Maharashtra State Electricity Distribution Company Limited vs Adani Power Maharashtra Limited and Others

1.4 In the case of MSEDCL v. APML and Others, this Court has upheld the view taken by CERC as well as APTEL, holding that the actual GCV of coal ‘as received’ at the plant site has to be taken into consideration. As such, no interference would be warranted with regard to the said issue also. [Para 38][662-F-G]

1.5 The only issue that is required to be considered is as to whether deallocation of Lohara Coal Blocks would amount to ‘Change in Law’ and as to whether APML would be entitled to restitution on account of the same. The same is concurrently held in favour of APML by both the MERC and the APTEL, thereby declaring the event of deallocation of Lohara Coal Blocks as ‘Change in Law’. Unless the said issue is found to be perverse or in ignorance of the mandatory statutory provisions or is based on extraneous considerations, it will not be permissible for this Court to interfere with the same. A perusal of the definition of ‘Law’ as found in Article 1.1 of the PPA would reveal that any order or notification, rule or regulation by an Indian Governmental Instrumentality would constitute ‘Law’. It cannot be disputed that Government of Maharashtra, Government of India and various statutory authorities would fall under the term ‘Governmental Instrumentalities’. In the present case, the cutoff date under the PPA was 14th August 2008. It is to be noted that the power to notify a Tiger Reserve as a Buffer Zone is vested with the State Government under Section 38V of the Wildlife (Protection) Act. For consideration and creation of Buffer Zone, three statutory requirements have to be complied with. From the material placed on record, it is clear that prior to 14th August 2008, the area where Lohara Coal Block is situated was not even proposed to be notified as a Buffer Zone. It is only seven days after the cut-off date, i.e., 21st February 2008, that the Chief Conservator, Forests gave approval for constitution of an Expert Committee for creating the Buffer Zone surrounding the core area. Thereafter, on 7th March 2008, the Conservator, TATR submitted the proposed demarcation to the Chief Conservator of Forest for creating the Buffer Zone surrounding the core area of TATR. The consultation of the Gram Sabha happened only between May 2008 and November 2008, i.e., much after the cut-off date. Subsequently, on 8th October 2008, the Conservator, TATR submitted the revised proposal for Buffer Zone to TATR. After numerous other deliberations, including the one with National Tiger Conservation Authority (NTCA), the Government of Maharashtra issued a notification on 5th May 2010 notifying 1101.7711 sq. km. as the Buffer Zone of TATR. As such, the notification dated 5th May 2010, which included the area where Lohara Coal Blocks were situated, will have to be construed to be a ‘Change in Law’. It is only because of issuance of the said notification, the coal block, which would have otherwise been available to APML, was not available to it. [Paras 40, 42-45][663-A-B; C-H; 664-A-F]

1.6 MoC had allocated Lohara Coal Blocks vide allocation letter dated 6th November 2007 and MoEF granted the ToR for Lohara Coal Blocks on 16th May 2008 pursuant to EAC’s recommendation in the meeting dated 28th April 2008. A perusal of the said letter of MoC dated 6th November 2007 would clearly reveal that allocation of Lohara West and Lohara Extension Coal Block to APML has been specifically made to meet the coal requirements of their 1000 MW power plant in District Gondia, Maharashtra. It is, thus, clear that the bid submitted by the appellant on the cut-off date was on the basis of the assurance that the coal would be available to it from Lohara Coal Blocks. Had the notification dated 5th May 2010 not been issued, APML could have utilized the coal from Lohara Coal Blocks which was ADANI POWER MAHARASHTRA LTD.

allotted to it by MoC. Apart from that, it is to be noted that MSEDCL was a part of the Expert Committee which was constituted by MERC vide its order dated 21st August 2013. Having participated in the proceedings of the meeting of the Expert Committee, MSEDCL cannot be permitted to take a stand contrary to the decision of the said Expert Committee. Deallocation of Lohara Coal Blocks was not on account of any fault of APML and this is recognized by CIL itself, inasmuch as it has returned the Bank Guarantee which was furnished by APML. No interference would be warranted with the concurrent findings of MERC and APTEL that deallocation of Lohara Coal Blocks would amount to ‘Change in Law’ event as defined under the PPA. [Paras 46-48][664-F-H; 665-A-C]

1.7 Insofar as methodology is concerned, APTEL has referred to the report of the Expert Committee appointed by MERC, which recommended determination of the price of coal from Lohara Coal Blocks using “transfer pricing method” which is one of the commonly used methods. It has accepted the report of the Expert Committee which provided a reasonable methodology to arrive at the cost of mining from Lohara Coal Blocks. the finding of APTEL is based on the report of the Expert Committee, which was ignored by MERC. The Expert Committee had found that APML had entered into a PPA based on the assurance of an instrumentality of the Government of India that coal would be provided to it from the Lohara Coal Blocks. However, on account of the reasons that have been elaborately discussed, Lohara Coal Blocks, which was allocated to APML, came to be deallocated for no fault on the part of APML. It is to be noted that the Expert Committee, while arriving at its finding, had also appointed external industry experts, i.e. legal consultant, financial experts and independent auditors. It is worthwhile to mention that one of the Members of the said Expert Committee was a representative of MSEDCL. What has been granted under the said methodology is the additional cost of transport which APML would be required to incur for transporting the coal from other locations on account of deallocation of Lohara Coal Blocks. We, therefore, find no reason to interfere with the said finding with regard to methodology of arriving at the compensation payable on account of ‘Change in Law’ event. [Paras 49 and 50][665-D-F; 668-F-H; 669-A;]

Manohar Lal Sharma v. The Principal Secretary and Others (2014) 9 SCC 516 : [2014] 8 SCR 446; Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017) 14 SCC 80 : [2017] 3 SCR 153 Tata Power Company Limited Transmission v.

Maharashtra Electricity Regulatory Commission 2022 SCC OnLine SC 1615; Maharashtra State Electricity Distribution Company Limited v. GMR Warora Energy Ltd. and Others in Civil Appeal No. 6927 of 2021 – referred to.