Acceptance Testing Intrigues Trigger Price Dispute

By Paul Emanuelli

In its December 2016 decision in All India Power Engineer Federation v. Sasan Power Ltd., the Supreme Court of India ruled against a power company in a pricing dispute. The case dealt with a bidding process for a 25-year power supply contract. The winning bidder quoted low rates in the first two years, after which its rates increased significantly. The parties disputed when the lower rate period expired. The question turned on the timing of the acceptance testing conducting by the tendering authority. The court ultimately ruled that the initial supply period conducted during a preliminary testing period occurred prior to formal acceptance testing and ruled against the power supply company.