1. Power Purchase Agreement — Notification imposing Evacuation Facility Charges by state instrumentality — Claim for compensation under change in law provisions — Appeal under Electricity Act, 2003. (Para 3 , 4 , 5 , 6 )
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2025 Supreme(SC) 907
SUPREME COURT OF INDIA
M. M. Sundresh, Rajesh Bindal, JJ.
Jaipur Vidyut Vitran Nigam Ltd. & Ors. – Appellants
Versus
Adani Power Rajasthan Ltd. & Anr. – Respondents
Civil Appeal No. 4336 of 2025 (Arising out of Civil Appeal Diary No. 26876 of 2024)
Decided On : 23-05-2025
Important Points
The Notification imposing Evacuation Facility Charges constitutes a change in law, entitling the affected party to compensation from that date.
Subject
Electricity Law - Power Purchase Agreements
Act Referred
Headnote
(A) Electricity Act, 2003 - Sections 86 and 111 - Power Purchase Agreement - Change in law - The Notification dated 19.12.2017 imposing Evacuation Facility Charges constitutes a change in law event, entitling the respondent to compensation from that date. The Appellate Tribunal for Electricity upheld this view, allowing the appeal on merits. (Paras 7, 19, 20)
(B) Appeals - Scope of appeals under the Electricity Act - The court's powers are limited to the statutory provisions, requiring substantial questions of law to be framed for consideration. (Paras 12, 15)
Facts of the case:
The appellants, Rajasthan Discoms, entered into a Power Purchase Agreement with Adani Power Rajasthan Ltd. for the supply of electricity. Following a notification from Coal India Ltd. imposing Evacuation Facility Charges, the respondent claimed it constituted a change in law, leading to a dispute over compensation. The Rajasthan Electricity Regulatory Commission allowed some claims, which were appealed to the Appellate Tribunal for Electricity.
Findings of Court:
The court found that the Notification constituted a change in law, entitling the respondent to compensation from the date of the Notification. The appeal was dismissed as the issues raised were already settled by prior judgments.
Issues: The main issues addressed were whether the Notification constituted a change in law and the interpretation of relevant articles of the Power Purchase Agreement.
Ratio Decidendi: The court held that the Notification imposed by Coal India Ltd. was a change in law event, and the principles of restitution apply, restoring the affected party to its economic position as if the change had not occurred.
Result: The appeal stands dismissed.
(B) Appeals - Scope of appeals under the Electricity Act - The court's powers are limited to the statutory provisions, requiring substantial questions of law to be framed for consideration. (Paras 12, 15)
Facts of the case:
The appellants, Rajasthan Discoms, entered into a Power Purchase Agreement with Adani Power Rajasthan Ltd. for the supply of electricity. Following a notification from Coal India Ltd. imposing Evacuation Facility Charges, the respondent claimed it constituted a change in law, leading to a dispute over compensation. The Rajasthan Electricity Regulatory Commission allowed some claims, which were appealed to the Appellate Tribunal for Electricity.
Findings of Court:
The court found that the Notification constituted a change in law, entitling the respondent to compensation from the date of the Notification. The appeal was dismissed as the issues raised were already settled by prior judgments.
Issues: The main issues addressed were whether the Notification constituted a change in law and the interpretation of relevant articles of the Power Purchase Agreement.
Ratio Decidendi: The court held that the Notification imposed by Coal India Ltd. was a change in law event, and the principles of restitution apply, restoring the affected party to its economic position as if the change had not occurred.
Result: The appeal stands dismissed.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Kartik Seth, Adv. Mr. Raghav Sharma, Adv. Mr. Saurabh Chaturvedi, Adv. Mr. Manni Sethi, Adv. M/s Chambers Of Kartik Seth, AOR
For the Respondent(s): Dr. A.M. Singhvi, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Amit Kapur, Adv. Ms. Poonam Sengupta, Adv. Mr. Arshit Anand, Adv. Mr. Shashwat Singh, Adv. Mr. Saunak Rajguru, Adv. Mr. Subham Bhut, Adv. Mr. Siddharth Seem, Adv. Mr. E. C. Agrawala, AOR
For the Appellant(s) : Mr. Kartik Seth, Adv. Mr. Raghav Sharma, Adv. Mr. Saurabh Chaturvedi, Adv. Mr. Manni Sethi, Adv. M/s Chambers Of Kartik Seth, AOR
For the Respondent(s): Dr. A.M. Singhvi, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Amit Kapur, Adv. Ms. Poonam Sengupta, Adv. Mr. Arshit Anand, Adv. Mr. Shashwat Singh, Adv. Mr. Saunak Rajguru, Adv. Mr. Subham Bhut, Adv. Mr. Siddharth Seem, Adv. Mr. E. C. Agrawala, AOR
Table of Contents
2. Appellants contest the change in law event, the award of compounding carrying costs at LPS rates, and the timing of supplementary bill issuance. (Para 9 )
3. The court analyzed the scope of appeals under the Electricity Act, the definition of law including notifications by state instrumentalities, and the application of restitutionary principles. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 21 , 22 , 23 , 24 , 25 , 26 , 27 )
4. Notifications by state instrumentalities constitute change in law; restitutionary principles justify compounding carrying costs to restore the affected party's economic position. (Para 18 , 21 , 24 , 25 )
5. Appeal dismissed; the judgment of the Appellate Tribunal for Electricity is upheld. (Para 28 , 29 )
6. What is the scope of an appeal to the Supreme Court under Section 125 of the Electricity Act, 2003?
Appeals are circumscribed by Section 100 of the Code of Civil Procedure, 1908, requiring the appellant to raise a substantial question of law. A mere question of law is insufficient; it must be substantial and capable of reversing the tribunal's decision. (Para 15 , 16 )
7. Does a notification issued by a state instrumentality constitute a change in law under a Power Purchase Agreement?
Yes. Notifications, orders, or directions issued by instrumentalities of the State after the cut-off date are considered change in law events, entitling the affected generator to compensation based on restitutionary principles. (Para 18 )
8. How are carrying costs determined in change in law events under the restitutionary principle?
Carrying costs are aimed at restoring the affected party to the same economic position as if the change in law had not occurred. This justifies the grant of compound interest from the date of the event to ensure full restitution. (Para 18 , 21 )
9. What is the distinction between Article 10.5.1(i) and 10.5.1(ii) regarding the effective date of tariff adjustments?
Article 10.5.1(i) applies to the date of adoption or promulgation of a law. Article 10.5.1(ii) applies only when the change in law results from a change in the interpretation of law by a court, tribunal, or governmental instrumentality. (Para 22 , 23 , 24 , 25 )
10. When should a supplementary bill be raised for change in law compensation?
A supplementary bill for change in law compensation is raised after due adjudication by the competent forum has taken place to determine the entitlement and quantum of the claim. (Para 26 )
JUDGMENT :
M. M. Sundresh, J.
1. Admit.
2. We have heard the learned Senior Counsel, Mr. Shyam Divan and learned Counsel, Mr. Karthik Seth appearing for the appellants and the learned Senior Counsel, Dr. Abhishek Manu Singhvi appearing for the respondent No. 1, at length. All the relevant documents, including the written submissions of the parties, have been perused.
3. In pursuance of the Letter of Intent issued to Adani Power Rajasthan Ltd. (respondent No.1-Power Generator), on 17.12.2009, a Power Purchase Agreement (hereinafter referred to as the “PPA”) dated 28.01.2010 was entered into between appellant Nos.1, 2 and 3, who are the Rajasthan Discoms engaged in the distribution and supply of electricity, on one side and respondent No.1 on the other, for the supply of 1200 MW Aggregate Contracted Capacity at a levelized tariff of Rs.3.238 per unit. The same was duly approved by respondent No.2.
4. While the agreement was in operation, a Notification came to be issued at the instance of M/s. Coal India Limited (hereinafter referred to as “CIL”), dated 19.12.2017, imposing a levy of Evacuation Facility Charges (hereinafter referred to as the “EFC”) with effect from 20.12.2017. Immediately, on the very next day i.e. 20.12.2017, respondent No.1 informed appellant No. 4 that the Notification dated 19.12.2017 constituted a ‘change in law’ event. The Notification dated 19.12.2017 is extracted below:
| “COAL INDIA LIMITED A Maharatna Company (A Govt. of India Enterprise) COAL BHAWAN Sales & Marketing Division Ground & Floor, Premises No, 04 MAR, Plot No. AF-III, Action Area -1A Rajarhat, New Town, Kolkata - 700156 Phone: 033-71104143, Fax: 033-23244229, Website: ……………………………… CIN: L23 L09WB1973GO1028844 |
| PRICE NOTIFICATION: CIL:S&M: GM(F)Pricing 2017/ 1005 dated 19th Dec. 2017 |
| Charge of Rs. 50 (Fifty) per tonne shall be levied as ‘Evacuation Facility Charges’ on all despatches except despatch through rapid loading arrangement. This is effective from 00:00 hour of 20" Dec. 2017. This issues with the approval of the competent authority. |
| General Manager (M&S) Marketing & Sales” |
5. On its failure in eliciting a suitable reply, respondent No.1 filed a Petition bearing No.1373/2018 before the Rajasthan Electricity Regulatory Commission (hereinafter referred to as the “RERC”), invoking Section 86 of the Electricity Act, 2003 (hereinafter referred to as the “2003 Act”) read with Article 10 of the PPA. While rejecting some of the reliefs, the RERC did allow some of the other prayers sought for by respondent No.1. Against the refusal of some of the claims, the respondent No. 1 filed an appeal before the Appellate Tribunal for Electricity (hereinafter referred to as the “APTEL”).
6. The appeal under Section 111 of the 2003 Act was so made along with an application seeking condonation of delay of 332 days in filing. Another application was filed seeking to condone the delay of 236 days in re-filing the appeal. Upon hearing both sides, the aforesaid applications were allowed and, thereafter, the appeal was decided on merits. It is pertinent to note that the common order by the APTEL, dated 23.01.2023, condoning the delay on both counts, has attained finality for want of further challenge.
7. The APTEL, inter alia, held by its judgment dated 18.04.2024, after elaborately considering the submissions made by both sides, that the Notification dated 19.12.2017 would amount to a change in law, and the respondent No. 1 would be entitled to the grant of compensation from the date of the Notification, by taking note of the decision rendered by this Court in GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401 (hereinafter referred to as “GMR Warora”) which, in turn, also placed reliance upon the earlier decisions of this Court. While doing so, it also took into consideration, the fair submission made on behalf of the appellants that the principal issue of levy of EFC, and consequen
