Discom gave nine months, the PPA allowed three: APTEL sends Rs 8.40 vs Rs 4.36 solar tariff fight back to KERC
A PPA runs from the date the Commission approves it, not the date it is signed, and a force majeure extension under Article 2.5.4 is capped at three months, the Tribunal held. With nothing on record on whether the 2 MW Tumkur project had crystallised its capital cost by 25 February 2017, the tariff goes back to KERC for a one-month inquiry while liquidated damages stand.
The Appellate Tribunal for Electricity has partly allowed the appeal of Jayamal Energy LLP, a 2 MW solar developer in Tumkur, Karnataka, against a Karnataka Electricity Regulatory Commission order that cut its tariff from ₹8.40 to ₹4.36 per unit and made it liable for liquidated damages. The damages stand. The tariff goes back to KERC.
The judgment of 26 October 2026 was written by Judicial Member Virender Bhat for himself and Officiating Chairperson Seema Gupta. KERC must now find out, within one month, whether the developer had crystallised its entire capital cost before 25 February 2017. If it had, the PPA tariff of ₹8.40 per kWh applies from commissioning, with carrying cost.
A 2 MW plant and two extensions
Jayamal Energy was formed as a special purpose vehicle to build a 2 MW solar project at village Shyasamaru in Tumkur district. The Karnataka Renewable Energy Development Limited approved the proposal and issued a letter of award. A power purchase agreement with Bangalore Electricity Supply Company Limited (BESCOM) followed on 2 July 2015.
KERC approved the PPA on 25 August 2015. The agreement gave 365 days from the effective date to complete conditions precedent and 18 months to reach the scheduled commissioning date. The project missed that date.
BESCOM, citing force majeure events the developer had raised, extended the commissioning date to 1 July 2017 by a memorandum of 16 June 2017. A further communication of 30 August 2017 pushed it to 1 October 2017.
Both extensions carried conditions. The tariff would be as per Article 5.1(ii) of the PPA, liquidated damages under clauses 2.2.1 and 2.5.7 would apply, and the performance guarantees had to be extended. The plant was commissioned on 31 August 2017, and Karnataka Power Transmission Corporation Limited issued the commissioning certificate on 19 October 2017.
The developer then filed OP No. 230 of 2017 before KERC. It asked the Commission to approve the extension to 1 October 2017 and to direct BESCOM to pay ₹8.40 per unit for the full PPA term.
On 29 November 2018 the Commission rejected the petition. It held that no force majeure notice had been served and that the reasons for delay were not force majeure events under the PPA. The tariff would be ₹4.36 per unit under the generic order of 12 April 2017, and damages were payable under Articles 2.2 and 2.5.7.
The effective date moves to Commission approval
Basava Prabhu Patil, senior counsel for the developer, argued that the effective date of a PPA is the date the Commission approves it. That would make the scheduled commissioning date 25 February 2017 and the real delay only six months and six days. Shahbaaz Husain appeared for BESCOM; KERC did not contest the appeal.
The Tribunal agreed with the developer on this point. It followed its own judgment in Sirwar Renewable Energy Pvt Ltd v. KERC (Appeal No. 245 of 2019), which relied on Azure Sunrise, SEI Aditi Power, SEI Diamond and Chennamangathihalli Solar Power Projects.
A PPA becomes implementable only when the Commission approves it. Until then a generator cannot seek sanctions, permissions or loans on its strength.
The bench also drew on Tata Power Company Ltd v. Reliance Energy Ltd, (2009) 16 SCC 659, and its own rulings in Rithwik Energy Generation, Hinduja National Power Corporation and Eswari Green Energy LLP. Section 86(1)(b) of the Electricity Act, 2003 makes Commission approval of a power purchase mandatory, so no clause of an unapproved PPA binds.
The Tribunal summed up the position at paragraph 18:
a PPA becomes effective only upon getting approval from the State Commission (para 18)
The scheduled commissioning date was therefore 25 February 2017, not 1 January 2017 as the Commission had taken it.
KERC could not reopen the extension BESCOM granted
The Commission had framed as its first issue whether it could make the developer prove force majeure even where the discom had not denied it. Relying on its own order of 7 August 2018 in OP No. 65 of 2017, it answered yes.
The Tribunal pointed out that it had reversed that very order in Madamageri Solar Power Projects LLP v. HESCOM (Appeal No. 322 of 2018, decided 12 August 2021). There it held that a discom which accepted the developer's reasons as force majeure and extended the date could not later approbate and reprobate.
Madamageri also held that the Commission was not justified in second-guessing an extension granted under a PPA clause it had itself approved. Once BESCOM acknowledged the delay and extended the date to 1 October 2017, KERC could not reopen the question. BESCOM did not counter this position in argument or in writing.
Three months was the ceiling under Article 2.5.4
That did not end the matter. BESCOM argued that its extensions were conditional on liquidated damages and on the lower generic tariff for the year of commissioning. The Tribunal found no infirmity in that, and went further, into the text of Article 2.5 of the PPA.
Article 2.5.3 allows the scheduled commissioning date to be pushed back by up to six months where the delay is caused by a BESCOM event of default. Article 2.5.4 deals with force majeure affecting either party: if the event continues beyond three months, either side may terminate.
The developer had sought extension for force majeure, not for any default by BESCOM, so the three-month limit applied. BESCOM had granted nine months. The Tribunal called that “patently contrary to the above noted clause of the PPA” and said it could not be accepted.
The bench made clear it was not doubting the discom's competence to extend time. It was insisting that the Commission cannot ignore the upper limits the PPA itself sets. Any extension beyond those limits is invalid.
Counting 18 months from 25 August 2015 and adding the permissible three months, the scheduled commissioning date stood extended to 25 May 2017. Commissioning on 31 August 2017 was therefore three months and six days late. The prayer to approve the extension to 1 October 2017 was rejected.
Rs 8.40 or Rs 4.36: an inquiry decides
Article 5.1 of the PPA fixes ₹8.40 per kWh under the KERC tariff order of 10 October 2013. But if commissioning is delayed beyond the Article 2.5 extension and the KERC tariff has changed in the meantime, the developer gets the lower of ₹8.40 and the varied tariff on the commercial operation date.
KERC had issued a generic order on 12 April 2017 fixing ₹4.36 per unit, and applied it following Savitha Oil Technologies Ltd v. KERC. The Tribunal turned instead to its judgment of 4 December 2025 in Smt Sharada Doddi v. Gulbarga Electricity Supply Company Ltd (Appeal No. 418 of 2023), which it described as absolutely identical on facts.
There too a 1 MW project under a 1 July 2015 PPA with a Karnataka discom was commissioned after the 12 April 2017 generic order, and the Commission cut the tariff to ₹4.36. The PPA clauses, including Article 5.1, were the same.
In Sharada Doddi the Tribunal reasoned that capital cost is the single most important driver of return on equity, interest, depreciation and so of tariff. If the developer had crystallised its capital cost before the original scheduled date, expecting approvals on time, the ₹8.40 tariff deserved protection.
Since the record did not show when that happened, the matter was remanded to KERC for that narrow inquiry.
The bench saw no reason to differ. A generator that has spent the entire capital cost before its scheduled commissioning date can justifiably be paid the PPA tariff despite a late commissioning.
In Jayamal Energy's case, however, neither side had argued the point, the written submissions were silent, and the record shed no light on it. The Tribunal therefore remitted the tariff question to KERC. If the developer crystallised the entire capital cost before 25 February 2017, the tariff is ₹8.40 per kWh.
No force majeure notice, so damages stand
On force majeure itself the developer lost. Article 8.3(b)(i) of the PPA requires the affected party to give written notice of the event as soon as practicable. Concededly, Jayamal Energy served no such notice on BESCOM.
The Tribunal applied the Supreme Court judgment of 25 August 2025 in Chamundeshwari Electricity Supply Company Ltd v. Saisudhir Energy (Chitradurga) Pvt Ltd (Civil Appeal No. 6888 of 2018). That ruling held the notice requirement in a PPA is “not mere directory and it is a condition precedent for invoking the force majeure clause”.
Without notice, no force majeure relief was available. For the same reason the Commission was right to hold the developer liable for damages under Articles 2.2 and 2.5.7.
Order
The impugned order of 29 November 2018 was affirmed insofar as it held Jayamal Energy liable to pay liquidated damages to BESCOM under Articles 2.2 and 2.5.7 of the PPA. On tariff, the case was remitted to KERC for a fresh hearing limited to whether the developer crystallised its entire capital cost before 25 February 2017.
The Commission must call for the necessary documents and conclude the inquiry within one month of the judgment. If the tariff is fixed at ₹8.40 per kWh, it applies from the actual date of commissioning and is payable with applicable carrying cost.
The appeal was partly allowed in these terms, and all pending interlocutory applications were disposed of. The judgment was pronounced in open court on 26 October 2026.