The Delhi High Court has dismissed the petition of Reliance Power Ltd's subsidiary and lifted the stay on Andhra Pradesh government's notice to encash Rs 300 crore bank guarantee as penalty and terminate the contract with the company for purchasing electricity from 4,000 MW Krishnapatnam Ultra Mega Power Project.
The notice was served to the R-Power subsidiary Coastal Andhra Power Ltd (CAPL) by state-run Andhra Pradesh Southern Power Distribution Company Ltd (APSPDCL) due to a delay in executing the power project.
Justice S Muralidhar vacated the March 20 interim order by which relief was granted to CAPL.
"No case is made out by Coastal Andhra Power Ltd (CAPL) for continuation of the interim order passed in its favour on March 20, 2012. The petition is accordingly dismissed and the interim order of March 20 is vacated," the judge said in the judgment.
The High Court, while dismissing the petition by CAPL, said the power company has been "unable to show" it that encashment of the bank guarantee will cause irretrievable hardship to CAPL. "CAPL has been unable to show that the encashment of the bank guarantee furnished by it to the respondents (APSPDCL and Andhra government) will result in irretrievable hardship to it (CAPL)," the court said.
The court had on March 20 restrained the APSPDCL from encashing a Rs 300-crore bank guarantee given by CAPL and terminating the contract for the project. The APSPDCL had threatened to encash the bank guarantee as penalty since the work on the Krishnapatnam UMPP had been stopped for over three months. R-Power was awarded the contract to execute Krishnapatnam power project in 2007 and the power produced by the project was to be shared by the four states — AP, Tamil Nadu, Karnataka and Maharashtra.
In its petition to the court, the CAPL had said it had to stop the work on the project in 2011 due to new Indonesian coal price regulation which had resulted in hike in the cost of imported coal. The rise in the import cost of the coal has rendered the firm incapable of meeting the conditions put in by lenders, CAPL had said in its plea.
The notice was served to the R-Power subsidiary Coastal Andhra Power Ltd (CAPL) by state-run Andhra Pradesh Southern Power Distribution Company Ltd (APSPDCL) due to a delay in executing the power project.
Justice S Muralidhar vacated the March 20 interim order by which relief was granted to CAPL.
"No case is made out by Coastal Andhra Power Ltd (CAPL) for continuation of the interim order passed in its favour on March 20, 2012. The petition is accordingly dismissed and the interim order of March 20 is vacated," the judge said in the judgment.
The High Court, while dismissing the petition by CAPL, said the power company has been "unable to show" it that encashment of the bank guarantee will cause irretrievable hardship to CAPL. "CAPL has been unable to show that the encashment of the bank guarantee furnished by it to the respondents (APSPDCL and Andhra government) will result in irretrievable hardship to it (CAPL)," the court said.
The court had on March 20 restrained the APSPDCL from encashing a Rs 300-crore bank guarantee given by CAPL and terminating the contract for the project. The APSPDCL had threatened to encash the bank guarantee as penalty since the work on the Krishnapatnam UMPP had been stopped for over three months. R-Power was awarded the contract to execute Krishnapatnam power project in 2007 and the power produced by the project was to be shared by the four states — AP, Tamil Nadu, Karnataka and Maharashtra.
In its petition to the court, the CAPL had said it had to stop the work on the project in 2011 due to new Indonesian coal price regulation which had resulted in hike in the cost of imported coal. The rise in the import cost of the coal has rendered the firm incapable of meeting the conditions put in by lenders, CAPL had said in its plea.
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