Supreme Court: In an appeal filed by Uttar Haryana Bijli Vitran Nigam Ltd. and Dakshin Haryana Bijli Vitran Nigam Ltd. (“Haryana Utilities”/ “Appellants”) against the judgment and order passed by the Appellate Tribunal for Electricity(‘APTEL'), wherein the Tribunal upheld the order dated 31-05-2018 passed by the Central Electricity Regulatory Commission (‘CERC'), the Division Bench of BR Gavai* and Vikram Nath, JJ. held that no error could be found with the concurrent findings of CERC and the APTEL that Adani power was entitled to Change in Law relief for 100% of the contracted capacity i.e., 1386 MW, which is 70% of the installed capacity of 1980 MW of the Phase IV extension of Mundra Project.
Background:
Haryana Utilities are distribution licensees undertaking the distribution and retail supply of electricity to consumers in the State of Haryana.
In 2008, Haryana Utilities entered into two Power Purchase Agreements (“PPAs”) with Adani Power Mundra Limited (“Adani power”) for procurement of contracted capacity. The PPAs were entered into pursuant to a tariff based Competitive Bidding Process initiated by the Haryana Utilities under the provisions of Section 63 of the Electricity Act, 2003, as per the Standard Bidding Guidelines notified by the Central Government.
Adani Power filed a petition before the CERC seeking, inter alia, relief of increase in tariff on various grounds. The orders of CERC were challenged before the APTEL. Further, the batch of appeals were challenged before Supreme Court in the case of Energy Watchdog v. CERC, (2017) 14 SCC 80 ,wherein the Court specifically rejected the claim that the increase in price of coal due to change in Indonesian Regulations would also amount to Change in Law. Further, it was held that only Change in Law in India would entitle the Generator to the benefit of restitution on account of such Change in Law.
Pursuant to the above orders, a petition was filed before CERC,thereafter an appeal was filed before APTEL, wherein it was held that all the issues are in favour of the respondent, thus, the appeal was dismissed. Being aggrieved thereby, the appellants have filed the present appeal.
The Court said that the following first three issues have been already answered in Maharashtra State Electricity Distribution Co. Ltd. v. Adani Power Maharashtra Ltd., 2023 SCC OnLine SC 233
Whether ‘Change in Law' relief on account of New Coal Distribution Policy (‘NCDP'),2013 should be on ‘actuals' viz. as against 100% of normative coal requirement assured in terms of NCDP 2007 or restricted to trigger levels in NCDP 2013 viz. 65%, 65%, 67% and 75% of Assured Coal Quantity (ACQ)?
It was held 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 NCDP, 2007.
(ii) Whether for computing ‘Change in Law' relief, the operating parameters be considered on ‘actuals' or as per technical information submitted in bid?
Insofar as the second issue is concerned, it was held that the Station Heat Rate (“SHR”) and Auxiliary consumption should be considered as per the Regulations or actuals, whichever is lower.
(iii) Whether ‘Change in Law' relief compensation is to be granted from 1-04-2013 (start of Financial Year) or 31-07-2013 (date of NCDP 2013)?
The third issue was answered holding that the Start date for the ‘Change in Law' event for the NCDP, 2013 is 1-04-2023
The remaining issues to be answered were:
(iv) Whether the Central Commission was justified in holding that Adani Power’s bid was based entirely on domestic coal availability and hence entitled to Change in Law relief on account of domestic coal shortfall?
The Court, after examining the documents placed on record, said that nothing reveals that representation was given by Adani power that its bid is based on 70% domestic and 30% imported coal.
Further, from the Executive Summary by Adani power, the Court noted that Adani's Power Plant had a strategic advantage as it had proximity to Mundra Port. It further states that Mundra Port possesses world class coal handling facilities with 17-meter-deep draft permitting capsize vessels to berth alongside. According to the document, it has proposed to supply 1425 MW to Haryana Power Generation Corporation Limited (‘HPGCL') from 1980 MW Phase IV extension of Mundra Project. The representation given is that it will use either imported or indigenous coal.
The Court said that if the appellant's contention is accepted that at the time of the bid there was no assurance of domestic coal supply, then the contention of the appellants that Adani power is entitled to shortfall of 70% of the coal, is itself contradictory.
The Court further noted that Standing Linkage Committee (long term) (‘SLC (LT)'), in its meeting based on the recommendation of the Central Electricity Authority (“CEA”), the Ministry of Power (“MoP”) had authorised the issuance of Letter of Authorisation (‘LoA') for 1386 MW i.e. 70% of 1980 MW installed capacity of Phase IV extension of the Mundra Project. This was done in accordance with the provisions of the NCDP 2007. Insofar as the remaining capacity is concerned, the decision was deferred to be taken by the SLC (LT) in the future, based on the recommendation of MoP and other relevant factors.
Thus, the Court said that Adani power would be entitled to benefit on account of the Change in Law if there was any shortfall of 70% of the domestic coal as was decided to be allotted by SLC(LT) in its meeting culminating in the Ministry of Coal issuing a LoA and the Fuel Supply Agreement (‘FSA') being signed by Adani power with Coal India Limited.
In view of the factual position that the entire domestic coal linkage came to be utilised for supplying power to Haryana Utilities, the Court opined that it is unjust on the part of Haryana Utilities to say that 70% of the installed capacity should be further bifurcated and the Change in Law benefit should be restricted only to 70% of the installed capacity which was allotted by the SLC (LT).
Placing reliance on Energy Watchdog v. CERC, (2017) 14 SCC 80 and Jaipur Vidyut Vitaran Nigam Ltd. v. Adani Power Rajasthan Ltd., 2020 SCC OnLine SC 697 the Court said that even according to Haryana Utilities, the entire coal covered under FSA was required to be utilised for generating power to be supplied to it as per the Memorandum of Understanding. Therefore, denial of the benefit of shortfall of the coal assured under FSA would be contrary to the restitutionary principle.
Thus, the Court held that no error could be found with the concurrent findings of CERC and the APTEL that Adani power was entitled to Change in Law relief for 100% of the contracted capacity i.e., 1386 MW, which is 70% of the installed capacity of 1980 MW of the Phase IV extension of Mundra Project.
(v) Whether the Central Commission erred in ignoring the methodology for computation of Change in Law compensation laid down in its earlier order in GMR Kamalanga Energy Limited v. Dakshin Haryana Bijli Vitran Nigam Limited?
The grievance of Haryana Utilities is that the methodology for granting benefit on account of the Change in Law adopted by the CERC and affirmed by APTEL is contrary to the one which was previously arrived at in the earlier cases of GMR Kamalanga Energy (supra)
The Court said that Haryana Utilities are indulging into approbation and reprobation. They cannot be permitted to blow hot and cold at the same time. Further, the Court viewed that after accepting before the CERC that they would adopt the methodology as given in the case of GMR Kamalanga Energy(supra), it would not be appropriate on the part of the appellants to change its stand after final orders are passed by the CERC.
Further, the Court said that the concurrent findings of fact recorded by the two expert bodies could have been interfered with, only if, they failed to take into consideration the mandatory statutory provisions or if the decisions had been taken by them on extraneous considerations or that they were ex facie arbitrary and illegal. Thus, the Court dismissed the appeal.
[Uttar Haryana Bijli Vitran Nigam Ltd v. Adani Power (Mundra)Limited, 2023 SCC OnLine SC 461, decided on 20-04-2023]
Judgment by: Justice BR Gavai
Advocates who appeared in this case :
For Appellant: Senior Advocate MG Ramachandran
For Respondent: Senior Advocate Dr. A.M. Singhvi