The Appellate Tribunal for Electricity (APTEL) has ruled that utilities and nodal agencies cannot deny relief to renewable energy developers over delayed or improper notices when they were already aware of the issue and were involved in resolving it.
PEDA Against Relief To Developer
PEDA had argued before the Tribunal that the developer was not entitled to force majeure relief because it had failed to issue formal force majeure notices within the timelines prescribed under the implementation agreement. The agency relied on earlier judgments of APTEL and the Supreme Court to contend that compliance with contractual notice provisions was mandatory for availing force majeure protection.
However, the Tribunal drew a distinction between cases involving external force majeure events unknown to the counterparty and situations where the utility itself had contemporaneous knowledge of the disruption and was actively involved in resolving the issue.
What Led To The Delay?
The principal dispute in the present case related to grid connectivity. Mihit Solar had sought 66 kV connectivity for its projects based on provisions contained in the tender documents issued by PEDA. However, PSPCL later insisted on connectivity at higher voltage levels, leading to delays in project execution. The Tribunal noted that both PEDA and PSPCL were continuously informed about the issue through letters, meetings and joint discussions.
In its order, APTEL observed: “The whole purpose underlying the Article 10.4 notice requirement enabling the counterparty to verify the event and take mitigation steps was entirely fulfilled through the series of communications and the meeting. PEDA was not merely aware; it was actively engaged in resolving the very dispute that constitutes the force majeure event.”
APTEL Clarification
APTEL also clarified that the requirement for force majeure notice is generally intended to ensure that the counterparty is informed about events preventing contractual performance so that mitigation measures can be initiated in time. However, where the utility or nodal agency already possesses complete knowledge of the disruption and has participated in resolution efforts, strict technical insistence on the format or nomenclature of the notice may not be justified.
The Tribunal ultimately upheld PSERC’s decision to condone 72 days of delay linked to the grid connectivity issue and seven days related to the Jat agitation, while disallowing 11 days’ relief granted earlier on account of a local court stay order due to absence of any force majeure notice for that specific event.
APTEL Modifies SCOD Extension
As a result, the Appellate Tribunal for Electricity (APTEL) reduced the total project deadline extension from 90 days to 79 days and revised the commissioning deadline to April 19, 2016. Since the solar projects were already completed before the new deadline, the Tribunal allowed the other reliefs granted to the developer, including the release of bank guarantees.
The ruling could affect future renewable energy disputes related to project delays, especially in cases where utilities or nodal agencies try to deny relief even after being aware of the reasons behind the delay.
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