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Introduction to the Revamped Structure
With an arising need, a ‘demand’ is paved. Consequently, to a demand, comes a development. The development, in this case, answers the calls of multiple developers who required a platform to be constructed to answer their demands as well as their issues be picked and resolved through government machinery.
The newly structured mechanism, termed as ‘Dispute Resolution Mechanism’ (“D.R.M”) was discussed at length in June and notified through an orders in September 2019 by Ministry of New and Renewable Energy (“MNRE”) The need arose from the power distribution companies facing massive losses arising out of high tariffs being charged by the solar/wind developers. This was supplemented by a prominent need to strike and bring upon an adjudicating body to resolve issues between the parties, including, the various developers and the Solar Energy Corporation of India (SECI) and National Thermal Power Corporation (NTPC).
The Framework elaborates on how the authorities are bound to proceed and enunciate a hierarchy to be followed in the line of adjudication. Thus, prime insights include:
– Making the process time-bound therefore, putting in-line an expeditious procedure.
– Establishment of a Dispute Resolution Committee (DRC) which would further deal with issues relating to the extension of time required based on the terms of the contract and in cases of invocation of Force Majeure clauses.
Further, it has also been delegated the power to adjudicate upon other disputes linked with the authorities in the sector of new and renewable energy.
It is even more important since it hears the calls of the bodies to walk on the path towards expeditious disposal of cases by making the authorities time-bound, and therefore accountable for the delay and laches caused at their end. Due to the elaborations posted regarding the procedural guidelines, another layer of clarity is poured in, which translates to lesser queries in the future.
The previous regime of the dispute framework stood in an alternate manner. The Central Electricity Regulatory Commission (“CERC”) and the Solar Energy Regulatory Commission (“SERC”) were responsible for answering the applications given by the developers. CERC was responsible for replying and adjudicating disputes relating to generating companies – owned or controlled by the government or having entered a scheme or arrangement with the state and those sharing transmission and trading licenses with respect to the determination of tariff and regulations. Both the organizations can refer the disputes to arbitration. Another body named as Appellate body for electricity ‘APTEL’ had been delegated the work of hearing applications. This body Suo-moto examined the validity of orders by CERC and SERC. Further, these decisions could be further challenged before the Supreme Court. However, this regime stood deficient and unsatisfactory in expeditious disposal of cases. Therefore, to answer the much-felt want of having machinery in the lines of the fast-track procedure, MNRE was compelled to make further amendments and constitute such a committee.
Scope & Ambit of the Committee
Observing MNRE guidelines and orders, the ambit of the newly restructured mechanism and the bodies and functionaries can be safely derived. The Dispute Resolution Committee will consider the following kinds of cases:
(i) All cases of appeal against decisions given by SECI on Extension of Time requests based on terms of the contract.
(ii) All requests of Extension of Time not covered under the terms of the contract.
(iii) All the disputes other than Extension of Time-related to SECI and NTPC with the developers.
The Process and the chain of events
If the application is made within the time limit, the request will be examined, and the final decision given to solar power developer/ wind power developer within twenty-one (21) days from the date of application. No separate extension of time shall be granted for overlapping periods of effect by two or more causes.
If the developer is not satisfied with the decision of SECI/ NTPC, then it may appeal to the Dispute Resolution Committee (DRC), within 21 days of SECI/NTPC’s order after paying a fee. This fee will be decided by the DRC and shall not be less than 5% of the impact of SECl’s/NTPC’s decision being challenged.
However, if the Government upholds the appeal in totality, after taking into consideration the recommendation of DRC. Implying a strike down of the SECI order, then the fee so collected shall be refunded, provided the DRC makes a recommendation for the same and the Government passes a specific order to that effect.
Furthermore, cases involving unforeseen issues including circumstances not covered under Contractual Agreements ( for example cases where the site is to be procured by the developer but there is a delay in land allotment due to policy change or registration by the Government, delays in grant of proposed connectivity due to court stays. ) will be placed before the DRC for consideration and make recommendations to the Ministry of New & Renewable Energy (MNRE) for appropriate decision.
It is pertinent to note that the DRC is to examine all cases referred to it in a time-bound manner and submit its recommendations to the Ministry of New & Renewable Energy (MNRE), not later than twenty-one (21) days from the date of reference. These recommendations will be placed along with the Ministry’s observations before Hon’ble Minister of New and Renewable Energy for a final decision. The Ministry will further examine and put up such recommendations to Minister (NRE) with the comments of integrated Finance Division (“IFD”) within twenty-one (21) days of receipt of a recommendation from the DRC.
Terms & Conditions:
Recognizing the ambit of the mechanism and the jurisdiction of the DRC, the Procedural Guidelines as notified on the 20th September read in consonance with the Order of MNRE passed on 18th June 2019, certain stipulations can be derived:
– To constitute the Dispute Resolution Committee, certain guidelines are enumerated. These include the decision of constituting a 3-member committee consisting of ‘eminent persons of impeccable integrity’. The upper age is set as 70 years. Furthermore, the persons must be in New Delhi in order to avoid expenditure on Air Travel 7 accommodation. Prime importance needs to be paid that no conflict of interest arises.
– To highlight upon the key imperatives of the act, it was stated that DRC is expected to hold hearings on the applications and submit it’s recommendations to the MNRE within a period of 21 days. It will also be expected to meet weekly to discuss the pending cases.
– In the case where the DRC is unable to give a decision within the time frame prescribed, that is 21 days, the secretary shall inform MNRE in this regard and the ministry may provide an additional 14 days within which the DRC will have to make a decision.
– The expense related to the DRC and the secretariat shall be borne by SECI and NTPC respectively.
– DRC will have the liberty to interact with the relevant parties of the case and shall record their views. However, Lawyers will not be permitted to present the case before the DRC.
– Through an amendment, MNRE issued an amendment allowing a developer to appeal to the DRC against the SECI or NTPC’s order within 21 days. It is also to be noted that any negative financial implication on the developer due to SECI or NTPC’s order would be put in abeyance for 21 days after the order.
Observation and Analysis
The mechanism being drafted in accordance with the ‘need’ of the players in this field, undoubtedly answers the much-felt need of these entities. The guidelines do lubricate the ends of seeking justice by simplifying the issues by highlighting a hierarchical-uniform-structure and paving a streamlined path for entities to travel in their journey of dispute resolution.
It is imperative to note that in the 3-member Committee as constituted and established by the orders and guidelines by the MNRE there stands a grave lacuna. The debatable issue being the absence of a judicial opinion being formulated by a judicial entity. The guidelines emphasize that the members of the committee will be ‘experts’ of this particular field, however, rationally thinking, it would be impossible for a judicial opinion be formulated by an entity linked in an operational rather than judicial role. Therefore, it is submitted that the presence of a judicial entity is essential for a superior order of decision formulation by an entity whose aim points at performing a judicial function, that is, rendering solutions and opinions of a higher-level.
Furthermore, another issue that needs to be realized is the fee requirement which agreeable sharp. The guidelines enunciate that for any dispute related to the extension of time requests, the fee payable shall be 5% of the impact of SECI/NTPC’s decision being challenged, with the impact being limited to the Performance Bank Guarantee (“PBG”) submitted for the project concerned. Also, a minimum fee of Rs. 1,00,000 (Rupees one lakh) would be payable even if the value of the aforesaid 5% is less than Rs. 1,00,000 (Rupees one lakh). This issue highlights certain imperatives which need to be covered and therefore, calls for a further amendment. It should also be duly-noted that even for disputes not relating to the extension of time and in events where there is no PBG covering the dispute, the fee cannot be less than Rs. 1,00,000 (Rupees one lakh) but build up to as high as Rs. 1,00,00,000 (Rupees one crore).
Noting these observations and summations, it can be emphasized that the need to amend and/or draft further guidelines to cover in entirety, the issues put forward by the entities, stays alive. It is also discerned that the procedure is tactic, elaborate and requires the employment of professionals and experts. Also, in the lines of establishing a judicial system, it has been discovered that Alternate Dispute Resolutions can turn up to be more expensive and time-consuming in certain cases to reach towards a formation of a mutually benefitable situation to assent and affirm the ends and justice of both the parties.