APTEL Rejects Solar Firm's Plea For Considering Demonetization As Force Majeure

The Appellate Tribunal for Electricity (APTEL) has rejected a plea by a solar company seeking relief on account of demonetization, ruling that the 2016 currency withdrawal cannot be treated as a force majeure event under the project’s Power Purchase Agreement (PPA) with the Solar Energy Corporation of India Ltd. (SECI). The case relates to delays in commissioning a 50 MW solar project in Maharashtra.

The tribunal held that the developer (Talettutayi Solar Projects Four Pvt Ltd) failed to comply with contractual requirements for invoking force majeure and did not demonstrate that demonetization made project execution impossible despite reasonable diligence. The ruling came as part of a broader order addressing liquidated damages and tariff implications arising from the project delay.

On the force majeure claim, the tribunal emphasized that the developer failed to issue a formal notice within the mandatory seven-day period specified in the PPA, describing such notice as a condition precedent for claiming relief. It further held that the developer did not establish that the impacts of demonetization or land-related challenges were unavoidable despite prudent utility practices.

APTEL Finds PPA Violation Genuine 

APTEL upheld SECI’s recovery of ₹15 crore through the encashment of performance bank guarantees, citing a clear breach of the PPA. The project was commissioned on August 10, 2017, three months after the Scheduled Commissioning Date (SCOD) of May 10, 2017, preventing SECI from fulfilling its downstream power supply commitments to Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). The tribunal observed that this constituted a legal injury to SECI.

Invoking Section 74 of the Indian Contract Act, the tribunal ruled that the liquidated damages clause in the PPA represented a genuine pre-estimate of loss rather than a penalty. It noted that where the actual loss is difficult to quantify, the agreed damages specified in the contract can be enforced without requiring proof of the precise quantum of loss.

However, APTEL granted partial relief by overturning the downward tariff revision imposed earlier by the Central Electricity Regulatory Commission (CERC). The regulator had concluded that the project missed the three-month grace period by one day, based on an incorrect commissioning date of August 11, 2017.

Relying on a commissioning certificate issued by the Maharashtra Energy Development Agency (MEDA), the tribunal confirmed that the project was actually commissioned on August 10, 2017—exactly within the three-month window from the SCOD. As a result, the developer will retain the pre-fixed tariff of ₹4.43 per kWh despite the delay.