M. P. POWER MANAGEMENT COMPANY LIMITED, JABALPUR v. M/S. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED & OTHERS

46Copy pinpoint46. 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 others v. K. Prasad and another 21. D “ 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 not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of power.”

47Copy pinpoint47. We may notice that as to what constitutes arbitrariness fell for consideration by this court in a case which involved cancellation of the examination held as part of a recruitment process, in East Coast Railway and another v. Mahadev Appa Roa and others22. We notice the following passages which are apposite for this case. “19. Black’s Law Dictionary describes the term “arbitrary” in the following words: 21 (2007) 7 SCC 140 22 (2010) 7 SCC 678 H

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A “Arbitrary. —1. Depending on individual discretion; specif., determined by a judge rather than by fixed rules, procedures, or law. 2. (Of a judicial decision) founded on prejudice or preference rather than on reason or fact. This type of decision is often termed arbitrary and capricious.”

B 20. To the same effect is the meaning given to the expression “arbitrary” by Corpus Juris Secundum which explains the term in the following words: “Arbitrary.—Based alone upon one’s will, and not upon any course of reasoning and exercise of judgment; bound by no law; capricious; exercised according to one’s own will or caprice and therefore conveying a notion of a tendency to abuse possession of power; fixed or done capriciously or at pleasure, without adequate determining principle, non-rational, or not done or acting according to reason or judgment; not based upon actuality but beyond a reasonable extent; not founded in the nature of things; not governed by any fixed rules or standard; also, in a somewhat different sense, absolute in power, despotic, or tyrannical; harsh and unforbearing. When applied to acts, ‘arbitrary’ has been held to connote a disregard of evidence or of the proper weight thereof; to express an idea opposed to administrative, executive, judicial, or legislative discretion; and to imply at least an element of bad faith, and has been compared with ‘willful’.” xxx xxx xxx

23. Arbitrariness in the making of an order by an authority can manifest itself in different forms. Non-application of mind by the authority making the order is only one of them. Every order passed by a public authority must disclose due and proper application of mind by the person making the order. This may be evident from the order itself 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.”

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 45 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

48Copy pinpoint48. We would, therefore, sum up as to when an act is to be treated A 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. B 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 characterised as being arbitrary. A total non-application of mind without due regard to the rights of the parties and public interest may be a clear indicator of arbitrary action. A wholly unreasonable decision which is little different from a perverse decision under the Wednesbury doctrine would qualify as an arbitrary decision under Article 14. Ordinarily visiting a party with the consequences of its breach under a contract may not be an arbitrary decision.

49Copy pinpoint49. We may now notice the judgment of this court in Joshi Technologies International Inc. v. Union of India and others 23, which is also relied upon by the learned Additional Solicitor General. The said case actually involved the complaint of the writ petitioner therein that it was entitled to the benefit of Section 42 of the Income Tax Act, 1961 E which provided for certain deductions. The petitioner had entered into an agreement with the respondent, the Government of India. The case of the respondent, inter alia, was one denying the case of the petitioner that the omission of Section 42 was by oversight. The prayer in the writ petition itself inter alia was essentially to declare entitlement to the deduction under Section 42, inter alia. It is while dealing with the said case that this court no doubt proceeds to, inter alia, lay down as following after adverting to ABL limited (supra) also:- “69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, 23 (2015) 7 SCC 728 H

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A discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, “normally”, the Court would not exercise such a discretion: 69.1. The Court may not examine the issue unless the action has some public law character attached to it. 69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means 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. D 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 G 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 tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In

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such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc. 70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business. 70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. 70.8. If the contract between private party and the State/ F instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction. G 70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public H

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A 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 expectation forms part of the principle of non-arbitrariness. 70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.”

50Copy pinpoint50. In State of Kerala v. M.K. Jose24, the specific question with which we are concerned with, namely, entertaining a writ petition in a F contractual matter and where the specific question was the validity of the termination of the contract, fell for consideration. We may notice the following: “13. A writ court should ordinarily not entertain a writ petition, if there is a breach of contract involving disputed questions of fact. G The present case clearly indicates that the factual disputes are involved.”

51Copy pinpoint51. Thereafter, the court went on to consider in detail the judgment of this Court in ABL (supra) and found that it was a case where the court granted relief as the facts were absolutely clear from the 24 H (2015) 9 SCC 433

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 49 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

documentary evidence and it pertained to interpretation of such clauses of the contract of insurance. We need notice only paragraph 20 in M.K. Jose (supra). It reads as under: “20. We have referred to the aforesaid authorities to highlight under what circumstances in respect of contractual claim or challenge to violation of contract can be entertained by a writ court. It depends upon facts of each case. The issue that had arisen in ABL International [(2004) 3 SCC 553] was that an instrumentality of a State was placing a different construction on the clauses of the contract of insurance and the insured was interpreting the contract differently. The Court thought it apt merely because something is disputed by the insurer, it should not enter into the realm of disputed questions of fact. In fact, there was no disputed question of fact, but it required interpretation of the terms of the contract of insurance. Similarly, if the materials that come on record from which it is clearly evincible, the writ court may exercise the power of judicial review but, a pregnant one, in the case at hand, the D High Court has appointed a Commission to collect the evidence, accepted the same without calling for objections from the respondent and quashed the order of termination of contract.” (Emphasis supplied)

52Copy pinpoint52. In State of U.P. v. Sudhir Kumar Singh and Others 25, 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, 25 2020 SCC Online 847 H

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A 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.” B

53Copy pinpoint53. We have already concluded that PPA is not a Statutory Contract. However, that would not be the end of enquiry. Dr. A.M. Singhvi, learned Senior Counsel, would point out that the contract, not being a statutory contract, assumes relevance only for the purpose of deciding as to whether the Court should relegate the writ applicant, to C alternate remedies. In other words, while the Court would retain its discretion to entertain the petition or decline to do so, in the facts of each case, there is no absolute taboo against the Court granting relief, even if the challenge to the termination of a contract is made in the case of a contract, which is not statutory in nature, when the offending party is the D State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr. Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court’s jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary.

54Copy pinpoint54. We may cull out our conclusions in regard to the points, which we have framed: i. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court. ii. The principle laid down in Bareilly Development Authority (supra) that in the case of a non-statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 51 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

Radhakrishna Agarwal (supra), may not continue to hold good, in the light of what has been laid down in ABL (supra) and as followed in the recent 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 B 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 vs. Union of India26. 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 dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence. vii. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a Writ Petition in a contractual matter. Again, the question as to whether the Writ Petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided,

26 (1994) 6 SCC 651 H

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A and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the Writ Court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may B relegate the party to the remedy by way of a civil suit. viii. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a Writ Petition (See in this regard, the view of this Court even in ABL (supra) C explaining how it distinguished the decision of this Court in State of U.P. and others v. Bridge & Roof Co.27, by its observations in paragraph-14 in ABL (supra)]. ix. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in D a Writ Petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant. x. The reach of Article 14 enables a Writ Court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court’s approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the Writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State. xi. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is 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 27 H (1996) 6 SCC 22

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 53 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

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 resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the D Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL (supra). It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition. xii. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate Forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (See in this regard Kumari Shrilekha Vidyarthi and others v. State of U.P. and others 28). 28 (1991) 1 SCC 212) H

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A However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a B mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely malafide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases. xiii. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather 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.

F 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 Others (supra)]. WHETHER THERE IS AN ARBITRATION CLAUSE?

55Copy pinpoint55. 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, H

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 55 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

it deals with disputes arising from a claim for any matter relating to the A tariff. Therefore, we would take the view that it may not be a case where the PPA provides for an arbitration clause capable of determining the lis in question. The situation therefore contemplated in U.P. Roof (supra) as laid down in ABL (supra) does not exist. THE IMPACT OF THE JUDGMENT IN THE FIRST B WRIT PETITION

56Copy pinpoint56. Taking up point no. 5., viz., the effect of the judgment of the High Court in the earlier round, we must notice indeed that this is a case which represents the second round of the litigation. In the earlier round the respondents had successfully invoked the jurisdiction under Article C 226 when it was served with the order of termination of the contract dated 11.08.2017. We have already noticed the fate of the said case. The first battle which commenced in the year 2017 resumed as it were with the present writ petition. We are not oblivious to the fact that the appellant did not think it fit to challenge the verdict in the first round of litigation. No doubt, the case of the appellant is that the appellant was of the view that the court has left it free to the appellant to take steps under the contract for termination of the contract. It is the case of the appellant in fact, that the judgment of the High Court in the earlier round would not be an obstacle for the appellant to revisit and terminate the contract for the reason that the PPA made it incumbent on the appellant to terminate the contract under Article 2.1(d) if the contractor did not fulfil the conditions subsequent even after the expiry of 210 days and a further period of nine months after the commencement of PPA. We must examine whether the earlier judgment, in fact, in law permits the appellant to re-open the said issue. A perusal of the judgment dated 20.6.2017 would reveal that the court was dealing with the challenge to the order dated 11.08.2017. The order dated 11.08.2017 would reveal that the appellant has found that there is a delay of 54 days in achieving the condition subsequent deadline. After considering the representation by the respondent, the appellant found that there is no merit in the case of force majeure and there was no justification for the delay in achieving conditions subsequent. Thereafter, the appellant, in terms of Article 2.5.1(d), terminated the PPA. Still further, a sum of Rs.1180.50 lakhs was found recoverable as penalty 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. H

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A 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.

57Copy pinpoint57. 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 proceeds to notice that the aspect of commissioning the project was not the basis for terminating the contract. Relying on Mohinder Singh Gill29, the appellants were not permitted to supplement the reasons for termination. Finally, the High court has proceeded to find that since the similar reason for termination of the agreement in the communication dated 11.8.2017 was not found justified in the case of Renew Clean Energy, the impugned communication dated 11.08.2017 was set aside. E It is thereafter that the liberty was given to the appellants to pass fresh orders in terms of the PPA in accordance with law.

58Copy pinpoint58. The appellants would persuade us to hold that the High Court intended, by the liberty granted to leave it open to the appellant to pass orders invoking its power under the PPA which would not only include termination of the PPA based on respondent not commissioning the project within the time but also revisit the aspect relating to non-fulfilment of the conditions subsequent. The respondent would join issue with the appellant on the score that judgment of the High Court must be understood as meaning that on the issue relating to non-fulfilment of the conditions subsequent the court made its pronouncement on merits with reference to the decision in Renew Clean Energy. All that was left open was the question related to the delay in commissioning the project.

59Copy pinpoint59. Learned Additional Solicitor General apart from reiterating his contention would point out that the earlier judgment should not be H 29 (1978) 1 SCC 405

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treated as res judicata and the only reason appellant did not challenge the High court judgment, dated 20.06.2018, was the liberty granted. He would further submit that at any rate even proceeding on the basis that the High court could not revisit the issue of the non-fulfilment of the conditions subsequent, the decision of the High Court would not stand in the way of this Court considering whether the order which is impugned in this case which includes the issue relating to non-fulfilment of the conditions subsequent is sustainable. This is apart from pointing out that even in the case of Renew Clean Energy, this Court in its order refusing to interfere in the judgment of the High Court has made it clear that it was not going into the merits of the said contention having regard to observations which had been made, namely, that the contractor therein being faced with unavoidable circumstances as also the factum of huge investment made in the project.

60Copy pinpoint60. 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 D 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 relating to commissioning of the project or rather in the matter of default in commissioning the project. It would neither be legal nor equitable to permit the appellant to contend that the issue relating to not having fulfilled the conditions subsequent can be canvassed all over again. G

AN ASIDE? THE STATE LOAD DISPATCH CENTRE (RESPONDENT NO.5): ITS STAND AND THE IMPACT OF THE SAME H

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61Copy pinpoint61. Respondent No.5 filed a counter affidavit in this Court. It claims to be the ‘Authority charged to perform functions under Section 32 (2) of the Electricity Act, 2003. Its responsibility is limited to monitoring and controlling of existing Grid elements and generating stations keeping the account of energy transmitted through the Grid. It specifically states that its role emerges after commissioning of the generating plant. It further states all activities prior to readiness of generator to inject power into the Grid are beyond its purview. The further stand is that none of the regulatory provisions allows it to interfere in pre-requisite regulatory compliance by the generator before injecting of power into the Grid. There is reference to short-term open access for which there are regulations. In respect of Renewable Energy generators intending to connect with the Grid, certain regulatory requirements, before injecting of power therein, are to be complied with. They are registration, data and speech communication facility, interface metering and communication of meter data through automatic meter reading. D Single line diagram indicating connectivity with the grid duly certified by MPPTCL (fourth respondent), when connected to 132KV and above, inter alia, copy of connection agreement with the fourth respondent, inter alia, information regarding sale of power under long- term access, medium-term open access or short-term open access, approval of CEIG for construction, operation and maintenance of electrical E plans and electrical lines under Section 73C of the Electricity Act, 2003 and approval of Power, Telecommunication and Coordination Committee (PTCC). It is further stated that on compliance with procedures it first issues a unique code for charging power evacuation line. When the line holds for a reasonable time, unique code for injection is issued. Real F time generation is monitored. If it is satisfied with the data recorded by the interface meters (Main and check) then 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.

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62Copy pinpoint62. 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 was commissioned. Its case was that it was complete in all respects and would have commissioned before the expiry of 24 months but for the illegal termination on two occasions as noted. In regard to non-compliance with certain regulatory requirements, various steps taken by it are referred to. C

63Copy pinpoint63. As far as registration is concerned, it was completed on 15.12.2016. In regard to data and speech communication facility, it is stated by Respondent No.1 that it is completed on 23.03.2017. In the said communication, on a letterhead showing the name of the fourth respondent and also showing the name of the fifth respondent, it is stated that the telemetry scheme for the 100MW solar power plant was generally in order and accepted for implementation, subject to four conditions stipulated therein. Thereafter, it is stated that “it is, therefore, required that the telemetry and voice communication from the control centre of the proposed power plant upto Back Up SLDC Bhopal/Sub-LDC Indore/SLDC Jabalpur be arranged before synchronization of your power plant. It may please be noted that synchronization of plant with grid shall not be allowed without commissioning of telemetry and voice communication.” It is seen signed by the Superintending Engineer (LD:E&T), SLDC, MPPTCL, Jabalpur. As far as the requirement of connection agreement, it has been stated in the reply affidavit of the first respondent that such connection agreement was, indeed, executed between Respondent No.1 and Respondent No.4. The agreement is dated 18.05.2017. At this juncture, we may notice that a Sur-Rejoinder has been filed by Respondent No.5. Having regard to the connection agreement, all that is stated is, till date, Respondent No.5 was not provided with a copy by the first respondent. It is also stated that Respondent Nos. 4 and 5 are two distinct entities and, therefore, it was required for compliance that the same should have been submitted to Respondent No. 5. We have already noticed that letter dated 23.07.2017 is on the same letterhead, showing the names of Respondent Nos. 4 and 5 and signed by the Superintending Engineer, wherein also, the names of H

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A Respondent Nos. 4 and 5 appear. It is a little intriguing and strange, that the fifth respondent did not know about the agreement and referred to it as a requirement and as though it had not been complied with by the first respondent. The first 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. It is pointed out that the first respondent set up the project to supply power to the appellant only as per the PPA and the said requirement was not applicable.

64Copy pinpoint64. The fifth respondent in the Sur-Rejoinder responded by pointing out that Respondent No.5 is the Nodal Body for managing the grid operations and within the State and it is generally seen that if the plant is commissioned the same cannot be left idle and be allowed to inject power into the grid, and it was in this regard, it was mentioned that if a third- party sale was to be undertaken by Respondent No.1 so that its plant was not left idle, then, it was incumbent on Respondent No.1 to have obtained open access. We find that as per Article 9.8 of the PPA, the first respondent was obliged to sell the contracted capacity for a period of twenty-five years from COD. Elaborate provisions have been made, which would visit the first respondent with monetary compensation to be paid to the appellant, in case of breach. Article 9.7 also provides for the obligation of the appellant to buy power for twenty-five years. It is only if there was refusal or inability to buy by the appellant, fully or partially, or in the event of default, as per Article 9.5, leading to termination, H

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the first respondent was left free to sell power to a third party, which A sale was to be regulated by certain terms.

65Copy pinpoint65. As regards another requirement, viz., approval of the CEIG for construction, operation and maintenance of the electrical plants and electrical lines, it is the case of the first respondent that such approval was obtained by letter dated 10.08.2017. It was also marked to B Respondent No.4. CEIG approval for the electrical plant was received on 09.08.2017. Respondent No.4, it is pointed out, had also, on 24.08.2017, issued a Joint Inspection Report certifying that the project may be charged. In fact, we find, in the Joint Inspection Report issued by the fourth respondent that: C “Newly constructed 132KV D.C.D.S. line from 400KV PS Chhegaon to 50MW Pooling Station of M/S Sky Power Solar India Pvt. Ltd. And 50MW Pooling Station of M/S Sky Power Southeast Solar India Pvt. Ltd. At village Chhirbel has been jointly inspected with EE (EHT-M) MPPTCL, Indore on dt.24/ 08/2017. During Joint Inspection No. any major defects has been found and line. May be charged.” (Emphasis supplied)

66Copy pinpoint66. In regard to the same, Respondent No.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 F 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.

67Copy pinpoint67. It appears to us that though letter dated 10.08.2017 is addressed G 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 Inspection Report of H

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A Respondent No.4 as Respondent No.1 has entered into a PPA for 50MW, and the sister concern, apparently, had a PPA for 50MW. Lastly, even given an opportunity, this is a matter which could have been clarified by the CEIG, for which no opportunity appears to have been given. We bear in mind Article 9.1 of the PPA. From the Joint Inspection Report, bearing in mind that 132KV line had a dual circuit, the same line was to B be used by the first respondent and its sister concern. This appears to be the only possible meaning on a joint reading of the CEIG Report dated 10.08.2017 and Joint Inspection Report dated 24.08.2017. We stand fortified in this regard by the report dated 21.04.2018 also where it is inter alia stated as follows:- C “1. Present Status of Transmission Line for power evacuation from Power Plant to Grid Substation 132 kV DCDS line is found erected between Pooling Substation to 400 kV Chhegaon (Torni)Substation. One circuit is used for already existing 50 MW plant of M/s Sky Power and 2nd circuit is proposed to be used for M/s Sky Power South East Solar India Pvt. Ltd. at village Chirbel, Distt. Khandwa, for which site verification visit is conducted.”

68Copy pinpoint68. The next requirement, according to the fifth respondent was that approval of the PTCC was required. The first respondent has, in the reply, stated the said requirement was completed on 05.09.2017. We find that Chief Engineer (Procurement) of the fourth respondent has recorded in the communication dated 05.09.2017 that PTCC had accorded PTCC route approval: “With reference to the subject cited above, DET (PTCC), Mumbai F has accorded PTCC route approval for charging 132KV DCDS line from 400kV S/s Chhegaon to 100MW Solar Power Project of M/s SkyPower Solar India & M/s SkyPower Southeast Solar India Pvt. Ltd. Chhirbel, Dist. Khandwa.”

69Copy pinpoint69. The fifth respondent, in the Sur-Rejoinder, in response to the G same, would respond by stating that the Respondent No.4 granting approval, did not mean that the same was issued with the knowledge or concurrence of Respondent No.5. We only remind ourselves that in the Counter Affidavit filed by Respondent No.5, Respondent No.5 had only stated against Requirement No.VIII that there was the requirement of approval of PTCC. What is reflected in letter dated 05.09.2017 is that H

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DET [PTCC] has accorded PTCC route approval. The approval is not granted 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.

70Copy pinpoint70. 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 telemetry and voice communication was not working, in spite of the fact that by letter dated 03.04.2017, relevant IP address for real time data communication was furnished. It is not functional till date, in the case of the first respondent, whereas, in regard to its sister concern, it is operational. A letter dated 14.10.2021 is produced to indicate that the telemetry of the first respondent was not integrated and no real time data was received from the IP address provided to it. Even, in regard to this matter, if an opportunity was to be given in law, to the first respondent under Article 9.1, it is not something which may be not achievable.

71Copy pinpoint71. We are also dealing with these aspects on the basis of an affidavit filed raising such issues for the first time by the fifth respondent. The fifth respondent had all the opportunity in the writ petition to raise such contentions. Even in the Review Petition, there is only adoption of the contentions of the appellant.

72Copy pinpoint72. Emphasis is placed on the statement of Respondent no.5 by respondent no.1 wherein it is stated “whereas though the generating station is ready for generation of power but the power cannot be evacuated into the grid in the absence of transmission line”. This is taken as an admission of the readiness of the first respondent for generation of power. It is pointed out further that necessary approval was taken before H

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A December 2016 to August 2017 for operating the transmission line. Respondent No.1 was not allowed to commission. Reliance is also placed on the inspection report of the appellant to show that the transmission line was ready. The examples about other operators are brushed aside as irrelevant. It is the generator’s prerogative to sell power in the open market. B

73Copy pinpoint73. A Sur-Rejoinder is filed by respondent No.5. Therein, it has interestingly produced its return in the review petition filed by the appellant before the High court. Therein we may notice that it referred to Section 32(2) of the Electricity Act and its functions. Thereafter it has stated as follows: C “3. That, in accordance with Electricity act, 2003, role of SLDC comes after commissioning of the generating plant and its evacuating transmission lines. On receipt of commissioning certificate of a generator, connectivity with the Grid, metering arrangement and other regulatory compliances, SLDC accords D permission of injection of 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. E 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.

F 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.”

74Copy pinpoint74. 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. G

75Copy pinpoint75. 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 respondent no.5 has filed a reply and we have noticed its stand. The stand appears to be that it is more of a formal respondent. Its role comes in only after

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commissioning. It is in this Court that there has been blossoming of its case for the first time. It is also admitted by respondent No.5 that it is not concerned with the pre-commissioning. It is its specific stand that all the activities prior to readiness of the generator to inject power are beyond its purview. It has specifically stated that its role comes only after commissioning the project. First respondent states that it has not commissioned the project. Its only case is that it was ready to commission the project within 24 months as provided in the PPA but it was illegally prevented from doing it.

76Copy pinpoint76. We may only observe that the fifth respondent has, in the Sur- Rejoinder, owned up letter dated 23.03.2017 as the letter it has sent. The said letter is in the letterhead of the fourth respondent and therein the name of the fifth respondent is also shown. It would appear that the fifth respondent is created under Section 31 of the Electricity Act, 2003. Section 31 reads as follows: “Constitution of State Load Despatch Centres.—(1) The State Government shall establish a Centre to be known as the State D Load Despatch Centre for the purpose of exercising the powers and discharging the functions under this Part. (2) The State Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any State Act, as may be notified by E the State Government: Provided that until a Government company or any authority or corporation is notified by the State Government, the State Transmission Utility shall operate the State Load Despatch Centre: F Provided further that no State Load Despatch Centre shall engage in the business of trading in electricity.”

77Copy pinpoint77. Therefore, it would appear to us that actually the fifth respondent is to be operated by the State Transmission Utility, which is defined in Section 2(67) as the Board (defined as the State Electricity G Board) or the Government company specified by the State Government under Section 39(1), unless it is operated by a Government company or any authority or corporation established or constituted by or under and State Act. It would, therefore, appear to us that if the fourth respondent is the State Transmission Utility, it would be the Body to operate the fifth respondent. The attempted disassociating of the fifth respondent from H

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A 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. B THE NARRATIVE RESUMES

78Copy pinpoint78. 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 C 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 monetary claim arising from a D contract may be successfully urged by a writ applicant but the premise would not be a mere breach of contract. Being part of public law the case must proceed on the basis of there being arbitrariness vitiating the decision. The matter should not fall within a genuinely disputed question of facts scenario. The dispute which must be capable of being resolved on a proper understanding of documents which are not in dispute may furnish a cause of action in a writ court. Such was the case in ABL (supra). What is this litigation all about? This litigation is not about enforcing a monetary claim. The writ petition lays a challenge to the termination of the contract. A termination of the contract, no doubt, again may not be immune if it is found to be afflicted with the vice of arbitrariness. Interference again may be refused if the court finds that the case really belongs to the small area with unclear contours where it can be appropriated as a private law dispute. The distinction between public law and private law has concededly been reduced to nearly imperceptible terms but the distinction in law remains. As far as the public law aspect is concerned, we are inclined to take the view that in view of what has been laid down in Shri Vidhyarthi Lekha (supra), the impact of the action in a contractual matter in the facts by public authority is felt in public domain. We are dealing with the action of the appellant in terminating the contract dealing with the right to generate renewable energy and for supplying it to the consumers. Supply of power and its H

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consumption are imperative and indispensable needs for not only the A common man but also for the efficient functioning of trade and industry. Decisions in this domain do impinge on public interest. Therefore, we would not be inclined to shut the doors on the first respondent in this matter. We also bear in mind that this is the second round of litigation. As noticed already, in the first round, the first respondent did succeed. B

79Copy pinpoint79. Having found that though a non-statutory contract and that there is no absolute prohibition against judicial review on the score that action is shown to be arbitrary, the questions which would fall for further consideration are: (1) whether action is arbitrary (2) the projected disputes of facts and their impact; (3) what is the impact of the principle that there must be overwhelming public interest in favour of the writ applicant for the writ court to interfere. THE ARGUMENT OF ‘OVERWHELMING PUBLIC INTEREST’

80Copy pinpoint80. 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 F 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 others v. Sasan Power Limited and others30, for the proposition that the Court must be mindful of public interest, which consists of interest of the consumers ultimately. G

81Copy pinpoint81. Per contra, the submission of the first respondent is that the Court must not be oblivious to certain facts. The rate per unit, in the case of the first respondent, is Rs.5.109 per unit. In respect of another 30 (2017) 1 SCC 487 H

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A project, where the PPA was entered into with a sister concern of the first respondent, the project price was Rs.5.298 per unit. The project stands commissioned. The tariff was arrived at on the basis of highly competitive bids. There were, in fact, 183 bids. It is further contended that the bid of the first respondent was found to be the lowest in the competitive bidding. The appellant is, in fact, buying power at higher tariff from at least 5 generators, who commissioned their projects in the year 2017-2018. It was further contended that the daily demand of the appellant is approximately 15000 megawatts. The quantum of the project of the first respondent is only 50 megawatts, which constitutes 0.33 per cent of the total demand. Purchasing such a small capacity, in terms of the rate under the PPA, would make no difference to the consumer tariff. This is apart from countenancing the appellant reneging on a binding contract, which involves reaching a reward for arbitrary State action, besides, destroying an investment of Rs.331 crores. In this regard, reliance is placed on the Judgment of this Court in Vice Chairman & Managing Director, City and Industrial Development Corporation of Maharashtra D Ltd. and another v. Shishir Realty Private Limited and others31. Public interest cannot be determined with reference to monetary considerations alone, it is pointed out.

82Copy pinpoint82. As far as All India Power Engineer Federation (supra) is concerned, in fact, the Court was dealing with Civil Appeals, which were filed under the Electricity Act, 2003. The question about public interest arose in the context of the provision in the contract, which provided for waiver, which would be a unilateral act under Article 18.3 of the PPA therein. The Court also discussed the effect of Section 63 of the Indian Contract Act, 1872. The Court, while dealing with waiver and public interest, held as follows: “21. Regard being had to the aforesaid decisions, it is clear that when waiver 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 31 H (2021) SCC Online SC 1141

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it is contrary to such public interest. This is clear from a reading A 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.” B

83Copy pinpoint83. 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 C that consumer interest in tariff is intertwined with public interest.

84Copy pinpoint84. On the other hand, in Vice Chairman & Managing Director, City and Industrial Development Corporation of Maharashtra Ltd. (supra), this Court, while dealing with a case involving the question of award of contract, held as follows: D “58. When a contract is being evaluated, the mere possibility of more money in the public coffers, does not in itself serve public interest. A blanket claim by the State claiming loss of public money cannot be used to forgo contractual obligations, especially when it is not based on any evidence or examination. The larger public interest of upholding contracts and the fairness of public authorities is also in play. Courts need to have a broader understanding of public interest, while reviewing such contracts.”

85Copy pinpoint85. In fact, the principle of public interest has found expression in cases which involved challenge to the legality of the award of contract.[See in this regard Tata Cellular v. Union of India (1994) 6 SCC 65132 (supra) and Raunaq International Ltd. v. I.V.R. Construction Ltd. and Others, (1999) 1 SCC 492.

86Copy pinpoint86. In Michigan Rubber (India) Limited v. State of Karnataka and Others33 after referring to Tata Cellular and Raunaq International G Limited (supra), the Court inter alia held as follows: - “35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of 32 (2017) 1 SCC 487 33 (2012) 8 SCC 216 H

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A contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable.”

87Copy pinpoint87. In Raunaq International Ltd. v. I.V.R. Construction Ltd. B and Others34 the case involved award of contract for the purpose of Thermal Power Station. In fact, the Appeals in this court were maintained against the grant of an interim order against the appellant to whom the contracts stood awarded. The case also involved relaxation of the criteria which was based on valid principles it was found. It was further found that the construction of two Thermal Power Units was being held up C due to the dispute. The Court, inter alia, held as follows: - “9. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction. D

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 of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest 34 H (1999) 1 SCC 492

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involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. Price may not always be the sole criterion for awarding a contract.”

88Copy pinpoint88. Therefore, on a conspectus of the case law, we find that the concept of overwhelming public interest has essentially evolved in the context of cases relating to the award of contract by the State. It becomes an important consideration in the question as to whether then the State C with whatever free play it has in its joints decides to award a contract, to hold up the matter or to interfere with the same should be accompanied by a careful consideration of the harm to public interest. We do not go on to say that consideration of public interest should not at all enter the mind of the court when it deals with a case involving repudiation of a D claim under a contract or for that matter in the termination of the contract. However, there is a qualitative difference in the latter categories of cases. Once the State enters into the contract, rights are created. If the case is brought to the constitutional court and it is invited to interfere with State action on the score that its action is palpably arbitrary, if the action is so found then an appeal to public interest must be viewed depending on the facts of each case. If the aspect of public interest flows entirely on the basis that the rates embodied in the contract which is arbitrarily terminated has with the passage of time become less appealing to the State or that because of the free play of market forces or other developments, there is a fall in the rate of price of the services or goods then this cannot become determinative of the question as to whether court should decline jurisdiction. In this case, it is noteworthy that the rates were in fact settled on the basis of international competitive bidding and in which as many as 182 bidders participated and the rate offered by the first respondent was undoubtedly the lowest. The fact that power has become cheaper in the market subsequently by itself should not result in non- G 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.

89Copy pinpoint89. In other words, public interest cannot also be conflated with an evaluation of the monetary gain or loss alone. H

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A POINTS NO. 6 - 8 AND 10

90Copy pinpoint90. 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 maejure’ 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 subsequent mentioned under Article 2.1 would also lead to an equal extension in the scheduled commissioning date. Article 2.5 provided for delay in achieving the conditions subsequent. Article 2.5.1 reads as follows: D “2.5.1. In case of delay in achieving any of the Conditions Subsequent under clause 2.1 (a to h), as may be applicable, MPPMCL shall encash CPG (submitted by Seller @ Rs. 30 Lakhs/ MW) as under, subject to Force Majeure: - a) Delay from 0-3 months - 1 % per week. E b) Delay from 3-6 months - 2% per week for the period exceeding 3 months, apart from (a) above. c) Delay from 6-9 months - 3% per week for the period exceeding 6 months, apart from (a) and (b) above. F d) In case of delay of more than 9 months, MPPMCL shall terminate PPA and release balance amount of CPG.”

91Copy pinpoint91. Thereafter, PPA deals with the aspect of commissioning. Article 2.6 deals with commissioning and it reads as follows: “2.6. COMMISSIONING G In case of Solar Project of capacity up to 50 MW, commissioning of plant shall be within 12 months from the date of financial closure subject to Force Majeure. In case of Solar Project of capacity beyond 50 MW and up to 100 MW, commissioning of plant shall be within 15 months from the date of financial closure subject to H

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 73 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

Force Majeure For capacity beyond 100 MW, commissioning period shall be within 18 months from the date of financial closure subject to Force Majeure..1 In case of failure to achieve this milestone, provision of PPA as mentioned below shall apply: - MPPMCL shall en cash the CPG in the following manner for the capacity not commissioned, subject to Force Majeure:- a) Delay from 0-3 months - 1% per week. b) Delay from 3-6 months - 2% per week for the period exceeding 3 months, apart from (a) above.. C c) Delay of more than 6 months – 3% per week for the period exceeding 6 months, apart from (a) and (b) above. Part Commissioning: In case of Solar PV Projects, Part commissioning of the Project shall be accepted by MPPMCL subject to the condition that the minimum capacity for acceptance D of part commissioning shall be 5 MW. Or in multiple of 5 MW COD means the commissioning date of just units (s) of the power project where upon 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. The E PPA will remain in force for a period of25 month from the COD.”

92Copy pinpoint92. 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 F (PY/Thermal Technology) installed by the Seller Located at Village bedhsya, 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 G 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 H

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A 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 Commission or Local B Authority or any other Authority prescribed under the law connected with the project of the Seller. The Seller shall be fully responsible for the design, construction, testing, operation and maintenance of the solar power plant in accordance with Standard Utility Practices, relevant technical standards and specifications. b) For the power plant situated in MP State, the power evacuation infrastructure laid by the Seller shall be the property of the concerned licensee (Transco/Discom) in whose territorial area the above lines are located - notwithstanding the fact that the cost of the said infrastructure has been paid by the Seller and the same . shall then be maintained by the concerned licensee at its cost. A separate transfer agreement shall be subsequently signed in this regard with the concerned licensee, if required. 3.1.3. The Seller shall obtain all statutory and non-statutory permissions as required. The seller supplying power from outside of MP State shall require to obtain long term open access permission as per relevant regulations of central and state regulators, as the case may be, from the state or regional load dispatch center and/or the state/central transmission utilities.”

93Copy pinpoint93. Article 4 deals with System Operations. Article 4.2 deals with system operation and scheduling. We may notice Articles 4.2.1 and 4.2.4. “4.2.1. The State Load Despatch Center shall be the Nodal Agency if the project is located in MP, for system operation, power accounting, scheduling, etc. The foes and charges of SLDC as approved by the MPERC shall be payable by the Seller to the SLDC. In case of the system is located in any other state, the Seller has to follow the regulations of the particular SLDCIRLDC and the fees and charges shall be payable by the seller accordingly.” “4.2.4. SLDCs/Control Centers of the States/UTs/DVC, in which the solar power plant is located, shall provide the 15-minute block-

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 75 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

wise data of schedule and actual generation from Solar Grid A Connected Power Plant as recorded in the Energy Meters to the concerned RLDC and NLDC on a weekly basis as per the requirement of SLDCIRLDC/NLDC. All the data shall be submitted in the form prescribed by the NLDC.”

94Copy pinpoint94. Article 4.3 deals with open access. Article 5.1 deals with B commercial operations date (COD). COD has been defined in the agreement as meaning the commissioning date of the last unit(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 C 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 Annezure- 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.”

95Copy pinpoint95. Article 5.2. deals with Pre-Commercial Operations and it inter alia provides that the discom shall take all power produced through the STU/CTU during the testing of the plant without any charges. Thereafter G 5.3 deals with Notice of Commercial Operations. It reads as follows:- “5.3 NOTICE OF COMMERCIAL OPERATIONS:- The Seller will specify in a written notice to the MPPMCL that:

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A a) The Plant is constructed in accordance with this Agreement and is ready to deliver Solar Power in accordance with the terms hereof; b) All permissions and approvals required for the Plant to sell Solar Power at the rates and terms specified under this B Agreement have been obtained and c) All interconnection facilities are available to receive Solar Power from the Plant. Such notice shall take effect and the Commercial Operations Date will be achieved following the Transco/Discom’s declaration that all of the conditions set forth in this Article have been satisfied or waived by the STU/CTU/MPPMCL/Transco/Discom i.e.: a) The Seller has successfully completed the testing of the Plant in accordance with the manufacturer’s recommendations and the Seller has obtained and provided to the STU/CTU/Transco/Discom Certificates from the Electrical Inspectorate of GoMP or any other state government authorised agency, and the STU/ Transco/Discom’s officer as may be designated; in case project is located in MP. In case project is located outside E MP, similar certificates be obtained from the concern authority of respective state. b) The Seller has delivered to the Transco/Discom a list of the Plant’s equipment, showing the make, model, serial number and certified the installed capacity of the F Plant; c) The Plant has achived initial synchronization with the Transco/Discom’s/STU/CTU Grid System and has demonstrated the reliability of its communications systems and communications with the STU/CTU/ Transco/Discom; G d) The Seller has operated the Plant without experiencing any abnormal or unsafe operating conditions on any interconnected system; e) The Seller shall also have notified the MPPMCL/ H Trancso/Discom/STU/CTU no later than 30 days prior

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 77 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

to the Commercial Operations Date that all the A Conditions Subsequent as laid out in clause 1.01 have been met and MPPMCL shall verify the same and shall provide the Seller a written endorsement in this behalf acknowledging the documents, certificates, approvals etc provided by the Seller in this regard.” B 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 C 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. D 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: E “9.1. DEFAULTS AND TERMINATION. In case of default, the non-defaulting party shall issue a default notice to the defaulting party. If the default is not fully set right within three months from the date of issue of the default notice, then in case of default by the Seller, the MPPMC.L by giving F seven days termination notice in writing, may terminate the agreement. In case of default by MPPMCL, the Seller may in the same way terminate the agreement.”

96Copy pinpoint96. Article 9.4 deals with various events which are described as seller event of default. The relevant provision reads, inter alia: G “9.4. SELLER EVENT OF DEFAULT The occurrence and continuation of any of the following events, unless any such event occurs as a result ofa Force Majeure Event, shall constitute Seller Event of Default: H

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A a) The failure to commence supply of power to MPPMCL up to the Contracted, Capacity, relevant to the Scheduled Commissioning Date, by the end of 24 months; or”

97Copy pinpoint97. Article 9.5 provides for appellant’s events of default. Article 9.7 falling under 9.6 which generally deals with ‘Remedy’. It reads as follows: “9.7. MPPMCL commits to buy power, as indicated in Article Error! Reference source not found. of PPA, from Seller at Rs. 5.051 per kWh for a period of 25 years from COD. In case MPPMCL refuses or is unable to buy the said power, fully or partially, or there is an event of default as per Clause 9 .5 of PPA leading to termination of the PPA, the seller would be free to sell the said power to a Third Party at any rate which will be decided between the Seller and the said Third Party and such sale would be governed by the following principles:” D (Emphasis supplied) The principles are set out providing for two cases.

98Copy pinpoint98. Article 11.6.3 deals with Change in Law. Article 13 deals with Jurisdiction and Dispute Resolution. Article 13.2.1 reads as follows: “13.2.1. Either Party is entitled to raise any claim, dispute or E difference of whatever nature arising under, out of or in connection with this Agreement (“Dispute”) by giving a written notice (Dispute Notice) to the other Party, which shall contain: • a description of the Dispute; F • the grounds for such Dispute; and • all written material in support of its claim 13.2.2. The other Party shall, within thirty (30) days of issue of Dispute Notice issued under 13.2.1, furnish:

G • counter-claim and defences, if any, regarding the Dispute; and • all written material m support of its defences 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 H (30) days from the date of furnishing counter claims or defence

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 79 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

by the other Party, both the Parties to the Dispute shall meet to A 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.”

99Copy pinpoint99. Article 12.2 reads as follows: B “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.” C

100Copy pinpoint100. 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 D or determination of any of such claims could result in change in the Tariff, shall be submitted to adjudication by the MPERC. Appeal against the decisions of MPERC shall be made only as per the provisions of the Electricity Act, 2003, as amended from time to time.” E

101Copy pinpoint101. Article 15.1.4. deals with Compliance with Law and in substance it provides that the provisions of the Electricity Act, 2003 will prevail in case of repugnancy or deviation from the terms of the agreement from the Act.

102Copy pinpoint102. In the impugned judgment the High Court has proceeded to hold inter alia that the respondent has invested Rs. 350 crores in establishing the unit and after replacing the stolen parts, the unit is ready for commissioning on any date. The High court has further proceeded on the basis that the project involved two milestones and the High court has set aside the earlier order which dealt with delay in achieving the first milestone. Thereafter, the finding is that the project was certified to be completed much prior to 24 months which period ended on 19.9.2017 and the notice of commissioning was given on 4.7.2017. The CEIG approval was also granted on 9.8.2017. It is further found that another inspection was done on 19.04.2018 after nine months of the notice of commissioning and the CEIG approval. It is despite the same that the H

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A impugned order has been passed. Still further the High court proceeds to find that it is undisputedly established that both the milestones of the project were completed whereas only some of the invertors were stolen for which an FIR was also lodged. It is again found that it is not in dispute that the aforesaid parts have been replaced by the respondent. Support was drawn from the case of Renew Energy and the courts discretion to interfere in the matter was reiterated. The decision was found to be arbitrary. The court directed the respondent to file necessary application for statutory sanction for operation of the unit and the appellant was to decide on the application. To complete the narrative a review petition, was filed by the appellant. The appellant sought to project the aspect of fraud. The fraud consisted of the act of the respondent relying on unique/distinctive serial numbers of the invertors in regard to a number of invertors which were found to be common/duplicate. In other words, the case of the appellant was that the project for 50 MV was divided into 10 blocks of 5 megawatt. Each block had 116/117 invertors. A fraud was committed on the CEIG. In other words, 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.

103Copy pinpoint103. 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 F 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 G 25.12.2017. The status of the project as on 19.04.2018 was indicated as ‘not ready for commissioning’. Thereafter, it is pointed out that there is no justification for delay in achieving condition subsequent. Still further, reference is made to the Order passed by the High Court in the earlier Writ Petition. Physical verification was carried out on 19.04.2018, H whereupon, it was found that installation work of plant and equipment

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 81 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

was incomplete in Blocks 9 and 10. It was further pointed out that the copy of the Inspection Report was enclosed, where installation of invertors, installation of solar EV panels, cabelling and earthing work, was yet to be completed. It was further pointed out that even after more than six months, after deadline of commissioning of project, the plant is not ready for commissioning. Thus, there was not only failure to achieve condition subsequent but also failure to commission the project within time. In comparison with the case of Renew Clean Energy, it is pointed out that apart from failure to comply with condition subsequent, even the outer timeline has not been observed, whereas, in the case of Renew Clean Energy, they were ready to commission by the scheduled commissioning date. The timeline under Article 9.1 was not conformed to. After referring to the Order of the High Court, it was found that, with reference to Article 2.5.1(d) and Article 9.1 of the PPA, the PPA was terminated.

104Copy pinpoint104. Let us demystify the case for termination. Apart from non- fulfilment of the condition subsequent, apparently, in tune with the liberty granted by the High Court, the appellant has set out a case that the last date of commencement of supply was 18.09.2017, and even as on 19.04.2018, the respondent was not ready for commissioning of the project. With reference to Articles 5.1, 5.2 and 5.3 of the PPA, which consisted of the commercial operation date, pre-commercial operation and notice of commercial operation, it is stated that the respondent has not intimated regarding the schedule of commissioning, till the date of the Termination Notice. A distinction is sought to be drawn between Renew Clean Energy and the respondent, in that the case of the first respondent, even the first respondent was not ready to commission the project within the stipulated time. F

105Copy pinpoint105. The case that the first respondent has projected in the Writ Petition, on the other hand, is, inter alia, as follows: On 04.07.2017, while issuing 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 G 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 H

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A 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 B 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 was obliged to issue default notice under Article 9.1 of the PPA. The respondent was entitled for a period of three months. No such notice was issued. As far as the Report of the Inquiry Committee dated 19.04.2018, relied on by the appellant, it is pointed out that the challenge to the earlier termination notice was pending and the respondent was constrained to demobilise its staff/security guards. Thefts took place. It is pointed out that these thefts took place after the certification by the CEIG. In other words, the respondent would blame the appellant for not conducting an inquiry immediately after the certification by the CEIG. It is also the case of the first respondent that, through its EPC Contractor, it had procured, inter alia, 1163 string invertors. Some of the string invertors were stolen, as stated earlier. That the case of the respondent is not that the project had been commissioned but that the appellant prevented it from commissioning the project before the last date. It is also seen stated that the project was complete in all respects from the side of the respondent but on account of theft of a very small number of equipment, highlighted by the appellant in its Inspection Report, the first respondent had, in the meanwhile ensured to get these miscellaneous equipments and parts reinstalled and the project was complete in all respects as on that date. As far as the theft is concerned, the first respondent had lodged two FIRs through its EPC Contractor well before the inspection carried out on 19.04.2018. THE ASPECT OF DISPUTED QUESTIONS OF FACTS

106Copy pinpoint106. What are the disputed questions of facts? The most important disputed question of fact is as to whether the first respondent was, in H

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 83 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

fact, ready to commission the project by the end of the peremptory date, which was fixed as a period of twenty-four months from the date of the agreement. On the one hand, the appellant would contend that first respondent was not ready to commission the project. This is for the reason that in the 9th and the 10th Blocks, certain string invertors were found missing. On the other hand, the case of the respondent is based on the Report of the CEIG, which would show that the respondent was ready to commission the project. As far as the CEIG Report is concerned, the case of the appellant appears to be that the respondent had played a fraud in obtaining the CEIG Report. This 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.

107Copy pinpoint107. 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 question of fact. This is on the reasoning that even if this Court proceeds on the basis of the Inspection Report F dated 19.04.2018, a miniscule percentage of Rs. 350 crores would be the subject matter of the lacunae that was pointed out by the Inspecting Team in its Report dated 19.04.2018. It is pointed out that the first respondent should not be visited with the highly arbitrary decision to terminate the PPA when nearly Rs. 350 crores have been sunk into the project. The project itself is an environment friendly project. An unusually G large number of competitors had bid in the bidding process and the first respondent had emerged as a lowest bidder, which, at that time was hailed.

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A THE CASE UNDER ARTICLE 9.1 READ WITH ARTICLE 9.4(a)

108Copy pinpoint108. One of the grounds taken by the first respondent against the termination notices is that it is issued without complying with Article 9.1 of the PPA. We have already adverted to the said Article. We have also referred to Article 9.4.(a). Let us divine what is contemplated under the PPA. The PPA contemplates Article 9 with its sub-divisions to provide for events of default and remedies. Under Article 9, the sub-Articles provide for seller’s event of default and the appellant’s Event of default. Reading Article 9.1 with Article 9.4 and, more particularly, Article 9.4.(a), which alone is relevant, we understand the following to be what is contemplated by the parties. Article 9.1 begins with the words ‘in case of default’. The default in the case of seller’s event of default would be the default, which is the subject matter of the termination. Here, we can safely conclude that the seller’s event of default, which is apposite, is the failure to commence the supply of power to the appellant at the contracted capacity, relevant to the scheduled commissioning date by the end of twenty-four months. The words ‘scheduled commissioning date’, have been defined in the PPA itself, to mean, for solar project of capacity 50MW as per the quantum indicated in LOI, the commissioning period allowed shall be nineteen months from the date of signing of the PPA. The period of twenty-four months must be reckoned from the date of the PPA and, so understood, since the date of the PPA is 18.09.2015, twenty-four months therefrom would expire on 18.09.2017. We, therefore, proceed on the basis that such an event, constituting 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 H a notice of termination, cannot be issued.

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109Copy pinpoint109. 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 there was a delay of 54 days in the matter of fulfilment of conditions subsequent and the scheduled commercial operation date, as per Article 2.6 was 14.04.2017. 11.08.2017 is noted as the date of notice of termination. 18.09.2017, being the end of twenty-four months from the date of signing of the PPA is shown as the last date of commencement of supply of the contracted capacity and Article 9.4 is referred to. 18.12.2017 is shown as the expiry date of three months, apparently, from 18.09.2017, for commencement of supply from the last due date. Thereafter, 25.12.2017 is shown as the expiry date of seven days of the PPA termination notice period. In paragraphs- C 21, 22 and 23 of the impugned notices, the appellant takes the following stand: “21. As per table-I, time line for commissioning of project has been indicated. You were required to adhere to st1pulated provisions of the PPA. Whereas this has not been achieved by D you, within the time line even considering provisions of Article 9.1 of the PPA i.e., 24 months (supply to power to. contracted capacity from date of PPA) + 3 months (default notice period) + 7 days (termination notice period), from the signing of the PPA have already being exhausted. E

22. Whereas, in light of showcause notice issued vide this office letter no. 108 dated 22.02.2017 and liberty granted “ by Hon’ble Court to MPPMCL, in its order dated 20.06.2018 for issuing fresh order in terms of PPA dated 18.09.2015 to you, in accordance with law, it is evident that you have failed to fulfil your contractual obligation as per PPA executed with you on 18.09.2015. Thus, F the PPA qualifies for termination.

23. Therefore, in line and in compliance to the Hon’ble High Court judgment dated 20.06.2018 and pursuant to the provision under Article-2.5.1 (d) along with the consideration of the timeline stipulated in Article 9 .1 of the PPA and showcause notice dated G 22.02.2017, the PPA signed on 18 Sept. 2015, between Mis Sky Power Southeast Solar India Pvt. Ltd. New -Delhi, (SPV of Parent Company Sky power Southeast Asia Holding 2 Ltd.) and MPPMCL, for supply of Power from the proposed, 50MW. Solar PY plant located at Village-Bedhaya District - Khandwa and H

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A subsequently location changed to Village Chhibel, Teb-Khalliiwa, Distt- Khandwa at a rate of Rs. 5.091 per unit, is hereby terminated.”

110Copy pinpoint110. Thus, we find the twenty-four months period from the 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.

111Copy pinpoint111. 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. D We may extract the following: “MP POWER MANAGEMENT COMPANY LIMITED CIN: U4010MP2006SGC018637 (A Govt. of M.P. UNDERTAKING) E Regd. Office: Shakti Bhawan, Rampur, Jabalpur, Madhya Pradesh, india-482008, Tel: 0761-2661111;-2660500, Fax: 0761- 261696, website:-www.mppmcl.com, email: md@mppmcl.com, No. 05-01/Solar Bidding-III/PP A/108 ‘Jabalpur Date 22.02.2017 F To, M/s Sky Power Southeast Solar Pvt. Ltd. 16A/20 W.E.A. Main Ajmal Khan Road,

G Karol Bagh, New Delhi-110005. Subject: submission of documents for fulfilment of condition subsequent in respect of your 50MW Solar Power project proposed at Village Chhirbel, Tallika Dist Khandwa under Phase-III solar H competitive bidding.

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 87 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

Ref: 1. Power purchase Agreement executed on 18.09.2015. A

2. Your letter No. SKP/MP/SOLAR/MPPMCL/2015-116/06, dated 12.01.2017 Dear Sir, With reference to your latter cited above, this is to intimate that B on scrutiny of the documents submitted by you for fulfilment of condition subsequent after 210 days from signing of PPA. In respect of your 50 MW solar power project proposed at village Chhirbel, Taluka & dist Khandwa, status of the documents found as under: C

D.G.M. (Commercial-3) R.0., MPPMCL, Bhopal G Chief General Manager (Commercial): Block No. 11, Shakti Bhawan, Rampur, Jabalpur (MP) 482008 Tel: 0761-2661245, 2702404, Fax: 0761-2661245, email: makarand.chincholkar@mppmcl.com H

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A It needs to be mentioned here that as per provisions of amended clause 2.1 (f) of the PPA pertaining to acquisition of land for the project, Seller shall be required to furnish the following ~ documentary evidence:- • Ownership or lease hold right (for at least 30 years) or right to use permission (for revenue land in Madhya Pradesh) in the name 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 D 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.l (dO of the PPA, referred PPA is liable for termination. Therefore, you are requested to E 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” F

112Copy pinpoint112. 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 Article 2.5.1, the PPA was liable for termination. The first respondent was asked for the explanation within ten days from the date of the letter for further necessary action in the matter. We are of the view that the said notice cannot qualify as one which was issued as a default notice under Article 9.1. We have already found that Article 9.1, dealing with default, which in this case, is the default by the seller, and, furthermore, the default being non-observance of the time limit of twenty-four

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 89 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

months from the date of agreement dated 18.09.2015, the notice dated 22.02.2017, could not have been issued, even before the expiry of the period of twenty-four months from 18.09.2015. In other words, the seller’s event of default under Article 9.4(a) could have become the subject matter of a notice under Article 9.1 only if there was failure on the part of the first respondent to supply power, as provided in Article 9.4(a), within twenty- four months. That point of time, viz., the expiry of twenty-four months from 18.09.2015, would arrive, at the earliest, only on 18.09.2017. Therefore, it is only after 18.09.2017 that the first notice or, what is described as the default notice, could have been issued by the respondent under Article 9.1. Apparently, C what has happened is the appellant has combined the default alleged with reference to Article 2.5.1(d), to which, undoubtedly, notice dated 22.02.2017, could be said to be related and has projected the said show-cause notice as the default notice within the meaning of Article 9.1 read with Article 9.4. Article 9.1 D contemplates a default, the issuance of default notice and, most importantly, giving a period of three months for the seller (first respondent) to set right things. It is if the seller does not remedy the matter within three months, that the second notice, which is essentially an Order of termination of the PPA, can be issued. A perusal of the notice dated 22.02.2017 does not make any E reference to the seller’s event of default contemplated in Article 9.4.(a). The reasons are not far to seek. For the reasons, which we have indicated hereinbefore, the notice could not have been issued based on there being a seller’s default within the meaning of Article 9.4.(a) on 22.02.2017. We reiterate that as on F 22.02.2017, the seller’s event of default under Article 9.4.(a), could not exist in law or in facts. 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 G 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 H

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A 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 B 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.

113Copy pinpoint113. Appellant has attempted to justify the notice dated 22.02.2017 as the show-cause notice within the meaning of Article 9.1 based on the C Judgment of the High Court in the first round of litigation. We are of the view that appellant would not be justified in drawing support from the said Judgment to contend that the issuance of notice dated 22.02.2017, would suffice and it absolves the appellant from complying with Article 9.1. From a perusal of the said Judgment in Writ Petition No. 12880 of D 2017, we find that the High Court found that an attempt was made by the appellant to justify the earlier termination dated 11.08.2017 on the ground that respondent had not commissioned the power project within the time fixed in the agreement. The High Court was not impressed as it found that the lack of commissioning of the power project was not the reason for terminating the contract and the appellant could not supplement the reason in view of Judgment of this Court in Mohinder Singh Gill and another v. Chief Election Commissioner, New Delhi and others35. It is thereafter, after setting aside the Order dated 11.08.2017, that liberty was granted to the appellants to pass fresh Order in terms of the PPA, in accordance with law. High Court, therefore, only permitted the appellants to invoke the PPA with respect to the lack of commissioning, and moreover, in accordance with law. It becomes clear as day light that since by the date of the Judgment, i.e., 20.06.2018, the period of twenty- four months from the date of the agreement, had expired, and if, in terms of the liberty granted by the High Court, the appellant was to lawfully terminate the contract, it could not have acted in breach of the mandate of the PPA, which, in fact, the High Court had specifically directed appellant to comply with. In other words, though nearly nine months had gone by from 18.09.2017, when the High Court pronounced Judgment on 20.06.2018, if the appellant wanted to terminate the agreement, at least under the contract, the appellant was obliged to issue 35 H (1978) 1 SCC 405

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 91 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

the default notice. As we have noticed, the appellant was perhaps A persuaded to issue the impugned termination notice on the basis of the earlier notice dated 22.02.2017 as it felt that it was entitled to ask the Court to revisit the issue relating to the non-fulfilment of the condition subsequent as well. The appellant has, in fact, proceeded in the notice of termination that the three months period, contemplated in Article 9.1, B 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 C 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 D 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.(a). E

114Copy pinpoint114. There is another vital aspect to be borne in mind. The impugned notice dated 11.08.2017, brought about the termination of the contract. This is while notice dated 04.07.2017 was issued by the first respondent, as noticed. Therein, the appellant was specifically asked to inspect the premises. The CEIG also issued the certificate on 09.08.2017. F Now the really significant fact is that after the appellant terminated the contract on 11.08.2017, it is wholly inconceivable and arbitrary to predicate that the first respondent should have commenced the project and complied with Article 9.4(a) by 18.09.2017. Even more unfair it would be to find that the first respondent had three months period from 18.09.2017 to cure the defect which period came to an end on 18.12.2017. Yet, this G very premise is reflected in the impugned notice dated 07.07.2018. There is no case at all for the appellant that immediately on the expiry of 24 months contemplated in Article 9.4(a), a notice was given under Article 9.1. This could not be, also for the reason that the appellant had well before 18.09.2017, on 11.08.2017, terminated the contract. This is H

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A indisputable. Equally significantly, termination of the contract dated 11.08.2017 clearly was illegal though it was found later and set aside by judgment dated 20.06.2018. Thus, we cannot also brush aside the complaint of the first respondent that this is a case where it stood prevented from commencing supply within the meaning of Article 9.4(a). The fact of termination by order dated 11.08.2017 and its invalidation by the High B court on 20.06.2018 are again not matters of dispute.

115Copy pinpoint115. There is another aspect to the matter. The termination of a contract, undoubtedly, results in the intrusion into and deprivation of valuable rights, which are vouchsafed to the awardee of the contract. It could be argued that dehors a contractual provision, unless it be that the contract peremptorily provides for the termination of the contract expressly without service of the notice on the occurrence of certain stipulated events, principles of natural justice may not be out of place and under the Theory of Fair State Action, in consonance with Article 14, an opportunity to the awardee as to why the contract should not be terminated, may be just. In this regard, we may recapitulate what this Court in State of U.P. v. Sudhir Kumar Singh and Others36 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 F 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 G 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 36 H (2020) SCConline SC 847

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 93 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

ex parte enquiries. We may bear in mind that Article 9.1 captures not really the principles of natural justice as such but an opportunity to set right a default by the seller.

116Copy pinpoint116. Having found that the impugned termination Order dated 07.07.2018 ill squares with the requirement of Article 9.1, the question may arise, whether this is a matter which should be the basis for interference in powers of judicial review under Article 226. This is not the basis on which the impugned Judgment is based. Could it be said that this is a matter, which should have formed the subject matter of a proceeding in a civil court. In this regard, we may notice the following aspects: C The object behind giving the default notice under Article 9.1 is to provide an opportunity to the seller under the PPA to comply with the PPA and remove the default within the period of three months. If it is a case where it is demonstrated that removal of the default was an impossibility, then, it would, indeed, be a futile exercise and perhaps, at least, in a writ proceeding based on infraction of Article 14 or that the action is arbitrary, the Court may have refused to exercise the extraordinary jurisdiction and relegate the party to other forum to seek whatever relief it may be entitled to. If on the other hand, complying with Article 9.1 was, indeed, meaningful and the default (Article 9.4.(a) could have been removed as contemplated under Article 9.1, then, undoubtedly, it may constitute arbitrariness to deprive the first respondent of the benefit of a default notice. We cannot be totally unmindful of the fact that such a Clause like Article 9.1 was inserted with the understanding, that, in such large complex projects, involving large sums of money being invested, and furthermore, the successful completion of the project being intended to augment the production of energy, in this case solar energy, there was an element of public interest also involved in not allowing the curtains to be rung down by an abrupt termination without affording an opportunity to the seller to remove the default. Therefore, we would also examine whether there is a case where, it could be said that the case of the first respondent is totally bereft of bonafides or merit.

117Copy pinpoint117. In this case, on 04.07.2017, the first respondent addressed what it purports to be the notice of commercial operations within the meaning of Article 5.3. It reads as follows: H

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A “Ref No. SKP-2/MP/SOLAR/COMM/2017-18/026 Date: 04-07-2017

To B The Chief Engineer (Planning & Design) M P Power Transmission Company Limited, Shakti Bhawan, Rampur, Jabalpur – 482008, Madhya Pradesh. C Subject: Notice to Commission on the 50 MW Solar Power Project of SkyPower Southeast Solar India Private Limited located at Village Chirbel, District Khandwa (“Project”), and Evacuation of Power from the Project to the 400 KV Chhagaon Sostation. Reference: Power Purchase Agreement dated September 18, 2015 D 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 E 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. F 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 some of the critical path items for the Project- • Transmission Line – 95% work has been completed as on G 28th June, 2017 for the 132KV DCDS (double circuit double string) transmission line from location of the Project to the 400KV substation Chhegaon. Balance 5% is expected to be completed by 15th July, 2017 in all respect. • Bay construction- 90% work on the 132 KV bay is completed (post receipt of connectivity approval from MP

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 95 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

Power Transmission Company Limited (“MPPTCL”) for the Project along with installation of specified equipment as required by MPPTCL. Balance 10% of the work, including testing, meter and CRP panel, is expected to be completed by 20th July, 2017. • Connecting Agreement-Connection agreements have already been signed on 18th May, 2017 between Madhya Pradesh Power Transmission Company Limited, Jabalpur and M/s SkyPower Solar India Private Limited. • SLDC connectivity- Connectivity from plant to the SLDC- Indore is already established through dedicated 2nox2mbps C point to point lease lines from BSNL (as per approved scheme of SLDC on 23rd March, 2017 through letter no. SE./LD. E&T/880, data can be transferred immediately on charging of plant). Specified equipment as per approved scheme of SLDC has been installed at SLDC-Indore and at the Project. Even, IP scheme for both the routers has been allocated by the SLDC, Jabalpur (through letter no. SE/LD.E&T/06, dated 3rd April, 2017). • CEIG Certification-We have initiated the process to obtain the CEIG certification, and the CEIG certification is expected by 20th July, 2017. The CEIG certificate shall be produced to MPPTCL as an annexure to obtain the commissioning certificate, as required under the PPA. Considering above facts on project progress we hereby request your kind needful and depute necessary officials and personnels to our site to undertake necessary inspection and testing and help us in the target commissioning dated of 31st July, 2017. In the event, you require any further information from us, we will be happy to provide the same upon your request.” (Emphasis supplied) G

118Copy pinpoint118. No doubt, Article 5.3 contemplates a notice whereunder the seller specifies that the plant was constructed as per the agreement and it was ready to deliver the solar power in accordance with its terms. Secondly, it must be indicated that all permissions and approvals required for the plant to sell solar power at the rates and terms had been obtained. H

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A 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 B 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 C 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.

119Copy pinpoint119. However, the first respondent in the letter dated 04.07.2017 D has intimated about the intention to commission the project by 31.07.2017, which is on the 27th day after the notice. As far as transmission line was concerned, 95 per cent of the work was claimed to have been completed as on the 28.06.2017. Balance 5 per cent, it is stated, would be completed by the 15.07.2017 in all respects. In regard to bay construction, 90 per cent of work was stated to be completed along with installation of certified E equipment. Here also, it is stated that the balance 10 per cent of the work including, testing, meter and CRP panel would be completed by 20.07.2017. Connection agreement is stated to have been signed on 18.05.2017. As far as SLDC connectivity is concerned, it is stated that connectivity to SLDC indoor was already established through dedicated F 2nox2mbps point to point lease lines from BSNL. As far as the certification by the CEIG, it is stated that the process to obtain the CEIG certification would be initiated and it is expected by 20.07.2017. Inspection was prayed for so as to achieve the target commissioning date by 31.07.2017. No doubt, the appellant has proceeded on the basis that the notice dated 04.07.2017 cannot be treated under Article 5.3 of the PPA. G As far as the CEIG Report is concerned, it appears to be dated 09.08.2017. It could no doubt be found that what Article 5.3 notice contemplates is a state of accomplishment of conditions when the notice is sent. However, the notice dated 04.07.2017 promised completion by 31.07.2017. Article 5.3 provides for waiver. If a default notice under H Article 9.1, was given on 07.07.2018, in place of the termination notice,

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 97 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

then, with the state of completion attained and, if anything further remained, doing that also, and issuing the notice, if insisted, the defect could have been removed.

120Copy pinpoint120. In this regard, we may notice a significant distinction between Article 2.5.1 (d) which was used as the sheet anchor by the appellant to contend that in the event of non-achievement of condition subsequent termination was mandatory. Article 2.5.1(d) is as follows: “d) In case of delay of more than 9 months, MPPMCL shall terminate PPA and release balance amount of CPG.” (Emphasis supplied) C

121Copy pinpoint121. When it comes to Article 9.1, we have noticed that it contemplates the giving of default notice when an event of default takes place. The seller is given three months’ time to set right 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).

122Copy pinpoint122. 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. F

123Copy pinpoint123. 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 project was ready and that G the first respondent can proceed with the commissioning activity. We bear in mind that the period of twenty-four months contemplated in Article 9.4(a), would expire only on 18.09.2017. The CEIG has given its Report on 09.08.2017 that the project was ready for commissioning. The factum of the Report cannot be treated as a disputed question of fact as it is covered by a document. In fact, we find that, the appellant proceeded H

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A on the basis admittedly that it was reliable, but, however, on 11.08.2017 issued the termination notice solely based on non-fulfilment of conditions subsequent. This notice stood set aside on 20.06.2018. Maybe the manner in which the inspection was carried out and the pitfalls in the same may be characterised as the disputed questions of facts. Also, though the appellant was invited to carry out the inspection on 04.07.2017, the appellant carried out the inspection only on 19.04.2018 and the Report was dated 21.04.2018.

124Copy pinpoint124. If we go by the Report of the CEIG, the project of the respondent would appear to have been completed for the purposes of effecting commissioning. It may be another matter that other formalities had to be completed. When the team of the appellant carried out the physical inspection, (it was done on 19.04.2018), the appellant’s team also substantially endorsed the Report of the CEIG. However, it was found that a certain number of string inverters inter alia, were not found at many locations in Block Nos. 9 and 10. It was found as follows: D “4. Any other specified observation in respect of installation of solar P.V plant In block 9 and 10, string inverters were not found at many location but those location had solar panels installed interconnections of PV panel (cabling) string work at there location are not found connected with each other Further, at some location the cable and earthing work is observed incomplieto & suspended.”

125Copy pinpoint125. It is here that we must notice the case of the first respondent to be that though the equipment was installed as certified in the Report of the CEIG and what remained was formal connectivity to the grid upon which commissioning certificate would be issued, the final event remained on account of non-issuance of connectivity code for connection to the grid. It is while so, when the challenge against the first termination notice was under consideration and there was 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.

M. P. POWER MANAGEMENT COMPANY LTD., JABALPUR v. M/S. SKY 99 POWER SOUTHEAST SOLAR INDIA PVT. LTD. [K. M. JOSEPH, J.]

126Copy pinpoint126. We will proceed on the basis that there was a CEIG Report A 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 deficiencies in the form of missing inverters inter alia from Block Nos. 9 and 10 inter alia. First respondent has a case of thefts occurring. In fact, the first respondent has a definite case that about 39 inverters involved were also replaced in June, 2018 based on Purchase Order of May 2018 [See Annexure R12 produced before the High Court in Review Petition No.682 of 2020]. This is even before 07.07.2018. No doubt, the appellant has a case that the FIRs relied on by the first respondent did not refer to inverters. As to whether, it was a result of thefts that the inverters etc. which were already there as on the date of the CEIG inspection went subsequently missing or as to whether it was as a result of the Report of the CEIG being flawed and, therefore, the inverters etc. were not there in the first place, even as on the date of the CEIG Report, appears to us to be a disputed question of fact. We proceed on the basis that the inverters in question were not there. But as noticed, about 39 stolen invertors were already replaced in June 2018. At any rate, if a default notice had been given pointing out this aspect, the matter could possibly be put right within three months of such a notice. We recall here the few complaints (essentially two in number) which remained of Respondent No.5. It could have been pointed out as part of aspect of default if it was so understood. We have also found that the joint inspection of the respondent No.4 had found on 24.08.2017 that the line may be charged. What we can find is only that this is not a case where the first respondent could be said to be in a position where it could be said that it would be unable to comply with the terms of the default notice if it was warranted. In other words, if as on 07.07.2018, instead of issuing a G termination notice, if notice had been given within the meaning of Article 9.1, it is quite possible that the first respondent would have remedied the defect as alleged. We have also noted that even in 2017, no notice was given under Article 9.1 and even the contract was terminated illegally as found by the High Court by notice dated 11.08.2017. The whole idea H