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Under the PPA the tariff was fixed at Rs. 3.85 per KWH, with an annual escalation of 5% based on Ministry of Non- Conventional Energy, Government of India guidelines. The PPA was duly approved by the State Commission.

ii) On 05.07.2003, KPTCL issued a letter terminating the PPA with immediate effect and sought to impose unilateral reduction of tariff to Rs. 2.80 per KWH with an annual escalation of 2% only, without assigning any reason.

iii) According to the Appellant they were coerced to sign a purported Supplemental Agreement on 14.11.2006. Being aggrieved by the action of KPTCL/GESCOM, the Appellant filed a Writ Petition being no. 13043/2011 which is pending before the High Court of Karnataka.

v) The Appellant issued notice dated 28.10.2011 to GESCOM specifying the events of default. However, despite the notice, GESCOM failed to pay the interest for delayed payments or open LC.

vi) On 27.02.2012 the Appellant issued termination notice to GESCOM and terminated the PPA.

vii) The Appellant then entered into a PPA dated 01.06.2012 with PTC India Ltd., a trader, for sale of electricity through the exchange. As the transaction involved inter-State transmission of electricity, it required "No Objection" of the SLDC as per the Regulations of the Central Commission. Accordingly, the Appellant applied to SLDC for grant of "No Objection" for inter-State open access. PTC also applied for "No Objection" on 05.06.2012.

ii) The question of unreasonable in denial of "No Objection" for inter-State open access by SLDC shall be gone into by the Central Commission only after the termination of the PPA has been found to be valid by the State Commission in the Petition pending before it.

10. We find that the PPA dated 10.06.2002 entered into between KPTCL, the predecessor of GESCOM, and the Appellant, there is a clause for termination of PPA due to failure or refusal by the KPTCL to perform its financial and other material obligations under the agreement. The Appellant has to deliver a Default Notice to GESCOM specifying the detail of the Event of Default calling upon GESCOM to remedy the same. If at the expiry of 30 days for the delivery of the Default Notice, unless the parties have agreed otherwise, or the Event of Default has been remedied, the Appellant can terminate the PPA by delivering the Termination Notice.

11. However, if dispute arises regarding the validity of the Termination Notice between the parties, the same has to be adjudicated by the State Commission under Section 86(1)(f) of the Electricity Act. Admittedly, in this case, GESCOM has filed a petition before the State Commission challenging the validity of the Termination Notice and the matter is pending for adjudication under Section 86(1)(f) of the Electricity Act.

12. According to Section 32(2)(a) of the Electricity Act, the SLDC is responsible for scheduling and dispatch of electricity within the State, in accordance with the contracts entered into with the licensee or the generating companies operating in the concerned State. Thus, if a Distribution Licensee claims that it has a valid PPA with a generating company and if the same generating company seeks "No Objection" for Inter- State open access as it has terminated the PPA, the SLDC cannot grant the "No Objection". The SLDC cannot sit on the judgment whether the PPA has been terminated legally when the Distribution Licensee is claiming that the termination is not valid. The validity of the Termination Notice can only be decided by the State Commission under Section 86(1)(f) of the Act.