Appellate Tribunal for Electricity: In an appeal for compensation in terms of change in law in the Power Purchase Agreement (‘PPA') against the order passed by the Rajasthan Electricity Regulatory Commission (‘State Commission') wherein it gave its view on the claim of ‘carrying cost'. The bench of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) set aside the order of the State Commission, directing it to render fresh decision expeditiously.
The subject matter for appeal were subjects including busy season surcharge, development surcharge, port congestion surcharge, forex tax, and particularly the issue of ‘carrying cost' and their computation being on ‘monthly compounding basis'.
The State Commission’s view on the claim of ‘carrying cost' was to allow the actual interest rate being paid for raising funds as certified by the statutory auditor based on audited accounts as the ‘carrying cost' for the payment of the claims under change in law. Challenging the State Commission’s view, the appellant stated that, it has not been duly compensated within the letter and spirit of the decision in Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power Ltd, (2019) 5 SCC 325.
The issue of proper calculation of the rate at which the ‘carrying cost' must be computed was decided in an appeal in Uttar Haryana Bijli Vitran Ltd. v. Adani Power (Mundra) Ltd, 2022 SCC OnLine SC 1068, wherein it was concluded that the restitution principles encapsulated in Article 13.2 of PPA would take effect for computing the impact of change in law. Once carrying cost was granted in favor of Adani Power, the interest on carrying cost was to be calculated on a compound interest basis from the date of the occurrence of the change in law. The aim was to restitute a party that was adversely affected by a change in law event and to accordingly restore it to its original economic position.
While relying on Adani Power (Mundra) (Supra), the Tribunal said that interest in ‘carrying cost' is nothing but time value for money and the only way a party can be afforded the benefit of restitution in every which way. The entire concept of restitutionary principles engrained in Article 13 of the PPAs must be read in the correct perspective. The said principle that governs compensating a party for the time value for money, is the very same principle that would be invoked and applied for grant of interest on carrying cost on account of a change in law event.
Accordingly, the order passed by the State Commission was set aside with the direction of passing an order bearing in mind the subsequent decision of the Supreme Court.
[Adani Power Rajasthan Ltd. v. Rajasthan Electricity Regulatory Commission, 2022 SCC OnLine APTEL 122, decided on 28-11-2022]
Advocates who appeared in this case:
For the Appellant- Advocate Amit Kapur;
Advocate Akshat Jain;
Advocate Avdesh Mandloi;
Advocate Shikhar Verma;
For the Respondent- Advocate Poorva Saigal;
Advocate Shubham Arya;
Advocate Reeha Singh.