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TMI Blog2022 (11) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... the Power Purchase Agreement (hereinafter referred to as 'the PPA', for short), which was entered into by the Appellant and the first Respondent. The review filed by the Appellant was dismissed. Hence the appeals. THE FACTS 3. The Appellant, which is "a wholly owned company of the Government of Madhya Pradesh" (as described by the Appellant in the Special Leave Petition), is responsible for the bulk purchase of electricity in the State of Madhya Pradesh for onward sale/supply to the distribution utilities (DISCOMS). The Appellant issued a request for proposal (RFP) dated 06.05.2015 for long-term procurement of 300 MW of solar energy through tariff-based competitive bidding. The bid of M/s. Sky Power Southeast Asia Holding Limited was accepted. It was declared the successful bidder for three units of 50 MW each at different tariff rates. The bidder subsequently incorporated the first Respondent, viz., M/s. Sky Power Southeast Solar India Private Limited as a special purpose company. This was for developing one project of 50 MW. The rate, which is applicable in respect of the first Respondent, was Rs. 5.109 per unit. In respect of the other two bids, the bidder incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 2.5.1 of the PPA. Explanation/justification if any was called for from the first Respondent. Acting on the request of the first Respondent, the Appellant granted time for response of the first Respondent till 10.03.2017. The response, which was given on 10.03.2017, reads as follows: Firstly, we are thrilled to update you that the project is under advanced construction and all equipment order for the project have been placed and construction happening on site we expect that the project will be top quality using the best equipment in the market and constructed by a top-tier EPC, for the benefit of both Sky Power and the state of MP. 1. Satisfaction of Condition subsequent regarding Construction Financing MPPMCL Comment: "Loan sanction letter of M/s. L&T Finance vide letter No. S07201A03/16-17 DATED 29.08.2016 Copy of facility agreement and affecting compliance documents as stated in above letters are required to be submitted" SKY POWER comment: reference is made to paragraph 2.1.1.(b) of the PPA, reproduced below: Sd/- D.G.M. (Commercial-3) R.0. MPMCL, Bhopal 6. Thereafter, the first Respondent sent communication dated 14.03.2017. It reads as follows: SKY POWER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant portion of the judgment reads as follows: 2. The contract has been terminated on account of 54 days delay in achieving the first milestone i.e., procurement of land, financial closure and necessary permissions from the competent authority within 210 days from the date of execution of agreement for completing the first part of the project. The only reason to terminate the agreement is that the Petitioner has failed to achieve first milestone within 210 days though the condition of - procurement of land was modified after 210 days on 20.04.2016. The delay in achieving the first milestone is visited with penalty in terms of Clause 2.5 of the agreement. 3. Similar communication terminating the contract was set aside by this Court in Writ Petition No. 12432/2017 (Renew Clean Energy Private Limited v. M.P. Power Management Co. Limited and Anr. vide order dated 18.08.2017. In the said petition, the Petitioner has admittedly commissioned the power project within the time prescribed except that there was delay of 16 days in achieving the first milestone. The said order has been affirmed on 05.04.2018 by the Hon'ble Supreme Court in Civil Appeal No. 3600/2018 (M.P. Power Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nating the contract was not justifiable. In this regard he drew support from the judgment of this Court in Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors. (2000) 6 SCC 293. He would next contend that the PPA contemplated provisions to resolve disputes. He further contended that first Respondent should have resorted, if at all, to a civil suit to claim redress. He pointed out that a writ petition is a public law remedy. The contract in question not being statutory in nature, there was no public law element so as to justify the approach Under Article 226. He would next contend that there is no basis for the High Court to have interfered at all. This is a case where broadly the contract contemplated fulfilment of conditions at two stages. The first stage related to various conditions that had to be fulfilled by the first Respondent which are described as conditions subsequent in the PPA. They are also aptly described as the pre-commissioning stage. The PPA clearly contemplated fulfilment of these conditions on an indisputable basis on or before 15.01.2017. In arriving at this date, the maximum period of 9 months contemplated under the PPA as the period which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g complied its obligations under the contract. In this regard essentially two aspects are projected. It is firstly pointed out that while the first writ petition was pending consideration, the Appellant carried out an inspection on 19.04.2018. A report ensued on 21.04.2018. It was revealed that the approval which is granted by the CEIG may not advance the case of the first Respondent as certain lacunae emerged. It was found by the inspecting team of the Appellant that in the blocks 9 and 10 (the project of 50MW consisted of 10 blocks of 5 MW each), 61 inverters were missing. It was further revealed that in regard to 258 invertors, there was duplication of numbers. In other words, without there being the professed numbers of invertors as required under the contract, the approval of the CEIG was procured. In fact, this aspect, which when it was discovered by the Appellant, formed the foundation for the review petition but was not favourably considered by the High Court. A writ petition in the facts of this case would not lie. He would submit that while a writ petition may be maintainable when the State is awarding its largesse in the form of award of contract, once it enters into a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redible number of 182 bidders participated. It is trouncing its competitors that the holding company of the first Respondent turned out to be the lowest bidder (here we must notice that during the course of the arguments the Appellant did propose that first Respondent could come up with proposal which apparently should involve rates lower than the contract rate so that the public interest concern is adequately addressed whereas the first Respondent pointed out since it has planned for the project on the basis which made it the lowest bidder, it would not be feasible for it to reduce the rate any further). Dr. Singhvi pointed out that there is no basis for discriminating the case of the first Respondent and M/s. Renew Energy. It is pointed out that the High Court in the first round of litigation had interfered with the termination order following the judgment in Renew Energy. In the case of Renew Energy, it could achieve fulfilment of the conditions subsequent with a delay of 16 days which was condoned finally. In the case of the first Respondent, the delay happened to be 56 days. Otherwise, their cases are similar. Renew Energy was allowed to commission whereas the first Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a the invertors which were to be installed, from abroad. There are irrefutable documents in the form of invoices, bills of lading, lorry receipts which fortify the first Respondent in its stand that it had installed all the invertors. The project was ready to take off well within 24 months. The first Respondent would suffer grave avoidable financial loss, besides fall in esteem as a global player, if the termination dated 07.07.2018 is allowed to stand. Under the contract, the first Respondent was obliged to sell power at an agreed rate for a period of 25 years. The fact that in view of the play of market forces, there has been a fall in the price of solar power and it would be open to the Appellant to procure solar power at a cheaper rate should not allow the Appellant to resile from its contractual obligations. In fact, it is pointed out that the Appellant is purchasing power even now at even higher rates. Being State Under Article 12, the Appellant should not be permitted to seek shelter under the theory of alternate remedies. This Court is reminded of the chronology of events commencing from the date of the PPA in the year 2015. The first Respondent has succeeded before the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection and the report of the CEIG cannot be lightly brushed aside on such a case. Still furthermore, it is pointed out that having regard to the massive cost of the project which stood at nearly Rs. 350 crores, what is involved is a miniscule percentage. In this regard learned Counsel would emphasise the contravention of Article 9.1 under which the Appellant was obliged to serve a notice in case of the alleged seller's default for not commissioning the project in 24 months from the date of PPA. If such a notice had been given, the first Respondent would have had an opportunity if at all even proceeding on the basis of Appellant's contention being tenable to procure invertors which are portable and available in the market and redress the problem. When the project has progressed in the manner, it had to deny the first Respondent the fruits of its labour, acting under a solemn contract awarded to it would be clearly unfair. The mere fact that there had been a fall in the market price of solar power should not persuade this Court to find that there is no overwhelming public interest. In this regard he also sought to draw support from recent judgment of this Court in Vice Chairm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while refusing to interfere with the judgment of the High Court had made it clear that it is not pronouncing on the question as to the delay in fulfilling the conditions subsequent and its impact. Secondly, it is pointed out that in the case of Renew Energy, the said company had gone ahead and commissioned the project and the only aspect was the delay of 16 days whereas in the case of the first Respondent the contract was liable to be terminated both for the reasons that the conditions subsequent was not fulfilled within the maximum time and also for the reason that the first Respondent had not commissioned the project within the time provided under the contract. 15. After hearing the learned Counsel for the parties, we find that the following points arise for our consideration. (1) Whether the PPA in question, is a statutory contract? (2) What is the scope of judicial review of action by the State in a matter arising from a contract and what is the effect of the contract not being statutory? What is arbitrariness? (3) What is the concept of public law in judicial review in a contractual matter? (4) Whether there is an arbitration Clause in regard to the subject matter? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 298, the broader concept of State, as defined in Article 12 of the Constitution, which, no doubt, would include the Appellant, is inapposite and inapplicable. The Appellant, being a Company, would not be entitled to exercise the executive power contemplated in Article 162 of the Constitution, which is the power with the Union or the State Governments. In this regard we may notice that the present avtar of Article 298 is born by substituting in 1956 the original version and the present version reads as follows: 298. Power to carry on trade, etc. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: Provided that-- (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature. 11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ......... Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements and, therefore, merely because PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory. (Emphasis supplied) 20. The decision in India Thermal Power Ltd. (supra), dealing with the concept of statutory contract, came to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as amended from time to time; 26. We are of the view that it may not be appropriate to describe the PPA as a Statutory Contract. Section 63 of the Electricity Act, 2003 must be understood in the background of immediately preceding provision, viz., Section 62, In a paradigm shift from the earlier regime, the task of determining the tariff has been conferred on the appropriate Commission. Section 62 indicates the procedure. Section 63, on the other hand, compels the Commission to adopt the tariff determined through a transparent process of bidding. However, the transparent process of bidding must be in accordance with the guidelines issued by the Central Government. Thus, it is for the purpose of applying the tariff determined Under Section 63 for the purpose of adopting the tariff Under Section 62, that the guidelines issued by the Central Government become relevant. It is true that there is reference to the guidelines made Under Section 63 in the PPA. However, it is for the purpose of conducting the bidding that the guideline would become relevant. That the tariff has been arrived at in accordance with the transparent process of bidding, which is in tune with the guidelines Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment revising the rate of royalty under a lease. The contention was both against the revision of rate of royalty during the period of the lease and the cancellation of the lease on various grounds. Though an attempt was sought to draw support from the judgment of this Court in Erusian Equipment and Chemicals Limited v. State of West Bengal (1975) 1 SCC 70, the Court took the view that the said case involved discrimination at the threshold or at the time of deciding as to whether the Government should enter into the contract. The Court took the view that the only question which normally arises in such cases is as to whether the action complained of was in conformity with the agreement. We may notice the earlier opinions of this Court which came to be dealt with in the following statement: We do not think that any of these cases could assist the Appellants or is at all relevant. None of these cases lays down that, when the State or its officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition Under Article 226 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. This Rule was enunciated by Mr. Justice Frankfurter in Viteralli v. Saton [359 US 535: Law Ed (Second series) 1012] where the learned Judge said: An executive agency must be rigorously held to the standards by which it professes its action to be judged.... Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed.... This judicially evolved Rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword. This Court accepted the Rule as valid and applicable in India in A.S. Ahluwalia v. Punjab [(1975) 3 SCC 503, 504 : 1975 SCC (L&S) 27 : (1975) 3 SCR 82] and in subsequent decision given in Sukhdev v. Bhagatram [(1975) 1 SCC 421, 462 : 1975 SCC (L&S) 101 : (1975) 3 SCR 619], Mathew, J., quoted the above-referred observations of Mr. Justice Frankfurter with approval. It may be noted that this rule, though supportable also as an emanation from Article 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with reason and should be free from arbitrariness. That is the very essence of the Rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege. This case while it dealt with the issue of arbitrariness at the stage of award of largesse by the State, it paved the way for future development in this field of law. 30. No doubt, in Bareilly Development Authority and Anr. v. Ajai Pal Singh and Ors. (1989) 2 SCC 116, the Appellant-Authority constituted under the U.P. Planning and Development Act, 1973, issued advertisement offering to register the names of applicants desirous of purchasing houses/flats. The terms and conditions were sought to be revised. The Court went on to hold as follows: 22. There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued Under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to Rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu [(1974) 4 SCC 3 : 1974 SCC (L&S) 165], Maneka Gandhi v. Union of India [(1978) 1 SCC 248], Ajay Hasia v. Khalid Mujib Sehravardi [(1981) 1 SCC 722 : 1981 SCC (L&S) 258], R.D. Shetty v. International Airport Authority of India [(1979) 3 SCC 489] and also Dwarkadas Marfatia and Sons v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. (Emphasis supplied) 32. In the judgment of this Court rendered by a Bench of two learned Judges decided in Shrilekha Vidyarthi (Kumari) v. State of U.P. (1991) 1 SCC 212, the court was concerned with a challenge to a general order by which the appointment of all government counsel in all the districts of the state of U.P. came to be terminated. The writ petition was filed Under Article 32 of the Constitution of India. Important and apposite are the following observations: 22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts uninformed by reason and influenced by personal predilections in contractual matters may result in adverse consequences to it alone without affecting the public interest, any such act of the State or a public body even in this field would adversely affect the public interest. 28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14. (Emphasis supplied) 33. As to what constitutes arbitrariness is captured in paragraph 36 and it reads as follows: 36. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition, viz., to restrain the Government from deducting a particular amount from the writ Petitioner's bill(s) was not a prayer which could be granted by the High Court Under Article 226. Indeed, the High Court has not granted the said prayer. 36. In Verigamto Naveen v. Govt. of A.P. and Ors. (2001) 8 SCC 344, the case involved, mining leases granted to a corporation and a sub-lease, which was permitted by the Government. Thereafter, the permission was sought to be withdrawn. The withdrawal of the permission, was the subject matter of challenge in writ proceedings, inter alia. Against, the Order of the Full Bench of the High Court, (which is reported in AIR 1995 A.P. 1), appeals were carried to this Court. On the issue relating to the jurisdiction of the Court in cases arising out of contract, this Court held as follows: 21.... Though there is one set of cases rendered by this Court of the type arising in Radhakrishna Agarwal case [(1977) 3 SCC 457 : AIR 1977 SC 1496] much water has flown in the stream of judicial review in contractual field. In cases where the decision-making authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a public utility and it has been awarded by a statutory body. But nevertheless, it may be noticed that the Government or government authorities at all levels are increasingly employing contractual techniques to achieve their regulatory aims. It cannot be said that the exercise of those powers are free from the zone of judicial review and that there would be no limits to the exercise of such powers, but in normal circumstances, judicial review principles cannot be used to enforce contractual obligations. When that contractual power is being used for public purpose, it is certainly amenable to judicial review. The power must be used for lawful purposes and not unreasonably. (Emphasis supplied) 38. The Court went to hold that the decision of the employer to terminate the services of the employees could not be said to have any element of public policy. The Court did not find any public element in the termination of the employees. We may at once notice that the Appellant in the said case was not a public sector unit as the Appellant in the present case. 39. In G. Bassi Reddy v. International Crops Research Institute and Anr. (2003) 4 SCC 225, the services of the Appellant came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Registrar of Trade Marks ((1998) 8 SCC 1).) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction. (Emphasis supplied) 42. We may also notice how this Court steered clear of the criticism that it was not following the principle laid down by this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. (1996) 6 SCC 22. The Court noted that the said case did involve a contract which contained an arbitration clause. It is found that in the case before it there was no arbitration clause. In regard to the question as to whether the first Respondent in the said case was discharging a public duty or public function was involved while repudiating the claim of the Appellants arising out of the contract, the Court drew support from the judgment in Kumari Shrilekha Vidyarthi (supra). 43. In Noble Resources Ltd. v. State of Orissa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esai that rise in international price would not by itself be a relevant consideration to rescind the contract may be correct, but then the same was not the sole ground for Respondent 2 to refuse to supply iron ore fines to the Appellant. 42. Moreover, certain serious disputed questions of fact have arisen for determination. Such disputed questions of fact ordinarily could not have been entertained by the High Court in exercise of its power of judicial review. 46. In the context of upgradation of aided schools and a complaint of discrimination, we notice the following observations of this Court in State Of Kerala and Ors. v. K. Prasad and Anr. (2007) 7 SCC 140. Para 11. This Court in Shrilekha Vidyarthi v. State of U.P. [(1991) 1 SCC 212 : 1991 SCC (L&S) 742] held that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 and basic to the Rule of law, the system which governs us, arbitrariness being the negation of the Rule of law. Non-arbitrariness, being a necessary concomitant of the Rule of law, it is imperative that all actions of every public functionary in whatever sphere must be guided by reason and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self or the record contemporaneously maintained. Application of mind is best demonstrated by disclosure of mind by the authority making the order. And disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons either in the order passed by the authority or in the record contemporaneously maintained is clearly suggestive of the order being arbitrary hence legally unsustainable. 48. We would, therefore, sum up as to when an act is to be treated as arbitrary. The court must carefully attend to the facts and the circumstances of the case. It should find out whether the impugned decision is based on any principle. If not, it may unerringly point to arbitrariness. If the act betrays caprice or the mere exhibition of the whim of the authority it would sufficiently bear the insignia of arbitrariness. In this regard supporting an order with a rationale which in the circumstances is found to be reasonable will go a long way to repel a challenge to state action. No doubt the reasons need not in every case be part of the order as such. If there is absence of good faith and the action is actuated with an oblique motive, it could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans of arbitration. 69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. 69.4. Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances. 70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under: 70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness. 70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discriminations. 70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions Under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary. 70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In State of U.P. v. Sudhir Kumar Singh and Ors. 2020 SCC Online 847, the first Respondent the successful tenderer had worked the contract for a year when he was visited with cancellation. This Court exhaustively referred to the earlier case law including ABL (supra) and Joshi Technology (supra) and held, inter alia, as follows: 23. It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a "public law element", as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India - see Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121 at paragraph 7. The present case is, therefore, a case which involves a "public law element" in that the Petitioner (Respondent No. 1 before us) who knocked at the doors of the writ court alleged breach of the audi alteram partem rule, as the entire proceedings leading t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in Sudhir Kumar Singh (supra). iii. The mere fact that relief is sought under a contract which is not statutory, will not entitle the Respondent-State in a case by itself to ward-off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary. iv. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into [See R.D. Shetty (supra)]. This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India (1994) 6 SCC 651. v. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a Writ Petition. vi. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the Fundamental Right of the Petitioner Under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible Rule in favour of the Court turning away the Petitioner to alternate Fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the Writ Court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL Limited (supra), if reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than relegating the matter to the alternate Forum. xiv. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the Writ Petition itself. xv. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. [See Sudhir Kumar Singh and Ors. (supra)]. WHETHER THERE IS AN ARBITRATION CLAUSE? 55. Before we proceed to deal further with the matter, we would have to first find whether there is any arbitration clause. We have already referred to the dispute resolution clause, namely, Article 13.2.1 and Article 13.2.3. They would appear to indicate that the clauses may not constitute an arbitration clause. As far as Article 13.3.1. is concerned, to which resort is to be made when the dispute remains unresolved under 13.2.3, it deals with disputes arising from a claim f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Article 2.5. It is this order which was challenged. Thereafter we find that the High court went on to notice that in a similar case, viz., relating to New Clean Energy Pvt. Ltd., the Petitioner therein admittedly commissioned the project within the time prescribed except that there was a delay of 16 days in achieving the first milestone. 57. Here we must understand the word 'first milestone' as fulfilment of the conditions subsequent. In regard to fulfilment of said milestone for which there was a delay of 16 days in the case of Renew clean Energy, there was a delay of 54 days in the case of the first Respondent. It is further noticed by the High Court that there was an order passed in favour of the Renew clean energy setting aside the termination of the contract in the said Petitioner's case as confirmed by this Court. Next the High Court went on to record that there is a dispute as to whether the Respondent had commissioned the power project in the present case. We notice that an attempt was made by the Appellant to justify the termination on the basis that the Respondent had not commissioned the power project within the time fixed. The High Court procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faced with unavoidable circumstances as also the factum of huge investment made in the project. 60. Having noticed the contents of the decision of the High court dated 20.06.2018 and also bearing in mind the terms of the notice of termination dated 11.08.2017 we are of the view that the High Court must be treated as having interfered with the order based no doubt on the order of the said court as affirmed by this Court in the case of Renew Clean Energy. Noticing, however, the contentions based on the aspect relating to project not being commissioned by the Respondent within time and further clearly finding that the impugned order was not premised on project not being commissioned the impugned order was set aside finding that the termination was not justified as regards to non-fulfilment of conditions subsequent. It is thereafter that the liberty was granted and it had to pass fresh order in terms of the PPA. We have to take the order as it is and we are of the firm view that the analysis of the order leads us to only one conclusion which is that the High Court intended to only leave open the right of the Appellant to invoke its power under the contract in regard to the issue rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a generating station is deemed to be commissioned. It is pointed out by letters dated 2.12.2015 and 3.11.2016 Respondent No. 5 requested Respondent No. 1 for compliance of the procedure/response. Mandatory documents were not submitted for injecting of Grid except registration. CEIG approval is only for renewable energy generation units and equipments installed in the Switchyard. Respondent No. 1 has not obtained CEIG approval of transmission line. The details of the interface meters, metering equipments are not mentioned in the report of CGIG. It is pointed out that other units including M/s. New Clean Energy was ready for evacuation of power with all regulatory requirements. 62. In the reply affidavit filed by the first Respondent to the said counter affidavit, it is complained that Respondent No. 5 though a party in the earlier writ petition as also in the present writ petition it never responded, objecting to the readiness of first Respondent in August 2017. The belated reply in the High Court is stated to seem as ill motivated and done at the instance of the Appellant. Furthermore, the first Respondent points out that it is not the case of the first Respondent that its project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Respondent has stated that, with regard to the single-line diagram indicating connectivity with the grid, that it was completed on 19.10.2016. An extension was sought for by Respondent No. 1, in which required diagrams were furnished to Respondent No. 4. Respondent No. 4, it is stated, has granted permission for charging the transmission line connected from the project to the STU. Diagrams were also, it is stated, approved by the CEIG. The answer of Respondent No. 5 in the Sur-Rejoinder that the letter dated 29.08.2017 was not issued by Respondent No. 5 but by Respondent No. 4. It is admitted that it is stated therein that the line is ready for charging but further necessary action, like issuing of charging code, has to be taken from Respondent No. 5 by Respondent No. 1. It is again stated that Respondent No. 1 has never approached Respondent No. 5 with copy of letter dated 29.08.2017 and CEIG approval for readiness of evacuating line. It is again stated that Respondent No. 5 is not an arm or even unit of Respondent No. 4. In regard to the contention that information regarding sale of power for access, including long-term access, was not made available by the first Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 in the Sur-Rejoinder would state that it is misleading and incorrect on the basis that it has been averred by Respondent No. 1 that the approval of the CEIG for readiness of 132KV double circuit line for connection with the grid was submitted by the sister concern of Respondent No. 1, while requesting code for charging the 132KV line for the sister concern. It is stated that in the approval issued on 10.08.2017, there is no mention that the second line will be utilised by Respondent No. 1. The letter of the CEIG dated 10.08.2017 is said to be addressed to the sister concern. There was to be a specific approval of CEIG in favour of Respondent No. 1. Copy was not marked to Respondent No. 5 but only marked to Respondent No. 4. It again reiterated that they are two different entities. 67. It appears to us that though letter dated 10.08.2017 is addressed to the sister concern of Respondent No. 1, viz., Sky Power Solar India Pvt. Ltd., what was the subject matter of the communication was for 100MW solar power project, and what is more, and it was for the establishment of 132KV 'dual' circuit transmission. This understanding of this CEIG Report is clear from the Joint Inspecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the fourth Respondent. We are a little mystified by the statement that the PTCC approval should be one issued with the knowledge and concurrence of the fifth Respondent. 70. It is, no doubt, true that as regards the contention of the fifth Respondent that there must be interface metering and communication of the meter data through automatic meter reading (AMR), which details are to be provided to the SLDC before the commissioning of the plant, there is no specific averment by the first Respondent. Here we must notice that it is for the first time such a plea is being raised by the fifth Respondent. Even proceeding on the basis that it was a requirement; it is required to be provided before commissioning. This is not a matter, which could not be set right at any rate, if an opportunity to remove a defect was provided, as we shall see, may be contemplated Under Article 9.1. It is also true that as far as the data and speech communication facility, the first Respondent has claimed that it was completed on 23.03.2017. We have already referred to it also. The stand of the fifth Respondent is that there is approval but it is only in principle. It is complained that till date, the tel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f power into the Grid. Further, SLDC schedules power of generator to the beneficiary/consumer if the valid Power Purchase Agreement exists between buyer and seller. 4. That, writ proceeding in the instant petition is regarding completion of commissioning of solar Generating Plant of M/s. Sky Power Southeast Solar India Pvt. Ltd., whereas the responsibility of SLDC begins after commissioning of the Solar Generating Plant and other regulatory compliances. As per provisions of Electricity Act, 2003 and MPEGC, commissioning certification is beyond the jurisdiction of SLDC. 6. That, the answering Respondent is more of a formal Respondent as the agreement was entered into between MPPMCL and the Original Petitioner in Writ Proceedings which is M/s. Sky Power. 74. No doubt, it has also stated in paragraph-7 that it adopts all the facts and grounds raised by the review Petitioner, namely, the Appellant. 75. It will be noticed that though Respondent No. 5 was a party to the earlier writ petition as much as it is a party in the present writ petition, Respondent No. 5 has not filed any counter affidavit in either of the writ petitions. It is only in the review petition that the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsmission Utility, it would be the Body to operate the fifth Respondent. The attempted disassociating of the fifth Respondent from the fourth Respondent, appears to us to be without justification. However, we leave the matter there. We may conclude nearly that all the requirements were met. There remained the metering requests and the aspects about furnishing data. They clearly appear to be matters which could have been remedied at any rate if a default notice was given. THE NARRATIVE RESUMES 78. At this juncture, we must make certain observations. While the law has evolved from the hands-off approach to one of contracts lending ground for writ courts making a foray into decisions by State and its instrumentalities even in contractual matter, there are certain principles which we have already in fact generally noticed. We have already found that the contract in question, i.e., the PPA, is not a statutory contract. We have also noticed that even if it is a non-statutory contract, there is no absolute bar in dealing with a cause of action based on acts or omission by the State or its instrumentalities even during the course of the working of a contract. We again reiterate that a mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be overwhelming public interest in favour of the writ applicant for the writ court to interfere. THE ARGUMENT OF 'OVERWHELMING PUBLIC INTEREST' 80. The case based on 'overwhelming public interest not being present in this case is based on the following submissions by the learned Additional Solicitor General. It is pointed out that under the PPA, if the Appellants are compelled to comply with the impugned judgment and that too for a period of twenty-five years, it would be liable to purchase power at the rate of Rs. 5.109/- unit. On the other hand, if the Writ Petition filed by the first Respondent is dismissed, there would be no obligation and consequent burden. It is important to notice that the Appellant would be compelled to pass on the burden to the ultimate consumers. All of this is to be viewed in the scenario, when power is available at a cheaper rate in the market. In other words, public interest lies not in favour of exercise of jurisdiction Under Article 226 of the Constitution of India. The High Court erred in not bearing in mind this fundamental principle the argument runs. The Appellant relied on the decision in All India Power Engineer Federation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is spoken of in the realm of contract, Section 63 of the Contract Act, 1872 governs. But it is important to note that waiver is an intentional relinquishment of a known right, and that, therefore, unless there is a clear intention to relinquish a right that is fully known to a party, a party cannot be said to waive it. But the matter does not end here. It is also clear that if any element of public interest is involved and a waiver takes place by one of the parties to an agreement, such waiver will not be given effect to if it is contrary to such public interest. This is clear from a reading of the following authorities. xxx xxx xxx 25. It is thus clear that if there is any element of public interest involved, the court steps in to thwart any waiver which may be contrary to such public interest. 83. In the said case, the Court further held that the moment the electricity tariff gets affected, the consumer interest comes in and public interest gets affected and further that there is a statutory recognition for the same in Sections 61 to 63 of the Electricity Act, 2003. Therefore, this Judgment, though in the context of a Statutory Appeal, has laid down that consumer interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est involved even in such a commercial transaction. 10. The elements of public interest are: (1) Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work -- thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g., a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation. 11. When a writ petition is filed in the High Court challenging the award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The fact that power has become cheaper in the market subsequently by itself should not result in non-suiting of the complaint of the first Respondent, if it is found that a case of clear arbitrariness has been established by the first Respondent. 89. In other words, public interest cannot also be conflated with an evaluation of the monetary gain or loss alone. POINTS NO. 6 - 8 AND 10 90. The time is now ripe to take a closer look at the relevant clauses of the PPA. Article 2 deals with the pre commissioning activities. Article 2.1 deals with satisfaction of the conditions subsequent by the Respondent. Clause 2.1.1 contemplates that the Respondent must complete all the conditions which are set out at his own cost and risk within 210 days from the effective date. The only two exceptions were 'force majeure' or if any of the conditions subsequent was specifically waived by the Appellant in writing. The consequences of non-fulfilling the condition subsequent is dealt with in Article 2.2 which related to force majeure obstructing the fulfilment of the conditions subsequent. Article 2.2.2 in fact provided that any increase in the time period for completion of the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 25 month from the COD. 92. There are other Articles which need not detain us. Article 3 deals with Supply Arrangements under Open Access. Article 3.1.1 reads as under: 3.1.1. The power generated through 50 MW Solar Power Project (PY/Thermal Technology) installed by the Seller Located at Village Bedhaya, Tai: Khandwa, Dist: Khandwa, State: Madhya Pradesh shall be injected into the Transmission/Distribution system of Transco/Discom on 33kV or above side of 33kV/EHV Substation situated at Deshgaon at injection point for sale to MPPMCL, subject to fulfilling the terms and conditions and protection schemes by the Seller as approved by the concerned Transco/Discom's. 3.1.2. The Seller shall ensure to interconnect and operate the solar power plant in parallel with the grid of Transco/Discom (in the area of the location of the generating unit) system subject to the terms and provisions of this agreement. The Seller shall be fully responsible for obtaining and maintaining any or all licenses and permissions required by law. The Seller shall abide by any law, rules, Regulations or any notification or order issued there under by the Central Govt. or State Govt. or Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it(s) of the power project whereupon the seller starts injecting power from full contracted capacity of the power project to the delivery point as approved by competent authority of the TRANSCO/DISCOM. DISCOM has been defined as a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in the State of Madhya Pradesh. Article 5.1 reads as under: 5.1. COMMERCIAL OPERATIONS DATE The Commercial Operation Date of the plant shall mean the commissioning date of last unit (s) of the power project where upon the seller starts injecting power from contracted capacity of the power project to the delivery point as approved by competent authority of the Transco/discom. After Each part commissioning and/por CoD of the contracted capacity, the commissioning certificate (s) certified by Transco/Discom shall be attached as Annexure- XII to the Power Purchase Agreement However part commissioning of the plant shall be accepted as laid out in Clause 2.6 and the energy supplied from the same shall be considered for billing and payment of the energy supplied from such commissioned units. 95. Article 5.2. deals with Pre-Commercial Operations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Seller in this regard. The Respondent was duty bound to notify to the Appellant that the plant is constructed as per PPA and it was ready to produce solar power and that all permissions and approvals to sell power at the rates and terms under the agreement had been obtained and all inter connection facilities were available to receive solar power from the plant. The PPA further contemplates that the said notice would take effect and the COD be achieved upon the TRANSCO/DISCOM declaring that all conditions in this Article were either fulfilled or waived. The PPA further deals with Sale and Purchase of Solar Power in Article 6 commencing at COD date. The seller, that is, the Respondent was to sell and the Appellant was to purchase and accept 50MW solar power at the point of delivery. The Respondent undertook not to sell any solar power (all of which is committed to the Appellant) to any other person. Article 7 deals with Metering and Measuring. Article 8 deals with Billing and Power Accounting. Article 9 deals with Events of Default and Remedies. Article 9.1 is relevant and it deals as follows: 9.1. DEFAULTS AND TERMINATION. In case of default, the non-defaulting party shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and counter-claim. 13.2.3. Within thirty (30) days of issue of Dispute Notice by any Party pursuant to Article 13.2.1 if the other Party does - not furnish any counter claim or defence Under Article 13.2.2 or thirty (30) days from the date of furnishing counter claims or defence by the other Party, both the Parties to the Dispute shall meet to settle such Dispute amicably. If the Parties fail to resolve the Dispute amicably within thirty (30) days from the later of the dates mentioned in this Article, the Dispute shall be referred for dispute resolution in accordance with Article 13.3. 99. Article 12.2 reads as follows: 12.2 GRID CODE DISCIPLINE The concerned Transco/Discom and the Seller shall observe the State/Indian Electricity Grid Code or its amendment if any, and operate their systems to the best of their capacity and resources. 100. Article 13.3.1 reads as follows: 13.3.1. Where any Dispute arising from a claim made by any Party for any matter related to Tariff or claims made by any Party which partly or wholly relate to any change in the Tariff or determination of any of such claims could result in change in the Tariff, shall be submitted to adjudication by the MP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it was the Appellants case that the Respondent had not complied with the PPA in regard to the installing of the required number of invertors. The first Respondent took the stand that the all the serial number of the invertors were quite legible though the contrary was contended. The CEIG reported the physical readiness of the project for commissioning. The Respondent also drew upon the inspection report of the Appellant itself. The High Court bearing in mind the limited jurisdiction dismissed the review. 103. In the impugned Termination Notice dated 07.07.2018, after referring to the delay of 54 days in fulfilling condition subsequent, it is mentioned that the commercial operation date, as per Article 2.6, was 14.04.2017. It was indicated that there was no indication regarding commissioning against the column 'readiness of plant' as on 11.08.2017. The last date for commencement of supply was shown as 18.09.2017. The expiry date of three months period for commencement of supply from the last due date was 18.12.2017. It is further provided that the expiry date of seven days of PPA Termination Notice period was 25.12.2017. The status of the project as on 19.04.2018 was ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing letter to Respondent No. 4, it issued notice for commissioning by 31.07.2017, in terms of Article 5.1(c) of the PPA. Site inspection by the Appellant was solicited through its EPC. The Respondent obtained approval from the CEIG for commissioning on 09.08.2017. The CEIG certified that all infrastructure and installation pertaining to the project were ready and the Respondent may proceed with the commissioning activities. CEIG approval is requirement Under Article 5.3(a). However, the Appellant proceeded to terminate the PPA by Order dated 07.07.2018. Thus, it is stated that the Appellant, for reasons best known to it, chose to ignore the first Respondent's request for proceeding with the commissioning of the project. The Respondent also obtained in principle connectivity for the project from the Appellant. It is the specific case of the Respondent that prior to 11.08.2017, first Respondent had received intimation from its EPC Contractor that the project was ready for commissioning barring minor works pending completion such as construction of shed/cubical for the Guard which would have no bearing on the project commissioning. The Respondent pointed out that the Appellant wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is was unsuccessfully canvassed before the High Court in the Review Petition. In other words, the case sought to be set up by the Appellant is that as many as 272 string invertors were bearing duplicate numbers and, therefore, it was being held out by the first Respondent that it had performed its contractual obligation, when it was not the case. As far as the delay of 53 days in fulfilling the conditions subsequent is concerned, there is no dispute that there was such a delay. Though, an attempt was made by the first Respondent to contend that in view of the amendment substituting one of the conditions subsequent, viz., the condition relating to land and, therefore, there would be further extension of time. We do not think that we can allow the first Respondent to set up such a plea. However, we have already concluded that the issue as to the right or power of the Appellant to terminate the PPA on account of the delay of 53 days, may not be open to the Appellant, in view of the judgment of the High Court. 107. The learned Senior Counsel for the first Respondent, Dr. A.M. Singhvi, would, in fact, contend that this Court may proceed on the basis that actually there is a disputed qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g default on the part of the first Respondent, had taken place. Continuing with the analysis of Article 9.1, what was expected of the Appellant was, as the non-defaulting party, to issue a default notice to the defaulting party, viz., the seller, which in this case is the first Respondent. Article 9.1 further clearly contemplates that if the default is not fully set right within three months from the date of issue of the default notice, then, in the case of default by the seller, the Appellant was to serve a seven days' notice of termination. The notice was, undoubtedly, to be in writing. It is by the second notice, which is to be of the duration of seven days that the Appellant could validly terminate the agreement. Thus, PPA clearly indicates the issuance of a default notice when seller commits an act of default. Without issuing the first default notice, giving three months' time from the date of issue of the notice, the second notice, which would be a notice of termination, cannot be issued. 109. Now, let us find whether the Appellant has followed this procedure. In the impugned termination notice dated 07.07.2018, what is indicated in a Table in paragraph-9 is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of the PPA, plus three months default notice period, plus seven days termination notice period, had been already exhausted. In paragraph-22, support is sought to be drawn from the show-cause notice dated '22.02.2017' and the liberty granted by the High Court in the first Writ Petition, for issuing a fresh Order. The PPA, it was found by the Appellant, qualified for termination. In paragraph-23, it is explicitly stated that based on Article 2.1.1(d) along with the timeline stipulated in Article 9.1 and the show-cause notice dated 22.02.2017, the PPA was terminated. 111. Therefore, the show-cause notice dated 22.02.2017 is what the Appellant lays store by to conclude that it was acting in compliance with the requirement of issuance of the default notice Under Article 9.1. It, therefore, becomes necessary to advert to the notice dated 22.02.2017. We may extract the following: MP POWER MANAGEMENT COMPANY LIMITED CIN: U4010MP2006SGC018637 (A Govt. of M.P. UNDERTAKING) Regd. Office: Shakti Bhawan, Rampur, Jabalpur, Madhya Pradesh, India-482008, Tel: 0761-2661111;- 2660500, Fax: 0761- 261696, website:www.mppmcl.com, email: [email protected], No. 05-01/Solar Bidding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of seller and possession of 100% of the area of the land required for the allotted project. * Requisite documents from the concerned and competent revenue registered authority for the acquisition ownership vesting of the land in the name of the seller and in case of private land clear title for ownership and/or registered lease deed for land taken on lease. As can be seen from the above table you have submitted clear title for ownership for only 64.94 hectare land. Whereas for 34.12 hectare land you have submitted unregistered lease deed for only 12 months, which cannot be considered for fulfilment of condition subsequent as per provisions of the PPA as mentioned above. Further, as per provision of Clause 2.5.1 (d) of the PPA, referred PPA is liable for termination. Therefore, you are requested to submit your explanation/justifications, if any, within 10 days from the issue of this letter, for further - necessary action in the matter. Chief General Manager Commercial MPPMCL, Jabalpur 112. A perusal of this notice, would reveal the following: The subject matter of the said notice appears to be the fulfilment of condition subsequent. It is clearly mentioned that as per A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. Still further, we notice from the tenor of the notice dated 22.02.2017 that the first Respondent was, in fact, asked to give its justification within ten days from the date of issue of the notice for necessary action in the matter. This is totally incompatible with the notice contemplated as a default notice within the meaning of Article 9.1. Article 9.1 contemplates the existence of a default by the seller and the giving of a period of three months to the seller to remove the defect. We are unable to understand how notice dated 22.02.2017 could be understood as affording any such opportunity as is contemplated Under Article 9.1. Therefore, we have no hesitation in holding that the Appellant cannot seek shelter under notice dated 22.02.2017 to justify the notice of termination dated 07.07.2018, if reliance is to be placed on Article 9.1 read with Article 9.4 (a). We have already found that the Appellant cannot be permitted to reopen the issue relating to the non-fulfilment of the conditions subsequent, as the issue has attained finality by virtue of the judgment of the High Court dated 20.06.2018. 113. Appellant has attempted to justify the notice dated 22.02.2017 as the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Article 9.1, came to an end automatically, on 18.12.2017 and things had not changed on the ground, entitling it to issue the notice dated 07.07.2018, after the further expiry of seven days on 25.12.2017. The Appellant, in this regard, appears to have laboured under the apprehension that the mere expiry of the period of three months, after the occurring of the event of seller default, within the meaning of Article 9.4 (a) and the further expiry of another seven days, entitled it to issue the notice of termination. What, on the other hand, Article 9.1 read with Article 9.4 (a) contemplated was not the mere running of time for a period of three months, after the occurrence of the seller's event of default but an opportunity to the seller by the giving of a notice of default and waiting for three months. It is only after the seller was put on notice of the default, which it had committed and an opportunity was granted to remove fully the default and it persevered in breach, that a valid Order of termination could be passed. On this reasoning, there can be no dispute that the Appellant has clearly failed to act in terms of the clear mandate of Article 9.1 read with Article 9.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20) SCConline SC 847 has, inter alia, held: 23. It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a "public law element", as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India -see Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121 at paragraph 7. The present case is, therefore, a case which involves a "public law element" in that the Petitioner (Respondent No. 1 before us) who knocked at the doors of the writ court alleged breach of the audi alteram partem rule, as the entire proceedings leading to cancellation of the tender, together with the cancellation itself, were done on an ex parte appraisal of the facts behind his back. No doubt, it related to a case of cancellation of the tender after the tenderer had worked thereunder for over a year and based on two ex parte enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as follows: Ref No. SKP-2/MP/SOLAR/COMM/2017-18/026 Date: 04-07-2017 To The Chief Engineer (Planning & Design) MP Power Transmission Company Limited, Shakti Bhawan, Rampur, Jabalpur - 482008, Madhya Pradesh. Subject: Notice to Commission on the 50 MW Solar Power Project of Sky Power Southeast Solar India Private Limited located at Village Chirbel, District Khandwa ("Project"), and Evacuation of Power from the Project to the 400 KV Chhegaon Substation. Reference: Power Purchase Agreement dated September 18, 2015 between Southeast Solar India Private Limited and MP Power Management Company Limited ("PPA"). Dear Sir, As per above cited subject matter and reference, we hereby intimate you of our intention to commission the project by 31st July, 2017 ("Proposed Commissioning Date"). By the Proposed Commissioning Date, we are likely to procure and obtain all permissions and approvals required for the Plant and fulfil and obligations specified in Article 5.3 read with Annexure XII of the PPA. In relating to the commissioning of the Project by the Proposed Commissioning Date, we would like to apprise you of the progress made by use in relation to completion of so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l solar power at the rates and terms had been obtained. Still further, all interconnection facilities were available to receive solar power. Notice is to take effect, however, only when the TRANSCO/DISCOM declares that all the conditions in Article 5.3 stood satisfied (or waived by it), inter alia, i.e., that the seller had successfully completed the testing of the plant in accordance with the manufacturer's recommendations and the seller had obtained and provided from the Electrical Inspectorate of the Government of Madhya Pradesh or other authorised agency, a certificate and the seller had delivered a list of the equipments with details. The further condition is that the plant had achieved initial synchronisation with the Appellant and had demonstrated reliability of its communication system, inter alia, that the seller had operated the plant without experiencing any abnormal or any unsafe operating condition on any interconnected system. The seller was also to notify the Appellant within no later than 30 days prior to the commercial operations date, that the conditions, as laid down in Article 1.01 have been met. 119. However, the first Respondent in the letter dated 04.07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... things fully. Thereafter, Article 9.1 provides that in case of the default by the seller not being removed fully, apparently, the Appellant by giving seven days termination notice 'may' terminate the agreement. The choice of the word 'may' importing discretion in Article 9.1 is in stark contrast with Article 2.5.1(d). 122. Apparently, it was so drafted so that in an event like in a seller event of default Under Article 9.4 (a), i.e., failure by the seller to supply power within 24 months, bearing in mind the nature of project and the stakes involved for both the Appellant and the seller, there may be cases where the seller may wish to grant more time so that a project which has progressed to a state of near completion may not be aborted by the termination and grant of time would, on the other hand, witness the full blossoming of the project. 123. It would appear that the Appellant did not carry out any inspection. The inspection carried out by the CEIG in first week of August, 2017 was an inspection conducted by the five-member team and it is further claimed that this inspection lasted for 3-4 days beginning from 01.08.2017. The CEIG has certified that the projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s demobilisation of manpower, certain string inverters were stolen, the cost of which is stated to be Rs. 172000 per string inverter. Based on safety concerns, the equipment was, according to the first Respondent, removed and kept in safe custody. The first Respondent has laid store by two first information reports lodged. The first FIR was lodged on 12.09.2017 and another FIR was lodged on 04.03.2018 relating to the theft of certain equipments. This is a case where the first Respondent has alleged that it has already invested Rs. 331 crores. 126. We will proceed on the basis that there was a CEIG Report dated 09.08.2017 certifying that the project of the first Respondent was complete. This is well before 18.09.2017, which was the date by which the commissioning had to be done. It is also clear that the commissioning, as such, was not completed. Still further, if we go by the CEIG Report, the case of the first Respondent of it being on the verge of commissioning could not be brushed aside as wanting in bonafides or merit. Still further, there is a case of the Appellant that the inspection carried out on 19.04.2018, resulting in Report dated 21.04.2018, revealed certain deficiencie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any justification would make its actions arbitrary. 127. The other aspect projected by the Appellant is what was projected in the Review Petition filed before the High Court. It was contended essentially as follows: The first Respondent had committed a fraud on the Office of the Chief Electrical Inspector, the Appellant and on the Court. It was alleged that the project was divided into 10 blocks of 5MW each and each Block of 5MW would have 116/117 Inverters approximately. Each of the Inverter was to have a unique distinctive serial number. Each inverter was to have 43KV rating, as indicated in the CEIG Report. The fraud consisted of a discovery by the Appellant on an alleged 'detailed' analysis of the serial numbers of the inverters, that in each Block, there were several Inverters having numbers which were common/duplicate and interchangeably used in the same or other blocks. It was alleged that for about 186 Invertors serial numbers were commonly, duplicably and interchangeably used. Some of the inverter numbers were not legible. Therefore, it was alleged that there was lack of due diligence by the authorised personnel of the CEIG. 128. In this regard, the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of the CEIG. A physical inspection by the CEIG, which was necessitated in terms of the original Judgment, at any rate, for revalidation of the Report was and is necessary and inevitable even if the appeals fail. The first Respondent had alerted the CEIG for the need for a re-inspection for ascertaining the aspect relating to duplication in numbers. It would appear that such inspection has not been carried out. In this regard, it is important to notice that the Appellant carried out an inspection on 19.04.2018 and it had not found out any such discrepancy as it has not projected in regard to the aspect of common numbers or illegibility of numbers, in the inverters, in its Report dated 21.04.2018. At any rate, the PPA clearly provided for the issuance of a default notice, providing an opportunity to remove the defect. This obligation has been observed in its breach. 129. Therefore, we would find that an inspection by the CEIG would necessarily have to be carried out in which the Appellant would have to be involved to facilitate the exercise. In the facts of this case, on being satisfied, the CEIG would necessarily have to grant the re-validation of the earlier Report. It would ..... 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