Summary
Adani Power Maharashtra had bid to supply 1320 MW to MSEDCL on the basis that 800 MW would be fuelled by the Lohara coal blocks allotted to it by the Ministry of Coal; after the bid cut-off date the Government of Maharashtra notified the area as part of the Tadoba Andheri Tiger Reserve buffer zone and the blocks were deallocated. MERC and APTEL concurrently held the deallocation a Change in Law, and APTEL directed that compensation be computed with the Lohara coal cost, including transportation, as the base. The Supreme Court dismissed MSEDCL's appeals: the buffer zone notification of 5 May 2010 was an order of a Governmental Instrumentality within the PPA's definition of 'Law', the deallocation was not the generator's fault, MSEDCL as a member of the Expert Committee could not resile from its recommendations, and the remaining issues were covered by earlier judgments.
Issues
- Whether deallocation of the bid-identified Lohara coal blocks, following the Government of Maharashtra's notification of a tiger reserve buffer zone after the bid cut-off date, amounts to a Change in Law under the PPA.
- Whether Change in Law compensation should be computed with the Lohara coal cost including transportation as the base, following the Expert Committee's transfer pricing methodology, rather than linkage coal cost.
- Whether the issues of domestic coal shortfall relief, SHAKTI Policy, carrying cost, station heat rate and gross calorific value warranted interference with APTEL's findings.
Provisions considered
- Article 1.1 (definitions of 'Law' and 'Indian Governmental Instrumentality') and Article 13 (Change in Law), Power Purchase Agreements between MSEDCL and Adani Power Maharashtra LimitedAny order or notification by the Government of Maharashtra or Government of India constitutes 'Law'; the restitutionary principle in Article 13 requires compensation that restores the generator to its position as if no Change in Law had occurred. (¶¶ 42, 43, 45, 49)
- Section 38V, Wild Life (Protection) Act, 1972The State Government's power to notify a buffer zone, exercised by notification dated 5 May 2010 which included the Lohara coal block area, was the Change in Law; none of the statutory steps towards it had begun before the bid cut-off date. (¶¶ 4, 44, 45)
- Provisions constituting CEA, CERC, State Commissions and APTEL as expert bodies, Electricity Act, 2003Concurrent findings of MERC and APTEL are not to be interfered with unless perverse, in ignorance of mandatory statutory provisions or based on extraneous considerations. (¶¶ 37, 40, 41)
Held
- The notification of 5 May 2010 declaring the buffer zone of the Tadoba Andheri Tiger Reserve, which included the Lohara coal blocks, was issued by a Governmental Instrumentality long after the bid cut-off date and must be construed as a Change in Law; the bid was premised on the Ministry of Coal's allocation of those blocks, and but for the notification the coal would have been available to the generator. (¶¶ 43, 44, 45, 46, 48)
- MSEDCL, having been a member of the Expert Committee constituted by MERC which found the generator entitled to compensation, cannot take a stand contrary to its decision; the deallocation involved no fault of the generator, as Coal India recognised by returning its bank guarantee. (¶¶ 46, 47)
- APTEL rightly relied on the Expert Committee's transfer pricing methodology, arrived at through a consultative process with external experts, to fix the Lohara coal cost including transportation as the base for compensation; taking linkage coal cost as the base would not restitute the generator, and the additional transport cost is what the methodology grants. (¶¶ 49, 50)
- The issues of shortfall relief on actuals against 100% of normative requirement, SHAKTI Policy, station heat rate and actual GCV as received are covered by MSEDCL v. APML and the judgments of even date; the carrying cost at the MYT Regulations rate stands as MSEDCL itself had sought it before MERC. (¶¶ 32, 33, 34, 35, 36, 38)
Result
Appeals dismissed; APTEL's judgment dated 5 October 2020 holding deallocation of the Lohara coal blocks to be a Change in Law and fixing the Lohara coal cost including transportation as the base for compensation upheld; pending applications disposed of; no costs.