JSA successfully represented Adani Power Ltd. (“Adani”) before Appellate Tribunal for Electricity (“APTEL”). By Judgment dated 18.04.2024, APTEL held that Adani is entitled to (a) Change in Law compensation on account of levy of Evacuation Facility Charges by Coal India, and (b) Carrying Cost at the rate of Late Payment Surcharge (on compounding basis) in terms of the Power Purchase Agreement (“PPA”). This is first time that APTEL has allowed Carrying Cost at the rate of Late Payment Surcharge, on compounding basis.
Following are some key findings of APTEL:
- The restitutionary principles engrained in relevant Article of the PPA that a party should be compensated for the time value of money, by virtue of a legal fiction, would be required to be invoked for grant of compound interest on Carrying Cost on account of a Change in Law event, from the date on which the Change in Law event occurred (@pgs. 24-26)
- Rejected Discoms’ contention that Adani should be entitled to Carrying Cost only after the Supplementary Bill is raised, as accepting it would result in Adani being deprived of the benefit, of Carrying Cost, for a period of more than six years between the date on which the Change in Law and date of this Judgment, thereby defeating the very object sought to be served by application of the restitutionary principle (@pg. 27).
- Adani is entitled to Carrying Cost at rate of Late Payment Surcharge (@pg. 28).
- Levy of Evacuation Facility Charges (on despatch of coal) through Coal India Limited’s notification dated 19.12.2017 is a Change in Law event (@pg. 26).
- Decision rendered by a larger Bench of Supreme Court as understood by subsequent smaller Bench of the Supreme Court would require lower Courts/Tribunals in the hierarchy to follow the later decision (@pg. 30).
- For the period of delay in filing of Appeal, if any, no Carrying Cost is payable to the Appellant (@pg. 34).
This judgement has finally settled the law regarding a highly contentious issue viz. grant of Carrying Cost at the rate of Late Payment Surcharge (on compounding basis) in terms of PPA. This should put to rest several long-standing litigations initiated by Discoms and will help several other generators in the sector where similar issues are pending. We expect this Judgment to also foster investor confidence in the power sector as it attempts to balance public and private interests in lines with the principles envisaged in Section 61 of the Electricity Act, 2003.
Our Disputes Team Comprised Joint Managing Partner – Amit Kapur, Partner – Poonam Verma Sengupta, Senior Associate – Saunak Kumar Rajguru and Associate – Subham Bhut.
Amit Kapur is a Partner with JSA since 2000. He has anchored the Firm’s Infrastructure practice since 1997 with focus on infrastructure sectors. Having served as Senior Partner of JSA since 01.04.2017, on 01.01.2019, Amit assumed office as the Joint Managing Partner of the Firm.