SUPREME COURT OF INDIA
ANIRUDDHA BOSE, SANJAY KUMAR, JJ.
Jaipur Vidyut Vitran Nigam Ltd. & Ors. – Appellants
Versus
Adani Power Rajasthan Ltd. & Anr. – Respondents
Miscellaneous Application Diary No. 21994 Of 2022 In Civil Appeal Nos. 8625-8626 of 2019
Decided On : 18-03-2024
Late Payment Surcharge - Electricity Act - 2003 Act, Section 2(28), Article 8.3.5, Article 8.8 - The judgment discusses the claim for Late Payment Surcharge (LPS) by Adani Power Rajasthan Limited (APRL) against the Rajasthan Discoms under the Power Purchase Agreement (PPA-2010) and the liability of the appellants-Rajasthan Discoms for LPS. The court also addresses the issue of interest/late payment surcharge and the plea of over-invoicing. The judgment emphasizes the liability of the appellants-Rajasthan Discoms for LPS and directs the payment of interest/late payment surcharge at the applicable SBAR, not exceeding 9% per annum, to be compounded annually.
Fact of the Case:
Adani Power Rajasthan Limited (APRL) sought a direction upon the Rajasthan Discoms for making payment of Rs.1376.35 crore towards Late Payment Surcharge (LPS) citing Article 8.3.5 of the Power Purchase Agreement dated 28.01.2010 (PPA-2010). The appeals arose out of a dispute involving additional payments claimed by APRL as per the PPA-2010, including compensation for loss due to change in law and carrying cost. The court also addressed the contempt proceedings initiated by APRL alleging disobedience of the judgment and order.
Finding of the Court:
The court found that the appellants-Rajasthan Discoms were liable for LPS and directed the payment of interest/late payment surcharge at the applicable SBAR, not exceeding 9% per annum, to be compounded annually. The court also dismissed the miscellaneous application filed by APRL and imposed costs of Rs. 50,000/- to be paid by APRL to the Supreme Court Legal Aid Committee.
Issues: The main issues involved the claim for Late Payment Surcharge (LPS) by APRL against the Rajasthan Discoms, the liability of the appellants-Rajasthan Discoms for LPS, and the plea of over-invoicing raised by APRL.
Ratio Decidendi: The court held that the appellants-Rajasthan Discoms were liable for LPS and directed the payment of interest/late payment surcharge at the applicable SBAR, not exceeding 9% per annum, to be compounded annually. The court also emphasized that a miscellaneous application is not the proper legal course to make a demand for LPS after a matter has been finally decided.
Final Decision: The court dismissed the miscellaneous application filed by APRL and imposed costs of Rs. 50,000/- to be paid by APRL to the Supreme Court Legal Aid Committee.
JUDGMENT
ANIRUDDHA BOSE, J.
The applicant, Adani Power Rajasthan Limited (APRL), is a generating company as per Section 2(28) of the Electricity Act, 2003 (“2003 Act”). It operates a thermal power plant in the State of Rajasthan. There were three appellants (1 to 3) in the main set of appeals, in connection with which the present application has been taken out, being the distribution licensees of the State of Rajasthan as per the provisions of the 2003 Act. They shall, henceforth in this judgment, be collectively referred to as “Rajasthan Discoms”. Rajasthan Urja Vikas Nigam Limited was the 4th appellant in the main set of appeals. It appears to have been formed by the Government of Rajasthan for the purpose of coordination among the aforesaid three Discoms, as also other distribution licensees of the State.
2. Through this miscellaneous application, the applicant seeks a direction upon the Rajasthan Discoms for making payment of Rs.1376.35 crore towards Late Payment Surcharge (“LPS”). This claim has been raised by the applicant citing Article 8.3.5 of the Power Purchase Agreement dated 28.01.2010 (“PPA-2010”) entered into between the Rajasthan Discoms and the applicant. The present application has been captioned as “APPLICATION FOR DIRECTIONS ON BEHALF OF THE RESPONDENT NO.1/APPLICANT (ADANI POWER RAJASTHAN LIMITED)” in the said appeals which stood disposed of by a common judgment of a three-Judge Bench of this Court delivered on 31.08.2020. Review petitions filed against this judgment by the Rajasthan Discoms stood dismissed on 02.03.2021.
3. The appeals arose out of a dispute involving certain additional payments claimed by the applicant as per the PPA-2010. Under the agreement, the applicant was to supply electricity to the Rajasthan Discoms, which had to be generated by the applicant. For this purpose, the PPA-2010 postulated domestic coal as the primary source of energy, while imported coal was to be used as a backup option. The applicant’s complaint was that, due to non-availability of sufficient domestic coal, it could not be allocated a domestic coal linkage by the Government of India and it was compelled to rely on imported coal from Indonesia, which had a higher cost. Claim for compensation of loss, caused on account of non-supply of domestic coal, was raised by the applicant before the Rajasthan Electricity Regulatory Commission (“RERC”), invoking the change in law clause of the PPA-2010. Change in law was one of the conditions under the PPA-2010, for which tariff adjustment payment could be made by the seller of electricity following the procedure stipulated in the aforesaid agreement. By an order dated 17.05.2018, RERC held that the applicant would be entitled to relief on account of change in law, which was held to be the difference between actual landed cost of alternative/imported coal (as certified by the auditor) and actual landed cost of domestic linkage coal. This was recorded in an order passed on 25.02.2022 by a Coordinate Bench of this Court in a contempt action brought by the applicant [Contempt Petition (Civil) No(s) 877-878 of 2021]. We shall refer to the said proceeding later in this judgment. We also need not delve into the question of eligibility of the applicant to get additional sum on account of change in law, as that question stands finally decided in the main judgment.
4. The applicant had also raised another claim for additional payment before the RERC, under the head of carrying cost which was disallowed by the RERC. Rajasthan Discoms, being aggrieved by the grant of change-in-law compensation, as also the applicant, being aggrieved by rejection of the claim for carrying costs appealed against the order of the RERC before the Appellate Tribunal for Electricity (“APTEL”). By a common decision dated 14.09.2019, the APTEL found that the applicant’s claim based on “change in law” was valid and opined that the applicant was entitled to compensation for the loss caused to it because of change in law u
(1) Condition precedent for entertaining appeal under Section 125 of Electricity Act, 2003 is existence of a substantial question – A question of law which arises incidentally or collaterally and has....
The main legal point established in the judgment is the court's affirmation of the relief in favor of the petitioner regarding the change in law, the calculation of the amount due, and the liability ....
Companies or juristic entities cannot be punished for contempt; specific individuals must be named for compliance responsibilities.
The court established that consumers cannot be charged for interest/carrying costs due to DISCOMS' delayed payments, limiting the special fuel surcharge to the original principal amount only.
The term “Law” in the PPAs would include all applicable rules, regulations, orders, Notifications issued by an Indian Governmental Instrumentality and shall also include all rules, regulations, decis....
Carrying Cost is compensable for Change in Law events, and the affected party must be restored to its original economic position, supporting claims for compound interest.
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