Jaipur Vidyut Vitaran Nigam Ltd. & Ors. vs Adani Power Rajasthan Limited & Anr.

HELD:1.1. Considering the documents on record, it is apparent that APRL’s bid was premised only on domestic coal. It was evaluated as such, and the Power Purchase Agreement (PPA) also records the same. The parties agreed ad idem that bid was evaluated based on domestic coal, and escalations were also based on domestic coal. Accordingly, the PPA was entered into, and primary fuel in the PPA was mentioned to be domestic coal from captive coal block/coal linkage and imported coal as a fallback support arrangement. It was binding on both the parties. Under Article 1.1 of the PPA, the primary fuel was mentioned as domestic coal, as such the submission that the bid and the PPA were based on imported coal, cannot be accepted. [Paras 39, 40][329-C-D, F-G; 330-A-B]

1.2. The PPA is final and binding on parties, and approval of tariff by the Rajasthan Electricity Regulatory Commission (RERC) was based on domestic coal. Rajasthan Discoms (including the appellant) agreed to use domestic coal on account of likely advantage of lower escalation in tariff on a bid based on domestic coal than that of imported coal. The decision of the Bid Evaluation Committee was found to be in their best interest. Thus, APRL bid was not based on imported coal, that would not have been in favour of Rajasthan Discoms and would have resulted in more escalations in the tariff. Thus, APRL could not be denied the benefit of the very foundational basis on which the RERC approved its bid. APRL could not be made to suffer from both the ends. Various documents and the PPA make it clear that its bid was premised on domestic coal and approved tariff was based on domestic coal, the order of RERC is final, conclusive, and binding on the parties; it has not been questioned and attained finality. No stand contrary to the same was permissible to be taken by the Rajasthan Discoms. [Para 41][330B-E]

1.3. It is further apparent from reply dated 31.7.2013 filed by the Rajasthan Discoms before the RERC in which it was clearly admitted that non-availability of domestic coal from the Central Government would put the case of APRL within the scope of change in law. Rajasthan Discoms before the RERC admitted that the bid was based on domestic coal, non-availability of which entitles APRL to claim compensation under the change in law as provided in Article 10 of the PPA. [Para 42][330-F]

1.4. It is apparent that the concurrent findings recorded by the RERC, as well as the Appellate Tribunal for Electricity (APTEL) do not suffer from any infirmity or perversity, and they are binding. As the scope of appeal under Section 125 of the Electricity Act is akin to Section 100 of the CPC and the concurrent findings based upon the facts cannot be disturbed in the appeal. [Para 45][331-B-C]

Energy Watchdog v. Central Electricity Regulatory Commission and Ors. (2017) 14 SCC 80 : [2017] 3 SCR 153 ; DSR Steel (Private) Ltd. v. State of Rajasthan and Ors. (2012) 6 SCC 782 : [2012] 5 SCR 583 ; Tamil Nadu Generation and Distribution Corporation Limited v. PPN Power Generating Company Private Limited (2014) 11 SCC 53 : [2014] 4 SCR 667 and Wardha Power Company Limited v. Maharashtra State Electricity Distribution Company Limited and Anr. (2016) 16 SCC 541– relied on.

1.5. Also, once having admitted before the RERC at the time of approval of tariff and evaluated the tariff of domestic coal and making admissions again on 31.7.2013 and 4.8.2017, it is not open to reprobate as parties are not permitted to approbate and reprobate at different stages. The Fuel Supply Agreement (FSA) for imported coal was a standby arrangement, but the entire bid, tariff, and the agreement were based on domestic coal. Thus, the consequences of non-availability due to change in law could not be escaped. [Paras 46, 47][331-D-E; 331-G-H] Suzuki Parasrampuria Suitings Private Limited v. Official Liquidator of Mahendra Petrochemicals Limited (in Liquidation) and Ors. (2018) 10 SCC 707 : [2018]

12 SCR 906 and R.N. Gosain v. Yashpal Dhir, (1992) 4 SCC 683 : [1992] 2 Suppl. SCR 257 – relied on.

1.6. Apart from that, it is found from the order of the APTEL, that change in law provision would be limited to a shortfall in the supply of domestic linkage coal. It was clarified in the order that APRL would be entitled to relief under the change in law provision to the extent of shortage in supply in domestic linkage coal. The findings of the APTEL are reasonable, proper, and unexceptional. [Paras 48, 49][332-B-C; 333-D]

2.1. Para 3.2 of the Statutory Guidelines of 2005 issued under Section 63 of the Electricity Act provided that in case of domestic coal, the bidder shall have made firm arrangements for fuel tie-up either by way of coal block allocation or fuel linkage. There is no doubt about it that the Government of Rajasthan entered into an MoU with APRL in 2008 to ensure supply of domestic coal and it had undertaken to facilitate the implementation of the Kawai Project for getting the coal block from the Central Government or coal from any other source for the project. Once the Government of Rajasthan entered into MoU dated 20.3.2008, containing Article 2.2, it was incumbent upon the State of Rajasthan to provide coal from any other source for the project, in case the Central Government could not allot coal linkage/coal block. The Central Government had even written to the Government of Rajasthan to provide coal to APRL from the coal mine, but due to paucity, it could not be supplied to APRL. Thus, there was a failure on the part of the Government of Rajasthan to provide coal from any other source. [Para 50][333D-H]

2.2 It is apparent that 100 percent of the quantity as per the consumers’ normative requirement was to be made by CIL, obviously on the approval of the application by the Standing Linkage Committee. It was kept pending due to a shortage of coal supplies and was ultimately processed under the SHAKTI Policy, and linkage for 100 percent was given from January 2018. Thus, earlier as the quantity of coal was not available, sufficient supply could not be made. It is not a case where APRL was adjudged ineligible, but prior commitments and the nonavailability of coal came in the way of failure to obtain domestic coal linkage under the NCDP of 2007, which itself was changed with effect from 26.7.2013. [Para 51][334-G-H; 335-A]

3.1. APRL’s claim is based on the date of change of law in 2013. Admittedly, earlier NCDP of 2007 prevailed on the appointed date, i.e., 7 days before submission of the bid. The PPA was based upon the domestic coal, and its availability was based upon NCDP of 2007. In NCDP dated 26.7.2013, the NCDP of 2007 was modified to the effect that power projects would only get a certain percentage of what was earlier allowable. [Paras 52, 53][335-B; 335-E-F]

3.2. It is apparent from the decision dated 31.5.2013 of the Standing Linkage Committee (Long-Term) that the application of APRL was kept in abeyance. It applied for coal linkage on 2.7.2009 on the basis of NCDP of 2007. The bid cut-off date was 30.7.2009, 7 days prior to the bid deadline, the NCDP of 2007 was applicable. A decision was taken by the Standing Linkage Committee on 14.2.2012 read with the decision dated 31.5.2013 indicating a shortage in domestic coal and dependence on imported coal. For the shortage of coal, APRL could not have been made to suffer, on that it had no control. It was decided not to issue fresh LoAs, and all pending applications were kept in abeyance. The Cabinet Committee on Economic Affairs decided on 21.6.2013 to reduce coal supply to 65 percent and 75 percent of ACQ for the remaining four years of the 12th Five Year Plan. It allowed passing through of higher cost of imported coal. The Ministry of Coal was directed to suitably amend the NCDP. The Ministry of Coal on 26.7.2013 amended the NCDP of 2007, and the Ministry of Power issued a letter on 31.7.2013, which provided for pass-through of additional cost incurred to meet the coal requirements. The Cabinet Committee on Economic Affairs in its decision dated 21.6.2013, recognised coal supply, subject to availability, to 4660 MW having no fuel linkage. The Kawai Project was included in the same. The Policy was revised, thus assurance given by the Government of India under the NCDP of 2007 was taken away. The provision of 100 per cent supply was taken away. [Para 54][335-F-H; 336-A-C]

3.3. The submission raised on behalf of appellant that there is no question seeking benefit due to change in foreign law is based on wrong factual premise. The relief was not claimed on the basis of change in foreign law. The PPA was based on the domestic law and there was a change in domestic law. Thus, consequences must follow. [Para 56][341-D-E]

3.4. The purpose of change in law is to restore through monthly tariff payment to the extent contemplated that the affected party is placed in the same economic position as if such a change in law has not occurred. As monthly tariff was worked out on domestic law, the requirement is to compensate on that basis due to change in law. The same is based on the principle of restitution. When there was a change in policy with respect to obtaining coal itself, which was agreed to in the PPA, the change in law would be applicable. [Paras 58, 59][341-G-H; 342-A, G]

4.1. The PPA under Article 1.1 and Schedule V provide for domestic coal as primary fuel and imported coal as a fallback arrangement. Whereas change in law was provided in Article 10. Article 10 of the PPA is clearly attracted that the change in law was in contemplation. Article 10 cannot be made redundant; the agreement is binding and must prevail. [Paras 62, 63][346-F-H; 347-B-C]

4.2. The RERC and APTEL have given concurrent findings in favour of the respondent with regard to change in law, with which this Court also concurs. [Para 66][347-E-F]

5. The plea of change in law was initially raised by APRL in the year 2013. A case was also filed by APRL in the year 2013 itself raising its claim on such basis. However, the appellantsRajasthan Discoms did not allow the claim regarding change in law, because of which APRL was deprived of raising the bills with effect from the date of change in law in the year 2013. Liability of the Late Payment Surcharge which has been saddled upon the appellants is at the rate of 2% in excess of 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. Considering the totality of the facts of this case and in order to do complete justice and to reduce the liability of the appellants-Rajasthan Discoms, payment of 2 per cent in excess of the applicable SBAR per annum with monthly rest would be on higher side. It would be appropriate to direct the appellantsRajasthan Discoms to pay interest/late payment surcharge as per applicable SBAR for the relevant years, which should not exceed

9 per cent per annum. It is also provided that instead of monthly rest, the interest would be compounded per annum. It is accordingly directed that the rate of interest/late payment surcharge would be at SBAR, not exceeding 9 per cent per annum, to be compounded annually, and the 2 per cent above the SBAR (as provided in Article 8.3.5 of PPA) would not be charged in the present case. [Paras 66, 67 and 68][349-A-E]

6. A submission was raised with respect to over-invoicing. It was submitted that 40 importers of coal are under investigation by the DRI concerning alleged over-invoicing. However, it was also conceded that there is no ultimate conclusion in the investigation reached so far. Until and unless there is a finding recorded by the competent court as to invoicing, the submission cannot be accepted. At this stage, it cannot be said that there is over-invoicing. [Para 69][349-E-G]