SC Rejects Rajasthan Discoms Plea, Upholds APTEL Verdict In Adani Power Case

The Supreme Court dismissed the Rajasthan discoms’ appeal against APTEL's ruling favouring Adani Power, stating the appeal lacked merit and upholding the tribunal’s earlier decision.

New Delhi: The Supreme Court on Friday dismissed an appeal filed by Rajasthan’s power distribution companies against a judgment of the Appellate Tribunal for Electricity (APTEL), which had ruled in favour of Adani Power Rajasthan Ltd (APRL), saying there is no merit in the appeal.

A bench comprising Justices M M Sundresh and Rajesh Bindal held that there was no merit in the plea of Jaipur Vidyut Vitran Nigam Ltd (JVVNL) and Rajasthan discoms. “We find no merit in this appeal. The appeal stands dismissed, accordingly”, said the apex court.

The apex court upheld the APTEL’s finding that a levy introduced by Coal India Limited constituted a “change in law” entitling Adani to compensation under its Power Purchase Agreement (PPA).

“We find no reason to interfere with the impugned judgment. Liability has been fastened upon the appellants (JVVNL and Rajasthan discoms) under the agreement. The contention that the supplementary bill ought to have been raised earlier and, therefore, the payment can only be made thereafter has neither a factual basis nor a legal one”, said the bench.

“We would only point out the fact that respondent No.1 did notify the change in law event immediately on the very next day of the notification having been issued. In any case, we have been informed that in pursuance of the order of remand made by the APTEL, further orders have been passed by the RERC on 19.06.2024, which has not been challenged before this court”, said the apex court.

The case revolved around a December 2017 notification issued by Coal India Limited (CIL), imposing a charge of Rs 50 per tonne as evacuation facility charges (EFC). Adani Power had signed a PPA with the Rajasthan Discoms in 2010 for the supply of 1200 MW of power. The company claimed that this levy constituted a “change in law” under Article 10 of the PPA.

Adani Power notified the discoms of the change in law event, seeking compensation, and when they failed to respond, the company moved before the Rajasthan Electricity Commission (RERC), which partially allowed its claims. Both parties moved before APTEL, which ruled in favour of Adani Power in April 2024.

The apex court said Article 8 of the PPA deals with billing and payment alone. Under Article 8.8, the other party is duty-bound to make the payment when a supplementary bill is raised due to a change in law event having occurred, as provided under Article 10 of the PPA. “This can happen only after due adjudication by the competent forum has taken place. For more clarity, one has to read Article 10.5.2 along with Article 8.8 of the PPA. It is only thereafter that Article 8.6 of the PPA might come into the picture when there exists a dispute on the quantum of amount claimed in the supplementary bill raised after the completion of due adjudication by the competent forum, on the issue pertaining to the change in law”, it said.