ESSAR POWER (JHARKHAND) LIMITED THROUGH ITS GENERAL MANAGER Vs. BIHAR STATE POWER HOLDING COMPANY LIMITED, THROUGH ITS GENERAL MANAGER

JUDGEMENT

(1.) Heard the parties.

(2.) In the present writ petition, petitioner is seeking the following reliefs: (a) Declaring that the Power Purchase Agreement dated 17.10.2011 (PPA) executed between the petitioner and earstwhile Bihar State Electricity Board (BSEB) (now Bihar State Power Holding Company Limited (BSPHCL/respondent no.1) (pursuant to being selected as the successful bidder in the Bid floated by respondent no.1 for long term procurement of electricity through tariff based on competitive bidding), has become null and void, in light of cancellation of Chakla and Ashok karkata Captive Coal Blocks (Captive Coal Blocks) by judgment and order of the Hon'ble Supreme Court of India ( Hon'ble Supreme Court) dated 25.8.2014 and 24.9.2014 passed in Writ Petition (Crl.) No.120 of 2012 (M.L. Sharma v. The Principal Secretary and others). The said Captive Coal Blocks were allocated to the petitioner by the Ministry of Coal, Government of India (MOC/Respondent no.2) to meet the fuel requirements for its 1800 MW Power Plant, being set up in Latehar, Jharkhand. The Bid dated 02.04.2011 submitted by the petitioner and the tariff quoted in the Bid, for supply of power to Respondent No.1, was promised, upon the availability of coal from the said Captive Coal Blocks (b) Declaring that due to continuing Force Majeure Event affecting the petitioner, the petitioner has a right to terminate the Power Purchase Agreement, for brevity, PPA, and validly terminated the Power Purchase Agreement by issuing a termination notice in terms of Article 11.5.1 read with Articles 4.7.1, 4.7.3 and 9.3 of the PPA as it is unable to commence supply of power, to the Respondent No.1, within for a maximum period of twelve months beyond the Scheduled Delivery Date on account of Force Majeure Events. In this regard, the petitioner had vide its letter dated 28.4.2014 and its other letters exchange with respondent no.1, duly intimated the respondent no.1 qua the continuing Force Majeure Events, affecting the petitioner, thereby preventing it from supplying power to respondent no.1 by the Schedule Delivery Date. Admittedly, the respondent no.1 has, by its letter dated 16.7.2014, acknowledged the continuous Force Majeure Events preventing the petitioner from commencing supply of power to it. (c) Declaring that the respondent no.1 is not entitled to recover an amount of Rs.157.5 Crs or part thereof from the petitioner by way of liquidated damages under the PPA. (d) quashing the letters dated 24.1.2017 by which the respondent no.1 has held the petitioner is guilty for delay and have shown intention to recover the liquidated damages and encash the contract performance guarantee. (e) Restraining respondent no.1 from arbitrarily invoking the Bank Guarantee No.13940100000324 dated 30.8.2011, for an amount of Rs.90,00,00,000/- (Rupees Ninety Crore only) (Contract Performance), furnished by the petitioner to the respondent no.1 in terms of Clause 2.2.9 of the Request for Proposal (RFP) dated 14.1.2011. To declare and hold, the termination of the PPA by the petitioner, in terms of Articles 11.5.1 is without any financial liability on either party (e) Directing respondent no.1 to return the Contract Performance Guarantee to the petitioner forthwith, in terms of Articles 3.8 of the PPA. Article 11.5..1 read with 3.8 of the PPA, requires the respondent no.1 to forthwith return the Contract Performance Guarantee on termination of the PPA under Article 11.5..1 (f) by way of interim relief, restrain Axis Bank Limited (Axis Bank/respondent no.3) from giving effect to any demand/communication seeking invocation of Bank Guarantee with respect to Contract Performance Guarantee by Respondent no.1, the officers and/or its authorized representatives/agents and permitting encashment thereof.

(3.) During argument the petitioner has principally has placed thrust with respect to invoking Bank Guarantee of 90,00,000/- Crores for purported liquidated damages for an amount of Rs.157.5 Crores on account of failure to supply power in terms of the contract. Further argued that question of liquidated damage does not arise as the situation was beyond the control of Company as it was not possible to establish the generating power station and invoked the clause of Force Majeure. Further the thrust has been made the notice violates the provision of contract and violates fairness which was served upon the petitioner Company calling upon to pay the amount of liquidated damage of Rs.157.50 Crore from the date of receipt of the letter failing which the Bihar State Power Holding Company Limited (hereinafter referred to as the Holding Company) will take appropriate legal action against the petitioner Company for recovery of the said amount.