Uttar Haryana Bijli Vitran Nigam Ltd. [uhbvnl] & Anr. vs Adani Power Ltd. & Ors.

(c) does not occur in the PPA in C.A. No.5865 of 2018 – Present case is governed by sub-clause (i) of Art.13.4.1, it is obvious that sub-clauses (b) and (c) have no application to the facts of the present case –A reading of Art.13 as a whole, therefore, leads to the position that subject to restitutionary principles contained in Art.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 dtd. 06.04.2015 and 16.02.2016 – Present case, therefore, falls within Art.13.4.1(i) – Respondents entitled to adjustment in their monthly tariff payment from the date on which the exemption notifications became effective – No reason to interfere with the judgment of the Appellate Tribunal – Electricity Act, 2003 – s.2(18) – Special Economic Zones Act, 2005 – s.26 – Customs Act, 1962 – Customs Tariff Act, 1975 – Central Excise Act, 1944.

Dismissing the appeals, the Court

HELD: 1.1 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 [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. Article 13.4.1 is subject to Article 13.2 of the PPAs. 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 is 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 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. 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. From a reading of Article

13.2 it is clear 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. [Paras 6, 7 and 8][498-C-H; 499-A-C]

1.2 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 06.04.2015 and 16.02.2016. 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 04.05.2017 that the CERC held that the respondents were entitled to claim added costs on account of change in law w.e.f. 01.04.2015. 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 carrying cost is only relatable to Article 13 of the PPA, no reason to interfere with the judgment of the Appellate Tribunal. [Para 10][500-A-E]

National Thermal Power Corporation Ltd. v. Madhya Pradesh State Electricity Board, (2011) 15 SCC 580 : [2011] 11 SCR 651; South Eastern Coalfields Ltd. v. State of Madhya Pradesh and Ors. (2003) 8 SCC 648 : [2003] 4 Suppl. SCR 651; Indian Council for EnviroLegal Action v. Union of India and Ors. (2011) 8 SCC

161 : [2011] 9 SCR 146; All India Power Engineer Federation and Ors. v. Sasan Power Ltd. and Ors. (2017) 1 SCC 487 : [2016] 9 SCR 901 – held

inapplicable.

Energy Watchdog v. Central Electricity Regulatory Commission and Ors. [2017] 3 SCR 153– referred to.