Power Purchase Agreement -claim for an increased tariff -VIDYUT VITARAN NIGAM LTD. & ORS. VS. ADANI POWER RAJASTHAN LIMITED & ANR

Power Purchase Agreement -claim for an increased tariff -VIDYUT VITARAN NIGAM LTD. & ORS. VS. ADANI POWER RAJASTHAN LIMITED & ANR

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.8625­8626 OF 2019
JAIPUR VIDYUT VITARAN NIGAM LTD. & ORS. … APPELLANTS
VS.
ADANI POWER RAJASTHAN LIMITED & ANR. … RESPONDENTS
WITH
CIVIL APPEAL NO(S). 3021 OF 2020
(DIARY NO.27976 OF 2019)
AND
CIVIL APPEAL NO(S). 3022­3023 OF 2020
(DIARY NO.39030 OF 2019)
J U D G M E N T

  1. The appellant herein Jaipur Vidyut Vitran Nigam Limited is the
    electricity Distribution Licensee in the State of Rajasthan. It entered
    into a Power Purchase Agreement (for short, ‘PPA’) on 28.1.2010 with
    Adani Power Rajasthan Limited (for short, ‘APRL’), a generating
    company in pursuance to a tariff­based competitive bid process in
    terms of Section 63 of the Electricity Act, 2003 (for short, ‘the
    Electricity Act’). The terms of PPA contained a tariff, and that could be
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    varied only as per the specific provisions contained in the PPA, not
    otherwise.
  2. APRL made a claim for an increased tariff under the change in
    law provisions in the PPA (Article 10). On 23.10.2006, Rajasthan
    Rajya Vidyut Utpadan Nigam Limited (for short, ‘RVUN’) conveyed to
    Adani Exports Limited its selection as a joint venture partner for the
    formation of a Joint Venture Company. It was stated that business
    activities of the proposed Joint Venture Company shall be limited to
    mining and supply of coal from allotted captive coal block for the
    requirement of existing/new thermal power stations of RVUN and/or
    for new projects of the State.
  3. On 2.8.2007, a Letter of Intent (for short, ‘LoI’) was issued by
    RVUN in favour of Adani Enterprise Limited (for short, ‘AEL’) for
    developing the coal block under a joint venture at Parsa East and
    Kente Basan, wherein it was provided that the coal can be utilised at
    the discretion of the Government of Rajasthan for new upcoming
    projects in the State under the joint venture or IPP.
  4. On 18.10.2007, New Coal Distribution Policy (NCDP) was
    introduced by the Ministry of Coal, assuring 100 per cent of domestic
    coal to power plants that is 85 per cent of normative capacity.
    3
  5. On 20.3.2008, an MoU was entered into between the
    Government of Rajasthan and AEL to set up a coal­based Thermal
    Power Generation Project of 1200 MW ± 10 percent capacity near
    Kawai, District Baran, Rajasthan. The estimated cost of the project
    was approximately Rs.5,000 crores. It was provided that the State of
    Rajasthan was to make the best efforts to facilitate getting the coal
    linkage from the Central Government or coal from any other source for
    the Project.
  6. On 16.5.2008, APRL requested the Government of Rajasthan to
    allocate coal from Parsa East and Kente Basan coal block.
  7. On 21.5.2008, it was conveyed to APRL that the State will make
    the best efforts to facilitate for getting coal linkage from the
    Government of India. It was informed that it would not be possible to
    supply coal from Parsa East and Kente Basan coal blocks as they
    barely meet RVUN projects’ requirements. APRL repeated the request
    on 28.5.2008, 9.6.2008, 11.6.2008, and 16.6.2008. On 29.8.2008, a
    request was made to the Government of Rajasthan to advise RVUN to
    enter into an MoU and to apply to the Ministry of Coal for allocation of
    coal blocks to the Kawai Project under the Government Dispensation
    Scheme.
    4
  8. On 25.2.2009, a Request for Proposal (for short, ‘RFP’) was
    issued by Rajasthan Rajya Vidyut Prasaran Nigam Limited (for short,
    ‘RVPN’) for procurement of power for long­term through tariff­based
    competitive bidding process under Case­1 bidding procedure for
    meeting the baseload requirement of the procurers.
  9. On 19.3.2009, a request was made by AEL to the Government of
    Rajasthan to extend the validity of the MoU for one year. On
    2.4.2009, a Standard Bidding Document for Case­1 was notified by
    the Ministry of Power. On 22.6.2009, APRL made a request in terms
    of the MoU to the Government of Rajasthan to allocate the surplus
    coal mine from the existing coal blocks and for extension of MoU,
    which was to expire on 20.3.2009. As an alternative, AEL was able to
    negotiate Indonesian coal at a discounted price of USD 36 per MT.
    The Coal Supply Agreement (for short, ‘CSA’) was signed for supplying
    standard coal for the project from Indonesia. The said agreement was
    terminated on 10.6.2010.
  10. On 2.7.2009, APRL prayed to the Ministry of Coal for granting
    long­term coal linkage of ‘F’ grade coal from South Eastern Coalfields
    Limited for the Kawai Project for 7.082 MT per annum of coal. The
    Government of Rajasthan extended the validity of the MoU up to
    20.3.2010. RVUN was advised to apply for the allocation of coal
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    blocks for meeting coal requirements for its projects and the Kawai
    Project under the Government Dispensation Scheme. It may invite
    tenders for mining and delivery of coal, as was done in Parsa East and
    Kente Basan coal blocks.
  11. According to the RFP, APRL submitted its bid on 6.8.2009. It
    offered a total contracted capacity of 1200 MW from the Kawai Project.
    The levelized tariff after negotiation was settled at Rs.3.238/KWh for
    25 years. The tariff in the bid was quoted based on domestic coal.
    The imported coal was limited, being a temporary measure, as fallback
    support option till the Government instrumentality resumed domestic
    coal supply.
  12. On 12.8.2009, AEL requested to allot Kente (Extn.) coal block for
    meeting the coal requirement of the Kawai Project inter alia the
    installed capacities of the projects. As against the earlier commitment
    of sale of 50 per cent of the power generated from the Kawai Project to
    the State of Rajasthan, AEL committed the entire power generated to
    the State provided it succeeds in the bidding process.
  13. A clarification was sought concerning the bid submitted by APRL
    to evaluate its bid as to the fuel arrangement in the bid, both domestic
    coal and imported coal were indicated. APRL was asked to clarify on
    which basis of fuel, the bid should be evaluated. APRL clarified on
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    12.9.2009, that its bid should be evaluated based on domestic coal
    tie­up. APRL undertook that the payment considering domestic coal
    escalations would be acceptable during the term of the PPA.
  14. On 3.12.2009, APRL issued a communication to RVPN. Because
    of the support offered by the Government of Rajasthan regarding the
    development of the Kawai Project, the levelized tariff was being
    reduced by 1 paisa to Rs.3.238 Kwh. On 17.12.2009, pursuant to the
    bid submitted, an LoI was issued by RVPN to APRL. On 18.12.2009,
    an unconditional acceptance was communicated to RVPN.
  15. On 28.1.2010, APRL executed the PPA with three procurers,
    namely, Jaipur Vidyut Vitran Nigam Limited, Jodhpur Vidyut Vitran
    Nigam Limited, and Ajmer Vidyut Vitran Nigam Limited, for the supply
    of aggregate contracted capacity of 1200 MW. The PPA postulates
    domestic coal usage as the primary fuel, while imported coal may be
    used as a backup arrangement.
  16. On 15.2.2010, APRL conveyed to the CMD­RRVUNL for getting
    the allocation of captive coal block for the supply of coal to the Kawai
    Power Project and conveyed confirmation to accept washed coal.
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  17. On 20.2.2010, AEL conveyed to the Government of Rajasthan
    that it would supply 91 per cent power from the Kawai Project to the
    Jaipur Vidyut Vitran Nigam Limited, Jodhpur Vidyut Vitran Nigam
    Limited, and Ajmer Vidyut Vitran Nigam Limited – Rajasthan Discoms,
    with whom the PPA was entered into on 28.1.2010. A prayer was
    made to extend the validity of MoU for a further period of one year
    w.e.f. 20.3.2010.
  18. On 25.2.2010, RVPN filed a petition before the State Commission
    on behalf of Rajasthan Discoms for approval of the Commission for the
    adoption of tariff quoted by APRL through competitive bidding. The
    State Commission passed an order on 31.5.2010 with respect to the
    adoption of a tariff for 1000 MW procurement and had made specific
    observations.
  19. On 24.3.2011, the Director General of Mineral and Coal issued a
    regulation specifying the formula for calculation of benchmark price
    with reference to the international market price of coal.
  20. APRL wrote a letter to the Ministry of Power, Government of
    India on 11.10.2011 for grant of coal linkage to it along with other 12th
    Five Year Plan Projects; however, it was delayed for more than a one
    year for various reasons, due to which conditions subsequent under
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    the PPA could not be fulfilled, and lenders of money to the Kawai
    Project had started levying penal interest due to delay in coal linkage
    allocation. A request was made for grant of coal linkage for the Kawai
    Project. It was stated that CIL was directed to execute an FSA for the
    11th Five Year Plan Projects, did not address the problems that
    continue to affect the 12th Five Year Plan Projects. In the light of the
    non­availability of domestic coal and the prohibitive cost of the
    alternate fuel, the Kawai Project became unviable for the tariff
    committed. Therefore, a request was made to grant coal linkage. The
    Ministry of Power, on 26.4.2012 in response to letter dated 17.2.2012
    of the Government of Rajasthan, informed that the Kawai Project had
    been recommended for linkage as a 12th Five Year Plan Project. In the
    meantime, the Government of Rajasthan may consider revising the
    mining plan capacity of the captive coal blocks allocated to them,
    namely Parsa East and Kante Basan upward to mitigate the demand
    of coal for power projects in Rajasthan.
  21. On 21.6.2012, APRL informed the Rajasthan Discoms about the
    uncertainties in the availability of coal supplies and the same being
    beyond their control. Despite various efforts by the Government of
    Rajasthan, neither the coal block nor the coal linkage was allocated.
    It was also informed that following the regulatory change in Indonesia,
    which mandates the export of coal only at the notified price, w.e.f.
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    11.9.2011, the cost of imported coal has risen too high to make the
    use of imported coal prohibitive. In case an early arrangement of coal
    linkage or allotment of captive coal was not made, the operation of the
    Government’s projects would be hampered. On 5.11.2012, the
    Government of Rajasthan informed that there was no surplus coal in
    Parsa East and Kente Basan coal blocks, which could be allocated to
    the Kawai Project. However, the Government of Rajasthan on
    22.11.2012, wrote a letter to the Ministry of Power and Ministry of
    Coal informing that Rajasthan Discoms have executed long­term PPA
    with APRL. It was stated that in case long­term coal linkage was not
    provided, then the State would be deprived of 1200 MW power at
    competitive rates, and Rajasthan was already facing an acute
    shortage. On 26.11.2012, another letter was written by the
    Government of Rajasthan for allocating coal linkage to 12th Five Year
    Plan Projects.
  22. As no coal linkage was granted, on 24.4.2013 AEL filed a Petition
    No.392 of 2013 before the State Commission claimed compensatory
    tariffs for the higher cost of coal. Ultimately, the Standing Linkage
    Committee (Long­Term) of the Government of India held a meeting on
    31.5.2013. On 21.6.2013, the Cabinet Committee of Economic Affairs
    approved a mechanism for signing the Fuel Supply Agreement (for
    short, ‘FSA’) for 78000 MW. AEL was not part of the same. On
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    17.7.2013, a Presidential Directive was issued by the Ministry of Coal
    to the Coal India Limited (for short, ‘CIL’) to sign the FSAs for the
    capacity mentioned above. The New Coal Distribution Policy, 2013
    (NCDP of 2013), was notified on 26.7.2013 by the Central Government
    for the revised arrangement for the supply of coal to identified thermal
    power stations of 78000 MW. AEL was not one of the thermal power
    stations included in the same.
  23. The Ministry of Power issued a letter on 31.7.2013, in which the
    change in law was considered regarding a shortfall in domestic coal in
    the quantity indicated in the Letter of Assurance (for short, ‘LoA’) or
    FSA. The Revised Tariff Policy under the Electricity Act was issued on
    28.1.2016. AEL was given the coal supply to the fullest extent in 2018
    under the SHAKTI Policy. It entered into an FSA with NCL/SECL for
    procurement of coal under the SHAKTI Policy.
  24. The State Commission ultimately decided the Petition No.392 of
    2013, filed by AEL on 17.5.2018. AEL was held entitled to relief under
    the change in law on account of NCDP of 2013. The amount of
    compensation payable to AEL was not computed. Dissatisfied with
    the order passed by the State Commission, Rajasthan Discoms filed
    an appeal before the Appellate Tribunal for Electricity (for short, ‘the
    APTEL’). The APTEL vide judgment dated 14.9.2019, held that the bid
    11
    of APRL was based on domestic coal and accordingly covered under
    the Change in Law event in terms of the PPA and of the decision of
    this Court in Energy Watchdog v. Central Electricity Regulatory
    Commission and Ors., (2017) 14 SCC 80. APRL was also held entitled
    for change in law under the Shakti Scheme as well as payment
    towards carrying cost. A further direction was issued to pay the
    amount of change in law compensation and Carrying Cost by duly
    verifying the relevant supporting documents for fuel cost and as per
    applicable Tariff Regulations for operating parameters. Aggrieved
    thereby, appeals have been preferred by Rajasthan Discoms. Another
    appeal has been filed by All India Power Engineers Federation (for
    short, ‘the Federation’).
  25. Shri C. Aryama Sundaram, learned senior counsel urged the
    following arguments:
    (a) APRL cannot claim any compensation for the use of imported
    coal for the supply of power either before January 2018 or after that
    as the use of such imported coal was as per the bid submitted by
    APRL and was covered as a part of its quoted tariff.
    (b) According to the bid documents submitted and the PPA entered
    into pursuant to it, demonstrate that APRL had duly stipulated and
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    agreed for the imported coal also as a fuel source and quoted the
    tariff­based thereon.
    (c) Without prejudice to the aforesaid, there was no change in law
    as APRL could have claimed no compensation. Even as per its best
    case, APRL could not be entitled to relief in relation to 100 percent
    coal requirement, but could only claim concerning the balance
    percentage, after considering the quantum under the FSA dated
    25.6.2009 for imported coal.
    (d) There is no computation, no determination of methodology or
    formula for the computation of the compensation; the same is required
    to be undertaken with verification of quantification of coal,
    parameters, computation of coal costs, etc. APRL cannot be permitted
    to unilaterally raise the invoices and claim compensation.
    (e) The finding recorded by the APTEL that the State Commission
    had computed the amount, is factually incorrect.
    (f) Any compensation paid to APRL would have to be recovered from
    the consumers; therefore, it affects the public interest. The
    computation and determination of the compensatory tariff, in any
    event, would have to be done by the State Commission.
    13
    (g) The Generator cannot raise the invoice, and the liability to make
    payment by the appellants does not crystallise. Therefore, there is no
    question of liability of late payment surcharge for such a period. At
    best, depending on the conduct of the Generator and in terms of
    restitution principle, simple interest may be considered for the period
    prior to determination by the State Commission. However, the
    application of late payment surcharge cannot be applied when there is
    no delay or default in payment of bills.
    (h) APRL had admitted that two periods are separate until the
    determination of change in law, which is carrying cost, and thereafter
    raising of invoices, there may be a default by the procurer, which is
    late payment surcharge. As the two periods are separate, there is no
    logic to apply the late payment surcharge, which is for the second
    period to the first one.
  26. Shri Prashant Bhushan, learned counsel appearing on behalf of
    Federation argued as under:
    (a) the main question is whether the bid submitted by APRL was
    premised on domestic coal or imported coal. He attracted our
    attention to the PPA, RFP, LoI, and other bid documents. The bid and
    PPA were based on imported coal. APRL quantified as per RFP only on
    the basis of imported coal. It did not have any firm coal linkage or LoA
    or FSA for the domestic coal.
    14
    (b) The MoU dated 20.3.2008, entered into between APRL and the
    Government of Rajasthan, was of no avail. Only the Central
    Government was the sole deciding authority as is clear from Article 2.2
    of the MoU. He attracted the attention of this Court to the RPF dated
    26.2.2009. MoU dated 20.3.2008, would not count as firm coal
    arrangement. APRL had entered into a CSA with its own company
    AEL to qualify for the bid. Once it has qualified based on imported
    coal, it cannot take a contrary stand.
    (c) A clarification was sought from APRL on 7.9.2009 on which
    basis of fuel, its bid was to be evaluated. In response to clarification,
    it was submitted by APRL that bid should be evaluated on the basis of
    domestic coal tie­up, and an undertaking was given that the payment
    considering ‘domestic coal escalation’ would be acceptable to it during
    the term of the PPA.
    (d) On 17.12.2009, Rajasthan Discoms informed APRL that rates
    mentioned at Annexure 1 (to provide 1200 MW power) and escalations
    thereof on domestic coal is based on APRL’s commitment that the
    above rates would be applicable even if coal requirement is met by way
    of a backup arrangement with imported coal. APRL gave an
    unconditional acceptance on 18.12.2009.
    15
    (e) Reliance was placed on the order dated 31.5.2010, passed by the
    Rajasthan Electricity Regulatory Commission (for short, ‘the RERC’).
    The APTEL failed to comprehensively consider the PPA and other
    documents. The bid documents also formed part of the PPA entered
    into between the parties.
    (f) The NCDP of 2007 did not create a vested right to get domestic
    coal even for those who did not have the LoA/FSA or recommendation
    of the Standing Linkage Committee (Long­Term). Our attention has
    been invited to Clauses 2.1 and 2.2 of the NCDP of 2007 and approval
    of the Standing Linkage Committee (Long­Term). As APRL did not
    have any coal linkage approval, it was not entitled to claim
    compensation on the basis of change in law. The CIL couldn’t make
    the supply. The grant of linkage or LoA is not a ministerial act.
    (g) The Statutory Guidelines of 2005 issued under Section 63 of the
    Electricity Act lay down that to participate in the competitive bidding
    for a PPA, an entity has to show ready availability of fuel source for the
    power plant. In the case of domestic coal, the bidder shall have made
    firm arrangements for fuel tie­up either by way of coal block allocation
    or fuel linkage. These Guidelines have been issued by the
    Government of India, which issued the NCDP of 2007. If the grant of
    LoA/FSA/linkage was to be considered automatic on entering into a
    16
    PPA, then there was no need for having this criterion for eligibility.
    The decision in Energy Watchdog and the Policy have not been
    appreciated correctly.
    (h) The SHAKTI Policy was notified on 22.5.2017. Those IPPs, which
    were having PPAs based on domestic coal, but were having no LoA or
    FSA for coal supply either under NCDP of 2007 or NCDP of 2013,
    could now participate in the auction and get 100 per cent of their
    normative requirement of coal supply. Under the SHAKTI Policy, APRL
    was given coal supply to the full extent of the normative requirements
    for generating and supply of electricity to the Rajasthan Discoms
    within five years. The SHAKTI Allocation in the year 2018 does not
    change the fact that APRL had considered imported coal as other coal
    for 5 years. The change in law, thus, could have been considered only
    after 5 years. Therefore, the question of change in law did not arise as
    APRL was given coal supply under the SHAKTI Policy within 5 years of
    Commercial Operation Date (for short, ‘COD’).
    (i) It was also submitted that APRL had done over­invoicing, and
    concerning that, the investigation is pending. A letter of rogatory has
    been issued and, in that regard, S.L.P. (Crl.) No.10683 of 2019 is
    pending in this Court, in which interim stay has been granted. Thus,
    the claim of APRL is not tenable. It was also urged that the Federation
    17
    has locus to file the appeal for quashing the order passed by the
    APTEL.
  27. On behalf of APRL, Dr. A.M. Singhvi and Shri Arvind Datar,
    learned senior counsel, raised the following arguments:
    (a)(i) the bid by APRL was premised only on domestic coal.
    (ii) The submission of the imported coal agreement submitted with the
    bid was only to indicate that the bidder is eligible for the bid.
    (iii) Non­availability of domestic coal is a change in law event.
    (iv) The decision in Energy Watchdog squarely applies to the case, in
    which it was held that changes in imported coal regime is not a
    change in law, changes in domestic coal regime is a change in law
    event.
    (b) APRL is entitled to carrying cost from the date the change in law
    event came into force as held by this Court in Uttar Haryana Bijli
    Vitran Nigam Limited (UHBVNL) & Anr. v. Adani Power Limited & Ors.,
    (2019) 5 SCC 325.
    (c) The bid was premised only on domestic coal. The RFP provides
    six scenarios for quoting tariffs, and the bidder can submit the bid
    under any one of the scenarios viz. (i) Captive Coal Block (ii) Linkage
    Coal (iii) Imported Coal (iv) Imported Gas (v) Domestic Gas and (vi)
    Hydro.
    18
    (d) APRL submitted its financial bid as per linkage coal format, i.e.,
    domestic coal. The tariff was allowed to be quoted in linkage coal
    format applicable to domestic coal. The Government of Rajasthan
    made consistent efforts by writing letters to various authorities of the
    Government of India to grant domestic coal linkage to the Kawai
    Project of APRL. The Imported Coal Supply Agreement was submitted
    as a part of bid only to demonstrate the raw material’s readiness as
    APRL was required to submit proof of linkage/fuel arrangement to
    qualify as a bidder.
    (e) Rajasthan Discoms admitted in their affidavit dated 31.7.2013
    before the RERC that non­availability of coal from the Central
    Government put the case of APRL within the scope of change in law.
    Once they have admitted that bid was based on domestic coal, nonavailability of which entitles APRL to claim compensation under the
    change in law as per Article 10 of the PPA. They cannot wriggle out of
    their obligation. The eligibility to get coal linkage under the SHAKTI
    Policy to APRL confirms that the PPA was based on domestic coal. The
    PPA was based on domestic coal, and the concurrent findings do not
    suffer from any infirmity or perversity.
    19
    (f) The non­allocation of domestic coal linkage to APRL is a change
    in law event as is apparent from various documents, affidavit dated
    31.7.2013 and entitlement under the SHAKTI Policy.
    (g) In Energy Watchdog, this Court recognised the change in NCDP
    of 2007 as change in law event for a project which did not have any
    LoA or FSA at the time of bid submission. It was not necessary to
    have linkage/allocation at the time of submission of the bid. A
    notification was issued on 26.7.2013 to change the NCDP of 2007.
    Following change in law events occurred:
    (i) the decision of Standing Linkage Committee on 14.2.2012; and
    (ii) the resolution dated 21.6.2013 of the Cabinet Committee of
    Economic Affairs and the advice of the Ministry of Power dated
    31.7.2013, based on which the Tariff Policy has been revised by the
    Government of India on 28.1.2016 to cover the cases which do not
    have coal linkage. The NCDP of 2007 was the only policy prevailing
    when the bid was submitted and was changed.
    The decision in Energy Watchdog is squarely applicable to the
    present appeals, in which it was laid down that modification of the
    NCDP of 2007 is a change in law. It was further observed that the fact
    that the fuel supply agreement has to be appended to the PPA is only
    to indicate that the raw material for the working of the plant was in
    20
    order. The copy of the FSA was to be furnished after 10 months of the
    signing of the PPA.
    (h) APRL has been continuously supplying power to the Rajasthan
    Discoms since May 2013 without any interruption. Thus, with effect
    from the change in law, APRL is entitled to compensation as
    concurrently held.
    In Re. Whether the bid submitted was premised on domestic coal?
  28. Considering the rival submissions, it is necessary to take note of
    Statutory Guidelines framed by the Central Government under Section
    63 of the Electricity Act. The relevant portion of Para 3.2(II) of the
    Guidelines of 2005 is extracted hereunder:
    “3.2 (II) In Case­1 procurement, to ensure serious
    participation in the bid process and timely completion of
    commencement of supply of power, the bidder, in case
    the supply is proposed from a station to be set­up,
    should be required to submit along with its bid,
    documents in support of having undertaken specific
    actions for project preparatory activities in respect of
    matters mentioned in (i) to (v) below.
    i)* ii)*
    iii)****
    iv) Fuel Arrangements: (a) In the following cases fuel
    arrangements shall have to be made for the quantity of
    fuel required to generate power from the phase of the
    power station from which power is proposed to be
    supplied at Normative Availability for the term of the PPA.
     In case of domestic coal, the Bidder shall have
    made firm arrangements for fuel tie up either by way
    of coal block allocation or fuel linkage
     In case of domestic gas, …..
    21
    b) Fuel arrangements in the following cases shall have to
    be made for the quantity of fuel required to generate
    power from the power station for the total installed
    capacity.
     In case of imported coal, the Bidder shall have
    either acquired mines having proven reserves for at
    least 50% of the quantity of coal required OR shall
    have a fuel supply agreement for at least 50% of the
    quantity of coal required for a term of at least five (5)
    years or the term of the PPA, which ever is less. ….”
    (emphasis supplied)
  29. In the MoU dated 20.3.2008, which was entered into between
    APRL and the Government of Rajasthan, the Government of Rajasthan
    had only agreed to provide assistance in securing coal linkage/coal
    block. Article 2.2 of the MoU is extracted hereunder:
    “2.2 The State will facilitate smooth implementation of
    the Project as may be required including making it’s
    best effort to facilitate getting coal linkage/coal block
    from the Central Government or coal from any other
    source for the Project. …”
    (emphasis supplied)
  30. The RFP formed part of the bid documents regarding fuel,
    provided as under:
    “5. Fuel: The choice of fuel, including but not limited to
    coal or gas, it’s sourcing and transportation is left
    entirely to the discretion of the Bidder. The Successful
    Bidder(s) shall bear complete responsibility to tie up the
    fuel linkage and the infrastructural requirements for fuel
    transportation, handling and storage.
  31. INFORMATION AND INSTRUCTIONS FOR BIDDERS
    2.1.2.2 Consents, Clearances and Permits: ****
    b. Fuel:
    22
    i. In case of domestic coal, the Bidder shall have
    made firm arrangements for fuel tie up either by way
    of mine allocation or fuel linkage. Such arrangement
    shall be for the quantity of fuel required to generate
    power from the power station at Normative Availability for
    the total installed capacity for the term of the PPA.
    ii. In case of imported coal, the Bidder shall have either
    acquired mines having proven reserves for at least fifty
    percent (50%) of the quantity of coal required to generate
    power from the power station at Normative Availability for
    the total installed capacity OR shall have fuel supply
    agreement for at least fifty percent (50%) of the quantity
    of fuel required for a term of at least five (5) years or the
    term of the PPA (which ever is less) to generate power
    from the generation source for the total installed capacity
    for the term of the PPA.
    iii. In case of domestic gas, …..
    iv. In case of RLNG, …..”
    (emphasis supplied)
  32. APRL concerning fuel in the bid documents dated 6.8.2009,
    indicated as under:
    “Domestic Coal:
    Name of the allocated mine
    (in case of mine allocation)
    Not applicable
    Proven reserves of the mine
    (in case of mine allocation)
    Not applicable
    Quantity of coal required for
    the power station at
    Normative Availability on an
    annual basis and supporting
    computation for the same:
    5.544 MMTPA of domestic
    coal. Supporting
    computation attached.
    Particulars of documents
    enclosed in support of the
    above.
    Adani Group has entered
    into a MoU with Govt. of
    Rajasthan (GoR) for
    development of Kawai
    Power Project (Copy
    enclosed). Under this
    MoU, GoR has assured its
    support for allocation of
    captive coal block or coal
    linkage. The necessary
    actions in this regard are
    being taken by APRL and
    GoR.
    23
    Imported Coal:
    Captive coal block/coal linkage will be made available for
    the Kawai Project with the support of Govt. of Rajasthan.
    However, we have also made an arrangement for
    supply of imported coal for at least 50% of the total
    requirement of the power project for 5 years, as fall
    back support arrangement.
    Name of the mine acquired or
    owned and country
    Not applicable
    Proven reserves of the mine
    (in case of mine allocation)
    Not applicable
    At least fifty percent (50%) of
    the quantity of coal required
    for the power station at
    Normative Availability on an
    annual basis and supporting
    computation for the same.
    2.54 Million MT with coal
    having GCV (ARB) of 4250
    Kcal/Kg. Supporting
    computation attached.
    Copy of the fuel supply
    agreement(s) for at least fifty
    percent (50%) of the total the
    quantity of coal required for a
    term of at least five (5) years
    or the term of the PPA (which
    even is less) for the power
    station at Normative
    Availability on an annual
    basis.
    Copy of the Fuel Supply
    Agreement dated 25th
    June 2009 with Adani
    Enterprises Ltd. for
    supply of 3 Million MT of
    Imported coal up to Sept
    2018 is attached. Our
    Fuel supplier AEL, who is
    the largest coal trading
    company of the country,
    has long term
    arrangements with coal
    mines in Indonesia,
    Australia and South Africa
    for trading of coal.
    Particular of documents
    enclosed in support of the
    above.
    FSA dated 25th June 2009
    The computation of coal consumption of normative availability
    was given as under:
    Computation of coal consumption at Normative Availability
    Name of the
    Power Project
    Total Capacity
    Kawai Thermal Power Project
    1320 MW
    24
    Particular Domestic
    Coal
    Imported
    Capacity MW 1320 1320
    Normative
    Availability
    % 85% 85%
    Annual
    Generation
    Mus 9829 9829
    SHR Kcal/Kwh 2200 2200
    GCV Kcal/Kg 3900 4250
    SCC Kg/Kwh 0.564 0.518
    100% Coal
    Requirement at
    Normative
    Availability
    MMTPA 5.544 5.088
    50% Coal
    Requirement at
    Normative
    Availability
    MMTPA 2.544
  33. A letter was written on 7.9.2009 by the Rajasthan Discoms
    seeking clarification from APRL as to on which basis of fuel, its bid to
    be evaluated. Following clarification was sought:
    “With respect to the aforesaid Bid submitted by you in
    response to RIP dated 25.02.09, the following
    clarifications/documents are required for your bids to be
    evaluated:
  34. For fuel arrangement, in the Bid both Domestic
    Coal as well as Imported Coal has indicated. You
    should clarify through a letter from MD/CEO, being
    full time Director/Manager on which basis of fuel, the
    Bid should be avaluated.”
    (emphasis supplied)
  35. In response to letter dated 7.9.2009, APRL clarified its position
    vide letter dated 12.9.2009 inter alia as under:
    “1. As per the provision of the RFP under clause
    No.2.4.1.1(B)(ii), a bidder can submit only one price bid
    from a generation source, even if different types of
    fuels are used.
    25
    We contemplate to use Domestic as well as Imported
    coal for the Kawai Project. A duly executed Fuel
    Supply Agreement (FSA) for more than 50% if the coal
    requirement for a period of 5 years (as specified in RfP for
    meeting the fuel requirement on the basis of imported
    coal) has been submitted with the bid. Further, we have
    also submitted with the bid a MoU, executed between the
    Government of Rajasthan and Adani Enterprises Ltd.,
    wherein at clause 2.2, the State has assured in making
    its best efforts to facilitate in getting Coal Linkage/Block
    or Coal from any other sources for the Power Project.
    We meet the fuel requirement on the basis of
    imported coal tie­up . However, we are sure to get
    domestic fuel tie­up with support of the Government
    of Rajasthan. In view of this, we submit that our bid
    should be evaluated on the basis of Domestic Coal tieup. We undertake that payment considering
    domestic coal escalations will be acceptable to us
    during the terms of the PPA.”
    (emphasis supplied)
  36. The Rajasthan Discoms issued an LoI dated 17.12.2009 to APRL
    inter alia containing the following condition:
    “Your offer to provide 1200 MW power at the rates
    mentioned at Annexure­1 and escalations thereof on
    domestic coal is based on your commitment that the
    above rates would be applicable even in case of coal
    requirement being met by you by way of back up
    arrangement with imported coal.”
    (emphasis supplied)
  37. APRL on 18.12.2009, communicated its unconditional
    acceptance to the LoI thus:
    “We acknowledge with thank receipt of RRVPNL LoI
    No.RVPN/CE(NPP&R)/D 81 dated 17th December 2009 in
    favour of Adani Power Rajasthan Limited (APRL). We
    have noted content of the LoI and we hereby
    26
    communicate our “unconditional acceptance” of the
    same. Please find enclosed herewith duplicate copy of
    LoI duly signed by authorized signatory, confirming
    “Accepted Unconditionally”.
    We are making necessary arrangements for submission of
    Performance Guarantee as per Article 2.2.9 of the final
    RfP FOR 1200 MW. We shall be grateful if approval of
    RERC for procurement of additional 200 MW is conveyed
    at the earliest and the draft PPA, prepared based on our
    offer/bid, for execution is submitted to us for scrutiny at
    our end.”
    (emphasis supplied)
  38. The PPA entered into between the parties provided inter alia as
    under:
    ““Fuel” shall mean the primary fuel used to generate
    electricity namely domestic coal/imported coal as back up
    arrangement.
    “Fuel Supply Agreement(s)” shall mean the agreement(s)
    entered into between the Seller and the fuel supplier for the
    purchase, transportation and handling of the Fuel, required
    for the operation of the Power Station.
    In case the transportation of the Fuel is not the responsibility
    of the fuel supplied, the Fuel Supply Agreement shall also
    include the separate agreement between the Seller and the fuel
    transporter for the transportation of Fuel in addition to the
    agreement between the Seller and the fuel supplier for the
    supply of the Fuel;
    ………
    5 SCHEDULE 5: DETAILS OF GENERATION SOURCE AND
    SUPPLY OF POWER
    (A) Details of generation source
    Sl.No. Particulars Details (as per Format 4.13 of the
    Selected Bid of Seller)
  39. Location of power
    station (Specify
    place, district and
    state)
    Village Kawai, District Baran,
    Rajasthan
  40. No. of
    existing/proposed
    units and installed
    Existing
    Sl
    No.
    No. of
    Units
    Installed
    Capacity
    COD
    27
    capacity of each
    unit (in MW)
  41. Not Applicable
    Proposed
    Sl
    No.
    No. of
    Units
    Installed
    Capacity
    Expected
    COD
  42. 1 660 MW July 2012
  43. 2 660 MW November
    2012
  44. Primary Fuel Coal
  45. Dates of last major
    R&M (unit wise)
    Not applicable
  46. Duration of Fuel
    Supply Agreement
    (FSA)
    Imported Coal supply FSA for five
    years and Captive Coal Block/Long
    Term Coal Linkage
  47. Quantum of power
    contracted with
    other purchasers, if
    any (in MW)
    NIL
  48. Details of surplus
    capacity (in MW)
    Total Capacity : 1320 MW
    Net Capacity
    (after Aux Consumption
    @ 8%
    : 1215 MW
    PPA executed so far : NIL
    Surplus Capacity : 1215 MW
    (B) Details of primary fuel
    Sl.No. Particulars Details (to be furnished by the
    Bidder)
  49. Primary fuel
    (Insert as applicable:
    “Domestic coal/Imported
    Coal/Domestic (pipeline)
    gas/Imported gas (RLNG)”
    Domestic Coal from Captive
    Coal/Coal Linkage and
    Imported coal as fallback
    support arrangement
  50. Fuel Source
    (Insert as applicable: “Coal
    India Limited (CIL) coal
    linkage/domestic captive
    coal mine/imported
    coal/domestic (pipeline)
    gas/imported gas (R­LNG)
    Captive Coal Block/Long
    Term Coal Linkage and
    Imported Coal Supply FSA
    for five year of PPA term
  51. Fuel grade
    (Applicable only in case of
    coal)
    ­­
  52. Name of the CIL subsidiary
    from which coal is proposed
    to be sourced or name and
    location of the captive mine
    (as applicable).
    ­­
  53. Bidder to insert the
    applicable price mechanism,
    Not applicable
    28
    based on whether the
    primary fuel is covered
    under:
  54. Administered Price
    Mechanism (“APM”); or
  55. Controlled and notified by
    an independent Regulator; or
  56. Controlled and notified by
    the Government of India or
    Government of India
    Instrumentality.
    (Applicable only for gas)
    (emphasis supplied)
  57. The RERC’s order dated 31.5.2010, adopting APRL’s tariff under
    Section 63 of the Electricity Act, has been relied upon. The same is
    extracted hereunder:
    “39. The other important point raised by the party
    relates to relaxing the qualifying requirements for the fuel
    in case of M/s. Adani Power Rajasthan Limited. This
    matter has been elaborately dealt with in the first report
    of the Bid Evaluation Committee, who found the party to
    be qualified as far as requirement for fuel is concerned
    based on tie­up for imported coal and at the same time
    found the option of use of domestic coal worth
    consideration on account of likely advantage of lower
    escalation in tariff for domestic fuel than that of imported
    coal. The procurer has subsequently taken undertaking
    from the bidder that lower escalation in two situations
    i.e. domestic coal or imported coal would be applied in
    tariff and by this they have tried to derive advantage of
    incurring lower fuel escalation cost. It may be mentioned
    that neither the guidelines of GoI nor the bid documents
    anticipate such a situation wherein imported coal and
    domestic coal both could be used by a developer and
    obviously in such a situation the Bid Evaluation
    Committee and procurer are required to take a decision,
    which is in their best interest.”
    (emphasis supplied)
  58. In this regard, Shri C. Aryama Sundaram, learned senior
    counsel, argued that:
    29
    (a) concerning fuel in the column pertaining to the domestic coal
    that APRL, it was mentioned, had entered into an MoU with the
    Government of Rajasthan for development of the Kawai Power Project.
    The Government of Rajasthan initially supported the allocation of
    captive coal block or coal linkage, and APRL and the Government of
    Rajasthan took the necessary action in this regard. At the same time,
    it was also made clear that as fallback support, APRL had arranged
    imported coal for at least 50 per cent of the total requirement.
    (b) The arrangement of fuel, as per bid, was the responsibility of the
    bidder/generator. The Generator cannot claim compensation for its
    inability to arrange domestic coal or any other fuel source. For
    qualification under the bid, the bidder had to secure documentary
    evidence for various requirements, including fuel source. For
    domestic coal, the requirement was of firm arrangement for fuel tie­up
    and imported coal, acquired mines with proven coal reserves or FSA to
    meet at least 50 percent of the normative requirement for at least 5
    years. APRL did not have any arrangement for the domestic coal at
    the time of the bid. The FSA dated 25.6.2009 for imported coal was
    the only firm arrangement with APRL. Besides that, it had MoU dated
    20.3.2008, with the Government of Rajasthan concerning domestic
    coal. The allocation of coal was by the Government of India. Under
    the SHAKTI Policy in January 2018, the coal was allocated to APRL.
    30
    APRL had sought for domestic coal escalation, which was allowed as a
    concession; however, this did not change the fact that the qualification
    was based on imported coal. In the Board Meeting of Rajasthan Rajya
    Vidyut Prasaran Nigam Limited held on 3.12.2009, the following
    resolution was passed:
    “3. The L­1 bidder, M/s. Adani Power Rajasthan Ltd.,
    has committed to provide 1200 MW power at the rates
    mentioned at (1) above irrespective of the availability
    of domestic coal, by meeting the coal requirements
    from imported or whatever sources as their backup
    arrangement. This condition shall be specifically
    mentioned in the LOI to be issued to L­1 bidder, M/s
    Adani Power Rajasthan Ltd., and the Power Purchase
    Agreement (PPA) to be entered into with them by
    Rajasthan Discoms.”
    (emphasis supplied)
    (c) APRL unconditionally accepted the LoI. The PPA is a document
    governing the rights and obligations of the parties. It recognises the
    possible use of domestic coal. There was no allotment of coal linkage
    or coal block to APRL until January 2018. As APRL did not receive the
    domestic coal allocation and thereafter, if there was a change in law
    affecting such domestic coal, APRL could have possibly claimed
    change in law. APRL was obliged to supply power even without such
    domestic coal.
    (d) Alternatively, it was argued that the PPA was primarily based on
    domestic coal. The imported coal was a backup arrangement. Even
    otherwise assuming that compensation can be permitted for change in
    31
    law, it has to be restricted only to the extent of domestic coal
    contemplated to be used for fuel as the PPA provided for both domestic
    and imported coal and the imported coal accounted for more than 50
    per cent of the requirement, the compensation has to be limited to the
    said extent. The aforesaid was 61 per cent of the fuel requirement.
  59. Dr. A.M. Singhvi, learned senior counsel in this regard on behalf
    of APRL, argued that the bid and the PPA were based on domestic
    coal. The tariff was also quoted on the domestic coal linkage format.
    As the bid was premised on domestic coal, the bid’s evaluation was
    made on the domestic coal. The PPA also provided for the same,
    which is binding. The FSA was for imported coal with the bid was
    only to assess bid eligibility. In the order dated 31.5.2010 of the
    RERC, the domestic coal was considered the basis and to be used as
    the primary fuel. He also relied upon the admissions made in the
    affidavit and the communications dated 31.7.2013 and 4.8.2017 and
    the fact that participation in the SHAKTI Policy was permissible only
    when the PPA was based on domestic coal. The Rajasthan Discoms
    cannot reprobate from their stand. The entire bid was premised and
    accepted only on domestic coal. Hence, the claim of APRL cannot be
    restrained to 40 per cent.
    When we consider the documents on record, it is apparent that
    APRL’s bid was premised only on domestic coal. It was evaluated as
    32
    such, and the PPA also records the same. In para 2 of the bid with
    respect to coal, the bid of APRL was premised on the domestic coal. It
    is apparent that APRL relied upon MoU entered into with the
    Government of Rajasthan for development of the Kawai Power Project
    and other projects, and the Government assured its support for
    allocation of the captive coal block or coal linkage. An arrangement of
    FSA relating to imported coal for at least 50 percent of the total
    requirement was relied upon; however, the bid was premised and
    accepted on domestic coal, which did not change the bid’s nature. A
    query was made by the Rajasthan Discoms on 7.9.2009 from APRL to
    indicate whether the bid should be evaluated on domestic coal or
    imported coal. It was made clear by APRL in its letter dated 12.9.2009
    quoted above, that bid should be evaluated on the basis of domestic
    coal tie­up, and an undertaking was given that domestic coal
    escalations would be acceptable to it during the term of the PPA. In
    the LoI dated 17.12.2009, the offer was accepted, and escalations
    thereof on domestic coal was based on the commitment that the
    quoted rates would be applicable even in case of coal requirement
    being met by APRL by way of a backup arrangement with imported
    coal. APRL sent an unconditional acceptance on 18.12.2009. Thus,
    the parties agreed ad idem that bid was evaluated based on domestic
    coal, and escalations were also based on domestic coal. Accordingly,
    33
    the PPA was entered into, and primary fuel in the PPA was mentioned
    to be domestic coal from captive coal block/coal linkage and imported
    coal as a fallback support arrangement. It was binding on both the
    parties.
  60. APRL applied for long term coal linkage with the Government of
    Rajasthan on 2.7.2009, i.e., prior to the submission of bid on
    6.8.2009. It submitted the bid by adopting linkage coal format, and
    the tariff was quoted in Rs./Kwh. It submitted the bid as per RFP of
    April 2009 Para IX under Format 4.10, clause 2.4.1, which related to
    linkage coal format bid, i.e., domestic coal. Under Article 1.1 of the
    PPA, the primary fuel was mentioned as domestic coal. The FSA was
    submitted for imported coal to assess bid eligibility for meeting the
    technical criteria. The domestic coal was primary fuel as such the
    submission cannot be accepted that the bid and the PPA were based
    on imported coal.
  61. The PPA is final and binding on parties, and approval of tariff by
    the RERC was based on domestic coal as apparent from para 39 of the
    order dated 31.5.2010. Rajasthan Discoms agreed to use domestic
    coal on account of likely advantage of lower escalation in tariff on a
    bid based on domestic coal than that of imported coal. The decision of
    the Bid Evaluation Committee was found to be in their best interest.
    34
    Thus, APRL bid was not based on imported coal, that would not have
    been in favour of Rajasthan Discoms and would have resulted in more
    escalations in the tariff. Thus, APRL could not be denied the benefit of
    the very foundational basis on which the RERC approved its bid.
    APRL could not be made to suffer from both the ends. Various
    documents and the PPA make it clear that its bid was premised on
    domestic coal and approved tariff was based on domestic coal, the
    order of RERC is final, conclusive, and binding on the parties; it has
    not been questioned and attained finality. No stand contrary to the
    same was permissible to be taken by the Rajasthan Discoms.
  62. It is further apparent that reply dated 31.7.2013 filed by the
    Rajasthan Discoms before the RERC in which it was clearly admitted
    that non­availability of domestic coal from the Central Government
    would put the case of APRL within the scope of change in law.
    Rajasthan Discoms before the RERC admitted that the bid was based
    on domestic coal, non­availability of which entitles APRL to claim
    compensation under the change in law as provided in Article 10 of the
    PPA.
  63. It was argued that incorrect admissions made could not have
    been relied upon. It could not be said to be incorrect and stated
    35
    factually correct position in view of the aforesaid material and order of
    the RERC.
  64. Apart from that, an eligibility to get coal linkage under the
    SHAKTI Policy was based upon the fact that the Generators, who were
    not within the coal linkage and their PPAs were based on domestic
    linkage coal, were eligible for grant of coal linkage. In case, the PPA
    was not based on domestic coal, the case of APRL would not have been
    recommended to include the Kawai Project under 4660 MW capacity
    to receive domestic coal under special dispensation.
  65. It is apparent that the concurrent findings recorded by the
    RERC, as well as the APTEL, in this regard, do not suffer from any
    infirmity or perversity, and they are binding. As the scope of appeal
    under Section 125 of the Electricity Act is akin to Section 100 of the
    CPC and the concurrent findings based upon the facts cannot be
    disturbed in the appeal as held in DSR Steel (Private) Ltd. v. State of
    Rajasthan and Ors., (2012) 6 SCC 782, Tamil Nadu Generation and
    Distribution Corporation Limited v. PPN Power Generating Company
    Private Limited, (2014) 11 SCC 53 and Wardha Power Company
    Limited v. Maharashtra State Electricity Distribution Company Limited
    and Anr., (2016) 16 SCC 541.
    36
  66. We also note that once having admitted before the RERC at the
    time of approval of tariff and evaluated the tariff of domestic coal and
    making admissions again on 31.7.2013 and 4.8.2017, it is not open to
    reprobate as parties are not permitted to approbate and reprobate at
    different stages as laid down in Suzuki Parasrampuria Suitings Private
    Limited v. Official Liquidator of Mahendra Petrochemicals Limited (in
    Liquidation) and Ors., (2018) 10 SCC 707 and R.N. Gosain v. Yashpal
    Dhir, (1992) 4 SCC 683.
  67. It was argued that FSA was appended to demonstrate the raw
    material’s readiness for the supply of contracted electricity by the
    Generator. It did not change the basis of the bid, whether it was
    based upon the domestic coal or imported coal. In case the bid was
    based upon the imported coal, the tariff would have been differently
    fixed as observed by the RERC, and it was not advantageous to
    Rajasthan Discoms to fix tariff on imported coal. The RERC observed
    that the FSA was only to demonstrate the raw material’s readiness
    and was not determinative of terms and conditions of the contract.
    The FSA for imported coal was a standby arrangement, but the entire
    bid, tariff, and the agreement were based on domestic coal. Thus, the
    consequences of non­availability due to change in law could not be
    escaped. In Energy Watchdog, it was observed that the FSA is only for
    37
    demonstrating the raw material’s readiness and is not determinative of
    the terms and conditions of the contract.
  68. Shri C. Aryama Sundaram argued that the FSA related
    approximately 61 per cent of the fuel requirement. Thus, the change
    in law claim may be confined to 35 to 40 per cent. The argument
    cannot be accepted as bidding was not based on dual fuel, but was
    evaluated on domestic coal. There was no such stipulation that
    evaluation of bidding was done on domestic basis; the tariff was to be
    worked out in the aforesaid ratio of 60:40 per cent of imported coal
    and domestic coal respectively. Apart from that, we find from the
    order of the APTEL, that change in law provision would be limited to a
    shortfall in the supply of domestic linkage coal. The finding recorded
    by the APTEL is extracted hereunder:
    “12.5 In the instant case, we have found in the previous
    paragraphs that Adani Rajasthan’s bid was premised on
    domestic coal on the basis of the 100% domestic coal
    supply assurance contained in NCDP 2007. Since
    SHAKTI Policy and the FSA executed thereunder still do
    not meet the assurance of 100% supply of domestic coal
    to Adani Rajasthan, it would follow that Adani Rajasthan
    would need to be compensated for any shortfall in supply
    of domestic linkage coal even post grant of coal linkage
    under the SHAKTI Policy. Rajasthan Discoms have not
    disputed that the introduction of SHAKTI Policy
    constitutes a Change in Law under the PPA. Their
    contention is that any shortfall of coal under the SHAKTI
    FSA by the coal companies is a contractual matter to be
    sorted out between Adani Rajasthan and the coal
    companies. We are not persuaded by this argument for
    the reason that we have already held in GMR Kamalanga
    case that the contractual conditions or limitations were
    38
    not present in NCDP 2007 at the time of bid submission
    by Adani Rajasthan. This contention of Rajasthan
    Discoms is also against the principle laid down in Energy
    Watchdog judgment. The SHAKTI Policy continues the
    earlier coal supply restriction to 75% of ACQ. If actual
    supply of domestic linkage coal under the SHAKTI FSA is
    higher, it goes without saying that the generator’s relief
    or compensation under the Change in Law provisions
    would be limited to the actual shortfall in supply of
    domestic linkage coal. We also note that there is no
    rational basis to assume that the supply under the
    SHAKTI FSAs would be higher or better than that under
    the pre­SHAKTI FSAs.
    12.6 The Supreme Court in Energy Watchdog judgment
    has already concluded as follows:
    “57. …… This being so, it is clear that so far as the
    procurement of Indian coal is concerned, to the extent
    that the supply from Coal India and other Indian
    sourcesis cut down, the PPA read with these
    documents provides in Clause 13.2 that while
    determining the consequences of change in law,
    parties shall have due regard to the principle that the
    purpose of compensating the party affected by such
    change in law is to restore, through monthly tariff
    payments, the affected party to
    the economic position as if such change in law has not
    occurred……”
    (emphasis supplied)
  69. It was clarified that APRL would be entitled to relief under the
    change in law provision to the extent of shortage in supply in domestic
    linkage coal. Thus, we find no merit in the submission raised. We
    find the findings of the APTEL to be reasonable, proper, and
    unexceptional.
  70. Our attention was also invited to para 3.2 of the Statutory
    Guidelines of 2005. It provided with respect to fuel arrangements.
    The same provided that in case of domestic coal, the bidder shall have
    39
    made firm arrangements for fuel tie­up either by way of coal block
    allocation or fuel linkage. There is no doubt about it that the
    Government of Rajasthan entered into an MoU with APRL in 2008 to
    ensure supply of domestic coal and it had undertaken to facilitate the
    implementation of the Kawai Project for getting the coal block from the
    Central Government or coal from any other source for the project.
    Once the Government of Rajasthan entered into MoU dated 20.3.2008,
    containing Article 2.2 quoted above, it was incumbent upon the State
    of Rajasthan to provide coal from any other source for the project, in
    case the Central Government could not allot coal linkage/coal block.
    The Central Government had even written to the Government of
    Rajasthan to provide coal to APRL from the coal mine, but due to
    paucity, it could not be supplied to APRL. Thus, there was a failure
    on the part of the Government of Rajasthan to provide coal from any
    other source. The NCDP of 2007 prevailed as law 7 days prior to the
    bid with respect to the supply of coal, the cut­off date of the bid was
    30.7.2009. It was provided in Clauses 2.1 and 2.2 of NCDP of 2007
    dated 18.10.2007 that 100 per cent of the quantity as per the
    normative requirement of the consumers would be considered for
    supply of coal through FSA by CIL. Para 5.2 of the NCDP of 2007
    provided that for power utilities, including Independent Power
    Producers (IPPs) and Captive Power Plants, cement sector and sponge
    40
    iron sector, the present system of linkage committee at the level of the
    Government would continue. CIL will issue LoA after approval of
    applications by the Standing Linkage Committee (Long­term). Clause
    6.1 provides that new consumers from the State/Central power
    utilities, CPPs, Independent Power Producers (IPPs), Fertilizers,
    Cement, and Sponge Iron units may be issued LoA based on prevailing
    norms and recommendations of the Administrative Ministry. Para 6.1
    of the policy is extracted hereunder:
    “6.1 New consumers from State/Central power utilities,
    CPPs, Independent Power Producers (IPPs), Fertilizer,
    Cement and Sponge Iron units may be issued LOA, based
    on prevailing norms and recommendation of
    Administrative Ministry, which may inter alia have regard
    to LoA/Linkage already granted to the consumer of
    specific sector, existing capacity, requirement for capacity
    addition during a plan period etc.”
  71. Para 7 deals with FSAs with new consumers. Paras 7.1 and 7.2
    are extracted hereunder:
    “7.1 On successfully achieving the milestones stipulated
    in LOA coal companies would execute FSA with the
    applicant consumer covering commercial arrangement for
    supply of coal. FSAs would be, inter­alia, based on ‘Take
    or Pay’ principle.
    7.2 The FSAs would cover 100% of normative coal
    requirements of the Power Utilities, including
    Independent Power Producers (IPPs) and Captive Power
    Plants (CPPs), Fertilizer units and 75% of normative coal
    requirement of other consumers.”
    It is apparent that 100 percent of the quantity as per the
    consumers’ normative requirement was to be made by CIL, obviously
    on the approval of the application by the Standing Linkage Committee.
    41
    It was kept pending due to a shortage of coal supplies and was
    ultimately processed under the SHAKTI Policy, and linkage for 100
    percent was given from January 2018. Thus, earlier as the quantity of
    coal was not available, sufficient supply could not be made. It is not a
    case where APRL was adjudged ineligible, but prior commitments and
    the non­availability of coal came in the way of failure to obtain
    domestic coal linkage under the NCDP of 2007, which itself was
    changed with effect from 26.7.2013.
    In Re. Change in Law
  72. APRL’s claim is based on the date of change of law in 2013.
    Admittedly, earlier NCDP of 2007 prevailed on the appointed date, i.e.,
    7 days before submission of the bid. In Energy Watchdog also, similar
    was the position. Though the application was submitted, coal linkage
    was not provided, and then there was a change in law in terms of the
    NCDP of 2013. This Court held that the benefit of change in law w.e.f.
    2013 was available. The PPA was based upon the domestic coal, and
    its availability was based upon NCDP of 2007. The application was
    filed before submitting the bid. The application for linkage was filed in
    terms of the agreement when the bid was premised and accepted, and
    the agreement was entered into on the basis of domestic coal, the
    change in law of 2007 in 2013 has to be applied. Thus, the
    submission raised that even in the absence of any LoA or FSA granted
    42
    to APRL by CIL, there was an impact of change of law on the PPA on
    account of NCDP of 2013.
  73. It was argued that there was no domestic coal linkage under
    which supply was cut down due to any law, and APRL was not
    allocated coal block, and its bid was premised on the imported coal.
    In Energy Watchdog, it was opined that only changes in Indian law
    could be considered under the PPA and not in foreign law. In NCDP
    dated 26.7.2013, the NCDP of 2007 was modified to the effect that
    power projects would only get a certain percentage of what was earlier
    allowable.
  74. It is apparent from the decision dated 31.5.2013 of the Standing
    Linkage Committee (Long­Term) that the application of APRL was kept
    in abeyance. It applied for coal linkage on 2.7.2009 on the basis of
    NCDP of 2007. The bid cut­off date was 30.7.2009, 7 days prior to the
    bid deadline, the NCDP of 2007 was applicable. A decision was taken
    by the Standing Linkage Committee on 14.2.2012 read with the
    decision dated 31.5.2013 indicating a shortage in domestic coal and
    dependence on imported coal. For the shortage of coal, APRL could
    not have been made to suffer, on that it had no control. It was
    decided not to issue fresh LoAs, and all pending applications were
    kept in abeyance. The Cabinet Committee on Economic Affairs
    43
    decided on 21.6.2013 to reduce coal supply to 65 percent and 75
    percent of ACQ for the remaining four years of the 12th Five Year Plan.
    It allowed passing through of higher cost of imported coal. The
    Ministry of Coal was directed to suitably amend the NCDP. The
    Ministry of Coal on 26.7.2013 amended the NCDP of 2007, and the
    Ministry of Power issued a letter on 31.7.2013, which provided for
    pass­through of additional cost incurred to meet the coal
    requirements. The Cabinet Committee on Economic Affairs in its
    decision dated 21.6.2013, recognised coal supply, subject to
    availability, to 4660 MW having no fuel linkage. The Kawai Project
    was included in the same. The Policy was revised, thus assurance
    given by the Government of India under the NCDP of 2007 was taken
    away. The provision of 100 per cent supply was taken away. With
    respect to the applicability of Energy Watchdog, a dispute has been
    raised. In Energy Watchdog, it was laid down that change in law is
    applicable to change in domestic law, not change in foreign law. It is
    not applicable to imported coal/change in foreign law. It was urged
    that application for grant of coal linkage was submitted to the Ministry
    of Coal for the supply of coal in the light of assurance given under the
    NCDP of 2007 in both the cases and those assurances, which were
    given in the Policy, were diluted or taken away by the subsequent
    scheme of the Government instrumentality. Consequently, no coal
    44
    linkage or LoA or FSA was available in the hands of the Generator in
    Energy Watchdog. The cut­off date for applicability of law was 7 days
    prior to the bid deadline and change in law provision of Article 10 of
    the PPA in question is similar to Article 13 of the PPA in Energy
    Watchdog. Article 10 is extracted hereunder:
    “ARTICLE 10: CHANGE IN LAW
    10.1 Definitions
    In this Article 10, the following terms shall have the
    following meanings:
    10.1.1 “Change in Law” means the occurrence of any of
    the following events after the date, which is seven (7)
    days prior to the Bid Deadline resulting into any
    additional recurring/non­recurring expenditure by the
    Seller or any income to the Seller:
    • the enactment, coming into effect, adoption,
    promulgation, amendment, modification or repeal
    (without re­enactment or consolidation) in India, of any
    Law, including rules and regulations framed pursuant
    to such Law;
    • a change in the interpretation or application of any
    Law by any Indian Governmental Instrumentality
    having the legal power to interpret or apply such Law,
    or any Competent Court of Law;
    • the imposition of a requirement for obtaining any
    Consents, Clearances and Permits which was not
    required earlier;
    • a change in the terms and conditions prescribed for
    obtaining any Consents, Clearances and Permits or the
    inclusion of any new terms or conditions for obtaining
    such Consents, Clearances and Permits; except due to
    any default of the Seller;
    • any change in tax or introduction of any tax made
    applicable for supply of power by the Seller as per the
    terms of this Agreement.
    45
    but shall not include (i) any change in any withholding
    tax on income or dividends distributed to the
    shareholders of the Seller, or (ii) change in respect of UI
    Charges or frequency intervals by an Appropriate
    Commission or (iii) any change on account of regulatory
    measures by the Appropriate Commission including
    calculation of Availability.
    10.2 Application and Principles for computing impact
    of Change in Law
    10.2.1 While determining the consequence of Change in
    Law under this Article 10, the Parties shall have due
    regard to the principle that the purpose of compensating
    the Party affected by such Change in Law, is to restore
    through monthly Tariff Payment, to the extent
    contemplated in this Article 10, the affected Party to the
    same economic position as if such Change in Law has not
    occurred.
    10.3 Relief for Change in Law
    10.3.1 During Construction Period
    As a result of any Change in Law, the impact of
    increase/decrease of Capital Cost of the Power Station in
    the Tariff shall be governed by the formula given below:
    For every cumulative increase/ decrease of each Rupees
    Sixteen crore Fifty Lakh (Rs.16.50 crore) in the Capital
    Cost during the Construction Period, the increase/
    decrease in Non Escalable Capacity Charges shall be an
    amount equal to zero point two six seven (0.267%) of the
    Non Escalable Capacity Charges. In case of Dispute,
    Article 14 shall apply.
    It is clarified that the above mentioned compensation
    shall be payable to either Party, only with effect from the
    date on which the total increase/ decrease exceeds
    amount of Rupees Sixteen crore Fifty Lakh (Rs.16.50
    crore).
    10.3.2 During Operating Period
    The compensation for any decrease in revenue or
    increase in expenses to the Seller shall be payable only if
    the decrease in revenue or increase in expenses of the
    Seller is in excess of an amount equivalent to 1 % of the
    46
    value of the Letter of Credit in aggregate for the relevant
    Contract Year.
    10.3.3 For any claims made under Articles 10.3.1 and
    10.3.2 above, the Seller shall provide to the Procurers
    and the Appropriate Commission documentary proof of
    such increase/ decrease in cost of the Power Station or
    revenue/ expense for establishing the impact of such
    Change in Law.
    10.3.4 The decision of the Appropriate Commission, with
    regards to the determination of the compensation
    mentioned above in Articles 10.3.1 and 10.3.2, and the
    date from which such compensation shall become
    effective, shall be final and binding on both the Parties
    subject to right of appeal provided under applicable Law.
    10.4 Notification of Change in Law
    10.4.1 If the Seller is affected by a Change in Law in
    accordance with Article 10.1 and the Seller wishes to
    claim relief for such a Change in Law under this Article
    10, it shall give notice to the Procurers of such Change in
    Law as soon as reasonably practicable after becoming
    aware of the same or should reasonably have known of
    the Change in Law.
    10.4.2 Notwithstanding Article 10.4.1, the Seller shall be
    obliged to serve a notice to the Procurers under this
    Article 10.4.2, even if it is beneficially affected by a
    Change in Law. Without prejudice to the factor of
    materiality or other provisions contained in this
    Agreement, the obligation to inform the Procurers
    contained herein shall be material.
    Provided that in case the Seller has not provided such
    notice, the Procurers shall have the right to issue such
    notice to the Seller.
    10.4.3 Any notice served pursuant to this Article 10.4.2
    shall provide, amongst other things, precise details of:
    (a) the Change in Law; and
    (b) the effects on the Seller
    10.5 Tariff Adjustment Payment On account of
    Change in Law
    10.5.1 Subject to Article 10.2, the adjustment in monthly
    Tariff Payment shall be effective from:
    47
    (i) the date of adoption, promulgation, amendment, reenactment or repeal of the Law or Change in Law; or
    (ii) the date of order/ judgment of the Competent Court or
    tribunal or Indian Governmental Instrumentality, if the
    Change in Law is on account of a change in
    interpretation of Law.
    10.5.2 The payment for Change in Law shall be through
    Supplementary Bill as mentioned in Article 8.8. However,
    in case of any change in Tariff by reason of Change in
    Law, as determined in accordance with this Agreement,
    the Monthly Invoice to be raised by the Seller after such
    change in Tariff shall appropriately reflect the changed
    Tariff.”
    (emphasis supplied)
  75. The said factual position is not disputed and was noticed by the
    APTEL in para 11.5, which is extracted hereunder:
    “11.5 It may be seen from the above that in both the
    PPAs, Change in Law is defined as the occurrence of any
    event after the date, which is seven (7) days prior to the
    Bid Deadline. Therefore, for reckoning the change in law
    the position prevailing as on cut­off date is relevant. In
    both cases, the basis for the bid in respect of the fuel was
    assurance under NCDP, 2007 and there was no Letter of
    Assurance or FSA for the project at the time of the
    bidding. The Rajasthan Discoms have not denied the
    factual position/comparison of the PPAs. That being the
    case, there is no merit in the argument of Rajasthan
    Discoms that Energy Watchdog case is not applicable to
    the present case. We note that as on cut­off date the law
    prevailing is NCDP 2007 in both the cases. The supply
    assurance contained in NCDP 2007 was changed or
    altered for the Kawai Project by the decision of SLC(LT)
    on 31.05.2013. The main thrust of Adani Rajasthan’s
    arguments is that even before the amendment of 2013 in
    NCDP 2007, the decision taken by SLC(LT) in May 2013
    amounts to a Change in Law event under the PPA. The
    2013 amendment to NCDP 2007 may be seen as a
    continuum of the SLC(LT)’s decision in May 2013 since it
    was Coal India’s inability to meet the committed/assured
    coal supply that prompted the Ministry of Coal to issue
    the amendment to NCDP in July 2013, based on the
    48
    CCEA decision in June 2013. The CCEA decision of June
    2013 directed as follows:
    “The Cabinet Committee on Economic Affairs (CCEA)
    today approved the following mechanism for supply of
    coal to power producers:
    (i) Coal India Ltd. (CIL) to sign Fuel Supply Agreements
    (FSA) for a total capacity of 78000 MW including cases of
    tapering linkage, which are likely to be commissioned by
    31.03.2015. Actual coal supplies would however
    commence when long term Power Purchase agreements
    (PPAs) are tied up.
    (ii) Taking into account the overall domestic availability
    and actual requirements, FSAs to be signed for domestic
    coal quantity of 65 percent, 65 percent, 67 percent and
    75 percent of Annual Contracted Quantity (ACQ) for the
    remaining four years of the 12th Five Year Plan.
    (iii) To meet its balance FSA obligations, CIL may import
    coal and supply the same to the willing Thermal Power
    Plants (TPPs) on cost plus basis. TPPs may also import
    coal themselves. MoC to issue suitable instructions
    (iv) Higher cost of imported coal to be considered for pass
    through as per modalities suggested by CERC. MoC to
    issue suitable orders supplementing the New Coal
    Distribution Policy (NCDP). MoP to issue appropriate
    advisory to CERC/SERCs including modifications if any
    in the bidding guidelines to enable the appropriate
    Commissions to decide the pass through of higher cost of
    imported coal on case to case basis.
    (v) Mechanism will be explored to supply coal subject to
    its availability to the TPPs with 4660 MW capacity and
    other similar cases which are not having any coal linkage
    but are likely to be commissioned by 31.03.2015, having
    long term PPAs and a high Bank exposure and without
    affecting the above decisions.”
    (emphasis supplied)
  76. The change in policy and in the terms and conditions prescribed
    for obtaining any consents, clearances and permits or the inclusion of
    any new terms or conditions for obtaining such consents, clearances,
    49
    and permits are also included. The submission raised on behalf of
    appellant that there is no question seeking benefit due to change in
    foreign law is based on wrong factual premise. The relief was not
    claimed on the basis of change in foreign law. Apart from that,
    admission has been relied upon change in law. The PPA was based on
    the domestic law and there was a change in domestic law. Thus,
    consequences must follow. The Government of Rajasthan entered into
    a MoU with APRL with respect to coal linkage in 2008 to provide coal
    linkage or coal from other sources.
  77. We find similarity in the present case as well as the Energy
    Watchdog. The factual matrix was similar with the present case. We
    find that the RERC and the APTEL have recorded the concurrent
    finding on facts. We find no ground to interfere. No substantial
    question of law is involved. It was held in Energy Watchdog, that
    change in law was brought about in the NCDP of 2007 by the decision
    of 26.7.2013. It is provided in Article 10.2.1 how the change in law is
    to be applied to compensate for the impact.
  78. The purpose of change in law is to restore through monthly tariff
    payment to the extent contemplated that the affected party is placed
    in the same economic position as if such a change in law has not
    occurred. As monthly tariff was worked out on domestic law, the
    50
    requirement is to compensate on that basis due to change in law. The
    same is based on the principle of restitution. In Uttar Haryana Bijli
    Vitran Nigam Limited (UHBVNL), it was laid down by this Court thus:
    “10. Article 13.2 is an in­built 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 as
    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.”
    (emphasis supplied)
    It was also held that carrying cost is payable from the date the
    change in law has taken place, and carrying cost is passed on the
    restitution principle. Article 10.2.1 of the PPA in question is similar to
    Article 13.2 considered in Energy Watchdog. The carrying cost is
    nothing but a compensation towards the time value of month/deferred
    payment. Article 8.3.5 provides for methodology in case of delayed
    payment.
    51
  79. When there was a change in policy with respect to obtaining coal
    itself, which was agreed to in the PPA, the change in law would be
    applicable. In Energy Watchdog it was observed thus:
    “56. However, insofar as the applicability of Clause 13 to
    a change in Indian law is concerned, the respondents are
    on firm ground. It will be seen that under Clause 13.1.1 if
    there is a change in any consent, approval or licence
    available or obtained for the project, otherwise than for
    the default of the seller, which results in any change in
    any cost of the business of selling electricity, then the
    said seller will be governed under Clause 13.1.1. It is
    clear from a reading of the Resolution dated 21­6­2013,
    which resulted in the letter of 31­7­2013, issued by the
    Ministry of Power, that the earlier coal distribution policy
    contained in the letter dated 18­3­2007 stands modified
    as the Government has now approved a revised
    arrangement for supply of coal. It has been decided that,
    seeing the overall domestic availability and the likely
    requirement of power projects, the power projects will
    only be entitled to a certain percentage of what was
    earlier allowable. This being the case, on 31­7­2013, the
    following letter, which is set out in extenso states as
    follows:
    FU­12/2011­IPC (Vol­III)
    Government of India
    Ministry of Power
    Shram Shakti Bhawan, New Delhi
    Dated: 31­7­2013
    To,
    The Secretary,
    Central Electricity Regulatory Commission,
    Chanderlok Building, Janpath,
    New Delhi
    Subject: Impact on tariff in the concluded PPAs due to
    shortage in domestic coal availability and consequent
    changes in NCDP.
    Ref. CERC’s D.O. No. 10/5/2013­Statutory Advice/CERC
    dated 20­5­2013.
    Sir,
    52
    In view of the demand for coal of power plants that
    were provided coal linkage by Govt. of India and CIL not
    signing any fuel supply agreement (FSA) after March
    2009, several meetings at different levels in the
    Government were held to review the situation. In
    February 2012, it was decided that FSAs will be signed
    for full quantity of coal mentioned in the letter of
    assurance (LoAs) for a period of 20 years with a trigger
    level of 80% for levy of disincentive and 90% for levy of
    incentive. Subsequently, MoC indicated that CIL will not
    be able to supply domestic coal at 80% level of ACQ and
    coal will have to be imported by CIL to bridge the gap.
    The issue of increased cost of power due to import of
    coal/e­auction and its impact on the tariff of concluded
    PPAs were also discussed and CERC’s advice sought.
  80. After considering all aspects and the advice of
    CERC in this regard, Government has decided the
    following in June 2013:
    (i) taking into account the overall domestic availability
    and actual requirements, FSAs to be signed for domestic
    coal component for the levy of disincentive at the quantity
    of 65%, 65%, 67% and 75% of annual contracted
    quantity (ACQ) for the remaining four years of the 12th
    Plan.
    (ii) to meet its balance FSA obligations, CIL may
    import coal and supply the same to the willing TPPs on
    cost plus basis. TPPs may also import coal themselves if
    they so opt.
    (iii) higher cost of imported coal to be considered for
    pass through as per modalities suggested by CERC.
  81. Ministry of Coal vide letter dated 26­7­2013 has
    notified the changes in the New Coal Distribution Policy
    (NCDP) as approved by the CCEA in relation to the coal
    supply for the next four years of the 12th Plan (copy
    enclosed).
  82. As per decision of the Government, the higher cost
    of import/market based e­auction coal be considered for
    being made a pass through on a case­to­case basis by
    CERC/SERC to the extent of shortfall in the quantity
    indicated in the LoA/FSA and the CIL supply of domestic
    coal which would be minimum of 65%, 65%, 67% and
    75% of LoA for the remaining four years of the 12th Plan
    for the already concluded PPAs based on tariff based
    competitive bidding.
  83. The ERCs are advised to consider the request of
    individual power producers in this regard as per due
    process on a case­to­case basis in public interest. The
    53
    appropriate Commissions are requested to take
    immediate steps for the implementation of the above
    decision of the Government.
    This issues with the approval of MOS(P)I/C.
    Encl: As above.
    Yours faithfully,
    sd/­
    (V. Apparao)
    Director
    This is further reflected in the revised Tariff Policy dated
    28­1­2016, which in Para 1.1 states as under:
    1.1. In compliance with Section 3 of the Electricity
    Act, 2003, the Central Government notified the Tariff
    Policy on 6­1­2006. Further amendments to the Tariff
    Policy were notified on 31­3­2008, 20­1­2011 and 8­7­
  84. In exercise of powers conferred under Section
    3(3) of the Electricity Act, 2003, the Central
    Government hereby notifies the revised Tariff Policy to
    be effective from the date of publication of the
    resolution in the Gazette of India.
    Notwithstanding anything done or any action taken
    or purported to have been done or taken under the
    provisions of the Tariff Policy notified on 6­1­2006 and
    amendments made thereunder, shall, insofar as it is
    not inconsistent with this Policy, be deemed to have
    been done or taken under provisions of this revised
    policy.
    Clause 6.1 states:
    6.1. Procurement of power
    As stipulated in Para 5.1, power procurement for
    future requirements should be through a transparent
    competitive bidding mechanism using the guidelines
    issued by the Central Government from time to time.
    These guidelines provide for procurement of electricity
    separately for base load requirements and for peak
    load requirements. This would facilitate setting up of
    generation capacities specifically for meeting such
    requirements.
    However, some of the competitively bid projects as
    per the guidelines dated 19­1­2005 have experienced
    difficulties in getting the required quantity of coal from
    Coal India Limited (CIL). In case of reduced quantity of
    domestic coal supplied by CIL, vis­à­vis the assured
    quantity or quantity indicated in letter of
    assurance/FSA the cost of imported/market based e­
    54
    auction coal procured for making up the shortfall,
    shall be considered for being made a pass through by
    appropriate Commission on a case­to­case basis, as
    per advisory issued by Ministry of Power vide OM No.
    FU­12/2011­IPC (Vol­III) dated 31­7­2013.”
    In the aforesaid para, a discussion was made with respect to
    change in terms and conditions prescribed for obtaining any consents,
    clearances, and permits. The change in law does not provide that
    letter of approval should be issued by CIL, as provided in Article 10.1
    relating to change in law. Even if the procedure is changed, that is to
    be given effect to.
    In Re. SHAKTI Policy 2017
  85. Under the SHAKTI Policy notified on 22.5.2017, those
    Independent Power Producers (IPPs), who were having PPAs based on
    domestic coal, but were not having LoA or FSA for coal supply either
    under NCDP of 2007 or NCDP of 2013, could participate in the
    auction to get 100 per cent of the normative requirement of coal
    supply. The eligibility was based upon the fact that the PPA was
    based upon the domestic supply. Under the SHAKTI Policy, APRL was
    given coal supply to the full extent of the normative requirements for
    generating and supplying electricity to the Rajasthan Discoms due to
    aforesaid significant terms in the PPA.
    55
  86. It was argued that the imported coal as alternate coal was
    available for 5 years, as such no relief could have been granted to
    APRL on the basis of change in law. As we have already discussed
    that there was a change in law as per Article 10.1; thus, the
    submission to the contrary is untenable.
  87. It was argued that APRL unconditionally accepted stipulations in
    the LoI dated 17.12.2009 on 18.12.2009. The submission is equally
    futile as the PPA under Article 1.1 and Schedule V provide for
    domestic coal as primary fuel and imported coal as a fallback
    arrangement. Whereas change in law was provided in Article 10.
    Article 15.6.2 of the PPA supersedes all prior written or oral
    understanding. The same is extracted hereunder:
    “15.6.2 Except as provided in this Agreement, all prior
    written or oral understandings, offers or other
    communications of every kind pertaining to this
    Agreement or supply of power up to the Contracted
    Capacity under this Agreement to the Procurers by the
    Seller shall stand superseded and abrogated.”
  88. Article 10 of the PPA is clearly attracted that the change in law
    was in contemplation. Article 10 cannot be made redundant; the
    agreement is binding and must prevail.
  89. The argument raised by Shri C. Aryama Sundaram that carrying
    cost is a penal provision, cannot be accepted in view of the decision of
    56
    this Court in Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL), in
    which with respect to carrying cost, it was held that carrying cost was
    payable in terms of restitution principle. The carrying cost is to be
    paid on the same basis as provided for other dues in the PPA.
  90. It was argued that the RERC and the APTEL had not determined
    the amount. It is apparent that the principle has been worked out by
    the RERC as well as the APTEL. The quantification directions have
    been issued to Rajasthan Discoms to verify the documents submitted
    by APRL and make payment in terms of the judgment and order.
    Nothing further was required to be done by the RERC as well as the
    APTEL.
  91. Considering the facts of this case and keeping in view that the
    RERC and APTEL have given concurrent findings in favour of the
    respondent with regard to change in law, with which we also concur,
    we may now deal with the question of liability of appellants­Rajasthan
    Discoms with regard to late payment surcharge. In this regard, the
    following Articles 8.3.5 and 8.8 of PPA, which are relevant for the
    present purpose, are extracted hereunder:
    “8.3.5. In the event of delay in payment of a Monthly
    Bill by the Procurers beyond its Due Date, a Late
    Payment Surcharge shall be payable by such Procurers to
    the Seller at the rate of two percent (2%) in excess of the
    applicable SBAR per annum, on the amount of
    outstanding payment, calculated on a day to day basis
    57
    (and compounded with monthly rest), for each day of the
    delay. The Late Payment Surcharge shall be claimed by
    the Seller through the Supplementary Bill.
    8.8 Payment of Supplementary Bill
    8.8.1 Either Party may raise a bill on the other Party
    (supplementary bill) for payment on account of:
    i) Adjustments required by the Regional Energy Account
    (if applicable);
    ii) Tariff Payment for change in parameters, pursuant to
    provisions in Schedule 4; or
    iii)Change in Law as provided in Article 10, and such
    Supplementary Bill shall be paid by the others party.
    8.8.2 The Procurers shall remit all amounts due under
    a Supplementary Bill raised by the Seller to the Seller’s
    Designated Account by the Due Date and notify the Seller
    of such remittance on the same day or the Seller shall be
    eligible to draw such amounts through the Letter of
    Credit. Similarly, the Seller shall pay all amounts due
    under a Supplementary Bill raised by Procurer(s) by the
    Due Date to concerned Procurer’s designated bank
    account and notify such Procurer(s) of such payment on
    the same day. For such payments by the Procurer(s),
    Rebate as applicable to Monthly Bills pursuant to Article
    8.3.6 shall equally apply.
    8.8.3 In the event of delay in payment of a
    Supplementary Bill by either Party beyond its Due Date,
    a Late Payment Surcharge shall be payable at the same
    terms applicable to the Monthly Bill in Article 8.3.5.
    8.9 The copies of all; notices/offers which are required to
    be sent as per the provisions of this Article 8, shall be
    sent by a party, simultaneously to all parties.”
    Liability of the Late Payment Surcharge which has been saddled
    upon the appellants is at the rate of 2% in excess of applicable SBAR
    per annum, on the amount of outstanding payment, calculated on a day
    to day basis (and compounded with monthly rest) for each day of the
    58
    delay. Therefore, there shall be huge liability of payment of Late
    Payment Surcharge upon the appellants­Rajasthan Discoms.
  92. With regard to the question of interest/late payment surcharge,
    we notice that the plea of change in law was initially raised by APRL in
    the year 2013. A case was also filed by APRL in the year 2013 itself
    raising its claim on such basis. However, the appellants­Rajasthan
    Discoms did not allow the claim regarding change in law, because of
    which APRL was deprived of raising the bills with effect from the date
    of change in law in the year 2013. We are, thus, of the opinion that
    considering the totality of the facts of this case and in order to do
    complete justice and to reduce the liability of the appellants­Rajasthan
    Discoms, payment of 2 per cent in excess of the applicable SBAR per
    annum with monthly rest would be on higher side. In our opinion, it
    would be appropriate to direct the appellants­Rajasthan Discoms to
    pay interest/late payment surcharge as per applicable SBAR for the
    relevant years, which should not exceed 9 per cent per annum. It is
    also provided that instead of monthly rest, the interest would be
    compounded per annum.
  93. We accordingly direct that the rate of interest/late payment
    surcharge would be at SBAR, not exceeding 9 per cent per annum, to
    be compounded annually, and the 2 per cent above the SBAR (as
    59
    provided in Article 8.3.5 of PPA) would not be charged in the present
    case.
  94. Before we part with the case, we may notice that Shri Prashant
    Bhushan, raised the submission with respect to over­invoicing. He
    attracted our attention to the investigation pending before the DRI. He
    has submitted that 40 importers of coal are under investigation by the
    DRI concerning alleged over­invoicing. The letter of rogatory was
    issued. However, learned counsel conceded that there is no ultimate
    conclusion in the investigation reached so far. Thus, we are of the
    opinion that until and unless there is a finding recorded by the
    competent court as to invoicing, the submission cannot be accepted.
    At this stage, it cannot be said that there is over­invoicing. We have
    examined the case on merits with abundant caution, and we find that
    there are concurrent findings of facts recorded by the RERC and the
    APTEL. With respect to the aspect that bid was premised on domestic
    coal, we find that findings recorded do not call for any interference.
  95. A question was raised concerning the maintainability of the
    appeal of the Federation. It is important to mention that the
    Federation was not the party before the RERC, and the APTEL rejected
    its intervention application. The order was not interfered with by this
    Court. Be that as it may. Given the appeal preferred by Rajasthan
    60
    Discoms, we have not examined the maintainability of the Federation’s
    appeal and locus to file an appeal. We leave the question open.
  96. In view of the preceding discussion, the appeals are partly
    allowed to the extent as indicated above.
    No order as to costs.
    …………………….J.
    (Arun Mishra)
    …….……………….J.
    (Vineet Saran)
    …….……………….J.
    (M.R. Shah)
    New Delhi;
    August 31, 2020.