Supreme Court adds a dimension to a relief under ‘Change in Law’ provision of the PPA- allows restitution on the basis of actual domestic coal shortfall

  • JSA successfully led Adani Power Maharashtra Ltd. (“Adani”) in a Civil Appeal filed by the Maharashtra Discom. The case related to an interpretation of a ‘Change in Law’ event being New Coal Distribution Policy (“NCDP”), 2007 [assuring 100% normative coal requirement] changing to NCDP 2013 [coal supply assurance reduced to 65%, 65%, 67% and 75% of ACQ]. Supreme Court in its Judgment dated 03.03.2023 accepted all submissions of Adani, dismissed the Civil Appeal filed by Maharashtra Discom to inter alia hold that Change in Law compensation to be paid to Adani for such shortfall must be on ‘actuals’ viz. ‘to the extent’ the shortfall in coal supply exists.
  • Three issues were framed and adjudicated by the Supreme Court: –
    • Station Heat Rate (“SHR”) – Whether for computing Change in Law relief, the SHR [NOT a bid parameter for CASE-1] be considered on ‘actuals’ OR as per technical information submitted in bid?
    • Gross Calorific Value (“GCV”) – Whether GCV of coal [NOT a bid parameter for CASE-1] be considered on ‘actuals’ viz. ‘as received’ for computing Change in Law relief?
    • Quantum/Trigger Levels – Whether Change in Law relief on account of NCDP 2013 should be on ‘actuals’ viz. as against 100% of normative coal requirement assured in terms of NCDP 2007 OR restricted to trigger levels in NCDP 2013 viz. 65%, 65%, 67% and 75% of ACQ?
  • All of the said three issues have been decided in favour of Adani. For ease of reference, key findings of the Supreme Court in Judgment dated 03.03.2023 are summarized below: –
    • SHR should be considered as per the ‘Tariff Regulations’ or ‘actuals’, whichever is lower. Considering lower of the two figures balances the interests of generators as well as consumers.
    • GCV ‘as received’ should be the appropriate basis to assess the quantum of shortfall in domestic coal and calculate the Change in Law compensation accordingly.
    • Change in Law relief on account of NCDP 2013 should be on ‘actuals’ viz. as against 100% of normative coal requirement assured in terms of NCDP 2007.
    • The Discoms cannot be expected to argue contrary to the stand of the Government, which clearly provides that the generators would be entitled to pass-through for the coal required to be imported or purchased from the open market on the ground of Change in Law. Different instrumentalities of the State taking contradictory/different positions/stands on the same issue is not permissible.
    • Discoms contention that generators should seek relief from Coal Companies for domestic coal shortfall is unreasonable.
    • A litigation where concurrent orders passed by the Regulatory Body and the Appellate Forum are brought in Appeal, effaces the purpose of the Electricity Act, 2003. Courts should be slow in interfering with the decisions taken by the experts in the field.
  • This matter emanated out of an Order dated 07.03.2008 passed by Maharashtra Electricity Regulatory Commission (“MERC”) wherein MERC had held it against Adani on the above three issues. On an Appeal filed by Adani (Appeal No. 182 of 2019), Appellate Tribunal for Electricity by its Judgment dated 14.09.2020 had reversed the findings of MERC and decided the above three issues in favour of Adani. APTEL’s findings on the above three issues have been now upheld by the Supreme Court in Civil Appeal No. 684 of 2021.
  • This Supreme Court Judgment qualifies as a ‘Landmark Judgment’ for the issues dealt by it. 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.


Our Dispute Team Comprised Joint Managing Partner – Amit Kapur,  Lead Partner – Poonam Verma, Associate – Saunak Kumar Rajguru, and Associate – Subham Bhut.