APTEL upholds that Delay in Securing Long-Term Access (LTA) is not a valid Force Majeure and therefore, Scheduled Delivery Date under PPA cannot be unilaterally extended

In a judgment dated 03.07.2026 in Appeal No.183 of 2020, the Appellate Tribunal for Electricity (Appellate Tribunal) has dismissed the appeal filed by Maruti Clean Coal and Power Limited (MCCPL), thereby upholding the Order dated 27.11.2019 passed by the Central Electricity Regulatory Commission (Central Commission). The Appellate Tribunal has ruled in favour of the Rajasthan Discoms — Jaipur Vidyut Vitran Nigam Limited, Ajmer Vidyut Vitran Nigam Limited and Jodhpur Vidyut Vitran Nigam Limited and Rajasthan Urja Vikas Nigam Limited (RUVNL), rejecting MCCPL’s claim that the Scheduled Delivery Date (SDD) of 30.11.2016 fixed under the Power Purchase Agreement (PPA) stood revised to 01.04.2017, and that the first contract year for tariff purposes ought to be reckoned from the later date.

1. Delay of Two Years in seeking Long-Term Access cannot be termed as Force Majeure

MCCPL had attributed its inability to supply the full Aggregate Contracted Capacity of 250 MW by the SDD on the non-operationalization of Long-Term Access (LTA)/Medium-Term Open Access (MTOA), and sought to characterise this as a Force Majeure event under the PPA. The Appellate Tribunal rejected this contention. It noted that after submitting a LTA revision request, MCCPL “just adopted a wait and watch approach” and neither sent any reminder to PGCIL/CTU nor made any other effort to ensure that LTA for the full 250 MW was granted expeditiously, following up only on 13.08.2015, after its plant had already achieved Commercial Operation Date. The fresh LTA application, mandated because the change in target region exceeded 100 MW under the Connectivity Regulations, 2009, was filed over two years after the PPA was signed.

The Appellate Tribunal found no merit in MCCPL’s plea that this delay was attributable to “legal uncertainty and procedural ambiguity” on account of the methodology for calculating relinquishement charges pending before the Central Commission. It held that the fifth proviso to Regulation 12(1) of the Connectivity Regulations, 2009 “clearly provided that a fresh LTA application would be required” for a change exceeding 100 MW or a change of region, and the order on relinquishement charges passed by the Central Commission “only elaborates and explains” what the proviso already provided, without effecting any change in the regulatory position. Since Force Majeure grants relief only where the triggering event “could not have been avoided if the affected party had taken reasonable care or complied with prudent utility practices,” the Appellate Tribunal held that MCCPL “neither took reasonable care nor acted prudently” in pursuing its LTA request.

2. Commencement of supply “Upto” Aggregate Contracted Capacity does not require the entire quantum of electricity flowing

MCCPL’s case was that the SDD stood fulfilled only when the entire 250 MW commenced flowing, and that part supply of 45 MW alone on 30.11.2016 could not amount to commencement of supply under the PPA. The Appellate Tribunal disagreed, construing Article 4.1.1 and Article 4.2.1(b) together. It held that the expression “upto the Aggregated Contracted Capacity” indicates that “the seller may commence supply of power of any quantum, the maximum limit being the aggregated contracted capacity,” and that it was “not mandatory for the power generator i.e. the seller to supply the entire aggregated contracted capacity of power by the Scheduled Delivery Date i.e. 30.11.2016 in order to constitute commencement of supply of power.”

The Apellate Tribunal noted that MCCPL had itself served the advance preliminary notice (26.09.2016) and final written notice (27.10.2016) under Article 4.1.2 for commencement of supply “w.e.f 30.11.2016 i.e scheduled delivery date,” raised monthly invoices at the tariff payable for the first contract year, which were duly paid, and never conveyed to the Discoms that the SDD should be treated as suspended, split into phases, or held in abeyance pending availability of transmission capacity for the balance 205 MW. On this basis, the AppellateTribunal held that the supply of 45 MW from 30.11.2016 itself constituted “commencement of supply” under Article 4.1.1, and that the first Contract Year commenced from that date.

3. No Force Majeure event affected CTU, LTA was, in Fact, Operationalized ahead of Schedule

The Appellate Tribunal also rejected MCCPL’s reliance on Article 9.2.2, which deems a Force Majeure event affecting CTU/STU to be a Force Majeure event affecting the Seller. It observed that the 23rd Meeting of WR Constituents had recorded that the Champa-Kurukshetra HVDC Phase-I and Phase-II lines, and the Jabalpur-Orai line, were expected to be commissioned only in November 2016/March 2018 and April 2018 respectively, yet MCCPL’s LTA was in fact operationalized on 31.03.2017, “almost one year earlier” than the timeline earlier communicated by PGCIL. In these circumstances, the Appellate Tribunal held, “it cannot be said that there was any force majeure event affecting the PGCIL/CTU for providing transmission access to the appellant.”

4. Deliberate delay in Furnishing the Letter of Credit

The Appellate Tribunal found that even after the Champa-Kurukshetra line achieved Commercial Operation on 24.03.2017 and PGCIL/CTU called upon MCCPL on the same date to furnish a Letter of Credit (LC), MCCPL offered “no justification” for the delay in submitting the LC until 31.03.2017, resulting in commencement of the balance 205 MW supply only from 01.04.2017. The Appellate Tribunal held that this appeared to be a deliberate delay with an “ulterior motive,” observing that had supply commenced on any date between 24.03.2017 and 01.04.2017, the first contract year “would have been merely of a few days,” which MCCPL avoided so as to secure the higher first-contract-year tariff of Rs.1.633/kWh (as against Rs.1.558/kWh for the second Contract Year) for a full twelve-month period. The Appellate Tribunal termed such conduct “not acceptable.”

Conclusion

Holding that neither the delay in operationalization of LTA nor the timing of supply of the balance 205 MW was covered by Force Majeure under the PPA, and that commencement of supply of 45 MW on 30.11.2016 itself marked the beginning of the first contract year, the Appellate Tribunal answered both issues framed for its consideration against MCCPL. Finding no error or infirmity in the Impugned Order, the Appellate Tribunal dismissed Appeal No.183 of 2020, reaffirming that Scheduled Delivery Dates fixed under a PPA cannot be unilaterally shifted by a generator based on its own commercial convenience, and that claims of Force Majeure must be tested strictly against the diligence or lack thereof shown by the party invoking it.

Judgment Link

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The Anatomy of a PPA Dispute in India: From Notice to Remedy

Understanding Power Purchase Agreement Disputes in India

The power sector in India has evolved quite a bit lately, and Power Purchase Agreements (PPAs) form the backbone of electricity generation and distribution. These contracts define how electricity generators, whether renewable or conventional, sell power to distribution companies (DISCOMs), ensuring commercial certainty and grid stability. However, as tariffs evolve, renewable targets expand, and regulatory frameworks tighten, power purchase agreement disputes in India have grown both in number and complexity.

A typical PPA dispute resolution in India can arise from multiple fault lines, including delays in project commissioning, disputes over tariff adjustments, curtailment of power by DISCOMs, or claims under the “Change in Law” clause. Each such disagreement can spiral into full-fledged regulatory litigation spanning multiple forums—from State Electricity Regulatory Commissions (SERCs) to the Appellate Tribunal for Electricity (APTEL), and sometimes even the Supreme Court.

This article breaks down the litigation lifecycle of a PPA dispute in India—from the moment a notice is issued, through the maze of jurisdictional forums, to the final remedies available to aggrieved parties.

 

What Triggers PPA Disputes in India?

Disputes under Power Purchase Agreements (PPAs) usually stem from mismatched expectations between generators and distribution licensees (DISCOMs), or from regulatory and operational challenges that disrupt project timelines and commercial viability. 

Below are the most common triggers in PPA disputes in India:

1.Tariff Disputes

Tariff determination is one of the most litigated aspects of any electricity regulatory dispute in India. 

Generators often lock in tariffs through competitive bidding or under cost-plus mechanisms approved by the State Electricity Regulatory Commission (SERC). Conflicts arise when:

• A DISCOM refuses to honour an agreed tariff, citing “unviable rates” or “change in circumstances.”
  
• The generator seeks tariff revision under the Change in Law clause due to new taxes, duties, or policy changes.
  
• Retrospective tariff reductions or renegotiations are attempted by state utilities, often seen in renewable energy PPAs (notably in Andhra Pradesh and Gujarat cases).

2.Commissioning Delays (COD) and Construction Hurdles

The Commercial Operation Date (COD) determines when the project is deemed ready to supply power. Delays in achieving COD, whether due to force majeure, delay in grid connectivity, or financing issues, often lead to disputes. 

DISCOMs may impose Liquidated Damages (LDs) or encash Performance Bank Guarantees (PBGs), while developers may argue that delays were beyond their control, such as late evacuation approvals or right-of-way obstructions.

3.Curtailment of Power and Grid Backdowns

Curtailment refers to situations where DISCOMs refuse to schedule or offtake power even though it is available for supply. 

While PPAs often guarantee “must-run” status for renewable plants, especially solar and wind, state load dispatch centres (SLDCs) sometimes curtail generation citing “grid security.” 

Developers argue this amounts to a breach of PPA unless backed by valid technical grounds.

4.Change in Law and Policy Transitions

One of the most contentious areas in PPA dispute resolution in India involves the Change in Law clause. Introduction of new taxes (like GST), safeguard duties on solar modules, or changes in transmission regulations can significantly affect project economics.

Developers typically seek pass-through of these costs, while DISCOMs resist on procedural or interpretational grounds, leading to regulatory litigation.

Contractual Preconditions Before Litigation

Before a power purchase agreement dispute in India matures into a regulatory or arbitral proceeding, parties must navigate several contractual preconditions embedded in the PPA itself.

These clauses serve as both a compliance checklist and a procedural gatekeeper.

1.Conditions Precedent (CPs)

Most PPAs stipulate a list of Conditions Precedent (CPs) that the developer must fulfil before the agreement becomes fully operational. These may include:

• Achieving financial closure
  
• Securing land and statutory approvals
  
• Executing grid connectivity and transmission agreements
  

If CPs are not satisfied within the stipulated period, DISCOMs may terminate the PPA or encash the developer’s Performance Bank Guarantee (PBG). However, delays often stem from state authorities’ slow approvals—raising questions of equity and fairness. 

2.Commercial Operation Date (COD)

The Commercial Operation Date marks the official commencement of power supply obligations. 

Disputes arise when DISCOMs allege the project was not “ready for dispatch,” while developers argue that grid non-readiness delayed synchronization. Evidence such as grid inspection reports, testing certificates, and SLDC communication logs play a vital role in proving whether COD was legitimately achieved.

3.Liquidated Damages (LDs) and Performance Bank Guarantees (PBGs)

LDs are pre-agreed penalties for delay or non-performance, while PBGs act as financial security. DISCOMs often encash PBGs citing commissioning delays or breach of PPA. 

Developers typically challenge such encashments as arbitrary or contrary to force majeure provisions. Regulatory bodies like CERC and SERCs have repeatedly held that LDs and PBGs cannot be enforced if delays stemmed from events beyond the developer’s control or if the utility itself contributed to the delay.

4.Notice and Cure Periods

Before initiating a formal claim or termination, PPAs generally require issuance of notice and allow a cure period for rectification. A failure to issue or properly serve notice can invalidate later proceedings.

These preconditions form the procedural foundation of every PPA dispute resolution in India. Observing them meticulously can prevent premature litigation and strengthen the developer’s case before the SERC or APTEL.

Forums & Hierarchy

The appropriate forum is critical in a power purchase agreement dispute in India, as jurisdiction determines both procedural timelines and the nature of available remedies. PPAs often contain arbitration clauses, but statutory disputes under electricity law can sometimes override contractual choices.

1.State Electricity Regulatory Commissions (SERCs)

SERCs are the first point of contact for most PPA disputes, particularly those involving:

• Tariff disagreements
  
• Claims for damages due to curtailment
  
• Enforcement of PPA obligations under the Electricity Act, 2003
  

SERCs have quasi-judicial powers to issue orders binding both generators and DISCOMs. Filing before a SERC is generally mandatory for disputes relating to regulated tariffs or grid operations, unless the PPA explicitly carves out arbitration for such claims.

2.Appellate Tribunal for Electricity (APTEL)

Aggrieved parties can appeal SERC orders to APTEL, which serves as the national-level appellate authority. Key characteristics include:

• National jurisdiction, addressing cross-state disputes
  
• Power to award damages, direct specific performance, or remand cases to SERCs
  
• Precedents set in APTEL PPA cases (e.g., Andhra Pradesh Solar PPA disputes) often guide future litigation
  

APTEL appeals are particularly common when SERC orders are perceived as inconsistent, delayed, or procedurally flawed.

3.Writ Jurisdiction

When parties believe statutory bodies have exceeded powers or violated fundamental rights, writ petitions under Article 226/32 of the Constitution may be filed in High Courts or the Supreme Court. These are exceptional remedies, usually pursued to secure:

• Stay of PPA termination
  
• Interim injunctions preventing encashment of PBGs
  
• Clarification on regulatory interpretation

4.Arbitration Carve-Outs

Some PPAs include arbitration clauses for commercial disputes. However, Indian courts have clarified that statutory obligations under the Electricity Act cannot be completely ousted by arbitration. Typically:

• Purely contractual claims (e.g., late payment penalties, indemnities) can go to arbitration
  
• Regulatory claims, tariff revision, or change-in-law disputes remain under SERC/APTEL jurisdiction
  

Evidence Strategy

In any power purchase agreement dispute in India, the strength of the case often hinges on meticulous evidence collection and presentation. Regulators and tribunals closely examine whether obligations were met, whether delays were excusable, and whether losses claimed are substantiated.

1.Grid Readiness and Evacuation Delays

One of the most frequent points of contention is whether the generator was ready to supply power and whether the DISCOM facilitated evacuation. Evidence includes:

• Grid synchronization certificates from the State Load Dispatch Center (SLDC)
  
• Communication logs for connectivity approvals
  
• Dispatch schedules showing actual versus scheduled generation
  

2.Metering and Energy Accounting Records

Accurate metering is critical to prove both delivery and shortfall of electricity. Documentation that regulators scrutinize includes:

• Meter calibration certificates
  
• Monthly energy accounting reports
  
• SLDC and DISCOM dispatch reconciliations
  

3.Force-Majeure Proof

Force majeure clauses protect generators from liability for events beyond their control. Commonly invoked scenarios are:

• Natural disasters (floods, cyclones)
  
• Grid failures beyond developer control
  
• Regulatory or policy delays
  

4.Documentary Trail of Notices and Communications

Every notice, email, or response related to contractual obligations, cure periods, or dispute escalation is crucial. A well-maintained documentary trail can:

• Prove that statutory and contractual preconditions were followed
  
• Demonstrate proactive mitigation efforts by the developer
  
• Strengthen claims before SERCs or APTEL
  

Conclusion

A power purchase agreement dispute in India is rarely a straightforward contract case—it sits at the intersection of regulatory oversight, commercial obligations, and public policy. Understanding the contractual framework, following procedural prerequisites, choosing the right forum, and building a sound evidentiary record are critical to securing relief.

For both developers and DISCOMs, proactive compliance and timely dispute management are the only sustainable strategies in India’s maturing power market.

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Supreme Court Verdict: Deemed Export Benefits under Foreign Trade Policy not available to Immoveable Assets, in particular, Thermal Power Plants

Supreme Court Upholds PSPCL’s Stand that Deemed Export benefits under the Foreign Trade Policy, 2004-09 and 2009-14 are only available to movable goods, and not to immovable assets such as coal-based thermal power plants and thereby, rejected the claim of Talwandi Sabo Power Limited and Nabha Power Limited contending withdrawal of Deemed Exports Benefits as Change in Law under the Power Purchase Agreement.

The Hon’ble Supreme Court of India, in its judgment dated 19 August 2025 in Nabha Power Limited v. Punjab State Power Corporation Limited & Ors. (Civil Appeal Nos. 8694 & 8739 of 2017), has delivered a landmark ruling upholding the position consistently taken by PSPCL before the State Commission, Appellate Tribunal, and the Apex Court.

PSPCL’s Contentions Before the Courts

Throughout the proceedings, PSPCL consistently advanced the following positions:

1. Inapplicability of Deemed Export Benefits to Thermal Power Plants which do not manufacture goods in India

o PSPCL argued that the Foreign Trade Policy (FTP) 2009-2014 extended deemed export benefits only to movable goods, and not to immovable assets such as coal-based thermal power plants assembled on-site.

o It was submitted that the legislative framework under the FTP and the Central Excise Act clearly distinguished between movable “goods” and immovable infrastructure. A generating station, embedded to the earth, could not be treated as “manufactured goods.”

2. FTP Benefits were Never Available to NPL/TSPL

o PSPCL highlighted that at the time of bid submission and execution of the Power Purchase Agreement (PPA), no deemed export benefits under Para 8.3 of the FTP were available to the project of Nabha Power Limited (NPL) or Talwandi Sabo Power Limited (TSPL).

3. Withdrawal of Benefits Not a “Change in Law”

o PSPCL had submitted that only statutory enactments or duly notified delegated legislation constitute “Change in Law” under Article 13 of the PPA.

o Administrative circulars, public notices, or press releases, lacking statutory force, could not trigger contractual relief. PSPCL stressed that DGFT’s policy notices were administrative/clarificatory in nature and did not qualify as “law.”

Hon’ble Supreme Court’s Findings

The Hon’ble Supreme Court upheld PSPCL’s contentions and the Appellate Tribunal’s Order, holding that:

• Press Releases or Cabinet communications do not constitute “law” under the Power Purchase Agreement (PPA). Only duly notified statutory instruments published in the Official Gazette qualify for consideration as “Change in Law.” The Hon’ble Court has reiterated the stance taken by the 3 Judge Bench in CA 8694 of 2017.
• Deemed export benefits of the Foreign Trade Policy (2009-2014) were never available to coal-based thermal power projects constructed in-situ, as such projects constitute immovable property and not “goods” as envisaged under the FTP.
• Withdrawal of such benefits by DGFT through policy circulars or notices cannot be construed as a “Change in Law” event under Article 13 of the PPA.

This judgment marks a significant affirmation of PSPCL’s consistent stand before the Punjab State Electricity Regulatory Commission (PSERC), the Appellate Tribunal for Electricity (APTEL), and the Hon’ble Supreme Court.

The ruling safeguards the interests of electricity consumers in Punjab by ensuring that the benefits accruing to the Thermal Power plants on account of grant of Mega Power status shall be fully passed on to the consumers of Punjab. This decision is a significant victory for PSPCL and the electricity consumers of Punjab, ensuring that the sanctity of competitive bidding including the Change in law provisions can accrue in favour of the Procurers as well when there is a negative change in law (reduction in cost after bidding) and tariff discipline is preserved.

 

 

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Power Purchase Agreements (PPAs) in India

A Power Purchase Agreement (PPA) is a long-term contract between an energy producer (seller) and an energy consumer (Buyer). PPA’s are a common type of agreement especially in the renewable energy sector. Energy law firms in India extensively deal with such agreements on a regular basis. PPAs enable energy producers to secure a return on their investments made in energy projects thus providing a financial framework to sell the energy produced at a pre-agreed amount. 

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Supreme Court’s Ruling on Change in Law Claims: Haryana Discoms vs GMR Kamalanga Energy Limited

What’s the impact of the Supreme Court ruling in favour of Haryana Discoms over GMR’s Change in Law claims? Unravel the legal complexities of this significant judgment here.

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