Scope of appeal — Section 125, Electricity Act, 2003. — An appeal under Section 125 of the Electricity Act, 2003 lies only on substantial questions of law as envisaged by Section 100 CPC; concurrent findings of fact by expert regulatory bodies (CERC/APTEL) will not be disturbed unless shown to be perverse, arbitrary, in violation of statute or based on extraneous considerations.
Coal linkage and FSAs — project-wide allocation. — Where Standing Linkage Committee minutes, LOAs and Fuel Supply Agreements indicate allocation of firm and tapering linkage and captive coal for the generating station/project as a whole, such allocation is not PPA-specific and must be understood as for the station in aggregate.
FSA interpretation — ACQ tied to aggregate PPA capacity. — Clause 4.1.1 of the FSA making Annual Contracted Quantity (ACQ) “in proportion to the percentage of generation covered under long-term PPAs” means coal supplied under the FSA is to be released against total PPA capacity; ACQ is operationalised in relation to PPAs but the entitlement under the FSA is station-wide.
Apportionment of linkage and alternate coal costs — pro rata. — Shortfall in firm/tapering linkage met through imported or open-market coal and resultant additional cost must be apportioned pro rata among all beneficiaries (DISCOMs) in proportion to scheduled/ supplied energy; the CERC’s methodology for computing such adjustment is validly applied.
Impleading of parties — necessity of GRIDCO. — A cost-plus PPA under Section 62 need not be impleaded as a necessary party to petitions commenced under Section 63 (competitive-bidding PPAs) where the relief sought relates to Section 63 PPAs; absence of GRIDCO (a Section 62 procurer) in GKEL’s Petitions Nos. 79 and 105 did not vitiate the proceedings.
Doctrine of approbation and reprobation — estoppel by conduct. — A procurer (Haryana Utilities) which accepted a methodology or position before the regulatory forum cannot later adopt a contrary stance after adverse orders; approbation and reprobation will bar inconsistent litigation posture.
Avoidance of anomalous cross-subsidy and equal treatment. — Treating linkage coal as PPA-specific in the facts of the case would lead to anomalous cross-subsidisation among states and unequal treatment of beneficiaries; pro rata apportionment safeguards equity and prevents discriminatory allocations.
Judicial restraint in regulatory matters. — Courts should be slow to disturb reasoned decisions of expert regulatory bodies (CERC/APTEL) on technical and factual matters related to tariff, fuel allocation and computation of compensation unless the decision is shown to be legally unsustainable.
Conclusion / Order. — Appeals dismissed; the APTEL judgment of 20.12.2019 upholding the CERC order of 20.3.2018 (which directed pro rata payment of supplementary bills raised by GKEL for July 2016–March 2017 and late payment surcharge) is affirmed.
2025 INSC 1079
Civil Appeal No.1929 of 2020 etc. Page 1 of 57
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1929 OF 2020
HARYANA POWER PURCHASE
CENTRE (HPPC) AND OTHERS … APPELLANTS
versus
GMR KAMALANGA ENERGY
LIMITED AND OTHERS … RESPONDENTS
with
CIVIL APPEAL NO. 3429 OF 2020
J U D G M E N T
B.R.GAVAI, CJI.
FACTUAL ASPECTS
1. These appeals take exception to the judgment and final order
dated 20th December 2019 passed by the Appellate Tribunal for
Electricity, New Delhi1 in Appeal No. 135 of 2018 along with
Appeal No. 54 of 2019, whereby the learned APTEL dismissed the
said appeals and upheld the order dated 20th March 2018 passed
by the Central Electricity Regulatory Commission, New Delhi2 in
Petition No. 105/MP/20173.
1 Hereinafter referred to as the ‘APTEL’
2 Hereinafter referred to as the ‘CERC’
33 Hereinafter referred to as ‘Petition No. 105’
Civil Appeal No.1929 of 2020 etc. Page 2 of 57
2. We have two appeals before us, both of which challenge the
same judgment and final order of the learned APTEL. The first
appeal being Civil Appeal No. 1929 of 2020 has been filed by
Haryana Power Purchase Centre and two others4 whereas the
second appeal being Civil Appeal No. 3429 of 2020 has been filed
by one GRID Corporation of Orissa Limited5. For the sake of clarity
and to avoid any confusion, the parties will be referred to
according to their positions in the first of the two civil appeals.
3. Before we proceed with the facts of the case, it would be
apposite to give a brief overview of the parties before us.
3.1 HPCC (Appellant No.1) is the nodal agency for the
procurement of power on behalf of the distribution licensees in
the State of Haryana, being Dakshin Haryana Bijli Vitran Nigam
Limited (Appellant No.2) and Uttar Haryana Bijli Vitran Nigam
Limited (Appellant No.3). Haryana Power Generation Corporation
Limited (Proforma Respondent No.6) is the body corporate that
was responsible for the initiation of the competitive bid process on
behalf of Appellant Nos. 2 and 3 for procurement of power in the
4 Hereinafter referred to as the ‘HPCC’
5 Hereinafter referred to as ‘GRIDCO’
Civil Appeal No.1929 of 2020 etc. Page 3 of 57
State of Haryana. Together, the said parties may be referred to as
the “Haryana Utilities”.
3.2 GMR Kamalanga Energy Limited6 (Respondent No.1) is a
generating company within the meaning of the Electricity Act,
20037. Notably, GKEL is a special purpose vehicle of GMR Energy
Limited8 which was the predecessor-in-interest of the Respondent
No.1.
3.3 PTC India Limited9 (Respondent No.2) is a trading licensee
within the meaning of the 2003 Act. Respondent No. 2 had an
arrangement with GKEL for the procurement of power.
3.4 CERC (Respondent No.3) is the regulatory commission under
the 2003 Act.
3.5 GRIDCO (Respondent No.4) is a licensee under the 2003 Act
which is responsible for procuring power for supply within the
State of Odisha.
3.6 Similarly, Bihar State Power (Holding) Company10
(Respondent No.5) is a licensee under the 2003 Act which is
6 Hereinafter referred to as ‘GKEL’
7 Hereinafter referred to as the ‘2003 Act’
8 Hereinafter referred to as ‘GEL’
9 Hereinafter referred to as ‘PTC’
10 Hereinafter referred to as ‘Bihar Utilities’
Civil Appeal No.1929 of 2020 etc. Page 4 of 57
responsible for procuring power for supply within the State of
Bihar.
4. Having given a brief overview of the parties in the civil
appeals, we may now proceed to examine the facts which lead to
the present appeals. The facts are as follows:-
4.1 With the intention to set up a thermal power plant of about
1,000 MW comprising of two units of about 500 MW each at village
Kamalanga, Dhenkanal in the State of Odisha, GEL entered into
a Memorandum of Understanding (MoU) with the Government of
Odisha on 9th June 2006. Per the terms of the MoU, the power
project as envisaged was to operate with coal as the primary fuel,
for which purpose the State of Odisha was to either allot coal
blocks upon receipt of sanction from the Government of India or
allot long-term coal linkage of such quality and quantity as
required for the project. The MoU further necessitated that a
nominated agency authorized by the Government of Odisha would
have the right to purchase up to 25% of power sent out from the
thermal power plants. While initially, the MoU envisaged the
setting up of thermal plants with an aggregate capacity of 1,000
MW (500 x 2), by way of alteration carried out subsequently, it
was decided that GKEL would develop four power plants each
Civil Appeal No.1929 of 2020 etc. Page 5 of 57
having a capacity of 350 MW. Three out of the four said units have
been installed, however, the fourth unit of 350 MW is yet to be
installed. Subsequently, this project was accorded the Mega
Power Project status by the Ministry of Power, Government of
India vide its letter dated 1st February 2012.
4.2 In terms of the MoU, on 28th September 2006, GKEL
executed a Power Purchase Agreement with GRIDCO (Respondent
No.4) being the nominated agency of the State of Odisha for the
sale of 25% of the gross power generated by GKEL to GRIDCO,
which came to 262.5 MW, upon the installed capacity reaching
1050 MW (350 MW x 3).
4.3 Thereafter, on 5th January 2007, GKEL addressed a letter to
the Government of Odisha requesting the State Government for a
recommendation to the Ministry of Coal, Government of India for
the allotment of long-term coal linkage in favour of GKEL.
Accordingly, the Department of Energy, Government of Odisha
vide letters dated 19th December 2005 and 12th January 2007
pursued the matter with the Government of India.
4.4 While this was underway, on 1st March 2007, the Haryana
Power Generation Corporation (Respondent No.6) issued a
Civil Appeal No.1929 of 2020 etc. Page 6 of 57
Request for Proposal11 on behalf of the Haryana Utilities for
procurement of 2,000 MW power on a long-term basis. The said
RfP envisaged the procurement of power by way of a tariff-based
bidding process as provided for under Section 63 of the 2003 Act.
In order to qualify for the bid, all the bidders were required to
submit proof of fuel arrangements in terms of Clauses 2.1.5 and
2.1.5 A of the RfP which read thus: -
“2.1.5 All Bidders are required to submit copies of
one or more of the following :-
(a)Linkage letter from the fuel supplier; or
(b)Fuel Supply Agreement between the Bidder and
Fuel Supplier; or
(c) Coal Block Allocation letter/In principle
approval for allocation of captive block from
Ministry of Coal; or
(d)Other details submitted by Bidders subject to
acceptance by the Procurer as sufficient proof for
demonstration of ability,
The above proof of fuel arrangement is not
required in case the fuel to be used by the Bidder
is imported fuel.
2.1.5 A The Successful Bidder is required to show
a firm fuel supply agreement/linkage by the time
limit specified for fulfilment of Conditions
Subsequent as mentioned in the PPA”
11 Hereinafter referred to as ‘RfP’
Civil Appeal No.1929 of 2020 etc. Page 7 of 57
4.5 Subsequently, the Standing Linkage Committee (Long
Term)12 of the Government of India in a meeting dated 2nd August
2007 approved a firm coal linkage of 2.14 MTPA13 for a 500 MW
power plant as had been originally envisaged under the 1,000 MW
(500 MW x 2) configuration.
4.6 In addition to the said approval, the Ministry of Coal,
Government of India intimated its decision to allocate Rampia and
Dip Side Rampia coal blocks in Odisha to a consortium of six
generating companies including GEL. GEL’s share was 4.6 MTPA
which corresponded to the project capacity of 1,000 MW. The
approval came to pass when the Ministry of Coal, Government of
India confirmed the allotment of the said coal blocks to the
aforementioned consortium vide letter dated 17th January 2008.
4.7 In the meanwhile, on 31st October 2007, GEL entered into
an agreement with PTC in order to enable the latter to participate
in the bidding process initiated by Haryana Power Generation
Corporation (Respondent No. 6) by way of the RfP. In pursuit of
the same, PTC submitted its bid for sale of 300 MW of power to
the Haryana Utilities and the bid was accepted. Thereafter, vide
12 Hereinafter referred to as ‘SLC-LT’
13 Short for ‘million tonnes per annum’
Civil Appeal No.1929 of 2020 etc. Page 8 of 57
an order dated 31st July 2008, the Haryana Electricity Regulatory
Commission (HERC) adopted the tariff successful bidders
including PTC under Section 63 of the 2003 Act.
4.8 Subsequently, upon the allocation of the Rampia and Dip
Side Rampia coal blocks to GEL and the remaining allottees of the
consortium, Mahanadi Coalfields Limited14 issued a Letter of
Assurance15 dated 25th July 2008 in favour of GEL for providing
firm linkage of 2.14 MPTA coal, being the normative requirement
of one of the power plants having capacity of 500 MW.
4.9 Thereafter, on 7th August 2008, PTC executed two separate
Power Purchase Agreements16 with the Dakshin Haryana Bijli
Vitran Nigam Limited (Appellant No.2) and Uttar Haryana Bijli
Vitran Nigam Limited (Appellant No.3) for supply of 150 MW of
power to each, aggregating to 300 MW with the Haryana STU-Inter
Connection Point being the delivery point. Notably, the fuel type
proposed to be utilized was Coal India Limited (CIL) coal linkage
and it was proposed to be sourced from the MCL.
4.10 As the captive coal from Rampia and Dip Side Rampia had
not become available, on 12th November 2008, the SLC-LT
14 Hereinafter referred to as ‘MCL’
15 Hereinafter referred to as ‘LoA’
16 Hereinafter referred to as ‘PPA’
Civil Appeal No.1929 of 2020 etc. Page 9 of 57
approved the tapering coal linkage of 2.384 MTPA for 550 MW of
the power project, against the coal block allocation to the
concerned project. In view of the same, on 8th July 2009, MCL
issued a LoA to GEL providing tapering linkage as aforementioned
till captive coal blocks became available.
4.11 Subsequently, as aforementioned, GKEL and GRIDCO
executed an amended and restated PPA on 4th January 2011
which altered the configuration of the thermal power plants and
their output capacity, while keeping intact the entitlement of
GRIDCO to 25% gross power generated by GKEL.
4.12 On 9th November 2011, GKEL entered into a PPA with Bihar
State Electricity Board, being the predecessor to Bihar Utilities
for supply of 260 MW of net power/282 MW of gross power. Per
the said PPA, the fuel source proposed to be utilized was Coal
India Limited (CIL) coal linkage and the coal was proposed to be
sourced from MCL and the Rampia and Dip Side Rampia coal
blocks allocated to GKEL.
4.13 Thereafter, on 26th March 2013, MCL signed a Fuel Supply
Agreement17 with GKEL for supply of coal to the power plants (3 x
17 Hereinafter referred to as ‘FSA’
Civil Appeal No.1929 of 2020 etc. Page 10 of 57
350 MW) being 500 MW under normal linkage and 425 MW
generation capacity covered under long term PPA i.e., an
aggregate of 1.819 MTPA/18.19 lakh tonnes. The FSA was
amended from time to time, initially to increase the quantum of
coal supplied from 1.819 MTPA to 2.0009 MTPA for the same
capacity of 425 MW and thereafter, the FSA was further amended
on 18th September 2014 to increase the quantum of coal supplied
to 2.14 MTPA on account of operationalization of the PPA with
Bihar Utilities.
4.14 Subsequently, on 28th August 2013, GKEL entered into
another independent FSA with MCL for tapering linkage.
4.15 In the meanwhile, on 23rd April 2013, GKEL preferred
Petition No. 79/MP/201318 before the CERC against Haryana
Utilities, being a petition under Section 79 of the 2003 Act read
with the statutory framework governing the procurement of power
through the competitive bidding process and Articles 12, 13 and
17 of the PPA dated 7th August 2008 executed between PTC and
the Haryana Utilities and the back-to-back PPA dated 12th March
2009 executed between GEL and PTC for compensation due to
18 Hereinafter referred to as ‘Petition No. 79’
Civil Appeal No.1929 of 2020 etc. Page 11 of 57
force majeure events and Change in Law during the operation
period. In the said petition, the GKEL sought adjustment of tariff
on account of events of Change in Law which affected the power
project during the operation period in order to restore GKEL to the
same economic position that it would have been in if the
concerned events had never occurred. It is notable that GRIDCO
was not made a party to this petition.
4.16 Soon thereafter, Unit I of the power project achieved
commercial operation and GKEL began supplying power to
GRIDCO w.e.f. 30th April 2013. Within a few months, Unit II of the
power project achieved commercial operation and GKEL
commenced the supply of power to Haryana Utilities w.e.f. 7th
February 2014. Subsequently, Unit III of the power project
achieved commercial operation on 25th March 2014 and thereafter
GKEL began supplying power to Bihar Utilities w.e.f. 1st
September 2014.
4.17 At this stage, it would be apposite to run through the
quantum of power that was contracted to be delivered under each
of the long-term PPAs, which are as follows:-
(a) Supply of 350 MW of gross power (Stage 1: 262.5 MW and
Stage 2: 87.5 MW) to GRIDCO in terms of PPA dated 28th
Civil Appeal No.1929 of 2020 etc. Page 12 of 57
September 2006 (as amended on 4th January 2011, with
delivery point as Odisha STU Interconnection point).
(b) Supply of 350 MW of gross power (300 MW net of
transmission losses and auxiliary consumption) to Haryana
Utilities based on PPA dated 7th August 2008 and back-toback PPA dated 12th March 2009 executed between GEL and
PTC.
(c) Supply of 282 MW of gross power (260 MW net of auxiliary
consumption) to Bihar State Electricity Board in term of PPA
dated 9th November 2011, with delivery point as the Bihar
STU Interconnection point.
4.18 The CERC vide order dated 3rd February 2016 disposed of
the Petition No. 79 filed by GKEL in the following terms:-
(i) At the time of bid submission, the notified rate of royalty on
coal was Rs. 55+5% of ROM price per tonne. This was
subsequently increased to an ad-valorem rate of 14% on
price of coal. The CERC held that GKEL would be entitled to
compensation for the same from Haryana Utilities.
(ii) At the time of bid submission, there was no clean energy cess
on coal. However, this was subsequently introduced by way
of the Finance Act 2010 whereby statutory cess of Rs. 100
Civil Appeal No.1929 of 2020 etc. Page 13 of 57
per tonne had been levied on coal. This was subsequently
reduced to Rs. 50 per tonne. The CERC held that GKEL
would be entitled to recover clean energy cess from Haryana
Utilities in proportion to the coal consumed for generation
and supply of electricity to the appellants.
(iii) At the time of bid submission, there was no excise duty on
coal. Excise duty @ 6% on the determined sale price of coal
was introduced by the Finance Act 2012. The CERC held
that GKEL would be entitled to compensation through
adjustment in tariff on account of the freshly applicable
excise duty on coal.
(iv) Owing to shortfall in the linkage coal and also due to transfer
of certain quantum of tapering linkage from MCL to Eastern
Coalfields Limited, GKEL had to import coal and also source
open market coal. This had led to an additional cost of Rs.
46.10 crores in the generation of power for the Haryana
Utilities during the months of February and May to July
2014. The CERC held that GKEL would be entitled to
compensation for the same and accordingly set out a
mechanism for computing the actual additional cost
incurred in a month to mitigate the shortfall in linkage coal.
Civil Appeal No.1929 of 2020 etc. Page 14 of 57
The actual compensation payable was to be calculated and
certified by the auditor in terms of the method laid down by
the CERC.
(v) At the time of submission of the bid, the pricing of coal was
based on the UHV19 method which was Rs. 400 per tonne for
F-grade, run-of-mine coal. Thereafter, the Government of
India directed a switchover from UHV-based pricing system
to GCV20-based pricing system. This led to a significant
increase in price. The resultant impact of the change was an
increase in cost of Rs. 10.76 crores for a full year. The CERC
disallowed this claim, holding that any decision affecting the
price of inputs for generating electricity including coal could
not be covered under Change in Law.
(vi) GKEL had also raised claims for increase in rail freight
charges owing to busy season surcharge and development
surcharge. CERC disallowed this claim.
(vii) GKEL also raised claims towards compensation/payment for
increase in MAT21 rate from 11.33% to 20.01% as brought in
by the Finance Act, 2012. This claim was also disallowed.
19 Short for ‘Useful Heat Value’
20 Short for ‘Gross Calorific Value’
21 Short for ‘Minimum alternate tax’
Civil Appeal No.1929 of 2020 etc. Page 15 of 57
(viii) A claim was raised by GKEL for payment towards the
increase in VAT22 from 4% to 5%. This claim was disallowed.
(ix) A claim was also raised for payment/compensation owing to
increase in water charges, which was disallowed.
4.19 It is notable that GKEL had preferred a similar petition
being Petition No. 112/MP/201523 against the Bihar Utilities with
regard to the PPA executed between the said parties for
compensation due to Change in Law which impacted revenues
and costs during the operating period. Vide order dated 7th April
2017, the CERC disposed of the petition by allowing all such
claims which fell within the parameters of Change in Law events.
4.20 Subsequently, in terms of the order dated 3rd February
2016 passed in Petition No. 79, GKEL raised supplementary bills
towards compensation for ‘Change in Law’ events as approved by
the CERC, by pro-rating coal received from various sources for the
period commencing from February 2014 onwards. The bills were
accompanied by Form 15, detailed annexures and calculations
which clearly showed apportionment of firm linkage coal
corresponding to respective PPA capacities.
22 Short for ‘Value added tax’
23 Hereinafter referred to as ‘Petition No. 112’
Civil Appeal No.1929 of 2020 etc. Page 16 of 57
4.21 Disputing the supplementary bills raised by GKEL, Haryana
Utilities wrote to PTC on 22nd September 2016 seeking certain
clarifications as to whether the bills were as per the order of the
CERC dated 3rd February 2016. GKEL responded to the letter on
6th October 2016 wherein it contended that as per CERC’s order,
it was entitled to claim additional cost incurred during a month
in respect of imported coal, open market coal and tapering coal or
any other coal purchased to make up the shortfall in the firm
linkage coal supplied by MCL.
4.22 Being dissatisfied with the response, Haryana Utilities
refused to make payments. To resolve the issue, a meeting was
held on 25th January 2017, however, the matter could not be
resolved. In light of the same, it was decided by PTC that the
supplementary bills raised by GKEL for the period between July
2016 to November 2016 would be considered to be disputed bills.
4.23 In order to resolve the issue, another meeting was convened
between the parties on 24th April 2017 wherein it was jointly
agreed that a clarificatory petition/review petition would be filed
before the CERC.
4.24 Thereafter, GKEL preferred Petition No. 105 before the
CERC under Section 79(1)(b) and (f) of the 2003 Act read with
Civil Appeal No.1929 of 2020 etc. Page 17 of 57
Articles 11.6 and 17 of the PPA dated 7th August 2008 for the
recovery of the outstanding amount from the Haryana Utilities
raised vide supplementary bills.
4.25 The CERC vide order dated 20th March 2018 disposed of the
said petition by directing the Haryana Utilities to pay the
supplementary bills raised by GKEL for the period from July 2016
to March 2017 along with late payment surcharge as per the
provisions of the PPA executed between the parties within one
month. The CERC held, in terms of the previous order dated 3rd
February 2017 as well as the decision of this Court in Energy
Watchdog v. Central Electricity Regulatory Commission and
Others24, GKEL would be eligible for relief for any shortfall in the
firm linkage and tapering linkage met through import and open
market coal. To avoid putting GRIDCO and Bihar Utilities at a
disadvantage, the CERC further directed that the firm and
tapering linkage coal supplied to GKEL would have to be
apportioned on a pro rata basis to all the beneficiaries of the
project and the cost of procurement of coal from alternate sources
24 (2017) 14 SCC 80
Civil Appeal No.1929 of 2020 etc. Page 18 of 57
to meet the shortfall would also be apportioned pro rata based on
power supplied to beneficiaries.
4.26 Aggrieved thereby, Haryana Utilities preferred Appeal No.
135 of 2018 before the learned APTEL. Subsequently, GRIDCO
preferred Appeal No. 54 of 2019 before the learned APTEL.
4.27 The learned APTEL vide the common judgment and final
order dated 20th December 2019 dismissed both the appeals and
upheld the order of the CERC.
4.28 Hence, these civil appeals under Section 125 of the 2003
Act.
SUBMISSIONS
5. We have heard Shri M.G. Ramachandran, learned Senior
Counsel appearing for the appellants, Dr. Abhishek Manu
Singhvi, learned Senior Counsel and Shri Vishrov Mukherjee,
learned counsel appearing for Respondent No.1, Ms. Prerna
Singh, learned counsel appearing for Respondent No.2, Shri Raj
Kumar Mehta, learned counsel appearing for Respondent No. 4
and Shri S.B. Upadhyay, learned Senior Counsel appearing for
Respondent No.5.
6. Shri Ramchandran, learned Senior Counsel appearing on
behalf of the Haryana Utilities submitted that from the perusal of
Civil Appeal No.1929 of 2020 etc. Page 19 of 57
the RfP issued by Haryana Utilities in March, 2007 and the bid
submitted by GKEL on 23rd November 2007 through PTC, it is
clear that the bidders were required to submit the details with
regard to fuel arrangement, source of fuel among other
particulars. It is equally clear that while submitting the bid, GKEL
had shown the source of fuel to be firm linkage granted by way of
SLC-LT meeting held on 2nd August 2007. It is further submitted
that the perusal of PPA dated 7th August 2008 between Haryana
Utilities and PTC would also show that the PPA was based on firm
linkage coal from MCL. It is submitted that as against this, the
PPA dated 9th November 2011, entered into by GKEL with Bihar
Utilities clearly indicated the sources of fuel as firm linkage as well
as Rampia and Dip Side of Rampia coal block allotment (tapering
linkage).
7. Shri Ramchandran further submitted that FSA as well as the
LoA in favour of GKEL for the first phase was unit specific. It is
submitted that FSA becomes operational in proportion to the
generation covered under long term PPAs. It is submitted that at
the time when the FSA dated 26th March 2013 was signed, even
though the linkage was for 500 MW, only 425 MW was considered
as generation capacity. This was so since the PPAs with Haryana
Civil Appeal No.1929 of 2020 etc. Page 20 of 57
Utilities for 300 MW as well as with GRIDCO for 125 MW were the
only long term PPAs at that time. Shri Ramchandran further
submitted that subsequently, when the Bihar PPA became
operational, the capacity under the FSA vis-à-vis firm linkage was
modified by specific additional 29.55 MW (out of a total Bihar PPA
capacity of 260 MW).
8. Shri Ramchandran contended that the Haryana Utilities
would be entitled to supply of 300 MW of energy from the firm
linkage whereas GRIDCO would be entitled to supply of 125 MW
energy produced using the coal available from the firm linkage. It
is, therefore, submitted that the Haryana Utilities cannot be
burdened with the additional cost incurred on account of
production of coal from the MCL tapering linkage. Shri
Ramchandran submitted that the difference on account of the use
of fuel from tapering linkage will have to be borne only by the
GRIDCO and Bihar Utilities inasmuch as the said coal was used
for production of power for Unit II of 200 MW and Unit III of 350
MW. It is, therefore, submitted that both the CERC as well as the
learned APTEL erred in putting the burden on the Haryana
Utilities whereas the same should have been apportioned to Bihar
Utilities and GRIDCO.
Civil Appeal No.1929 of 2020 etc. Page 21 of 57
9. Shri Raj Kumar Mehta, learned counsel appearing on behalf
of GRIDCO submitted that it was the PPA with GRIDCO which
came to be operationalized first in April 2013. It is submitted that
even though GRIDCO’s share in the installed capacity of the
thermal station of GKEL was 25%, the order dated 3rd February
2016 in Petition No. 79 and order dated 20th March, 2018 in
Petition No. 105 were passed without impleading GRIDCO. It is
submitted that GRIDCO was a necessary and proper party as its
rights were adversely affected. It is submitted that GRIDCO was
also not impleaded in the appeal being Appeal No. 135 of 2018
filed by the Haryana Utilities before the learned APTEL. It is
submitted that on account of the order dated 28th November 2018
of the learned APTEL, GRIDCO came to be impleaded in the said
appeal.
10. Shri Mehta further submitted that the reasoning given by the
learned APTEL that since GRIDCO’s PPA was Cost Plus Tariff PPA
under Section 62 of the 2003 Act whereas the proceedings before
the CERC and the learned APTEL were initiated seeking
compensation on the grounds of Change in Law with regard to
Haryana Utilities and Bihar Utilities which fell under Section 63
of the 2003 Act and therefore, GRIDCO was not necessary party,
Civil Appeal No.1929 of 2020 etc. Page 22 of 57
is wholly unsustainable. It is submitted that GKEL had
specifically prayed for pro rating of linkage coal amongst all the
three utilities namely GRIDCO, Haryana Utilities and Bihar
Utilities and as such GRIDCO was a necessary party.
11. It is submitted that the project sought to be installed by
GKEL was at the instance of the Government of Odisha. It is
submitted that the State of Odisha had provided all the necessary
facilities to GKEL to install the project. It is therefore submitted
that it is the GRIDCO which had the first right to the power
generated from the coal made available from the firm linkage.
12. Dr. Abhishek Manu Singhvi appearing on behalf of the
respondent No. 1 submitted that the appeals are liable to be
dismissed on the short ground that they do not raise any
substantial question of law as is required under Section 125 of
the 2003 Act. It is further submitted that the order dated 20th
March 2018 in Petition No. 105 is passed by the CERC on the
basis of its earlier order dated 3rd February, 2016 in Petition No.
79. It is submitted that the CERC in Petition No. 79 had clearly
held that coal supplied to GKEL under linkage by Government of
India is to be apportioned on pro rata basis to all the three
Civil Appeal No.1929 of 2020 etc. Page 23 of 57
Distribution Companies25 i.e. Haryana Utilities, GRIDCO and
Bihar Utilities. It is submitted that since the Haryana Utilities had
not challenged the said order, it was not permissible for them to
challenge the order passed in Petition No. 105. It is further
submitted that supply of coal from all the modes of procurement
has to be considered for the power project inasmuch as allocation
by Government of India was for the whole project and not specific
to any particular DISCOM.
13. Dr. Singhvi further submitted that the concurrent orders
passed by the CERC and the learned APTEL are equitable orders
inasmuch as it has been held that coal supplied under the linkage
is to be apportioned on pro rata basis to all the DISCOMS.
However, if the contentions of the Haryana Utilities are accepted,
it will amount to burdening the consumers in the State of Odisha
and Bihar. It is further submitted that if the contentions of both
Haryana Utilities and GRIDCO are accepted, it will amount to
putting the total burden on the consumers in the State of Bihar.
14. Dr. Singhvi further contended that the attitude of Haryana
Utilities is of approbation and reprobation. It is submitted that in
25 Hereinafter referred to as ‘DISCOMS’
Civil Appeal No.1929 of 2020 etc. Page 24 of 57
the case of Uttar Haryana Bijli Vitran Nigam Ltd. & Another
v. Adani Power (Mundra) Limited and Others26, this Court
noted that after accepting before the CERC that they would adopt
the methodology as given in the case of GMR-Kamalanga Energy
Limited v. Dakshin Haryana Bijli Vitran Nigam Ltd.27,
Haryana Utilities changed their stand subsequently.
15. In the totality, Dr. Singhvi submitted that the appeals
deserve to be dismissed.
16. Shri S.B. Upadhyay, learned Senior Counsel appearing on
behalf of respondent No. 5 has supported the concurrent orders
of the CERC and the learned APTEL.
DISCUSSION AND ANALYSIS
17. At the outset, it can be noticed that all three DISCOMS agree
that GKEL is entitled to compensation on account of Change in
Law event. However, the Haryana Utilities and GRIDCO argued
that the said liability should not come to them but should instead
be passed on to the other two. It is only the Bihar Utilities which
agrees that the liability has to be equally shared by all three
26 (2023) 14 SCC 736;
27 (2016) SCC OnLine CERC 43
Civil Appeal No.1929 of 2020 etc. Page 25 of 57
DISCOMS in proportion to the energy supplied to them. We find
it appropriate to deal with both the appeals separately.
CIVIL APPEAL NO. 1929 OF 2020
18. Undisputedly, the present appeal filed by Haryana Utilities
challenges the impugned judgment and final order passed by
learned APTEL whereby the learned APTEL has upheld the order
of the CERC. The appeal to this Court has been filed under Section
125 of the 2003 Act. The perusal of Section 125 shows that the
appeal is tenable only on the grounds as available under Section
100 of the Code of Civil Procedure, 190828, as such, it could be
seen that appeal would be tenable only on a substantial question
of law.
19. One of us (B.R. Gavai, J, as he then was) had an occasion to
deal with a large batch of electricity appeals pertaining to Change
in Law event. This Court first decided the common issues involved
in the said batch of appeals in Maharashtra State Electricity
Distribution Company Limited v. Adani Power Maharashtra
28 Hereinafter referred to as “CPC”
Civil Appeal No.1929 of 2020 etc. Page 26 of 57
Limited and Others29. It would be apposite to refer to following
paragraphs of the said judgment:
“118. It could thus be seen that two expert bodies i.e.
CERC and the learned APTEL have concurrently
held, after examining the material on record, that the
factors of SHR and GCV should be considered as per
the Regulations or actuals, whichever is lower. CERC
as well as the State Regulatory bodies, after extensive
consultation with the stakeholders, had specified
SHR norms in the respective Tariff Regulations. In
addition, insofar as GCV is concerned, the CEA has
opined that the margin of 85-100 kcal/kg for a nonpit head station may be considered as a loss of GCV
measured at wagon top till the point of firing of coal
in boiler.
119. In this respect, we may refer to the following
observations of this Court in Reliance Infrastructure
Ltd. v. State of Maharashtra [Reliance Infrastructure
Ltd. v. State of Maharashtra, (2019) 3 SCC 352] :
(SCC pp. 376-77, paras 38-39)
“38. MERC is an expert body which is
entrusted with the duty and function to frame
regulations, including the terms and
conditions for the determination of tariff. The
Court, while exercising its power of judicial
review, can step in where a case of manifest
unreasonableness or arbitrariness is made
out. Similarly, where the delegate of the
legislature has failed to follow statutory
procedures or to take into account factors
which it is mandated by the statute to consider
or has founded its determination of tariffs on
29 (2023) 7 SCC 401, hereafter referred to as MSEDCL
Civil Appeal No.1929 of 2020 etc. Page 27 of 57
extraneous considerations, the Court in the
exercise of its power of judicial review will
ensure that the statute is not breached.
However, it is no part of the function of the
Court to substitute its own determination for
a determination which was made by an expert
body after due consideration of material
circumstances.
39. In Assn. of Industrial Electricity
Users v. State of A.P. [Assn. of Industrial
Electricity Users v. State of A.P., (2002) 3 SCC
711] a three-Judge Bench of this Court dealt
with the fixation of tariffs and held thus : (SCC
p. 717, para 11)
‘11. We also agree with the High Court [S.
Bharat Kumar v. State of A.P., 2000 SCC
OnLine AP 565 : (2000) 6 ALD 217] that
the judicial review in a matter with
regard to fixation of tariff has not to be as
that of an appellate authority in exercise
of its jurisdiction under Article 226 of the
Constitution. All that the High Court has
to be satisfied with is that the
Commission has followed the proper
procedure and unless it can be
demonstrated that its decision is on the
face of it arbitrary or illegal or contrary to
the Act, the court will not interfere.
Fixing a tariff and providing for crosssubsidy is essentially a matter of policy
and normally a court would refrain from
interfering with a policy decision unless
the power exercised is arbitrary or ex
facie bad in law.’ ”
Civil Appeal No.1929 of 2020 etc. Page 28 of 57
**** **** ****
121. Recently, the Constitution Bench of this Court
in Vivek Narayan Sharma (Demonetisation Case-5
J.) v. Union of India [Vivek Narayan Sharma
(Demonetisation Case-5 J.) v. Union of India, (2023) 3 SCC
1] has held that the Courts should be slow in interfering
with the decisions taken by the experts in the field and
unless it is found that the expert bodies have failed to take
into consideration the mandatory statutory provisions or
the decisions taken are based on extraneous
considerations or they are ex facie arbitrary and illegal, it
will not be appropriate for this Court to substitute its
views with that of the expert bodies.”
20. It can thus be seen that this Court has held that when
various expert bodies like the CERC, the APTEL and the Central
Electricity Authority after considering the relevant material on
record have taken a particular view, the Court should be slow in
interfering with the decisions taken by them. It has been held that
unless the Court finds that the expert bodies have failed to take
into consideration the mandatory statutory provisions or if their
decisions are based on extraneous considerations or they are ex
facie arbitrary and illegal, it will not be appropriate for this Court
to substitute its views with that of the expert bodies.
21. After deciding the common issues involved in the batch of
electricity appeals in the case of MSEDCL (supra), this Court
Civil Appeal No.1929 of 2020 etc. Page 29 of 57
considered various additional issues involved in individual
matters pertaining to the question of Change in Law event. One
such case was GMR Warora Energy Limited v. Central
Electricity Regulatory Commission (CERC) and Others30. This
Court in the said case observed thus:
“VI. Epilogue
171. Before we part with the judgment, we must note
that we have come across several appeals in the
present batch which arise out of concurrent findings
of fact arrived at by two statutory bodies having
expertise in the field. We have also found that in
some of the matters, the appeals have been filed only
for the sake of filing the same. We also find that
several rounds of litigation have taken place in some
of the proceedings.
172. Recently, this Court in Maharashtra State
Electricity Distribution Co. Ltd. v. Adani Power
Maharashtra Ltd. [Maharashtra State Electricity
Distribution Co. Ltd. v. Adani Power Maharashtra
Ltd., (2023) 7 SCC 401] has noted that one of the
reasons for enacting the Electricity Act, 2003 was
that the performance of the Electricity Boards had
deteriorated on account of various factors. The
Statement of Objects and Reasons of the Electricity
Act, 2003 would reveal that one of the main features
for enactment of the Electricity Act was delicensing
of generation and freely permitting captive
generation. In the said judgment, we have recorded
the statement of the learned Attorney General made
in Energy Watchdog [Energy Watchdog v. CERC,
30 (2023) 10 SCC 401
Civil Appeal No.1929 of 2020 etc. Page 30 of 57
(2017) 14 SCC 80 : (2018) 1 SCC (Civ) 133] that the
electricity sector, having been privatised, had largely
fulfilled the object sought to be achieved by the
Electricity Act. He had stated that delicensed
electricity generation resulted in production of far
greater electricity than was earlier produced. The
learned Attorney General had further urged the
Court not to disturb the delicate balance sought to
be achieved by the Electricity Act i.e. that the
producers or generators of electricity, in order that
they set up power plants, be entitled to a reasonable
margin of profit and a reasonable return on their
capital, so that they are induced to set up more and
more power plants. At the same time, the interests of
the end-consumers also need to be protected.
173. However, we find that, in spite of this position,
litigations after litigations are pursued. Though the
concurrent orders of statutory expert bodies cannot
be said to be perverse, arbitrary or in violation of the
statutory provisions, the same are challenged.”
22. It will also be appropriate to refer to the following
observations made by this Court in paragraph 181 of the said
judgment:
181. It is further to be noted that the appeal to this
Court under Section 125 of the Electricity Act, 2003
is only permissible on any of the grounds as specified
in Section 100 of the Code of Civil Procedure, 1908.
As such, the appeal to this Court would be
permissible only on substantial questions of law.
However, as already observed herein, even in cases
where well-reasoned concurrent orders are passed by
the Electricity Regulatory Commissions and the
learned APTEL, the same are challenged by
Civil Appeal No.1929 of 2020 etc. Page 31 of 57
the DISCOMS as well as the generators. On account of
pendency of litigation, which in some of the cases in
this batch has been more than 5 years, non-payment
of dues would entail paying of heavy carrying cost to
the generators by the DISCOMS, which, in turn, will be
passed over to the end-consumer. As a result, it will
be the end-consumer who would be at sufferance. We
are of the opinion that such unnecessary and
unwarranted litigation needs to be curbed.
23. This Court in clear terms noted that the appeal under
Section 125 of the 2003 Act is only permissible on any of the
grounds as specified in Section 100 of the CPC. As such, it is
permissible only on substantial questions of law. This Court
observed that even in cases where well-reasoned concurrent
orders are passed by the Electricity Regulatory Commissions and
the learned APTEL, the same are challenged by DISCOMS as well
as the generators. It has been observed that on account of
pendency of litigation which in some of the cases in the said batch
had been for more than 5 years, non-payment of dues would
result in paying of heavy carrying cost to the generators by the
DISCOMS. It was observed that, in turn, this heavy cost is passed
over to the end-consumers who are the ultimate sufferers. The
Court had in unequivocal terms observed that such unnecessary
and unwarranted litigations need to be curbed. In spite of the
Civil Appeal No.1929 of 2020 etc. Page 32 of 57
aforesaid observations, this Court is flooded with such kind of
litigations.
24. In the present matter, there are concurrent findings of facts
not only in the impugned judgment passed by the learned APTEL
and the order passed by the CERC in Petition No. 105, but also in
the order dated 3rd February 2016 passed by the CERC in Petition
No. 79 during the first round of litigation. The Court will,
therefore, have to be very slow in interfering with the said findings
of fact. Unless it is found that the findings are perverse, arbitrary
or in violation of the statutory provisions, it will not be permissible
for this Court to interfere with the same.
25. Though, it was sought to be argued on behalf of the
appellants that in the present case question of interpretation of
the documents arises and the same question would fall in the
category of substantial question of law, we do not find that any
substantial question of law arises for consideration in the present
appeal.
26. Be that as it may, since the present appeal is pending since
2020 having been admitted on 3rd June 2020, we propose to deal
with the merits of the matter.
Civil Appeal No.1929 of 2020 etc. Page 33 of 57
27. It will be relevant to refer to the Petition No. 79 filed by GKEL
before the CERC. GKEL contended in the said petition that it had
entered into three long term PPAs as under:
a) Supply of 350 MW gross power (Stage 1: 262.5 MW and Stage
2: 87.5 MW) to Grid Corporation of Odisha Limited (GRIDCO)
in terms of PPA dated 28th September 2006 (as amended on 4th
January 2011 with delivery point as Odisha STU
interconnection point).
b) Supply of 282 MW gross power (260 MW net of auxiliary
consumption) to Bihar State Electricity Board in terms of PPA
dated 9th November 2011, with delivery point as the Bihar STU
interconnection point.
c) Supply of 350 MW gross power (300 MW net of transmission
losses and auxiliary consumption) to Haryana Discoms based
on the competitive bidding through back-to-back
arrangements:
(i) The PPAs dated 7th August, 2008 entered into between
PTC India Limited and Haryana Discoms with delivery
point as Haryana STU bus bar;
Civil Appeal No.1929 of 2020 etc. Page 34 of 57
(ii) Back-to-back PPA dated 12th March, 2009 between GMR
Energy Limited (holding company of GKEL) and PTC India
Limited.
28. The petition was filed by GKEL seeking relief on account of
Change in Law on various grounds. One of the grounds was with
regard to deviations from the New Coal Distribution Policy, 2007
(the NCDP) and changes in coal distribution policy of the
Government of India and Coal India Limited.
29. The issue with regard to firm linkage and tapering linkage in
favour of GKEL and allocation of captive coal mines in favour of a
consortium of six companies including GKEL also fell for
consideration in the said petition. It will also be relevant to refer
to the following submissions of GKEL recorded by the CERC:
“6…..
(a) As regards the firm linkage, the Standing
Linkage Committee (Long Term) (SLC-LT)
approved a coal linkage for the project on 2.8.2007
which was communicated to the petitioner on
24.9.2007. Letter of Assurance (LOA) was issued
in favour of GEL on 25.7.2008 for 2.14 MTPA of
coal for 500 MW capacity of the Power Project.
LOA was transferred in the name of GEKL by
Ministry of Coal on 17.2.2011.
(b) On 6.11.2007, Ministry of Coal conveyed its
decision to allocate Rampia and Dip Side Rampia
Civil Appeal No.1929 of 2020 etc. Page 35 of 57
coal blocks in Odisha to a consortium comprising
of GEL and five other companies (M/s Sterlite
Energy Ltd, M/s Mittal Steel India Limited, M/s
Lanco Group Limited, M/s Navbharat Power
Private Ltd, and M/s Reliance Energy Ltd).
Ministry of Coal vide its letter dated 17.1.2008
made the allocation under Section 3(3)(a) (iii) of
the Coal Mines (Nationalisation) Act, 1973 for
captive use in the specified end use projects by the
allocatees. A joint venture company in the name
of Rampia Coal Mine and Energy Private Limited
was formed by the allocattees to carry out coal
mining in early 2008.
(c) On 12.11.2008, SLC-LT approved tapering coal
linkage for the power project based on the
recommendation of CEA that development of coal
block allocated to GEL alongwith others was likely
to take time. On 8.7.2009, LOA was issued for
tapering coal linkage of 2.384 MTPA for 550 MW
capacity in favour of GEL till coal from Rampia
coal block was available. LOA was transferred in
the name of GEKL by Ministry of Coal on
17.2.2011.
(d) On 26.3.2013, Mahanadi Coalfield Limited
(MCL) signed the Fuel Supply Agreement with
GEKL for supply of 1.819 MTPA of coal per
annum.
7. According to the petitioners, the financial
closure of the power project was achieved on
29.5.2009 and the petitioners went ahead with
execution of the project with the expected COD of
Unit 1 as 25.4.2013 as on the date of filing the
present petition.
Civil Appeal No.1929 of 2020 etc. Page 36 of 57
30. In the said petition, the Haryana Utilities had raised a
preliminary objection on the ground that impact of Change in Law
can be ascertained only during the operation period, i.e. after the
power project has been declared under commercial operation.
The CERC with following observations rejected the said
preliminary objection:
“17. According to the Haryana Discoms, the
present petition is premature since the impact of
"Change in Law" can be ascertained only during
the operation period, that is, after the power
project has been declared under commercial
operation. In this regard, it is noted that 1st Unit
of the power project was commissioned on
30.4.2013 and has been taken note of by the
Haryana Power Purchase Centre (which is
responsible for purchase of power on behalf of
the Haryana Discoms) in its letter dated
20.5.2013. Subsequently, in its letter dated
8.8.2013, HPCC in response to the petitioner's
offer contained in the letter dated 4.7.2013,
consented for scheduling of power from the
Project. The 2nd Unit achieved COD on
12.11.2013 and supply to the Haryana Discoms
commenced on 7.2.2014. 3rd Unit achieved COD
on 25.3.2014. Since all units of the power project
have achieved COD, the operating period has
already commenced, making the petitioners
eligible for compensation under Change in Law
during the operating period. The objections of
Haryana Discoms on this count are disposed of
accordingly.”
Civil Appeal No.1929 of 2020 etc. Page 37 of 57
31. The perusal of paragraphs 54, 55 and 73 of the order passed
by the CERC dated 3rd February 2016 would reveal that it devised
a formula for computing the Energy Charge Rate31 which required
pro rata allocation of coal among all three DISCOMS. It is
pertinent to note that the Haryana Utilities did not challenge the
said order and paid the amounts due in terms of the said order
till June 2016. The Haryana Utilities had accepted the bills which
were submitted in pursuance to the order passed in Petition No.
79 and a total of about Rs. 140 crores were paid till June, 2016.
However, in September 2016, the Haryana Utilities raised the
issue of pro rata allocation of coal. After due deliberations,
Haryana Utilities and GKEL agreed that the latter would approach
the CERC for clarification in this regard. As such, GKEL filed
Petition No. 105. The argument of Haryana Utilities in the said
petition was that coal received under FSA dated 26th March 2013
should be considered for Haryana Utilities only and shortfall in
supply thereof should be met through imported, open market or
tapering coal. However, it was submitted on behalf of GKEL that
the allocation of coal was made for the entire plant of GKEL and
31 Hereinafter referred to as ‘ECR’
Civil Appeal No.1929 of 2020 etc. Page 38 of 57
therefore, coal shall be used proportionately for generation and
supply of power to all beneficiaries namely GRIDCO, Haryana
Utilities and Bihar Utilities.
32. The CERC vide order dated 20th March 2018 passed in
Petition No. 105 considered the rival submissions as under:
“31. On perusal of the documents on record, it
emerges that the Petitioner was granted firm
linkage of 500 MW and linkage from captive coal
mine for 550 MW for its plant which was envisaged
to have capacity of 1050 MW(3x350 MW),
Subsequently, LOA dated 25.7.2008 was issued
for firm linkage of 2.14 MTPA for 500 MW and LOA
dated 8.7.2009 was issued for tapering linkage of
2.384 MTPA for 550 MW by Ministry of Coal.
Perusal of the Standing Linkage Committee (SLC)
Minutes of Meeting dated 14.2.2012 reveals that
the tapering linkage of 2.384 MTPA was allocated
to the Petitioner for all three beneficiaries i.e.
GRIDCO, Bihar Discoms and Haryana Discoms.
The Committee noted that in some cases like GMR
Kamalanga Energy Ltd., two separate LoAs were
recommended by the SLC (LT) in different
meetings, due to change in the
configuration/capacity of the unit. The 2nd LoA
was recommended by the SLC (LT) for the
remaining capacity arising out of the changed
configuration. On the recommendation of SLC
(LT), the LoAs dated 25.7.2008 and 8.7.2009 were
issued to the Petitioner for 500 MW and 550 MW
respectively to meet the coal requirement for the
entire capacity of 1050 MW.
Civil Appeal No.1929 of 2020 etc. Page 39 of 57
32. FSA dated 26.3.2013 was entered into by the
Petitioner with Mahanadi Coalfield Limited for 500
MW of firm linkage coal. The Tapering Linkage
FSA with MCL was signed on 20.5.2014 and
Tapering linkage FSA with ECL was signed on
29.5.2014. Paras 4.1.1 and 4.2 of the FSA dated
26.3.2013 provide as under:
"4.1.1 The Annual Contracted Quantity of
Coal agreed to be supplied by the Seller and
undertaken to be purchased by the
Purchaser, shall be 18.19 lakh Tes. Per Year
from the Seller's mines and/or from import,
as per Schedule I. For part of Year, the ACQ
shall be prorated accordingly. The ACQ shall
be in proportion of the percentage of
Generation covered under long term Power
Purchase Agreements executed by the
Purchaser with the DISCOMs either directly
or through PTC(s) who has/have signed the
back to back long term PPA(s) with
DISCOMs. Whenever, there is any change in
the percentage of PPA(s), corresponding
change in ACQ shall be effected through a
side agreement. Such changes shall be
allowed to be made only once in a year and
shall be made effective only from the
beginning of the next quarter. However, in no
case ACQ should exceed the LOA quantity as
mentioned in Schedule I.
4.2. The total quantity of coal supplied
pursuant to this Agreement is meant for use
at Power Plant (3X350 MW), 500 MW under
Normal Linkage (425 MW generation
capacity covered under long term PPA).
Located at Village-Kamalanga, Dt.
Civil Appeal No.1929 of 2020 etc. Page 40 of 57
Dhenkanal, Odhisha as listed in Schedule I.
The Purchaser shall not sell/divert and/or
transfer the Coal to any third party for any
purpose whatsoever and the same shall be
treated as material breach of Agreement, for
which the Purchaser, shall be fully
responsible and each act shall warrant
suspension of coal supplies by the Seller in
terms of Clause 14.1 (b)."
It is evident from the above provisions of the FSA
that the total quantum of coal supplied pursuant
to the FSA is meant for use at the power plant
(3x350 MW) of the Petitioner. Further, ACQ would
be in proportion to the percentage of generation
covered under long term PPAs either with the
DISCOMs directly or through PTC which have
been signed by the Petitioner. Therefore, the FSA
cannot be for a particular PPA as contended by
HPPC. As on the date of the FSA, only 425 MW
were to be operationalised under long term PPAs
with PTC/Haryana DISCOMs and GRIDCO and
accordingly, only 425 MW covered under the long
term PPAs was mentioned in the FSA. The FSA
further provides that whenever there is any
change in the percentage of PPAs, corresponding
changes in the ACQ shall be effected through side
agreements. The FSAs for the tapering linkage
were signed with MCL on 20.5.2014 and with ECL
on 29.5.2014. These FSAs were signed before the
commencement of supply under Bihar PPA. The
Petitioner was receiving 2.58 MTPA of coal from
both firm and tapering linkage to meet the
requirement for 618 MW and after
operationalization of Bihar PPA, the Petitioner
received 3.63 MTPA of coal to meet the
requirement of 905 MW. Therefore, any shortfall
Civil Appeal No.1929 of 2020 etc. Page 41 of 57
in the firm linkage as well as tapering linkage met
through import and open market coal shall be
eligible for relief under the Change in law in the
light of the order dated 3.2.2016 and the Hon'ble
Supreme Court's judgment in Energy Watchdog
case.
33. In the light of the above discussion, it cannot
be inferred from the language of para 48 of the
order dated 3.2.2016 that the requirement of
Haryana PPA shall be met from the firm linkage
under the FSA dated 26.3.2013 and shortfall
thereof shall be met through import and open
market coal. Such an interpretation goes against
the coal allocation by Ministry of Coal to power
plant of the Petitioner as a whole and will put the
GRIDCO PPA and Bihar PPA at a disadvantage visa-vis Haryana PPA. In fact, the Commission in
para 73 (b) of the order dated 3.2.2016 in Petition
No. 79/MP/2013 had observed as under:
“73……
(b) The additional cost incurred in a
month due to shortage of linkage coal
shall be computed on ex-bus scheduled
energy and shall be pro-rated
corresponding to the scheduled
generation for Haryana Discoms as per
methodology given in para 56 above."
Therefore, in light of the allocation of firm as well
as tapering linkage for all three beneficiaries and
our order dated 3.2.2016 in Petition No.
79/MP/2013, the firm and tapering linkage coal
supplied to the Petitioner has to be apportioned on
Civil Appeal No.1929 of 2020 etc. Page 42 of 57
pro rata basis to all beneficiaries of the project and
the cost of procurement of coal from alternate
sources to meet the shortfall of firm and tapering
linkage coal has also to be apportioned pro rata
based on power supplied to these beneficiaries.
Accordingly, the contention of Haryana Discoms
to appropriate the coal supplied under firm
linkage towards the capacity being supplied to
them instead of pro-rata apportionment to all the
beneficiaries is not correct. The order dated
3.2.2016 has to be read in its entirety and HPPC
is not correct to pick up an observation in para 48
of the said order to claim that Its liability is limited
to imported/open market coal for the shortage in
firm linkage coal only. In our view, the Petitioner
has correctly apportioned the linkage coal to
Haryana Discoms proportionate to the capacity
being supplied to them and has issued
Supplementary Bills in accordance with the
formula devised in order dated 3.2.2016 in
Petition No. 79/MP/2013. Accordingly, we direct
the respondents to pay the supplementary bills
raised by the Petitioner for the period from July,
2016 to March, 2017 along with late payment
surcharge as per the provisions of the PPA within
one month from the date of issue of the order.”
33. The said order came to be challenged by the Haryana
Utilities. However, at the instance of the learned APTEL, GRIDCO
came to be impleaded as party respondent in the appeal filed by
the Haryana Utilities. Subsequently, GRIDCO also filed its own
appeal before the learned APTEL. It was sought to be contended
Civil Appeal No.1929 of 2020 etc. Page 43 of 57
on behalf of the Haryana Utilities that the order passed in Petition
No. 105 was beyond the order dated 3rd February 2016. Rejecting
the said contention, the learned APTEL by a well-reasoned
judgment and order observed thus:
“8.16 The Appellants contention that the Impugned
Order has gone beyond Order dated 03.02.2016 is
incorrect. It is evident from Paragraph 33 of the
Impugned Order that CERC has merely reiterated its
earlier Order and upheld the bills raised by GKEL in
terms of Order dated 03.02.2016 in Petition No.
79/MP/2013.
Coal supply to Plant as whole and not Procurer
Specific
8.17 GKEL had quoted tariff for Haryana PPAs
considering coal availability for the Project from
linkage coal and its own Captive Coal blocks based
on
(a) SLC-LT approval dated 02.08.2007 for 500 MW;
and
(b) Ministry of Coal decision dated 06.11.2007 to
allocate Rampia and Dip side Rampia coal blocks to
GKEL.
8.18 At the time of bid submission for Haryana, the
SBD did not permit inclusion of different sources of
coal - linkage, captive etc. Therefore, GKEL had cited
linkage from CIL/MCL. Use of coal from the Captive
Coal block was envisaged for the entire Plant as
evident from the allocation letter dated 17.01.2008
wherein GKEL share of coal reserves is 138 MT @ 4.6
Civil Appeal No.1929 of 2020 etc. Page 44 of 57
MT for 30 years to meet coal requirement of the
Project as a whole.
8.19 Coal supply was to the Project as a whole and
not Procurer Specific is supported by:-
(a) The SLC minutes dated 14.02.2012 clearly state
that the tapering linkage coal of 2.384 MTPA is to be
utilized for all three PPAs with GRIDCO, Haryana and
Bihar Discoms.
(b) Clause 4.2 of the FSA dated 26.03.2013 signed
with MCL clearly states that:-
"the total quantity of coal supplied pursuant
to this Agreement is meant for use at Power
Plant (3x350 MW), 500 MW under Normal
Linkage (425 MW generation capacity
covered under long term PPA)."
8.20 It is submitted that LoA and FSA are for the
station and never for a particular PPA as contended
by the Appellants. Further, the Appellant's
contention that the apportionment of coal (from firm
linkage) is to be done proportionally between the
Appellants (300 MW), GRIDCO (150 MW) and Bihar
(29.55 MW) is erroneous. It is submitted that the enduse stated in these documents is for the Station/
Plant. This was confirmed by MCL in terms of letter
dated 02.05.2018 which stated that the Coal is
released for the total PPA capacity and not bifurcated
on the basis of individual PPAs.
8.21 In terms of Clause 4.1 of the FSA, the ACQ shall
be in proportion of the percentage generation covered
under long term PPAs with Discoms. The relevant
portion of Clause 4.1 is reproduced below:-
Civil Appeal No.1929 of 2020 etc. Page 45 of 57
"4.1.1... The ACQ shall be in proportion of the
percentage of Generation covered under long
term Power Purchase Agreements executed by
the Purchaser with the DISCOMs either
directly or through PTC(s) who has/ have
signed the back to back long term PPA(s) with
DISCOMS."
It is only commencement of supply of coal which is
linked to commencement of supply under the PPA.
For example, if supply of power to Bihar commenced
before Haryana, the ACQ would have been
allocated/operationalized similarly.
8.22 In view of the above, contention of Haryana that
the tapering linkage granted in relation to coal block
cannot be linked to 300 MW is wrong. In fact, the
linkage coal/ coal block or tapering linkage are
allocated for the station and to be utilized for all three
PPAs. In fact, allocating coal under the FSA to
Haryana Discoms to the exclusion of Bihar and
GRIDCO will be contrary to the provisions of the FSA.
8.23 As brought out above, the allocation of coal was
for the Project as a whole and not Procurer/PPA wise.
This is evident from the following:-
(a) LOAs dated 25.07.2008 and 08.07.2009 were for
the plant as a whole.
(b) Allocation letter dated 17.01.2008 for the Captive
Coal mine is for 4.6 MT which is sufficient for 1050
MW, being the installed capacity of the Project.
(c) Minutes of the SLC-LT dated 14.02.2012 note that
the entire linkage (firm and tapering) is for all the 3
PPAs.
Civil Appeal No.1929 of 2020 etc. Page 46 of 57
(d) Letter dated 02.05.2018 issued by Mahanadi
Coalfields Limited ("MCL") states that CIL and its
subsidiaries had allocated coal to the Project on prorata basis vis-à-vis the operational capacities and not
on basis of procurers. The letter specifically states
that "in case of multiple PPAs, coal is released to the
IPPs considering the total PPA capacity and not
bifurcated on the basis of individual PPAs". The
aforesaid only confirms the provision of clause 4.1.1
of the FSAs which also talks of allocation of coal on
pro-rata basis to long term PPAs executed by the
Discoms directly through PTC.
8.24 If the Appellant's contention is upheld, it will
lead to an anomalous situation wherein GRIDCO and
Bihar Discoms will end up cross-subsidizing supply
of power to Haryana Discoms. It is submitted that the
Ld. Central Commission has rightly allowed pro-rata
allocation of linkage and alternate coal so as to
ensure that the impact is equally apportioned.
8.25 Since the allocation is not PPA specific,
allocation of coal to one procurer to the exclusion of
others will be contrary to the terms of such allocation.
8.26 Further, such action will also be contrary to
Article 14 of the Constitution of India since it will
result in equals being treated unequally.”
34. It could thus be seen that the present appeal challenges the
concurrent findings arrived at by the CERC on two different
occasions and the learned APTEL in the impugned judgment. The
perusal of the aforesaid judgment and orders would reveal that
they are based upon interpretation of various documents and
Civil Appeal No.1929 of 2020 etc. Page 47 of 57
considering the following factual aspects with respect to fuel
arrangements for the Project:
(i) The original SLC-LT allocation dated 2nd August 2007
for firm linkage was made prior to the Haryana PPA;
(ii) Letter dated 6th November 2007 issued by Ministry of
Coal intimating its decision to allocate Rampia and Dip
Side Rampia coal blocks in Odisha to a consortium
comprising of GKEL and five other allotees;
(iii) Allocation letter dated 17th January 2008 for the captive
coal mine is for 4.6 MT which is sufficient for 1050 MW,
being the installed capacity of the Project; and
(iv) SLC-LT minutes dated 14th February 2012 noted that
the firm linkage capacity was intended for Odisha,
Bihar and Haryana.
35. It will also be relevant to refer to letter dated 7th February
2022 issued by MCL in response to the clarification sought by
GKEL on the letters dated 2nd May 2018 and 22nd June 2021 of
MCL with regard to supply of coal to GKEL under FSA dated 26th
February 2013. The relevant extracts of the said letter are as
under:
Civil Appeal No.1929 of 2020 etc. Page 48 of 57
“As per the provision of FSA dated 26/03/2013, Annual
Contracted Quantity (ACQ) under FSA is in proportion
to the percentage of Generation covered under long
term Power Purchase Agreement(s) executed by the
Purchaser (IPP) with DISCOMs against the total LOA
quantity. In case of multiple PPAs, coal is allocated/
released as per the ACQ against the total PPA capacity
and not segregated on the basis of any specific PPA. The
same was clarified vide MCL's letter dated 02.05.2018.
It is pertinent to mention that letter dated of
22/06/2021 of MCL was issued to all concerned
DISCOMs, with whom M/s GKEL has signed PPA, for
the purpose of intimating the DISCOMs the quantum
of coal procured by M/s GKEL under FSA from the
sources of MCL to ensure proper utilization of coal. The
said letter indicates the overall, quantity of coal
supplied for all the PPAs.”
36. As mentioned earlier, after deciding the common issues
involved in a batch of electricity appeals in the case of MSEDCL
(supra), this Court decided various individual matters involving
additional issues. Another such matter was Uttar Haryana Bijli
Vitran (supra). It would be pertinent to note that the Haryana
Utilities had approached this Court challenging the concurrent
judgment and order passed by learned APTEL dated 3rd November
202032 and CERC dated 31st May 201833.
32 2020 SCC OnLine APTEL 92
33 2018 SCC OnLine CERC 411
Civil Appeal No.1929 of 2020 etc. Page 49 of 57
37. In the said proceedings Adani Power (Mundra) Ltd.34 had
filed Petition No. 97/MP/201735 before the CERC pursuant to the
orders passed by this court in Energy Watchdog (supra). The
CERC vide order dated 31st May 2018 had allowed the said
petition and directed the working out of the relief. It will be
relevant to refer to the following paragraphs of the Uttar Haryana
Bijli Vitran (supra):
48. The grievance of Haryana Utilities is that the
methodology for granting benefit on account of the
change in law adopted by CERC and affirmed by the
learned APTEL is contrary to the one which was
previously arrived at in the earlier cases of GMR, DB
Power, etc.
49. Perusal of the order passed by the
learned APTEL would reveal that AP(M)L had
proposed a methodology based on the methodology
approved by CERC in the GMR-Kamalanga Energy
Ltd. v. Dakshin Haryana Bijli Vitran Nigam
Ltd. [GMR-Kamalanga Energy Ltd. v. Dakshin
Haryana Bijli Vitran Nigam Ltd., 2016 SCC OnLine
CERC 43] considering the quoted tariff under the
PPAs as the base.
50. The learned APTEL had referred to the record of
proceedings of CERC dated 10-8-2017, which read
thus : (Uttar Haryana Bijli Vitran Nigam case [Uttar
Haryana Bijli Vitran Nigam Ltd. v. Adani Power
(Mundra) Ltd., 2020 SCC OnLine APTEL 92] , SCC
OnLine APTEL para 7.3)
34 Hereinafter referred to as AP(M)L
35 Hereinafter referred to as ‘Petition No. 97’
Civil Appeal No.1929 of 2020 etc. Page 50 of 57
“7.3. … (a) … ‘3. In response to the
Commission's query as to whether the
methodology adopted by the petitioner in the
light of the methodology given in GMR
case [GMR-Kamalanga Energy
Ltd. v. Dakshin Haryana Bijli Vitran Nigam
Ltd., 2016 SCC OnLine CERC 43] is
acceptable to Haryana Utilities, learned
counsel replied in the positive.’ ”
(emphasis in original)
51. The learned APTEL had also referred to the order
of CERC dated 28-9-2017 [Adani Power Ltd. v. Uttar
Haryana Bijli Vitaran Nigam Ltd., 2017 SCC OnLine
CERC 305] in IA No. 57 of 2017 in Petition No.
97/MP/2017, which reads thus : (Uttar Haryana
Bijli Vitran Nigam case [Uttar Haryana Bijli Vitran
Nigam Ltd. v. Adani Power (Mundra) Ltd., 2020 SCC
OnLine APTEL 92] , SCC OnLine APTEL para 7.3)
“7.3. … (b) … ‘7. … Haryana Utilities who is
the only respondent has not objected to the
calculation made by the applicant.’ ”
(emphasis in original)
52. The learned APTEL had also referred to the order
dated 3-12-2018 [Uttar Haryana Bijli Vitran Nigam
Ltd. v. Adani Power (Mundra) Ltd., 2018 SCC OnLine
CERC 237] passed by CERC in review petition
bearing No. 24/RP/2018, which reads thus : (Uttar
Haryana Bijli Vitran Nigam case [Uttar Haryana Bijli
Vitran Nigam Ltd. v. Adani Power (Mundra) Ltd.,
2020 SCC OnLine APTEL 92] , SCC OnLine APTEL
para 7.4)
“7.4. … ‘25. … It is apparent from the above
that the Commission, after due
consideration of the submissions of the
Adani Power and Prayas had consciously
Civil Appeal No.1929 of 2020 etc. Page 51 of 57
decided on the methodology for
computation of relief due to shortage of
domestic coal under change in law for the
period from 1-4-2013 to 31-3-2017 in para
46 of the impugned order [Adani Power
(Mundra) Ltd. v. Uttar Haryana Bijli Vitran
Nigam Ltd., 2018 SCC OnLine CERC 411]
. The review petitioners had not suggested
any methodology of calculation of the relief
due to shortage of domestic coal. On the
other hand, the review petitioners in their
reply dated 28-7-2017 in Petition No.
97/MP/2017 had stated that “the reliance
to the decision of GMR is wholly
inappropriate”. The review petitioners are
now suggesting an alternative formula for
computation of the relief under change in
law. As already reiterated in the earlier part
of the order, the review cannot be used for
substitution of a view already taken with a
new view. Therefore, the review on the
ground is not maintainable.’ ”
53. We find that Haryana Utilities are indulging into
approbation and reprobation. They cannot be
permitted to blow hot and cold at the same time.
After accepting before CERC that they would adopt
the methodology as given in GMR-Kamalanga
Energy [GMR-Kamalanga Energy Ltd. v. Dakshin
Haryana Bijli Vitran Nigam Ltd., 2016 SCC OnLine
CERC 43] , it would not be appropriate, in our view,
on the part of the appellants, which are, after all,
instrumentalities of the State, to change its stand
after final orders are passed by CERC.”
Civil Appeal No.1929 of 2020 etc. Page 52 of 57
38. It could thus clearly be seen that the learned APTEL had
referred to the record of proceedings of the CERC dated 10th
August 2017 wherein to the Commission’s query as to whether the
methodology adopted by the petitioner in the light of the
methodology given in GMR Kamalanga (supra) was acceptable to
Haryana Utilities, learned counsel replied in the positive. The
learned APTEL also referred to the order of the CERC dated 28th
September 201736 in IA No. 57 of 2017 in Petition No. 97 wherein
Haryana Utilities had not objected to the calculation made by the
applicant. It could further be seen that the learned APTEL had also
referred to the order dated 3rd December 201837 passed by the
CERC in Review Petition No. 24/RP/2018 filed by the Haryana
Utilities against the order dated 31st May 2018 of the CERC. The
CERC in the said review petition referred to the affidavit filed by
the Haryana Utilities stating that ‘the reliance to the decision of
GMR is wholly inappropriate”. The learned APTEL, observing that
the Review Petitioners are now suggesting an alternative formula
for computation of the relief under change in law, rejected the
review petition.
36 (2017) SCC OnLine CERC 305
37 (2018) SCC OnLine CERC 237
Civil Appeal No.1929 of 2020 etc. Page 53 of 57
39. This Court in Uttar Haryana Bijli Vitran (supra) had
observed that the Haryana Utilities are indulging in approbation
and reprobation. It has been observed that they cannot be
permitted to blow hot and cold at the same time. It has further
been observed that after accepting before the CERC that they
would adopt the methodology as given in GMR Kamalanga
(supra), it would not be appropriate on the part of Haryana Utilities
to change its stand after final orders were passed by the CERC.
This Court had therefore dismissed the appeal of the Haryana
Utilities observing that the interference would be warranted only if
the concurrent findings have failed to take into consideration the
mandatory statutory provisions or if the decision had been taken
by them on extraneous consideration or that they were ex facie
arbitrary and illegal. As a matter of fact, this Court in the said case
had approved the methodology applied by the CERC and affirmed
by the learned APTEL which was based on the decision of the
CERC in the case of GMR Kamalanga (supra).
40. In that view of the matter and considering the concurrent
findings of fact by the CERC on two different occasions and the
learned APTEL in impugned order and also taking into note of the
communication dated 2nd February 2022 issued by MCL, we see
Civil Appeal No.1929 of 2020 etc. Page 54 of 57
no merit in the appeal of Haryana Utilities and the same is liable
to be dismissed.
Civil Appeal No. 3429 of 2020
41. Insofar as the appeal by GRIDCO is concerned, the main
contention of GRIDCO is that the order dated 3rd February 2016
in Petition No. 79 and order dated 20th March 2018 in Petition No.
105 were passed without impleading GRIDCO. It will be relevant
to note that the PPA with GRIDCO is under Section 62 of the 2003
Act whereas the PPAs with the Haryana Utilities and Bihar
Utilities are under Section 63 of the 2003 Act. As such there was
no occasion for GKEL to implead GRIDCO as a party to the said
petitions.
42. It is further to be noted that the petitions filed by GKEL
before the CERC were filed seeking compensation on account of
Change in Law events affecting Haryana and Bihar PPAs which
were concluded by following provisions prescribed under Section
63 of the 2003 Act. Section 63 of the 2003 Act provides for the
determination of tariff by bidding process whereas under Section
62, the tariff is determined on Cost Plus basis. It can thus be seen
that proceedings under Sections 62 and 63 of the 2003 Act are
entirely different.
Civil Appeal No.1929 of 2020 etc. Page 55 of 57
43. It is also relevant to note that GKEL had filed a petition being
Petition No. 77/GT/201338 for approval of the tariff for supply of
electricity to the GRIDCO. The CERC vide order dated 12th
November 2015 had determined the tariff payable by the GRIDCO
to GKEL for the period of 1st April 2013 to 1st March 2014. Being
aggrieved by the said order, GRIDCO filed Appeal No. 45 of 2016
before the learned APTEL. The learned APTEL vide judgment and
order dated 1st August 2017 did not find any merit in the
methodology adopted by CERC for determining the tariff. The
learned APTEL found that the CERC had calculated ECR in
accordance with the CERC (Terms and Conditions of Tariff)
Regulations, 2009. The methodology adopted by the CERC for
determining the tariff payable by GRIDCO to GKEL has been duly
approved by the learned APTEL. In that view of the matter, we find
that GRIDCO was neither a necessary nor a proper party to the
proceedings initiated by GKEL by way of Petition Nos. 79 and 105.
44. On merits, it is the contention of the GRIDCO that it was its
PPA which was executed first on 28th September 2006 and was
operationalized in April 2013. It is therefore contended that
38 Hereinafter referred to as ‘Petition No. 77’
Civil Appeal No.1929 of 2020 etc. Page 56 of 57
GRIDCO has the first right over the firm linkage FSA dated 26th
March 2013. GRIDCO further contended that allocation under
SLC-LT meeting dated 2nd August 2007 and LOA dated 25th July
2008 was against long term PPAs and the only PPA at that time
was with GRIDCO, therefore, the firm linkage was for GRIDCO.
While considering GRIDCO’s appeal, the learned APTEL found
that the supply of coal from all modes of procurement has to be
considered for the power plant as a whole and not for specific PPAs
as prayed by the appellants.
45. In the foregoing paragraphs, while considering the appeal of
Haryana Utilities, we have already upheld the concurrent findings
of the CERC and the learned APTEL that the coal supply from all
the sources has to be apportioned amongst all the three DISCOMS
in proportion to the energy supplied to them. None of the
DISCOMS can claim a priority for supply of power based either on
the prior date of agreement or the recital as to the source of coal.
In view of the findings given by us while discussing the appeal of
the Haryana DISCOMS, we find no merit in the present appeal as
well. The same is therefore liable to be dismissed.
Civil Appeal No.1929 of 2020 etc. Page 57 of 57
CONCLUSION
46. In the result, we pass the following orders:
I. Civil Appeal No. 1929 of 2020 filed by Haryana Utilities and
Civil Appeal No. 3429 of 2020 filed by GRIDCO are dismissed
sans merit; and
II. The impugned judgment and order dated 20th December
2019 passed by the Appellate Tribunal for Electricity, New
Delhi in Appeal No. 135 of 2018 along with Appeal No. 54 of
2019 is upheld.
47. Pending application(s), if any, shall stand disposed of.
..…………..……………...CJI.
(B.R.GAVAI)
…….........…………………...J.
(K. VINOD CHANDRAN)
NEW DELHI;
SEPTEMBER 8, 2025
