23 May 2025 Civil Appeals >> Civil & Consumer Law  

In a recent Supreme Court of India decision on May 23, 2025, in the case of Jaipur Vidyut Vitran Nigam Ltd. & Others v/s Adani Power Rajasthan Ltd. & Another (Civil Appeal No. 4336 of 2025), the court upheld the Appellate Tribunal for Electricity's (APTEL) ruling that a notification imposing Evacuation Facility Charges (EFC) constituted a "change in law" event. The Supreme Court bench, comprising Justice M.M. Sundresh and Justice Rajesh Bindal, affirmed that Adani Power Rajasthan Ltd. (the power generator) is entitled to compensation from the date of the notification, along with carrying cost at Late Payment Surcharge (LPS) rates on a compounding basis.

Background of the Dispute:

The case originated from a Power Purchase Agreement (PPA) dated January 28, 2010, between Rajasthan Discoms (appellants) and Adani Power Rajasthan Ltd. (respondent No. 1) for the supply of 1200 MW. On December 19, 2017, Coal India Limited (CIL) issued a notification imposing EFC with effect from December 20, 2017. Adani Power immediately informed the appellants that this notification constituted a "change in law" event.

Following the appellants' failure to provide a suitable reply, Adani Power filed a petition before the Rajasthan Electricity Regulatory Commission (RERC), invoking Section 86 of the Electricity Act, 2003, read with Article 10 of the PPA. While the RERC allowed some prayers, Adani Power appealed the rejected claims to the APTEL.

The APTEL, in its judgment dated April 18, 2024, held that the CIL notification dated December 19, 2017, amounted to a "change in law" and that Adani Power was entitled to compensation from the notification date, citing the Supreme Court's decision in GMR Warora Energy Ltd. v. CERC (2023). The APTEL also granted carrying costs at LPS rates on a compounding basis.

Supreme Court's Analysis and Ruling:

The Supreme Court limited the scope of its appeal to the interpretation of Article 10.2.1 vis-a-vis 10.5 of the PPA, specifically 10.5.1 (ii). However, the appellants also made submissions on other issues, including the condonation of delay by APTEL and the awarding of carrying cost at LPS rates, arguing that a supplementary bill was mandatory at the earliest point.

The Supreme Court reiterated its consistent position on "change in law" events, drawing upon previous judgments in GMR Warora Energy Ltd., UHBVNL v. Adani Power Ltd. (2019), and UHBVNL v. Adani Power (Mundra) Ltd. (2023). The Court emphasized that all additional charges imposed by state instrumentalities after a cut-off date, through orders, directions, or notifications, are considered "change in law" events, entitling generators to compensation based on restitutionary principles.

Regarding the supplementary bill argument, the Court found no factual or legal basis for the appellants' contention that payment could only be made after an earlier supplementary bill was raised. It noted that Adani Power had notified the "change in law" event immediately after the CIL notification was issued. The Court clarified that Article 10.5.1 (ii) of the PPA, which pertains to changes in interpretation of law by a court or tribunal, was not applicable in this case, as the dispute was not about the interpretation of the notification but whether it constituted a "change in law".

The Court also affirmed that LPS cannot be equated with carrying cost or actual cost incurred for power supply and that the principle of restitution under "change in law" provisions applies to tariffs. It further noted that the argument against compound interest on carrying cost from the date of the "change in law" event had been specifically rejected in previous rulings, as it aims to restore the affected party to its original economic position.

In conclusion, the Supreme Court found no reason to interfere with the APTEL's judgment, affirming the liability of the appellants and dismissing their contentions.

Section 86, ELECTRICITY ACT - 2003  

ELECTRICITY ACT, 2003