2026 INSC 202 Page 1 of 19

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.2584-2585 OF 2026

West Bengal State Electricity Distribution Co. Ltd.

….Appellant(s)

Versus

Adhunik Power & Natural Resource Ltd. & Ors.

….Respondent(s)

J U D G M E N T

Joymalya Bagchi, J.

1. The appeals are directed against the judgment and order

dated 04.09.2025 whereby the Appellate Tribunal for

Electricity (‘APTEL’) modified the order dated 29.01.2020

passed by the Central Electricity Regulatory Commission,

New Delhi (‘CERC’) and directed that Respondent No.1,

Adhunik Power and Natural Resources Ltd. (‘APNRL’), was

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entitled to (i) compensation for coal purchased through e-

auction/import to meet the shortfall in tapering linkage

granted to it pending operationalization of the Ganeshpur

captive coal block, and (ii) compensation on account of

Change in Law events with effect from 25.08.2014 as per

Article 10.2 of the PPA

1/PSA

2, along with carrying costs till

actual payment was made.

2. On 05.01.2011, a PSA was executed between the Appellant,

West Bengal State Electricity Distribution Company Ltd.

(‘WBSEDCL’) and Respondent No. 3, PTC India Limited

3 (‘PTC’)

for supply of 100 MW of power for a period of 25 years.

3. As a back-to-back arrangement on 25.03.2011, a PPA was

executed between APNRL and PTC for onward sale of 100 MW

of power to WBSEDCL.

4. The West Bengal Electricity Regulatory Commission vide its

order dated 15.12.2011 approved the PPA/PSA.

1

Power Purchase Agreement.

2

Power Supply Agreement.

3

An inter-state trader of electricity.

Page 3 of 19

Relevant clauses of the PPA/PSA

5. Article 10 of the PPA/PSA defines “Change in Law” events that

entitle the affected party to compensation through monthly

tariff payments in a manner that restores such party to the

same economic position as if the Change in Law had not

occurred. For better appreciation, Article 10 of the PPA/PSA

is extracted hereinbelow:

“In this Article 10, the following terms shall have the

following meanings:

I. Change in Law means occurrence of

any of the following events:

a) the enactment, coming into effect, adoption,

promulgation, amendment, modification or

repeal (without re-enactment or consolidation)

in India, of any Law, including rules and

regulations framed pursuant to such Law;

b) a change in the interpretation or application

of any Law by any Indian Governmental

Instrumentality having the legal power to

interpret or apply such Law, or any Competent

Court of Law;

c) the imposition of a requirement for obtaining

any Consents, Clearances and Permits which

was not required earlier;

d) change in the terms and conditions

prescribed for obtaining any Consents,

Clearances and Permits or the inclusion of any

new terms or conditions for obtaining such

Consents, Clearances and Permits; except due

to any default of the Seller;

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e) any change in tax or introduction of any tax

made applicable for supply of power by the

Seller

f) any change in law relating to Mining laws

and Environment Laws or tax cess or duty

affecting input cost or raw material.

II. But Change in Law shall not include:

a) Any change in any withholding tax on

income or dividends distributed to the

shareholders of the Seller, or

b) Change in respect of UI charges or

frequency intervals by an Appropriate

Commission.

III. Such Change in Law could be but not

restricted to any of the following cases

where it,

a) Results in any change in respect of tax.

b) Affects Seller’s or PTC’s obligation under

this Agreement.

c) Materially affects the construction,

Commissioning or operation of the Project.”

6. Article 2.2 of the PPA/PSA provides that for sale of power

under the Agreement, the buyer shall pay capacity charge,

non-escalable energy charge and escalable energy charge in

accordance with Table A of Schedule A to the PPA/PSA. Article

2.2 of the PPA/PSA is reproduced hereinbelow:

“2.2 For sale of power under this Agreement PTC

shall pay the Capacity Charges, the Non -

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Escalable Energy Charges and the Escalable

Energy Charges only as per Table A of Schedule

A.

Seller shall be entitled for recovery of the

Capacity Charges for a Contract Year in

accordance with the formula of Monthly Capacity

Charges payable as per charges mentioned in

schedule A.”

7. Article 2.5 of the PPA/PSA stipulates that if the Seller

procures coal from alternative sources instead of the

designated captive source, it shall not claim any separate

escalation in Escalable Energy Charges on that score. Such

coal will be deemed to have been sourced from the captive

source itself. Article 2.5 of the PPA/PSA is reproduced

hereinbelow:

“2.5 On the ground of sourcing of coal from any

other sources by the Seller, Seller shall not ask

for any separate escalation rate for Escalable

Energy Charges and it will be considered that

such coal has been deemed to be sourced from

the captive source only for the purchasing of

Power by FTC from the Seller under this Agreement.”

(emphasis supplied)

Relevant Correspondences

8. Although the PPA/PSA did not specifically stipulate the

source of coal for electricity generation by APNRL, the Minutes

of Meeting dated 03.01.2011, convened for negotiation of rate

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and finalization of PPA for purchase of power, record that

APNRL had a captive coal block at Ganeshpur, Jharkhand,

held in joint venture with M/s. Tata Steel Ltd. (‘TISCO’).

9. Subsequent to the execution of the PPA/PSA, WBSEDCL vide

letter dated 30.04.2012 enquired about the status of work

relating to lifting of coal from Ganeshpur captive coal block

and transportation of such coal, to coal-handling plants.

These materials on record lead to the irresistible conclusion

that the source of coal for generating and supplying electricity

to WBSEDCL under the PPA/PSA was the captive coal block

in Ganeshpur at Jharkhand.

Factual trajectory leading to the dispute

10. As the captive coal block could not be operationalized, APNRL

sourced coal under tapering linkage from Central Coalfields

Ltd. (CCL) and commenced supply of power to WBSEDCL

through PTC. APNRL further contends that it met the shortfall

in tapering linkage by procuring coal through e-auction and

imports.

Page 7 of 19

11. Through various correspondences, APNRL requested PTC/

WBSEDCL to permit pass-through of the additional coal cost

incurred on account of procurement of coal from alternate

sources owing to shortfall under tapering linkage. Referring to

Article 2.5 of PPA/PSA, such prayers were turned down.

12. Meanwhile, this Court in Manohar Lal Sharma v. Principal

Secy. & Ors.

4 vide Judgment dated 25.08.2014, cancelled the

allotment of coal blocks made by the Screening Committee of

the Government of India as well as allotments made through

Government dispensation route. This included the Ganeshpur

Captive Coal Block allotted to APNRL. Thereafter, the

Government issued the Coal Mines (Special Provision)

Ordinance, 2014 followed by the Coal Mines (Special

Provision) Act, 2015. Consequently, APNRL unsuccessfully

participated in the bid for allocation of Ganeshpur Captive

Coal Block.

13. In light of such developments, APNRL requested PTC/

WBSEDCL to make payments on the basis of actual energy

purchased, as reflected in bills raised since 31.03.2014. Such

4

(2014) 9 SCC 516.

Page 8 of 19

claim was founded on the contention that cancellation of the

coal block constituted a “change in the interpretation or

application of any law by any Indian Government

Instrumentality having the legal power to interpret or apply

such law, or any competent court of law” within the meaning

of Article 10.1.1(b), and that the enactment of the Coal Mines

(Special Provision) Act, 2015, which altered the process of

allocation of coal blocks, amounted to “change in law relating

to Mining Laws and Environmental Laws or tax cess or duty

affecting input cost or raw material” under 10.1.1(f). PTC/

WBSEDCL refuted the aforesaid claim.

14. In these circumstances, APNRL approached the CERC, New

Delhi on 25.10.2017 vide Petition No.305/MP/2015 seeking

directions to WBSEDCL and PTC to permit pass-through of

energy charges based on the actual fuel cost incurred by it.

Findings of the Central Electricity Regulatory Commission

15. Upon hearing the parties, CERC, inter alia, held that Article

2.5 of the PPA/PSA was applicable to cases where the captive

source of coal was operational. It further held that APNRL was

entitled to compensation for procuring coal through e-

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auction/imports to meet the shortfall in tapering linkage

granted to it pending operationalization of the captive coal

block. However, CERC did not accept APNRL’s contention that

the cancellation of its coal block pursuant to the judgment

rendered in Manohar Lal (supra), and enactment of the Coal

Mines (Special Provision) Act, 2015 altering the manner of

allocation of coal blocks, constituted a Change in Law event

under Article 10 of the PPA/PSA. Accordingly, it directed

APNRL to approach CERC through a fresh petition outlining

details of the tapering linkage granted to it, reasons for delay

in development, operationalization of captive coal block and

the coal requirement met through e-auction/imported coal to

meet the shortfall in supply under tapering linkage.

Findings of the Appellate Tribunal for Electricity

16. Both APNRL and WBSEDCL approached APTEL vide Appeal

No.143/2020 and Appeal No.66/2022 respectively. APTEL

vide common impugned order dated 04.09.2025 , while

upholding the direction of the CERC that APNRL was entitled

to the actual cost of coal sourced through e-auction/import to

meet shortfall in tapering linkage, reversed its finding vis-à-

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vis Change in Law event and held that cancellation of coal

block and the subsequent promulgation of the Coal Mines

(Special Provision) Act, 2015 constituted Change in Law

events within the meaning of Articles 10.1.1(b) and 10.1.1(f)

of the PPA/PSA and remanded the matter to C ERC for

awarding appropriate compensation to APNRL as per Article

10.2 of PPA/PSA, along with carrying costs till actual payment

was made.

Arguments at the Bar

17. Mr. Kapil Sibal, Senior Counsel for Appellant has premised

his challenge to the impugned order primarily on the ground

that the PPA/PSA did not expressly stipulate the source of

coal i.e. Ganeshpur Captive Coal Block and that Article 2.5

indemnified WBSEDCL against any escalation of price from

the levelized tariff specified under Table A of Schedule A to the

PPA/PSA on account of procurement of coal from other

sources. It was thus contended that, in the absence of any

express stipulation regarding the captive coal block in the

PPA/PSA, neither its cancellation pursuant to this Court’s

judgment in Manohar Lal (supra) nor the promulgation of the

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Coal Mines (Special Provisions) Act, 2015 could constitute a

Change in Law event materially affecting APNRL’s obligations

under the Agreement.

18. On the contrary, Mr. C.A. Sundaram, Senior Counsel for

Respondent No.1 submitted that APTEL vide the impugned

order dated 04.09.2025 rightly granted compensation to

APNRL towards coal procured through e -auction/import to

meet the shortfall in tapering linkage granted to it pending

operationalization of the Ganeshpur Captive Coal Block. It

was further contended that compensation on account of

Change in Law event had also been correctly allowed with

effect from 25.08.2014, together with carrying costs till the

date of actual payment.

Analysis

19. The contention advanced by Mr. Sibal, namely that the PPA/

PSA did not expressly stipulate the source of coal i.e.

Ganeshpur Captive Coal Block, stands squarely rebutted by

the concurrent findings of both CERC and APTEL. Reading

Article 2.5 in conjunction with the Minutes of Meeting dated

03.01.2011 and the subsequent letter dated 30.04.2012,

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APTEL affirmed CERC’s finding that PPA/PSA was executed

in the backdrop of the minutes drawn on 03.01.2011 wherein

one of the salient features of the transaction was as follows:

“8. APRNL has a captive coal block at Ganeshpur

in Jharkhand and this coal block is a joint venture

with TISCO.”

20. APTEL also noted that immediately after the execution of the

PPA/PSA, WBSEDCL vide letter dated 30.04.2012, had

enquired about the status of work related to lifting of coal from

the coalmine and transportation of coal from the Ganeshpur

coal block allocated to APNRL. We consider it apposite to

extract herein the contents of the said letter:

“Dear Sir,

A PPA has been executed on 05.01.2011 by and

between WBSEDCL and PTC India Ltd. As per

undertaking of APNRL, it is understood that they

have already obtained allocation of Ganeshpur Coal

Block in the State of Jharkhand for captive mining of

coal block jointly with Tata Steel Limited, on equal

sharing, i.e. 50:50 basis.

In this context, I would request you to provide us the

present status of the work related to lifting of coal

from the coalmine and transportation of coal from

captive mine, allocated to APNRL, to the coal

handling plant, within 10.05.2012.”

21. When Article 2.5 of PPA/PSA is read in light of these

correspondences between the parties, there is no escape from

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the irresistible conclusion that the ‘captive coal block’ refers

to the Ganeshpur Coal Block at Jharkhand.

22. Mr. Sibal’s argument that a written contract between parties

cannot be qualified with reference to any prior or subsequent

statements/conduct is unfounded. The law in this regard is

crystal clear. Ordinarily, when a contract is reduced to

writing, its terms must be determined from the document

itself.

5 However, this rule does not put an embargo on looking

into such facts which (i) establish a link between terms of the

contract and existing facts i.e. attending circumstances,

6 or

(ii) impart meaning to a term which may otherwise be

meaningless or unworkable.

7 These principles have been

eloquently summarized in Anglo American Metallurgical

Coal Pty. Limited v. MMTC Limited

8 wherein this Court

observed:

“30. ….Section 92 of the Evidence Act refers to the

terms of a “contract, grant or other disposition of

property or any matter required by law to be reduced

to the form of a document”. In all these cases, under

Proviso (6) read with Illustration (f), any fact may be

proven which shows in what manner the language

5

S.91, The Indian Evidence Act, 1872 (S. 94, The Bharatiya Sakshya Adhiniyam, 2023).

6

See Proviso (6) and illustrations (f) & (g) to S.92, The Indian Evidence Act (S.95, The

Bharatiya Sakshya Adhiniyam, 2023).

7

S.95, The Indian Evidence Act, 1872 (S.98, The Bharatiya Sakshya Adhiniyam, 2023).

8

(2021) 3 SCC 308.

Page 14 of 19

of a document is related to existing facts. Illustration

(f) of Section 92 of the Evidence Act indicates that

facts, which may on the face of it, be ambiguous and

vague, can be made certain in the contextual setting

of the contract, grant or other disposition of property.

Section 94 of the Evidence Act then speaks of

language being used in a document being “plain in

itself”. It is only when such document “applies

accurately to existing facts”, that evidence may not

be given to show that it was not meant to apply to

such facts. Likewise, the obverse situation is

contained in Section 95 of the Evidence Act, which

then states that when the language used in a

document is plain in itself, but it is “unmeaning in

reference to existing facts”, only then may evidence

be given to show that it was used in a peculiar

sense.”

23. In the present context, we note that Article 2.5 of the PPA/PSA

refers to a ‘captive source’ for coal supply for generation &

supply of power and indemnifies WBSEDCL against any

additional cost arising from procurement of coal from

alternate sources. Though the captive source is not expressly

identified in Article 2.5, its identity is clearly discernible from

the surrounding circumstances, in particular, the Minutes of

Meeting dated 03.01.2011 recording the salient features

underlying the PPA/PSA, which specifically note that APNRL

had a captive coal block at Ganeshpur. Further, the letter

dated 30.04.2012 issued by WBSEDCL enquiring about the

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status of work relating to lifting of coal from Ganeshpur

captive coal block and its transportation to the coal handling

plant, reinforces this position. WBSEDCL was a party to these

correspondences and has never disputed their contents. In

these circumstances, it does not lie in the mouth of WBSEDCL

to contend that the PPA/PSA did not prescribe Ganeshpur

Coal Block as the captive coal source for generation and

supply of electricity.

24. With regard to compensation payable on account of additional

coal cost arising due to a Change in Law event i.e. cancellation

of Ganeshpur captive coal block vide this Court’s decision in

Manohar Lal (supra) and the subsequent promulgation of the

Coal Mines (Special Provision) Act, 2015, we are in wholesome

agreement with APTEL that in Manohar Lal (supra), this

Court interpreted the provisions of Coal Mines Nationalization

Act, 1957 (‘CMN Act’) and Mines & Minerals Development and

Regulation Act, 1957 (‘MMDR Act’) in a manner different from

the interpretation adopted by the Government of India, and

consequently cancelled the allotment of coal blocks made by

the Screening Committee as well as through the Government

dispensation route. This change in interpretation of the CMN

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Act, 1957 and the MMDR Act, 1957 by this Court resulting in

cancellation of the coal blocks and subsequent promulgation

of the Coal Mines (Special Provision) Act, 2015 falls within

Articles 10.1.1(b) and 10.1.1(f) of the PPA/PSA. There is no

cavil that such Change in Law materially affected the right of

APNRL to procure coal from the cancelled coal block ,

compelling it to source coal from other sources at a higher

price. WBSEDCL cannot claim immunity under Article 2.5 of

the PPA/PSA. We say so as Article 2.5 and Article 10 operate

in different fields. While Article 2.5 indemnifies WBSEDCL

against escalation in coal price beyond the levelized price

9

where coal is procured from sources other than the captive

source i.e. the Ganeshpur captive coal block, Article 10 is

triggered when a Change in Law event materially affects the

right of APNRL to operate the coal block and meet its

obligation under the PPA/PSA. Given this situation, APTEL

had rightly reversed the findings of CERC vis-à-vis Change in

Law event and awarded compensation with effect from

25.08.2014, along with carrying costs until the date of actual

payment.

9

Specified in Table A of Schedule A to the PPA/PSA.

Page 17 of 19

25. However, we are unable to agree with APTEL’s view that

APNRL would be entitled to compensation for procurement of

coal through e-auction/imports to meet the shortfall in

tapering linkage prior to the cancellation of the coal block on

25.08.2014. In arriving at this conclusion, APTEL appears to

have lost sight of the fact that the Minutes of Meeting dated

03.01.2011 expressly recorded, as one of the salient features,

that the Ganeshpur Captive Coal block had been allotted to

APNRL in joint venture with TISCO. It was also assured by

APNRL that the said coal block would be operational by the

time power supply to WBSEDCL commenced. In this factual

backdrop, it was incorrect for APTEL to hold that the

indemnity clause contained in Article 2.5 of the PPA/PSA

would be inapplicable as delay in operationalization of the coal

block was attributable to inaction by the lead miner TISCO

and/or owing to ‘go-no-go’ policy of the Ministry of

Environment and Forests. Such restrictive interpretation of

Article 2.5, in our considered opinion, is untenable, as it

would expose WBSEDCL to the vagaries of coal cost escalation

due to unforeseen events, save and except a Change in Law

event under Article 10 of the PPA/PSA. APTEL’s reliance on

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its earlier decision in GMR Kamalanga Energy Ltd. and Anr

v. CERC and Ors.

10 is also misconceived. The said decision is

clearly distinguishable on facts, inasmuch as the PPA therein

did not contain any clause akin to Article 2.5 indemnifying the

purchaser against cost escalation arising due to procurement

of coal from sources other than the captive source.

Conclusion

26. In light of such discussion, the appeals are partly allowed and

the impugned order dated 04.09.2025 passed by APTEL is set

aside to the limited extent that it grants compensation for

procurement of coal through e-auction/import to meet

shortfall in tapering linkage granted to it pending

operationalization of the Ganeshpur captive coal block. The

remaining portion of the order awarding compensation on

account of Change in Law events with effect from 25.08.2014

along with carrying costs till the date of actual payment, is

upheld. Though not placed on record during the course of

hearing, we have taken note of the fact that CERC has already

passed a consequential order dated 11.02.2026 for

10

2018 SCC OnLine Aptel 151.

Page 19 of 19

implementation of the impugned order. We direct CERC to

modify its order in terms of the aforesaid directions within

four weeks from the date of this order. No order as to costs.

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

…..…..……...……………………….CJI.

(SURYA KANT)

……..…..……...……………………….J.

(B.V. NAGARATHNA)

……..…..……...……………………….J.

(JOYMALYA BAGCHI)

NEW DELHI,

FEBRUARY 27, 2026