# JAIPUR VIDYUT VITARAN NIGAM LTD. & ORS v. ADANI POWER RAJASTHAN LIMITED & ANR

- **Citation:** [2020] 12 S.C.R. 301
- **Court:** Supreme Court of India
- **Decided:** 2020-08-31
- **Case number:** Civil Appeal Nos. 8625-8626 of 2019
- **Bench:** Arun Mishra, Vineet Saran, M. R. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jaipur-vidyut-vitaran-nigam-ltd-ors-v-adani-power-rajasthan-limited-anr-34528
- **Pages:** 50

## Headnote

Electricity Act, 2003 - s.63 - 'Change in law' compensation
- Appellant is electricity Distribution Licensee in the State of
Rajasthan - It entered into a Power Purchase Agreement (PPA) on
28.1.2010 with Adani Power Rajasthan Limited (APRL), a
generating company in pursuance to a tariff-based competitive bid
process in terms of s.63 of the Act - The terms of PPA contained a
tariff, which could be varied only as per the specific provisions
contained in the PPA, and not otherwise - The PPA postulated
domestic coal usage as the primary fuel - Meanwhile, the New Coal
Distribution Policy, 2013 (NCDP of 2013), was notified on
26.7.2013 by the Central Government - Claim of APRL for increased
tariff under the change in law provisions in the PPA - Tenability of
- Held: The parties had agreed ad idem that bid was evaluated based
on domestic coal, and escalations were also based on domestic coal
- It was binding on both the parties - The Policy having been
thereafter revised in terms of NCDP of 2013, thus assurance given
by the Government of India under the NCDP of 2007 was taken
away - The PPA was based on the domestic law and there was a
change in domestic law - Submission that the bid and the PPA were
based on imported coal, cannot be accepted - When there was a
change in policy with respect to obtaining coal itself, which was
agreed to in the PPA, the change in law would be applicable -
Requirement to compensate due to change in law - The same is
based on the principle of restitution - APRL accordingly entitled to
claim compensation under the change in law as provided in Article
10 of the PPA - Doctrines/ Principles - Principle of restitution.
Electricity Act - s.125 - Appeal under - Scope - Held: Scope
of appeal u/s.125 of the Electricity Act is akin to s.100 CPC -
Concurrent findings based upon the facts cannot be disturbed in
appeal - Appeal.
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[2020] 12 S.C.R.
Partly allowing the appeals, the Court
HELD:1.1. Considering the documents on record, it is
apparent that APRL's bid was premised only on domestic coal.
It was evaluated as such, and the Power Purchase Agreement (PPA)
also records the same. The parties agreed ad idem that bid was
evaluated based on domestic coal, and escalations were also based
on domestic coal. Accordingly, the PPA was entered into, and
primary fuel in the PPA was mentioned to be domestic coal from
captive coal block/coal linkage and imported coal as a fallback
support arrangement. It was binding on both the parties. Under
Article 1.1 of the PPA, the primary fuel was mentioned as domestic
coal, as such the submission that the bid and the PPA were based
on imported coal, cannot be accepted. [Paras 39, 40][329-C-D,
F-G; 330-A-B]
1.2. The PPA is final and binding on parties, and approval
of tariff by the Rajasthan Electricity Regulatory Commission
(RERC) was based on domestic coal. Rajasthan Discoms
(including the appellant) agreed to use domestic coal on account
of likely advantage of lower escalation in tariff on a bid based on
domestic coal than that of imported coal. The decision of the Bid
Evaluation Committee was found to be in their best interest.
Thus, APRL bid was not based on imported coal, that would not
have been in favour of Rajasthan Discoms and would have
resulted in more escalations in the tariff. Thus, APRL could not
be denied the benefit of the very foundational basis on which the
RERC approved its bid. APRL could not be made to suffer from
both the ends. Various documents and the PPA make it clear
that its bid was premised on domestic coal and approved tariff
was based on domestic coal, the order of RERC is final,
conclusive, and binding on the parties; it has not been questioned
and attained finality. No stand contrary to the same was
permissible to be taken by the Rajasthan Discoms. [Para 41][330B-E]
1.3. It is further apparent from reply dated 31.7.2013 filed
by the Rajasthan Discoms before the RERC in which it was clearly
admitted that non-

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 [2020] 12 S.C.R. 301
301
JAIPUR VIDYUT VITARAN NIGAM LTD. & ORS.
v.
ADANI POWER RAJASTHAN LIMITED & ANR.
(Civil Appeal Nos. 8625-8626 of 2019)
AUGUST 31, 2020
[ARUN MISHRA, VINEET SARAN AND M. R. SHAH, JJ.]
Electricity Act, 2003 - s.63 - 'Change in law' compensation
- Appellant is electricity Distribution Licensee in the State of
Rajasthan - It entered into a Power Purchase Agreement (PPA) on
28.1.2010 with Adani Power Rajasthan Limited (APRL), a
generating company in pursuance to a tariff-based competitive bid
process in terms of s.63 of the Act - The terms of PPA contained a
tariff, which could be varied only as per the specific provisions
contained in the PPA, and not otherwise - The PPA postulated
domestic coal usage as the primary fuel - Meanwhile, the New Coal
Distribution Policy, 2013 (NCDP of 2013), was notified on
26.7.2013 by the Central Government - Claim of APRL for increased
tariff under the change in law provisions in the PPA - Tenability of
- Held: The parties had agreed ad idem that bid was evaluated based
on domestic coal, and escalations were also based on domestic coal
- It was binding on both the parties - The Policy having been
thereafter revised in terms of NCDP of 2013, thus assurance given
by the Government of India under the NCDP of 2007 was taken
away - The PPA was based on the domestic law and there was a
change in domestic law - Submission that the bid and the PPA were
based on imported coal, cannot be accepted - When there was a
change in policy with respect to obtaining coal itself, which was
agreed to in the PPA, the change in law would be applicable -
Requirement to compensate due to change in law - The same is
based on the principle of restitution - APRL accordingly entitled to
claim compensation under the change in law as provided in Article
10 of the PPA - Doctrines/ Principles - Principle of restitution.
Electricity Act - s.125 - Appeal under - Scope - Held: Scope
of appeal u/s.125 of the Electricity Act is akin to s.100 CPC -
Concurrent findings based upon the facts cannot be disturbed in
appeal - Appeal.
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[2020] 12 S.C.R.
Partly allowing the appeals, the Court
HELD:1.1. Considering the documents on record, it is
apparent that APRL's bid was premised only on domestic coal.
It was evaluated as such, and the Power Purchase Agreement (PPA)
also records the same. The parties agreed ad idem that bid was
evaluated based on domestic coal, and escalations were also based
on domestic coal. Accordingly, the PPA was entered into, and
primary fuel in the PPA was mentioned to be domestic coal from
captive coal block/coal linkage and imported coal as a fallback
support arrangement. It was binding on both the parties. Under
Article 1.1 of the PPA, the primary fuel was mentioned as domestic
coal, as such the submission that the bid and the PPA were based
on imported coal, cannot be accepted. [Paras 39, 40][329-C-D,
F-G; 330-A-B]
1.2. The PPA is final and binding on parties, and approval
of tariff by the Rajasthan Electricity Regulatory Commission
(RERC) was based on domestic coal. Rajasthan Discoms
(including the appellant) agreed to use domestic coal on account
of likely advantage of lower escalation in tariff on a bid based on
domestic coal than that of imported coal. The decision of the Bid
Evaluation Committee was found to be in their best interest.
Thus, APRL bid was not based on imported coal, that would not
have been in favour of Rajasthan Discoms and would have
resulted in more escalations in the tariff. Thus, APRL could not
be denied the benefit of the very foundational basis on which the
RERC approved its bid. APRL could not be made to suffer from
both the ends. Various documents and the PPA make it clear
that its bid was premised on domestic coal and approved tariff
was based on domestic coal, the order of RERC is final,
conclusive, and binding on the parties; it has not been questioned
and attained finality. No stand contrary to the same was
permissible to be taken by the Rajasthan Discoms. [Para 41][330B-E]
1.3. It is further apparent from reply dated 31.7.2013 filed
by the Rajasthan Discoms before the RERC in which it was clearly
admitted that non-availability of domestic coal from the Central
Government would put the case of APRL within the scope of
change in law. Rajasthan Discoms before the RERC admitted
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that the bid was based on domestic coal, non-availability of which
entitles APRL to claim compensation under the change in law as
provided in Article 10 of the PPA. [Para 42][330-F]
1.4. It is apparent that the concurrent findings recorded by
the RERC, as well as the Appellate Tribunal for Electricity
(APTEL) do not suffer from any infirmity or perversity, and they
are binding. As the scope of appeal under Section 125 of the
Electricity Act is akin to Section 100 of the CPC and the concurrent
findings based upon the facts cannot be disturbed in the appeal.
[Para 45][331-B-C]
Energy Watchdog v. Central Electricity Regulatory
Commission and Ors. (2017) 14 SCC 80 : [2017] 3
SCR 153 ; DSR Steel (Private) Ltd. v. State of Rajasthan
and Ors. (2012) 6 SCC 782 : [2012] 5 SCR 583 ; Tamil
Nadu Generation and Distribution Corporation Limited
v. PPN Power Generating Company Private Limited
(2014) 11 SCC 53 : [2014] 4 SCR 667 and Wardha
Power Company Limited v. Maharashtra State Electricity
Distribution Company Limited and Anr. (2016) 16 SCC
541- relied on.
1.5. Also, once having admitted before the RERC at the
time of approval of tariff and evaluated the tariff of domestic coal
and making admissions again on 31.7.2013 and 4.8.2017, it is not
open to reprobate as parties are not permitted to approbate and
reprobate at different stages. The Fuel Supply Agreement (FSA)
for imported coal was a standby arrangement, but the entire bid,
tariff, and the agreement were based on domestic coal. Thus,
the consequences of non-availability due to change in law could
not be escaped. [Paras 46, 47][331-D-E; 331-G-H]
Suzuki Parasrampuria Suitings Private Limited v.
Official Liquidator of Mahendra Petrochemicals Limited
(in Liquidation) and Ors. (2018) 10 SCC 707 : [2018]
12 SCR 906 and R.N. Gosain v. Yashpal Dhir, (1992) 4
SCC 683 : [1992] 2 Suppl. SCR 257 - relied on.
JAIPUR VIDYUT VITARAN NIGAM LTD. v. ADANI POWER
RAJASTHAN LIMITED
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1.6. Apart from that, it is found from the order of the APTEL,
that change in law provision would be limited to a shortfall in the
supply of domestic linkage coal. It was clarified in the order that
APRL would be entitled to relief under the change in law provision
to the extent of shortage in supply in domestic linkage coal. The
findings of the APTEL are reasonable, proper, and unexceptional.
[Paras 48, 49][332-B-C; 333-D]
2.1. Para 3.2 of the Statutory Guidelines of 2005 issued
under Section 63 of the Electricity Act provided that in case of
domestic coal, the bidder shall have made firm arrangements for
fuel tie-up either by way of coal block allocation or fuel linkage.
There is no doubt about it that the Government of Rajasthan
entered into an MoU with APRL in 2008 to ensure supply of
domestic coal and it had undertaken to facilitate the
implementation of the Kawai Project for getting the coal block
from the Central Government or coal from any other source for
the project. Once the Government of Rajasthan entered into
MoU dated 20.3.2008, containing Article 2.2, it was incumbent
upon the State of Rajasthan to provide coal from any other source
for the project, in case the Central Government could not allot
coal linkage/coal block. The Central Government had even
written to the Government of Rajasthan to provide coal to APRL
from the coal mine, but due to paucity, it could not be supplied to
APRL. Thus, there was a failure on the part of the Government
of Rajasthan to provide coal from any other source. [Para 50][333D-H]
2.2 It is apparent that 100 percent of the quantity as per
the consumers' normative requirement was to be made by CIL,
obviously on the approval of the application by the Standing
Linkage Committee. It was kept pending due to a shortage of
coal supplies and was ultimately processed under the SHAKTI
Policy, and linkage for 100 percent was given from January 2018.
Thus, earlier as the quantity of coal was not available, sufficient
supply could not be made. It is not a case where APRL was
adjudged ineligible, but prior commitments and the nonavailability of coal came in the way of failure to obtain domestic
coal linkage under the NCDP of 2007, which itself was changed
with effect from 26.7.2013. [Para 51][334-G-H; 335-A]
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3.1. APRL's claim is based on the date of change of law in
2013. Admittedly, earlier NCDP of 2007 prevailed on the
appointed date, i.e., 7 days before submission of the bid. The
PPA was based upon the domestic coal, and its availability was
based upon NCDP of 2007. In NCDP dated 26.7.2013, the NCDP
of 2007 was modified to the effect that power projects would only
get a certain percentage of what was earlier allowable. [Paras 52,
53][335-B; 335-E-F]
3.2. It is apparent from the decision dated 31.5.2013 of the
Standing Linkage Committee (Long-Term) that the application
of APRL was kept in abeyance. It applied for coal linkage on
2.7.2009 on the basis of NCDP of 2007. The bid cut-off date was
30.7.2009, 7 days prior to the bid deadline, the NCDP of 2007
was applicable. A decision was taken by the Standing Linkage
Committee on 14.2.2012 read with the decision dated 31.5.2013
indicating a shortage in domestic coal and dependence on
imported coal. For the shortage of coal, APRL could not have
been made to suffer, on that it had no control. It was decided not
to issue fresh LoAs, and all pending applications were kept in
abeyance. The Cabinet Committee on Economic Affairs decided
on 21.6.2013 to reduce coal supply to 65 percent and 75 percent
of ACQ for the remaining four years of the 12th Five Year Plan.
It allowed passing through of higher cost of imported coal. The
Ministry of Coal was directed to suitably amend the NCDP. The
Ministry of Coal on 26.7.2013 amended the NCDP of 2007, and
the Ministry of Power issued a letter on 31.7.2013, which provided
for pass-through of additional cost incurred to meet the coal
requirements. The Cabinet Committee on Economic Affairs in
its decision dated 21.6.2013, recognised coal supply, subject to
availability, to 4660 MW having no fuel linkage. The Kawai Project
was included in the same. The Policy was revised, thus assurance
given by the Government of India under the NCDP of 2007 was
taken away. The provision of 100 per cent supply was taken
away. [Para 54][335-F-H; 336-A-C]
3.3. The submission raised on behalf of appellant that there
is no question seeking benefit due to change in foreign law is
JAIPUR VIDYUT VITARAN NIGAM LTD. v. ADANI POWER
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based on wrong factual premise. The relief was not claimed on
the basis of change in foreign law. The PPA was based on the
domestic law and there was a change in domestic law. Thus,
consequences must follow. [Para 56][341-D-E]
3.4. The purpose of change in law is to restore through
monthly tariff payment to the extent contemplated that the
affected party is placed in the same economic position as if such
a change in law has not occurred. As monthly tariff was worked
out on domestic law, the requirement is to compensate on that
basis due to change in law. The same is based on the principle of
restitution. When there was a change in policy with respect to
obtaining coal itself, which was agreed to in the PPA, the change
in law would be applicable. [Paras 58, 59][341-G-H; 342-A, G]
4.1. The PPA under Article 1.1 and Schedule V provide for
domestic coal as primary fuel and imported coal as a fallback
arrangement. Whereas change in law was provided in Article 10.
Article 10 of the PPA is clearly attracted that the change in law
was in contemplation. Article 10 cannot be made redundant; the
agreement is binding and must prevail. [Paras 62, 63][346-F-H;
347-B-C]
4.2. The RERC and APTEL have given concurrent findings
in favour of the respondent with regard to change in law, with
which this Court also concurs. [Para 66][347-E-F]
5. The plea of change in law was initially raised by APRL in
the year 2013. A case was also filed by APRL in the year 2013
itself raising its claim on such basis. However, the appellantsRajasthan Discoms did not allow the claim regarding change in
law, because of which APRL was deprived of raising the bills with
effect from the date of change in law in the year 2013. Liability of
the Late Payment Surcharge which has been saddled upon the
appellants is at the rate of 2% in excess of applicable SBAR per
annum, on the amount of outstanding payment, calculated on a
day to day basis (and compounded with monthly rest) for each
day of the delay. Considering the totality of the facts of this case
and in order to do complete justice and to reduce the liability of
the appellants-Rajasthan Discoms, payment of 2 per cent in excess
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of the applicable SBAR per annum with monthly rest would be on
higher side. It would be appropriate to direct the appellantsRajasthan Discoms to pay interest/late payment surcharge as per
applicable SBAR for the relevant years, which should not exceed
9 per cent per annum. It is also provided that instead of monthly
rest, the interest would be compounded per annum. It is
accordingly directed that the rate of interest/late payment
surcharge would be at SBAR, not exceeding 9 per cent per annum,
to be compounded annually, and the 2 per cent above the SBAR
(as provided in Article 8.3.5 of PPA) would not be charged in the
present case. [Paras 66, 67 and 68][349-A-E]
6. A submission was raised with respect to over-invoicing.
It was submitted that 40 importers of coal are under investigation
by the DRI concerning alleged over-invoicing. However, it was
also conceded that there is no ultimate conclusion in the
investigation reached so far. Until and unless there is a finding
recorded by the competent court as to invoicing, the submission
cannot be accepted. At this stage, it cannot be said that there is
over-invoicing. [Para 69][349-E-G]
Case Law Reference
[2017] 3 SCR 153
relied on
Para 24
[2012] 5 SCR 583
relied on
Para 45
[2014] 4 SCR 667
relied on
Para 45
(2016) 16 SCC 541
relied on
Para 45
[2018] 12 SCR 906
relied on
Para 47
[1992] 2 Suppl. SCR 257
relied on
Para 47
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 86258626 of 2019.
From the Judgment and Order dated 14.09.2019 of the Appellate
Tribunal for Electricity, New Delhi in Appeal Nos. 202 and 305 of 2018.
With
Civil Appeal Nos. 3021, 3022-3023 of 2020.
JAIPUR VIDYUT VITARAN NIGAM LTD. v. ADANI POWER
RAJASTHAN LIMITED
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C. Aryama Sundaram, Basava Prabhu Patil, Dr. A.M. Singhvi,
Arvind Datar, Sr. Advs., Prashant Bhushan, Pranav Sachdeva, Jatin
Bhardwaj, Ms. Neha Rathi, Ms. Ranjitha Ramachandran, Nikunj Dayal,
Shubham Arya, Geet Ahuja, Mahesh Agarwal, Amit Kapoor, Ms. Poonam
Verma, Arshit Anand, M.S. Ananth, Ms. Sakshi Kapoor, Malav Deliwala,
Azeem Samuel, E. C. Agrawala, Advs. for the appearing parties.
The following Judgment of the Court was delivered :
JUDGMENT
1. The appellant herein Jaipur Vidyut Vitran Nigam Limited is the
electricity Distribution Licensee in the State of Rajasthan. It entered
into a Power Purchase Agreement (for short, 'PPA') on 28.1.2010 with
Adani Power Rajasthan Limited (for short, 'APRL'), a generating
company in pursuance to a tariff-based competitive bid process in terms
of Section 63 of the Electricity Act, 2003 (for short, 'the Electricity Act').
The terms of PPA contained a tariff, and that could be varied only as per
the specific provisions contained in the PPA, not otherwise.
2. APRL made a claim for an increased tariff under the change in
law provisions in the PPA (Article 10). On 23.10.2006, Rajasthan Rajya
Vidyut Utpadan Nigam Limited (for short, 'RVUN') conveyed to Adani
Exports Limited its selection as a joint venture partner for the formation
of a Joint Venture Company. It was stated that business activities of the
proposed Joint Venture Company shall be limited to mining and supply of
coal from allotted captive coal block for the requirement of existing/new
thermal power stations of RVUN and/or for new projects of the State.
3. On 2.8.2007, a Letter of Intent (for short, 'LoI') was issued by
RVUN in favour of Adani Enterprise Limited (for short, 'AEL') for
developing the coal block under a joint venture at Parsa East and Kente
Basan, wherein it was provided that the coal can be utilised at the
discretion of the Government of Rajasthan for new upcoming projects in
the State under the joint venture or IPP.
4. On 18.10.2007, New Coal Distribution Policy (NCDP) was
introduced by the Ministry of Coal, assuring 100 per cent of domestic
coal to power plants that is 85 per cent of normative capacity.
5. On 20.3.2008, an MoU was entered into between the
Government of Rajasthan and AEL to set up a coal-based Thermal Power
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Generation Project of 1200 MW ± 10 percent capacity near Kawai,
District Baran, Rajasthan. The estimated cost of the project was
approximately Rs.5,000 crores. It was provided that the State of Rajasthan
was to make the best efforts to facilitate getting the coal linkage from
the Central Government or coal from any other source for the Project.
6. On 16.5.2008, APRL requested the Government of Rajasthan
to allocate coal from Parsa East and Kente Basan coal block.
7. On 21.5.2008, it was conveyed to APRL that the State will
make the best efforts to facilitate for getting coal linkage from the
Government of India. It was informed that it would not be possible to
supply coal from Parsa East and Kente Basan coal blocks as they barely
meet RVUN projects' requirements. APRL repeated the request on
28.5.2008, 9.6.2008, 11.6.2008, and 16.6.2008. On 29.8.2008, a request
was made to the Government of Rajasthan to advise RVUN to enter
into an MoU and to apply to the Ministry of Coal for allocation of coal
blocks to the Kawai Project under the Government Dispensation Scheme.
8. On 25.2.2009, a Request for Proposal (for short, 'RFP') was
issued by Rajasthan Rajya Vidyut Prasaran Nigam Limited (for short,
'RVPN') for procurement of power for long-term through tariff-based
competitive bidding process under Case-1 bidding procedure for meeting
the baseload requirement of the procurers.
9. On 19.3.2009, a request was made by AEL to the Government
of Rajasthan to extend the validity of the MoU for one year. On 2.4.2009,
a Standard Bidding Document for Case-1 was notified by the Ministry
of Power. On 22.6.2009, APRL made a request in terms of the MoU to
the Government of Rajasthan to allocate the surplus coal mine from the
existing coal blocks and for extension of MoU, which was to expire on
20.3.2009. As an alternative, AEL was able to negotiate Indonesian
coal at a discounted price of USD 36 per MT. The Coal Supply
Agreement (for short, 'CSA') was signed for supplying standard coal
for the project from Indonesia. The said agreement was terminated on
10.6.2010.
10. On 2.7.2009, APRL prayed to the Ministry of Coal for granting
long-term coal linkage of 'F' grade coal from South Eastern Coalfields
Limited for the Kawai Project for 7.082 MT per annum of coal. The
JAIPUR VIDYUT VITARAN NIGAM LTD. v. ADANI POWER
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Government of Rajasthan extended the validity of the MoU up to
20.3.2010. RVUN was advised to apply for the allocation of coal blocks
for meeting coal requirements for its projects and the Kawai Project
under the Government Dispensation Scheme. It may invite tenders for
mining and delivery of coal, as was done in Parsa East and Kente Basan
coal blocks.
11. According to the RFP, APRL submitted its bid on 6.8.2009. It
offered a total contracted capacity of 1200 MW from the Kawai Project.
The levelized tariff after negotiation was settled at Rs.3.238/KWh for
25 years. The tariff in the bid was quoted based on domestic coal. The
imported coal was limited, being a temporary measure, as fallback support
option till the Government instrumentality resumed domestic coal supply.
12. On 12.8.2009, AEL requested to allot Kente (Extn.) coal block
for meeting the coal requirement of the Kawai Project inter alia the
installed capacities of the projects. As against the earlier commitment
of sale of 50 per cent of the power generated from the Kawai Project to
the State of Rajasthan, AEL committed the entire power generated to
the State provided it succeeds in the bidding process.
13. A clarification was sought concerning the bid submitted by
APRL to evaluate its bid as to the fuel arrangement in the bid, both
domestic coal and imported coal were indicated. APRL was asked to
clarify on which basis of fuel, the bid should be evaluated. APRL clarified
on 12.9.2009, that its bid should be evaluated based on domestic coal tieup. APRL undertook that the payment considering domestic coal
escalations would be acceptable during the term of the PPA.
14. On 3.12.2009, APRL issued a communication to RVPN.
Because of the support offered by the Government of Rajasthan
regarding the development of the Kawai Project, the levelized tariff was
being reduced by 1 paisa to Rs.3.238 Kwh. On 17.12.2009, pursuant to
the bid submitted, an LoI was issued by RVPN to APRL. On 18.12.2009,
an unconditional acceptance was communicated to RVPN.
15. On 28.1.2010, APRL executed the PPA with three procurers,
namely, Jaipur Vidyut Vitran Nigam Limited, Jodhpur Vidyut Vitran Nigam
Limited, and Ajmer Vidyut Vitran Nigam Limited, for the supply of
aggregate contracted capacity of 1200 MW. The PPA postulates
domestic coal usage as the primary fuel, while imported coal may be
used as a backup arrangement.
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16. On 15.2.2010, APRL conveyed to the CMD-RRVUNL for
getting the allocation of captive coal block for the supply of coal to the
Kawai Power Project and conveyed confirmation to accept washed
coal.
17. On 20.2.2010, AEL conveyed to the Government of Rajasthan
that it would supply 91 per cent power from the Kawai Project to the
Jaipur Vidyut Vitran Nigam Limited, Jodhpur Vidyut Vitran Nigam Limited,
and Ajmer Vidyut Vitran Nigam Limited - Rajasthan Discoms, with
whom the PPA was entered into on 28.1.2010. A prayer was made to
extend the validity of MoU for a further period of one year w.e.f.
20.3.2010.
18. On 25.2.2010, RVPN filed a petition before the State
Commission on behalf of Rajasthan Discoms for approval of the
Commission for the adoption of tariff quoted by APRL through
competitive bidding. The State Commission passed an order on 31.5.2010
with respect to the adoption of a tariff for 1000 MW procurement and
had made specific observations.
19. On 24.3.2011, the Director General of Mineral and Coal issued
a regulation specifying the formula for calculation of benchmark price
with reference to the international market price of coal.
20. APRL wrote a letter to the Ministry of Power, Government of
India on 11.10.2011 for grant of coal linkage to it along with other 12th
Five Year Plan Projects; however, it was delayed for more than a one
year for various reasons, due to which conditions subsequent under the
PPA could not be fulfilled, and lenders of money to the Kawai Project
had started levying penal interest due to delay in coal linkage allocation.
A request was made for grant of coal linkage for the Kawai Project. It
was stated that CIL was directed to execute an FSA for the 11th Five
Year Plan Projects, did not address the problems that continue to affect
the 12th Five Year Plan Projects. In the light of the non-availability of
domestic coal and the prohibitive cost of the alternate fuel, the Kawai
Project became unviable for the tariff committed. Therefore, a request
was made to grant coal linkage. The Ministry of Power, on 26.4.2012 in
response to letter dated 17.2.2012 of the Government of Rajasthan,
informed that the Kawai Project had been recommended for linkage as
a 12th Five Year Plan Project. In the meantime, the Government of
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Rajasthan may consider revising the mining plan capacity of the captive
coal blocks allocated to them, namely Parsa East and Kante Basan
upward to mitigate the demand of coal for power projects in Rajasthan.
21. On 21.6.2012, APRL informed the Rajasthan Discoms about
the uncertainties in the availability of coal supplies and the same being
beyond their control. Despite various efforts by the Government of
Rajasthan, neither the coal block nor the coal linkage was allocated. It
was also informed that following the regulatory change in Indonesia,
which mandates the export of coal only at the notified price, w.e.f.
11.9.2011, the cost of imported coal has risen too high to make the use of
imported coal prohibitive. In case an early arrangement of coal linkage
or allotment of captive coal was not made, the operation of the
Government's projects would be hampered. On 5.11.2012, the
Government of Rajasthan informed that there was no surplus coal in
Parsa East and Kente Basan coal blocks, which could be allocated to
the Kawai Project. However, the Government of Rajasthan on
22.11.2012, wrote a letter to the Ministry of Power and Ministry of Coal
informing that Rajasthan Discoms have executed long-term PPA with
APRL. It was stated that in case long-term coal linkage was not provided,
then the State would be deprived of 1200 MW power at competitive
rates, and Rajasthan was already facing an acute shortage. On
26.11.2012, another letter was written by the Government of Rajasthan
for allocating coal linkage to 12th Five Year Plan Projects.
22. As no coal linkage was granted, on 24.4.2013 AEL filed a
Petition No.392 of 2013 before the State Commission claimed
compensatory tariffs for the higher cost of coal. Ultimately, the Standing
Linkage Committee (Long-Term) of the Government of India held a
meeting on 31.5.2013. On 21.6.2013, the Cabinet Committee of Economic
Affairs approved a mechanism for signing the Fuel Supply Agreement
(for short, 'FSA') for 78000 MW. AEL was not part of the same. On
17.7.2013, a Presidential Directive was issued by the Ministry of Coal to
the Coal India Limited (for short, 'CIL') to sign the FSAs for the capacity
mentioned above. The New Coal Distribution Policy, 2013 (NCDP of
2013), was notified on 26.7.2013 by the Central Government for the
revised arrangement for the supply of coal to identified thermal power
stations of 78000 MW. AEL was not one of the thermal power stations
included in the same.
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23. The Ministry of Power issued a letter on 31.7.2013, in which
the change in law was considered regarding a shortfall in domestic coal
in the quantity indicated in the Letter of Assurance (for short, 'LoA') or
FSA. The Revised Tariff Policy under the Electricity Act was issued on
28.1.2016. AEL was given the coal supply to the fullest extent in 2018
under the SHAKTI Policy. It entered into an FSA with NCL/SECL for
procurement of coal under the SHAKTI Policy.
24. The State Commission ultimately decided the Petition No.392
of 2013, filed by AEL on 17.5.2018. AEL was held entitled to relief
under the change in law on account of NCDP of 2013. The amount of
compensation payable to AEL was not computed. Dissatisfied with the
order passed by the State Commission, Rajasthan Discoms filed an appeal
before the Appellate Tribunal for Electricity (for short, 'the APTEL').
The APTEL vide judgment dated 14.9.2019, held that the bid of APRL
was based on domestic coal and accordingly covered under the Change
in Law event in terms of the PPA and of the decision of this Court in
Energy Watchdog v. Central Electricity Regulatory Commission and
Ors., (2017) 14 SCC 80. APRL was also held entitled for change in law
under the Shakti Scheme as well as payment towards carrying cost. A
further direction was issued to pay the amount of change in law
compensation and Carrying Cost by duly verifying the relevant supporting
documents for fuel cost and as per applicable Tariff Regulations for
operating parameters. Aggrieved thereby, appeals have been preferred
by Rajasthan Discoms. Another appeal has been filed by All India Power
Engineers Federation (for short, 'the Federation').
25. Shri C. Aryama Sundaram, learned senior counsel urged the
following arguments:
(a) APRL cannot claim any compensation for the use of imported
coal for the supply of power either before January 2018 or after that as
the use of such imported coal was as per the bid submitted by APRL
and was covered as a part of its quoted tariff.
(b) According to the bid documents submitted and the PPA entered
into pursuant to it, demonstrate that APRL had duly stipulated and agreed
for the imported coal also as a fuel source and quoted the tariff-based
thereon.
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(c) Without prejudice to the aforesaid, there was no change in
law as APRL could have claimed no compensation. Even as per its best
case, APRL could not be entitled to relief in relation to 100 percent coal
requirement, but could only claim concerning the balance percentage,
after considering the quantum under the FSA dated 25.6.2009 for imported
coal.
(d) There is no computation, no determination of methodology or
formula for the computation of the compensation; the same is required
to be undertaken with verification of quantification of coal, parameters,
computation of coal costs, etc. APRL cannot be permitted to unilaterally
raise the invoices and claim compensation.
(e) The finding recorded by the APTEL that the State Commission
had computed the amount, is factually incorrect.
(f) Any compensation paid to APRL would have to be recovered
from the consumers; therefore, it affects the public interest. The
computation and determination of the compensatory tariff, in any event,
would have to be done by the State Commission.
(g) The Generator cannot raise the invoice, and the liability to
make payment by the appellants does not crystallise. Therefore, there
is no question of liability of late payment surcharge for such a period. At
best, depending on the conduct of the Generator and in terms of restitution
principle, simple interest may be considered for the period prior to
determination by the State Commission. However, the application of
late payment surcharge cannot be applied when there is no delay or
default in payment of bills.
(h) APRL had admitted that two periods are separate until the
determination of change in law, which is carrying cost, and thereafter
raising of invoices, there may be a default by the procurer, which is late
payment surcharge. As the two periods are separate, there is no logic to
apply the late payment surcharge, which is for the second period to the
first one.
26. Shri Prashant Bhushan, learned counsel appearing on behalf
of Federation argued as under:
(a) the main question is whether the bid submitted by APRL was
premised on domestic coal or imported coal. He attracted our attention
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to the PPA, RFP, LoI, and other bid documents. The bid and PPA were
based on imported coal. APRL quantified as per RFP only on the basis
of imported coal. It did not have any firm coal linkage or LoA or FSA
for the domestic coal.
(b) The MoU dated 20.3.2008, entered into between APRL and
the Government of Rajasthan, was of no avail. Only the Central
Government was the sole deciding authority as is clear from Article 2.2
of the MoU. He attracted the attention of this Court to the RPF dated
26.2.2009. MoU dated 20.3.2008, would not count as firm coal
arrangement. APRL had entered into a CSA with its own company
AEL to qualify for the bid. Once it has qualified based on imported coal,
it cannot take a contrary stand.
(c) A clarification was sought from APRL on 7.9.2009 on which
basis of fuel, its bid was to be evaluated. In response to clarification, it
was submitted by APRL that bid should be evaluated on the basis of
domestic coal tie-up, and an undertaking was given that the payment
considering 'domestic coal escalation' would be acceptable to it during
the term of the PPA.
(d) On 17.12.2009, Rajasthan Discoms informed APRL that rates
mentioned at Annexure 1 (to provide 1200 MW power) and escalations
thereof on domestic coal is based on APRL's commitment that the above
rates would be applicable even if coal requirement is met by way of a
backup arrangement with imported coal. APRL gave an unconditional
acceptance on 18.12.2009.
(e) Reliance was placed on the order dated 31.5.2010, passed by
the Rajasthan Electricity Regulatory Commission (for short, 'the RERC').
The APTEL failed to comprehensively consider the PPA and other
documents. The bid documents also formed part of the PPA entered
into between the parties.
(f) The NCDP of 2007 did not create a vested right to get domestic
coal even for those who did not have the LoA/FSA or recommendation
of the Standing Linkage Committee (Long-Term). Our attention has
been invited to Clauses 2.1 and 2.2 of the NCDP of 2007 and approval
of the Standing Linkage Committee (Long-Term). As APRL did not
have any coal linkage approval, it was not entitled to claim compensation
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on the basis of change in law. The CIL couldn't make the supply. The
grant of linkage or LoA is not a ministerial act.
(g) The Statutory Guidelines of 2005 issued under Section 63 of
the Electricity Act lay down that to participate in the competitive bidding
for a PPA, an entity has to show ready availability of fuel source for the
power plant. In the case of domestic coal, the bidder shall have made
firm arrangements for fuel tie-up either by way of coal block allocation
or fuel linkage. These Guidelines have been issued by the Government
of India, which issued the NCDP of 2007. If the grant of LoA/FSA/
linkage was to be considered automatic on entering into a PPA, then
there was no need for having this criterion for eligibility. The decision in
Energy Watchdog and the Policy have not been appreciated correctly.
(h) The SHAKTI Policy was notified on 22.5.2017. Those IPPs,
which were having PPAs based on domestic coal, but were having no
LoA or FSA for coal supply either under NCDP of 2007 or NCDP of
2013, could now participate in the auction and get 100 per cent of their
normative requirement of coal supply. Under the SHAKTI Policy, APRL
was given coal supply to the full extent of the normative requirements
for generating and supply of electricity to the Rajasthan Discoms within
five years. The SHAKTI Allocation in the year 2018 does not change
the fact that APRL had considered imported coal as other coal for 5
years. The change in law, thus, could have been considered only after 5
years. Therefore, the question of change in law did not arise as APRL
was given coal supply under the SHAKTI Policy within 5 years of
Commercial Operation Date (for short, 'COD').
(i) It was also submitted that APRL had done over-invoicing, and
concerning that, the investigation is pending. A letter of rogatory has
been issued and, in that regard, S.L.P. (Crl.) No.10683 of 2019 is pending
in this Court, in which interim stay has been granted. Thus, the claim of
APRL is not tenable. It was also urged that the Federation has locus to
file the appeal for quashing the order passed by the APTEL.
27. On behalf of APRL, Dr. A.M. Singhvi and Shri Arvind Datar,
learned senior counsel, raised the following arguments:
(a)(i) the bid by APRL was premised only on domestic coal.
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(ii) The submission of the imported coal agreement submitted with
the bid was only to indicate that the bidder is eligible for the bid.
(iii) Non-availability of domestic coal is a change in law event.
(iv) The decision in Energy Watchdog squarely applies to the
case, in which it was held that changes in imported coal regime is not a
change in law, changes in domestic coal regime is a change in law event.
(b) APRL is entitled to carrying cost from the date the change in
law event came into force as held by this Court in Uttar Haryana Bijli
Vitran Nigam Limited (UHBVNL) & Anr. v. Adani Power Limited &
Ors., (2019) 5 SCC 325.
(c) The bid was premised only on domestic coal. The RFP
provides six scenarios for quoting tariffs, and the bidder can submit the
bid under any one of the scenarios viz. (i) Captive Coal Block (ii) Linkage
Coal (iii) Imported Coal (iv) Imported Gas (v) Domestic Gas and (vi)
Hydro.
(d) APRL submitted its financial bid as per linkage coal format,
i.e., domestic coal. The tariff was allowed to be quoted in linkage coal
format applicable to domestic coal. The Government of Rajasthan made
consistent efforts by writing letters to various authorities of the
Government of India to grant domestic coal linkage to the Kawai Project
of APRL. The Imported Coal Supply Agreement was submitted as a
part of bid only to demonstrate the raw material's readiness as APRL
was required to submit proof of linkage/fuel arrangement to qualify as a
bidder.
(e) Rajasthan Discoms admitted in their affidavit dated 31.7.2013
before the RERC that non-availability of coal from the Central
Government put the case of APRL within the scope of change in law.
Once they have admitted that bid was based on domestic coal, nonavailability of which entitles APRL to claim compensation under the
change in law as per Article 10 of the PPA. They cannot wriggle out of
their obligation. The eligibility to get coal linkage under the SHAKTI
Policy to APRL confirms that the PPA was based on domestic coal.
The PPA was based on domestic coal, and the concurrent findings do
not suffer from any infirmity or perversity.
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(f) The non-allocation of domestic coal linkage to APRL is a
change in law event as is apparent from various documents, affidavit
dated 31.7.2013 and entitlement under the SHAKTI Policy.
(g) In Energy Watchdog, this Court recognised the change in
NCDP of 2007 as change in law event for a project which did not have
any LoA or FSA at the time of bid submission. It was not necessary to
have linkage/allocation at the time of submission of the bid. A notification
was issued on 26.7.2013 to change the NCDP of 2007. Following change
in law events occurred:
(i) the decision of Standing Linkage Committee on 14.2.2012; and
(ii) the resolution dated 21.6.2013 of the Cabinet Committee of
Economic Affairs and the advice of the Ministry of Power dated
31.7.2013, based on which the Tariff Policy has been revised by the
Government of India on 28.1.2016 to cover the cases which do not have
coal linkage. The NCDP of 2007 was the only policy prevailing when
the bid was submitted and was changed.
The decision in Energy Watchdog is squarely applicable to the
present appeals, in which it was laid down that modification of the NCDP
of 2007 is a change in law. It was further observed that the fact that the
fuel supply agreement has to be appended to the PPA is only to indicate
that the raw material for the working of the plant was in order. The
copy of the FSA was to be furnished after 10 months of the signing of
the PPA.
(h) APRL has been continuously supplying power to the Rajasthan
Discoms since May 2013 without any interruption.