APTEL Dismisses NTPC's Force Majeure Claim Over Farakka Water Shortage, Cites Decade-Long Inaction on Lift Pumps
NTPC sought relief for plant shutdowns at Farakka caused by low Ganga Feeder Canal water levels, but APTEL held the situation was foreseeable and self-attributable.
The Appellate Tribunal for Electricity dismissed NTPC Limited's appeal on 11 May 2026, rejecting its claim that the shutdown of six units at the Farakka Super Thermal Power Station during February and March 2016 was caused by a force majeure event. NTPC had argued that a drastic fall in water levels in the Ganga Feeder Canal — caused by deficient monsoon rains and diversion of water to Bangladesh under the Indo-Bangladesh Water Sharing Treaty, 1996 — triggered the shutdowns and entitled it to revised billing under its Power Purchase Agreements. The Tribunal, comprising Officiating Chairperson Ms. Seema Gupta and Judicial Member Mr. Virender Bhat, upheld the Central Electricity Regulatory Commission's order dated 17 November 2017, finding that the water shortage was neither sudden nor unforeseeable, and that NTPC's own failure to install approved lift pumps lay at the root of the problem.
The Dispute Before the Tribunal
NTPC's Farakka Station has a total installed capacity of 2100 MW, comprising three units of 200 MW each and three units of 500 MW each, commissioned between 1986 and 2012. The station draws its cooling water from the Ganga Feeder Canal, whose flow is controlled by the Farakka Barrage Project Authority under the Ministry of Water Resources.
Under the Indo-Bangladesh Water Sharing Treaty signed on 12 December 1996, a minimum of 35,000 cusecs of water is diverted towards Bangladesh annually during the lean season, which runs from 1 January to 31 May. NTPC contended that during February and March 2016, a combination of this treaty diversion and deficient monsoon rainfall in 2015 caused a drastic reduction in canal water levels, forcing it to shut down all six units of the Farakka Station.
NTPC served force majeure notices on its beneficiary distribution companies in March 2016 and raised the issue at the 32nd Commercial Sub-Committee meeting of the Eastern Regional Power Committee on 10 June 2016 and the 33rd TCC/ERPC meeting on 25 June 2016. It then filed Petition No. 154/MP/2016 before the CERC, seeking a declaration that the water unavailability constituted a force majeure event under Article 8 of the PPAs, exclusion of the shutdown period from plant availability calculations, and recovery of the difference in tariff from the beneficiaries.
The CERC rejected all reliefs by its order dated 17 November 2017. NTPC appealed to APTEL.
The Force Majeure Clause and NTPC's Case
Article 8.0 of the PPA dated 13 November 2010 defines force majeure as events such as war, rebellion, mutiny, civil commotion, riot, strike, lock-out, “forces of nature, accident, act of God or any other such reason beyond the control of concerned party.” NTPC's case was that the water shortage fell under the heads of “forces of nature” and “act of God.”
NTPC relied on monsoon reports for 2014 and 2015, a letter dated 15 February 2017 from the Farakka Barrage Authority, and the text of the Indo-Bangladesh Water Treaty, 1996. The Farakka Barrage Authority's letter stated that the reduction in water level during the lean season of 2016 was not a usual one but was a significant phenomenon compared to recent past years.
The History of the Lift Pump Scheme
The Tribunal's reasoning turned heavily on a sequence of regulatory proceedings that predated the 2016 shutdowns by several years.
As far back as 2006, NTPC's Board of Directors, at its 288th meeting on 26 June 2006, approved the construction of a lift pumphouse on the Ganga Feeder Canal specifically to mitigate the impact of reduced water availability caused by the Bangladesh treaty diversion.
In 2009, when NTPC filed Petition No. 222/2009 before the CERC for tariff determination for the Farakka Station for the period 2009–2014, it projected an additional capitalisation of Rs. 6,810 lakhs for the construction of lift pumps. The justification stated in that petition was the drop in water level of the source feeder canal on account of the revised Indo-Bangladesh Ganga water sharing agreement. The CERC, by order dated 14 June 2012, allowed this expenditure under Regulation 9(2)(ii) of the 2009 Tariff Regulations.
However, the lift pumps were never installed. In a subsequent petition (No. 233/2013), NTPC disclosed by affidavit dated 28 October 2013 that in March 2013, while civil works were underway, there was a sudden ingress of subsoil water from the nearby Farakka Feeder Canal into the lift pump house area, flooding and stopping the excavation work. NTPC stated that design modifications were being finalised and capitalisation of the Rs. 6,810 lakh scheme would not be possible during 2013–14. The CERC noted these reasons in its order dated 12 November 2014 and reiterated them in its subsequent order dated 6 February 2017 in Petition No. 274/2014.
No further mitigating steps appear to have been taken by NTPC between 2013 and the shutdowns of February–March 2016.
How the Tribunal Reasoned
The Tribunal addressed the two components of NTPC's force majeure claim separately.
On the treaty diversion, the Tribunal observed that the Indo-Bangladesh Water Sharing Treaty had existed since 1996 and was not signed for the first time in 2016. NTPC had knowledge of the treaty and of the minimum 35,000 cusecs diversion during the lean season. A known, recurring obligation under a long-standing treaty cannot constitute a force majeure event.
On the monsoon deficiency, the Tribunal examined the rainfall data NTPC relied upon. The monsoon reports for 2014 and 2015 showed rainfall deficiencies of 12% and 14% respectively during June to September. The Tribunal found these figures to be only marginal, not drastic, and held that NTPC had failed to demonstrate that such deficiency was so exceptional as to exceed statistical levels over the last 100 years or that it could not have been anticipated.
As for the Farakka Barrage Authority's letter of 15 February 2017, which described the 2016 reduction as significant compared to recent years, the Tribunal noted that no supporting data or comparative analysis had been produced before the CERC or before APTEL. The Commission had rightly discarded those observations.
The Tribunal then drew the central inference: NTPC had been aware of the risk of fluctuating water levels in the Ganga Feeder Canal at least since 2009, had obtained regulatory approval and funding for lift pumps to address that very risk, and had abandoned the scheme after technical difficulties without pursuing any alternative mitigation. The Tribunal held that the shutdown of the plant during the subject period was solely attributable to the delay on NTPC's part in constructing the lift pumps or initiating any other mitigating steps.
The Tribunal referred to the Delhi High Court's observations in Halliburton Offshore Services Inc. v. Vedanta Limited and Another, 2020 SCC OnLine DEL 2068, which were quoted with approval by the Supreme Court in Maharashtra State Electricity Distribution Co. Ltd. v. Maharashtra Electricity Regulatory Commission, (2022) 4 SCC 657. Those observations hold that a force majeure clause is to be interpreted narrowly, that parties ought to be compelled to adhere to contractual terms, and that the court must assess the conduct of the parties prior to the alleged event before excusing non-performance.
Applying that standard, the Tribunal concluded that NTPC could not be allowed to take benefit of its own fault. The contingency that materialised in 2016 was one NTPC had been conscious of, had planned to address, and had failed to remedy.
Outcome
The Tribunal concurred with the CERC's finding that the fall in water flow in the Ganga Feeder Canal due to hydrological factors, coupled with the diversion of water to Bangladesh under the Indo-Bangladesh Water Sharing Treaty, 1996, did not constitute a force majeure event under Article 8 of the PPAs. No error or infirmity was found in the impugned order dated 17 November 2017.
Appeal No. 23 of 2018 was dismissed as devoid of merit. The judgment was pronounced in open court on 11 May 2026.