Document Fragment View

Matching Fragments

III. Procurement of Equipment • The Agreement came to be signed after obtaining in principle approval of financial assistance from the Bankers on 29.06.2016 • An Agreement for Sale and Purchase of Solar Modules was entered into by the Appellant with the Vendor on 09.09.2016 4.20 In regard to the approval for conversion of the use of the land from agricultural purpose to the purpose of setting up a Solar Power Project, the Appellants obtained various documents/approval which are required for the Application for conversion and applied to the Deputy Commissioner, Chitradurga on 16.02.2016 vide application dated 16.02.2016 duly acknowledged. (which has been mentioned in the final Land Conversion Order dated 29.09.2016).The demand Notice for payment of the conversion charges (after the Tahsildar's recommendation to the Deputy Commissioner) was issued by the Deputy Commissioner on 08.09.2016 (i.e. after 6 months). Thereafter, the payment was made by the Appellants on 22.09.2016 within 14 days. The Order of Conversion of Land into Non- Agriculture was given by the Deputy Commissioner only on 29.09.2016. Thus, the approval for conversion of land was received after a lapse of about 8 months. Copies of the Demand Notice dated 08.09.2016 and the Order of Conversion of land into Non- Agriculture dated 29.09.2016 are filed along with main appeal. 4.21 The Karnataka Land Revenue Act, 1964 itself stipulates a period of 4 months in the case of Deemed Conversion. Relevant portion of the S.95. of Karnataka Land Revenue Act, 1964 in this regard is extracted hereunder for ready reference of this Tribunal:

7.7 Learned counsel, appearing for the first Respondent submitted that the first Respondent/ Govt. of Karnataka has agreed to grant six months' extension of COD but all the Escoms were directed by the State Commission to advice all land owning solar developers to approach the State Commission and seek for approval of the extension of time. Admittedly, the Appellants faced numerous problems in executing the project, namely, the delay in obtaining approvals of the Government and its instrumentalities including order for land conversion, approval for evacuation line etc.. However, such clearances/approvals are of routine in nature and are generally involved in execution of all the projects. Learned counsel further pointed out that the onus of obtaining all necessary approvals was on the Appellant as per Article 2.1.1 of the PPA and in view of the delayed execution of the project, the Appellant would only be entitled to varied tariff applicable as on the date of Commercial Operation. Learned counsel vehemently submitted that the delays by Govt. agencies cannot be termed as events of force majeure due to the fact that Article 8.3 clearly sets out the events which constitute Force majeure. Learned counsel for the first Respondent further submitted that in case of a force majeure, requisite notice as contemplated in the PPA has to be issued by the Appellants to the Respondents. The State Commission has rightly interpreted the clause of force majeure and ruled that none of the reasons or events cited by the Appellants for delay in the commissioning of the projects falls under the force majeure events. 7.8 Learned counsel further contended that while referring to various dates of activities submitted by the Appellants, it is crystal clear that at every stage, it has been the Appellants who have acted in a belated manner which have been duly noted and commented by the State Commission in the impugned order. For an instance, that the PPA was signed on 03.07.2015, the Appellants applied for conversion of land only on 16.02.2016 i.e. after lapse of seven months from the effective date for which no explanation has been justified by the Appellants. Similar was the cases for evacuation & bay approvals. Regarding the contention of the Appellants that the established principles on force majeure in the case of Satyabartha Ghose v. Mugneerm Bangurare has not been followed in the present case, Learned counsel pointed out that the factual matrix of the case cited are different from the present case and hence no reliance can be placed on the same. Summing up his arguments, learned counsel reiterated that the Appeal lacks merits and deserves to be dismissed.

(vi) Inability despite complying with all legal requirements to obtain, renew or maintain required licenses or Legal Approvals; (emphasis supplied)

(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; 8.2 Learned Counsel for the Appellants further submitted that considering the events responsible for delaying the project and provisions for the time extension under the PPA, the first Respondent granted extension of six months to commission the plants. In fact, a number of approvals from various agencies were required such as approval for conversion of land, grid connectivity, approval for bay connectivity, approval of Chief Electrical Inspector for charging of line etc.. While taking note of receipt of various approvals by the Appellants, it is crystal clear that solar projects would not have been completed within the scheduled COD. For example, land conversion order was issued on 29.09.2016, evacuation approval granted on 22.08.2016, approval for bay connectivity received on 17.12.2016 and the plant was commissioned on 30.06.2017. Further, the in principal approval of financial assistance was received on 09.09.2016 and agreement for purchase of solar modules was entered into by the Appellants on 09.06.2016. Learned counsel was quick to submit that the Appellants have utilised the stipulated time with utmost care without slackness as a result of which the plant could be commissioned well within the extended period of six months. Hence, the imposition of liquidated damages by the State Commission and allowing much lower tariff than the agreed under the PPA is not at all justified. 8.3 Learned counsel stated that even the Karnataka Land Revenue Act, 1964 itself stipulates a period of four months in the case of deemed conversion. Learned counsel contended that in the circumstances mentioned herein above, there were delays in the implementation of the project due to reasons beyond the controls of the Appellants and not attributable to them and hence the Appellants cannot be penalised for none of their mistakes by imposing LD on one hand and reducing the tariff drastically on the other. 8.4 Per contra, learned counsel for the Respondents contended that the Commission has the exclusive jurisdiction to determine the tariff payable for purchase of energy by distribution licensee and, therefore, any agreement or contract between the distribution licensees and the generator can be subject to the scrutiny by the Commission to ascertain the reasonability and validity of the tariff payable by the generators with an objective of safeguarding the consumer interest at large. To substantiate his arguments, learned counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Gujarat Urja Vikas Nigam Limited Vs. Tarini Infrastructure Ltd. And Ors., reported in AIR 2016 SC 5580 in which it is held that State Commission has powers to revisit the tariff of a concluded PPA in furtherance of public interest. In the instant case, Article 5.1 of the PPA itself provides for a varied KERC tariff in the event of delay in commissioning of the project.Admittedly, there is a delay of 4-5 months in the commissioning of the project and the varied KERC tariff as on the date of commissioning of the project would be applicable which was Rs. 4.36/unit as per tariff order of the State Commission relating to that period. Learned counsel further submitted that this being the case, the State Commission in suo motto issued direction to first Respondent not to allow the extension of time under PPA, also with regard to payment of tariff applicable during that period even though the plant has been actually commissioned.

8.8 We have gone through the relevant material on the issue placed before us and carefully considered the submissions of learned counsel for both the parties. It is relevant to note that under the special programme undertaken by the State Govt. for promoting the RE generation and to provide opportunities for individual agricultural land owning farmers to become solar power developers, many farmers came forward to set up solar projects in their respective land. Subsequent to completion of various scrutiny and formalities, the PPA came to be signed on 03.07.2015 which among others provided a guaranteed tariff of Rs.8.40 per unit and completion period of 18 months. The said PPA was approved by Karnataka Commission on 26.08.2015. As per the guidelines issued by the Govt. of Karnataka, a number of approvals/clearances/sanctions were required in the process of setting of solar projects such as financial closures, approval for conversion of land from agricultural purpose to be used for setting up a solar power project, approval for grid connectivity, approval for bay extension, approval from Chief Electrical Inspector for charging of the line etc.. While going through the matrix of various dates/events, it is pertinent to notice that the approval from the Govt. instrumentalities could be received by the Appellants after lapse of considerable time which in turn became the impediments in timely implementation of the solar projects. For an instance, land conversion order could be issued by the concerned authorities only on 29.09.2016, power evacuation approval came to be granted on 22.08.2016 and bay connectivity approval on 17.12.2016. For procurement of equipment, the agreement with the supplier was entered into 09.09.2016. With these eventl dates, it became almost certain that COD of projects cannot be achieved as per schedule.