Others (2022) 4 SCC 657; Uttar Haryana Bijli Vitran Nigam Limited & Anr. v. Adani Power (Mundra) Limited and Another (2023) 2 SCC 624 – relied & Ors.

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 183 A B C D E F G H 184 SUPREME COURT REPORTS [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, 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 – Therefore, such unnecessary and unwarranted litigation needs to be curbed – Union of India, through A B C D E F G H GMR WARORA ENERGY LTD. v.

CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC) 185 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:

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. A B C D E F G H 186 SUPREME COURT REPORTS [2023] 8 S.C.R.

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.

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]

This Court in the case of Energy Watchdog so also in Adani Rajasthan case and recently in MSEDCL v. APML & Ors. A B C D E F G H GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC) 187 has held that the change in NCDP would amount to ‘Change in Law’. [Paras 106][221-C] A

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]

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]

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]

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 B C D E F G H 188 SUPREME COURT REPORTS [2023] 8 S.C.R. 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.