Holding

The delay was attributable to government authorities, invoking the force majeure clause, entitling the respondents to an extension of time and restoration of the original tariff, and no substantial question of law arose for Supreme Court intervention.

Summary

The appellant, Bangalore Electricity Supply Company Ltd., entered into a Power Purchase Agreement (PPA) with a solar project SPV and a farmer under Karnataka's solar policy, requiring commercial operation within 18 months. Delays occurred in land conversion, evacuation approvals, and other regulatory processes, leading the Karnataka Electricity Regulatory Commission (KERC) to reject the respondents' claim of force majeure and to reduce the tariff, imposing liquidated damages. The Appellate Tribunal for Electricity (APTEL) reversed KERC, finding that the delays were caused by government authorities, that the respondents acted diligently, and that the force majeure clause applied, warranting an extension of time and restoration of the original tariff with a late payment surcharge. The Supreme Court examined whether a substantial question of law existed, concluding that the dispute was factual and the APTEL's findings were reasonable. Consequently, the Court dismissed the appeals, upholding the APTEL's order restoring the tariff and rejecting the reduction and damages.

Issues considered

Whether the delay in commissioning the solar project falls within the force majeure clause of the PPA.
Whether the respondents are entitled to an extension of the Scheduled Commissioning Date under Article 2.5 of the PPA.
Whether the reduction of tariff under Article 5.1 of the PPA and imposition of liquidated damages are justified.
Whether the Supreme Court has jurisdiction to entertain the appeal under Section 125 of the Electricity Act, 2003 as a substantial question of law.

Legislation cited

Subjects

Section 125 of Electricity Act, 2003Section 32 of Contract Act, 1872Section 56 of Contract Act, 1872Power Purchase AgreementForce MajeureReduction in tariffFrustration of contractQuestion of lawSubstantial question of lawSolar Power Project

Judgment

[2024] 8 S.C.R. 1024 : 2024 INSC 631

Bangalore Electricity Supply Company Limited
v.
Hirehalli Solar Power Project LLP & Others
(Civil Appeal No. 7595 of 2021)
27 August 2024
[Pamidighantam Sri Narasimha* and Pankaj Mithal, JJ.]

Issue for Consideration
Whether the extension of the Scheduled Commissioning Date
(SCD) was occasioned under the force majeure clause of the
Power Purchase Agreement (PPA), and consequently, whether the
reduction in tariff payable to the respondents is justified.

Headnotes†
Electricity Act, 2003 – State of Karnataka introduced a
policy dated 26.08.2014 to identify and promote solar energy
projects by land-owning farmers – These solar power plants
of 1-3 MW capacity would generate and sell power to the
State Electricity (Distribution) Supply Companies at the
tariff determined by the Karnataka Electricity Regulatory
Commission (KERC) – Respondent no. 2-farmer applied
under the policy – Respondent No.1 is a special purpose
vehicle (SPV) to undertake the solar power project – In the
year 2015, the appellant entered into a PPA with respondent
no. 2 and the same was approved by KERC – The SPV had
to achieve commercial operation within 18 months from the
effective date – Several farmers, including the respondent,
raised concerns regarding delay in the execution of the
project on account of delay in getting land use conversion,
delay in getting evacuation approvals, demonetisation, and
other reasons – KERC rejected the various causes of delay
put forth by the respondents and held that the force majeure
clause must be strictly interpreted – KERC reduced the tariff
payable to the respondent to Rs. 4.36 per unit for the term of
the PPA by relying on Article 5.1 of the PPA – However, the
APTEL found that the respondents had taken all necessary
care and caution and acted with due diligence and held that
respondents are entitled to the benefit of the force majeure
clause and an extension of time – Also held that reduction in

* Author
[2024] 8 S.C.R. 1025

Bangalore Electricity Supply Company Limited v.
Hirehalli Solar Power Project LLP & Others

tariff from Rs. 8.40 to Rs. 4.36 per unit would adversely affect
them – Hence, it directed the appellant to pay the difference
in per unit tariff along with the late payment surcharge as
provided under Article 6.4 of the PPA – Correctness:
Held: The KERC’s appreciation of the evidence has led it to
the conclusion that the delay in commissioning was due to the
respondents’ delay in making the applications, despite the approval
of the PPA – However, the APTEL has taken note of certain
additional factors affecting the time taken to secure the approvals
that were not considered by the KERC – These include the time
taken by the government to provide the PTCL that is required for
approval of land conversion, and the delay caused by the authority
in evacuation approval – Considering these additional factors, the
APTEL has re-appreciated the evidence to find that the delay was
not attributable to the respondents but to the government bodies and
relevant authorities – There is no error in the APTEL’s approach,
and it is reasonable in its re-appreciation of evidence – In light
of the above findings of fact by the APTEL that the delay is not
attributable to the respondents and that the force majeure clause is
applicable, it rightly held that the extension of time under Article 2.5
is warranted and the commissioning of the project on 24.08.2017
is within the extended period of 24 months – Consequently, the
APTEL also rightly held that there is no occasion for the imposition
of liquidated damages under Articles 2.2 and 2.5.7 or for the
reduction of tariff under Article 5.1 of the PPA. [Paras 10.4, 12]
Electricity Act, 2003 – s.125 – Scope and ambit of appellate
jurisdiction:
Held: The position that emerges in this case, it is a little more
restrictive as the requirement under Section 125 is not merely a
‘question of a law’ but a ‘substantial question of law’ – The restrictive
scope of appellate jurisdiction is a product not only of the statutory
preconditions, but also a necessary measure to enable freedom to
statutory regulator and Tribunal to develop sectorial laws through
a principled and consistent approach. [Paras 1, 7.4]
Contract Act, 1872 – Chapter III – ss.32 and 56 – Power
Purchase Agreement – Force Majeure:
Held: The law on force majeure, specifically in the context of
PPAs, has been comprehensively dealt with by this Court in
Energy Watchdog v. Central Electricity Regulatory Commission –
The Court delved into contractual jurisprudence on force majeure
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clauses and frustration of contracts – It held that Sections 32
and 56 of the Indian Contract Act, 1872 govern the law on force
majeure – When the contract contains an express or implied force
majeure clause, it is governed under Chapter III of the Contract Act,
specifically Section 32 – In such cases, the ‘doctrine of frustration’
in Section 56 does not apply and the court must interpret the force
majeure clause contained in the contract – It held that a force
majeure clause must be narrowly construed. [Para 10.1]

Case Law Cited
Chennamangathihalli Solar Power Project LLP v. BESCOM, 2020
SCC OnLine APTEL 75; SEBI v. Mega Corporation Limited [2022]
2 SCR 546 : 2022 SCC OnLine SC 361; Energy Watchdog v.
Central Electricity Regulatory Commission [2017] 3 SCR 153 :
(2017) 14 SCC 80 – referred to.
List of Acts
Electricity Act, 2003; Contract Act, 1872.
List of Keywords
Section 125 of Electricity Act, 2003; Section 32 and section 56 of
Contract Act, 1872; Power Purchase Agreement; Force Majeure;
Reduction in tariff; Frustration of contract; Question of law;
Substantial question of law; Solar Power Project.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7595 of 2021
From the Judgment and Order dated 12.08.2021 of the Appellate
Tribunal for Electricity, New Delhi in Appeal No. 38 of 2019
With
Civil Appeal Nos. 7608 and 6386 of 2021
Appearances for Parties
K.M. Nataraj, ASG, Yasobant Das, Sr. Adv., Ms. Garima Jain, Arnav
Khanna, Tushar Mahindroo, Mohit Singh, Arunav Patnaik, Ms. Bhabna
Das, Advs. for the Appellants.
Prateek K. Chadha, A.A.G., Basava Prabhu Patil, Sr. Adv.,
Ms. Prerna Priyadarshini, Syed Faraz Alam, Atharva Gaur, Aayushman
Aggarwal, Ujjal Banerjee, Anmol Sehgal, V. N. Raghupathy, Sreekar
Aechuri, Advs. for the Respondent.
[2024] 8 S.C.R. 1027

Bangalore Electricity Supply Company Limited v.
Hirehalli Solar Power Project LLP & Others

Judgment / Order of the Supreme Court

Table of Contents*

Facts: ........................................................................................ 2
KERC’s order: .......................................................................... 5
APTEL’s impugned order: ......................................................... 6
Submissions: .............................................................................. 10
Scope of Supreme Court’s appellate jurisdiction under
Section 125 of the Act: ................................................................ 13
Analysis on merits: .................................................................... 16
Clauses of the Power Purchase Agreement (PPA): ................. 17
Re: Applicability of the force majeure clause: ............................ 21
Conclusion ............................................................................... 26

Judgment
Pamidighantam Sri Narasimha, J.
1. The short issue arising from these appeals is whether the extension of
the Scheduled Commissioning Date1 was occasioned under the force
majeure clause of the Power Purchase Agreement,2 and consequently,
whether the reduction in tariff payable to the respondents is justified.
While upholding the decision of the Appellate Tribunal for Electricity3
we have examined the scope and ambit of our appellate jurisdiction
under Section 125 of the Electricity Act, 2003.4 We have held that
the restrictive scope of appellate jurisdiction is a product not only of
the statutory preconditions, but also a necessary measure to enable
freedom to statutory regulator and Tribunal to develop sectorial laws
through a principled and consistent approach.
2. Facts : Since the facts and the PPAs are similar in all three appeals,
we will deal with the facts in the lead Civil Appeal No. 7595/2021,
where the most relevant facts are as follows:

* Ed. Note: Pagination as per the original Judgment.
1 Hereinafter “SCD”.
2 Hereinafter “PPA”.
3 Hereinafter “APTEL”.
4 Hereinafter “the Act”.
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2.1 State of Karnataka introduced a policy dated 26.08.2014 to
identify and promote solar energy projects by land-owning
farmers. These solar power plants of 1-3 MW capacity would
generate and sell power to the State Electricity (Distribution)
Supply Companies5 at the tariff determined by the Karnataka
Electricity Regulatory Commission.6
2.2 Respondent no. 2 is one of the many farmers who applied
under the policy and is recognised as a solar power developer7
under the policy. Respondent No.1 is a special purpose vehicle
to undertake the solar power project in Chitradurga district in
Karnataka.
2.3 Pursuant to a Letter of Award dated 28.08.2015, the appellant
entered into a PPA with respondent no. 2 on 29.08.2015. This
PPA was approved by the KERC on 07.09.2015. The relevant
clauses of the PPA will be discussed later, but an important
aspect to note at this juncture is that the SPV must achieve
commercial operation within 18 months from the effective date
as per Article 1.1(xxviii) read with Article 4.1(c) of the PPA.
Effective date is defined under Article 1.1(xii) as the date of
signing the PPA. Hence, the SCD for the project was 28.02.2017
as per these clauses.
2.4 The SPV (respondent no. 1) was incorporated on 05.02.2016.
The respondents then submitted an application for land
conversion on 16.02.2016. On 10.03.2016, they paid the
evacuation approval processing fee. On 27.12.2016, they
paid the land conversion processing fee, and the approval
for conversion was granted on 07.01.2017. The evacuation
scheme was provisionally approved on 13.05.2016, and the
final approval was on 22.08.2016.
2.5 Several farmers, including the respondent, raised concerns
regarding delay in the execution of the project on account of
delay in getting land use conversion, delay in getting evacuation
approvals, demonetisation, and other reasons. Hence, the

5 Hereinafter “DISCOMs”.
6 Hereinafter “KERC”.
7 Hereinafter “SPD”.
[2024] 8 S.C.R. 1029

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Government of Karnataka by a letter dated 24.11.2016 directed
all DISCOMs to set up 3-member committees to examine each
request for extension.
2.6 The present respondents requested a 6-month extension under
Article 2.5 of the PPA on 03.12.2016. This was approved by
the appellant through a letter dated 02.03.2017.
2.7 However, by a letter dated 05.04.2017, KERC directed the
DISCOMs that all requests for extensions must be filed before
it. Pursuant to this letter, the respondents filed a petition before
the KERC seeking extension of time for the commercial operation
of the project and invoked the force majeure clause in the PPA
(Article 8.3).
2.8 During the pendency of the petition, the respondents’ solar
power project was commissioned on 24.08.2017, within the
extended period of 24 months.
3. KERC’s order : In its order dated 18.09.2018, the KERC rejected the
various causes of delay put forth by the respondents and held that
the force majeure clause must be strictly interpreted. First, delay in
approval of the PPA by KERC was held to have no bearing on the
initial obligations of the SPD in applying for approvals, loans, etc as
the respondents had not proved the same. Second, it found that the
respondent had applied for conversion of land only on 18.02.2016,
over five months after signing the PPA and paid the charges only
on 27.12.2016, after which it was allowed on 07.01.2017. Hence, the
delay in conversion of land use was attributed to the respondent. Third,
the delay in disbursement of loan also did not delay the implementation
as the respondent had commenced implementation from its own
funds. Fourth, the respondent applied for the evacuation approval
only on 25.02.2016, and the regular approval was finally granted
on 22.08.2016. Hence, the respondent delayed the application and
cannot attribute the same to the authorities. Similarly, the KERC also
rejected delay on other grounds such as time taken for delivery of the
breaker, and inspection of the project and grant of safety approval.
3.1 It also found that the respondents had not submitted a notice
as contemplated under Article 8.3(b)(i) and hence, they are
not entitled to invoke force majeure and claim an extension of
time under Article 2.5. Since the KERC found that the delay in
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securing approvals and the consequent delay in commissioning
was attributable to the respondents, it imposed liquidated
damages under Articles 2.2 and 2.5.7 of the PPA.
3.2 Lastly, the KERC reduced the tariff payable to the respondent
to Rs. 4.36 per unit for the term of the PPA by relying on
Article 5.1 of the PPA.
4. APTEL’s impugned order : The respondent’s appeal against the order
of the KERC was allowed by the APTEL by the order impugned
before us. The APTEL dealt with each ground of delay raised by the
respondents. First, it took note that the respondent’s application for
land conversion was on 16.02.2016, after which it had to procure
several documents, including a PTCL certificate, as provided under
Rule 106A of the Karnataka Land Revenue Act. Further, these
documents must be secured from various government departments,
which is a laborious process. The PTCL certificate was issued by
the government only on 04.10.2016, although the respondent had
applied for it even before signing the PPA. Hence, it found that the
respondent could not be blamed for the delay in getting approval
for land use conversion.
4.1 Further, the APTEL also took note of the State Government’s
opinion to grant deemed conversion in such projects due to the
number of SPDs facing similar issues. However, the APTEL
observed, the guidelines to revenue authorities were unclear
and hence the SPDs could not benefit from the same. The delay
in the issuance of these guidelines and the confusion among
authorities regarding deemed conversion had also resulted in a
delay in obtaining land use conversion, which the respondents
cannot be faulted for.
4.2 Second, the APTEL found that although the application for
grid connectivity and evacuation approval were submitted
on 25.02.2016, the final approval was only given on 22.08.2016,
after a lapse of 5 months. Until this approval is given, the
authorities will not prepare the bay SLD and layout drawings
with estimation of bay erection. The bay intimation notice was
received by the respondents only a few days before the original
SCD, and it was 170 days after the grant of final evacuation
approval. Hence, there was a delay in the construction of the
bay that was not caused by the respondents.
[2024] 8 S.C.R. 1031

Bangalore Electricity Supply Company Limited v.
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4.3 Relying on other decisions by the APTEL, it held that the date
of signing the PPA will not be the effective date, as provided in
Article 1.1(xxviii). Rather, the PPA becomes effective only when it
is approved by the KERC, which in this case was on 07.09.2015.
Hence, 18 months must be calculated from this date.
4.4 The APTEL observed that the appellant had itself approved
the extension of time by 6 months after a Technical Committee
constituted by it had scrutinised all relevant documents. Hence,
the appellant could not take the stance that the respondents
were not diligent. Even before the KERC, the appellant had not
objected to the grounds raised by the respondents, and hence
they could not take a contrary stance at this stage.
4.5 Considering the delay in obtaining the PTCL certificate and
approval for land conversion, the approval for evacuation, and
construction of the bay, the APTEL found that the respondents
had taken all necessary care and caution and acted with due
diligence. Hence, it held that the respondents could not be
blamed for the delay as the time taken by government authorities
to provide approvals was not within their control and they had
taken all the measures that they could. Consequently, the
APTEL found that the respondents are entitled to the benefit
of the force majeure clause and an extension of time, as was
already approved by the appellant. The respondents were able
to commission the project on 24.08.2017, which falls within the
extended period of 24 months from 07.09.2015.
4.6 With regard to the reduction in tariff by the KERC, APTEL
considered that the government scheme, under which these
PPAs were signed, was intended to create opportunity and
benefit for farmers by establishing solar power plants. The
farmers had invested huge amounts, sometimes through loans,
in these projects and a reduction in tariff from Rs. 8.40 to Rs.
4.36 per unit would adversely affect them. Hence, it directed
the appellant to pay the difference in per unit tariff along with
the late payment surcharge as provided under Article 6.4 of
the PPA.
4.7 Lastly, it also set aside the imposition of liquidated damages
under the PPA as it found that there was no delay in securing
approvals and commissioning the project.
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5. Submissions: We have heard Mr. K.M. Nataraj, ASG and Mr. Yasobant
Das, senior advocate appearing for the appellants, and Mr. Basava
Prabhu Patil, senior advocate for the respondents. The learned
counsels have, through the course of their submissions, emphasised
on whether or not the delay in the present matter would be covered
under the force majeure clause of the PPA.
5.1 Learned ASG argued that a force majeure clause must be strictly
interpreted. There must be a specific pleading by the party
claiming force majeure and the burden is on him to prove the
same. In this regard, he made two primary submissions: first,
there was no force majeure event that warrants an extension of
time under Article 2.5 of the PPA; and second, the respondents
have not complied with the requirement of submitting a written
notice invoking force majeure as required under Article 8.3(b)(i).
Further, he has also argued that the APTEL was not justified
in granting late payment surcharge to the respondent as the
same was not pleaded before the KERC or in appeal.
5.2 In regard the argument on force majeure, Mr. Nataraj has taken
us through the various dates concerning approval for change
in land use and the evacuation approval. He has submitted
that the delay in securing these approvals is attributable to the
respondents, who were required to obtain these permissions
within the contractually stipulated period of 365 days under
Article 2.1 of the PPA, and to finally commission the project within
a period of 18 months. Despite being aware of these timelines,
he submits that the respondents delayed the applications
and payment of requisite fees. The government departments
provided the approvals within a few days from the time when
the respondents fulfilled all requirements. He therefore submits
that the delay is attributable to the respondents and hence, as
per Article 8.3(b)(iv), they cannot claim benefit of force majeure.
Consequently, the tariff must be reduced as per Article 5.1 as
a higher tariff increases the burden on consumers and hence,
affects public interest.
5.3 Mr. Das supplemented these submissions by arguing that in
Civil Appeal No. 6386 of 2021, the respondents therein had
also raised the ground of demonetisation as a reason for delay
in commissioning. He submits that Article 8.3 of the PPA does
not cover such a ground as a force majeure event.
[2024] 8 S.C.R. 1033

Bangalore Electricity Supply Company Limited v.
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6. Mr. Patil, appearing for the respondents, has submitted that there
are three primary factors, among several others, that caused the
delay – (i) time taken for converting the land; (ii) time taken for the
KERC to approve the PPA; and (iii) time taken for the evacuation
approval. He submits that these concerns have been raised by
not only the respondents in the present case but in several other
cases. Due to the extent to which SPDs were facing these issues,
the government directed DISCOMs to set up committees to look
into the same and consider the facts of each case individually. It is
pursuant to this direction that the respondents’ case was considered
by the appellant, who granted a 6-month extension on 02.03.2017
by exercising its power under Article 2.5 read with Article 8.3 of the
PPA. He submits that it was incorrect for the KERC to then require
the respondents to file a separate petition to seek extension as the
same is not as per the terms of the PPA. He further submits that
the KERC had perversely appreciated the evidence regarding delay
and that it should not have rejected the petition when the appellant
had already granted the extension. Further, he submitted that the
respondents were able to complete the project within the extended
time period.
6.1 Mr. Patil also took us through several orders of this Court8
that dismiss appeals arising out of similar orders by the
APTEL. He has specifically referred to the APTEL’s decision in
Chennamangathihalli Solar Power Project LLP v. BESCOM 9 and
has submitted that this decision has been relied on by the APTEL
in several subsequent decisions arising out of similar facts,
including the present impugned order. This Court has dismissed
the appeal arising out of Chennamangathihalli (supra)10 and
appeals from other APTEL orders relying on it. Mr. Nataraj, in
his written submissions, has sought to differentiate these cases
from the present matter on facts.
7. Scope of Supreme Court’s appellate jurisdiction under Section 125 of
the Act: Before we deal with the submissions of the learned counsels,
we must take note of the scope of our appellate jurisdiction under
Section 125, which reads:

8 In Civil Appeal No. 3958/2020; Civil Appeal No. 897/2022; Civil Appeal No. 5134/2021; Civil Appeal Diary
Nos. 32980/2022, 33053/2022 and 33572/2022.
9 2020 SCC OnLine APTEL 75.
10 In Civil Appeal No. 3958/2020.
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“Section 125. (Appeal to Supreme Court):
Any person aggrieved by any decision or order of the
Appellate Tribunal, may, file an appeal to the Supreme
Court within sixty days from the date of communication of
the decision or order of the Appellate Tribunal, to him, on
any one or more of the grounds specified in section 100
of the Code of Civil Procedure,1908…”
7.1 Section 100 of the CPC restricts the High Court’s jurisdiction in
second appeals to cases that involve ‘substantial questions of
law’. There are two components to this requirement – (i) there
must be a ‘question of law’; and (ii) such question of law must
be ‘substantial’.
7.2 In SEBI v. Mega Corporation Limited,11 this Court analysed
the meaning of ‘question of law’ to determine the scope of its
appellate jurisdiction under Section 15Z of the SEBI Act, 1992.12
It held that this phrase is open textured and must be interpreted
by looking at the words in their context.13 The relevant portions
are extracted:
“17. The jurisdiction of the Supreme Court under
Section 15Z to consider any question of law arising
from the orders of the Tribunal should therefore be
seen in the ‘context’ of the powers and jurisdiction
of the Tribunal under Sections 15K, 15L, 15M, 15T,
15U and 15Y of the Act. It is in the functioning of the
Tribunal to re-examine all questions of fact at the
appellate stage while exercising jurisdiction under
Section 15T of the Act. In Clariant and National
Securities Depository, this Court had an occasion
to examine the jurisdiction of the Tribunal and
explain that the Tribunal has wide powers. Being a
permanent body, apart from acting as an appellate

11 [2022] 2 SCR 546 : 2022 SCC OnLine SC 361
12 Section 15Z of the SEBI Act, 1992 reads:
“15Z. Appeal to Supreme Court.-- Any person aggrieved by any decision or order of the Securities
Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the Securities Appellate Tribunal to him on any question of
law arising out of such order…” (emphasis supplied)
13 ibid, para 16.
[2024] 8 S.C.R. 1035

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Tribunal on fact, the Tribunal routinely interprets the
Act, Rules and Regulations made thereunder and
evolves a legal regime, systematically developed
over a period of time. The advantage and benefit of
this process is consistency and structural evolution
of the sectorial laws.
18. It is in the above-referred context that the Supreme
Court while exercising appellate jurisdiction under
Section 15Z of the Act would be measured in its
approach while entertaining any appeal from the
decision of the Tribunal. This freedom to evolve and
interpret laws must belong to the Tribunals to subserve
the regulatory regime for clarity and consistency and
it is with this perspective that the Supreme Court will
consider appeals against judgment of the Tribunals
on questions of law arising from its orders.
19. It is in this very context that the UK Supreme
Court in the case of Jones v. First Tier Tribunal,
formulated certain principles for appellate courts
to interfere against the orders of Tribunals on the
ground of existence of questions of law. The Court
held as under:
“16 … It is primarily for the tribunals,
not the appellate courts, to develop a
consistent approach to these issues [of
law and fact], bearing in mind that they are
peculiarly well fitted to determine them. A
pragmatic approach should be taken to
the dividing line between law and fact, so
that the expertise of tribunals at the first
tier and that of the Upper Tribunal can be
used to best effect. An appeal court should
not venture too readily into this area by
classifying issues as issues of law which
are really best left for determination by the
specialist appellate tribunals.”
20. The scope of appeal under Section 15Z may be
formulated as under:
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20.1 The Supreme Court will exercise jurisdiction
only when there is a question of law arising for
consideration from the decision of the Tribunal. A
question of law may arise when there is an erroneous
construction of the legal provisions of the statute
or the general principles of law. In such cases, the
Supreme Court in exercise of its jurisdiction of Section
15Z may substitute its decision on any question of
law that it considers appropriate.
20.2 However, not every interpretation of the law
would amount to a question of law warranting
exercise of jurisdiction under Section 15Z. The
Tribunal while exercising jurisdiction under Section
15T, apart from acting as an appellate authority on
fact, also interprets the Act, Rules and Regulations
made thereunder and systematically evolves a legal
regime. These very principles are applied consistently
for structural evolution of the sectorial laws. This
freedom to evolve and interpret laws must belong
to the Tribunal to subserve the Regulatory regime
for clarity and consistency. These are policy and
functional considerations which the Supreme Court
will keep in mind while exercising its jurisdiction under
Section 15Z.”
7.3 The above understanding of ‘question of law’ as a precondition
to this Court’s exercise of appellate jurisdiction under regulatory
statutes is extremely pertinent to the present matter. The Act
envisages the establishment of State Electricity Regulatory
Commissions and the Central Electricity Regulatory Commission
as expert and specialised bodies that discharge advisory,
regulatory, and adjudicatory functions.14 It has established the
APTEL as an appellate body to hear appeals against orders of
the adjudicating officers or the Appropriate Commission.15 Hence,
while delineating the contours of this Court’s interference in

14 The functions of the Central Commission are enlisted in Section 79 of the Act. Similarly, Section 86
provides the functions of the State Commissions.
15 Section 110 establishes the APTEL. Section 111 provides the scope of appellate jurisdiction of the APTEL
and Section 120 sets out the procedure to be followed by the APTEL and the powers of the APTEL.
[2024] 8 S.C.R. 1037

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appeal under Section 125, we must be mindful and measured
so as to enable a systematic and coherent development of
electricity law by the Commissions and the APTEL.
7.4 Having examined the scope of this Court’s exercise of appellate
jurisdiction when there is a ‘question of law’ under Section 15Z
of the SEBI Act, the position that emerges in this case, it is
a little more restrictive as the requirement under Section 125
is not merely a ‘question of a law’ but a ‘substantial question
of law’.16
8. Analysis on merits: The above discussion provides the context in
which we decide the present appeals. We take note of several orders
of this Court that have dismissed appeals arising out of similar
orders and similar facts.17 We find it necessary to state our reasons
for dismissing the present appeals, to finally settle this issue. We
will therefore analyse the submissions of the learned counsels in
light of the scope of our jurisdiction and the reasoning and findings
of the impugned order.
8.1 At the outset, it is necessary to state that the learned ASG and
learned senior counsel for the appellant have not proposed a
substantial question of law for this Court to consider. Rather,
they have argued on facts as to whether or not the delay is
attributable to the respondents, and consequently whether force
majeure is applicable. We will analyse the impugned order, as
well as the KERC’s order, to determine whether there is any
substantial question of law that calls for our interference.
9. Clauses of the Power Purchase Agreement (PPA): Before discussing
the orders of the KERC and the APTEL, it is necessary to identify
the relevant clauses of the PPA. Article 2.1 of the PPA imposes the
obligation on the SPD to secure necessary approvals, clearances,
and permits within 365 days. Liquidated damages can be imposed
on the SPD under Article 2.2 in case of delay, provided that the delay
is not attributable to the appellant or due to a force majeure event.

16 The requirement of ‘substantial question of law’ for this Court to exercise appellate jurisdiction under
Section 125 has also been recognised in BSES Rajdhani Power Limited v. Delhi Electricity Regulatory
Commission (2023) 4 SCC 788.
17 In Civil Appeal No. 3958/2020; Civil Appeal No. 897/2022; Civil Appeal No. 5134/2021; Civil Appeal Diary
Nos. 32980/2022, 33053/2022 and 33572/2022.
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9.1 Article 2.5.1 permits the extension of the SCD in case the SPD
is unable to fulfil its contractual obligations due to the appellant’s
default or there are force majeure events that affect either the
appellant or the SPD. The list of force majeure events is set
out in Article 8.3(a), and sub-clause (vi) is the most relevant
for us. A party can invoke the force majeure clause subject to
the conditions set out in Article 8.3(b).
9.2 Article 2.5.7 provides that subject to the other provisions of
the PPA, the SPD is liable to pay liquidated damages if it is
unable to supply power to the appellant by the SCD. Therefore,
the payment of damages under this clause is subject to an
extension of time under Article 2.5.1. Article 5.1 provides for the
tariff rate payable to the SPD as Rs. 8.40 per unit. However, in
cases of delay, subject to extension of time under Article 2.5, it
provides that the lower of Rs. 8.40 per unit and the varied tariff
applicable as on the date of commercial operation will apply.
A plain reading of Article 5.1 makes it clear that the lower tariff
will not apply if there is an extension of time under Article 2.5.
9.3 The relevant clauses of the PPA are reproduced for ready
reference:
“Article 2.1: Conditions Precedent
The obligations of BESCOM and the SPD under this
Agreement are conditional upon the occurrence of the
following in full within 365 days from the effective date.
2.1.1
(i)The SPD shall obtain all permits, clearances and
approvals (whether Statutory or otherwise) as required
to execute and operate the Protect hereinafter referred
to as “Approvals”):
(ii) The Conditions Precedent required to be satisfied by
the SPD shall be deemed to have been fulfilled when the
SPD shall submit:
a. The DPR to BESCOM and achieve financial closure
and provide a certificate to BESCOM from the lead
banker to this effect;
[2024] 8 S.C.R. 1039

Bangalore Electricity Supply Company Limited v.
Hirehalli Solar Power Project LLP & Others

b. All Consents, Clearances and Permits required for
supply of power to BESCOM as per the terms of
this Agreement; and
c. Power evacuation approval from Karnataka Power
Transmission Company Limited or BESCOM, as
the case maybe.
2.1.2 SPD shall make all reasonable endeavors to satisfy
the Conditions Precedent within the time stipulated and
BESCOM shall provide to the SPD all the reasonable
cooperation as may be required to the SPD for satisfying
the Conditions Precedent.
2.1.3 The SPD shall notify BESCOM in writing at least once
a month on the progress made in satisfying the Conditions
Precedent. The date, on which the SPD fulfills any of the
Conditions Precedent pursuant to Clause 2.1.1, it shall
promptly notify BESCOM of the same.”
“Article 2.2: Damages for delay by the SPD:
“2.2.1 In the event that the SPD does not fulfill any or all
of the Conditions Precedent set forth in Clause 2.1 within
the period of 365 days and the delay has not occurred
for any reasons attributable to BESCOM or due to Force
Majeure, the SPD shall pay to BESCOM damages in an
amount calculated at the rate of 0.2% (zero point two per
cent) of the Performance Security for each day’s delay until
the fulfillment of such Conditions Precedent, subject to a
maximum period of 60 (Sixty) days. On expiry of the said
60 (Sixty) days, BESCOM at its discretion may terminate
this Agreement.”
Article 2.5: Extension of Time
“2.5.1 In the event that the SPD is prevented from
performing its obligations under Clause 4.1 by the
Scheduled Commissioning Date due to:
a. Any BESCOM Event of Default; or
b. Force Majeure Events affecting BESCOM; or
c. Force Majeure Events affecting the SPD,
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2.5.2 The Scheduled Commissioning Date and the
Expiry Date shall be deferred, subject to the reasons and
limits prescribed in Clause 2.5.1 and Clause 2.5.3 for a
reasonable period but not less than ‘day for day’ basis,
to permit the SPD or BESCOM through the use of due
diligence, to overcome the effects of the Force Majeure
Events affecting the SPD or BESCOM, or till such time
such Event of Default is rectified by BESCOM.
2.5.3. In case of extension occurring due to reasons
specified in clause 2.5.1 (a), any of the dates specified
therein can be extended, subject to the condition that the
Scheduled Commissioning Date would not be extended
by more than 6 (six) months.
…
2.5.6. As a result of such extension, the Scheduled
Commissioning Date and the Expiry Date newly determined
date shall be deemed to be the Scheduled Commissioning
Date and the Expiry Date for the purposes of this Agreement.
2.5.7. Liquidated damages for delay in commencement of
supply of power to BESCOMs.
Subject to the other provisions of this agreement, if the
SPD is unable to commence supply of power to BESCOM
by the scheduled commissioning date, the SPD shall pay
to BESCOM, liquidated damages for the delay in such
commencement of supply of power as follows:
(a) For the delay up to one month-amount equivalent
to 20% of the performance security.
(b) For the delay of more than one month up to
three months-amount equivalent to 40% of the
performance security.
(c) For the delay of more than three months up
to six months-amount equivalent to 100% of the
performance security.
For avoidance of doubt, in the event of failure to pay the
above mentioned damages by the SPD, the BESCOM
entitled to encash the performance Security.”
[2024] 8 S.C.R. 1041

Bangalore Electricity Supply Company Limited v.
Hirehalli Solar Power Project LLP & Others

Article 5: Rates and Charges:
“5.1 Tariff payable: The SPD shall be entitled to receive
the Tariff of Rs. 8.40 per kwh based on the KERC tariff
order S/03/1 dated 10.10.2013 in respect of SPD’s Solar
PV projects in terms of this agreement for the period
between COD and the Expiry Date. However, subject to
Clause 2.5, if there is a delay in commissioning of the
Project beyond the Scheduled Commissioning Date and
during such period such period there is a variation in the
KERC Tariff, then the applicable Tariff for the projects shall
be the lower of the following:
(i) Rs.8.40 per kwh
(ii) varied tariff applicable as on the date of Commercial
Operation…”
Article 8: Force Majeure
“8.3 Force Majeure Events:
a) Neither Party shall be responsible or liable for or
deemed in breach hereof because of any delay or failure
in the performance of its obligations hereunder (except
for obligations to pay money due prior to occurrence of
Force Majeure events under this Agreement) or failure to
meet milestone dates due to any event or circumstance
(a “Force Majeure Event”) beyond the reasonable control
of the Party affected by such delay or failure, including
the occurrence of any of the following:
i. Acts of God;
ii. Typhoons, floods, lightning, cyclone, hurricane, drought,
famine, epidemic, plague or other natural calamities;
iii. Strikes, work stoppages, work slowdowns or other labor
dispute which affects a Party’s ability to perform under
this Agreement;
iv. Acts of war (whether declared or undeclared), invasion
or civil unrest;
v. Any requirement, action or omission to act pursuant to
any judgment or order of any court or judicial authority in
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India (provided such requirement, action or omission to
act is not due to the breach by the SPD or BESCOM, of
any Law or any of their respective obligations under this
Agreement);
vi. Inability despite complying with all legal requirements
to obtain, renew or maintain required licenses or Legal
Approvals;
vii. Fire, Earthquakes, explosions, accidents, landslides;
viii. Expropriation and/or compulsory acquisition of the
Project in whole or in part;
ix. Chemical or radioactive contamination or ionizing
radiation; or
x. Damage to or breakdown of transmission facilities of
either Party;
b) The availability of the above item (a) to excuse a
Party’s obligations under this Agreement due to a Force
Majeure Event shall be subject to the following limitations
and restrictions:
(i) The non-performing Party gives the other Party written
notice describing the particulars of the Force Majeure Event
as soon as practicable after its occurrence;
(ii) The suspension of performance is of no greater scope
and of no longer duration than is required by the Force
Majeure Event.
(iii) The non-performing Party is able to resume performance
of its obligations under this Agreement, it shall give the
other Party written notice to that effect;
(iv) The Force Majeure Event was not caused by the non
performing Party’s negligent or intentional acts, errors or
omissions, or by its negligence/failure to comply with any
material Law, or by any material breach or default under
this Agreement;
(v) In no event shall a Force Majeure Event excuse the
obligations of a Party that are required to be completely
performed prior to the occurrence of a Force Majeure Event.”
[2024] 8 S.C.R. 1043

Bangalore Electricity Supply Company Limited v.
Hirehalli Solar Power Project LLP & Others

10. Re: Applicability of the force majeure clause: The primary issue
for our consideration is whether the delay in this case is due to a
force majeure event as defined under Article 8.3, and consequently
whether the respondents were entitled to an extension of time under
Article 2.5. If the answer to these questions is affirmative, the tariff
cannot be lowered under Article 5.1 and liquidated damages cannot
be imposed under Articles 2.2 and 2.5.7.
10.1 The law on force majeure, specifically in the context of PPAs,
has been comprehensively dealt with by this Court in Energy
Watchdog v. Central Electricity Regulatory Commission.18 The
Court delved into contractual jurisprudence on force majeure
clauses and frustration of contracts. It held that Sections 32 and
56 of the Indian Contract Act, 187219 govern the law on force
majeure. When the contract contains an express or implied
force majeure clause, it is governed under Chapter III of the
Contract Act, specifically Section 32. In such cases, the ‘doctrine
of frustration’ in Section 56 does not apply and the court must
interpret the force majeure clause contained in the contract.20 It
held that a force majeure clause must be narrowly construed.21
10.2 The present case is clearly one where the PPA contains an
explicit force majeure clause in Article 8.3, which has already
been extracted above. The question is whether the delay in
commissioning falls within the ambit of this clause. Article 8.3(a)
(vi) is the most relevant force majeure event that would apply
to the facts here. It reads:

18 [2017] 3 SCR 153 : (2017) 14 SCC 80
19 Section 32 reads:
“32. Enforcement of contracts contingent on an event happening.—Contingent contracts to do or
not to do anything if an uncertain future event happens, cannot be enforced by law unless and until
that event has happened.
If the event becomes impossible, such contracts become void.”
Section 56 reads:
“56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful.—A contract to do an act which,
after the contract is made, becomes impossible, or, by reason of some event which the promisor could
not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non-performance of act known to be impossible or unlawful.—
Where one person has promised to do something which he knew, or, with reasonable diligence, might
have known, and which the promisee did not know, to be impossible or unlawful, such promisor must
make compensation to such promisee for any loss which such promisee sustains through the non-
performance of the promise.”
20 Energy Watchdog (supra), para 47.
21 ibid, para 45.
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“vi. Inability despite complying with all legal
requirements to obtain, renew or maintain required
licenses or Legal Approvals”
Article 8.3(b)(iv) disentitles a party from claiming force majeure
when the event was caused by its own negligence, intentional
act, or omission. It reads:
“b) The availability of the above item (a) to excuse
a Party’s obligations under this Agreement due to a
Force Majeure Event shall be subject to the following
limitations and restrictions:
…
(iv) The Force Majeure Event was not caused by
the non performing Party’s negligent or intentional
acts, errors or omissions, or by its negligence/failure
to comply with any material Law, or by any material
breach or default under this Agreement…”
10.3 When these clauses are read together, it is clear that the SPD
would be entitled to the benefit of Article 8.3(a)(vi) when it is
unable to secure the necessary approvals and licenses required
under the PPA, provided that there is no negligence or intentional
act or omission on its part that caused this situation.
10.4 The entire dispute before the KERC and the APTEL revolves
on a question of fact – whether the respondents were negligent
or not diligent in securing approvals and hence, is the delay in
commissioning attributable to them. The KERC’s appreciation
of the evidence has led it to the conclusion that the delay in
commissioning was due to the respondents’ delay in making
the applications, despite the approval of the PPA. However,
the APTEL has taken note of certain additional factors
affecting the time taken to secure the approvals that were not
considered by the KERC. These include the time taken by the
government to provide the PTCL that is required for approval
of land conversion, and the delay caused by the authority in
evacuation approval. Considering these additional factors, the
APTEL has reappreciated the evidence to find that the delay
was not attributable to the respondents but to the government
[2024] 8 S.C.R. 1045

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bodies and relevant authorities. We find that there is no error in
the APTEL’s approach, and it is reasonable in its reappreciation
of evidence.
10.5 Further, the APTEL also correctly took note of the fact that a large
number of SPDs have raised similar issues, and the government
has responded to the same by requiring DISCOMs to set-up
committees to look into these cases. The large number of cases
that raise similar grounds and the government’s response show
that the delay was not faced by the respondents alone, and
hence cannot be entirely blamed on them. The government
has itself acknowledged that the land use conversion process
is a long and arduous one, which led it to deem conversion for
solar power projects under the present scheme. However, due
to lapses in the implementation of the deemed conversion, the
SPDs were unable to avail the same. The APTEL has rightly
appreciated these facts to hold that the respondents acted
diligently and with care and caution to secure approvals, and
hence their claims cannot be rejected through recourse to
Article 8.3(b)(iv).
11. Finally, we have also considered the letter by the appellant dated
02.03.2017 that granted a 6-month extension to the respondents
after considering its individual facts and circumstances. This grant
of extension must be seen in light of the government’s direction
to DISCOMs dated 24.11.2016 to set up 3-member committees to
consider each request for extension. This shows that the appellant,
after considering the specific case of the respondents, has itself
accepted that they are entitled to the benefit of Article 2.5 read with
Article 8.3 of the PPA. Even before the KERC, the appellant did not
challenge the respondents’ contentions. Therefore, at the appellate
stage before the APTEL and this Court, they cannot be permitted
to take a contrary stance and raise the plea that the delay was
attributable to the respondents and not covered by the force majeure
clause or that there was non-compliance with the notice requirement
under Article 8.3(b)(i). We therefore reject the contentions of the
appellant that force majeure does not apply in this case.
12. In light of the above findings of fact by the APTEL that the delay is
not attributable to the respondents and that the force majeure clause
is applicable, it rightly held that the extension of time under Article 2.5
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is warranted and the commissioning of the project on 24.08.2017 is
within the extended period of 24 months. Consequently, the APTEL
also rightly held that there is no occasion for the imposition of
liquidated damages under Articles 2.2 and 2.5.7 or for the reduction
of tariff under Article 5.1 of the PPA.
13. Conclusion: After considering the learned counsels’ submissions in
light of the above findings of the APTEL, we find that no substantial
question of law arises in the present case. The APTEL has primarily
decided a question of fact as to the attributability of the delay, and from
the above, it is clear that the APTEL’s findings are neither illegal nor
unreasonable. Hence, we find no reason to interfere with the same.
14. Lastly, we also reject the appellant’s contention that the APTEL’s
direction to pay late payment surcharge to the respondents is
unjustified since the same was not pleaded. As we have already
held, the APTEL rightly restored the tariff of Rs. 8.4 per unit and
directed the appellant to pay the difference amount. The direction to
pay the late payment surcharge on this amount is explicitly rooted in
the PPA, and hence, is in furtherance of the intention of the parties.
There is no reason to set aside the same.
15. With the above reasons, we dismiss the present appeals.
16. No order as to costs.

Result of the case: Appeals dismissed.

†
Headnotes prepared by: Ankit Gyan