Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Contract – Termination of Contract |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Contract – Termination of Contract – Appellant issued aRequest for Proposal (RFP) for long term procurement of 300 MVpower from Grid connected Solar Energy Sources through tariffbased competitive bidding – Respondent no.1 was selected –Pursuant thereto, Power Purchase Agreement (PPA) was executedbetween the appellant and respondent no.1 for sale and procurementof solar power, for which, respondent no.1 submitted bankguarantee – Respondent no.1 was unable to fulfill prescribedconditions within stipulated period – Consequently, PPA terminatedby the appellant and further, imposed penalty on respondent no.1 –Penalty amount was to be encashed from bank guarantee – HighCourt set aside the order of termination of the contract, however,maintained the invocation of bank guarantee – On appeal, held: –The termination of contract was not fair – Respondent no.1 wasunable to obtain the requisite land for establishing the power plantand on its request, the State allotted land to the respondent on lease– However, land was found to be heavily encroached and there wasstiff resistance every time respondent no.1 tried to approach theland – Respondent no.1 sought for change of location of the project,which was granted – Thereafter respondent no.1 purchased anotherland and undertook the construction activities and the project inan advance stage of synchronization – The same was notified to theappellant by communication dated 10.07.2017 stating that thecommissioning of the project was in final stage – However, stillappellant terminated the contract by its order dated 11.08.2017 –Respondent No.1 had spent substantial amount in development ofthe project in the changed location – The delay in commissioningthe project was due to unavoidable circumstances like resistancefaced at the allotted site and subsequent change of location of theproject – These circumstances, though not a Force Majeure event, time taken by respondent No.1 in change of location andconstruction of the plant have to be kept in view for counting thedelay – Further, since the contract permits imposition of penalty,respondent no.1 liable to pay penalty in terms of clause 2.5.1 of thePPA for delay – But the action of the appellant in terminating thecontract arbitrary and rightly set aside by the High Court – Insofaras bank guarantee is concerned, Supreme Court stayed the orderof the High Court subject to restitution by the appellant of theamount covered by the bank guarantee which has been invokedwhich is said to have been complied with by the appellant. |
Judge | Hon'ble Ms. Justice R. Banumathi |
Neutral Citation | 2018 INSC 307 |
Petitioner | M.p. Power Management Company Ltd. |
Respondent | Renew Clean Energy Pvt. Ltd. & Anr. |
SCR | [2018] 3 S.C.R. 829 |
Judgement Date | 2018-04-05 |
Case Number | 3600 |
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