# GMR WARORA ENERGY LIMITED v. CENTRAL ELECTRICITY REGULATORY COMMISSION

- **Citation:** [2023] 8 S.C.R. 183
- **Court:** Supreme Court of India
- **Decided:** 2023-04-20
- **Case number:** Civil Appeal No.11095 of 2018
- **Bench:** B. R. Gavai, Vikram Nath
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/gmr-warora-energy-limited-v-central-electricity-regulatory-commission-37543
- **Pages:** 60

## Headnote

Electricity - Components to be considered as "Change in
Law" events - Held: The term "Law" has been defined in the Power
Purchase Agreements - 'Law' would mean all laws including
Electricity Laws in force in India and any statute, ordinance,
regulations, orders, Notification or code, rules, or any interpretation
of any of them by an Indian Governmental Instrumentality and
having force of law - It shall also include all rules, regulations,
decisions and orders of the CERC and the MERC - Thus, all such
additional charges which are payable on account of orders,
directions, Notifications, Regulations, etc., issued by the
instrumentalities of the State after the cut-off date will have to be
considered to be 'Change in Law' events - The Generators would
be entitled to compensation on the restitutionary principle on such
changes occurring after the cut-off date - Revision of charges to
be paid on Busy Season Surcharge, Development Surcharge and
Port Congestion Charges from time to time by the 'Railway Board'
would come within the ambit of 'Change in Law' - Notifications by
which MoEF mandated power projects to use beneficiated coal with
ash content lower than 34% would also amount to "Change in Law'
- Further, change in NCDP would also amount to 'Change in Law'
- With regard to forest tax, as on the cut-off date there was no
Forest Tax applicable on coal mined and transported from South
Eastern Coalfields Limited mines located in Forest area - For the
first time, vide Notification of the Forest Department, Government
of Chhattisgarh a fee was levied - Said notification issued by the
Forest Department of the Government of Chhattisgarh, which is an
instrumentality of the State would also be a 'Change in Law' - No
error in the finding of the APTEL in that regard - Also, 'add on
premium' was required to be paid on account of cancellation of
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[2023] 8 S.C.R.
captive coal blocks and inordinate delay on account of Go-No-Go
policy - As such, it cannot be said that the reasoning adopted by
the APTEL is perverse and arbitrary - EFC imposed by CIL which
is an instrumentality of the State, circular of CIL would also amount
to 'Change in Law' - In the light of said findings, each of the appeals
considered independently, dismissed - Electricity Act, 2003.
Electricity - Carrying cost - Grant of interest - Held: Once
carrying cost has been granted, it cannot be urged that interest on
carrying cost should be calculated on simple interest basis instead
of compound interest basis - Grant of compound interest on carrying
cost and that too from the date of the occurrence of the 'Change in
Law' event is based on sound logic - It 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 - In view of the consistent position of law and
application of restitutionary principles and privity of contractual
obligations between the parties as contained in the Power Purchase
Agreements, the view taken by the APTEL with regard to carrying
cost warrants no interference - Electricity Act, 2003.
Electricity Act, 2003 - s.125 - Appeals arising from concurrent
findings of fact arrived at by two statutory bodies having expertise
in the field - Held: CERC, SERCs and APTEL are bodies consisting
of experts in the field - This Court should be slow in interfering
with the concurrent findings of fact unless they are found to be
perverse, arbitrary and either in ignorance of or contrary to the
statutory provisions - Appeal to this Court u/s.125 is only permissible
on any of the grounds as specified in s.100 of the Code of Civil
Procedure, 1908 - As such, the appeal to this Court would be
permissible only on substantial questions of law - However, even in
cases where well-reasoned concurrent orders are passed by the ERC
and APTEL, the same are challenged by the DISCOMS as well as
the Generators - On account of p

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183
 [2023] 8 S.C.R. 183
183
GMR WARORA ENERGY LIMITED
v.
CENTRAL ELECTRICITY REGULATORY COMMISSION
(CERC) & ORS.
(Civil Appeal No.11095 of 2018)
APRIL 20, 2023
[B. R. GAVAI AND VIKRAM NATH, JJ.]
Electricity - Components to be considered as "Change in
Law" events - Held: The term "Law" has been defined in the Power
Purchase Agreements - 'Law' would mean all laws including
Electricity Laws in force in India and any statute, ordinance,
regulations, orders, Notification or code, rules, or any interpretation
of any of them by an Indian Governmental Instrumentality and
having force of law - It shall also include all rules, regulations,
decisions and orders of the CERC and the MERC - Thus, all such
additional charges which are payable on account of orders,
directions, Notifications, Regulations, etc., issued by the
instrumentalities of the State after the cut-off date will have to be
considered to be 'Change in Law' events - The Generators would
be entitled to compensation on the restitutionary principle on such
changes occurring after the cut-off date - Revision of charges to
be paid on Busy Season Surcharge, Development Surcharge and
Port Congestion Charges from time to time by the 'Railway Board'
would come within the ambit of 'Change in Law' - Notifications by
which MoEF mandated power projects to use beneficiated coal with
ash content lower than 34% would also amount to "Change in Law'
- Further, change in NCDP would also amount to 'Change in Law'
- With regard to forest tax, as on the cut-off date there was no
Forest Tax applicable on coal mined and transported from South
Eastern Coalfields Limited mines located in Forest area - For the
first time, vide Notification of the Forest Department, Government
of Chhattisgarh a fee was levied - Said notification issued by the
Forest Department of the Government of Chhattisgarh, which is an
instrumentality of the State would also be a 'Change in Law' - No
error in the finding of the APTEL in that regard - Also, 'add on
premium' was required to be paid on account of cancellation of
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[2023] 8 S.C.R.
captive coal blocks and inordinate delay on account of Go-No-Go
policy - As such, it cannot be said that the reasoning adopted by
the APTEL is perverse and arbitrary - EFC imposed by CIL which
is an instrumentality of the State, circular of CIL would also amount
to 'Change in Law' - In the light of said findings, each of the appeals
considered independently, dismissed - Electricity Act, 2003.
Electricity - Carrying cost - Grant of interest - Held: Once
carrying cost has been granted, it cannot be urged that interest on
carrying cost should be calculated on simple interest basis instead
of compound interest basis - Grant of compound interest on carrying
cost and that too from the date of the occurrence of the 'Change in
Law' event is based on sound logic - It 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 - In view of the consistent position of law and
application of restitutionary principles and privity of contractual
obligations between the parties as contained in the Power Purchase
Agreements, the view taken by the APTEL with regard to carrying
cost warrants no interference - Electricity Act, 2003.
Electricity Act, 2003 - s.125 - Appeals arising from concurrent
findings of fact arrived at by two statutory bodies having expertise
in the field - Held: CERC, SERCs and APTEL are bodies consisting
of experts in the field - This Court should be slow in interfering
with the concurrent findings of fact unless they are found to be
perverse, arbitrary and either in ignorance of or contrary to the
statutory provisions - Appeal to this Court u/s.125 is only permissible
on any of the grounds as specified in s.100 of the Code of Civil
Procedure, 1908 - As such, the appeal to this Court would be
permissible only on substantial questions of law - However, even in
cases where well-reasoned concurrent orders are passed by the ERC
and APTEL, the same are challenged by the DISCOMS as well as
the Generators - On account of pendency of litigation, which in
some of the cases in this batch has been more than 5 years, nonpayment of dues would entail paying of heavy carrying cost to the
Generators by the DISCOMS, which, in turn, will be passed over to
the end consumer - As a result, it will be the end consumer who
would be at sufferance - Therefore, such unnecessary and
unwarranted litigation needs to be curbed - Union of India, through
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Ministry of Power, may evolve a mechanism to ensure timely payment
by the DISCOMS to the Generating Companies, which would avoid
huge carrying cost to be passed over to the end consumers - A
mechanism may also be evolved to avoid unnecessary and
unwarranted litigation, the cost of which is also passed on to the
ultimate consumer - Code of Civil Procedure, 1908 - s.100.
Dismissing the appeals, the Court
HELD: 1. The term "Law", has been defined in the PPAs.
Perusal of the definition of the term "Law" itself would clearly
show that the term "Law" would mean all laws including Electricity
Laws in force in India and any statute, ordinance, regulation,
Notification or code, rule, or any interpretation of any of them by
an Indian Governmental Instrumentality and having force of law.
It would further reveal that the term "Law" shall also include all
applicable rules, regulations, orders, Notifications by an Indian
Governmental Instrumentality and shall also include all rules,
regulations, decisions and orders of the CERC and the MERC.
CIL is an instrumentality of the Government of India and its
orders, insofar as price of fuel are concerned, are binding on all
its subsidiaries. Price of coal includes the sum of base price, other
charges and statutory charges as applicable at the time of delivery
of coal. As discussed, the term 'Law' would also include all
applicable rules, regulations, orders, Notifications issued by an
Indian Governmental Instrumentality. It would thus be clear that
all such additional charges which are payable on account of orders,
directions, Notifications, Regulations, etc., issued by the
instrumentalities of the State, after the cut-off date, will have to
be considered to be 'Change in Law' events. The Generators
would be entitled to compensation on the restitutionary principle
on such changes occurring after the cut-off date. [Paras 93, 94,
96-99][218-C, E-F; 219-E, G-H; 220-A]
Energy Watchdog v. Central Electricity Regulatory
Commission and others (2017) 14 SCC 80; Jaipur
Vidyut Vitaran Nigam Ltd. and others v. Adani Power
Rajasthan Limited and another 2020 SCC Online SC
697; Maharashtra State Electricity Distribution
Company Limited v. Adani Power Maharashtra Limited
& Ors. 2023 SCC OnLine 233 - relied on.
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
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2. Insofar as increase in Busy Season Surcharge,
Development Surcharge on transportation of coal, and Port
Congestion Surcharge by the Indian Railways are concerned, the
learned APTEL had found that the Indian Railways is an
instrumentality of the State. It has been found that the Busy
Season Surcharge, Development Surcharge and Port Congestion
Surcharge were increased from time to time vide Circulars/
Notifications issued by the Ministry of Railways, through the
Railway Board. A Constitution Bench of this Court, in the case of
Railway Board, Government of India v. M/s Observer Publications
(P) Ltd., has held the Railway Board to be a State within the
meaning of Article 12 of the Constitution of India. As such, no
error could be found in the finding of the learned APTEL that the
revision of charges to be paid on Busy Season Surcharge,
Development Surcharge and Port Congestion Charges from time
to time by the 'Railway Board' would come within the ambit of
'Change in Law'. [Paras 101-103][220-C-E]
Railway Board, Government of India v. M/s Observer
Publications (P) Ltd. (1972) 2 SCC 266 : [1972] 3 SCR
865 - relied on.
3. Insofar as MoEF notification on coal quality is concerned,
the MoEF, vide Notification dated 2nd January 2014, i.e.
subsequent to the particular cut-off date, i.e. 1st June 2012, has
mandated power projects to use beneficiated coal with ash content
lower than 34%. The draft notification of MoEF dated 11th July
2012 culminated into the final Notification dated 2nd January 2014.
By no stretch of imagination, can it be said that MoEF is not an
instrumentality of the State. By the said Notification, MoEF has
mandated power projects to use beneficiated coal with ash content
lower than 34%. Admittedly, prior to the cut-off date, the same
was not a requirement. It is thus clear that the said Notifications
dated 11th July 2012 and 2nd January 2014 would amount to
"Change in Law'. As such, no fault can be found with the finding
of the learned APTEL that the same would amount to 'Change in
Law'. [Paras 104, 105][220-F-H; 221-A]
4. This Court in the case of Energy Watchdog so also in
Adani Rajasthan case and recently in MSEDCL v. APML & Ors.
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has held that the change in NCDP would amount to 'Change in
Law'. [Paras 106][221-C]
5. Insofar as Forest Tax is concerned, perusal of the material
placed on record would reveal that, as on the cut-off date, there
was no Forest Tax applicable on coal mined and transported from
South Eastern Coalfields Limited ("SECL" for short) mines
located in Forest area. For the first time, vide Notification of the
Chhattisgarh State Government, Department of Forest, under
53 the provisions of Chhattisgarh Transit (Forest Produce Rule)
2001, a fee at the rate of Rs.7 per ton was levied. Undisputedly,
the said Notification is issued by the Forest Department of the
Government of Chhattisgarh, which is an instrumentality of the
State. As such, no error can be found with the finding of the learned
APTEL in that regard. [Para 107][221-D-E]
6. Insofar as 'Add on premium price' is concerned,
undisputedly, 'add on premium' was required to be paid on account
of cancellation of captive coal blocks and inordinate delay on
account of Go-No-Go policy. As such, it cannot be said that the
reasoning adopted by the learned APTEL is perverse and
arbitrary. [Para 108][221-F]
7. EFC was imposed by CIL vide its Circular dated 19th
December 2017. CIL is an instrumentality of the State. It is thus
clear that, on the cut-off date, there was no requirement of EFC,
which has been brought into effect only on 19th December 2017.
As such, the circular of CIL dated 19th December 2017 would
also amount to 'Change in Law'. It is also not in dispute that
EFC has been paid by the generators while paying the base price,
other charges and statutory charges at the time of delivery of
coal. As such, no interference would be warranted with the said
finding. [Paras 109-111][221-G-H; 222-A]
8. A perusal of Article 11.3.4 of the PPA would reveal that
in the event of delay in payment of a monthly bill by any procurer
beyond its due date, a late payment surcharge shall be payable
by the procurer to the seller at the rate of 2% in excess of the
applicable State Bank Advance Rate ("SBAR" for short) per
annum, on the amount of outstanding payment, calculated on a
day to day basis (and compounded with monthly rest), for each
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
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day of the delay. Article 11.8 of the PPA deals with Payment of
Supplementary Bill. It enables either party to raise a
supplementary bill on the other party for payment on account of
certain events. Clause (iii) of Article 11.8.1 of the PPA deals with
'Change in Law' as provided in Article 13. It requires the bill to
be paid by the other party. Article 11.8.3 of the PPA also provides
that in the event of delay in payment of a supplementary bill by
either party beyond one month from the date of billing, a late
payment surcharge shall be payable at same terms applicable to
the monthly bill in Article 11.3.4. This Court in the case of Uttar
Haryana Bijli Vitran Nigam Limited (UNHVNL) and another v.
Adani Power Limited and others has held that insofar as the
"operation period" is concerned, compensation for any increase/
decrease in revenues or costs to the seller is to be determined
and effected from such date as is decided by the appropriate
Commission. It has further been held that the compensation is
only payable for increase/decrease in revenue or cost to the seller
if it is in excess of an amount equivalent to 1% of the Letter of
Credit in aggregate for a contract year. It has been held that
restitutionary principles apply in case a certain threshold limit is
crossed. It has been held that an in-built restitutionary principle
compensates the party affected by such 'Change in Law' and the
affected party must be restored through monthly tariff payment
to the same economic position as if such 'Change in Law' had not
occurred. In case the 'Change in Law' happens to be by way of
adoption, promulgation, amendment, re-enactment or repeal of
the law or 'Change in Law', it has to be effected from the date on
which such change occurs. In Maharashtra State Electricity
Distribution Company Limited v. Maharashtra Electricity Regulatory
Commission and Others, this Court has clearly held that the
DISCOMS have a contractual obligation to make timely payment
of the invoices raised by the power generating companies, subject
to scrutiny and verification of the same. This Court has rejected
the contention that the funding cost was much lesser than the
rate of LPS. This Court has reiterated the proposition that the
courts cannot rewrite a contract which is executed between the
parties. This Court has emphasized that it cannot substitute its
own view of the presumed understanding of commercial terms
by the parties, if the terms are explicitly expressed. It has been
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held that the explicit terms of a contract are always the final word
with regard to the intention of the parties. Article 11.8 of the PPA
entitles either party to raise a supplementary bill on the other
party on account of 'Change in Law' as provided in Article 13 and
such bills are required to be paid by the either party. Article 11.8.3
of the PPA specifically provides that in the event of delay in
payment of a supplementary bill by either party beyond one month
from the date of billing, a late payment surcharge shall be payable
at the same terms applicable to the monthly bill in Article 11.3.4.
Article 11.3.4 of the PPA specifically provides a late payment
surcharge to be paid by the procurer to the seller at the rate of
2% in excess of the applicable SBAR per annum on the amount
of outstanding payment calculated on day to day basis (and
compounded with monthly rest), for each day of the delay. In Uttar
Haryana Bijli Vitran Nigam Limited and Another v. Adani Power
(Mundra) Limited and Another this Court has reiterated that once
carrying cost has been granted, it cannot be urged that interest
on carrying cost should be calculated on simple interest basis
instead of compound interest basis. It has been held that grant of
compound interest on carrying cost and that too from the date of
the occurrence of the 'Change in Law' event is based on sound
logic. It has been held that 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 argument that there is no provision in
the PPAs for payment of compound interest from the date when
the 'Change in Law' event had occurred, has been specifically
rejected by this Court. In view of this consistent position of law
and application of restitutionary principles and privity of contractual
obligations between the parties as contained in the PPAs, the
view taken by the learned APTEL with regard to carrying cost
does not warrants interference. [Paras 116-126][223-D-G; 225B-F; 227-D-H; 228-A; 229-D-G]
Uttar Haryana Bijli Vitran Nigam Limited (UNHVNL)
and another v. Adani Power Limited and others (2019)
5 SCC 325 : [2019] 4 SCR 487; Maharashtra State
Electricity Distribution Company Limited v.
Maharashtra Electricity Regulatory Commission and
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
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Others (2022) 4 SCC 657; Uttar Haryana Bijli Vitran
Nigam Limited and Another v. Adani Power (Mundra)
Limited and Another (2023) 2 SCC 624 - relied on.
9. Civil Appeal No. 11095 of 2018 and Civil Appeal Nos.
11910 - 11911 of 2018
In these batch of appeals, insofar as the appeal of
DNHDISCOM is concerned, they are aggrieved by the order of
the learned APTEL allowing Busy Season Surcharge and
Development Surcharge, MoEF Notification on coal quality and
Change in NCDP. They are also aggrieved by the finding of the
learned APTEL with regard to carrying cost. Insofar as the Busy
Season Surcharge and Development Surcharge are concerned,
they are issued under the Circulars/Notifications of Indian
Railways. The notification on coal quality is issued by MoEF. All
these are the instrumentalities of the State, and these would,
therefore, amount to 'Change in Law'. Insofar as rest of the claims,
which are concurrently allowed and disallowed by both the CERC
and the learned APTEL, are concerned, in view of the judgments
of this Court on this issue, as stated above, there is no-reason to
interfere with the same, not noticing any perversity, arbitrariness
and/or any contravention of the statutory provisions. The appeals
of both the Generator and the DNH-DISCOM are, therefore,
liable to be dismissed. [Paras 132, 134, 135][231-G-H; 232-A,
B-D]
10. Civil Appeal Nos. 4628-4629 of 2021
The learned APTEL allowed the claim of the Generator only
on the ground of Busy Season Surcharge and Development
Surcharge on transportation of coal, and the Carrying Cost. In
view of finding on the issues as above, no error can be found with
the finding of the learned APTEL in that regard. No merit in the
appeals. The appeals are, accordingly, liable to be dismissed.
[Paras 136, 137][232-E-F]
11. Civil Appeal Nos. 12055-12056 of 2018
The issue of Busy Season Surcharge, Development
Surcharge and Port Congestion Surcharge have already been
considered by us herein above. All these are charges under the
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Notifications issued by the Indian Railways, through the Railway
Board. As such, no error can be found with the finding of the
learned APTEL that they would amount to 'Change in Law' events.
Insofar as levy of 'Forest Tax' is concerned, the same is levied
by the State Government under the statutory provisions. In that
view of the matter, there is no reason to interfere with the order
of the learned APTEL. The appeals are, accordingly, liable to be
dismissed. [Paras 138, 139, 141][232-F-G; 233-A]
12. Civil Appeal Nos. 2935-2936 of 2020
In addition to the 'Change in Law' benefits granted by the
State Commission, 'Coal Terminal Surcharge', 'Chhattisgarh
Paryavaran Upkar' and 'Chhattisgarh Vikas Upkar' were also
considered to be 'Change in Law' events by the learned APTEL.
The 'Coal Terminal Surcharge' was levied by the Indian Railways
subsequent to the cut-off date. Similarly, the Government of
Chhattisgarh, under Section 8 of the Chhattisgarh Adhosanrachna
Vikas Evam Paryavaran Upkar Adhiniyam, 2005, vide Notification
dated 16th June 2015, which is admittedly after the cut-off date,
introduced 'Chhattisgarh Paryavaran Upkar' and 'Chhattisgarh
Vikas Upkar'. Even the Change in Swacch Bharat Cess at the
rate of 0.5% on Service Tax for Operation Period and Change in
Krishi Kalyan Cess at the rate of 5% on Service Tax for Operation
Period, which had beengranted concurrently by the State
Commission and the learned APTEL, were notified by the Union
of India after the cut-off date. It could thus be seen that all these
additional taxes or cesses were introduced by the
instrumentalities of the Government of India or by the
Government of Chhattisgarh. The same are issued under the
provisions of the concerned statutes, rules, notifications, orders,
etc. It is thus clear that they would amount to 'Law' within the
meaning of the term 'Law' as defined in the PPAs. As such, no
error can be found with the order of the learned APTEL. There
is no merit in the appeals. The appeals are, accordingly, liable to
be dismissed. [Paras 142 - 145][232-B-F]
13. Civil Appeal No. 3123 of 2019 and Civil Appeal No.5372
of 2019
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
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In the present matter, in addition to the claims granted by
the CERC, the learned APTEL also granted the following claims:
(i) Change in NCDP (cancellation of Captive Block vis-à-vis
tapering linkage), (ii) Busy Season Surcharge and Developmental
Surcharge, (iii) Carrying Cost; and (iv) Add on Premium Price.
Insofar as other claims which were concurrently allowed and
disallowed by the CERC and the learned APTEL are concerned,
in view of the concurrent findings, there is no reason to interfere
with the same. The appeals of both DISCOMS as well as
Generating Companies are, therefore, liable to be dismissed.
[Paras 146, 151, 152][233-G-H; 234-A, E-F]
14. Civil Appeal No. 6641 of 2019
This appeal is filed by GKEL, being aggrieved by the
concurrent denial of benefits on certain components. As already
discussed herein above in view of the concurrent findings
recorded by the CERC as well as the learned APTEL for
disallowing the claims, there is no reason to interfere with the
same. The appeal is, accordingly, liable to be dismissed. [Paras
153, 154][234-F-G]
15. Civil Appeal Nos. 5583-5584 of 2021
In the present case, the benefit is granted on following
grounds: (i) Shortfall in domestic coal on account of Change in
NCDP; (ii) Add on premium on account of existing tapering
linkage by three years; (iii) Busy Season Surcharge. Insofar as
Busy Season Surcharge is concerned, apart from there being
concurrent findings of facts, reasons are already given herein
above, as to how the same would amount to 'Change in Law'.
There is no merit in the appeals. The same are, accordingly, liable
to be dismissed. [Paras 155, 157, 158][234-H; 235-A-C]
16. Civil Appeal No. 39 of 2021
The CERC has granted benefit on the following grounds. i.
Shortfall in linkage coal on account of NCDP 2013 and SHAKTI
Policy; ii. Change in coal quality pursuant to amendment of the
Environment (Protection) Rules, 1986; iii. Increase in Busy
Season Surcharge and Development Surcharge on transportation
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of coal by Indian Railways; and iv. Carrying cost on allowed
'Change in Law' claims. The view taken by the CERC has been
affirmed by the learned APTEL. As such, the appeal arises out of
the concurrent findings of fact. The other components, i.e. change
in coal quality pursuant to amendment of the Environment
(Protection) Rules, 1986, and increase in Busy Season Surcharge
and Development Surcharge on transportation of coal by Indian
Railways, have already been considered by us herein to amount
to 'Change in Law' events. The issue regarding 'Carrying Cost'
has also ben considered. As such, no interference is warranted
in the concurrent findings by the learned APTEL, especially in
view of the judgments of this Court. The appeal is, accordingly,
liable to be dismissed. [Paras 159, 160, 163][235-D-F; 236-B-C]
17. Civil Appeal No. 5005 of 2022 and Civil Appeal No.
4089 of 2022
The appeals are filed being aggrieved by the order of the
learned APTEL granting compensation on account of 'EFC' and
'carrying cost'. Undisputedly, the EFC was imposed by CIL vide
its Circular dated 19th December 2017. it is not in dispute that
EFC has been paid by the Generators while paying the base price,
other charges and statutory charges at the time of delivery of
coal. As such, no interference is warranted with the said finding.
Insofar as 'carrying cost' is concerned, As such, no interference,
therefore, is warranted on the said issue also. There is no merit
in the appeals. The same are, accordingly, liable to be dismissed.
[Paras 164 - 168][236-D-F]
18.1 The CERC, SERCs and the learned APTEL are bodies
consisting of experts in the field. Several appeals in the present
batch arise out of concurrent findings of fact arrived at by two
statutory bodies having expertise in the field. In some of the
matters, the appeals have been filed only for the sake of filing
the same. Several rounds of litigation have taken place in some
of the proceedings. Recently, this Court, in the case of MSEDCL
v. APML & Ors. has noted that one of the reasons for enacting
the Electricity Act, 2003 was that the performance of the Electricity
Boards had deteriorated on account of various factors. The
Statement of Objects and Reasons of the Electricity Act, 2003
would reveal that one of the main features for enactment of the
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
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Electricity Act was delicensing of generation and freely permitting
captive generation. In the said judgment, the statement of the
learned Attorney General made in the case of Energy Watchdog
that the electricity sector, having been privatized, had largely
fulfilled the object sought to be achieved by the Electricity Act
was recorded. He had stated that delicensed electricity generation
resulted in production of far greater electricity than was earlier
produced. The learned Attorney General had further urged the
Court not to disturb the delicate balance sought to be achieved
by the Electricity Act, i.e. that the producers or generators of
electricity, in order that they set up power plants, be entitled to a
reasonable margin of profit and a reasonable return on their
capital, so that they are induced to set up more and more power
plants. At the same time, the interests of the end consumers also
need to be protected. However, in spite of this position, litigations
after litigations are pursued. Though the concurrent orders of
statutory expert bodies cannot be said to be perverse, arbitrary
or in violation of the statutory provisions, the same are challenged.
Even the Standing Committee of Parliament, in its report, has
recommended that there should be consistency and uniformity
with regard to orders emanating from the status of 'Change in
Law'. It has also recommended that the provisions should also
be made for certain percentage of payments of regulatory dues
to be paid by DISCOMS in case the orders of regulators are
being taken to learned APTEL/higher judiciary for their
consideration and decision. The learned APTEL has also referred
to the Policy Directive dated 27th August 2018 issued in terms
of Section 107 of the Electricity Act, 2003 by the MoP to the
CERC, where it emphasized the need to ensure expeditious
recovery of 'Change in Law' compensation. The learned APTEL
has also referred to the Electricity (Timely Recovery of Costs
due to Change in Law) Rules, 2021, notified by MoP on 22nd
October 2021, which provide for timely recovery of compensation
on account of occurrence of 'Change in Law' events. The learned
APTEL found that the Haryana Utilities have been adopting
dilatory tactics, which not only defeat the public policy but also
have the undesirable fallout of adding to the burden of the end-
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consumers they profess to serve on account of increasing
'Carrying Cost'. The learned APTEL further found that
withholding of past payments, including towards taxes and duties
by the DISCOMS, is in violation of the provisions of the PPAs,
which casts a specific mandate on the procurer to honour the
invoices raised, irrespective of dispute, and impose a specific
bar against unilateral deductions/setting off. The 'Change in Law'
events will have to accrue from the date on which Rules, Orders,
Notifications are issued by the instrumentalities of the State. Even
in spite of this finding, the DISCOMS are pursuing litigations
after litigations. When the PPA itself provides a mechanism for
payment of compensation on the ground of 'Change in Law',
unwarranted litigation, which wastes the time of the Court as well
as adds to the ultimate cost of electricity consumed by the end
consumer, ought to be avoided. Ultimately, the huge cost of
litigation on the part of DISCOMS as well as the Generators adds
to the cost of electricity that is supplied to the end consumers.
[Paras 128, 169 , 174-176][230-A; 237-A-E; 240-C-G; 241-A-C]
18.2 It is further to be noted that the appeal to this Court
under Section 125 of the Electricity Act, 2003 is only permissible
on any of the grounds as specified in Section 100 of the Code of
Civil Procedure, 1908. As such, the appeal to this Court would
be permissible only on substantial questions of law. However, as
already observed herein, even in cases where well-reasoned
concurrent orders are passed by the Electricity Regulatory
Commissions and the learned APTEL, the same are challenged
by the DISCOMS as well as the Generators. On account of
pendency of litigation, which in some of the cases in this batch
has been more than 5 years, non-payment of dues would entail
paying of heavy carrying cost to the Generators by the DISCOMS,
which, in turn, will be passed over to the end consumer. As a
result, it will be the end consumer who would be at sufferance.
Such unnecessary and unwarranted litigation needs to be curbed.
[Paras 179][241-E-H]
18.3 The Union of India through Ministry of Power ("MoP")
is therefore, appealed to evolve a mechanism so as to ensure
timely payment by the DISCOMS to the Generating Companies,
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which would avoid huge carrying cost to be passed over to the
end consumers. The Union of India, through MoP, may also
evolve a mechanism to avoid unnecessary and unwarranted
litigation, the cost of which is also passed on to the ultimate
consumer. [Paras 181, 182][242-B-C]
Maharashtra State Electricity Distribution Company
Limited v. GMR Warora Energy Ltd. & ors. Civil Appeal
No. 6927 of 2021; Manohar Lal Sharma v. The Principal
Secretary & Ors. (2014) 9 SCC 516 : [2014] 8 SCR
446; and 2014 (9) SCC 614 : [2014] 12 SCR 110;
Ashoka Smokeless Coal India (P) Limited and Others v.
Union of India and Others (2007) 2 SCC 640 : [2006]
9 Suppl. SCR 954; Uttar Haryana Bijli Vitran Nigam
Limited and another v. Adani Power (Mundra) Limited
and another Civil Appeal No. 5684 of 2021;
Maharashtra State Electricity Distribution Company
Limited v. Adani Power Maharashtra Limited and
another Civil Appeal Nos. 677- 678 of 2021 - referred
to.
Case Law Reference
[2014] 8 SCR 446
referred to
Para 73
[2014] 12 SCR 110
referred to
Para 73
[2006] 9 Suppl. SCR 954
referred to
Para 90
[1972] 3 SCR 865
relied on
Para 102
[2019] 4 SCR 487
relied on
Para 117, 175
CIVIL APPELLATE JURISDICTION : Civil Appeal No.11095
of 2018.
From the Judgment and Order dated 14.08.2018 of the Appellate
Tribunal for Electricity at New Delhi in Appeal No.111 of 2017.
With
Civil Appeal Nos.11910-11911, 12055-12056 of 2018, 3123, 5372,
6641 of 2019, 2935-2936 of 2020, 4628-4629, 5583-5584, 39 of 2021,
5005, 4089 of 2022
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Balbir Singh, ASG, G. Saikumar, Samir Malik, Ms. Nikita Choukse,
Akash Lamba, Naman Tandan, Ms. Farha Malik, Chandra Prakash,
Ms. Swapna Sinha, M/s D.S.K. Legal, Anup Jain, Udit Gupta,
Raghavendra Pratap Singh, M/s Udit Kishan and Associates, Shubham
Arya, Ms. Poorva Saigal, Nikunj Dayal, Ms. Pallavi Saigal, Ms. Shikha
Sood, Ms. Reeha Singh, Ms. Anumeha Smiti, Ravi Nair, Advs. for the
Appellant.
Dr. A. M. Singhvi, Sajan Poovayya, Sr. Advs., Mahesh Agarwal,
Ms. Poonam Sengupta, Arshit Anand, Saunak Rajguru, Nidhiram Sharma,
Ms. Nidhiram Sharma, Ms. Sakshi Kapoor, E. C. Agrawala, Vishrov
Mukherjee, Pukhrambam Ramesh Kumar, Girik Bhalla, Karun Sharma,
Ms. Priyanka Vyas, Suraj Dasguru, Advs. for the Respondents.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
Index*
I.
INTRODUCTION..............................Paras 1 to 5
II.
BRIEF FACTS AND SUBMISSIONS...... Paras 6 to 91
III.
ADDITIONAL ISSUES..........................Para 92
IV.
CONSIDERATION...........................Paras 93 to 130
V.
CONCLUSION..............................Paras 131 to 168
VI.
EPILOGUE.................................Paras 169 to 184
List of abbreviations:
1.
APTEL
-
 Appellate Tribunal for Electricity
2.
CEA
-
Central Electricity Authority
3.
CERC
-
Central Electricity Regulatory
Commission
4.
CIL
-
Coal India Limited
5.
COD
-
Commercial Operation Date
6.
CSA
-
Coal Supply Agreement
7.
DISCOMS
-
Distribution Companies
8.
ECL
-
Eastern Coalfield Limited
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
REGULATORY COMMISSION (CERC)
*Ed Note : Pagination in the Index is as per the original judgment.
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9.
EFC
-
Evacuation Facility Charges
10.
FSA
-
Fuel Supply Agreement
11.
GCV
-
Gross Calorific Value
12.
LoA
-
Letter of Assurance
13.
LPS
-
Late Payment Surcharge
14.
MAT
-
Minimum Alternate Tax
15.
MCL
-
Mahanadi Coalfield Limited
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 Distribution Policy
21.
PPAs
-
Power Purchase Agreements
22.
RFP
-
Request for Proposal
23.
SBAR
-
State Bank Advance Rate
24.
SECL
-
South Eastern Coal Limited
25.
SHAKTI
-
Scheme for Harnessing and
Allocating Koyala (Coal) Transparently
in India
26.
SHR
-
Station Heat Rate
27.
TANGEDCO -
Tamil Nadu Generation and Distribution
Corporation
28.
UHV
-
Useful Heat Value
I. INTRODUCTION
1. When we heard this batch of Electricity appeals, it was agreed
between all the parties that this Court should first decide Civil Appeal
No. 684 of 2021 (Maharashtra State Electricity Distribution
Company Limited v. Adani Power Maharashtra Limited & Ors.1)
["MSEDCL v. APML & Ors." for short] and Civil Appeal No. 6927 of
1 2023 SCC OnLine 233
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2021 (Maharashtra State Electricity Distribution Company Limited
v. GMR Warora Energy Ltd. & ors.), inasmuch as three of the issues
involved in all the appeals in the batch were common. It was submitted
that those two appeals could be decided by deciding the three common
issues. However, insofar as the other appeals are concerned, it was
submitted that, in addition to the three common issues, certain additional
issues were also involved and it was agreed that after those two appeals
are decided, the other appeals should be heard for considering these
additional issues.
2. The said three common issues are thus:
(i)
Whether 'Change in Law' relief on account of New Coal
Distribution Policy, 2013 ("NCDP 2013" for short) should
be on 'actuals' viz. as against 100% of normative coal
requirement assured in terms of New Coal Distribution
Policy, 2007 ("NCDP 2007" for short) OR restricted to
trigger levels in NCDP 2013 viz. 65%, 65%, 67% and 75%
of ACQ?
(ii)
Whether for computing 'Change in Law' relief, the
operating parameters should be considered on 'actuals' OR
as per technical information submitted in bid?
(iii)
Whether 'Change in Law' relief compensation is to be
granted from 1st April 2013 (start of Financial Year) or 31st
July 2013 (date of NCDP 2013)?
3. After extensively hearing all the learned counsel for the parties,
vide the judgment and order dated 3rd March 2023 in the case of MSEDCL
v. APML & Ors. (supra), this Court decided those two appeals after
considering the aforesaid three issues.
4. The first issue was answered by this Court, holding that the
'Change in Law' relief for domestic coal shortfall should be on 'actuals',
i.e. as against 100% of normative coal requirement assured in terms of
the NCDP, 2007. Insofar as the second issue is concerned, it was held
that the Station Heat Rate ("SHR" for short) and Auxiliary consumption
should be considered as per the Regulations or actuals, whichever is
lower. The third issue was answered holding that the Start date for the
'Change in Law' event for the NCDP, 2013 is 1st April 2013.
5. After we decided those appeals, we have heard the present
appeals in which some of the issues which were decided by us vide the
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY
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said judgment in the case of MSEDCL v. APML & Ors. (supra) also
arose for consideration along with other issues. However, most of the
issues in all these appeals are overlapping and, therefore, we propose to
decide these appeals by this common judgment.
II. BRIEF FACTS AND SUBMISSIONS
Civil Appeal No. 11095 of 2018 and Civil Appeal Nos. 1191011911 of 2018
6. These cross appeals challenge the common judgment and order
dated 14th August 2018 passed by the learned Appellate Tribunal for
Electricity, New Delhi (hereinafter referred to as "APTEL") in Appeal
No. 111 of 2017 & I.A. No.450 of 2018 and in Appeal No.290 of 2017 &
I.A. No.519 of 2017.
7. Civil Appeal No.11095 of 2018 is filed by GMR Warora Energy
Ltd. (hereinafter referred to as "GWEL"/"Generator") to the extent it
was denied compensatory benefits on certain components on the ground
of 'Change in Law'.
8. Civil Appeal Nos. 11910-11911 of 2018 have been filed by DNH
Power Distribution Co. Ltd. (DPDCL) (hereinafter referred to as "DNHDISCOM"), being aggrieved by the order of the learned APTEL accepting
the claim of GWEL on certain issues and holding the same to be 'Change
in Law'.
9. The facts, in brief, giving rise to these appeals are as under:
10. GWEL had set up a Thermal Power Station at Warora, District
Chandrapur in the State of Maharashtra with an installed capacity of
600 MW (2 x 300 MW). The Commercial Operation Date ("COD" for
short) of Unit 1 was 19th March 2013 and that of Unit 2 was 1st September
2013.
11. GWEL had entered into long term Power Purchase Agreements
("PPAs" for short) with DNH-DISCOM for supply of 200 MW power
to Maharastra State Electricity Distribution Company Limited
("MSEDCL" for short) on 17th March 2010 ["MSEDCL PPA") and for
supply of 200 MW power on 21st March 2013 ("DNH PPA"), after it
emerged as the successful bidder for supply of power to MSEDCL/
DNH-DISCOM. The Scheduled delivery date under the MSEDCL PPA
was 17th March 2014, whereas under the DNH PPA, it was 1st April
2013. GWEL is also supplying 150 MW power from its power plant to
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Tamil Nadu Generation and Distribution Corporation ("TANGEDCO"
for short) by way of back-to-back arrangement with trading company
GMR Energy Trading Limited, for which purpose, a PPA was signed on
27th November 2013 ("TANGEDCO PPA").
12. In terms of the PPAs, the cut-off date, which is 7 days prior to
the bid deadline, is to be considered for the purpose of claims under
'Change in Law'. Following are the cut-off dates under the said PPAs.
13. Certain 'Change in Law' events occurred with regard to
MSEDCL PPA and DNH PPA after the cut-off date. The same were
notified by GWEL to MSEDCL/ DNH-DISCOM.
14. GWEL filed Petition No. 8/MP/2014 before the Central
Electricity Regulatory Commission (hereinafter referred to as "CERC")
seeking relief for 'Change in Law'.
15. Vide Order dated 1st February 2017, certain claims were
allowed and certain claims were disallowed by the CERC.
16.