Electricity Act, 2003 – Power Purchase Agreement – Art.10 – Principles for computing impact of Change in Law – Tariff Adjustment Payment on account of Change in Law – Power Purchase Agreement between the appellants-Discoms and respondent No.1-Power Generator for the supply of 1200 MW power – Issuance of Notification by Coal India imposing a levy of Evacuation Facility Charges – Next day, respondent No.1 informed appellants that the Notification constituted a ‘change in law’ event – Respondent no.1 then filed a Petition before the Electricity Regulatory Commission – Some reliefs allowed, and against refusal of some of the claims, the respondent No.1 filed an appeal – Appellate tribunal allowed the delay in filing and re-filing of the appeal – Appellate tribunal held that the Notification 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 along with carrying cost at Late Payment Surcharge rates and remanded the matter to the Commission for computation of the amounts – Challenge to: Held: 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 – Generators would be entitled to compensation on the restitutionary principle on such changes occurring after the cut-off date – Art.10.2.1 in the PPA was incorporated based on the principle of restitution, 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 – Under Art.10.5.1(i) of the PPA, the adjustment in monthly tariff payment shall become effective from the date notified in the change in law – Art. 10.5.1(ii) of the PPA emerge where there is an adjudication by way of an order/judgment of a competent Court or Tribunal or an Indian Governmental Instrumentality, 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 an Indian Governmental Instrumentality – Thus, no reason to interfere with the impugned judgment – Liability has been fastened upon the appellants under the agreement – Submission that the supplementary bill ought to have been raised earlier and, thus, the payment can only be made thereafter has neither a factual basis nor a legal one. [Paras 18, 21-25, 28]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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