinquishment/transfer without CTU/CERC approval and subject to compensation “in accordance with the regulations.”
  • Regulation 18 of the Connectivity Regulations provides for relinquishment charges (a statutory compensatory mechanism) and is consistent with the Act; the Commission in Petition No. 92/MP/2015 (order dated 8.3.2019) settled that Regulation 18 is valid and the method for computing stranded capacity/relinquishment charges must be applied.
  • Clause 9 (force majeure) in the BPTA is temporary and limited in scope — it excuses parties only for temporary events preventing use of the transmission system and does not negate obligations to pay transmission or relinquishment charges; this interpretation is supported by prior Commission orders (e.g., Aryan MP, Navbharat) and by the BPTA wording (resume transmission/drawal as soon as practicable once event ceases).
  • Signing of PPAs was not a pre-condition for regulatory approval or for grant of LTA — Commission approvals for HCPTCs were given without requiring PPAs, and CTU acted in accordance with those approvals; therefore absence of PPA cannot constitute force majeure relieving payment obligations.
  • CTU had computed the Petitioner's relinquishment charges under the Commission's 8.3.2019 directions and quantified the Petitioner's liability (Rs. 44.12 crore as per CTU's computation reported in the pleadings).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court (as recorded in the opinion)
Bharathidasan University & Anr. v. All-India Council for Technical Education & Ors., [(2001) 8 SCC 676] Petitioner relied on this Supreme Court authority to argue that the Commission cannot introduce a charge (relinquishment charge) that is not sanctioned by the parent statute. The opinion records that the Petitioner placed reliance on this judgment; the court recorded the reliance but does not adopt the Petitioner's proposition that Regulation 18 is ultra vires the Act (the court instead applied the Commission's prior findings on Regulation 18).
Damodar Valley Corporation v. CERC & Ors. (APTEL), (Appeal Nos. 271, 272, 273, 275 of 2006 & 8 of 2007) Petitioner relied on the APTEL decision in support of its contention on limits of regulatory/contractual charges and force majeure issues. The opinion notes the Petitioner's reliance on the APTEL judgment; the court records that reliance but proceeds to apply the Commission's own analysis regarding Regulation 18 and BPTA interpretation.
CERC order dated 31.5.2010 in Petition No. 233/2009 (regulatory approval for HCPTCs) Shows that regulatory approval for High Capacity Power Transmission Corridors (HCPTCs) was granted without linking signing of PPAs with regulatory approval; CTU and Petitioner relied on this reasoning in submissions. The court relied on that order to hold that the Petitioner was aware that regulatory approval and grant of LTA could be given without PPAs; therefore absence of PPAs did not constitute force majeure preventing LTA grant/operation.
CERC order dated 8.3.2019 in Petition No. 92/MP/2015 Adjudicated stranded capacity and held Regulation 18 (relinquishment mechanism) to be in conformity with the Act; specified methodology/directions for computing stranded capacity and relinquishment charges. The court treated this order as settling the legal position: Regulation 18 is statutory and applicable; BPTA/LTA agreements are statutory contracts governed by Connectivity Regulations. The court held that the Petitioner's liability for relinquishment charges is determined in accordance with that order and is binding on the Petitioner (subject to appeals).
CERC order dated 2.12.2013 in Petition No. 244/MP/2012 Interpreted Clause 7.1 of the BCD Procedure as making long-term PPA necessary for scheduling of power under LTA (distinct from transmission charge liability). The opinion notes competing reliance: Petitioner cited it to show PPAs are necessary for operationalization; CTU argued the order distinguishes scheduling from liability to pay transmission charges. The court recorded both uses and relied on the distinction in analysis.
CERC order dated 31.10.2017 in Petition No. 69/MP/2014 (Aryan MP Power Generation Pvt. Ltd. v. Powergrid) Interpreted Clause 9 of the BPTA as providing temporary amnesty for force majeure and held it cannot be used to exit BPTA or avoid obligations like relinquishment. The court relied on this order in construing Clause 9 as temporary and restrictive; it reinforced the conclusion that Clause 9 does not negate relinquishment obligations under Clause 5/Regulation 18.
CERC order dated 14.7.2017 in Petition No. 317/MP/2013 (Navbharat Power Pvt. Ltd. v. Powergrid) Also treated Clause 9 as providing temporary amnesty, not a route to abandon LTA obligations. The court cited this decision as supportive authority for the restricted, temporal interpretation of Clause 9 and its non-applicability to avoid relinquishment charges.
CERC order dated 8.12.2017 in Petition No. 203/MP/2017 Referenced by Petitioner on the point that BGs should be returned when construction obligations are fulfilled. The court recorded the Petitioner's reliance on this order in its rejoinder; its final directions dealt with BG retention until relinquishment charges are paid (see order disposition).
CERC order dated 8.6.2013 in Petition No. 118/MP/2012 Petitioner relied on this order (where non-availability of coal linkage was held an event beyond control) to analogize non‑availability of PPAs as force majeure. The opinion records the Petitioner's reliance but ultimately distinguishes that precedent: court did not accept the analogy to treat absence of PPAs as force majeure for BPTA obligations.
Appellate Tribunal findings (e.g., Appeal No. 54 of 2014 and other appellate references) Referenced by CTU to support the proposition that absence of long‑term PPA cannot be construed as force majeure. The court recorded that prior Commission and Appellate Tribunal findings support CTU's position; the opinion relied on the settled administrative jurisprudence reflected in CERC orders and the APTEL findings to reject the Petitioner's force majeure claim.

Court's Reasoning and Analysis

The Commission conducted a step-by-step analysis addressing each framed issue. The reasoning, as stated in the opinion, may be summarized in the following logical progression (reflecting only the court's own statements and the material recorded in the opinion):

  1. Characterisation of BPTA and its statutory context:
    • The BPTA was executed under the Connectivity Regulations (Regulation 15). The BPTA expressly incorporates that the terms and any applicable regulations/notifications issued by the Commission or GOI prevail where inconsistent with the agreement.
    • The Commission treated BPTAs/LTA agreements as "statutory contracts" governed by the Connectivity Regulations and the Act (a point previously adjudicated in the Commission's order dated 8.3.2019 in Petition No. 92/MP/2015).
  2. Interpretation of Clause 9 (force majeure) of the BPTA:
    • The Commission parsed Clause 9 into its elements: (i) duty of parties to comply; (ii) discharge from liability for failure to perform to the extent caused by force majeure events; (iii) requirement of notice and proof; (iv) resumption of transmission/drawal "as soon as practicable" after the event ceases.
    • On textual and contextual construction, Clause 9 is oriented to events that prevent the use of the transmission lines and suspend power flow; the clause contemplates resumption and therefore is temporal/temporary in nature.
    • Accordingly, Clause 9 provides a limited, temporary amnesty for certain failures due to force majeure but does not operate as an omnibus clause to discharge permanent liabilities (such as those relating to relinquishment under Clause 5/Regulation 18).
    • The court expressly relied on earlier Commission decisions (Aryan MP; Navbharat) for the proposition that Clause 9 cannot be used to exit BPTA or avoid relinquishment obligations.
  3. Relationship between contract (BPTA) and regulations (Connectivity Regulations / Regulation 18):
    • Regulation 18 provides a statutory compensatory mechanism for relinquishment of LTA (payment formula, periods, notice rules, and apportionment of compensation to other customers).
    • The Commission's earlier order (8.3.2019 in Petition No. 92/MP/2015) held that Regulation 18 is in conformity with the Act and that relinquishment charges are compensation in nature tied to statutory transmission charges. The Commission considered that finding binding (subject to appeals) and that the regulation provides the compensatory scheme which BPTAs incorporate by reference (Clause 5 requires compensation "in accordance with CERC regulations").
    • Therefore, relinquishment charges are statutory in character (not purely contractual) and Regulation 18's mechanism governs computation and liability.
  4. Whether absence of long‑term PPAs constitutes force majeure under Clause 9:
    • The Petitioner's factual claims (difficulty in securing PPAs, refusal by CSPTCL to offtake, annulment of certain bids) were examined in context of how LTAs and HCPTCs were planned and approved.
    • The Commission relied on its prior regulatory order (Petition No. 233/2009) which acknowledged that regulatory approval for transmission corridors had to be granted without necessarily linking them to executed PPAs (to avoid hampering transmission project progress). That order made it clear that PPAs were not a pre-condition for regulatory approval or for grant of LTA.
    • Given that LTA had been applied for and granted in the absence of PPAs and that the petitioner had entered into BPTA accepting obligations, the Petitioner's failure to secure PPAs for the entire capacity was held to be a commercial risk taken by the Petitioner and not an event beyond its control under Clause 9.
    • Therefore, the Commission concluded that absence of long‑term PPAs does not qualify as a force majeure event excusing the Petitioner from relinquishment and transmission charge obligations under the BPTA and Regulation 18.
  5. Date of relinquishment and consequences for bank guarantee:
    • The Commission applied its direction in the 8.3.2019 order that the notice period for relinquishment is the date the application was made to CTU. Accordingly the court held: relinquishment date for 386 MW is 7.12.2016, and for 430 MW is 17.5.2017.
    • The Commission held the Petitioner liable to pay relinquishment charges computed by CTU in accordance with the 8.3.2019 order. The BG of Rs. 40.08 crore shall be kept alive until the Petitioner makes payment of the relinquishment charges; CTU may encash the BG to adjust against unpaid relinquishment charges and return any balance.
  6. Final application of findings to prayers:
    • The court rejected the Petitioner's primary prayers seeking declarations that inability to secure PPAs was force majeure and that the BPTA stood annulled without liability.
    • The petitions for relinquishment were accepted as factual relinquishments (i.e., the dates were fixed) but were not accepted as liability-free; they are subject to payment of the relinquishment charges determined as per the Commission's earlier order.

Holding and Implications

Holding (core ruling): The Petition is disposed of. Clause 9 of the BPTA is a temporary force majeure clause and does not operate as an omnibus provision discharging the Petitioner from payment of relinquishment charges under Clause 5 of the BPTA and Regulation 18 of the Connectivity Regulations; the Petitioner is liable to pay relinquishment charges as determined in accordance with the Commission's order dated 8.3.2019 in Petition No. 92/MP/2015.

Implications and direct effects:

  • The Petitioner's requests for declarations that (a) inability to secure PPAs was a force majeure event; and (b) the BPTA stands annulled without liability were rejected.
  • The Petitioner's relinquishments are recorded with effective dates: 386 MW relinquished with effect from 7.12.2016; 430 MW relinquished with effect from 17.5.2017. These relinquishments are, however, subject to payment of relinquishment charges as per the Commission's earlier order (8.3.2019 in Petition No. 92/MP/2015).
  • The Petitioner must keep the BG (Rs. 40.08 crore) alive until payment of the relinquishment charges; CTU may encash the BG against unpaid charges and return any balance.
  • No new law or reinterpretation overturning Commission precedent was made: the order applies existing Commission findings (most importantly the 8.3.2019 order) and prior Commission jurisprudence (Aryan MP, Navbharat) to the facts of this petition. The decision reinforces that Regulation 18 is the statutory mechanism for relinquishment compensation and that Clause 9 cannot be used to escape those statutory liabilities.

Note: This summary is drawn exclusively from the provided opinion text. It does not add facts or inferences beyond what the opinion itself records.

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    Gmr Chhattisgarh Energy Limited (Gcel) v. Power Grid Corporation Of India Limited And Another

    The Petitioner, GMR Chhattisgarh Energy Limited (GCEL), has filed the present Petition under Section 79(1)(c) of the Electricity Act, 2003 (hereinafter referred to as the Act) read with Regulation 32of 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 (hereinafter referred to as the Connectivity Regulations) for relinquishment of 816 MW of LTA as per the BPTA dated 31.3.2010. Brief Facts of the Case

    2. The Petitioner is a generating Company under Section 7 of the Actand has setup a 1370 MW (2x685 MW) super critical coal based thermal power plant in Village Raikheda, Tilda Block, Raipur in the State of Chhattisgarh in accordance with and pursuant to the Memorandum of Understanding (MoU) dated 4.6.2007 and the Implementation Agreement dated 10.9.2008 (as amended on 12.4.2010) executed by GMR Energy Limited (in its capacity as the holding company of the Petitioner) with the Government of Chhattisgarh. The Petitioner vide its letter dated 30.8.2008 applied for long term access in inter-State transmission system for evacuation of 1215 MW power from its power project out of which 455 MW was to be transferred in Chhattisgarh through its trading utility, 300 MW to the Western Region and 460 MW to the Northern Region. CTU granted LTA for 438 MW for the trading utility in Order in Petition No. 11/MP/2017 Page 3 Chhattisgarh (263 MW: Western Region & 175 MW: Northern Region). The Petitioner was granted LTA for 816 MW of which 386 MW was for Western Region and 430 MW was for Northern Region. The Petitioner entered into Bulk Power Transfer Agreement (BPTA) dated31.3.2010 with CTU for evacuation of power on target basis i.e. 386 MW in Western Region and 430 MW in Northern Region. The Petitioner furnished the Bank Guarantee of Rs. 40.08 crore in favour of CTU in terms of BPTA.LTA was granted with additional system strengthening as indicated in Clause 3 of the BPTA. The timeframe for commissioning of the Petitioners power project as indicated at Annexure I of the BPTA were August 2013 and January 2014.

    3. For evacuation of power from the generation projects and to meet the requirements of long term open access by IPPs, CTU, in consultation with the CEA and other stakeholders, finalized the construction of 9 nos. of high capacity transmission corridors and accordingly, approached the Commission, vide Petition No. 233/2009, seeking, amongst others, regulatory approval for development of the above high capacity transmission corridors. The Commission in its order dated 31.5.2010 granted regulatory approval for execution of 9 High Capacity Power Transmission Corridors (HCPTCs). HCPTC-V was identified for facilitating transfer of power from six generation projects including that of the Petitioner.

    4. The progress of the power project of the Petitioner was monitored in various Joint Co-ordination Committee (JCC) meetings wherein the Petitioner continued to represent that it was proceeding with implementation of the project. Unit 1 and Unit 2 of the Project achieved commercial operation on 1.6.2015 and 31.3.2016 respectively. The Petitioner vide its letter dated 7.12.2016 informed the CTU that it has not been able to ensure firm tie-up for the supply of power to be generated from Order in Petition No. 11/MP/2017 Page 4 its power project on account of refusal of Chhattisgarh State Power Trading Company to offtake 35% power as agreed in the implementation Agreement and on account of limited number of bids for procurement of power. Accordingly, the Petitioner requested CTU for deferment of the date of operationalization of 430 MW LTA in Northern Region till 30.6.2017, surrender of 386 MW LTA in Western Region and return of BG of Rs.40.08 crores. The Petitioner argued that the above events are beyond its control and therefore, covered under force majeure in terms of the BPTA. CTU vide its letter dated 13.12.2016 informed the Petitioner that the refusal of CSPTCL to off-take 35% of power does not have any bearing on the LTA of 816 MW and the failure in entering into long term PPAs is a part of competition in the market and cannot be claimed as covered under force majeure event. The Petitioner vide its letter dated 17.5.2017 informed the CTU that in view of the annulment of bid process for procurement of power by UPPCL, it intended to surrender/relinquish 430 MW LTA to Northern Region. CTU vide its letter dated 13.6.2017 informed the Petitioner that its letter dated 17.5.2017 did not constitute notice in terms of Clauses 5 and 9 of the BPTA, that the Clause 9 of the BPTA provides temporary amnesty to the party affected by force majeure and that a LTA Customer may relinquish the LTA on payment of relinquishment charges. CTU demanded an unequivocal undertaking for payment of relinquishment charges as a condition for consideration of the request of relinquishment. CTU vide its letters dated 4.7.2017, 3.8.2017 and 23.8.2017 asked the Petitioner to open an LC of Rs.44.96 crores for operationalisation of LTA as the required transmission systems were expected to be commissioned by 31.8.2017. The Petitioner vide its letter dated 24.8.2017 reiterated its request for relinquishment of 816 MW LTA, return of BG of 40.08 crore and no further demand for opening the LC. Thereafter, the Petitioner has filed the present petition with the following prayers: Order in Petition No. 11/MP/2017 Page 5 (a) hold and declare that the inability on the part of the Petitioner to execute long term Power Purchase Agreements (PPAs) on account of inadequate number of long term power procurement processes being undertaken by the distribution licensees in Northern and Western Regions, is a result of events beyond the control of the Petitioner and a force majeure event with respect to the Bulk Power Transmission Agreement (BPTA); (b) declare that the Bulk Power Transmission Agreement dated 31.3.2010 stands annulled, without any liability, on account of occurrence of force majeure events which are beyond the control of the Petitioner; (c) without prejudice to anything contained in prayers (a) and (b), hold and declare that the Long Term Access (LTA) of 386 MW in Western Region under BPTA dated 31.03.2010 stands surrendered/relinquished with effect from 7.12.2016, without any liability, including payment of relinquishment charges, upon the Petitioner; (d) without prejudice to anything contained in prayers (a) and (b), hold and declare that the Long Term Access (LTA) of 430 MW in Northern Region under BPTA dated 31.03.2010 stands surrendered/relinquished with effect from 17.05.2017, without any liability, including payment of relinquishment charges, upon the Petitioner; (e) direct the Respondent No. 1 to return the bank guarantee amounting to Rs. 40.08 Crs. furnished by the Petitioner; (f) in the interim, grant prayer (e). Submissions of the Petitioner

    5. The Petitioner, in support of its contention and prayers, has submitted as under: (a) The Petitioner applied for grant of LTA/BPTA under the repealed Central Electricity Regulatory Commission (Open Access in Inter-state Transmission) Regulations, 2004 (hereinafter referred to as Open Access Regulations, 2004) but BPTA was executed on 31.3.2010 pursuant to and under Connectivity Regulations which replaced the Open Access Regulations, 2004. The provisions of the Open Access Regulations 2004, the Connectivity Regulations and the Detailed Procedure framed thereunder read with the Billing, Collection and Disbursement Procedure (BCD Procedure) approved Order in Petition No. 11/MP/2017 Page 6 by the Commission permit the grant of LTA on target region basis. As per Clause 22.7 of the Detailed Procedure, LTA can be granted for target regions. However, an applicant who has been granted such LTA shall have to firm up exact source of supply or destination, as the case may be, at least 3 years prior to the intended date of availing LTA at least for a capacity equivalent to 50% of the quantum of power for which LTA has been sought for through signing of PPA with such grid connected entity(ies)/ State Utilities. (b) At the time of planning, seeking regulatory approval and development of the HCPTC, LTA requirement of the Petitioner was never under consideration and as such the LTA requirement of the Petitioner never formed part of the augmentation of the transmission system by the CTU. The LTA granted to the Petitioner was on the basis of margins available qua the then planned/under construction transmission system. The Petitioner has placed its reliance on order dated 31.5.2010 in Petition No. 233/2009. (c) Grant of LTA to a generator does not guarantee flow of power or operationalization of the LTA. A firm long term PPA is a condition precedent for operationalization of the LTA which is evident from Clause 7.1 of the Billing, Collection and Disbursement Procedure (BCD Procedure) issued under the 2010 Sharing Regulations read with the order dated 2.12.2013 in Petition No. 244/MP/2012. (d) Since the year 2009, there have been only three successful long term bids floated by the Discoms in the Western Region till December, 2014 with requisitioned capacity of around 10,000 MW as against 42,471 MW of Order in Petition No. 11/MP/2017 Page 7 installed capacity commissioned by the Independent Power Producer (IPPs) in the country. (e) According to Section 38 of the Act, CTU is vested with the function of planning and co-ordination relating to development and operation of the inter- State Transmission System (ISTS) for smooth evacuation and delivery of electricity as per the market condition. CTU has failed to develop the high capacity transmission corridors as per the statutory mandates as contained in Section 38(2)(b) and 38(2)(c) of the Act.Further,Regulation9of the Connectivity Regulations envisages augmentation/development of transmission corridor only for the purpose of LTA, and not for MTOA/STOA. Taking cognizance of this fact in the coordination meeting that generators have not executed long-term PPAs, CTU ought to have withheld construction of the system, as otherwise the system built would be un-economical and inefficient. In the present case, LTA was granted to the Petitioner on the basis of the available margins in the high capacity transmission corridor, which was already under development and meant for generators other than the Petitioner. Hence, the Petitioner cannot at all be fastened with any liability to pay any relinquishment charges when it was not the target beneficiary when the said system was being planned and developed by the CTU. (f) Under Regulation 18 of the Connectivity Regulations, the Petitioner has a statutory right to relinquish LTA before the expiry of the full-term of the LTA subject to payment of compensation towards the stranded capacity resulting from such relinquishment in the manner provided in the said regulation. However, the question of stranded capacity in the present case does not arise Order in Petition No. 11/MP/2017 Page 8 as per the Connectivity Regulations read with the BCD Procedure since the LTA granted to the Petitioner cannot be implemented in the absence of adequate number of long-term power procurement exercise being conducted by Discoms and consequently, no relinquishment charges are payable by the Petitioner. (g) In order to invoke any liability qua payment of any relinquishment charges under the Connectivity Regulations, CTU has to establish existence of stranded capacity and only thereafter claim for compensation can be made. With regard to stranded capacity, the Commission had referred the matter to the CEA and since CEA has not been able to resolve the same, the Commission by order dated 21.7.2015 in Petition No. 92/MP/2015 constituted a committee to go into all the aspects of the stranded capacity and relinquishment charges. Since no methodology could be developed by the Committee in existence for working out the stranded capacity on account of relinquishment of LTA quantum, any relinquishment charges calculated and subsequently imposed by CTU would amount to an arbitrary and misguided imposition. (h) The charges that are leviable for open access to the transmission system are expressly specified in Sections 38 and 40 of the Act. The Act does not mandate/sanction levy of relinquishment charge. Accordingly, the Commission has no jurisdiction to introduce a charge by way of regulation which is not expressly sanctioned by the Act/parent statute. In this regard, the Petitioner has placed reliance on the judgment of the Honble Supreme Court in the case of Bharathidasan University& Anr. Vs. All-India Council for Technical Order in Petition No. 11/MP/2017 Page 9 Education & Ors., reported in [(2001) 8 SCC 676]and the APTEL judgment in the case of Damodar Valley Corporation vs. CERC & Ors., in Appeal Nos. 271, 272, 273,

    275 of 2006 & 8 of 2007 .

    6. Subsequent to the filing of the Petition, the Petitioner filed IA No. 34/2017 seeking amendment to the main Petition on account of subsequent development post filing of the main Petition. Vide Record of Proceedings for the hearing dated 27.7.2017, the Petitioner was permitted to file amended Petition. Accordingly, IA was disposed of. Reply of the Respondent

    7. CTU vide its reply affidavitdated6.9.2018hassubmittedas under: (a) The LTA was granted to the Petitioner with the additional system strengthening as set out in LTA grant pursuant to which the Petitioner entered into BPTA dated 31.3.2010. In terms of Clause 2of the BPTA, the Petitioner has agreed to share and pay to CTU the transmission charges in accordance with the Regulations/Tariff Orders issued by the Commission corresponding to the capacity of power contracted from the generation project through open access from the scheduled date of commissioning of the project irrespective of actual date of commissioning. Accordingly, irrespective of the actual commissioning of the generating units, the Petitioner is required to pay the transmission charges in accordance with the BPTA. (b) Under Clause 5 of BPTA, the Petitioner has undertaken not to relinquish or transfer its rights and obligations under the BPTA without the prior approval of PGCIL and the Commission and subject to the payment of compensation in accordance with the Regulations issued by the Commission Order in Petition No. 11/MP/2017 Page 10 from time to time. Regulation 18 of the Connectivity Regulations provides for payment of relinquishment charges, which are in effect nothing but the transmission charges payable upon the relinquishment of the LTA and thus are not de hors the provisions of the Act. (c) Clause 9 of the BPTA deals with occurrence of force majeure conditions which is in the context of compliance of the terms of the BPTA. Any issues of the long term customer prior to operationalization of LTA were neither conceived nor were a matter of contractual agreement with PGCIL under the BPTA which is evident from the last sentence of Clause 9 which provides that transmission/drawal of power shall be started as soon as practicable by the parties concerned after such eventuality has come to an end or ceased to exist. Therefore, the BPTA contemplated such events of force majeure owing to occurrence of which the ongoing transmission/drawal of power had been disrupted. In the light of the clear provisions in the BPTA, the Petitioner cannot contend that non-availability of long term bids in the target region was a force majeure condition within the meaning of Clause 9 of the BPTA. Therefore, the issues affecting the Petitioner regarding power purchase tie-ups cannot be covered under Clause 9 of the BPTA. (d) While undertaking regulatory approval for different high capacity transmission corridors proposed to be implemented by PGCIL, the Commission in its order dated 31.5.2010 in Petition No. 233/2009 had taken due cognizance of the fact that the IPPs had not been able to sign the PPAs because the States had not gone ahead with the bidding process for evacuation of power. Therefore, the Commission had observed that linking Order in Petition No. 11/MP/2017 Page 11 the signing of the PPAs with regulatory approval was to hamper the progress of transmission projects. Keeping in view the provisions of Tariff Policy, the Commission had observed that signing of PPAs between IPPs and beneficiaries has no linkages with regulatory approval of transmission corridors for power evacuation were to be implemented after taking account the bonafide nature of generating projects which were likely to be materialized in near future. That being so, non-signing of PPAs with beneficiaries due to absence of adequate bids in target regions, could not be construed as a force majeure event under the BPTA. (e) Regulation 12 of the Connectivity Regulations provides for submission of the bank guarantee by an LTA applicant to CTU during construction phase when augmentation of transmission system is required, in accordance with the provisions of the Detailed Procedure notified under the Connectivity Regulations. As per the Detailed Procedure, LTA grantee is required to keep available with PGCIL at all material times, the prescribed Bank Guarantee, which may be encased on occurrence of the specified events. Starting from the grant of LTA and upto its operationalization and even thereafter during the period that the LTA remain operational, Payment Security mechanism with respect to ISTS transmission charges/relinquishment charges is to remain available with PGCIL. (f) The Petitioner has misconstrued the scope and operation of Clause 7.1 of the BCD Procedure to contend that till the PPAs are executed with the beneficiaries, LTA cannot be operationalized and no liability to pay transmission charges arise. In terms of proviso to Clause 7.1 of BCD, the Order in Petition No. 11/MP/2017 Page 12 transmission charges liability for DIC shall be corresponding to total quantum for which LTA is granted, with or without firm beneficiaries. The reliance placed by the Petitioner on order dated 2.12.2013 in Petition No. 244/MP/2012 is also misplaced as in the said order the Commission observed that for scheduling of power under LTA, execution of long-term PPA was necessary condition for availing the said LTA. Such scheduling of power is distinct and independent of the incidence/liability of transmission charges payment in terms of BPTA and Regulations. (g) The Petitioner has admitted that it has not been able to execute a firm PPA for evacuation of power. The LTA was granted to the Petitioner with High Capacity Power Transmission Corridor-V system inter-alia including Champa Kurukshetra 800kV, 3000MW HVDC Bipole link which was ultimately commissioned with all its elements on16.9.2017. However, all such generation projects which were granted LTA with HCPTC-V corridor were afforded an opportunity to evacuate power from the part-system already commissioned and the margins available. For operationalization of LTAs earlier granted with Jabalpur- Orai 765 kV corridor/Champa Kurukshetra HVDC Phase II against 559 MW transmission capacity was effectively made available after the surrender of the LTA by different LTA applicants in terms of directions of the Commission in Petition No. 84/MP/2016. The Petitioner did not opt for up-gradation/operationalization of its LTA even though its generation project was at a higher priority than the other applicants who opted for up-gradation/operationalization of LTA. Subsequently, the HVDC bipole link was commissioned in two phases of 1500 MW each. The first phase (1500 MW of 3000 MW) was completed in March 2017 and prior to Order in Petition No. 11/MP/2017 Page 13 completion of the first phase, the eligible LTA customers (including the Petitioner) were again afforded an opportunity to provide their consent towards operationalization of LTA with Phase-I of the HVDC link in a meeting held on 23.3.2017 in accordance with the Commission`s directions vide RoP dated 14.2.2017 in IA Nos. 30/2016 and7/2017 in Petition No. 84/MP/2016. However, the Petitioner also did not attend the meeting even though the Petitioners power plant was generating at that time, which makes it amply clear that the Petitioner was not interested in early operationalization of LTA. (h) Since the System Strengthening for the Petitioners project was completed on 1.10.2017, the Petitioner became liable to pay transmission charges to CTU from 1.10.2017 in accordance with the provisions of the BPTA.

    (i) During the pendency of the said Petition, the Petitioner sought to surrender

    430 MW LTA in NR vide its letter dated 17.5.2017 raising force majeure issues reiterating the provisions of Clause 9of the BPTA. Owing to surrender of the entire 816 MW LTA by the Petitioner, there is no question of any deferment of part LTA. Since the surrender of 816 MW LTA was not in accordance with the provisions of the Connectivity Regulations, the Petitioner is liable to pay relinquishment charges and also the applicable transmission charges till the relinquishment of its LTA. Rejoinder of the Petitioner

    8. The Petitioner, vide its rejoinder dated 22.10.2018, has mainly reiterated the submissions made in the Petition and has also submitted as under: Order in Petition No. 11/MP/2017 Page 14 (a) Clause 9 of the BPTA has an overriding effect over the other clauses of the BTPA, which impose certain amount of liability on either of the party for making payment to the other party to the said BPTA including Clause 2 of BPTA. (b) Upon execution of the BTPA, all rights and obligations as per the Connectivity Regulations, including relinquishment charges as provided in Regulation 18, are subject to the said BPTA. Accordingly, right of PGCIL to claim any relinquishment charges based upon the exist/surrender/relinquishment of LTA is subject to the provisions of the BPTA only and in the event of occurrence of a situation beyond the control of the generating company, as per Clause 9 of BPTA, it is discharged from various obligations under the BPTA including payment of relinquishment charges. (c) Inability to ensure firm long term tie up power supply is clearly a reason beyond the control of the Petitioner and falls within the ambit of Clause 9 of BPTA. The Petitioner, in this regard, has relied upon the 37th report of Standing Committee on Energy presented before Lok Sabha on 7.3.2018, wherein it has been noted that there have been unforeseen circumstances which have led the IPPs suffering from huge cash flow and falling in trouble without any source of recovery whatsoever. (d) PGCIL has failed to prove any stranded capacity in order to make the beneficiary/Petitioner liable for payment of relinquishment charges. Ascertainment of stranded capacity is a condition precedent to the liability towards relinquishment charges. Order in Petition No. 11/MP/2017 Page 15 (e) PGCIL is wrongly interpreting order dated 31.5.2010 in Petition No. 233/2009. The said order cannot override Clause 9 of the BPTA in the event of occurrence of any force majeure event. (f) The Commission in its order dated 8.12.2017 in Petition No. 203/MP/2017 has categorically observed that in the event, the construction obligations by a generator have been fulfilled as per the BPTA, then the construction Bank Guarantee has to be returned. Accordingly, the Bank Guarantee furnished by the Petitioner is liable to be returned by PGCIL. In any case, on account of occurrence of force majeure event as pointed out by the Petitioner, PGCIL ought to return the Bank Guarantee to the Petitioner. (g) The Commission in its order dated 2.12.2013 in Petition No. 244/MP/2012 has clearly held that the long-term PPA is a necessary condition for availing long-term access in accordance with Para 7.1 of BCD and inadequate number of bids, being force majeure event beyond the control of the Petitioner, its LTA could not have been operationalized by PGCIL. (h) The Commission in its order dated 8.6.2013 in Petition No. 118/MP/2012 has observed that non-availability of coal linkage for the Petitioner therein was an event beyond the control of the Petitioner. Accordingly, applying the same principle in the present case, non-availability of long-term bids for procurement of power in the WR and NR by Discom qua BTPA of the Petitioner is also a force majeure event. Order in Petition No. 11/MP/2017 Page 16 Submissions during the hearing

    9. During the hearing of the petition, learned senior counsel for the Petitioner submitted as under:- (a) Once a contract has been entered into on account of provisions in the statute or regulations and the principles in the regulations have been incorporated in the contract, it cannot be said that the regulation will operate independent of the contract. Since the incident of relinquishment charge is on account of a contract executed in terms envisaged under Regulation 15 of the Connectivity Regulations, Regulation 18 would then be required to be applied in a manner envisaged by the parties in the contract/BPTA. Accordingly, Clauses 5 and 9 of the BPTA becomes relevant and would control the obligations of the parties. (b) The Commission in Petition No. 69/MP/2014 (Aryan MP Power Generation Pvt. Ltd. Vs. PGCIL) and in Petition No. 317/MP/2013 (Navbharat Power Pvt. Ltd. Vs. PGCIL) and other orders has interpreted Clause 9 of the BPTA to cover a temporary phase when the project developer is unable to utilize the transmission system or when the licensee is unable to make its transmission system available due to any force majeure event and has held that the said provision cannot be used for making an exit from BPTA. Force Majeure cannot be of temporary nature for the reason that the definition of force majeure includes war, rebellion, mutiny, fire, flood, change in law etc. and some of these events creates a permanent disability to jeopardize the ability of the Petitioner to start operation again. Therefore, Clause 9 of the Order in Petition No. 11/MP/2017 Page 17 BPTA is without any limitations as to the time for which force majeure period can be claimed. (c) Clauses 1 to 11 of the BPTA unambiguously provide that the obligation contained under the terms relating to payment of transmission charges (Clause 2) and relinquishment charges (Clause 5) shall stand discharged in the event of occurrence of force majeure situation (Clause 9). Therefore, Clause 9 is an omnibus clause that cuts right through the agreement and includes the failure to carry out the obligation to pay the transmission charges and relinquishment charges as envisaged in Clauses 3 and 5 of the BPTA. The functional basis of a power project is long term PPAs and if the same are not executed due to reasons not attributable to the project developer, the existence of force majeure events as provided in Clause 9 cannot be denied. Further, Clause 6 of the BPTA has no application to the present case as this is not a case of exit/abandonment of the project. (d) The event narrated by the Petitioner i.e. non-availability of long term PPA is an event of force majeure within the meaning of Clause 9 of the BPTA and on occurrence of such force majeure event, the obligation to pay the relinquishment charges under Regulation 18(1) of the Connectivity Regulations stands extinguished. An analysis of the various provisions of the BPTA would show that the statutory right of CTU to collect transmission charges was made in terms of the contract/BPTA. As per the minutes of the 37th and 40th Reports of the Parliamentary Standing Committee issued in March, 2018 and August, 2018 respectively, there was no possibility of signing of PPAs which resulted in the assets being stranded/stretched and Order in Petition No. 11/MP/2017 Page 18 several companies being declared NPAs. Lack of agreement for supply of power between generators and distribution licensees is an event of force majeure which is recognized by the Central Government.

    10. Learned Counsel for CTU submitted as under:

    a) The Commission in its order dated 8.3.2019 in Petition No. 92/MP/2015 has decided the issue of stranded capacity and payment of relinquishment charges. The Commission has held that Regulation 18 of the Connectivity Regulations was in conformity with the provisions of the Act and in advancement of the objects of the Act with regard to Open Access. Further, the Commission has held that the Relinquishment Charges were in the nature of the compensation which a long term customer was obliged to pay as transmission charges in accordance with the mechanism envisaged in the Regulation 18 of the Connectivity Regulation. Therefore, the issue as regards the liability of payment of relinquishment charges has been settled by the Commission which is binding on the petitioner being a party in the Petition No. 92/MP/2015.

    b) In line with the direction of the Commission in order dated 8.3.2019 in Petition No. 92/MP/2015, CTU has computed the stranded capacity and relinquishment charges of the various generators including the Petitioner. The Petitioner is liable to pay Rs. 44.12 Crs. as Relinquishment Charges.

    c) The allegations made by the Petitioner as regards the responsibility of the CTU to execute the transmission corridors taking into account the actual Order in Petition No. 11/MP/2017 Page 19 long term PPAs entered by the Petitioner has been dealt with by the Commission in Para 94 of the Order dated 8.3.2019 in the Petition No. 92/MP/2015. Since, signing of the PPAs is not a pre-condition for implementation of transmission corridors, the same cannot be pleaded as a Force Majeure event relieving the Petitioner from paying the relinquishment/transmission Charges under the BPTA.

    d) The Commission in the Order dated 8.3.2019 in Petition No. 92/MP/2015 has held that since BPTA is in terms of the Connectivity Regulations, it is in the nature of a statutory contract. The relationship between the CTU and the LTA customer being statutory in nature has to be governed by the provisions of the Connectivity Regulations. Further, the liability for payment towards the relinquishment charges is to be determined based on Regulation 18 of the Connectivity Regulations. Since, the issue as regards the applicability of the Regulation 18 in the context of BPTA stands adjudicated, the submission of the Petitioner in this regard is liable to be rejected.

    e) Under Clause 5.0 of the BPTA, the obligation to pay the transmission charges under the BPTA is absolute and the Petitioner cannot transfer/relinquish its rights and obligations without the prior approval of the Commission. Since, the relinquishment is to be upon the payment of necessary compensation in accordance with the regulations, Regulation 18 of the Connectivity Regulation has been included as an operating contractual provision under the express terms of Clause 5.0 of the BPTA. Therefore, the inter argument of the statute ousting the Regulation is of no consequence. Order in Petition No. 11/MP/2017 Page 20

    f) While interpreting a contract what is of essence is the intention of the parties in the context which it appears and the nature of the rights and obligations agreed there under`. As such the Force Majeure Clause under BPTA must be construed accordingly and cannot be given a wider area of applicability than what has been intended by the parties. The BPTA is a contract for use of transmission line of a transmission licensee by a DIC wherein the DIC agrees to bear the transmission charges as a consideration for use of the said transmission lines irrespective of the actual power flow. In other words, so long as a DIC is connected to the transmission lines of the licensee and retains the rights to access the system, it is liable to pay transmission charges to the licensee. It is in this context that Clause 9 of the Connectivity Regulations provides for an exclusion Clause in the nature of the force majeure event which temporarily absolves the parties from any liabilities arising from a breach of contract. This is evident from the last sentence of the Clause 9 which says that power flow should be started as soon as the force majeure event is over. Therefore, Clause 9 of the BPTA being temporary in nature and being restrictive in application cannot be relied upon by the Petitioner to contend that the entire BPTA including Clause 5.0 of the BPTA ceases to operate as between the parties. The liabilities under Clause 5 of the BPTA and Regulation 18 of the Connectivity Regulations must be distinguished from the liabilities under Clause 9 of the BPTA. Clause 9 of the BPTA only provides for a departure of payment from the transmission charges and by no means can provide for departure from obligation under the Clause

    5 of the BPTA. Order in Petition No. 11/MP/2017 Page 21

    g) As per the findings of the Commission in various cases and of the Appellate Tribunal in Appeal No. 54 of 2014, the absence of long term PPA cannot be construed as a force majeure event. The Petitioner is accordingly liable to pay the Relinquishment Charges.

    11. Learned Senior Counsel for the Petitioner has submitted as under: (a) Relinquishment Charges have been made as part of the contractual obligations under Clause 5 and therefore, the same is amenable to the Clause

    9 of the BPTA. While the relinquishment charges can be computed in terms of the protocol provided under Regulation 18, levy of the same is subject to the terms and subject of the BPTA. Further, the BPTA does not contain any exception or non obstante clause specifying that the relinquishment charges will be levied as per the Connectivity Regulations. In the absence of such stipulations, CTU cannot argue that the compensation for relinquishment is a statutory charge which is payable de-hors the provisions of the BPTA. (b) The argument by PGCIL that PPA is not at all relevant while considering the LTA application is fundamentally flawed. Regulation 12 of the Connectivity Regulations provides that an agreement for sale/purchase of power is a consideration at the time of applying for LTA. Clause 22.7 of the Detailed Procedure under the Connectivity Regulation casts an obligation on an LTA customer to confirm the exact details of the PPA executed 3 years prior to the intended date of operationalization of the LTA. Clause 7.1 of the BCD Procedure provides that an LTA cannot be operational in the event firm long term PPA is not available. Regulation 15-B of the Connectivity Regulations provides that LTA can only be availed by having a contract of above one year. Order in Petition No. 11/MP/2017 Page 22 In view of the above provisions, the Commission is precluded from taking a view that non- availability of long term PPAs as a result of non-initiation of a long term power purchase processes by the distribution licensees will have no impact on the BPTAs. (c) Ministry of Power issued the guidelines for procurement of power under Design, Build, Finance, Own and Operate (DBFOO) basis on 8.1.2013. As per DBFOO, coal cost is a pass through in certain scenarios which relate to the source of coal. For example, if the bids are called for scenarios relating to domestic coal linkage or from domestic coal mines, then power plants based on imported coal cannot participate in such bids. The said stipulation is a departure from the earlier Case 1 bidding regime where coal source was at the discretion of the bidders. This factor has materially affected the Petitioner from entering into long term PPA. The aforesaid reason cannot be ignored by the Commission and in the event of relinquishment of BPTA/LTA on account of the said force majeure reasons, no relinquishment charges can be levied. (d) The BPTA is not an underlying contract for underwriting the costs of PGCIL. Where a generator is not able to evacuate power on account of reasons which are beyond its control, the said generator cannot be made liable to underwrite the cost of PGCIL on account of non-usage of the transmission system. As per Section 38(2)(b) of the Act, CTU is required to effectively coordinate the construction of transmission systems with various entities including the generators. It follows therefrom that when the generators have raised their concerns pertaining to non-evacuation of power on account of reasons beyond their control, CTU cannot just proceed with the Order in Petition No. 11/MP/2017 Page 23 transmission corridors only on the basis of BPTAs being signed with the generators. As per Para 5.3.2 of the National Electricity Policy, CTU is required to undertake network expansion after identifying requirements in consultation with the stakeholders and taking up the execution after the due regulatory approval. When PGCIL develops transmission corridors without execution of contracts/BPTA with the beneficiaries, the risks in developing the transmission network cannot be entirely attributable to the LTA customers. CTU has to take the risk of developing transmission infrastructure in the event of occurrence of any unforeseeable or uncontrollable event. (e) CTUs interpretation of clause 9 of the BPTA is only applicable to the extent of transmission of electricity in a transmission system, and not for the purpose of injection or withdrawal of power is completely erroneous. After injection of power by the generator from its generating station, it has no role qua such generation of power. If the force majeure clause is interpreted as per the argument of CTU, then it will be applicable for the benefit of CTU, and for no other entity. Any issues qua the flow of power in the transmission system can only be attributable to CTU and in such an event, any benefit of force majeure will always be availed by CTU. The above interpretation will render clause 9 otiose as only CTU can invoke the said clause since the generator does not have any role after injection of power in the transmission system from its power plant. (f) Reliance on Regulation 8(5) of the Sharing Regulations with regard to the liability of generators to pay the transmission charges irrespective of the force majeure clause is misplaced. Regulation 13(1)(l) of the Sharing Order in Petition No. 11/MP/2017 Page 24 Regulations provides that force majeure clause shall be inserted in the TSA which means that in case of an event beyond the control of a generator, the said clause will be applicable and the generators are not bound to pay the transmission charges on account of force majeure events. Since the liability to collect the transmission charges has been subjected to TSA which is a statutory contract, the Sharing Regulations will have to be implemented as per the provisions of the TSA. Accordingly, the Regulation 8(5) of the Sharing Regulations cannot be independently invoked. In the event of occurrence of force majeure, the liability to pay transmission charges by the generator is discharged. Analysis and Decision

    12. We have considered the submissions of the Petitioner and Respondents and perused all relevant documents on record and the regulations of the Commission and the orders issued by the Commission having bearing on the adjudication of disputes raised in the petition. The following issues arise for our consideration: (a) Issue No. 1: Whether Clause 9 of the BPTA dealing with force majeure is an omnibus provision cutting across all provisions of the BPTA including clause 3 and 5 and in the event force majeure is proved, relieves an affected party from its liability to pay the transmission charges or relinquishment charges as the case may be, or is a standalone provision applicable for disruption in injection/supply of power of temporary nature? (b) Issue No.2: Whether the case of the Petitioner is covered under clause 9 of the BPTA? (c) What should be the date of relinquishment of LTA under the BPTA dated 31.3.2010? (d) Issue No.4: What are the reliefs admissible to the Petitioner in terms of its prayers in the Petition? Order in Petition No. 11/MP/2017 Page 25 These issues have been dealt with ad seriatim in the succeeding paragraphs of this order. Issue No. 1: Whether Clause 9 of the BPTA dealing with force majeure is an omnibus provision cutting across all provisions of the BPTA including clause

    3 and 5 and in the event force majeure is proved, relieves an affected party from its liability to pay the transmission charges or relinquishment charges as the case may be, or is a standalone provision applicable for disruption in injection/supply of power of temporary nature?

    13. The Petitioner has set up a 1370MW (2x685) power project at village Raikheda in the State of Chhattisgarh. The Petitioner vide its application dated 30.8.2008 applied for LTA for 1215 MW having 300 MW to the Western Region, 460 MW to the Northern Region and 455 MW within the State of Chhattisgarh. The Petitioner was granted LTA of 438 MW for CSPTCL within the State of Chhattisgarh and 816 MW outside the State (386 MW in Western Region and 430 MW in Northern Region). The Petitioner entered into a BPTA with CTU on 31.3.2010 for 816 MW for transfer of power to Western Region and Northern Region. The Petitioner has submitted that it has not been able to ensure firm tie up for supply of power on account of refusal of CSPTCL to off-take 35% of power and also for limited number of long term bids by the distribution companies for procurement of power and vide its letter dated 7.12.2016 sought to relinquish 386 MW of power to the Western Region. Further, the Petitioner vide its letter dated 17.5.2017 sought to relinquish 430 MW LTA to Northern Region on account of annulment of bids by UPPCL.

    14. The Petitioner has submitted that CTU accorded long term access in terms of the Connectivity Regulations. The Petitioner and CTU entered into BPTA as required under Regulation 15 of the Connectivity Regulations for payment of transmission charges (Clause 2 of the BPTA). Clause 5 of the BPTA recognized the ability to relinquish or transfer obligations specified in the BPTA subject to approval of CTU and the Commission and further subject to payment of compensation. In terms of Order in Petition No. 11/MP/2017 Page 26 Clause 9 of the BPTA, the parties have agreed to limit their liability for loss or damage arising out of failure to carry out the terms of the agreement if such loss or damage is on account of force majeure. Further, force majeure has been defined in broad terms to include change in law or any other cause beyond the control of the defaulting party. Therefore, the statutory right of CTU to collect the transmission charges was made in terms of the contract/BPTA. The Petitioner has submitted that the agreed terms of the BPTA, being Clauses 1 to 11 are unambiguous which provide that the obligations contained under the terms relating to payment of transmission charges (Clause 2) and relinquishment charges (Clause 5) shall stand discharged in the event of occurrence of force majeure situation (Clause 9). The Petitioner has submitted that Clause 9 is an omnibus clause that cut right through the agreement since it provides that no party is liable to any claim for any loss or damages whatsoever arising out of the failure to carry out the terms of this Agreement. The Petitioner has submitted that use of the phrase this agreement includes the failure to pay the transmission charges and relinquishment charges as envisaged in Clauses 3 and 5 of the agreement. The parties entering into contract are fully aware of the nature of the contract including the contingencies (i.e. Clause 9 of the BPTA) and it would not be proper if any other interpretation or meaning is given to the same which is contrary to the original intention of the parties i.e. inspite of occurrence of force majeure events under clause 9, the contractual obligations under Regulation 5 to pay the relinquishment charges continues to be alive.

    15. Learned Senior Counsel for the Petitioner submitted that a question which needs to be considered is whether the Petitioner would be liable for payment of relinquishment charges in terms of Regulation 18 of Connectivity Regulations read with the order dated 8.3.2019 in Petition No.92/MP/2015 irrespective of whether the Order in Petition No. 11/MP/2017 Page 27 Petitioner has demonstrated existence of force majeure events. The Petitioner has submitted that once a contract has been entered into on account of provisions in statute/regulations and the principles in the regulations have been incorporated in the contract, it cannot be said that the regulation will operate independent of the contract. The Petitioner has submitted that the incidences of relinquishment charge is on account of the contract executed in terms envisaged under Regulation 15 and hence Regulation 18 would require to be applied in a manner envisaged by the parties in the BPTA. It is in this context that Clauses 5 and 9 become relevant and would control the obligations of the parties, irrespective of whether such obligation has reference to determination made under the regulations.

    16. CTU has submitted that the issue regarding liability of payment of relinquishment charges and method of determination of stranded capacity has been settled by the Commission in order dated 8.3.2019 in Petition No.92/MP/2015 and is binding on the Petitioners who were also parties in the said proceedings (subject to order in the appeals). The Petitioners cannot now be heard to contend that they are not liable to make payment of the compensation in the manner provided under Regulation 18 of the Connectivity Regulations. CTU has submitted that the Petitioner in terms of Clause 2.0 of the BPTA has undertaken to share and pay to the CTU the transmission charges in accordance with the Regulations/Tariff orders of the Commission. Further, Clause 6 of the BPTA have bound the generators to pay the transmission charges when they are abandoning the project or making an exit. CTU has emphasized that it is in pursuance of the said provision that the Petitioner has furnished to the CTU the bank guarantee corresponding to the LTAs granted to them which can be encashed by the CTU in case of any adverse progress of the generating unit assessed in the Coordination Meeting. CTU has further submitted Order in Petition No. 11/MP/2017 Page 28 that Clause 5.0 of the BPTA prevents the Petitioner to relinquish or transfer its rights and obligations specified in the BPTA without the prior approval of the Commission and CTU and subject to payment of compensation in accordance with the regulations of the Commission issued from time to time. Therefore, Regulation 18 has been included as an operating contractual provision under the express terms of Clause 5.0 of the BPTA and therefore, the entire argument of the contract ousting the regulation is of no consequence. CTU has submitted that the contention of the Petitioner that the right to claim relinquishment charges based upon exit/surrender/relinquishment of LTA is subject to provisions of BPTA which has become frustrated on account of force majeure event, already stands adjudicated in order dated 8.3.2019 in Petition No.92/MP/2015 wherein the Commission has held that BPTAs or LTA Agreements are in accordance with the Connectivity Regulations and they are in the nature of statutory contract and are to be governed by the provisions of Connectivity Regulations. CTU has submitted that the interpretation supplied by the Petitioner to Clause 9 of the BPTA so as to broaden its applicability to situations which were never intended to be covered, is absolutely erroneous and has occurred on account of the unwarranted comparison by the Petitioner of the force majeure clause in the BPTA with the force majeure clause in the Power Purchase Agreement between the generating companies and distribution licensees. CTU has submitted that the force majeure clause in the BPTA must be interpreted on the principle of interpretation of contract i.e. the intention of the parties, the context in which they appear and the nature of rights and obligations agreed thereunder and cannot be given a wider area of applicability than what has been intended by the parties. CTU has submitted that the BPTA is a contract for use of transmission lines of a transmission licensee by a DIC wherein the DIC agrees to Order in Petition No. 11/MP/2017 Page 29 bear the transmission charges as a consideration for use of the said transmission lines irrespective of the actual power flow, meaning thereby that so long as a DIC is connected to the transmission lines of the licensee and retains the right to access the system, it is liable to pay the transmission charges to the licensee. It is in this context that Clause 9 provides for an exclusion clause in the nature of force majeure which temporarily absolves the parties from any liability arising out of the breach of contract if the same has occurred on account of force majeure which prevents the use of the transmission lines and suspends the power flow. That is why the clause says that power flow is to be started as soon as force majeure event is over. CTU has submitted that clause 9 of the BPTA being temporary in nature and restrictive in its application cannot be relied upon by the Petitioner to contend that once it becomes applicable, the entire BPTA including clause 5.0 ceases to operate between the parties. CTU has emphasized that the applicability of Clause 9 cannot be extended to matters which are beyond the eventualities affecting transmission/drawal of power. CTU has submitted that the attempt of the Petitioner to misinterpret the provisions of Clauses 9 and 5 of the BPTA read with Regulation

    18 of the Connectivity Regulations so as to evade its liability of payment of relinquishment charges at the time of relinquishment of the LTA, is also negated by the clear language of Clause 9 of the BPTA.

    17. We have considered the submissions of the Petitioner and CTU. The main contention of the Petitioner is that once the BPTA has been signed as required under Regulation 15 of the Connectivity Regulations, the rights and liabilities of the parties to the BPTA shall be governed by the provisions of the BPTA and not in accordance with the provisions of the Connectivity Regulations. To be specific, the Petitioners contention is that the relinquishment charges determined under Regulation 18 of the Order in Petition No. 11/MP/2017 Page 30 Connectivity Regulations cannot be levied if the Petitioner is excused for performance on account of force majeure in terms of Clause 9 of the BPTA. Therefore, the question for consideration is whether the relinquishment charges are statutory or contractual in nature. The Commission has dealt with the issue in its order dated 8.3.2019 in Petition No.92/MP/2015. Relevant observations and findings of the Commission in the said order are extracted as under:

    97. We have considered the submissions of the parties. Long Term Access rights have been granted to the LTA customers under provisions of Regulation 12 of the Connectivity Regulations and such access rights carry with itself the corresponding commitment under Regulation 26 to pay the transmission charges for the transmission systems included in the LTA grants. Further, in terms of the Connectivity Regulations, the LTA customers have signed the Bulk Power Transmission Agreements or Long Term Access Agreement making unconditional commitment to pay the transmission charges throughout the term of the LTA. Regulation 18 deals with the relinquishment of long term access rights by the LTA customers. Regulation 18 provides for an exit provision for the long term customers to relinquish the LTA rights subject to payment of transmission charges for a maximum period of 12 years with a notice period of one year or payment of transmission charges in lieu thereof. Since BPTA or LTA Agreements are in terms of the Connectivity Regulations, they are in the nature of statutory contract. Therefore, the relationship between the CTU and the LTA customers are basically statutory in nature and has to be governed by the provisions of the Connectivity Regulations. As a corollary, the relinquishment of access rights of the LTA customers has to be strictly construed in terms of the provisions of the Connectivity Regulations.

    98. Regulation 18 which deals with the relinquishment of long term access rights by LTA customers is extracted as under:

    18. Relinquishment of access rights (1) A long-term customer may relinquish the long-term access rights fully or partly before the expiry of the full term of long-term access, by making payment of compensation for stranded capacity as follows:- (a) Long-term customer who has availed access rights for atleast 12 years

    (i) Notice of one (1) year If such a customer submits an application to the Central Transmission Utility at least 1 (one) year prior to the date from which such customer desires to relinquish the access rights, there shall be no charges.

    (ii) Notice of less than one (1) year If such a customer submits an application to the Central Transmission Utility at any time lesser than a period of 1 (one) year prior to the date from which such customer desires to relinquish the access rights, such customer shall pay an amount equal to 66% of the estimated transmission charges (net present value) for the stranded transmission capacity for the period falling short of a notice period of one (1) year. (b) Long-term customer who has not availed access rights for at least 12 (twelve) years such customer shall pay an amount equal to 66% of the estimated Order in Petition No. 11/MP/2017 Page 31 transmission charges (net present value) for the stranded transmission capacity for the period falling short of 12 (twelve) years of access rights: Provided that such a customer shall submit an application to the Central Transmission Utility at least 1 (one) year prior to the date from which such customer desires to relinquish the access rights; Provided further that in case a customer submits an application for relinquishment of long-term access rights at anytime at a notice period of less than one year, then such customer shall pay an amount equal to 66% of the estimated transmission charges (net present value) for the period falling short of a notice period of one (1) year, in addition to 66% of the estimated transmission charges (net present value) for the stranded transmission capacity for the period falling short of 12(twelve) years of access rights. (2) The discount rate that shall be applicable for computing the net present value as referred to in sub-clause (a) and (b) of clause (1)above shall be the discount rate to be used for bid evaluation in the Commissions Notification issued from time to time in accordance with the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees issued by the Ministry of Power. (3) The compensation paid by the long-term customer for the stranded transmission capacity shall be used for reducing transmission charges payable by other long-term customers and medium-term customers in the year in which such compensation payment is due in the ratio of transmission charges payable for that year by such long term customers and medium-term customers.

    99. Regulation 18 provides for relinquishment of access rights fully or partly before expiry of the full term of long term access by making payment of compensation for the stranded capacity. The regulation has fixed a period of maximum of 12 years for the purpose of compensation for access rights even though the tenure of the LTA is 25 years. Further, the compensation has been fixed at an amount of 66% of the transmission charges (net present value) for the stranded transmission capacity for a period falling short of 12 years. In other words, the long term customers relinquishing the access rights are exempted from paying 34% of the transmission charges (net present value) for a period falling short of 12 years. Thus on account of the exit of a long term customer through relinquishment, the entire transmission charges from 13th year to 25th year and 34% of the transmission charges from 1st year to 12th year for the relinquished capacity has to be borne by other long term customers and medium term customers. This aspect becomes clear from Regulation 18(3) which provides that the compensation received on account of relinquishment shall be applied for reducing the transmission charges of other long term and medium term customers which are required to bear the additional transmission charges which would have been borne by the relinquishing long term customers but for the relinquishment of long term access rights. Therefore, Regulation 18 statutorily provides for a compensatory mechanism for relinquishment of access rights by long term customers by apportioning the risks between the relinquishing long term customers and the other long term and medium term customers keeping in view the likely utilization of the relinquished transmission assets. It is pertinent to mention that neither BPTA nor Long Term Access Agreements between the long term customers and CTU provide for any compensatory mechanism but only mention that it shall be determined as per the regulations of the Commission. In other words, the compensatory mechanism for long term access rights is statutory in nature. Therefore, the Commission does not agree with the contention of relinquishing long term customers that the compensation on account of relinquishment of long term Order in Petition No. 11/MP/2017 Page 32 access rights shall have to be decided on the principles of section 73 and 74 of the Indian Contract Act, 1872.. In the light of the above findings of the Commission, the issue whether the relinquishment charges shall be governed by the Connectivity Regulations or the provisions of the BPTA stands settled. Since appeals have been filed against the said order, it is needless to say that the above findings are subject to the decision of the Appellate Tribunal. As the matter stands today, the issue is settled and cannot be reopened in the present proceedings.

    18. Another argument of the Petitioner is that Clause 9 of the BPTA is an omnibus clause that cut right through the agreement and the use of the words this agreement includes the failure to carry out the obligation to pay the transmission charges and relinquishment charges, as envisaged in Clauses 3 and 5 of the BPTA. The Petitioner has submitted that the Commission has taken a view qua Clause 9 in Aryan Coal and other related matters that the said clause provides temporary amnesty and appeals are presently pending against these orders. Despite being aware that the Commission has become functus officio qua the interpretation of Clause 9 of the BPTA, the Petitioner has urged the Commission to take an independent view on account of the submissions made in the petition. Therefore, without any prejudice to our findings in our earlier order, we are examining the submissions of the Petitioner.

    19. The relevant provisions of the BPTA dated 31.3.2010 between the Petitioner and CTU are quoted hereunder: 1.0 In accordance with Central Electricity Regulatory Commission Regulations, 2009 and Electricity Act 2003 (including there amendment, if any) and in accordance with the term mentioned above, POWERGRID agrees to provide such open access required by these Long Term Transmission Customers from the date and in the manner mentioned in the Annexure 1, Annexure 2 , Annexure 3 and Annexure 4 of Order in Petition No. 11/MP/2017 Page 33 this agreement for a period of 25 years from the schedule date of open access of individual long-term open access customers (as specified in Annexure I). 2.0 (a) Long term transmission customer shall share and pay the transmission charges in accordance with the regulation/tariff order issued by Central Electricity Regulatory Commission from time to lime of POWERGRlD transmission system of concerned applicable Region i.e. Northern Region, Western Region, Southern Region including charges for inter-regional links/ULDC/NLDC charges and any additions thereof. These charges would be applicable corresponding to the capacity of power contracted from the said generation project through open access from the, scheduled date of commissioning of generating projects as indicated at Annexure-l irrespective of their actual date of commissioning. (b) Long term transmission customer shall share and pay the transmission charges of the transmission system detailed in Annexure-3 in accordance with tile sharing mechanism detailed in Annexure-4. In case, in future, any other long-term transmission customer(s) is/are granted open access through the transmission system detailed at Annexure-3 (subject to technical feasibility), he/they would also share the applicable transmission charges. (c)Each Long transmission customer (including its successor/assignee) shall pay the applicable transmission charges from the date of commissioning of the respective transmission system which would not be prior to the schedule commissioning date of generating units as indicated by the respective developer as per Annexure-l. The commissioning of transmission system would be preponed only if the same is agreed mutually by concerned parties. (d) In addition to opening of LC for 105% of estimated average monthly billing for charges mentioned at 2(a) and 2(b) above, Long-Term Transmission customer would provide security in the form of irrevocable Bank Guarantee (BO), in favor of POWER GRID, equivalent to two months estimated average monthly billing, three months prior to the scheduled date of commissioning of generating units as indicated at Annexure-l. Initially the security mechanism shall be valid for a minimum period of three (3) years and shall be renewed from time to time till the expiry of the open access. 3.0 POWERGRID agrees to provide Long Term Access required by Long term transmission customer as per the details mentioned above and in accordance with the Regulations under the Central Electricity Regulatory Commission (Open Access in Interstate Transmission) Regulations 2009 and conditions specified by the CERC from time to time. However, during the tenure of this agreement if any of the covenants and conditions recited in this agreement including agreements at Annexure- A, Band C found inconsistent with the provisions of the Electricity Act 2003 and/or applicable notifications/rules/regulations issued either by CERC or by GOI as per the provisions of the Electricity Act, then not withstanding anything contained in the agreement referred to above, the said rules and regulations shall prevail. 5.0 The Long term transmission customer shall not relinquish or transfer its rights and obligations specified in the Bulk Power Transmission Agreement, without prior approval of POWERGRlD and CERC and subject to payment of compensation in accordance with the CERC Regulations issued from time to time. Order in Petition No. 11/MP/2017 Page 34 6.0 (a) In case any of the developers fail to construct the generating station or dedicated transmission system or makes an exit or abandon its project, POWERGRlD shall have the right to collect the transmission charges and/or damages as the case may be in accordance with the notification/regulation issued by CERC from time to time. The developer shall furnish a Bank guarantee from a nationalised bank for an amount which shall be equivalent to Rs.5 (five)Lakhs/MW to compensate such damages. The bank guarantee format is enclosed as Annexure-Y. The details and categories of bank would be in accordance with clause 2 (h) above. The Bank guarantee would be furnished in favour of POWERGRID in accordance with the time frame agreed during the meeting held at CEA on 1.2,2010. (b) This bank guarantee would be initially valid for a period upto six months after the expected date of commissioning schedule of generating units) mentioned at Annexure-l (however, for existing commissioned units, the validity shall be the same as applicable to the earliest validity applicable to the generator in the group mentioned at Annexure I), The bank guarantee would be encashed by POWER GRID in case of adverse progress of individual generating units assessed during coordination meeting as per para 7 below. However, the validity should be extended by the concerned Long Term transmission customer(s) as per the requirement to be indicated during co-ordination meeting. (c) The POWERGRID shall build transmission system included at Annexure-3 keeping view of various commissioning schedules, however, till the completion of identified transmission elements the transfer of power will be based on the availability of system on short term basis. (d) In the event of delay in commissioning of concerned transmission system from its schedule, as indicated at Annexure-4 POWERGRID shall pay proportionate transmission charges to concerned Long Term Access Customer(s) proportionate to its commissioned capacity (which otherwise would have been paid by the concerned Long Term Access Customer (s) to POWERGRID) provided generation is ready and POWERGRID fails to make alternate arrangement for dispatch of power. 9.0 The parties shall ensure due compliance with the terms of this Agreement. However, no party shall be liable for any claim for any loss or damage whatsoever arising out of failure to carry out the terms of the Agreement to the extent that such a failure is due to force majeure events such as war, rebellion, mutiny, civil commotion, riot, strike, lock out, fire, flood, forces of nature, major accident, act of God, change of law and any other cause," beyond the control of the defaulting party. But any party claiming the benefit of this clause shall satisfy the other party of the existence of such an event and give written notice of 30 days to the other party to this effect. Transmission/drawal of power shall be started as soon as practicable by the parties concerned after such eventuality has come to an end or ceased to exist.

    10. In the event of filnalisation of beneficiaries by the developers the applicable transmission charges and other charges covered under this agreement would be payable by the concerned beneficiary. These charges would be effective only from the date of signing of agreement by concerned beneficiary with POWERGRID for the validity period of open access.

    20. Perusal of the above provisions makes the scheme envisaged in the BPTA clear. As per Clause 1, CTU has agreed to grant long term access to the Petitioner in Order in Petition No. 11/MP/2017 Page 35 accordance with the Act and Connectivity Regulations from the date and in the manner mentioned in Annexure 1 to 4 of the BPTA for a period of 25 years from the scheduled date indicated in Annexure 1. According to Clause 2, the Petitioner is under obligation to pay the transmission charges in accordance with the regulations and tariff order of the Commission issued from time to time. The applicable charges are payable by the Petitioner from the date of commissioning of the transmission system which should not be prior to the scheduled date of commissioning of the generating station irrespective of actual date of commissioning of the generating station. Further Clause 2 (d) provides for opening of LC and BG as security. As per Clause 3, CTU has agreed to provide the long term access as per the BPTA in accordance with the regulations and conditions as specified by the Commission from time to time. During the tenure of the agreement, if any of the covenants and conditions recited in the agreement are found inconsistent with the provisions of the Act or applicable notification, rules/regulations issued by the Commission or by GOI as per the provisions of the Act, then the said rules and regulations shall prevail. Therefore, the parties to the BPTA have expressly agreed that the provisions of the applicable notification/rules/regulations issued by GOI or the Commission shall prevail over any covenant or conditions of the BPTA. Clause 5 enjoins upon the Petitioner not to relinquish or transfer its rights and obligations under the BPTA without prior approval of CTU and the Commission and subject to compensation determined in accordance with the regulations of the Commission issued from time to time. This means that the BPTA incorporates the relinquishment charges determined under Regulation 18 of the Connectivity Regulation as compensation for relinquishment in terms of Clause 5 of the BPTA. Clause 6 deals with four eventualities attributable to the Petitioner i.e. failure to construct the generating Order in Petition No. 11/MP/2017 Page 36 station, failure to construct the dedicated transmission system, exit from the project or abandonment of the project, on occurrence of which CTU has the right to collect the transmission charges and/or damages in accordance with the regulation/notification issued by the Commission from time to time. For compensating the damages, the Petitioner is required to give a bank guarantee @Rs.5 lakh/MW which could be encashed on account of adverse progress of the individual generating units assessed during the coordination meeting as per Clause

    7. Clause 9 enjoins upon both parties to ensure due compliance of the terms of the agreement. However, a party is discharged from its liability for claim for any loss or damages if it fails to carry out the terms of the agreement to the extent such failure is due to force majeure events. There is also provision for notice by the party claiming force majeure to the other party. The Clause further enjoins on the parties to resume transmission/drawal of power as soon as practicable by the parties concerned after the eventuality ceased to exist or come to an end.

    21. The parties have argued at length with regard to applicability of force majeure clause in case of relinquishment of LTA and liability of parties to pay the relinquishment charges. It is a settled principle that while interpreting the contract, the intention of the parties, the context in which they appear and the nature of rights and obligations agreed thereunder are relevant considerations which should be kept in view. Therefore, Clause 9 of the BPTA has to be interpreted with due consideration of the above principle of construction. Different elements of Clause 9 are as under: (a) The parties shall ensure due compliance with the terms of the agreement. Order in Petition No. 11/MP/2017 Page 37 (b) No party shall be liable for any claim of damages or loss arising out of failure to carry out the terms of the agreement. (c) The party shall be relieved of the liability to the extent that such a failure is due to force majeure events such as war, rebellion, mutiny, civil commotion, riot, strike, lock out, fire, flood, forces of nature, major accident, act of God, change of law and any other cause beyond the control of the defaulting party. (d) The defaulting party shall satisfy the other party of the existence of such an event and give a written notice of 30 days. (e) Transmission/drawal of power shall be started as soon as practicable by the parties concerned after such eventuality has come to an end or ceased to exist. It is evident from the above that the intention of the parties is to ensure due compliance of the terms of the BPTA. BPTA is a contract for use of the transmission lines of a transmission licensee by a long term customer wherein the transmission licensee agrees to provide open access to its transmission lines and the long term customer agrees to pay the transmission charges as a consideration of use of the said transmission lines. In other words, so long as the long term customer is connected to the transmission lines of the licensee and retains the right to access to the system, it is liable to pay the transmission charges irrespective of actual power flow. Clause 9 provides for an exclusion in the form of force majeure which absolves a party from its liability to any loss or damages arising out of its failure to carry out the terms of the BPTA if it has occurred on account of force majeure which prevents the use of the transmission lines by the long term customer and suspends the power Order in Petition No. 11/MP/2017 Page 38 flow. The clause does not visualize the failure to be of permanent nature, It says that as soon as the event ceases to exist, the transmission/drawal of power shall be started as soon as practicable, meaning thereby that the clause is envisaged to be applicable for a temporary period. Therefore, Clause 9 of the BPTA covers situation of temporary in nature and has a restrictive application. The scope of the said clause cannot be given wider application to cover the cases under Clause 5 wherein the long term customer has an option to relinquish the LTA on payment of compensation in accordance with the regulations issued from time to time. We are of the view that Clause 9 of the BPTA cannot be considered as an omnibus provision to cover under its sweep clause 5 which deals with relinquishment of the LTA. Therefore, the Petitioner cannot escape its liability to pay the relinquishment charges under Clause

    5 of the BPTA and Regulation 18 of the Connectivity Regulations by resorting to Clause 9 of BPTA.

    22. The Commission in its order dated 31.10.2017 in Petition No.69/MP/2014 (Aryan MP Power Generation Pvt Limited Vs. Powergrid Corporation of India Ltd) has dealt with clause 9 of the BPTA in the context of clause of the BPTA as under:

    18. Next we consider whether the Petitioner is entitled to be discharged from its liability to pay the transmission charges on account of force majeure under clause 9 of the BPTA. Clause 9 of BPTA says that no party shall be liable to any claim for any loss or damage arising out of the failure of the other party to carry out the terms of the agreement to the extent such failure is on account of force majeure events such as war etc. and any other causes beyond the control of the defaulting party. In our view, losses or damages referred to in clause 9 of the BPTA shall not cover the liability of payment of transmission charges. In this connection, clause 6 of the BPTA is relevant which is extracted as under: 6.0 (a) In case any of the developers fail to construct the generating station/dedicated transmission system or makes an exit or abandon its project, POWERGRID shall have the right to collect the transmission charges and/ or damages as the case may be in accordance with the notification/regulation issued by CERC from time to time.. Thus clause 6 says about both transmission charges and damages. Therefore, if a project developer is affected by force majeure, it will only be discharged from paying Order in Petition No. 11/MP/2017 Page 39 the damages only and not the transmission charges. Further, Clause 9 of the BPTA cannot be used to relinquish the LTOA under the BPTA. It is clear from the last sentence of the said clause which says that Transmission/drawal of power shall be started as soon as practicable by the parties conferred after such eventuality has come to an end or ceased to exist. Therefore, the situation covered under clause 9 of the BPTA covers a temporary phase when the project developer is unable to utilise the transmission system or the when licensee is unable to make its transmission system available due to any force majeure event. It cannot be used for making an exit from BPTA which is governed in terms of clause 6.0 of the BPTA. Further in order dated 14.7.2017 in Petition No.317/MP/2013 (Navbharat Power Private Limited Vs. Power Grid Corporation of India Ltd & Another), the Commission has treated clause 9 of the BPTA as providing temporary amnesty and not for seeking an exit from the LTA. Relevant portion of the order is extracted as under:

    19. The Petitioner has abandoned the project for the purely commercial reasons and the Petitioner cannot be said to be affected by reasons beyond its control. The Petitioner has relied upon the findings of the Honble Appellate Tribunal for Electricity dated 4.2.2014 in Appeal No. 123 of 2012. In the said case, the Appellate Tribunal held that the approval under the Bombay Tenancy and Agricultural Land (Vidarbha Region and Kutch Area) Act,1958 and for water source under the Environment Protection Act,1986 and CRZ Regulations are statutory/ legal approvals under the PPA and accordingly, it fall under force majeure events and the period of delay is required to be suspended or excused and to that extent the period of Commercial Operation Date, Date of construction default and Scheduled Commercial Operation Date were to be extended under the LTA Agreement. In the present case, the Petitioner has abandoned the project on account of delay in obtaining clearances and is seeking to wriggle out of the LTA Agreement. From the analysis of Clause 9 of the LTA Agreement, it clearly emerges that the said clause is for providing temporary amnesty to the parties affected by force majeure in order to make their agreement work. The provision of Clause 9 of the LTA Agreement does not permit a defaulting party to abandon the LTA which is evident form the last sentence of the said clause which states that drawal/transmission of power shall be started as soon as practicable by the parties concerned after such eventuality has come to an end or ceased to exist.

    23. In the light of the analysis on the issue and our findings in the orders as quoted above, we hold that Clause 9 of the BPTA dated 31.3.2010 gives a temporary amnesty from the compensation for loss or damages to the party affected by force majeure and cannot be used for evading relinquishment charges on account of relinquishment of LTA. Both Clause 5 of the BPTA and Regulation 18 of the Connectivity Regulations require that in case of relinquishment of LTA, the Petitioner Order in Petition No. 11/MP/2017 Page 40 is required to pay the relinquishment charges. Since CTU has determined the liability of the Petitioner for relinquishment charges pursuant to the order of the Commission dated 8.3.2019 in Petition No.92/MP/2015, the Petitioner is liable to pay the relinquishment charges. Issue No.2: Whether the case of the Petitioner is covered under force majeure in terms of clause 9 of the BPTA?

    24. The Petitioner has submitted that pursuant to the execution of the BPTA, it made best efforts to enter into PPA with the distribution companies in the Western Region and Northern Region but could not succeed. Since the long term power procurement in the regions is substantially disproportionate to the commissioned IPPs, the situation is beyond the control of the Petitioner. The Petitioner has submitted that its inability to enter into long term PPA is an event of force majeure rendering the LTA impossible to perform and therefore, the Petitioner be allowed to relinquish the LTA of 816 MW of LTA (386 to Western Region and 430 MW to Northern Region) without any liability for relinquishment charges.

    25. CTU has submitted that nowhere in the BPTA, there is any reference to the PPA to be executed by the LTA Customers. Since LTA was granted to the Petitioner without executing the PPAs, non-execution of PPA cannot be interpreted as a force majeure event. CTU has further submitted that the Petitioner has relinquished 386 MW of LTA in the Western Region on account of refusal of CSPTCL to off-take 35% of power of the project. CTU has submitted that refusal of CSPTCL has no bearing on the LTA to Western Region as the LTA granted to Chhattisgarh was never a part of the present PPA. Order in Petition No. 11/MP/2017 Page 41

    26. The Petitioner has submitted that PPA became a material requirement while granting as well as operationalizing the LTA. Therefore, absence of PPA resulted in frustration of the LTA. The Petitioner has quoted the following provisions of the Regulations, Procedures and orders of the Commission in support of its contention: (a) Regulation 12 of the Connectivity Regulations requires the applicant for long term access to indicate the entity to whom power is to be supplied or procured and the quantum of power to be supplied or procured and therefore, the agreement for sale/purchase of power is a consideration at the time of applying for LTA. (b) Para 22.7 of the Detailed Procedure issued under the Connectivity Regulations requires the LTA Customer to confirm to CTU with the exact details of the PPA executed by the said customer, three years prior to the intended operationalization of the LTA. (c) Clause 7.1 of the BCD Procedure provides that LTA cannot be operationalized in the event a firm long term PPA is not available. (d) The Commission in order dated2.12.2013 in Petition No.244/MP/2012 relying on Clause 7.1 of the BCD Procedure has held that execution of long term PPA is a necessary condition for availing long term access. (e) The Commission after recognizing the impossibility of availing LTA on account of lack of long term PPA inserted Regulation 15B through 6th amendment of the Connectivity Regulations and provided that LTA can be availed by having a contract of above one year. Order in Petition No. 11/MP/2017 Page 42 (f) Even under Shakti Scheme, it was mandated that coal could be provided only for those generating companies who have long term or medium term PPA. (g) Ministry of Power issued the guidelines for procurement of power under Design, Build, Finance, Own and Operate (DBFOO) basis on 8.1.2013. As per DBFOO, coal cost is a pass through in certain scenarios which relate to the source of coal. For example, if the bids are called for scenarios relating to domestic coal linkage or from domestic coal mines, then power plants based on imported coal cannot participate in such bids. This factor has materially affected the Petitioner from entering into long term PPA. (h) The 37th and 40th Parliamentary Standing Committee Reports recognized the issue of lack of long term PPAs with distribution licensees being uncontrollable. The Petitioner has submitted that non-availability of long term PPA has close link with the utilisation of the LTA and therefore, lack of long term PPA is a force majeure condition which is beyond the control of the Petitioner.

    27. We have considered the submissions of the Petitioner and Respondent CTU. The subject transmission system based on which LTA was granted to the Petitioner were executed on the basis of the regulatory approval granted by the Commission vide its orders dated 26.3.2010 and 31.5.2010 in Petition No.233/2009. The Petitioner was a party to the said petition. The issue of signing of the PPA was considered at the time of according regulatory approval. Relevant para of the order dated 26.3.2010 is extracted as under: Order in Petition No. 11/MP/2017 Page 43

    17. As regards the requirement for signing of PPAs with the beneficiaries, we observe that the IPPs have not been able to come forward to sign the PPAs, primarily because the States have not yet gone ahead with the bidding process for evacuation of power. However, linking the signing of the PPAs with regulatory approval will hamper the progress of the transmission projects. The Tariff Policy issued vide Govt. of India in para 7.1.4 does not make it mandatory for network expansion by the CTU/STU. The said para reads as under: In view of the approach laid down by the NEP, prior agreement with the beneficiaries would not be a pre-condition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consonance with the National Electricity Plan and in consultation with stakeholders, and taking up the execution after due regulatory approvals. In view of the above mandate of the Tariff Policy, we are of the view that the CTU should carry out consultation with the stake holders and satisfy itself about the bonafide nature of generation projects which are likely to materialize during the next three years and submit the detailed report about such projects, including the physical progress made wherever feasible and approach the Commission by first week of April, 2010. Therefore, the Petitioner is aware that the regulatory approval was granted to the Petitioner on the basis of the LTA and without linking it to PPAs. It was left to the Project Developer for tie-up with the beneficiaries for PPA. When availability of PPA was not a condition precedent either for applying for LTA or for regulatory approval, therefore, it cannot be pleaded at this stage that PPA is a necessary pre-condition of the LTA and hence its absence cannot be considered as force majeure frustrating the operation of the LTA. The Petitioner has in fact entered into long term PPA for

    558 MW and the Petitioners failure to enter into PPA for the balance capacity cannot be considered as force majeure.

    28. As regards the reasons adduced by the Petitioner (as summarized in para 26of this order) to prove that the existence of long term PPA is a necessary condition for availing the LTA and absence of long term PPA has led to frustration of the LTA, we are of the view that these provisions in the Connectivity Regulations and Detailed Procedure have been specified to cater to different requirements and cannot be pleaded as the basis for grant of LTA in the absence of which LTA stands frustrated. Regulation 12 requires an applicant for long term access to indicate the entity from which power is to be procured or supplied and the quantum of power to be supplied. But the first proviso provides that where the source or quantum has not been fixed up, then the applicant has to indicate the quantum of power alongwith the name of Order in Petition No. 11/MP/2017 Page 44 the region where the electricity is to be interchanged. Thus, PPA is not an essential condition for applying for LTA. Para 22.7 of the Detailed Procedure requires the LTA Customer to give details of the PPA three years prior to operationalization of LTA, the purpose being that the last mile connectivity could be planned and implemented. As regards Clause 7.1 of the BCD Procedure, scheduling can be done against the LTA quantum when there is long term, medium term and short term PPA. This provision is regarding scheduling and from the said provision, inference cannot be drawn that in the absence of long term PPA, LTA would be frustrated. In fact, Regulations allow for scheduling of medium term and short term power against the LTA quantum and offset is allowed. Regulation 15B of the Connectivity Regulations facilitates operationalization of LTA with PPA of the duration of more than one year. In other words, if the LTA Customer is able to make a medium term PPA of more than one year, it can schedule its power under MTOA. This provision does not support the case of the Petitioner that in the absence of long term PPA, LTA stands frustrated. The requirement for participating in Shakti Scheme or procurement under DBFOO or the observation of the Parliamentary Standing Committee cannot absolve the Petitioner from its liability towards LTA under the BPTA. In our view, the Petitioner had applied for and was granted LTA in the absence of long term Power Purchase Agreements and the Petitioner has taken the business risk by entering into BPTA in the absence of long term PPA. Failure of the Petitioner to enter into long term or medium term PPA for 816 MW cannot be considered as the reasons beyond the control of the Petitioner and hence, is not covered under Clause 9 of the BPTA. Order in Petition No. 11/MP/2017 Page 45 Issue No.3: What should be the date of relinquishment of LTA under the BPTA dated 31.3.2010?

    29. The Petitioner has sought relinquishment of LTA of 386 MW with effect from 7.12.2016 and LTA of 430 MW with effect from 17.5.2017. The dates of relinquishment are based on the dates of the letters when request for relinquishment was made. The Commission in order dated 8.3.2019 in Petition No.92/MP/2015 has held that relinquishment of long term access is a statutorily permissible option which entails payment of compensation for the stranded capacity on account of such relinquishment. The Commission vide Order dated 8.3.2019 in Petition No. 92/MP/2015 has directed as under with respect to date of relinquishment: 161..(b) Notice period for relinquishment shall be considered from the date the application was made to CTU for relinquishment and if no application was made, the date from which the Commission directs the CTU to accept the relinquishment.

    30. CTU in its written submission has stated that in accordance with the directions in order dated 8.3.2019 in Petition No.92/MP/2015, CTU has computed the stranded capacity and relinquishment charges of various generators including the Petitioner who have relinquished the LTA. CTU has considered the date of relinquishment as 1.10.2017. In the light of our decision in para 161(b) of the order dated 8.3.2019 in Petition No.92/MP/2015, the date of relinquishment shall be considered as 7.12.2016 for 386 MW and 17.5.2017 for LTA of 430 MW. The relinquishment of the LTA from the above dates are subject to payment of relinquishment charges in terms of our order dated 8.3.2019 in Petition No.92/MP/2015. Issue No.4: What are the reliefs admissible to the Petitioner in terms of the prayers in the petition?

    31. The first prayer of the Petitioner is for a declaration that inability on the part of the Petitioner to execute long term PPAs on account of inadequate long term power Order in Petition No. 11/MP/2017 Page 46 procurement processes being undertaken by the distribution licensees in Northern and Western Regions is beyond the control of the Petitioner and a force majeure event. The said prayer is rejected in the light of our decision on Issue Nos. 1 and 2 in this order.

    32. The second prayer of the Petitioner is for a declaration that BPTA dated 31.3.2010 stands annulled without any liability on account of occurrence of force majeure event. The said prayer is rejected in the light of our decision on Issue Nos. 1 and 2 in this order. The Petitioner is liable to pay the relinquishment charges for the capacity relinquished as determined in accordance with our order dated 8.3.2019 in Petition No.92/MP/2015.

    33. The third prayer of the Petitioner is for a declaration that LTA of 386 MW to Western Region under the BPTA stands relinquished with effect from 7.12.2016 without any liability. The fourth prayer is for a declaration that LTA of 430 MW to Northern Region stands relinquished with effect from 17.5.2017 without any liability. The prayers are decided in terms of our direction in para 30 above.

    34. In fifth prayer, the Petitioner has sought a direction to CTU to return the Bank Guarantee of Rs.40.08 crore. We observe that the Petitioner shall be liable for payment of relinquishment charges as calculated by CTU in terms of this Order and Order dated 8.3.2019 in Petition No. 92/MP/2015. We direct that BG shall be kept alive by the petitioner till it makes payment of relinquishment charges as calculated by CTU. In case the Petitioner does not make payment of relinquishment charges to CTU in accordance with timeline provided in order dated 8.3.2019 in Petition No. 92/MP/2015, CTU shall encash the BG and adjust the same against relinquishment charges and return the balance amount, if any, to the Petitioner. Order in Petition No. 11/MP/2017 Page 47

    35. Petition No.11/MP/2017 is disposed of in terms of the above. sd/- sd/- sd/- (I.S. Jha) (Dr. M.K. Iyer) (P.K. Pujari) Member Member Chairperson

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