TMI Blog2021 (5) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to a Calendar month as per the Gregorian Calendar. 1.2.1(l) provides that references to any date or period shall mean and include such date, period as may be extended pursuant to the agreement. As per Article 1.2.1(m), any reference to any period commencing from a specified date and until the specified day shall include both such day or dates. The conclusion of the Commission is not agreed upon that the definition of month is with reference only to one month and not more which is wrong a reading of the provision. The Commission applied 1.2.1(m) which refers to a period commencing from a specified date to a specified day for the purpose of including the date of the event. The Commission has committed an error in applying 1.2.1(m) when the provision that is applicable is 1.2.1(k) read with the definition of month in Article 21.1. There is a specific mention of 'twelve months' in the definition of 'SCOD' and Article 1.2.1(k) categorically provides that any reference to a 'Month' shall be a calendar month. Applicability of Article 1.2.1(k) excludes the operation of Article 1.2.1(m) to the facts of this case. The next contention of the Appellant is that actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Appeal 9274 of 2019 is a special purpose vehicle for setting up a 20 MWA (AC) capacity Solar PV ground mount Project in Bagepalli Taluk, Chikkaballapura. (c) The Projects were awarded to the Respondents on 31.03.2016. Power Purchase Agreements (PPAs) were entered into between the parties on 23.05.2016. The Power Purchase Agreements were approved by Karnataka Electricity Regulatory Commission (KERC) on 17.10.2016. Supplementary Power Purchase Agreements were entered into between the parties on 17.12.2016 incorporating the modifications suggested by the Karnataka Electricity Regulatory Commission on 07.12.2016. (d) In respect of the Bidar Project, a Commissioning Certificate was issued on 25.10.2017 by KPTCL on the basis of minutes of meeting that was held on 16.10.2017. The Commissioning Certificate for Bagpalli Project was also issued on 23.11.2017. 3. Original Petition (OP) No. 18 of 2018 was filed by the Respondents in Civil Appeal 9274 of 2019 aggrieved by the reduction of the tariff payable by Appellant No. 1 from Rs. 6.10/kWh to Rs. 4.36/kWh and imposition of damages of Rs. 20,00,000/- (Rupees Twenty Lakhs only) for delay in commissioning the plant. 4. Apart from others, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The Appellate Tribunal framed the following point for consideration: Whether the Project of the Appellants was delayed by one day in terms of Power Purchase Agreement and whether the Commission was justified in imposing liquidated damages on the Appellant for such delay in commissioning the Project. 9. The Appellate Tribunal held that the Commissioning Date of both the Solar Plants according to KPTCL is 16.10.2017. According to the Tribunal, synchronization took place prior to the commissioning of the Plant. The Tribunal was also of the view that the Scheduled date of Commissioning was done within the time limit prescribed under the agreements even if the commencement of the Solar Plants is taken as 17.10.2017. The Appellate Tribunal for electricity allowed the Appeals filed by the Respondents and set aside the orders passed by the Karnataka Electricity Regulatory Commission. The Appellant has challenged the said judgment of the Appellate Tribunal for Electricity in these Appeals. 10. We have heard Mr. Tushar Mehta, the learned Solicitor General and Mr. Balaji Srinivasan for the Appellant and Mr. Basava Prabhu Patil, learned Senior Advocate for the Respondents. The learned Solic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which day the Plants were commissioned. Computation of twelve months from 16.10.2017, in that case, cannot be detrimental to the Respondents. He emphasized that commissioning of the Plant is different from Commercial Operation date. He requested this Court not to interfere with the judgment of the Appellate Tribunal as the Respondents have entered into an agreement on the basis of the offer made by the Appellant to pay tariff at Rs. 6.10/kWh. Any reduction of tariff would sound a death knell to the Solar Plants which are going through difficult times. 13. Before we proceed further, it is necessary to have an overview of the PPA entered into between the parties on 23.05.2016. Development of 1200 MWA of Solar Power in 60 Districts through private sector participation was a decision taken by the State Government for improving the power infrastructure in the State. Karnataka Renewable Energy Development Ltd. was appointed as a Nodal agency for facilitating the development of renewable energy in the State. The offer made by the Respondents for setting up two Solar PV ground mount Projects was accepted pursuant to which an agreement was entered into. The relevant provisions of the PPA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total Performance Security. In addition to the 20% deducted above. c. For the delay of more than two and upto three months an amount equivalent to 40% of the Performance Security in addition to the 20%+40% deducted above. For avoidance of doubt, in the event of failure to pay the above-mentioned damages by the Developer entitles BESCOM to encash the Performance Security. 5.8.2. In case the Developer delays the achievement of Commercial Operation Date beyond 3 (three) months, the Developer shall pay to BESCOM, the Liquidated Damages at rate of INR 50,000/- (Rupees Fifty Thousand only) per MW per day of delay for the delay in such commissioning. Provided that the Developer shall be required to make such payments to BESCOM in advance on a week to week basis for the period of delay. 5.8.3. The maximum time period allowed for achievement of Commercial Operation Date with payment of Liquidated Damages shall be limited to 22 (twenty two) months from the Effective Date. In case, the achievement of COD is delayed beyond 22 (twenty two) months from the Effective Date, it. shall be considered as an Developer's Event of Default and provisions of Article 16 shall apply and the Power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from (and excluding) the date of the event, where applicable, else a calendar month. Scheduled Commissioning Date shall mean 12 (twelve) months from the Effective Date. 14. The dispute in these Appeals is whether the Respondents did not commission the Solar Projects before the expiry of 12 months from 17.10.2016 which is the date of approval of PPA by KERC. The conflicting views of the parties relate to the computation of 12 months for the purpose of determining whether the Scheduled Commissioning Date is 16.10.2017 or 17.10.2017. According to the Appellants, SCOD is 17.10.2017 and on the other hand the Respondents contend that it is 16.10.2017. The other issue that falls for consideration is whether injection of power is a pre-requisite for deciding the Date of Commissioning of the Projects and whether the 'Commercial Operation Date' and 'Commissioning Date' are one and the same. 15. Before embarking on the exercise of interpretation of the agreement it is necessary to take stock of the well-settled canons of construction of contracts. Lord Hofmann in Investors Compensation Scheme Limited v. West Bromwich Building Society 1998 (1) AIR 98 summarized the broad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera SA v. Salen Rederierna [1985] 1 AC 191, 201: ... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense. 16. The duty of the Court is not to delve deep into the intricacies of human mind to explore the undisclosed intention, but only to take the meaning of words used i.e. to say expressed intentions (Smt. Kamala Devi v. Seth Takhatmal and Anr. 1964 (2) SCR 152). In seeking to construe a Clause in a Contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is driven to the conclusion that Clause is ambiguous, and that it has two possible meanings. In those circumstances, the Court has to prefer one above the other in accordance with the settled principles. If one meaning is more in accord with what the Court considers to the underlined purpose an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that Article 1.2.1(k) of the PPA is relevant. The Tribunal held that the date of the event which is the date on which the PPA was approved i.e. 17.10.2016 shall be excluded in calculating the period of 12 months. 20. Reduction of applicable tariff is permissible Under Article 12.2 of the PPA only when there is delay in commissioning of the Project beyond the Scheduled Commissioning Date. As discussed above, there is no dispute that the Scheduled Commissioning date shall be 12 months from the effective date. There is no quarrel between the parties that the effective date is 17.10.2016. The interpretation Clause contains three provisions which are 1.2.1(k), 1.2.1(l) and 1.2.1(m). According to 1.2.1(k), any reference to a month shall mean a reference to a Calendar month as per the Gregorian Calendar. 1.2.1(l) provides that references to any date or period shall mean and include such date, period as may be extended pursuant to the agreement. As per Article 1.2.1(m), any reference to any period commencing from a specified date and until the specified day shall include both such day or dates. The other crucial provision which has to be taken note of is the definition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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