Clearsky Solar Pvt Ltd & Ors v. KERC & Ors

• Published date: 05 August 2021
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Government Contracts, Procurement & PPP, Trials & Appeals & Compensation
• Law Firm: HSA Advocates
• Author: Mr Hemant Sahai, Puja Priyadarshini and Nehul Sharma

APTEL Judgment dated August 02, 2021 in Appeal No. 160 of 2020

Background facts

• Appeal was filed by Clearsky Solar Pvt Ltd (Clearsky) before the Appellate Tribunal for Electricity (APTEL) challenging the Karnataka Electricity Regulatory Commission (KERC) order dated May 29, 2020 (KERC Order) in relation to extension of COD and continuation of tariff of a 3 MW solar project under the Farmers' scheme of the Karnataka Solar Policy (Project).
• Clearsky was aggrieved by the KERC Order inasmuch as, KERC had set aside the extension of timelines for achieving Scheduled Commercial Operation Date (SCOD) which was granted by Gulbarga Electricity Supply Co Ltd (GESCOM) in terms of the Power Purchase Agreement (PPA) taking into consideration the genuine Force Majeure events which had affected the Project. Pertinently, the extension of timelines was a subject matter of the Supplementary PPA executed between Clearsky and GESCOM which KERC had unreasonably refused to approve. In complete disregard of the merits of the case, the Supplementary PPA was also set side and the tariff incorporated under the PPA at INR 8.40/kWh was unreasonably reduced to INR 4.36/kWh in addition to liquidated damages of INR 3.6 lakh.
• In arriving at the conclusions under the Impugned Order, KERC had completely brushed aside the fact that the construction of the entire Project (along with the associated infrastructure) was completed well within the original SCOD contemplated under the PPA This was so evidenced by the statutory certificate issued by the Chief Electricity Inspector, Government of Karnataka (CEIG) However, the Project could not be put to commercial operation due to want of a formal order for land conversion (i.e. from agricultural to non-agricultural) which was to be granted by government authorities - which Clearsky had diligently pursued and could not be granted for reasons beyond the control of Clearsky. Interestingly,...