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Electricity & Energy LawSupreme Court of India

Chamundeshwari Electricity Supply Company Ltd. (CESC) v. Saisudhir Energy (Chitradurga) Pvt. Ltd.

Civil Appeal · 2025 INSC 1034Decided 25 Aug 2025
Civil Appeal No. 6888 of 2018
Justice Sanjay Kumar · Justice Satish Chandra Sharma

Background

Saisudhir Energy was selected to build a 10 MW solar power project in Karnataka and signed a Power Purchase Agreement with Chamundeshwari Electricity Supply Company (CESC) at a fixed tariff, subject to achieving commercial operation within a set timeframe. The project could not be commissioned on time because the state transmission utility (KPTCL) delayed building the necessary 220 kV evacuation lines by over a year. CESC nevertheless encashed the developer's Rs. 24.9 crore performance bank guarantee for missing the deadline, and also offered to extend the deadline only if the developer accepted a much lower tariff. The developer approached Karnataka's electricity regulator, which, along with the Appellate Tribunal for Electricity, ruled in the developer's favour, treating the delay as a "force majeure" event and ordering CESC to return the bank guarantee, extend timelines, and renegotiate the tariff.

Decision Breakdown

The Supreme Court reversed both lower rulings and sided with CESC. It held that under the PPA's own terms, a party claiming relief for delay had two specific contractual routes (seeking an extension for delay "attributable to" CESC, or formally invoking the force majeure clause (which required written notice within 7 days)) and the developer had done neither. Because the force majeure notice requirement was a mandatory precondition, not a mere formality, the regulator's finding of force majeure could not stand. The Court also held that regulatory bodies cannot rewrite a competitively-bid commercial contract's own risk allocation in the name of fairness or equity; since the developer never sought or obtained an extension under the correct clause, CESC's encashment of the bank guarantee was a valid exercise of its contractual right.

Lesson Learnt

In a commercial contract, if you want relief for a delay caused by circumstances beyond your control, you must follow the contract's own specified procedure (such as giving timely written notice). Courts and regulators generally will not rewrite the parties' contractual bargain after the fact, even where the outcome seems harsh.

Chamundeshwari Electricity Supply Company Ltd. (CESC) v. Saisudhir Energy (Chitradurga) Pvt. Ltd. – Legal Case Shots | LegalAware