Summary
The Haryana distribution utilities contended that Adani Power (Mundra), in claiming Change in Law compensation for domestic coal shortfall, had not accounted for the benefit of Inter Plant Transfer of linkage coal permitted by a Coal India communication of 19 June 2013, which APTEL held was not a Change in Law. The Supreme Court set that finding aside: the communication records a decision of Coal India, a Government instrumentality, and falls within the PPA's wide definition of 'Law', so Inter Plant Transfer is a Change in Law whose savings in railway transportation cost must be passed on to the distribution companies. The matter was remitted to CERC to work out the effect after hearing all affected DISCOMs; the computation of shortfall compensation as assured coal quantity minus actual supply was upheld.
Issues
- Whether the communication dated 19 June 2013 of Coal India Limited permitting Inter Plant Transfer of coal under the model Fuel Supply Agreement amounts to a 'Change in Law' within the meaning of the power purchase agreements.
- Whether Change in Law compensation for domestic coal shortfall is to be computed as Assured Coal Quantity minus actual supply.
- How the benefit of transportation cost savings arising from Inter Plant Transfer is to be worked out and to whom it must be passed on.
Provisions considered
- Definition of 'Law' and the Change in Law clause, Power Purchase Agreements dated 7 August 2008 between the Haryana Utilities and Adani Power (Mundra) Limited'Law' includes all rules, regulations, orders and notifications by an Indian Governmental Instrumentality; a decision of the Coal India Board communicated to its subsidiaries falls within it. (¶¶ 23, 24, 27, 31)
- Conditions (a) to (f) permitting Inter Plant Transfer of coal, Coal India Limited communication dated 19 June 2013 (modification of the model Fuel Supply Agreement for new power plants)Permits transfer of linkage coal between plants wholly owned by the purchaser, with supply remaining on account of the original plant for commercial purposes; this reflects a decision of Coal India, an instrumentality of the Government of India, and is a Change in Law. (¶¶ 25, 26, 27)
Held
- The communication of 19 June 2013 reflects a decision of Coal India Limited, an instrumentality of the Government of India, and the PPA's definition of 'Law' is wide enough to include orders and notifications by Governmental instrumentalities; APTEL erred in treating it as a mere administrative instruction and not a Change in Law, particularly when CERC had declined to decide the point and APTEL itself soon after held a Coal India circular on evacuation facility charge to be a Change in Law. (¶¶ 24, 27, 28, 29, 30, 31, 35)
- The computation of Change in Law relief for domestic coal shortfall as Assured Coal Quantity minus actual supply stands covered by Energy Watchdog and MSEDCL v. APML and is upheld. (¶¶ 20, 21, 34)
- Before Inter Plant Transfer was permitted the generator had to use its linkage coal only at the original plant and must have factored the railway transportation cost into its bid; the saving in transportation cost resulting from the transfer, being the cost that would have been incurred to the original plant minus the actual cost, must be passed on to the DISCOMs and in turn to consumers. (¶¶ 32, 33)
- Since the change affects the generator, the Haryana Utilities and the Maharashtra and Rajasthan DISCOMs, and the Court lacks expertise to quantify the benefit, CERC as the expert body must work out the effect after notice to and hearing all of them. (¶¶ 33, 36)
Result
Appeal partly allowed; APTEL's finding that the communication of 19 June 2013 is not a Change in Law set aside and Inter Plant Transfer held to be a Change in Law; matter remitted to CERC to work out its effect and calculate the benefits within six months after notice to MSEDCL and the Rajasthan DISCOMs; pending applications disposed of; no costs.