Case: Bangalore Electricity Supply Company Limited (BESCOM) Vs. E.S. Solar Power Pvt. Ltd. &amp; Ors

the whole of its terms and accordingly the whole context must be considered in endeavoring to collect the intention of the parties, even though the immediate object of inquiry is the meaning of an isolated clause. Bihar State Electricity Board, Patna and Ors. v. M/s. Green Rubber Industries and Ors 1990 (1) SCC 731. 17. Liquidated damages can be imposed on the Developer under Article 5.8.1 if he is unable to commence supply of power to the Appellant by the Scheduled Commissioning Date. Article 12 deals with the applicable tariff. The developer shall be entitled to receive the tariff of Rs. 6.10/kWh of energy supplied the Appellant in accordance with the terms of the agreement. If there is delay in commissioning of the project beyond the Scheduled Commissioning Date and if there is change in KERC applicable tariff, Article 12.2 provides that the changed applicable tariff for the project shall be the lower of the Tariff as in Clause 12.1 and KERC applicable tariff as on the commercial operation day. 18. The bone of contention is whether the Scheduled Commissioning Date of the Solar Power Project is 16.10.2017 or 17.10.2017. We proceed to advert to the undisputed facts. KERC approved the PPAs on 17.10.2016. Scheduled Commissioning Date according to the agreement should be 12 months from 17.10.2016. There is also no dispute between the parties that 12 months means 365 days. According to the Appellants if 17.10.2016 is included in computation of 365 days, the Scheduled Commissioning Date is 16.10.2017. On the other hand, the Respondents contended that 17.10.2016 should be excluded in the calculation of 365 days, in which case, 17.10.2017 would be the Scheduled Commissioning Date. 19. The Commission relied upon 1.2.1(m) of the PPA to conclude that 17.10.2016 has to be included for ciphering the period of 365 days to determine the Scheduled Commissioning Date. Whereas, the Appellate Tribunal was of the view that Article 1.2.1 (k) of the PPA is relevant. The Tribunal held that the date of the event which is the date on which the PPA was approved i.e. 17.10.2016 shall be excluded in calculating the period of 12 months. 20. Reduction of applicable tariff is permissible under Article 12.2 of the PPA only when there is delay in commissioning of the Project beyond the Scheduled Commissioning Date. As discussed above, there is no dispute that the Scheduled Commissioning date shall be 12 months from the effective date. There is no quarrel between the parties that the effective date is 17.10.2016. The interpretation clause contains three provisions which are 1.2.1 (k), 1.2.1 (l) and 1.2.1 (m). According to 1.2.1 (k), any reference to a month shall mean a reference to a Calendar month as per the Gregorian Calendar. 1.2.1 (l) provides that references to any date or period shall mean and include such date, period as may be extended pursuant to the agreement. As per Article 1.2.1 (m), any reference to any period commencing from a specified date and until the specified day shall include both such day or dates. The other crucial provision which has to be taken note of is the definition of the expression Month in Article 21.1 of the agreement. Month has been defined to mean a period of 30 days and excluding (the date of the evet) where applicable, else a Calendar month. We are not concerned with 1.2.1 (l), in this case as there is no question of any extension of any period pursuant to the agreement. 1.2.1 (k) indicates that any reference to a month shall mean reference to a Calendar month. Reverting to the definition of Month, it is clear that a month shall mean either 30 days where applicable or a Calendar month. In this case, there is no dispute that 12 Calendar months have to be taken into account for determining the Scheduled Commissioning Date. The crucial expression in the definition of Month is excluding the date of the event. If the date of the event i.e. 17.10.2016 is excluded, the Scheduled Commissioning Date would be 17.10.2017. We do not agree with the conclusion of the Commission that the definition of month is with reference only to one month and not more which is wrong a reading of the provision. The Commission applied 1.2.1 (m) which refers to a period commencing from a specified date to a specified day for the purpose of including the date of the event. In our view, the Commission has committed an error in applying 1.2.1 (m) when the provision that is applicable is 1.2.1 (k) read with the definition of month in Article 21.1. There is a specific mention of twelve months in the definition of SCOD and Article 1.2.1 (k) categorically provides that any reference to a Month shall be a calendar month. Applicability of Article 1.2.1 (k) excludes the operation of Article 1.2.1 (m) to the facts of this case. 21. The next contention of the Appellant is that actual injection of power into the Grid was on 17.10.2017 and as the Scheduled is 16.10.2017, the reduction of the tariff in view of the delay of 1 day in commissioning is justified. The alternate submission that is made by the Respondents that even assuming that the Scheduled Commissioning Date is 16.10.2017 and not 17.10.2017, the Respondents commissioned the Solar Plants on 16.10.2017 itself. According to the Respondents, the Appellant committed an error in penalizing the Respondents on a wrong premise that the actual injection of power is required to show that the Solar Plants were commissioned. The Commission answered the point in favour of the Appellants by holding that actual injection of power is necessary to determine the date of commissioning of the Plant. The Appellate Tribunal reversed the findings recorded by the Commission on this aspect by relying upon the Commissioning certificate issued by the KPTCL which is to the effect that the Solar Plants were commissioned on 16.10.2017 itself. There is no dispute that the power was injected from the solar plants on 17.10.2017.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]16. The duty of the Court is not to delve deep into the intricies of human mind to explore the undisclosed intention, but only to take the meaning of words used i.e. to say expressed intentions (Smt. Kamala Devi vs. Seth Takhatmal & Anr 1964 (2) SCR 152 ). In seeking to construe a clause in a Contract, there is no scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is driven to the conclusion that clause is ambiguous, and that it has two possible meanings. In those circumstances, the Court has to prefer one above the other in accordance with the settled principles. If one meaning is more in accord with what the Court considers to the underlined purpose and intent of the contract, or part of it, than the other, then the court will choose former or rather than the later. Ashville Investment v. Elmer Contractors. 1988 (2) All ER 577 The intention of the parties must be understood from the language they have used, considered in the light of the surrounding circumstances and object of the contract. Bank of India and Anr. v. K. MohanDas and Ors 2009 5 SCC 313.  Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavoring to collect the intention of the parties, even though the immediate object of inquiry is the meaning of an isolated clause. Bihar State Electricity Board, Patna and Ors. v. M/s. Green Rubber Industries and Ors 1990 (1) SCC 731. 17. Liquidated damages can be imposed on the Developer under Article 5.8.1 if he is unable to commence supply of power to the Appellant by the Scheduled Commissioning Date. Article 12 deals with the applicable tariff. The developer shall be entitled to receive the tariff of Rs. 6.10/kWh of energy supplied the Appellant in accordance with the terms of the agreement. If there is delay in commissioning of the project beyond the Scheduled Commissioning Date and if there is change in KERC applicable tariff, Article 12.2 provides that the changed applicable tariff for the project shall be the lower of the Tariff as in Clause 12.1 and KERC applicable tariff as on the commercial operation day.KERC approved the PPAs on 17.10.2016. Scheduled Commissioning Date according to the agreement should be 12 months from 17.10.2016. There is also no dispute between the parties that 12 months means 365 days.According to the Appellants if 17.10.2016 is included in computation of 365 days, the Scheduled Commissioning Date is 16.10.2017.On the other hand, the Respondents contended that 17.10.2016 should be excluded in the calculation of 365 days, in which case, 17.10.2017 would be the Scheduled Commissioning Date.19. The Commission relied upon 1.2.1(m) of the PPA to conclude that 17.10.2016 has to be included for ciphering the period of 365 days to determine the Scheduled Commissioning Date. Whereas, the Appellate Tribunal was of the view that Article 1.2.1 (k) of the PPA is relevant. The Tribunal held that the date of the event which is the date on which the PPA was approved i.e. 17.10.2016 shall be excluded in calculating the period of 12 months.20. Reduction of applicable tariff is permissible under Article 12.2 of the PPA only when there is delay in commissioning of the Project beyond the Scheduled Commissioning Date. As discussed above, there is no dispute that the Scheduled Commissioning date shall be 12 months from the effective date. There is no quarrel between the parties that the effective date is 17.10.2016. The interpretation clause contains three provisions which are 1.2.1 (k), 1.2.1 (l) and 1.2.1 (m). According to 1.2.1 (k), any reference to a month shall mean a reference to a Calendar month as per the Gregorian Calendar. 1.2.1 (l) provides that references to any date or period shall mean and include such date, period as may be extended pursuant to the agreement. As per Article 1.2.1 (m), any reference to any period commencing from a specified date and until the specified day shall include both such day or dates. The other crucial provision which has to be taken note of is the definition of the expression Month in Article 21.1 of the agreement. Month has been defined to mean a period of 30 days and excluding (the date of the evet) where applicable, else a Calendar month. We are not concerned with 1.2.1 (l), in this case as there is no question of any extension of any period pursuant to the agreement. 1.2.1 (k) indicates that any reference to a month shall mean reference to a Calendar month. Reverting to the definition of Month, it is clear that a month shall mean either 30 days where applicable or a Calendar month. In this case, there is no dispute that 12 Calendar months have to be taken into account for determining the Scheduled Commissioning Date. The crucial expression in the definition of Month is excluding the date of the event. If the date of the event i.e. 17.10.2016 is excluded, the Scheduled Commissioning Date would be 17.10.2017. We do not agree with the conclusion of the Commission that the definition of month is with reference only to one month and not more which is wrong a reading of the provision. The Commission applied 1.2.1 (m) which refers to a period commencing from a specified date to a specified day for the purpose of including the date of the event. In our view, the Commission has committed an error in applying 1.2.1 (m) when the provision that is applicable is 1.2.1 (k) read with the definition of month in Article 21.1. There is a specific mention of twelve months in the definition of SCOD and Article 1.2.1 (k) categorically provides that any reference to a Month shall be a calendar month. Applicability of Article 1.2.1 (k) excludes the operation of Article 1.2.1 (m) to the facts of this case.The Commission answered the point in favour of the Appellants by holding that actual injection of power is necessary to determine the date of commissioning of the Plant. The Appellate Tribunal reversed the findings recorded by the Commission on this aspect by relying upon the Commissioning certificate issued by the KPTCL which is to the effect that the Solar Plants were commissioned on 16.10.2017 itself. There is no dispute that the power was injected from the solar plants on 17.10.2017.