Remand Leaves Undecided Issue Open; Adjudicating Authority Applies Binding Law As On Decision Date : Supreme Court
Kiran Raj
The Supreme Court Division Bench of Justices Manoj Misra and Joymalya Bagchi has remanded to the Appellate Tribunal for Electricity the limited issue of whether interest on “carrying cost” payable to RattanIndia Power Limited must be compounded, arising from change-in-law compensation claims under a power purchase agreement with Maharashtra State Electricity Distribution Company Limited. The Court held that when a matter is sent back for fresh consideration and the remand order has not finally determined the issue, the adjudicating authority is not conclusively bound by the remand observations or cited decisions and must decide the question in line with the binding law as it stands on the date of decision. It clarified that the direction to pay carrying cost with interest at the late payment surcharge rate will remain undisturbed, and only the compounding question is to be decided afresh.
RattanIndia Power Limited supplies power to Maharashtra State Electricity Distribution Company Limited under two long-term power purchase agreements executed in April 2010 and June 2010 for contracted capacities of 450 MW and 750 MW.
Also Read: Supreme Court Restores CISF Constable’s Dismissal For Second Marriage Under CISF Rules, 2001
Invoking Section 86 of the Electricity Act, 2003, the generator approached the Maharashtra Electricity Regulatory Commission seeking compensation for asserted change-in-law events affecting the project from the date electricity supply commenced, together with carrying cost. In April 2018, the Commission allowed certain change-in-law claims but held that increases in specified Chhattisgarh cesses did not qualify as change in law, that the agreements did not provide for carrying cost on approved change-in-law events, and that compensation would run from the scheduled delivery date rather than for the period prior to it.
On appeal, the Appellate Tribunal for Electricity set aside those findings and remitted the matter for fresh determination, including quantification. In the remand proceedings, the generator filed an application placing calculations and a monetary claim, including carrying cost, and sought interim payment. By an order in February 2023, the Commission partly allowed the application, quantified change-in-law compensation including carrying cost, required the generator to raise a supplementary bill, and recorded a separate amount for reconciliation.
The core dispute concerned the carrying cost computation: the generator relied on the agreements’ late payment surcharge mechanism (with compounding), while the procurer computed carrying cost using interest on working capital under tariff/MYT regulations on a simple-interest basis. The parties also relied on change-in-law and payment provisions in the agreements, including the restitutive principle (Article 10.2.1), the requirement of documentary proof (Article 10.3.3), and supplementary bill/late payment surcharge clauses.
The Court observed: “Rather, it is duty of a court, whether it is trying original proceedings or hearing an appeal, to take notice of the change in law affecting pending actions and to give effect to the same.”
The Court stated: “In such a situation, where the lis is alive, the subordinate court or adjudicating body will have to apply and follow the law which holds the field on the day it decides the matter.”
The Court observed: “In our view, when a Court or Appellate Tribunal remands a matter to the subordinate court, or adjudicating body, for a fresh decision in the light of observations contained therein, and while doing so refers to certain decisions, it does not mean that the subordinate court or adjudicating body is bound by those decisions and can look no further, even if, in the interregnum, the law has changed or developed. We must not be understood as saying that such a direction has to be ignored. Rather, such a direction must be given due consideration unless the law on the subject, which is binding on the court or adjudicating body, requires otherwise.”
The Court recorded: “For example, the law declared by this Court is binding on all courts within the territory of India.” It stated: “The answer to it is an obvious “No”.” The Court observed: “Reason being, when the remand order does not itself settles an issue, the issue remanded is alive and has to be decided as per law applicable on the date of the decision.”
The Court observed: “For the reasons above, we are of the view that APTEL, though rightly observed that the remand order indicated award of LPS benefit, erred in holding that it can look no further than the order of remand.”
On the rationale for interest on carrying cost, the Court stated: “Grant of compound interest on carrying cost and that too from the date of occurrence of the change in law event is based on sound logic.” It observed: “The idea behind granting interest on carrying cost is not far to see, it is aimed at restituting a party that is adversely affected by a change in law event and restore it to its original economic position as if such a change in law event had not taken place.”
The Court recorded the limited remit of further adjudication: “We, however, clarify that grant of interest at LPS rate as directed by APTEL in the impugned order shall not be disturbed. The only issue left for APTEL to decide is qua compounding of interest. Rest of the issues stand closed.”
The Court directed: “As we have already held that remand order dated 18.10.2022 had issued no specific direction to apply a particular rate, observations contained therein were by way of guidance and did not limit the power of MERC or APTEL to decide the issue as per the law. In this view of the matter, we deem it appropriate to remand the matter back to APTEL to decide the issue of compounding of interest based on the facts of the case, and in accordance with the law. We, however, clarify that grant of interest at LPS rate as directed by APTEL in the impugned order shall not be disturbed. The only issue left for APTEL to decide is qua compounding of interest. Rest of the issues stand closed.”
“Appeal is allowed in the aforesaid terms. There is no order as to costs. Pending applications, if any, stand disposed of.”
Advocates Representing the Parties
For the Petitioners: Mr. Syed Jafar Alam, AOR Mr. Vishrov Mukerjee, Adv. Mr. Pratyush Singh, Adv. Ms. Juhi Senguttuvan, Adv.
For the Respondents: M/S. Udit Kishan And Associates, AOR Mr. B.p. Patil, Sr. Adv. Mr. Udit Gupta, Adv. Mr. Vyom Chaturvedi, Adv. Ms. Pragya Gupta, Adv. Ms. Sneha Singh, Adv. Ms. Prachi Gupta, Adv. Ms. Shaily Gupta, Adv. Mr. Geet Ahuja, Adv. Ms. Purnima Chanana, Adv.
Case Title: RattanIndia Power Limited versus Maharashtra State Electricity Distribution Company Limited and Another
Neutral Citation: 2025 INSC 1502
Case Number: Civil Appeal No.8232 of 2023
Bench: Justice Manoj Misra, Justice Joymalya Bagchi
