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Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

29Sep

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Supreme Court

Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

The Supreme Court held that the Power Purchase Agreement's explicit terms govern the parties' rights. The encashment of the performance bank guarantee was valid as the developer failed to seek an extension under the contractual mechanism or issue a mandatory Force Majeure notice. Regulatory commissions cannot rewrite the contractual risk allocation or grant remedies outside the agreed framework. Facts Of The Case: The dispute arose from a Power Purchase Agreement (PPA) executed between Chamundeshwari Electricity Supply Company Ltd. (CESC) and Saisudhir Energy Pvt. Ltd. for a 10 MW solar power project. The PPA stipulated that the developer was to achieve the Commercial Operation Date (COD) within 12 months, preceded by fulfilling certain Conditions Precedent within 240 days. A critical pr...

What Qualifies as ‘Goods’? Supreme Court Explains Why a Power Plant Isn’t Eligible for Export Benefits

The Supreme Court held that a press release announcing a policy change does not constitute a "Change in Law" under a Power Purchase Agreement, as only duly promulgated notifications have legal force. It further ruled that deemed export benefits under the Foreign Trade Policy are inapplicable to immovable, integrated power plants, as the policy is designed for movable "goods" and requires strict adherence to defined supply and procurement conditions. Facts Of The Case: The case involved appeals by Nabha Power Limited and Talwandi Sabo Power Limited against the Punjab State Power Corporation Limited (PSPCL). The dispute arose from a Power Purchase Agreement (PPA) executed following a tariff-based competitive bidding process. The appellants claimed that post-bid notifications from the...

Supreme Court Empowers Pollution Boards to Levy Environmental Damages

The Supreme Court held that Pollution Control Boards can impose restitutionary and compensatory damages, including ex-ante bank guarantees, under Sections 33A and 31A of the Water and Air Acts. This power is distinct from punitive penalties and is grounded in the 'Polluter Pays' principle to remediate environmental damage. Facts Of The Case: The Delhi Pollution Control Committee (DPCC) issued show cause notices in 2006 to multiple entities, including residential and commercial complexes, for operating without the mandatory "consent to establish" and "consent to operate" under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981. As a condition for granting consent, the DPCC demanded the payment of fixed sums a...