The Supreme Court has dismissed an appeal filed by Rajasthan’s power distribution companies against a ruling of the Appellate Tribunal for Electricity (APTEL) in favour of Adani Power Rajasthan Ltd, asking them to pay Adani Power around ₹186 crore in compensation.
A bench of justices M M Sundresh and Rajesh Bindal said on May 23, that it found no merit in the appeals filed by Jaipur Vidyut Vitran Nigam Ltd (JVVNL) and other state discoms. The court upheld APTEL’s April 2024 decision that recognised a levy introduced by Coal India Ltd (CIL) as a “change in law” event under the Power Purchase Agreement (PPA) between Adani Power and the discoms.
In December 2017, CIL had issued a notification introducing an Evacuation Facility Charge to cover the expenses related to transporting coal from the mine to the destination. Adani Power, which had entered a PPA to supply 1,200 MW of power to Rajasthan discoms, argued that such charge amounted to a sudden change in law and increased its cost of generating electricity. Since the provisions of the PPA protected it from financial losses due to new or modified laws, rules, or charges imposed by the government, Adani Power claimed it was entitled to receive compensation.
After the Rajasthan Electricity Regulatory Commission partially allowed Adani Power’s claim, the company as well as the State discoms appealed to APTEL. The Tribunal held that the new charge levied by CIL was a statutory levy imposed by a government entity and thereby qualifying as a change-in-law event and thus, Adani Power should be paid the compensation by the discoms.
{{/usCountry}}After the Rajasthan Electricity Regulatory Commission partially allowed Adani Power’s claim, the company as well as the State discoms appealed to APTEL. The Tribunal held that the new charge levied by CIL was a statutory levy imposed by a government entity and thereby qualifying as a change-in-law event and thus, Adani Power should be paid the compensation by the discoms.
{{/usCountry}}In its judgement on Friday, the Supreme Court, too, agreed with the Tribunal’s ruling and hence, upheld its order directing JVVNL and other discoms to compensate Adani Power. The court noted that the introduction of the EFC disrupted the economic basis of the PPA and activated the principle of restitution.
“The new statutory levy by a government body like CIL qualifies as a change in law, thereby entitling APRL to be restored to the same economic position as if the change had not occurred,” the court said while dismissing the appeals filed by the discoms.
The apex court also upheld the tribunal’s direction that compensation to Adani Power should be paid from the date of the CIL notification, along with carrying costs at Late Payment Surcharge rates specified in the PPA.
The discoms thus, will now have to pay ₹186 crore to Adani Power in dues, the top court said.