Kiran Raj

The Supreme Court Division Bench of Justice M. M. Sundresh and Justice Rajesh Bindal held that "adjustment in monthly Tariff Payment shall be effective from the date notified in the change in law" and affirmed the decision of the Appellate Tribunal for Electricity (APTEL) granting compensation to a power generator based on a change in law. The apex court clarified that there was no substantial question of law warranting interference under Section 125 of the Electricity Act, 2003, and dismissed the appeal challenging the Tribunal’s decision. The Court also affirmed the entitlement of the respondent to carrying costs calculated on a compounding basis.

The dispute arose out of a Power Purchase Agreement (PPA) executed on 28.01.2010 between the Rajasthan Discoms (appellants) and Adani Power Rajasthan Ltd. (respondent no.1) for the supply of 1200 MW of electricity at a levelized tariff of Rs.3.238 per unit. The agreement was approved by the concerned State Commission.

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A Notification dated 19.12.2017 issued by Coal India Limited (CIL) introduced an additional charge of Rs. 50 per tonne as Evacuation Facility Charges (EFC), effective from 20.12.2017. The very next day, respondent no.1 informed the appellants that this constituted a change in law event. Upon not receiving a suitable reply, respondent no.1 approached the Rajasthan Electricity Regulatory Commission (RERC) under Section 86 of the Electricity Act, 2003 read with Article 10 of the PPA.

The RERC allowed partial relief, and the respondent filed an appeal before APTEL under Section 111 of the Electricity Act, 2003. The appeal was accompanied by applications for condonation of delay in filing (332 days) and re-filing (236 days), both of which were allowed. The delay orders were not challenged and attained finality.

APTEL, in its judgment dated 18.04.2024, stated that the CIL Notification amounted to a change in law. Relying on GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401 and related precedents, APTEL granted the respondent compensation with effect from 20.12.2017 and awarded carrying costs at Late Payment Surcharge (LPS) rates on a compounding basis. It was also held that the respondent was not entitled to LPS for the delay period of 332 days, during which the appeal was filed.

In response, the appellants challenged the APTEL judgment before the Supreme Court. On 09.09.2024, the apex court limited the scope of the appeal to interpreting Article 10.2.1 vis-à-vis 10.5.1(ii) of the PPA. Despite this limitation, the appellants made submissions on other issues, including delay, lack of a supplementary bill, and misapplication of precedents.

The appellants argued that the delay was attributable to the respondent and therefore Article 10.5.1(ii), which pertains to changes in interpretation of law via judicial orders, should apply. They contested the awarding of LPS-based carrying costs, asserting that no supplementary bill was raised, as required under Article 8 of the PPA. They relied on Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Ltd., (2021) 20 SCC 200, and stated that GMR Warora was inapplicable due to factual differences.

In reply, the respondent contended that the appellants had acted beyond the scope of the appeal as settled by the apex court's order dated 09.09.2024. Relying on prior decisions in UHBVNL v. Adani Power Ltd. (2019) 5 SCC 325 and UHBVNL v. Adani Power (Mundra) Ltd. (2023) 2 SCC 624, counsel submitted that all pertinent issues had been conclusively resolved by the Supreme Court.

The respondent pointed out that no supplementary bill was raised earlier as the appellants had clearly indicated they would not honour it. It was argued that the necessity of adjudication prior to billing was implicit under Article 10.5.2 and Article 8.8 of the PPA. The respondent stated that carrying costs are part of the restitution principle codified in Article 10.2.1.

The Court reviewed the relevant statutory framework, including Sections 111 and 125 of the Electricity Act, 2003, and Section 100 of the Code of Civil Procedure, 1908. It reiterated that under Section 125, an appeal to the Supreme Court lies only on substantial questions of law. The Court noted that it had framed only one such question in its earlier order and that other contentions lacked such legal substance.

"Section 100 of the CPC, after its amendment in the year 1978, consciously concerns itself with a question of law which shall be substantial in nature."

"It is axiomatic that an appellant has to raise a substantial question of law, which if the Court finds to be in existence, shall accordingly frame it... and answer it accordingly."

"Article 10.2.1 in the instant PPA was incorporated based on the principle of restitution. The idea of this principle is to compensate the affected party in order to restore it to the same economic position, but for the change in law."

"As a matter of course, the adjustment in monthly tariff payment shall become effective from the date notified in the change in law."

"Article 10.5.1(ii) is not applicable... since there is no change in law which has occasioned by way of an interpretation given by a Court or a Tribunal or an Indian Governmental Instrumentality."

"So long as there is no interpretation on the Notification with respect to its applicability to the parties before us, Clause (ii) of Article 10.5.1 of the PPA will have no application."

"A supplementary bill has to be raised only after due adjudication by the competent forum... For more clarity, one has to read Article 10.5.2 along with Article 8.8 of the PPA."

"The incidental issue raised with respect to carrying cost at the rate of LPS has also been dealt with... any fresh consideration would only be an academic exercise."

"Liability has been fastened upon the appellants under the agreement. The contention that the supplementary bill ought to have been raised earlier and, therefore, the payment can only be made thereafter has neither a factual basis nor a legal one."

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The Supreme Court stated that the appeal lacked merit and did not disclose any substantial question of law. It concluded that the APTEL judgment warranted no interference. The Court confirmed the respondent’s entitlement to tariff adjustment effective from the date of the CIL Notification and upheld the award of carrying cost on a compounding basis.

The Court stated: "For the aforesaid reasons, we find absolutely no reason to interfere with the impugned judgment. Liability has been fastened upon the appellants under the agreement. The contention that the supplementary bill ought to have been raised earlier and, therefore, the payment can only be made thereafter has neither a factual basis nor a legal one."

"In view of the aforesaid analysis, we find no merit in this appeal. The appeal stands dismissed, accordingly."

"Pending application(s), if any, shall stand disposed of."

Advocates Representing the Parties

For the Petitioners: Mr. Kartik Seth, Advocate; Mr. Raghav Sharma, Advocate; Mr. Saurabh Chaturvedi, Advocate; Mr. Manni Sethi, Advocate; M/s Chambers of Kartik Seth, AOR

For the Respondents: Dr. A.M. Singhvi, Senior Advocate; Mr. Mahesh Agarwal, Advocate; Mr. Amit Kapur, Advocate; Ms. Poonam Sengupta, Advocate; Mr. Arshit Anand, Advocate; Mr. Shashwat Singh, Advocate; Mr. Saunak Rajguru, Advocate; Mr. Subham Bhut, Advocate; Mr. Siddharth Seem, Advocate; Mr. E.C. Agrawala, AOR

Case Title: Jaipur Vidyut Vitran Nigam Ltd. & Ors. v. Adani Power Rajasthan Ltd. & Anr.

Neutral Citation: 2025 INSC 770

Case Number: Civil Appeal No. 4336 of 2025 (Arising out of Civil Appeal Diary No. 26876 of 2024)

Bench: Justice M. M. Sundresh, Justice Rajesh Bindal

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