2025 INSC 770

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4336 OF 2025

(Arising out of CIVIL APPEAL DIARY NO. 26876 OF 2024)

JAIPUR VIDYUT VITRAN NIGAM

LTD. & ORS. …APPELLANT(S)

VERSUS

ADANI POWER RAJASTHAN LTD. & ANR. … RESPONDENT(S)

J U D G M E N T

M. M. Sundresh, J.

1. Admit.

2. We have heard the learned Senior Counsel, Mr. Shyam Divan and learned

Counsel, Mr. Karthik Seth appearing for the appellants and the learned

Senior Counsel, Dr. Abhishek Manu Singhvi appearing for the respondent

No. 1, at length. All the relevant documents, including the written

submissions of the parties, have been perused.

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3. In pursuance of the Letter of Intent issued to Adani Power Rajasthan Ltd.

(respondent No.1-Power Generator), on 17.12.2009, a Power Purchase

Agreement (hereinafter referred to as the “PPA”) dated 28.01.2010 was

entered into between appellant Nos.1, 2 and 3, who are the Rajasthan

Discoms engaged in the distribution and supply of electricity, on one side

and respondent No.1 on the other, for the supply of 1200 MW Aggregate

Contracted Capacity at a levelized tariff of Rs.3.238 per unit. The same

was duly approved by respondent No.2.

4. While the agreement was in operation, a Notification came to be issued at

the instance of M/s. Coal India Limited (hereinafter referred to as “CIL”),

dated 19.12.2017, imposing a levy of Evacuation Facility Charges

(hereinafter referred to as the “EFC”) with effect from 20.12.2017.

Immediately, on the very next day i.e. 20.12.2017, respondent No.1

informed appellant No. 4 that the Notification dated 19.12.2017

constituted a ‘change in law’ event. The Notification dated 19.12.2017 is

extracted below:

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“COAL INDIA LIMITED

A Maharatna Company

(A Govt. of India Enterprise)

COAL BHAWAN

Sales & Marketing Division

Ground & Floor, Premises No, 04 MAR, Plot No. AF-III, Action Area -1A

Rajarhat, New Town, Kolkata - 700156

Phone: 033-71104143, Fax: 033-23244229, Website:

………………………………

CIN: L23 L09WB1973GO1028844

PRICE NOTIFICATION: CIL:S&M: GM(F)Pricing 2017/ 1005 dated

19th Dec. 2017

Charge of Rs. 50 (Fifty) per tonne shall be levied as ‘Evacuation Facility

Charges’ on all despatches except despatch through rapid loading arrangement.

This is effective from 00:00 hour of 20" Dec. 2017. This issues with the

approval of the competent authority.

General Manager (M&S)

Marketing & Sales”

5. On its failure in eliciting a suitable reply, respondent No.1 filed a Petition

bearing No.1373/2018 before the Rajasthan Electricity Regulatory

Commission (hereinafter referred to as the “RERC”), invoking Section 86

of the Electricity Act, 2003 (hereinafter referred to as the “2003 Act”) read

with Article 10 of the PPA. While rejecting some of the reliefs, the RERC

did allow some of the other prayers sought for by respondent No.1. Against

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the refusal of some of the claims, the respondent No. 1 filed an appeal

before the Appellate Tribunal for Electricity (hereinafter referred to as the

“APTEL”).

6. The appeal under Section 111 of the 2003 Act was so made along with an

application seeking condonation of delay of 332 days in filing. Another

application was filed seeking to condone the delay of 236 days in re-filing

the appeal. Upon hearing both sides, the aforesaid applications were

allowed and, thereafter, the appeal was decided on merits. It is pertinent to

note that the common order by the APTEL, dated 23.01.2023, condoning

the delay on both counts, has attained finality for want of further challenge.

7. The APTEL, inter alia, held by its judgment dated 18.04.2024, after

elaborately considering the submissions made by both sides, that the

Notification dated 19.12.2017 would amount to a change in law, and the

respondent No. 1 would be entitled to the grant of compensation from the

date of the Notification, by taking note of the decision rendered by this

Court in GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401

(hereinafter referred to as “GMR Warora”) which, in turn, also placed

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reliance upon the earlier decisions of this Court. While doing so, it also

took into consideration, the fair submission made on behalf of the

appellants that the principal issue of levy of EFC, and consequently, the

date from which the respondent No. 1 would be entitled to the grant of

compensation, is covered by the aforementioned judgement. Further

reliance was placed on the said decision by the APTEL, for the purpose of

granting carrying cost at the rate of Late Payment Surcharge (hereinafter

referred to as “LPS”), on a compounding basis, which is to be reckoned

from the date of the Notification. The submission made by the appellants

before the APTEL that a supplementary bill is mandatory before seeking

relief for the LPS was also considered and rejected. Once again, the impact

of delay was argued and considered with specific reference to carrying

cost. Accordingly, the following conclusion was arrived at:

“X.CONCLUSION:

The Appellant shall, in terms of what has been indicated hereinabove, be

entitled for the benefit of the change in law event on account of evacuation

facility charges from the date on which the notification, issued by Coal India

Limited, was made applicable to them. The sum representing this benefit shall

be paid by Respondents 2 to 5 to the appellant along with carrying cost at LPS

rates. While the Appellant shall not be entitled for carrying cost (much less at

LPS rates), for the delay of 332 days in filing the Appeal, they shall be given

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credit for the sum of Rs.5 lakhs paid by them earlier as a condition for

condoning the delay in filing the Appeal, since they are now being denied

carrying cost for the said period of delay. The matter is remanded to the

Respondent-Commission to compute the amounts which the Appellant is

entitled to in terms of this Judgment. The Appeal is disposed of accordingly.”

8. When the appeal was filed before this Court, it was entertained, limiting

its scope only to the interpretation of Article 10.2.1 vis-à-vis 10.5 of the

PPA, with specific reference to 10.5.1 (ii). The following is the order

passed by this Court on 09.09.2024:

“We have heard learned senior counsel for the parties at length.

Most of the issues raised in the present matter are covered by earlier decisions

of this Court in ‘GMR Warora Energy Ltd. v. CERC & Ors.’, (2023) 10 SCC

401, ‘UHBVNL v. Adani Power (Mundra) Limited’, (2023) 2 SCC 624,

‘UHBVNL v. Adani Power Limited’, (2019) 5 SCC 325 and ‘MSEDCL v.

MERC & Ors.’, (2022) 4 SCC 657. We may note that the delay in refiling has

been duly considered earlier by the APTEL while condoning it. The said order

has attained finality.

The only issue which might arise for consideration in this appeal pertains

to the interpretation of Article 10.2.1 vis-à-vis Article 10.5 of the PPA with

specific reference to 10.5.1 (ii).

Learned senior counsel for the respondents seeks and is granted two weeks’

time to file a counter affidavit.

Rejoinder affidavit shall be filed within a period of two weeks thereafter.

List on 26.11.2024.”

(emphasis supplied)

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SUBMISSIONS ON BEHALF OF THE APPELLANTS

9. Notwithstanding the aforesaid order passed on 09.09.2024, the learned

Senior Counsel and learned Counsel appearing for the appellants, made

elaborate submissions on the other issues as well. It is submitted that the

delay has occasioned only due to the fault of respondent No.1 through the

litigation process and, therefore, what is to be applied is Article 10.5.1 (ii).

The APTEL was wrong in condoning the delay by allowing the

applications filed by respondent No.1. There is no basis for awarding

carrying cost at the rate of LPS, and the APTEL ought not to have awarded

the same as the LPS is granted only when there is a delay in the payment

of a supplementary bill. The learned Senior Counsel placed substantial

reliance on the PPA to contend that it is respondent No.1 who did not raise

the supplementary bill at the earliest point of time, as mandated under

Article 8 of the PPA. The decision rendered by this Court in GMR Warora

(supra) does not apply to the case of respondent No.1, considering that in

the said case, a supplementary bill was indeed raised. Unless a demand is

raised, there is no question of payment that would arise, as there is a clear

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distinction between the liability to pay, as against an obligation to pay. In

support of his contention, the learned Senior Counsel has also placed

reliance upon the decision of this Court in Prem Cottex v. Uttar Haryana

Bijli Vitran Nigam Ltd., (2021) 20 SCC 200.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS

10. The learned Senior Counsel Dr. Abhishek Manu Singhvi appearing for the

respondent No. 1, submits that there exists a preliminary objection as

arguments have been made by the appellants beyond the scope of not only

the present appeal but also the order, dated 09.09.2024, of this Court. The

issues sought to be raised by the appellants have already been settled by

this Court in not only GMR Warora (supra) but also in two other

decisions of this Court in Uttar Haryana Bijli Vitran Nigam Ltd. v.

Adani Power Ltd., (2019) 5 SCC 325 (hereinafter referred to as

“UHBVNL 2019”) and Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani

Power (Mundra) Ltd., (2023) 2 SCC 624 (hereinafter referred to as

“UHBVNL 2023”).

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11. There is no question of raising a supplementary bill earlier, in view of the

definite stand taken by the appellants on the notification made by

respondent No.1 on 20.12.2017. It is nobody’s case that the appellants were

going to honour the bill if raised at the earliest point of time, as contended

by them. The APTEL itself has held that respondent No.1 is not entitled to

carrying cost for the period of delay in filing the appeal. The orders passed

on that count have attained finality. The appellants are making a futile

attempt at reopening the issues which are closed. Thus, it is a fit case where

the appeal has to be dismissed with costs, particularly when appropriate

orders have been passed by the RERC in pursuance of the order of remand

made by the APTEL.

12. Before we deal with the submissions made by the parties, we deem it

appropriate to discuss and elaborate on the scope of appeals under the 2003

Act.

SCOPE OF APPEALS UNDER THE ELECTRICITY ACT, 2003

13. Whenever a statute provides for an appeal, a Court is expected to restrain

itself to the contours of the powers conferred under it. The nature and status

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of the Court loses its significance as it only draws its powers from the

statute alone, and not beyond. After all, judicial restraint and sobriety,

when consciously restricted by the Legislature, forms an integral part of

the duties and functions of the Court.

Section 111 of the 2003 Act

“111. Appeal to Appellate Tribunal.— (1) Any person aggrieved by an order

made by an adjudicating officer under this Act (except under Section 127) or

an order made by the Appropriate Commission under this Act may prefer an

appeal to the Appellate Tribunal for Electricity:

Provided that any person appealing against the order of the adjudicating officer

levying any penalty shall, while filing the appeal, deposit the amount of such

penalty:

Provided further that where in any particular case, the Appellate Tribunal is of

the opinion that the deposit of such penalty would cause undue hardship to such

person, it may dispense with such deposit subject to such conditions as it may

deem fit to impose so as to safeguard the realisation of penalty.

(2) Every appeal under sub-section (1) shall be filed within a period of forty-

five days from the date on which a copy of the order made by the adjudicating

officer or the Appropriate Commission is received by the aggrieved person and

it shall be in such form, verified in such manner and be accompanied by such

fee as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry

of the said period of forty-five days if it is satisfied that there was sufficient

cause for not filing it within that period.

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may,

after giving the parties to the appeal an opportunity of being heard, pass such

orders thereon as it thinks fit, confirming, modifying or setting aside the order

appealed against.

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(4) The Appellate Tribunal shall send a copy of every order made by it to the

parties to the appeal and to the concerned adjudicating officer or the

Appropriate Commission, as the case may be.

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall

be dealt with by it as expeditiously as possible and endeavour shall be made by

it to dispose of the appeal finally within one hundred and eighty days from the

date of receipt of the appeal:

Provided that where any appeal could not be disposed of within the said period

of one hundred and eighty days, the Appellate Tribunal shall record its reasons

in writing for not disposing of the appeal within the said period.

(6) The Appellate Tribunal may, for the purpose of examining the legality,

propriety or correctness of any order made by the adjudicating officer or the

Appropriate Commission under this Act, as the case may be, in relation to any

proceeding, on its own motion or otherwise, call for the records of such

proceedings and make such order in the case as it thinks fit.”

Section 125 of the 2003 Act

“125. Appeal to Supreme Court.—Any person aggrieved by any decision or

order of the Appellate Tribunal, may, file an appeal to the Supreme Court,

within sixty days from the date of communication of the decision or order of

the Appellate Tribunal, to him, on any one or more of the grounds specified in

Section 100 of the Code of Civil Procedure, 1908 (5 of 1908):

Provided that the Supreme Court may, if it is satisfied that the appellant was

prevented by sufficient cause from filing the appeal within the said period,

allow it to be filed within a further period not exceeding sixty days.”

Section 100 of the Code of Civil Procedure, 1908

“100. Second appeal.— (1) Save as otherwise expressly provided in the body

of this Code or by any other law for the time being in force, an appeal shall lie

to the High Court from every decree passed in appeal by any Court subordinate

to the High Court, if the High Court is satisfied that the case involves a

substantial question of law.

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(2) An appeal may lie under this section from an appellate decree passed ex-

parte.

(3) In an appeal under this section, the memorandum of appeal shall precisely

state the substantial question of law involved in the appeal.

(4) Where the High Court is satisfied that a substantial question of law is

involved in any case, it shall formulate that question.

(5) The appeal shall be heard on the question so formulated and the respondent

shall, at the hearing of the appeal, be allowed to argue that the case does not

involve such question:

Provided that nothing in this sub-section shall be deemed to take away or

abridge the power of the Court to hear, for reasons to be recorded, the appeal

on any other substantial question of law, not formulated by it, if it is satisfied

that the case involves such question.”

14. Under Section 111 of the 2003 Act, the APTEL is vested with all the

powers that can possibly be exercised by the Regulatory Commission. In

other words, it is the final Court of fact and law.

15. However, under Section 125 of the 2003 Act, the powers expected to be

exercised by this Court is circumscribed and controlled by the pari materia

provision contained under Section 100 of the Code of Civil Procedure,

1908 (hereinafter referred to as “the CPC”). Thus, it is axiomatic that an

appellant has to raise a substantial question of law, which if the Court finds

to be in existence, shall accordingly frame it in whatever manner it deems

fit and proper, and put it to the other side to respond. It is for this Court to

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ultimately consider the existence of a substantial question of law and if it

does so, answer it accordingly. We will only clarify that there is no bar for

this Court to add any number of substantial questions of law even after

framing one earlier, in which case the respondents will have to be given

due notice of the same.

16. Section 100 of the CPC, after its amendment in the year 1978, consciously

concerns itself with a question of law which shall be substantial in nature.

Therefore, a mere question of law would not be sufficient enough to

entertain an appeal under Section 125 of the 2003 Act. Added to that, it

should be such that the substantial question of law, if answered in the

affirmative in favour of the appellant, shall have the effect of reversing the

decision of the APTEL. While deciding a substantial question of law, this

Court shall do so, based upon the findings of fact rendered by the APTEL,

unless by way of an exception, a perversity is found thereunder. In a case

where a finding is rendered contrary to the records, without assigning any

reason, and/or on a total misconception of the fact seen apparently on the

face of the record, may in a given case, give rise to a substantial question

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of law. Suffice it is to state that a substantial question of law has to be

framed by this Court in exercise of the power under Section 125 of the

2003 Act and, thereafter, to be answered accordingly.

17. In the facts of the instant case, we have indeed framed only one substantial

question of law vide order dated 09.09.2024, as aforementioned. Though

we did permit the appellants to raise all the other issues and considered

them as not feasible, the fact remains that they do not constitute substantial

questions of law.

DISCUSSION

18. The issue with respect to change in law over a notification issued by a

public authority and the resultant date to be reckoned has indeed attained

finality pursuant to the judgments delivered by this Court in GMR Warora

Energy Ltd. (supra), UHBVNL 2019 (supra) and UHBVNL 2023

(supra).

GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401

“95. For appreciating the rival submissions, we will have to construe the term

“Law”, which has been defined in the PPAs, which reads thus:

“ “Law” means, in relation to this Agreement, all laws including

Electricity laws in force in India and any statute, ordinance,

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regulation, notification or code, rule, or any interpretation of any of

them by an Indian Governmental Instrumentality and having force of

law and shall further include all applicable rules, regulations, orders,

notifications by an Indian Governmental Instrumentality pursuant to

or under any of them and shall include all rules, regulations, decisions

and orders of CERC and MERC.”

96. 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 CERC and MERC.

97. In any case, the issue as to what would amount to “Law” is no more res

integra. This Court, in Energy Watchdog [Energy Watchdog v. CERC, (2017)

14 SCC 80 : (2018) 1 SCC (Civ) 133] , has observed thus : (SCC p. 131, para

57)

“57. Both the letter dated 31-7-2013 and the revised Tariff Policy are

statutory documents being issued under Section 3 of the Act and have the

force of law. This being so, it is clear that so far as the procurement of

Indian coal is concerned, to the extent that the supply from Coal India and

other Indian sources is cut down, the PPA read with these documents

provides in Clause 13.2 that while determining the consequences of

change in law, parties shall have due regard to the principle that the

purpose of compensating the party affected by such change in law is

to restore, through monthly tariff payments, the affected party to the

economic position as if such change in law has not occurred. Further,

for the operation period of the PPA, compensation for any

increase/decrease in cost to the seller shall be determined and be effective

from such date as decided by the Central Electricity Regulation

Commission. This being the case, we are of the view that though change

in Indonesian law would not qualify as a change in law under the

guidelines read with the PPA, change in Indian law certainly would.”

98. The aforesaid view of this Court taken in Energy Watchdog [Energy

Watchdog v. CERC, (2017) 14 SCC 80 : (2018) 1 SCC (Civ) 133] has been

approved by a Bench of three learned Judges of this Court in Adani Rajasthan

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case [Jaipur Vidyut Vitaran Nigam Ltd. v. Adani Power Rajasthan Ltd., (2021)

18 SCC 478] and also followed by this Court when the two linked matters out

of this batch of appeals were decided by this Court in Maharashtra State

Electricity Distribution Co. Ltd. v. Adani Power Maharashtra Ltd. [(2023) 7

SCC 401] It cannot be denied that CIL is an instrumentality of the

Government of India and its orders, insofar as price of fuel is concerned,

are binding on all its subsidiaries.

***

100. As discussed hereinabove, the term “Law” would also include all

applicable rules, regulations, orders, notifications issued by an Indian

governmental instrumentality.

101. 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.

***

111. Undisputedly, EFC was imposed by CIL vide its Circular dated 19-12-

2017.

112. As already discussed hereinabove, 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 19-12-2017. As such, the

circular of CIL dated 19-12-2017 would also amount to “change in law”.

***

117. For considering the rival submissions, it will be apposite to refer to the

following articles, which are almost common in most of the PPAs:

“11. Billing and payment.—

***

11.3. Payment of monthly bills.—

***

11.3.4. 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 two (2) per cent in excess of the applicable

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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.

***

11.8. Payment of supplementary bill.—

11.8.1. Either party may raise a bill on the other party (“supplementary bill”)

for payment on account of:

(i) Adjustments required by the Regional Energy Account (if applicable);

(ii) Tariff payment for change in parameters, pursuant to provisions in

Schedule 5; or

(iii) Change in law as provided in Article 13 and such bill shall be paid by

the other party.

***

11.8.3. 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.”

118. 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 @ 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 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.

***

120. It could thus be seen that this Court in Adani Power [Uttar Haryana Bijli

Vitran Nigam Ltd. v. Adani Power Ltd., (2019) 5 SCC 325 : (2019) 2 SCC (Civ)

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657] has held that insofar as the “operation period” is concerned, compensation

for any increase/decrease in revenues or costs to the seller is to be determined

and effected from such date as is decided by the appropriate Commission. It

has further been held that the compensation is only payable for

increase/decrease in revenue or cost to the seller if it is in excess of an amount

equivalent to 1% of the letter of credit in aggregate for a contract year. It has

been held that restitutionary principles apply in case a certain threshold

limit is crossed. It has been held that an inbuilt restitutionary principle

compensates the party affected by such “change in law” and the affected

party must be restored through monthly tariff payment to the same

economic position as if such “change in law” had not occurred.

121. From the perusal of para 9 of Adani Power [Uttar Haryana Bijli Vitran

Nigam Ltd. v. Adani Power Ltd., (2019) 5 SCC 325 : (2019) 2 SCC (Civ) 657],

it would also be clear that in case the “change in law” happens to be by

way of adoption, promulgation, amendment, re-enactment or repeal of the

law or “change in law”, it has to be effected from the date on which such

change occurs.

122. In this respect, it will also be apposite to refer to the following

observations of this Court in Maharashtra State Electricity Distribution Co.

Ltd. v. Maharashtra Electricity Regulatory Commission [(2022) 4 SCC 657] :

(SCC pp. 719-20, paras 173-78)

“173. APTEL correctly found that: (Maharashtra Pradesh Electricity

Regulatory Commission case [Maharashtra State Electricity Distribution

Co. Ltd. v. Maharashtra Pradesh Electricity Regulatory Commission, 2021

SCC OnLine APTEL 13], SCC OnLine APTEL para 13)

‘13. … On the contrary, there is a conscious exclusion regarding any suo

motu change in the rate to be applied while calculating LPS, it being

incorrect to argue on the assumption that the contract permits automatic

change in system.’

174. This Court is unable to accept Mr Singh's submission that the

conclusion of APTEL that LPS is not tariff is erroneous. The meaning of the

expression tariff has to be considered, and has rightly been considered by

APTEL in the context of the relevant provision of the power purchase

agreements. The dictionary meaning of tariff may be charge. However, in

Article 13 of Stage 1 and Article 10 of Stage 2 power purchase agreements,

tariff means monthly tariff and tariff adjustment consequential to change in

law, is of monthly tariff in respect of supply of electricity.

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175. As argued by the respondent power generating companies appearing

through Mr Rohatgi, Mr Singhvi, Mr Mukherjee and Ms Anand respectively,

LPS is only payable when payment against monthly bills is delayed and not

otherwise.

176. The object of LPS is to enforce and/or encourage timely payment

of charges by the procurer i.e. the appellant. In other words, LPS

dissuades the procurer from delaying payment of charges. The rate of

LPS has no bearing or impact on tariff. Changes in the basis of the rates

of LPS do not affect the rate at which power was agreed to be sold and

purchased under the power purchase agreements. The principle of

restitution under the change in law provisions of the power purchase

agreements are attracted in respect of tariff.

177. LPS cannot be equated with carrying cost or actual cost incurred for the

supply of power. The appellant has a contractual obligation to make timely

payment of the invoices raised by the power generating companies, subject,

of course, to scrutiny and verification of the same. Mr Mukul Rohatgi has a

point that if the funding cost was so much lesser than the rate of LPS, as

contended by the appellant, the appellant could have raised funds at a lower

rate of interest, made timely payment of the invoices raised by the power

generating companies, and avoided LPS.

178. The proposition that courts cannot rewrite a contract mutually

executed between the parties, is well settled. The Court cannot, through

its interpretative process, rewrite or create a new contract between the

parties. The Court has to simply apply the terms and conditions of the

agreement as agreed between the parties, as observed by this Court in Shree

Ambica Medical Stores v. Surat People's Coop. Bank [(2020) 13 SCC 564] ,

para 20, cited by Ms Divya Anand. This appeal is an attempt to renegotiate

the terms of the PPA, as argued by Ms Divya Anand as also other counsel. It

is well settled that courts cannot substitute their own view of the presumed

understanding of commercial terms by the parties, if the terms are explicitly

expressed. The explicit terms of a contract are always the final word with

regard to the intention of the parties, as held by this Court in Nabha Power

Ltd. v. Punjab SPCL [(2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1] , paras 45

& 72, cited by Ms Anand.”

(emphasis in original)

123. This Court has clearly held in Maharashtra State Electricity Distribution

Co. [Maharashtra State Electricity Distribution Co. Ltd. v. Maharashtra

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Electricity Regulatory Commission, (2022) 4 SCC 657] that the DISCOMS

have a contractual obligation to make timely payment of the invoices

raised by the power generating companies, subject to scrutiny and

verification of the same. This Court has rejected the contention that the

funding cost was much lesser than the rate of LPS. This Court has reiterated

the proposition that the courts cannot rewrite a contract which is executed

between the parties. This Court has emphasised that it cannot substitute its own

view of the presumed understanding of commercial terms by the parties, if the

terms are explicitly expressed. It has been held that the explicit terms of a

contract are always the final word with regard to the intention of the parties.

124. As already discussed hereinabove, Article 11.8 of the PPA entitles either

party to raise a supplementary bill on the other party on account of “change in

law” as provided in Article 13 and such bills are required to be paid by the

either party. Article 11.8.3 of the PPA specifically 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 the same

terms applicable to the monthly bill in Article 11.3.4. Article 11.3.4 of the PPA

specifically provides a late payment surcharge to be paid by the procurer to the

seller @ of 2% in excess of the applicable SBAR per annum on the amount of

outstanding payment calculated on day-to-day basis (and compounded with

monthly rest), for each day of the delay.

***

126. It is thus clear that this Court has reiterated in Adani Power (Mundra)

[Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power (Mundra) Ltd.,

(2023) 2 SCC 624 : (2023) 1 SCC (Civ) 31] that 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. It

has been held that 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 has been held that it is 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.

127. The argument that there is no provision in the PPAs for payment of

compound interest from the date when the “change in law” event had

occurred, has been specifically rejected by this Court.

128. In view of this consistent position of law and application of restitutionary

principles and privity of contractual obligations between the parties as

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contained in the PPAs, we do not find that the view taken by the learned APTEL

with regard to carrying cost warrants interference.

***

177. It is further to be noted that this Court in Uttar Haryana Bijli Vitran Nigam

Ltd. v. Adani Power Ltd. [(2019) 5 SCC 325 : (2019) 2 SCC (Civ) 657], has

specifically observed that the “change in law” events will have to accrue

from the date on which rules, orders, notifications are issued by the

instrumentalities of the State. Even in spite of this finding, the DISCOMS

are pursuing litigations after litigations.

178. We find that, when the PPA itself provides a mechanism for payment

of compensation on the ground of “change in law”, unwarranted litigation,

which wastes the time of the Court as well as adds to the ultimate cost of

electricity consumed by the end-consumer, ought to be avoided.

Ultimately, the huge cost of litigation on the part of DISCOMS as well as

the generators adds to the cost of electricity that is supplied to the end-

consumers.”

(emphasis supplied)

Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power (Mundra) Ltd.

(2023) 2 SCC 624

“20. It is clear that the restitutionary principles encapsulated in Article

13.2 would take effect for computing the impact of change in law. We see

no reason to interfere with the impugned judgment [Adani Power (Mundra)

Ltd. v. CERC, 2021 SCC OnLine APTEL 67] , wherein it has been held by the

Appellate Tribunal that Respondent 1 Adani Power had started claiming

change in law event compensation in respect of installation of FGD unit along

with carrying cost, right from the year 2012 and that it has approached several

fora to get this claim settled. Respondent 1 Adani Power finally succeeded in

getting compensation towards FGD unit only on 28-3-2018, but the carrying

cost claim was denied. The relief relating to carrying cost was granted to

Respondent 1 Adani Power by the Appellate Tribunal vide order dated 13-4-

2018 [Adani Power Ltd. v. CERC, 2018 SCC OnLine APTEL 5] which was

duly tested by this Court and upheld on 25-2-2019 [Uttar Haryana Bijli Vitran

Nigam Ltd. v. Adani Power Ltd., (2019) 5 SCC 325 : (2019) 2 SCC (Civ) 657].

Once carrying cost has been granted in favour of Respondent 1 Adani

Power, it cannot be urged by the appellants that interest on carrying cost

should be calculated on simple interest basis instead of compound interest

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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.

The idea behind granting interest on carrying cost is not far to see, it is

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.

21. In the instant case, Respondent 1 Adani Power had to incur expenses to

purchase the FGD unit and install it in view of the terms and conditions of the

environment clearance given by the Ministry of Environment and Forests,

Union of India, in the year 2010. For this, it had to arrange finances by

borrowing from banks. The interest rate framework followed by scheduled

commercial banks and regulated by Reserve Bank of India mandates that

interest shall be charged on all advances at monthly rests. In this view of the

matter, Respondent 1 Adani Power is justified in stating that if the banks

have charged it interest on monthly rest basis for giving loans to purchase

the FGD unit, any restitution will be incomplete, if it is not fully

compensated for the interest paid by it to the banks on compounding basis.

22. We are of the opinion that interest on carrying cost is nothing but time

value for money and the only manner in which a party can be afforded the

benefit of restitution in every which way. In the facts of the instant case, the

Appellate Tribunal was justified in allowing interest on carrying cost in favour

of Respondent 1 Adani Power for the period between the year 2014, when the

FGD unit was installed, till the year 2021. There was no justification for the

Central Commission to have excluded the period between 2014 and 2018

and grant relief from the date of the passing of the order i.e. from 28-3-

2018 [Adani Power Ltd. v. Uttar Haryana Bijli Vitran Nigam Ltd., 2018 SCC

OnLine CERC 8] to 2021; nor is there any logic to such a segregation of

timelines, particularly when Respondent 1 Adani Power was prompt in raising

a claim on the appellants and pursuing its legal remedies.

23. We are not persuaded by the submission made on behalf of the

appellants that since no fault is attributable to them for the delay caused

in determination of the amount, they cannot be saddled with the liability

to pay interest on carrying cost; nor is there any substance in the argument

sought to be advanced that there is no provision in the PPAs for payment

of compound interest from the date when the change in law event had

occurred.

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24. The entire concept of restitutionary principles engrained in Article 13

of the PPAs has to 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. Therefore, reliance on

Article 11.3.4 read with Article 11.8.3 on the part of the appellants cannot take

their case further. Nor does the decision in Priya Vart case [Priya Vart v. Union

of India, (1995) 5 SCC 437] have any application to the facts of the present

case as the said case relates to payment of compensation under the Land

Acquisition Act and the interest that would be payable in case of delayed

payment of compensation.”

(emphasis supplied)

Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power Ltd. (2019) 5

SCC 325

“9. It will be seen that Article 13.4.1 makes it clear that adjustment in

monthly tariff payment on account of change in law shall be effected from

the date of the change in law [see sub-clause (i) of clause 4.1], in case the

change in law happens to be by way of adoption, promulgation,

amendment, re-enactment or repeal of the law or change in law. As opposed

to this, if the change in law is on account of a change in interpretation of

law by a judgment of a Court or Tribunal or governmental

instrumentality, the case would fall under sub-clause (ii) of clause 4.1, in

which case, the monthly tariff payment shall be effected from the date of

the said order/judgment of the competent authority/Tribunal or the

governmental instrumentality. What is important to notice is that Article

13.4.1 is subject to Article 13.2 of the PPAs.

10. Article 13.2 is an in-built restitutionary principle which compensates

the party affected by such change in law and which must restore, through

monthly tariff payments, the affected party to the same economic position

as if such change in law has not occurred. This would mean that by this

clause a fiction is created, and the party has to be put in the same economic

position as if such change in law has not occurred i.e. the party must be

given the benefit of restitution as understood in civil law. Article 13.2,

however, goes on to divide such restitution into two separate periods. The first

period is the “construction period” in which increase/decrease of capital cost

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of the project in the tariff is to be governed by a certain formula. However, the

seller has to provide to the procurer documentary proof of such

increase/decrease in capital cost for establishing the impact of such change in

law and in the case of dispute as to the same, a dispute resolution mechanism

as per Article 17 of the PPA is to be resorted to. It is also made clear that

compensation is only payable to either party only with effect from the date on

which the total increase/decrease exceeds the amount stated therein.

11. So far as the “operation period” is concerned, compensation for any

increase/decrease in revenues or costs to the seller is to be determined and

effected from such date as is decided by the appropriate Commission. Here

again, this compensation is only payable for increase/decrease in revenue or

cost to the seller if it is in excess of an amount equivalent to 1% of the Letter

of Credit in aggregate for a contract year. What is clear, therefore, from a

reading of Article 13.2, is that restitutionary principles apply in case a

certain threshold limit is crossed in both sub-clauses (a) and (b). There is

no dispute that the present case is covered by sub-clause (b) and that the

aforesaid threshold has been crossed. The mechanism for claiming a

change in law is then set out by Article 13.3 of the PPA.

***

13. A reading of Article 13 as a whole, therefore, leads to the position that

subject to restitutionary principles contained in Article 13.2, the adjustment in

monthly tariff payment, in the facts of the present case, has to be from the date

of the withdrawal of exemption which was done by administrative orders dated

6-4-2015 and 16-2-2016. The present case, therefore, falls within Article

13.4.1(i). This being the case, it is clear that the adjustment in monthly

tariff payment has to be effected from the date on which the exemptions

given were withdrawn. This being the case, monthly invoices to be raised by

the seller after such change in tariff are to appropriately reflect the changed

tariff. On the facts of the present case, it is clear that the respondents were

entitled to adjustment in their monthly tariff payment from the date on which

the exemption notifications became effective. This being the case, the

restitutionary principle contained in Article 13.2 would kick in for the simple

reason that it is only after the order dated 4-5-2017 [Adani Power Ltd. v. Uttar

Haryana Bijli Vitran Nigam Ltd., 2017 SCC OnLine CERC 66] that CERC

held that the respondents were entitled to claim added costs on account of

change in law w.e.f. 1-4-2015. This being the case, it would be fallacious to say

that the respondents would be claiming this restitutionary amount on some

general principle of equity outside the PPA. Since it is clear that this amount of

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carrying cost is only relatable to Article 13 of the PPA, we find no reason to

interfere with the judgment of the Appellate Tribunal.”

(emphasis supplied)

19. Notwithstanding the aforesaid clear pronouncements of this Court, we

would like to throw a little more light on what constitutes a ‘change in law’

event, in view of the persuasive submissions made by Mr. Shyam Divan,

the learned Senior Counsel appearing for the appellants.

20. While Article 10 of the PPA, with specific reference to Article 10.2, deals

with application and principles for computing impact of change in law,

Article 10.5, being a facet of Article 10.2 of the PPA, concerns itself with

tariff adjustment payment on account of change in law. Article 10.2 and

Article 10.5 of the PPA are extracted as below:

“10.2 Application and Principles for computing impact of Change in Law

10.2.1 While determining the consequence of Change in Law under this Article

10, the Parties shall have due regard to the principle that the purpose of

compensating the Party affected by such Change in Law is to restore through

monthly Tariff Payment, to the extent contemplated in this Article 10, the

affected Party to the same economic position as if such Change in Law has not

occurred.

***

10.5 Tariff Adjustment Payment on account of Change in Law

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l0.5.1 Subject to Article 10.2, the adjustment in monthly Tariff Payment shall

be effective from:

(i) the date of adoption, promulgation, amendment, re-enactment or repeal of

the Law or Change in Law; or

(ii) the date of order/ judgment of the Competent Court or tribunal or Indian

Governmental Instrumentality, if the Change in Law is on account of a change

in interpretation of Law.

10.5.2 The payment for Change in Law shall be through Supplementary Bill as

mentioned in Article 8.8. However, in case of any change in Tariff by reason

of Change in Law, as determined in accordance with this Agreement, the

Monthly Invoice to be raised the Seller after such change in Tariff shall

appropriately reflect the changed Tariff.”

21. As held by this Court in the decisions referred to supra, Article 10.2.1 in

the instant PPA was incorporated based on the principle of restitution. The

idea of this principle is to compensate the affected party in order to restore

it to the same economic position, but for the change in law. This particular

provision is a substantive one, which in a normal circumstance, has to be

given effect to in letter and spirit.

22. Article 10.5 of the PPA deals with tariff adjustment payment occasioned

on account of change in law. Under Article 10.5.1 (i) of the PPA, the

adjustment would start from the date of change in law. Therefore, as a

matter of course, the adjustment in monthly tariff payment shall become

effective from the date notified in the change in law.

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23. Article 10.5.1 (ii) of the PPA might emerge in a factual scenario where

there is an adjudication by way of an order/judgment of a competent Court

or Tribunal or an Indian Governmental Instrumentality, as the case may be.

Rendering of an order/judgement would require an interpretation of law.

When there is a change in the interpretation of law in rendering the

order/judgement, the date of such an order/judgment would constitute a

‘change in law’ under Article 10.5.1 (ii) of the PPA.

24. 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.

25. To make this position clear, Article 10.5.1 (ii) of the PPA is not applicable

to the facts of the instant case since there is no change in law which has

occasioned by way of an interpretation given by a Court or a Tribunal or

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an Indian Governmental Instrumentality. Recognising a change in law is

different from interpreting a notification as the one applicable to the

parties. We are only clarifying the position that there is no change in the

interpretation of law involved in the case at hand, particularly when the

said issue was not before the APTEL, for which the author of the change

in law should have been made a party to the proceedings, in order to defend

it. The Notification, dated 19.12.2017, and its application are not in

dispute. What is in dispute is whether it constitutes a change in law or not.

So long as there is no interpretation on the Notification with respect to its

applicability to the parties before us, Clause (ii) of Article 10.5.1 of the

PPA will have no application.

26. Article 10.5.2 of the PPA kicks in thereafter. Hence, a supplementary bill

has to be raised only after due adjudication by the competent forum. Our

view is fortified on a proper reading of Article 8 of the PPA.

“ARTICLE 8: BILLING AND PAYMENT

***

8.3 Payment of Monthly Bills

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8.3.1 The Procurers shall pay the amount payable under the Monthly Bill on

the Due Date to such account of the Seller, as shall have been previously

notified by the Seller in accordance with Article 8.3.4 below.

8.3.2 All payments made by the Procurer(s) shall be appropriated by the Seller

in the following order of priority:

i) towards Late Payment Surcharge, if any;

ii) towards the earlier unpaid Monthly Bill(s), if any; and

iii) towards the then current Monthly Bill.

***

8.3.5 In the event of delay in payment of a Monthly Bill by the Procurers

beyond its Due Date, a Late Payment Surcharge shall be payable by such

Procurers to the Seller at the rate of two percent (2%) in excess of the 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.

The Late Payment Surcharge shall be claimed by the Seller through the

Supplementary Bill.

***

8.6 Disputed Bill

8.6.1 If a Party does not dispute a Monthly Bill, Provisional Bill or a

Supplementary Bill raised by the other Party by the Due Date, such Bill shall

be taken as conclusive.

8.6.2 If a Party disputes the amount payable under a Monthly Bill, Provisional

Bill or a Supplementary Bill, as the case may be, that Party shall, within thirty

(30) days of receiving such Bill, issue a notice (the “Bill Dispute Notice”) to

the invoicing Party setting out:

i) the details of the disputed amount;

ii) its estimate of what the correct amount should be; and

iii) all written material in support of its claim.

***

8.8 Payment of Supplementary Bill

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8.8.l Either Party may raise a bill on the other Party ("Supplementary Bill”) for

payment on account of:

i) Adjustments required by the Regional Energy Account (if applicable);

ii) Tariff Payment for change in parameters, pursuant to provisions in Schedule

4; or

iii) Change in Law as provided in Article 10,

and such Supplementary Bill shall be paid by the other Party.

***

8.8.3 In the event of delay in payment of a Supplementary Bill by either Party

beyond its Due Date, a Late Payment Surcharge shall be payable at the same

terms applicable to the Monthly Bill in· Article 8.3.5.”

It is not in dispute that a supplementary bill is not a monthly bill. Article 8

of the PPA deals with billing and payment alone. Under Article 8.8, the

other party is duty-bound to make the payment when a supplementary bill

is raised due to a change in law event having occurred, as provided under

Article 10 of the PPA. This can happen only after due adjudication by the

competent forum, has taken place. For more clarity, one has to read Article

10.5.2 along with Article 8.8 of the PPA. It is only thereafter that Article

8.6 of the PPA might come into the picture when there exists a dispute on

the quantum of amount claimed in the supplementary bill raised after the

completion of due adjudication by the competent forum, on the issue

pertaining to the change in law.

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27. The incidental issue raised with respect to carrying cost at the rate of LPS

has also been dealt with in the decisions referred to in GMR Warora

Energy Ltd. (supra), UHBVNL 2019 (supra) and UHBVNL 2023

(supra) and, therefore, any fresh consideration would only be an academic

exercise. We also find that the decision relied upon by the learned Senior

Counsel appearing on behalf of the appellants, have no application to the

facts of the case.

28. For the aforesaid reasons, we find absolutely no reason to interfere with

the impugned judgment. Liability has been fastened upon the appellants

under the agreement. The contention that the supplementary bill ought to

have been raised earlier and, therefore, the payment can only be made

thereafter has neither a factual basis nor a legal one. We would only point

out the fact that respondent No.1 did notify the change in law event

immediately on the very next day of the notification having been issued.

In any case, we have been informed that in pursuance of the order of

remand made by the APTEL, further orders have been passed by the RERC

on 19.06.2024, which has not been challenged before this Court.

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29. In view of the aforesaid analysis, we find no merit in this appeal. The

appeal stands dismissed, accordingly.

30. Pending application(s), if any, shall stand disposed of.

...………………………. J.

(M. M. SUNDRESH)

…………………………. J.

(RAJESH BINDAL)

NEW DELHI;

MAY 23, 2025