Tuesday 11 May 2021

Golden rules for interpretation of Commercial contracts

 Before embarking on the exercise of interpretation of

the agreement it is necessary to take stock of the wellsettled

canons of construction of contracts. Lord Hoffmann in

Investors Compensation Scheme Limited vs. West

Bromwich Building Society1 summarized the broad

principles of interpretation of contract as follows:


(1) Interpretation is the ascertainment of the meaning which

the document would convey to a reasonable person having

all the background knowledge which would reasonably have

been available to the parties in the situation in which they

were at the time of the contract.

(2) The background was famously referred to by Lord

Wilberforce as the "matrix of fact," but this phrase is, if

anything, an understated description of what the

background may include. Subject to the requirement that it

should have been reasonably available to the parties and to

the exception to be mentioned next, it includes absolutely

anything which would have affected the way in which the

language of the document would have been understood by a

reasonable man.

(3) The law excludes from the admissible background the

previous negotiations of the parties and their declarations of

subjective intent. They are admissible only in an action for

rectification. The law makes this distinction for reasons of

practical policy and, in this respect only, legal interpretation

differs from the way we would interpret utterances in

ordinary life. The boundaries of this exception are in some

respects unclear. But this is not the occasion on which to

explore them.

(4) The meaning which a document (or any other utterance)

would convey to a reasonable man is not the same thing as

the meaning of its words. The meaning of words is a matter

of dictionaries and grammars; the meaning of the document

is what the parties using those words against the relevant

background would reasonably have been understood to

mean. The background may not merely enable the

reasonable man to choose between the possible meanings of

words which are ambiguous but even (as occasionally

happens in ordinary life) to conclude that the parties must,

for whatever reason, have used the wrong words or syntax.

(See : Mannai Investments Co Ltd v Eagle Star Life Assurance

Co Ltd [1997] 2 WLR 945.

(5) The "rule" that words should be given their "natural and

ordinary meaning" reflects the common sense proposition

1 1998 (1) AIR 98

that we do not easily accept that people have made linguistic

mistakes, particularly in formal documents. On the other

hand, if one would nevertheless conclude from the

background that something must have gone wrong with the

language, the law does not require judges to attribute to the

parties an 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

AB [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

intricies 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 vs. Seth

Takhatmal & 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 and intent of the

contract, or part of it, than the other, then the court will

choose former or rather than the later. Ashville

Investment v. Elmer Contractors.3 The intention of the

parties must be understood from the language they have

used, considered in the light of the surrounding

circumstances and object of the contract. Bank of India

and Anr. v. K. MohanDas and Ors4. Every contract is to

be considered with reference to its object and the whole of

its terms and accordingly the whole context must be

considered in endeavoring to collect the intention of the

parties, even though the immediate object of inquiry is the

meaning of an isolated clause. Bihar State Electricity

Board, Patna and Ors. v. M/s. Green Rubber Industries

and Ors5. {Para 15}

 Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 9273 of 2019

Bangalore Electricity Supply Company Limited (BESCOM). Vs

E.S. Solar Power Pvt. Ltd. & Ors.


Author: L. NAGESWARA RAO, J.

Dated: May 03, 2021.


1. These appeals arise out of a judgment of the Appellate

Tribunal for Electricity at Delhi by which the order passed by

the Karnataka Electricity Regulatory Commission (KERC) was

reversed.

2. The facts that are necessary for adjudication of the

dispute in these appeals are as follows:


(a) Karnataka Renewable Energy Development Limited

(KREDL) issued a Request for proposal on 20.11.2015

from bidders for undertaking development of Solar

PV ground mount Power Plants in Karnataka pursuant

to a decision taken by the State Government for

development of 1200 MWA of Solar power to be

implemented in 60 Taluks through private sector

participation. Emmvee Photovoltaic Power Private

Limited, the second Respondent herein, incorporated

two Special Purpose Vehicles (SPV) in accordance

with the terms of the Request for Proposal and

submitted its bid for acceptance by the first

Appellant, Bangalore Electricity Supply Company

Limited.

(b) Respondent No. 1 in Civil Appeal 9273 of 2019 is a

special purpose vehicle constituted by Respondent

No. 2 for setting up a Solar PV ground mount Project

with a capacity of 10 MWA (AC) in Bidar Rural Taluk,

Bidar District, Respondent No. 1 in Civil 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, the main ground taken in the

Original Petition by the Respondents is that Commissioning of

the Project took place on 16.10.2017 which is clear from the

Minutes of meeting drawn by the Officials of KPTCL. The

meeting was attended by officers of KPTCL, officers of

GSCOM and representatives of the Respondents. It was

contended by the Respondents that the Project commenced

its operations within 12 months from the date of approval of

the PPA by the Karnataka Electricity Regulatory Commission

and the imposition of damages and reduction of tariff

payable by the Appellant was contrary to the provisions of

the agreement.

5. Original Petition No. 19 of 2018 was filed by the

Respondents in Civil Appeal 9273 of 2019 in respect of the

Solar PV ground mount Power Project in Bidar for reliefs

similar to those claimed in OP 18 of 2018.

6. The Karnataka Electricity Regulatory Commission by its

Order dated 23.10.2018 dismissed OP No. 18 of 2018 and OP

No. 19 of 2018. The Karnataka Electricity Regulatory

Commission framed four issues for consideration which are

as follows:

(i) ‘Whether the Scheduled Commissioning date’ of the

Solar Power Projects in question would fall in

16.10.2017 or 17.10.2017.

(ii) On what date the Solar Power Projects in OP No. 18 of

2018 and OP 19 of 2018 have started injection of power

into the Grid.

(iii) Whether injection of power into the State Grid from a

Solar Power Project is essential in order to declare that

a Project is commissioned.

(iv) ‘Whether Commissioning of the Project’ and

‘Commercial Operation of the Project’ are one and the

same or different concepts in a Solar Power Project.

7. Insofar as issue No. 1 is concerned the Commission was

of the view that the Scheduled Commissioning date for the

Solar Power Projects of the Developer is 16.10.2017 and not

17.10.2017 as contended by the Respondents. Considering

issues 2, 3, and 4 together, the Commission was of the

opinion that the injection of power into the Grid from a Solar

Power Project is a sine qua non for declaring that the Project

is commissioned. The Commission was of the view that the

injection of power from the Solar Power Project into the Grid

was only on 17.10.2017. In view of the above findings

recorded by the Commission, the OP’s were dismissed.

8. The Respondents approached the Appellate Tribunal for

Electricity by filing Appeal Nos.332 and 333 of 2018. 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 Solicitor General was critical of

the judgment of the Appellate Tribunal for its interference

with a well-considered order of the Commission. He argued

that the conclusion of the Appellate Tribunal that the SCOD is

17.10.2017 and not 16.10.2017 is contrary to the terms of

the PPA. He relied upon several clauses of the PPA to justify

that the decision taken by the Appellant to impose liquidated

damages and to reduce tariff to 4.36/kWh from 6.10/kWh.

He emphasized that injection of power to the Grid is a pre

requisite for determining the date of commissioning of a

Solar Plant. He urged that the Tribunal committed an error in

relying upon judgments relating to the General Clauses Act

when PPA excluded the applicability of the General Clauses

Act.

11. Mr. Balaji Srinivasan, took us through the documents to

argue that regulatory commission correctly interpreted the

agreement to include the first date and last date i.e. the date

on which PPA was approved by the KERC for determining the

Scheduled Commissioning Date. He took us through the

material on record to show that there was minimum

generation of power on 16.10.2017 which was utilized for

auxiliary purposes which does not satisfy the condition of

injection of power into the Grid. He submitted that it is clear

that there was no injection of power into the Grid till

17.10.2017 and the Respondents are not entitled to tariff at

the rate of 6.10/kWh. Reliance was placed on a judgment of

this Court reported in 2019 SCC online Supreme Court 1014

to argue that a Solar Power Plant is deemed to be

commissioned only when there is injection of power into the

Grid.

12. Mr. Basava Prabhu S. Patil, learned Senior Advocate

responding to the submissions made on behalf of the

Appellant contended that the twelve months period for

deciding the Scheduled Commissioning Date starts from

17.10.2016 which was the date of approval of PPA by KERC.

He referred to several covenants of the PPA to asseverate

that the date of the event i.e. the date of approval of PPA has

to be excluded for the purpose of computation of twelve

months for deciding the Scheduled Commissioning Date

(SCOD). There is no dispute regarding injection of power to

the Grid on 17.10.2017. Therefore, there is no default on the

part of the Respondents and they were unnecessarily

penalized. The alternative submission of the Respondents is

that even if 17.10.2016 is not excluded, twelve months end

on 16.10.2017 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 which are relevant are as under:

Article 1.1

The words and expressions beginning with capital

letters and defined in this Agreement (including those in

Article 21) shall, unless the context otherwise requires,

have the, meaning ascribed thereto herein, and the

words and expressions defined in the Schedules and

used therein shall have the meaning ascribed thereto in

the Schedules

Article 1.2 (k)

any reference to month shall mean a reference to a

calendar month as per the Gregorian calendar;

Article1.2 (l) and (m)

any reference to any period commencing "from" a

specified day or date and "till" or "until" a specified day

or date shall include both such days or dates; provided

that if the last day of any period computed under this

Agreement is not a business day, then ·the period shall

run until the end of the next business day;

Article 1.2.4

Any word or expression used in this Agreement shall,

unless otherwise defined or construed in this

Agreement, bear its ordinary English meaning and, for

these purposes, the General Clauses Act 1897 shall not

apply.

Article 3

3.1. Effective Date

This Agreement shall come into effect from the date of

getting concurrence from KERC on the PPA and such

date shall be referred to as the Effective Date.

Article 5.1 Obligations of the Developer

5.1.1 Subject to and on the terms and conditions of this

Agreement, the Developer shall at its own coast and

expense:

(c) commence supply of power up to the Contracted

Capacity to BESCOM no later than the Scheduled

Commissioning Date and continue the supply of power

throughout the term of the Agreement;

5.4 Connectivity to the grid

The Developer shall · be responsible for power

evacuation from the Power Project to the nearest

Delivery Point/ Delivery points.

Article 5.8 – Liquidated Damages for delay in

commencement of supply of power to BESCOM

5.8.1. If the Developer is unable to commence supply of

power to BESCOM .by the Scheduled Commissioning

Date other than for the reasons specified in Clause

5.7.1, the Developer shall pay to BESCOM, · Liquidated

Damages for the delay in such commencement of

Supply of power and making the Contracted Capacity

available for dispatch by the Scheduled Commissioning

Date as per the following:


a. For the delay up to one month an amount equivalent

to 20°/o of the Performance Security.

b. For the delay of more than one (1) month and upto

two months an amount equivalent to 40°/o 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°/o

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

Project shal.1 be removed from the list of selected

projects in the event of termination of this Agreement:

ARTICLE 8: Synchronization, Commissioning and

Commercial Operation

8.1. The Developer shall provide at least forty (40) days

advanced preliminary written notice and at least twenty

(20) days advanced final written notice to BESCOM of

the date on which it intends to synchronize the Power

Project to the Grid System.

8.2. Subject to Clause 8.1, the Power Project shall be

synchronized by the Developer with the Grid System

when it meets all the connection conditions prescribed

in applicable Grid Code then in effect and otherwise

meets all other Indian legal requirements for

synchronization to the Grid System.

8.3. The synchronization equipment shall be installed

by the Developer at its generation facility of the Power

Project at its own cost The Developer shall synchronize

its system with the Grid System only after the approval

of synchronization scheme is granted by the head of the

concerned sub-station/Grid System and

checking/verification is made by the concerned

authorities of the grid system.

8.4. The Developer shall immediately after each

synchronization/tripping of generator, inform the substation

of the Grid System to which the Power Project is

electrically connected in accordance with applicable

Grid Code.

8.5. The Developer shall commission the Project

within 12 months from the Effective Date.

ARTICLE 12: APPLICABLE TARIFF AND SHARING OF

COM BENEFITS

12.1. The Developer shall be entitled to receive the

Tariff of INR6.10 / kWh of energy supplied by it to

BESCOM in accordance with the terms of this

Agreement during the period between COD and the

Expiry Date.

12.2. Provided further that as a consequence of delay

in Commissioning of the Project beyond the Scheduled

Commissioning Date, subject to Article 4, if there is

change in KERC applicable tariff, the changed applicable

Tariff for the Project shall be the lower of the following:

I. Tariff at in Clause 12.1 above

II. KERC applicable Tariff as on the Commercial

Operation Date.

ARTICLE 21: DEFINITIONS

"COD" or "Commercial Operation Date" shall mean

the actual commissioning date of respective units of the

Power Project where upon the Developer starts injecting

power from the Power Project to the Delivery Point.

"Effective Date" shall mean date of Approval of PPA

KERC;

Month" shall mean a period of thirty, (30) 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 wellsettled

canons of construction of contracts. Lord Hoffmann in

Investors Compensation Scheme Limited vs. West

Bromwich Building Society1 summarized the broad

principles of interpretation of contract as follows:

(1) Interpretation is the ascertainment of the meaning which

the document would convey to a reasonable person having

all the background knowledge which would reasonably have

been available to the parties in the situation in which they

were at the time of the contract.

(2) The background was famously referred to by Lord

Wilberforce as the "matrix of fact," but this phrase is, if

anything, an understated description of what the

background may include. Subject to the requirement that it

should have been reasonably available to the parties and to

the exception to be mentioned next, it includes absolutely

anything which would have affected the way in which the

language of the document would have been understood by a

reasonable man.

(3) The law excludes from the admissible background the

previous negotiations of the parties and their declarations of

subjective intent. They are admissible only in an action for

rectification. The law makes this distinction for reasons of

practical policy and, in this respect only, legal interpretation

differs from the way we would interpret utterances in

ordinary life. The boundaries of this exception are in some

respects unclear. But this is not the occasion on which to

explore them.

(4) The meaning which a document (or any other utterance)

would convey to a reasonable man is not the same thing as

the meaning of its words. The meaning of words is a matter

of dictionaries and grammars; the meaning of the document

is what the parties using those words against the relevant

background would reasonably have been understood to

mean. The background may not merely enable the

reasonable man to choose between the possible meanings of

words which are ambiguous but even (as occasionally

happens in ordinary life) to conclude that the parties must,

for whatever reason, have used the wrong words or syntax.

(See : Mannai Investments Co Ltd v Eagle Star Life Assurance

Co Ltd [1997] 2 WLR 945.

(5) The "rule" that words should be given their "natural and

ordinary meaning" reflects the common sense proposition

1 1998 (1) AIR 98

that we do not easily accept that people have made linguistic

mistakes, particularly in formal documents. On the other

hand, if one would nevertheless conclude from the

background that something must have gone wrong with the

language, the law does not require judges to attribute to the

parties an 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

AB [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

intricies 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 vs. Seth

Takhatmal & Anr2). 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 and intent of the

contract, or part of it, than the other, then the court will

2 1964 (2) SCR 152

choose former or rather than the later. Ashville

Investment v. Elmer Contractors.3 The intention of the

parties must be understood from the language they have

used, considered in the light of the surrounding

circumstances and object of the contract. Bank of India

and Anr. v. K. MohanDas and Ors4. Every contract is to

be considered with reference to its object and the whole of

its terms and accordingly the whole context must be

considered in endeavoring to collect the intention of the

parties, even though the immediate object of inquiry is the

meaning of an isolated clause. Bihar State Electricity

Board, Patna and Ors. v. M/s. Green Rubber Industries

and Ors5.

17. Liquidated damages can be imposed on the Developer

under Article 5.8.1 if he is unable to commence supply of

power to the Appellant by the Scheduled Commissioning

Date. Article 12 deals with the applicable tariff. The

developer shall be entitled to receive the tariff of Rs.

6.10/kWh of energy supplied the Appellant in accordance

with the terms of the agreement. If there is delay in

commissioning of the project beyond the Scheduled

Commissioning Date and if there is change in KERC

3 1988 (2) All ER 577

4 2009 5 SCC 313

5 1990 (1) SCC 731


applicable tariff, Article 12.2 provides that the changed

applicable tariff for the project shall be the lower of the Tariff

as in Clause 12.1 and KERC applicable tariff as on the

commercial operation day.

18. The bone of contention is whether the Scheduled

Commissioning Date of the Solar Power Project is 16.10.2017

or 17.10.2017. We proceed to advert to the undisputed

facts. KERC approved the PPAs on 17.10.2016. Scheduled

Commissioning Date according to the agreement should be

12 months from 17.10.2016. There is also no dispute

between the parties that 12 months means 365 days.

According to the Appellants if 17.10.2016 is included in

computation of 365 days, the Scheduled Commissioning Date

is 16.10.2017. On the other hand, the Respondents

contended that 17.10.2016 should be excluded in the

calculation of 365 days, in which case, 17.10.2017 would be

the Scheduled Commissioning Date.

19. The Commission relied upon 1.2.1(m) of the PPA to

conclude that 17.10.2016 has to be included for ciphering

the period of 365 days to determine the Scheduled

Commissioning Date. Whereas, the Appellate Tribunal was 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 expression ‘Month’ in Article 21.1 of the agreement.

Month has been defined to mean a period of 30 days and

excluding (the date of the evet) where applicable, else a

Calendar month. We are not concerned with 1.2.1 (l), in this

case as there is no question of any extension of any period

pursuant to the agreement. 1.2.1 (k) indicates that any

reference to a month shall mean reference to a Calendar

month. Reverting to the definition of ‘Month’, it is clear that

a month shall mean either 30 days where applicable or a

Calendar month. In this case, there is no dispute that 12

Calendar months have to be taken into account for

determining the Scheduled Commissioning Date. The crucial

expression in the definition of ‘Month’ is “excluding the date

of the event”. If the date of the event i.e. 17.10.2016 is

excluded, the Scheduled Commissioning Date would be

17.10.2017. We do not agree with the conclusion of the

Commission 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. In our view, 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.

21. The next contention of the Appellant is that actual

injection of power into the Grid was on 17.10.2017 and as

the Scheduled is 16.10.2017, the reduction of the tariff in

view of the delay of 1 day in commissioning is justified. The

alternate submission that is made by the Respondents that

even assuming that the Scheduled Commissioning Date is

16.10.2017 and not 17.10.2017, the Respondents

commissioned the Solar Plants on 16.10.2017 itself.

According to the Respondents, the Appellant committed an

error in penalizing the Respondents on a wrong premise that

the actual injection of power is required to show that the

Solar Plants were commissioned. The Commission answered

the point in favour of the Appellants by holding that actual

injection of power is necessary to determine the date of

commissioning of the Plant. The Appellate Tribunal reversed

the findings recorded by the Commission on this aspect by

relying upon the Commissioning certificate issued by the

KPTCL which is to the effect that the Solar Plants were

commissioned on 16.10.2017 itself. There is no dispute that

the power was injected from the solar plants on 17.10.2017.

In view of the conclusion reached by us on the issue relating

to the Scheduled Commissioning Date being 17.10.2017, it is

not necessary to adjudicate the point relating to the

requirement of actual injection of power into the Grid to

decide the date of commissioning. At the request of Mr.

Balaji Srinivasan, learned counsel for the Appellant, four

weeks time is granted to implement the judgment of the

Appellate Tribunal.

22. For the aforesaid reasons, the judgment of the

Appellate Tribunal is upheld and the Appeals are dismissed.

..................................J.

[ L. NAGESWARA RAO ]

...............................J.

[ VINEET SARAN ]

New Delhi,

May 03, 2021.


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