APTEL Upholds Delay Penalty But Cancels Tariff Cut In Maharashtra 50 MW Solar Project

The Appellate Tribunal for Electricity (APTEL) partly allowed an appeal filed by M/s Talettutayi Solar Projects Four Private Ltd. related to its 50 MW solar power project in Maharashtra. The case dealt with delays in commissioning the project and the financial consequences imposed by the Solar Energy Corporation of India (SECI).

The developer had signed a Power Purchase Agreement with SECI in April 2016 for setting up the solar project. As per the agreement, the Scheduled Commissioning Date was May 10, 2017. However, the project was commissioned on August 10, 2017, leading to a delay of around three months. SECI treated this delay as a breach of contract and imposed penalties, including encashment of performance bank guarantees and a reduction in tariff.

The developer argued that the delay was due to reasons beyond its control. These included delays in approvals from state agencies such as Maharashtra State Electricity Transmission Company Limited, the impact of demonetization in 2016 on project execution, and SECI’s delay in signing the Power Sale Agreement with Maharashtra State Electricity Distribution Company Limited. Based on these factors, the developer requested an extension of the commissioning deadline without any penalty.

Earlier, the Central Electricity Regulatory Commission had rejected these claims. CERC allowed SECI to encash bank guarantees worth ₹15 crore as liquidated damages and also ordered a downward revision of the project tariff. The developer then challenged this order before APTEL.

After reviewing the matter, APTEL upheld the levy of liquidated damages. The Tribunal stated that under the PPA, it was the responsibility of the developer to obtain all required approvals and clearances at its own risk. APTEL also pointed out that the developer had not issued a formal Force Majeure notice as required under the agreement. Since serving such a notice was mandatory for claiming relief, the Tribunal ruled that the developer could not avoid the penalty.

However, APTEL ruled in favor of the developer on the issue of tariff reduction. The Tribunal noted that the PPA allowed tariff reduction only if the project was commissioned more than three months after the scheduled date. CERC had considered the commissioning date as August 11, 2017, which crossed the three-month limit by one day. APTEL examined evidence, including a certificate issued by the Maharashtra Energy Development Agency, which confirmed that the project was commissioned on August 10, 2017.

As the commissioning took place within the allowed three-month period, APTEL set aside the order for tariff reduction. The Tribunal concluded that while the developer must bear liquidated damages for the delay, it is entitled to receive power purchase payments at the original agreed tariff.