Case Note & Summary
The case involves a dispute between Jaipur Vidyut Vitran Nigam Limited (JVVNL), an electricity distribution licensee in Rajasthan, and Adani Power Rajasthan Limited (APRL), a generating company. APRL entered into a Power Purchase Agreement (PPA) on 28.1.2010 with JVVNL and other Rajasthan discoms for supply of 1200 MW power from its Kawai project, following a tariff-based competitive bidding process under Section 63 of the Electricity Act, 2003. The tariff was quoted based on domestic coal, with imported coal as a backup. The Government of Rajasthan had assured coal linkage or allocation of captive coal blocks for the project. Despite repeated requests, coal linkage was not granted, and the captive coal blocks allocated to other entities were not available. APRL faced increased costs due to reliance on imported coal and regulatory changes in Indonesia. APRL filed a petition before the Rajasthan Electricity Regulatory Commission (State Commission) claiming compensatory tariff for change in law under Article 10 of the PPA. The State Commission allowed the claim, which was upheld by the Appellate Tribunal for Electricity (APTEL). JVVNL appealed to the Supreme Court. The Supreme Court dismissed the appeal, holding that the non-allocation of coal linkage despite the State's assurance constituted a change in law under the PPA, entitling APRL to compensatory tariff. The Court emphasized that the change in law clause covers any change in Indian law or governmental instrumentality's action or inaction that adversely affects the project. The Court also noted that the tariff was adopted by the State Commission under Section 63, and the Commission had the power to consider change in law claims. The appeal was dismissed with no order as to costs.
Headnote
A) Electricity Law - Change in Law - Compensatory Tariff - Section 63, Electricity Act, 2003 - Power Purchase Agreement - Non-allocation of coal linkage despite government assurance constitutes change in law - Held that the generating company is entitled to compensatory tariff for increased fuel cost due to change in law (Paras 1-30). B) Contract Law - Interpretation of Contracts - Change in Law Clause - Power Purchase Agreement - Article 10 - Change in law includes any change in Indian law or governmental instrumentality's action or inaction - Held that failure to allocate coal linkage despite commitment amounts to change in law (Paras 15-20). C) Electricity Law - Tariff Adoption - Competitive Bidding - Section 63, Electricity Act, 2003 - State Commission's power to adopt tariff - Held that the State Commission can adopt tariff as per competitive bidding process and can consider change in law claims (Paras 10-14).
Issue of Consideration
Whether the non-allocation of coal linkage to the generating company despite the State's assurance constitutes a change in law under the Power Purchase Agreement, entitling the generating company to an increased tariff.
Final Decision
The Supreme Court dismissed the appeals, holding that the non-allocation of coal linkage constituted a change in law under the PPA, and the generating company was entitled to compensatory tariff. No order as to costs.
Law Points
- Change in law
- compensatory tariff
- power purchase agreement
- competitive bidding
- Section 63 Electricity Act
- 2003
- coal linkage
- force majeure
- tariff revision
