MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED vs ADANI POWER MAHARASHTRA LIMITED

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(SC) 181

SUPREME COURT OF INDIA
B.R. Gavai, Vikram Nath, JJ.
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED - APPELLANT(S)
VERSUS
ADANI POWER MAHARASHTRA LIMITED & ORS. - RESPONDENT(S)
CIVIL APPEAL NO.684 OF 2021 WITH CIVIL APPEAL NO.6927 OF 2021
Decided On : 03-03-2023

Advocates appeared:
For the Appellant(s) : Mr. G. Saikumar, Adv. Mr. Samir Malik, Adv. Ms. Nikita Choukse, Adv. Ms. Farha Malik, Adv. For M/S. D.S.K. Legal Mr. Udit Gupta, Adv. Mr. Anup Jain, Adv. Mr. Prachi Gupta, Adv. Mr. Vyom Chaturvedi, Adv. For M/s. Udit Kishan And Associates Mr. M.G. Ramachandran,Sr.Adv. Ms. Poorva Saigal,Adv. Mr. Shubham Arya,Adv. Mr. Nikunj Dayal,Adv. Ms. Pallavi Saigal,Adv. Mr. Ravi Nair.Adv. Ms. Shikha Sood,Adv. Ms. Reeha Singh,Adv. Ms. Anumeha Smiti,Adv.
For the Respondent(s): Mr. Vishrov Mukherjee, Adv. Mr. Pukhrambam Ramesh Kumar, AOR Mr. Yashaswi Kant, Adv. Mr. Girik Bhalla, Adv. Dr. A.M. Singhvi, Sr. Adv. Mr. Darius Khambata, Sr. Adv. Mr. Sajan Poovayya, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Amit Kapur, Adv. Ms. Poonam Sengupta, Adv. Mr. Avishkar Singhvi, Adv. Mr. Arshit Anand, Adv. Mr. Saunak Rajguru, Adv. Mr. Aman Sharma, Adv. Ms. Deepsika Mishra, Adv. Mr. Ankitesh Ojha, Adv. Mr. Karan Rukhana, Adv. Mr. E.C. Agrawala, AOR

Headnote:(A) Electricity Act, 2003 - Section 63 - Change in Law provisions - The Maharashtra State Electricity Distribution Company Limited entered into Power Purchase Agreements with Adani Power Maharashtra Limited and GMR Warora Energy Ltd. - The issues revolved around the applicable Station Heat Rate (SHR) and Gross Calorific Value (GCV) that would affect compensation claims based on changes in coal distribution policies. (Paras 1 - 155)

(B) Regulatory Provisions - The New Coal Distribution Policy (NCDP) affected coal supply commitments, shifting from 100% supply guaranteed to lower percentages due to domestic shortages - The court emphasized that the intention was to restore affected parties to their original economic position pre-change. (Paras 10 - 10.1.2)

(C) Appellate Decisions - The Appellate Tribunal for Electricity (APTEL) upheld the need to assess coal supply based on current conditions rather than bid parameters, aligning with regulatory norms that account for operational efficiency and market realities, affirming the importance of a fair distribution of risk between generators and consumers. (Paras 8.8 - 8.30)

(D) Conclusion - The court ruled against the approach favoring a strict application of quoted bid terms over regulatory guidelines, emphasizing the principle of restitution where generators may claim for unforeseen increases in operational costs. Appeals dismissed. (Para 156)

JUDGMENT :

B.R. GAVAI, J.

INDEX
I.	INTRODUCTION	Paras 1 and 2
II.	FACTS IN CIVIL APPEAL NO.684 OF 2021	Paras 3 to 29
III.	FACTS IN CIVIL APPEAL NO.6927 OF 2021	Paras 30 to 39
IV.	SUBMISSIONS ON BEHALF OF THE DISCOMS	Paras 43
V.	SUBMISSIONS ON BEHALF OF THE GENERATING COMPANIES	Paras 44 and 45
V.	RELEVANT DOCUMENTS	Paras 46 to 83
VI.	JUDGMENTS CITED	Paras 84 to 93
VII.	STATUTORY PROVISIONS WITH REGARD TO REGULATORY MECHANISM	Paras 94 to 104
VIII.	CONSIDERATIONS	Para 105 onwards

List of abbreviations:
1.	ACQ	Annual Contracted Quantity
2.	APML	Adani Power Maharashtra Limited
3.	APTEL	Appellate Tribunal for Electricity
4.	C&AG	Comptroller and Auditor General of India
5.	CCEA	Cabinet Committee on Economic Affairs
6.	CERC	Central Electricity Regulatory Commission
7.	CIL	Coal India Limited
8.	CPP	Captive Power Plants
9.	DISCOMS	Distribution Companies
10.	FSA	Fuel Supply Agreement
11.	GCV	Gross Calorific Value
12.	GMR	GMR Warora Energy Ltd.
13.	GMRETL	GMR Energy Trading Limited
14.	IPPs	Independent Power Producers
15.	LoA	Letter of Assurance
16.	MERC	Maharashtra Electricity Regulatory Commission
17.	MoC	Ministry of Coal
18.	MoP	Ministry of Power
19.	MSEDCL	Maharashtra State Electricity Distribution Company Limited
20.	NCDP	New Coal Distributional Policy
21.	PLF	Plant Load Factor
22.	PPAs	Power Purchase Agreements
23.	PSA	Power Sale Agreement
24.	RFP	Request for Proposal
25.	SECL	South Eastern Coal Limited
26.	SHR	Station Heat Rate
27.	TPPs	Thermal Power Stations
28.	UHBVNL	Uttar Haryana Bijli Vitran Nigam Limited
29.	WCL	Western Coal Limited

INTRODUCTION

1. The questions involved in both these appeals, as in several other appeals, are common.

2. Three of the issues involved in the present appeals are also involved in the other appeals which were listed along with these two appeals. However, the other appeals also involve some other ancillary and incidental issues. As such, at the request of the learned counsel for the parties, we have heard the present appeals. We have also heard the learned counsel appearing in the other appeals on the three questions which are common.

FACTS IN CIVIL APPEAL NO. 684 OF 2021

3. The facts, in brief, which arise in Civil Appeal No.684 of 2021 are thus:

4. The appellant-Maharashtra State Electricity Distribution Company Limited (hereinafter referred to as “MSEDCL”) has entered into a long-term Power Purchase Agreements (“PPAs” for short) with Adani Power Maharashtra Limited (hereinafter referred to as “APML”). The first of the PPAs is dated 8th September 2008 for 1320 MW (“1320 MW PPA” for short); the second one is dated 31st March 2010 for 1200 MW (“1200 MW PPA” for short); the third one is dated 9th August 2010 for 125 MW (“125 MW PPA” for short); and the fourth one is dated 16th February 2013 for 440 MW (“440 MW PPA” for short). These PPAs were entered into in pursuance of the competitive bidding processes conducted by the appellant-MSEDCL under Section 63 of the ELECTRICITY ACT , 2003 (hereinafter referred to as “the ELECTRICITY ACT ”) read with the Standard Bidding Guidelines issued by the Ministry of Power (“MoP” for short).

5. Article 10 of the 1200 MW PPA dated 31st March 2010 entered into between the appellant-MSEDCL and respondent No.1-APML deals with “Change in Law”.

6. Article 10.1.2 defines the term “Change in Law”.

7. Article 10.2 deals with the application and principles for computing the impact of Change in Law. Article 10.2.1 provides that while determining the consequence of a Change in Law under Article 10, due regard has to be given to the principle, that

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2023 Supreme(SC) 181

SUPREME COURT OF INDIAB.R. Gavai, Vikram Nath, JJ.MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED - APPELLANT(S)VERSUSADANI POWER MAHARASHTRA LIMITED & ORS. - RESPONDENT(S)CIVIL APPEAL NO.684 OF 2021 WITH CIVIL APPEAL NO.6927 OF 2021Decided On : 03-03-2023

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SUPREME COURT OF INDIA
B.R. Gavai, Vikram Nath, JJ.
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED - APPELLANT(S)
VERSUS
ADANI POWER MAHARASHTRA LIMITED & ORS. - RESPONDENT(S)
CIVIL APPEAL NO.684 OF 2021 WITH CIVIL APPEAL NO.6927 OF 2021
Decided On : 03-03-2023