Supreme Court affirms entitlement to change‑in‑law relief for coal evacuation charge and dismisses DISCOMs' challenge

A bench of Justice M. M. Sundresh and Justice Rajesh Bindal heard an appeal by Rajasthan distribution companies challenging an APTEL direction that Coal India’s notification dated 19.12.2017 imposing Evacuation Facility Charges (EFC) constituted a “change in law” under the Power Purchase Agreement (PPA) and entitled the generator to compensation with carrying cost. The Court restricted the appeal to the interpretation of Article 10.2.1 vis‑à‑vis Article 10.5 and heard detailed submissions from Senior Counsel Shyam Divan and Karthik Seth for the appellants and Senior Counsel Dr. Abhishek Manu Singhvi for respondent No.1.

The Court dismissed the appeal and held that the APTEL’s finding that the CIL notification amounted to a change in law and that the generator was entitled to restitutionary relief and carrying cost did not call for interference. The Court emphasised that Article 10.2.1 embodied the restitutionary principle to “restore through monthly Tariff Payment … the affected Party to the same economic position as if such Change in Law has not occurred,” and that Article 10.5.1(i) applied where the change was by notification or order, while Article 10.5.1(ii) applied only where the change arose from an interpretation in an adjudicatory order. The Court, in its reasoning, observed: “Hence, a mere difference in the understanding of a ‘change in law’ by one party to the PPA, does not, by itself, preclude the other party from deriving a benefit by invoking Article 10.5.1 (i) of the PPA. In other words, a different understanding would not result in a different interpretation of law, that would bar entitlement under Article 10.5.1 (i) of the PPA and, therefore, such a situation would not fall within the purview of Article 10.5.1 (ii) of the PPA.” The Court also noted that “The Notification, dated 19.12.2017, and its application are not in dispute.”

Background The dispute arose from a Letter of Intent to Adani Power Rajasthan Ltd. and a PPA dated 28.01.2010 under which Rajasthan DISCOMs procured 1,200 MW at a levelised tariff. Coal India issued a price notification dated 19.12.2017 introducing an Evacuation Facility Charge effective 20.12.2017. The generator notified the procurers the next day, claiming a change‑in‑law event under Article 10 of the PPA and sought relief before the Rajasthan Electricity Regulatory Commission (RERC) under Section 86 of the Electricity Act, 2003. The RERC allowed certain reliefs and denied others; the generator appealed to the Appellate Tribunal for Electricity (APTEL), which condoned delay applications (which were not subsequently challenged) and held on 18.04.2024 that the CIL notification amounted to change in law, directing payment of the benefit from the date of the notification together with carrying cost at Late Payment Surcharge (LPS) rates on a compounded basis, and remanding computation to the Commission.

The DISCOMs challenged APTEL’s grant of carrying cost and reliance on prior Supreme Court precedents, contending that a supplementary bill was a prerequisite for claiming LPS and that Article 10.5.1(ii) applied where change arose from judicial or tribunal interpretation. Respondent‑generator relied on this Court’s consistent jurisprudence in GMR Warora, UHBVNL (2019) and UHBVNL (Mundra) (2023) establishing that notifications by State instrumentalities (including CIL) could constitute change in law and that restitutionary principles required compensation from the date of the change, with carrying cost compounded from that date.

The Supreme Court analysed the scope of appeals under sections 111 and 125 of the Electricity Act and emphasised that appeals to this Court must raise a substantial question of law. Applying settled precedents, the Court found no merit in re‑opening issues conclusively covered by earlier decisions. It held that Article 10.5.1(ii) did not apply because there was no change in interpretation by a Court, tribunal or governmental instrumentality; recognising a change in law differed from interpreting a notification. The Court found that Article 10.5.2 and Article 8 (billing and payment) required a supplementary bill to be raised only after adjudication by a competent forum and that the generator had promptly notified the change. The appeal was dismissed and pending applications were disposed of; the APTEL order and remand to RERC for computation remained in effect.

Case No.: CIVIL APPEAL NO. 4336 OF 2025 (Arising out of Civil Appeal Diary No. 26876 of 2024)
Case Title: JAIPUR VIDYUT VITRAN NIGAM LTD. & ORS. v. ADANI POWER RAJASTHAN LTD. & ANR.
Appearances:
For the Petitioner(s): Mr. Shyam Divan, Senior Counsel; Mr. Karthik Seth, Counsel
For the Respondent(s): Dr. Abhishek Manu Singhvi, Senior Counsel