Jaipur Vidyut Vitran Nigam Ltd. vs. Adani Power Rajasthan Ltd. [March 18, 2024]
Citation: 2024 INSC 213; [2024] 3 S.C.R. 1023-1043
Background and Facts
The dispute centered on a Power Purchase Agreement (PPA) between Adani Power Rajasthan Ltd. (APRL) and Jaipur Vidyut Vitran Nigam Ltd. (JVVNL) for the supply of 1200 MW of electricity at a fixed tariff. In December 2017, Coal India Limited (CIL) imposed an Evacuation Facility Charge (EFC) of ₹50 per tonne of coal, increasing APRL’s operational costs. APRL invoked the “Change in Law” clause under the PPA, seeking compensation for these additional charges.
APRL’s claim was initially partially allowed by the Rajasthan Electricity Regulatory Commission (RERC). Both parties appealed to the Appellate Tribunal for Electricity (APTEL), which ruled in favor of APRL, holding that the EFC constituted a “change in law” and entitled APRL to compensation. JVVNL and other Rajasthan discoms challenged this decision before the Supreme Court.
Supreme Court’s Analysis and Ruling
The Supreme Court, with Justices M.M. Sundresh and Rajesh Bindal on the bench, upheld the APTEL’s decision. The Court ruled that the statutory levy imposed by CIL was indeed a “change in law” under the PPA. The bench applied the restitution principle, stating that APRL must be restored to the same economic position it would have been in had the change in law not occurred. Thus, APRL was entitled to compensation for the increased costs due to the EFC.
The Court dismissed the appeal by JVVNL and Rajasthan discoms, finding no merit in their arguments. The judgment reinforced that any statutory levy by a government entity affecting the cost structure under a PPA qualifies as a “change in law,” triggering compensation provisions to maintain the contractual balance.
Late Payment Surcharge (LPS) Issue
Separately, APRL sought over ₹1,300 crore as Late Payment Surcharge (LPS) from JVVNL through a miscellaneous application. The Supreme Court dismissed this plea, ruling that such relief could not be sought via a miscellaneous application after the main judgment was delivered. The Court imposed a cost of ₹50,000 on APRL for this procedural impropriety, clarifying that the claim for LPS must be pursued before the appropriate forum and not through post-judgment applications.
Significance
This judgment affirms the enforceability of “change in law” clauses in power sector contracts, ensuring that private power producers are compensated for statutory cost escalations. It upholds the principle of economic restitution and contractual balance, while also drawing a clear procedural boundary regarding claims for late payment surcharges after the conclusion of the main proceedings.
Citation
2024 INSC 213; [2024] 3 S.C.R. 1023-1043
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