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14. They also countered the submissions on force majeure by stating that the fundamental basis of the contract was the fuel supply agreement that was to be entered into, and pointed out various clauses in the PPAs to show that the fuel supply agreement and imported coal were both very important elements, both in the bid and the PPAs. Non-escalable tariffs do not lead to the conclusion that if a source of coal becomes unavailable in a manner that completely undermines the basis of the bid, the tariff cannot be adjusted. If otherwise they fall within the change in law provision and/or force majeure provision, the mere fact that a non-escalable tariff has been quoted would make no difference. A large part of the argument was centered around the meaning of the expression “frustration” in the Contract Act and the correct construction of clause 12 of the PPA. A large number of authorities, both English and Indian, were cited to show that the contract had become commercially impracticable, and that they would have to fold up operations, which would not be in public interest as the consumers would then have to obtain electricity at rates much higher than were quoted by them. According to them, a force majeure event in Clause 12 takes place the moment performance is “hindered” and there can be no doubt that an astronomical rise in prices of Indonesian coal, thanks to a change in law, has certainly hindered performance. They also argued that in any event the change in law clause is very wide and since the PPA deals with imported coal, obviously change in law would cover foreign law. They also went on to add that when the PPA wanted to restrict a particular clause to Indian law, it did so expressly. They also stated that it is significant that neither GUVNL nor Haryana Utilities had filed appeals in the present case, and the Government had in several policy decisions and statements made it clear that in cases like the present, where there is grave unforeseen hardship on account of non-allocation of Indian coal, the rise in cost should be adequately compensated. They, therefore, questioned the locus standi of the consumer groups, who are the only appellants before us, stating that on the estimation made by the respondents, the impact of increase in both cases on tariff would be extremely minimal as opposed to the huge accumulated losses suffered by these entities which would make them fold up. Ultimately, it was argued that even the Central Commission did not give them the entire benefit of rise in price in coal, and consequently in the final analysis the relief granted on the ground of force majeure by the Central Commission should not be disturbed, and relief on the ground of change in law should, in addition, have been given to them.

12.7 Available Relief for a Force Majeure Event Subject to this Article 12:
No Party shall be in breach of its obligations pursuant to this Agreement to the extent that the performance of its obligations was prevented, hindered or delayed due to a Force Majeure Event;
Every Party shall be entitled to claim relief in relation to a Force Majeure Event in regard to its obligations, including but not limited to those specified under Article 4.5.
For the avoidance of doubt, it is clarified that no Tariff shall be paid by the Procurers for the part of Contracted Capacity affected by a Natural Force Majeure Event affecting the Seller, for the duration of such Natural Force Majeure Event. For the balance part of the Contracted Capacity, the Procurer shall pay the Tariff to the Seller, provided during such period of Natural Force Majeure Event, the balance part of the Power Station is declared to be Available for scheduling and dispatch as per ABT for supply of power by the Seller to the Procurers.

For so long as the Seller is claiming relief due to any Non Natural Force Majeure Event (or Natural Force Majeure Event affecting the Procurer/s) under this Agreement, the Procurers may from time to time on one (1) days notice inspect the Project and the Seller shall provide Procurer’s personnel with access to the Project to carry out such inspections, subject to the Procurer’s personnel complying with all reasonable safety precautions and standards. Provided further the Procurers shall be entitled at all times to request Repeat Performance Test, as per Article 8.1, of the Unit(s) Commissioned earlier and now affected by Direct or Indirect Non Natural Force Majeure Event (or Natural Force Majeure event affecting the Procurer/s), where such Testing is possible to be undertaken in spite of the Direct or Indirect Non Natural Force Majeure Event (or Natural Force Majeure Event affecting the Procurer/s), and the Independent Engineer accepts and issues a Final Test Certificate certifying such Unit(s) being capable of delivering the Contracted Capacity and being Available, had there been no such Direct or Indirect Non Natural Force Majeure Event (or Natural Force Majeure Event affecting the Procurer/s). In case, the Available Capacity as established by the said Repeat Performance Test (provided that such Repeat Performance Test, the limitation imposed by Article 8.1.1 shall not apply) and Final Test Certificate issued by the Independent Engineer is less than the Available Capacity corresponding to which the Seller would have been paid Capacity Charges equal to Debt Service in case of Indirect Non Natural Force Majeure Event (or Natural Force Majeure Event affecting the Procurer/s), then the Procurers shall make pro-rata payment of Debt Service but only with respect to such reduced Availability. For the avoidance of doubt, if Debt Service would have been payable at an Availability of 60% and pursuant to a Repeat Performance Test it is established that the Availability would have been 40%, then Procurers shall make payment equal to Debt Service multiplied by 40% and divided by 60%. Similarly, the payments in case of Direct Non Natural Force Majeure Event (and Natural Force Majeure Event affecting the Procurer/s) shall also be adjusted pro-rata for reduction in Available Capacity.

Failure to comply with an Indian Law; or Breach of, or default under this Agreement or any Project Documents.” This clause makes it clear that changes in the cost of fuel, or the agreement becoming onerous to perform, are not treated as force majeure events under the PPA itself.
45. We are, therefore, of the view that neither was the fundamental basis of the contract dislodged nor was any frustrating event, except for a rise in the price of coal, excluded by clause 12.4, pointed out. Alternative modes of performance were available, albeit at a higher price. This does not lead to the contract, as a whole, being frustrated. Consequently, we are of the view that neither clause 12.3 nor 12.7, referable to Section 32 of the Contract Act, will apply so as to enable the grant of compensatory tariff to the respondents. Dr. Singhvi, however, argued that even if clause 12 is held inapplicable, the law laid down on frustration under Section 56 will apply so as to give the respondents the necessary relief on the ground of force majeure. Having once held that clause 12.4 applies as a result of which rise in the price of fuel cannot be regarded as a force majeure event contractually, it is difficult to appreciate a submission that in the alternative Section 56 will apply. As has been held in particular, in the Satyabrata Ghose case, when a contract contains a force majeure clause which on construction by the Court is held attracted to the facts of the case, Section 56 can have no application. On this short ground, this alternative submission stands disposed of.