Holding

The term ‘Law’ in the PPAs includes all statutes, regulations, notifications and orders of governmental instrumentalities, making the identified charges ‘Change in Law’ events; generators are entitled to restitutionary compensation with compound interest on carrying cost, and courts must not disturb concurrent factual findings of expert bodies absent perversity.

Summary

The Supreme Court examined a batch of appeals arising from Power Purchase Agreements (PPAs) between GMR Warora Energy Ltd. (the generator) and various distribution companies, challenging the classification of several post‑cut‑off charges as ‘Change in Law’ events and the computation of carrying cost interest. The Court held that the term ‘Law’ in the PPAs embraces all statutes, regulations, notifications and orders of governmental instrumentalities, including those of CERC and MERC, so that charges such as Busy Season Surcharge, Development Surcharge, Port Congestion Surcharge, MoEF coal‑quality notifications, changes in the New Coal Distribution Policy, Forest Tax, Add‑on Premium and Evacuation Facility Charges constitute ‘Change in Law’ events. Generators are therefore entitled to restitutionary compensation, including compound interest on carrying cost from the date of the change. The Court reiterated that courts should not interfere with concurrent factual findings of expert regulatory bodies unless they are perverse or arbitrary, and dismissed all appeals.

Issues considered

The definition of ‘Law’ under the PPAs and what constitutes a ‘Change in Law’ event
Whether specific post‑cut‑off charges (Busy Season Surcharge, Development Surcharge, Port Congestion Surcharge, MoEF coal‑quality notification, NCDP changes, Forest Tax, Add‑on Premium, EFC) qualify as ‘Change in Law’
Whether carrying cost interest should be calculated on a simple or compound basis
Whether courts may interfere with concurrent findings of fact by CERC, SERCs and APTEL
Whether appeals under Section 125 of the Electricity Act, 2003 are maintainable

Legislation cited

Code of Civil Procedure, 1908s. 100
Electricity Act, 2003s. 100, s. 125

Subjects

Change in LawPower Purchase AgreementCarrying CostCompound InterestElectricity RegulationDISCOMGeneratorConcurrent FindingsRestitutionary PrincipleLate Payment SurchargeRailway SurchargeForest TaxMoEF NotificationNCDPEvacuation Facility Charges

Judgment

[2023] 8 S.C.R. 183 183

GMR WARORA ENERGY LIMITED A
v.
CENTRAL ELECTRICITY REGULATORY COMMISSION
(CERC) & ORS.
(Civil Appeal No.11095 of 2018) B
APRIL 20, 2023
[B. R. GAVAI AND VIKRAM NATH, JJ.]
Electricity – Components to be considered as “Change in
Law” events – Held: The term “Law” has been defined in the Power
C
Purchase Agreements – ‘Law’ would mean all laws including
Electricity Laws in force in India and any statute, ordinance,
regulations, orders, Notification or code, rules, or any interpretation
of any of them by an Indian Governmental Instrumentality and
having force of law – It shall also include all rules, regulations,
decisions and orders of the CERC and the MERC – Thus, all such D
additional charges which are payable on account of orders,
directions, Notifications, Regulations, etc., issued by the
instrumentalities of the State after the cut-off date will have to be
considered to be ‘Change in Law’ events – The Generators would
be entitled to compensation on the restitutionary principle on such
E
changes occurring after the cut-off date – Revision of charges to
be paid on Busy Season Surcharge, Development Surcharge and
Port Congestion Charges from time to time by the ‘Railway Board’
would come within the ambit of ‘Change in Law’ – Notifications by
which MoEF mandated power projects to use beneficiated coal with
ash content lower than 34% would also amount to “Change in Law’ F
– Further, change in NCDP would also amount to ‘Change in Law’
– With regard to forest tax, as on the cut-off date there was no
Forest Tax applicable on coal mined and transported from South
Eastern Coalfields Limited mines located in Forest area – For the
first time, vide Notification of the Forest Department, Government
G
of Chhattisgarh a fee was levied – Said notification issued by the
Forest Department of the Government of Chhattisgarh, which is an
instrumentality of the State would also be a ‘Change in Law’ – No
error in the finding of the APTEL in that regard – Also, ‘add on
premium’ was required to be paid on account of cancellation of
H
183
184 SUPREME COURT REPORTS [2023] 8 S.C.R.

A captive coal blocks and inordinate delay on account of Go-No-Go
policy – As such, it cannot be said that the reasoning adopted by
the APTEL is perverse and arbitrary – EFC imposed by CIL which
is an instrumentality of the State, circular of CIL would also amount
to ‘Change in Law’ – In the light of said findings, each of the appeals
considered independently, dismissed – Electricity Act, 2003.
B
Electricity – Carrying cost – Grant of interest – Held: Once
carrying cost has been granted, it cannot be urged that interest on
carrying cost should be calculated on simple interest basis instead
of compound interest basis – Grant of compound interest on carrying
cost and that too from the date of the occurrence of the ‘Change in
C Law’ event is based on sound logic – It aimed at restituting a party
that is adversely affected by a ‘Change in Law’ event and restore it
to its original economic position as if such a ‘Change in Law’ event
had not taken place – In view of the consistent position of law and
application of restitutionary principles and privity of contractual
D obligations between the parties as contained in the Power Purchase
Agreements, the view taken by the APTEL with regard to carrying
cost warrants no interference – Electricity Act, 2003.
Electricity Act, 2003 – s.125 – Appeals arising from concurrent
findings of fact arrived at by two statutory bodies having expertise
E in the field – Held: CERC, SERCs and APTEL are bodies consisting
of experts in the field – This Court should be slow in interfering
with the concurrent findings of fact unless they are found to be
perverse, arbitrary and either in ignorance of or contrary to the
statutory provisions – Appeal to this Court u/s.125 is only permissible
on any of the grounds as specified in s.100 of the Code of Civil
F Procedure, 1908 – As such, the appeal to this Court would be
permissible only on substantial questions of law – However, even in
cases where well-reasoned concurrent orders are passed by the ERC
and APTEL, the same are challenged by the DISCOMS as well as
the Generators – On account of pendency of litigation, which in
G 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 – Therefore, such unnecessary and
unwarranted litigation needs to be curbed – Union of India, through
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GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 185
REGULATORY COMMISSION (CERC)

Ministry of Power, may evolve a mechanism to ensure timely payment A
by the DISCOMS to the Generating Companies, which would avoid
huge carrying cost to be passed over to the end consumers – A
mechanism may also be evolved to avoid unnecessary and
unwarranted litigation, the cost of which is also passed on to the
ultimate consumer – Code of Civil Procedure, 1908 – s.100.
B
Dismissing the appeals, the Court
HELD: 1. The term “Law”, has been defined in the PPAs.
Perusal of the definition of the term “Law” itself would clearly
show that the term “Law” would mean all laws including Electricity
Laws in force in India and any statute, ordinance, regulation, C
Notification or code, rule, or any interpretation of any of them by
an Indian Governmental Instrumentality and having force of law.
It would further reveal that the term “Law” shall also include all
applicable rules, regulations, orders, Notifications by an Indian
Governmental Instrumentality and shall also include all rules,
regulations, decisions and orders of the CERC and the MERC. D
CIL is an instrumentality of the Government of India and its
orders, insofar as price of fuel are concerned, are binding on all
its subsidiaries. Price of coal includes the sum of base price, other
charges and statutory charges as applicable at the time of delivery
of coal. As discussed, the term ‘Law’ would also include all E
applicable rules, regulations, orders, Notifications issued by an
Indian Governmental Instrumentality. It would thus be clear that
all such additional charges which are payable on account of orders,
directions, Notifications, Regulations, etc., issued by the
instrumentalities of the State, after the cut-off date, will have to
be considered to be ‘Change in Law’ events. The Generators F
would be entitled to compensation on the restitutionary principle
on such changes occurring after the cut-off date. [Paras 93, 94,
96-99][218-C, E-F; 219-E, G-H; 220-A]
Energy Watchdog v. Central Electricity Regulatory
Commission and others (2017) 14 SCC 80; Jaipur G
Vidyut Vitaran Nigam Ltd. and others v. Adani Power
Rajasthan Limited and another 2020 SCC Online SC
697; Maharashtra State Electricity Distribution
Company Limited v. Adani Power Maharashtra Limited
& Ors. 2023 SCC OnLine 233 – relied on. H
186 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 2. Insofar as increase in Busy Season Surcharge,
Development Surcharge on transportation of coal, and Port
Congestion Surcharge by the Indian Railways are concerned, the
learned APTEL had found that the Indian Railways is an
instrumentality of the State. It has been found that the Busy
Season Surcharge, Development Surcharge and Port Congestion
B
Surcharge were increased from time to time vide Circulars/
Notifications issued by the Ministry of Railways, through the
Railway Board. A Constitution Bench of this Court, in the case of
Railway Board, Government of India v. M/s Observer Publications
(P) Ltd., has held the Railway Board to be a State within the
C meaning of Article 12 of the Constitution of India. As such, no
error could be found in the finding of the learned APTEL that the
revision of charges to be paid on Busy Season Surcharge,
Development Surcharge and Port Congestion Charges from time
to time by the ‘Railway Board’ would come within the ambit of
‘Change in Law’. [Paras 101-103][220-C-E]
D
Railway Board, Government of India v. M/s Observer
Publications (P) Ltd. (1972) 2 SCC 266 : [1972] 3 SCR
865 – relied on.
3. Insofar as MoEF notification on coal quality is concerned,
E the MoEF, vide Notification dated 2nd January 2014, i.e.
subsequent to the particular cut-off date, i.e. 1st June 2012, has
mandated power projects to use beneficiated coal with ash content
lower than 34%. The draft notification of MoEF dated 11th July
2012 culminated into the final Notification dated 2nd January 2014.
By no stretch of imagination, can it be said that MoEF is not an
F instrumentality of the State. By the said Notification, MoEF has
mandated power projects to use beneficiated coal with ash content
lower than 34%. Admittedly, prior to the cut-off date, the same
was not a requirement. It is thus clear that the said Notifications
dated 11th July 2012 and 2nd January 2014 would amount to
G “Change in Law’. As such, no fault can be found with the finding
of the learned APTEL that the same would amount to ‘Change in
Law’. [Paras 104, 105][220-F-H; 221-A]
4. This Court in the case of Energy Watchdog so also in
Adani Rajasthan case and recently in MSEDCL v. APML & Ors.
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GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 187
REGULATORY COMMISSION (CERC)

has held that the change in NCDP would amount to ‘Change in A
Law’. [Paras 106][221-C]
5. Insofar as Forest Tax is concerned, perusal of the material
placed on record would reveal that, as on the cut-off date, there
was no Forest Tax applicable on coal mined and transported from
South Eastern Coalfields Limited (“SECL” for short) mines B
located in Forest area. For the first time, vide Notification of the
Chhattisgarh State Government, Department of Forest, under
53 the provisions of Chhattisgarh Transit (Forest Produce Rule)
2001, a fee at the rate of Rs.7 per ton was levied. Undisputedly,
the said Notification is issued by the Forest Department of the
Government of Chhattisgarh, which is an instrumentality of the C
State. As such, no error can be found with the finding of the learned
APTEL in that regard. [Para 107][221-D-E]
6. Insofar as ‘Add on premium price’ is concerned,
undisputedly, ‘add on premium’ was required to be paid on account
of cancellation of captive coal blocks and inordinate delay on D
account of Go-No-Go policy. As such, it cannot be said that the
reasoning adopted by the learned APTEL is perverse and
arbitrary. [Para 108][221-F]
7. EFC was imposed by CIL vide its Circular dated 19th
December 2017. CIL is an instrumentality of the State. It is thus E
clear that, on the cut-off date, there was no requirement of EFC,
which has been brought into effect only on 19th December 2017.
As such, the circular of CIL dated 19th December 2017 would
also amount to ‘Change in Law’. It is also not in dispute that
EFC has been paid by the generators while paying the base price, F
other charges and statutory charges at the time of delivery of
coal. As such, no interference would be warranted with the said
finding. [Paras 109-111][221-G-H; 222-A]
8. A perusal of Article 11.3.4 of the PPA would reveal that
in the event of delay in payment of a monthly bill by any procurer G
beyond its due date, a late payment surcharge shall be payable
by the procurer to the seller at the rate of 2% in excess of the
applicable State Bank Advance Rate (“SBAR” for short) per
annum, on the amount of outstanding payment, calculated on a
day to day basis (and compounded with monthly rest), for each
H
188 SUPREME COURT REPORTS [2023] 8 S.C.R.

A day of the delay. Article 11.8 of the PPA deals with Payment of
Supplementary Bill. It enables either party to raise a
supplementary bill on the other party for payment on account of
certain events. Clause (iii) of Article 11.8.1 of the PPA deals with
‘Change in Law’ as provided in Article 13. It requires the bill to
be paid by the other party. Article 11.8.3 of the PPA also provides
B
that in the event of delay in payment of a supplementary bill by
either party beyond one month from the date of billing, a late
payment surcharge shall be payable at same terms applicable to
the monthly bill in Article 11.3.4. This Court in the case of Uttar
Haryana Bijli Vitran Nigam Limited (UNHVNL) and another v.
C Adani Power Limited and others has held that insofar as the
“operation period” is concerned, compensation for any increase/
decrease in revenues or costs to the seller is to be determined
and effected from such date as is decided by the appropriate
Commission. It has further been held that the compensation is
only payable for increase/decrease in revenue or cost to the seller
D
if it is in excess of an amount equivalent to 1% of the Letter of
Credit in aggregate for a contract year. It has been held that
restitutionary principles apply in case a certain threshold limit is
crossed. It has been held that an in-built restitutionary principle
compensates the party affected by such ‘Change in Law’ and the
E affected party must be restored through monthly tariff payment
to the same economic position as if such ‘Change in Law’ had not
occurred. In case the ‘Change in Law’ happens to be by way of
adoption, promulgation, amendment, re-enactment or repeal of
the law or ‘Change in Law’, it has to be effected from the date on
which such change occurs. In Maharashtra State Electricity
F
Distribution Company Limited v. Maharashtra Electricity Regulatory
Commission and Others, this Court has clearly held that the
DISCOMS have a contractual obligation to make timely payment
of the invoices raised by the power generating companies, subject
to scrutiny and verification of the same. This Court has rejected
G the contention that the funding cost was much lesser than the
rate of LPS. This Court has reiterated the proposition that the
courts cannot rewrite a contract which is executed between the
parties. This Court has emphasized that it cannot substitute its
own view of the presumed understanding of commercial terms
by the parties, if the terms are explicitly expressed. It has been
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GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 189
REGULATORY COMMISSION (CERC)

held that the explicit terms of a contract are always the final word A
with regard to the intention of the parties. Article 11.8 of the PPA
entitles either party to raise a supplementary bill on the other
party on account of ‘Change in Law’ as provided in Article 13 and
such bills are required to be paid by the either party. Article 11.8.3
of the PPA specifically provides that in the event of delay in
B
payment of a supplementary bill by either party beyond one month
from the date of billing, a late payment surcharge shall be payable
at the same terms applicable to the monthly bill in Article 11.3.4.
Article 11.3.4 of the PPA specifically provides a late payment
surcharge to be paid by the procurer to the seller at the rate of
2% in excess of the applicable SBAR per annum on the amount C
of outstanding payment calculated on day to day basis (and
compounded with monthly rest), for each day of the delay. In Uttar
Haryana Bijli Vitran Nigam Limited and Another v. Adani Power
(Mundra) Limited and Another this Court has reiterated that once
carrying cost has been granted, it cannot be urged that interest
D
on carrying cost should be calculated on simple interest basis
instead of compound interest basis. It has been held that grant of
compound interest on carrying cost and that too from the date of
the occurrence of the ‘Change in Law’ event is based on sound
logic. It has been held that it is aimed at restituting a party that is
adversely affected by a ‘Change in Law’ event and restore it to E
its original economic position as if such a ‘Change in Law’ event
had not taken place. The argument that there is no provision in
the PPAs for payment of compound interest from the date when
the ‘Change in Law’ event had occurred, has been specifically
rejected by this Court. In view of this consistent position of law
F
and application of restitutionary principles and privity of contractual
obligations between the parties as contained in the PPAs, the
view taken by the learned APTEL with regard to carrying cost
does not warrants interference. [Paras 116-126][223-D-G; 225-
B-F; 227-D-H; 228-A; 229-D-G]
Uttar Haryana Bijli Vitran Nigam Limited (UNHVNL) G
and another v. Adani Power Limited and others (2019)
5 SCC 325 : [2019] 4 SCR 487; Maharashtra State
Electricity Distribution Company Limited v.
Maharashtra Electricity Regulatory Commission and
H
190 SUPREME COURT REPORTS [2023] 8 S.C.R.

A Others (2022) 4 SCC 657; Uttar Haryana Bijli Vitran
Nigam Limited and Another v. Adani Power (Mundra)
Limited and Another (2023) 2 SCC 624 – relied on.
9. Civil Appeal No. 11095 of 2018 and Civil Appeal Nos.
11910 - 11911 of 2018
B In these batch of appeals, insofar as the appeal of
DNHDISCOM is concerned, they are aggrieved by the order of
the learned APTEL allowing Busy Season Surcharge and
Development Surcharge, MoEF Notification on coal quality and
Change in NCDP. They are also aggrieved by the finding of the
C learned APTEL with regard to carrying cost. Insofar as the Busy
Season Surcharge and Development Surcharge are concerned,
they are issued under the Circulars/Notifications of Indian
Railways. The notification on coal quality is issued by MoEF. All
these are the instrumentalities of the State, and these would,
therefore, amount to ‘Change in Law’. Insofar as rest of the claims,
D which are concurrently allowed and disallowed by both the CERC
and the learned APTEL, are concerned, in view of the judgments
of this Court on this issue, as stated above, there is no-reason to
interfere with the same, not noticing any perversity, arbitrariness
and/or any contravention of the statutory provisions. The appeals
E of both the Generator and the DNH-DISCOM are, therefore,
liable to be dismissed. [Paras 132, 134, 135][231-G-H; 232-A,
B-D]
10. Civil Appeal Nos. 4628-4629 of 2021
The learned APTEL allowed the claim of the Generator only
F on the ground of Busy Season Surcharge and Development
Surcharge on transportation of coal, and the Carrying Cost. In
view of finding on the issues as above, no error can be found with
the finding of the learned APTEL in that regard. No merit in the
appeals. The appeals are, accordingly, liable to be dismissed.
G [Paras 136, 137][232-E-F]
11. Civil Appeal Nos. 12055-12056 of 2018
The issue of Busy Season Surcharge, Development
Surcharge and Port Congestion Surcharge have already been
considered by us herein above. All these are charges under the
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 191
REGULATORY COMMISSION (CERC)

Notifications issued by the Indian Railways, through the Railway A
Board. As such, no error can be found with the finding of the
learned APTEL that they would amount to ‘Change in Law’ events.
Insofar as levy of ‘Forest Tax’ is concerned, the same is levied
by the State Government under the statutory provisions. In that
view of the matter, there is no reason to interfere with the order
B
of the learned APTEL. The appeals are, accordingly, liable to be
dismissed. [Paras 138, 139, 141][232-F-G; 233-A]
12. Civil Appeal Nos. 2935-2936 of 2020
In addition to the ‘Change in Law’ benefits granted by the
State Commission, ‘Coal Terminal Surcharge’, ‘Chhattisgarh C
Paryavaran Upkar’ and ‘Chhattisgarh Vikas Upkar’ were also
considered to be ‘Change in Law’ events by the learned APTEL.
The ‘Coal Terminal Surcharge’ was levied by the Indian Railways
subsequent to the cut-off date. Similarly, the Government of
Chhattisgarh, under Section 8 of the Chhattisgarh Adhosanrachna
Vikas Evam Paryavaran Upkar Adhiniyam, 2005, vide Notification D
dated 16th June 2015, which is admittedly after the cut-off date,
introduced ‘Chhattisgarh Paryavaran Upkar’ and ‘Chhattisgarh
Vikas Upkar’. Even the Change in Swacch Bharat Cess at the
rate of 0.5% on Service Tax for Operation Period and Change in
Krishi Kalyan Cess at the rate of 5% on Service Tax for Operation E
Period, which had beengranted concurrently by the State
Commission and the learned APTEL, were notified by the Union
of India after the cut-off date. It could thus be seen that all these
additional taxes or cesses were introduced by the
instrumentalities of the Government of India or by the
Government of Chhattisgarh. The same are issued under the F
provisions of the concerned statutes, rules, notifications, orders,
etc. It is thus clear that they would amount to ‘Law’ within the
meaning of the term ‘Law’ as defined in the PPAs. As such, no
error can be found with the order of the learned APTEL. There
is no merit in the appeals. The appeals are, accordingly, liable to G
be dismissed. [Paras 142 – 145][232-B-F]
13. Civil Appeal No. 3123 of 2019 and Civil Appeal No.5372
of 2019

H
192 SUPREME COURT REPORTS [2023] 8 S.C.R.

A In the present matter, in addition to the claims granted by
the CERC, the learned APTEL also granted the following claims:
(i) Change in NCDP (cancellation of Captive Block vis-à-vis
tapering linkage), (ii) Busy Season Surcharge and Developmental
Surcharge, (iii) Carrying Cost; and (iv) Add on Premium Price.
Insofar as other claims which were concurrently allowed and
B
disallowed by the CERC and the learned APTEL are concerned,
in view of the concurrent findings, there is no reason to interfere
with the same. The appeals of both DISCOMS as well as
Generating Companies are, therefore, liable to be dismissed.
[Paras 146, 151, 152][233-G-H; 234-A, E-F]
C 14. Civil Appeal No. 6641 of 2019
This appeal is filed by GKEL, being aggrieved by the
concurrent denial of benefits on certain components. As already
discussed herein above in view of the concurrent findings
recorded by the CERC as well as the learned APTEL for
D disallowing the claims, there is no reason to interfere with the
same. The appeal is, accordingly, liable to be dismissed. [Paras
153, 154][234-F-G]
15. Civil Appeal Nos. 5583-5584 of 2021

E In the present case, the benefit is granted on following
grounds: (i) Shortfall in domestic coal on account of Change in
NCDP; (ii) Add on premium on account of existing tapering
linkage by three years; (iii) Busy Season Surcharge. Insofar as
Busy Season Surcharge is concerned, apart from there being
concurrent findings of facts, reasons are already given herein
F above, as to how the same would amount to ‘Change in Law’.
There is no merit in the appeals. The same are, accordingly, liable
to be dismissed. [Paras 155, 157, 158][234-H; 235-A-C]
16. Civil Appeal No. 39 of 2021
The CERC has granted benefit on the following grounds. i.
G
Shortfall in linkage coal on account of NCDP 2013 and SHAKTI
Policy; ii. Change in coal quality pursuant to amendment of the
Environment (Protection) Rules, 1986; iii. Increase in Busy
Season Surcharge and Development Surcharge on transportation

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GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 193
REGULATORY COMMISSION (CERC)

of coal by Indian Railways; and iv. Carrying cost on allowed A
‘Change in Law’ claims. The view taken by the CERC has been
affirmed by the learned APTEL. As such, the appeal arises out of
the concurrent findings of fact. The other components, i.e. change
in coal quality pursuant to amendment of the Environment
(Protection) Rules, 1986, and increase in Busy Season Surcharge
B
and Development Surcharge on transportation of coal by Indian
Railways, have already been considered by us herein to amount
to ‘Change in Law’ events. The issue regarding ‘Carrying Cost’
has also ben considered. As such, no interference is warranted
in the concurrent findings by the learned APTEL, especially in
view of the judgments of this Court. The appeal is, accordingly, C
liable to be dismissed. [Paras 159, 160, 163][235-D-F; 236-B-C]
17. Civil Appeal No. 5005 of 2022 and Civil Appeal No.
4089 of 2022
The appeals are filed being aggrieved by the order of the
learned APTEL granting compensation on account of ‘EFC’ and D
‘carrying cost’. Undisputedly, the EFC was imposed by CIL vide
its Circular dated 19th December 2017. it is not in dispute that
EFC has been paid by the Generators while paying the base price,
other charges and statutory charges at the time of delivery of
coal. As such, no interference is warranted with the said finding. E
Insofar as ‘carrying cost’ is concerned, As such, no interference,
therefore, is warranted on the said issue also. There is no merit
in the appeals. The same are, accordingly, liable to be dismissed.
[Paras 164 – 168][236-D-F]
18.1 The CERC, SERCs and the learned APTEL are bodies F
consisting of experts in the field. Several appeals in the present
batch arise out of concurrent findings of fact arrived at by two
statutory bodies having expertise in the field. In some of the
matters, the appeals have been filed only for the sake of filing
the same. Several rounds of litigation have taken place in some
of the proceedings. Recently, this Court, in the case of MSEDCL G
v. APML & Ors. 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 H
194 SUPREME COURT REPORTS [2023] 8 S.C.R.

A Electricity Act was delicensing of generation and freely permitting
captive generation. In the said judgment, the statement of the
learned Attorney General made in the case of Energy Watchdog
that the electricity sector, having been privatized, had largely
fulfilled the object sought to be achieved by the Electricity Act
B was recorded. 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
C 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. However, in spite of this position, litigations
after litigations are pursued. Though the concurrent orders of
D statutory expert bodies cannot be said to be perverse, arbitrary
or in violation of the statutory provisions, the same are challenged.
Even the Standing Committee of Parliament, in its report, has
recommended that there should be consistency and uniformity
with regard to orders emanating from the status of ‘Change in
Law’. It has also recommended that the provisions should also
E
be made for certain percentage of payments of regulatory dues
to be paid by DISCOMS in case the orders of regulators are
being taken to learned APTEL/higher judiciary for their
consideration and decision. The learned APTEL has also referred
to the Policy Directive dated 27th August 2018 issued in terms
F of Section 107 of the Electricity Act, 2003 by the MoP to the
CERC, where it emphasized the need to ensure expeditious
recovery of ‘Change in Law’ compensation. The learned APTEL
has also referred to the Electricity (Timely Recovery of Costs
due to Change in Law) Rules, 2021, notified by MoP on 22nd
G October 2021, which provide for timely recovery of compensation
on account of occurrence of ‘Change in Law’ events. The learned
APTEL found that the Haryana Utilities have been adopting
dilatory tactics, which not only defeat the public policy but also
have the undesirable fallout of adding to the burden of the end-

H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 195
REGULATORY COMMISSION (CERC)

consumers they profess to serve on account of increasing A
‘Carrying Cost’. The learned APTEL further found that
withholding of past payments, including towards taxes and duties
by the DISCOMS, is in violation of the provisions of the PPAs,
which casts a specific mandate on the procurer to honour the
invoices raised, irrespective of dispute, and impose a specific
B
bar against unilateral deductions/setting off. The ‘Change in Law’
events will have to accrue from the date on which Rules, Orders,
Notifications are issued by the instrumentalities of the State. Even
in spite of this finding, the DISCOMS are pursuing litigations
after litigations. When the PPA itself provides a mechanism for
payment of compensation on the ground of ‘Change in Law’, C
unwarranted litigation, which wastes the time of the Court as well
as adds to the ultimate cost of electricity consumed by the end
consumer, ought to be avoided. Ultimately, the huge cost of
litigation on the part of DISCOMS as well as the Generators adds
to the cost of electricity that is supplied to the end consumers.
D
[Paras 128, 169 , 174-176][230-A; 237-A-E; 240-C-G; 241-A-C]
18.2 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 E
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 the DISCOMS as well as the Generators. On account of
pendency of litigation, which in some of the cases in this batch F
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.
Such unnecessary and unwarranted litigation needs to be curbed.
[Paras 179][241-E-H] G

18.3 The Union of India through Ministry of Power (“MoP”)
is therefore, appealed to evolve a mechanism so as to ensure
timely payment by the DISCOMS to the Generating Companies,

H
196 SUPREME COURT REPORTS [2023] 8 S.C.R.

A which would avoid huge carrying cost to be passed over to the
end consumers. The Union of India, through MoP, may also
evolve a mechanism to avoid unnecessary and unwarranted
litigation, the cost of which is also passed on to the ultimate
consumer. [Paras 181, 182][242-B-C]
B Maharashtra State Electricity Distribution Company
Limited v. GMR Warora Energy Ltd. & ors. Civil Appeal
No. 6927 of 2021; Manohar Lal Sharma v. The Principal
Secretary & Ors. (2014) 9 SCC 516 : [2014] 8 SCR
446; and 2014 (9) SCC 614 : [2014] 12 SCR 110;
Ashoka Smokeless Coal India (P) Limited and Others v.
C Union of India and Others (2007) 2 SCC 640 : [2006]
9 Suppl. SCR 954; Uttar Haryana Bijli Vitran Nigam
Limited and another v. Adani Power (Mundra) Limited
and another Civil Appeal No. 5684 of 2021;
Maharashtra State Electricity Distribution Company
D Limited v. Adani Power Maharashtra Limited and
another Civil Appeal Nos. 677- 678 of 2021 – referred
to.
Case Law Reference
[2014] 8 SCR 446 referred to Para 73
E
[2014] 12 SCR 110 referred to Para 73
[2006] 9 Suppl. SCR 954 referred to Para 90
[1972] 3 SCR 865 relied on Para 102
[2019] 4 SCR 487 relied on Para 117, 175
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.11095
of 2018.
From the Judgment and Order dated 14.08.2018 of the Appellate
Tribunal for Electricity at New Delhi in Appeal No.111 of 2017.
G With
Civil Appeal Nos.11910-11911, 12055-12056 of 2018, 3123, 5372,
6641 of 2019, 2935-2936 of 2020, 4628-4629, 5583-5584, 39 of 2021,
5005, 4089 of 2022

H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 197
REGULATORY COMMISSION (CERC)

Balbir Singh, ASG, G. Saikumar, Samir Malik, Ms. Nikita Choukse, A
Akash Lamba, Naman Tandan, Ms. Farha Malik, Chandra Prakash,
Ms. Swapna Sinha, M/s D.S.K. Legal, Anup Jain, Udit Gupta,
Raghavendra Pratap Singh, M/s Udit Kishan and Associates, Shubham
Arya, Ms. Poorva Saigal, Nikunj Dayal, Ms. Pallavi Saigal, Ms. Shikha
Sood, Ms. Reeha Singh, Ms. Anumeha Smiti, Ravi Nair, Advs. for the
Appellant. B

Dr. A. M. Singhvi, Sajan Poovayya, Sr. Advs., Mahesh Agarwal,
Ms. Poonam Sengupta, Arshit Anand, Saunak Rajguru, Nidhiram Sharma,
Ms. Nidhiram Sharma, Ms. Sakshi Kapoor, E. C. Agrawala, Vishrov
Mukherjee, Pukhrambam Ramesh Kumar, Girik Bhalla, Karun Sharma,
Ms. Priyanka Vyas, Suraj Dasguru, Advs. for the Respondents. C
The Judgment of the Court was delivered by
B. R. GAVAI, J.
Index*
I. INTRODUCTION…………………………Paras 1 to 5 D
II. BRIEF FACTS AND SUBMISSIONS…… Paras 6 to 91
III. ADDITIONAL ISSUES…………..............Para 92
IV. CONSIDERATION………………………Paras 93 to 130
V. CONCLUSION…………………………Paras 131 to 168 E
VI. EPILOGUE……………………………Paras 169 to 184
List of abbreviations:
1. APTEL - Appellate Tribunal for Electricity
2. CEA - Central Electricity Authority F
3. CERC - Central Electricity Regulatory
Commission
4. CIL - Coal India Limited
5. COD - Commercial Operation Date G
6. CSA - Coal Supply Agreement
7. DISCOMS - Distribution Companies
8. ECL - Eastern Coalfield Limited
*Ed Note : Pagination in the Index is as per the original judgment. H
198 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 9. EFC - Evacuation Facility Charges
10. FSA - Fuel Supply Agreement
11. GCV - Gross Calorific Value
12. LoA - Letter of Assurance
B 13. LPS - Late Payment Surcharge
14. MAT - Minimum Alternate Tax
15. MCL - Mahanadi Coalfield Limited
16. MERC - Maharashtra Electricity Regulatory
Commission
C
17. MoC - Ministry of Coal
18. MoP - Ministry of Power
19. MSEDCL - Maharashtra State Electricity
Distribution Company Limited
D 20. NCDP - New Coal Distribution Policy
21. PPAs - Power Purchase Agreements
22. RFP - Request for Proposal
23. SBAR - State Bank Advance Rate
E 24. SECL - South Eastern Coal Limited
25. SHAKTI - Scheme for Harnessing and
Allocating Koyala (Coal) Transparently
in India
26. SHR - Station Heat Rate
F 27. TANGEDCO - Tamil Nadu Generation and Distribution
Corporation
28. UHV - Useful Heat Value
I. INTRODUCTION
G 1. When we heard this batch of Electricity appeals, it was agreed
between all the parties that this Court should first decide Civil Appeal
No. 684 of 2021 (Maharashtra State Electricity Distribution
Company Limited v. Adani Power Maharashtra Limited & Ors.1)
[“MSEDCL v. APML & Ors.” for short] and Civil Appeal No. 6927 of
1
2023 SCC OnLine 233
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 199
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2021 (Maharashtra State Electricity Distribution Company Limited A
v. GMR Warora Energy Ltd. & ors.), inasmuch as three of the issues
involved in all the appeals in the batch were common. It was submitted
that those two appeals could be decided by deciding the three common
issues. However, insofar as the other appeals are concerned, it was
submitted that, in addition to the three common issues, certain additional
B
issues were also involved and it was agreed that after those two appeals
are decided, the other appeals should be heard for considering these
additional issues.
2. The said three common issues are thus:
(i) Whether ‘Change in Law’ relief on account of New Coal C
Distribution Policy, 2013 (“NCDP 2013” for short) should
be on ‘actuals’ viz. as against 100% of normative coal
requirement assured in terms of New Coal Distribution
Policy, 2007 (“NCDP 2007” for short) OR restricted to
trigger levels in NCDP 2013 viz. 65%, 65%, 67% and 75%
of ACQ? D
(ii) Whether for computing ‘Change in Law’ relief, the
operating parameters should be considered on ‘actuals’ OR
as per technical information submitted in bid?
(iii) Whether ‘Change in Law’ relief compensation is to be
granted from 1st April 2013 (start of Financial Year) or 31st E
July 2013 (date of NCDP 2013)?
3. After extensively hearing all the learned counsel for the parties,
vide the judgment and order dated 3rd March 2023 in the case of MSEDCL
v. APML & Ors. (supra), this Court decided those two appeals after
considering the aforesaid three issues. F
4. The first issue was answered by this Court, holding that the
‘Change in Law’ relief for domestic coal shortfall should be on ‘actuals’,
i.e. as against 100% of normative coal requirement assured in terms of
the NCDP, 2007. Insofar as the second issue is concerned, it was held
that the Station Heat Rate (“SHR” for short) and Auxiliary consumption G
should be considered as per the Regulations or actuals, whichever is
lower. The third issue was answered holding that the Start date for the
‘Change in Law’ event for the NCDP, 2013 is 1 st April 2013.
5. After we decided those appeals, we have heard the present
appeals in which some of the issues which were decided by us vide the H
200 SUPREME COURT REPORTS [2023] 8 S.C.R.

A said judgment in the case of MSEDCL v. APML & Ors. (supra) also
arose for consideration along with other issues. However, most of the
issues in all these appeals are overlapping and, therefore, we propose to
decide these appeals by this common judgment.
II. BRIEF FACTS AND SUBMISSIONS
B Civil Appeal No. 11095 of 2018 and Civil Appeal Nos. 11910-
11911 of 2018
6. These cross appeals challenge the common judgment and order
dated 14th August 2018 passed by the learned Appellate Tribunal for
Electricity, New Delhi (hereinafter referred to as “APTEL”) in Appeal
C No. 111 of 2017 & I.A. No.450 of 2018 and in Appeal No.290 of 2017 &
I.A. No.519 of 2017.
7. Civil Appeal No.11095 of 2018 is filed by GMR Warora Energy
Ltd. (hereinafter referred to as “GWEL”/”Generator”) to the extent it
was denied compensatory benefits on certain components on the ground
D of ‘Change in Law’.
8. Civil Appeal Nos. 11910-11911 of 2018 have been filed by DNH
Power Distribution Co. Ltd. (DPDCL) (hereinafter referred to as “DNH-
DISCOM”), being aggrieved by the order of the learned APTEL accepting
the claim of GWEL on certain issues and holding the same to be ‘Change
E in Law’.
9. The facts, in brief, giving rise to these appeals are as under:
10. GWEL had set up a Thermal Power Station at Warora, District
Chandrapur in the State of Maharashtra with an installed capacity of
600 MW (2 x 300 MW). The Commercial Operation Date (“COD” for
F
short) of Unit 1 was 19th March 2013 and that of Unit 2 was 1st September
2013.
11. GWEL had entered into long term Power Purchase Agreements
(“PPAs” for short) with DNH-DISCOM for supply of 200 MW power
to Maharastra State Electricity Distribution Company Limited
G (“MSEDCL” for short) on 17th March 2010 [“MSEDCL PPA”) and for
supply of 200 MW power on 21st March 2013 (“DNH PPA”), after it
emerged as the successful bidder for supply of power to MSEDCL/
DNH-DISCOM. The Scheduled delivery date under the MSEDCL PPA
was 17th March 2014, whereas under the DNH PPA, it was 1st April
H 2013. GWEL is also supplying 150 MW power from its power plant to
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 201
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

Tamil Nadu Generation and Distribution Corporation (“TANGEDCO” A
for short) by way of back-to-back arrangement with trading company
GMR Energy Trading Limited, for which purpose, a PPA was signed on
27th November 2013 (“TANGEDCO PPA”).
12. In terms of the PPAs, the cut-off date, which is 7 days prior to
the bid deadline, is to be considered for the purpose of claims under B
‘Change in Law’. Following are the cut-off dates under the said PPAs.

13. Certain ‘Change in Law’ events occurred with regard to
MSEDCL PPA and DNH PPA after the cut-off date. The same were C
notified by GWEL to MSEDCL/ DNH-DISCOM.
14. GWEL filed Petition No. 8/MP/2014 before the Central
Electricity Regulatory Commission (hereinafter referred to as “CERC”)
seeking relief for ‘Change in Law’.
15. Vide Order dated 1st February 2017, certain claims were D
allowed and certain claims were disallowed by the CERC.
16. The claims which were allowed by the CERC are thus:
“i. Increase in CVD from 8% to 10% and 10% to 12%;
ii. Increase in Excise Duty;
E
iii. Increase in Service Tax;
iv. Increase in other taxes [Work Contract Tax (WCT),
VAT, CST];
v. Change in Excise Duty on coal;
vi. Increase in the rate of Royalty on coal; F
vii. Levy of Clean Energy Cess by Government of India
(Gol);
viii. Increase in service tax on transportation of goods by
IR;
ix. Levy of Swachh Bharat Cess.” G
17. The claims which were disallowed by the CERC are thus:
“i. Withdrawal of deemed export benefit by DGFT;
ii. Design changes in Coal Handling Plant (CHP);
iii. Increase in the rate of Minimum Alternate Tax
(MAT); H
202 SUPREME COURT REPORTS [2023] 8 S.C.R.

A iv. Increase in Busy Season Surcharge and Development
surcharge on transportation of coal by Indian
Railways (IR);
v. Increase in sizing charges and surface transportation
charges by Coal India Ltd. (CIL);
B vi. Increase in operating cost on account of specification
of coal quality to be used for the TPS;
vii. Change from UHV to GCV based pricing of coal;
viii. Incremental increase in Interest on Working Capital
(IWC) on account of increase in Project costs.”
C 18. Being aggrieved by the judgment and order passed by the
CERC, cross-appeals were filed by both GWEL and DNH-DISCOM.
19. Vide the impugned judgment, the learned APTEL, while
concurring with the view of CERC on the claims allowed by it, further
allowed the claims on the ground of ‘Change in Law’ on the following
components:
D (i) Busy Season Surcharge and Development Surcharge;
(ii) Ministry of Environment and Forest (“MoEF”) Notification
on coal quality; and
(iii) Change in NCDP and Carrying Cost.
20. However, the rest of the claims were disallowed by the learned
E APTEL, concurring with the view taken by the CERC. Insofar as the
appeal filed by DNH-DISCOM is concerned, the same was dismissed
by the learned APTEL. Hence, these cross-appeals.
21. We have heard Mr. Vishrov Mukherjee, learned counsel
appearing on behalf of the GWEL and Mr. Samir Malik, learned counsel
F appearing on behalf of MSEDCL and Mr. M.G. Ramachandran, learned
Senior Counsel appearing on behalf of the DNH-DISCOM.
22. Mr. Vishrov Mukherjee submits that the learned APTEL has
erred in disallowing the claim on the following items:
(i) Withdrawal of Deemed Export Benefit by way of Circular
dated 28th December 2011 and Notification dated 28 th
G
December 2011 issued by the Directorate General of Foreign
Trade (“DGFT”) and amendment to the Foreign Trade Policy
dated 21st March 2012;
(ii) Imposition of Crushing/Sizing charges and Surface
Transportation Charges by Notification dated 15th October
H 2009;
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 203
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

(iii) Change in system of classification of coal by Coal India A
Limited (“CIL” for short) from Useful Heat Value (“UHV”
for short) to Gross Calorific Value (“GCV” for short) system
of pricing by way of Notification dated 30th December 2011;
(iv) Increase in levy of Minimum Alternate Tax (“MAT” for
short) pursuant to amendment of Section 115JB of the
B
Income Tax Act, 2012;
(v) Design changes in Coal Handling Plant in terms of letter
issued by the Central Electricity Authority (“CEA” for short)
dated 19th April 2011;
(vi) Increase in working capital.
C
23. It is submitted that all these changes have taken place on
account of the Notifications/Orders/Circulars issued by the
instrumentalities of the State and as such, the learned APTEL ought to
have allowed the claim for compensation on account of ‘Change in Law’
on the aforesaid items also.
24. It is submitted that the compensation on account of the ‘Change D
in Law’ is based on the principle of restitution so as to put back the party
to the same economic position it was in, had the ‘Change in Law’ event
not taken place. However, this has not been considered in the correct
perspective by the learned APTEL.
25. Learned counsel appearing on behalf of the DNH-DISCOM E
and MSEDCL, on the contrary, submit that the learned APTEL has
erred in considering the Busy Season Surcharge and Development
Surcharge, MoEF Notification on coal quality, Change in NCDP and
Carrying Cost as ‘Change in Law’ events. He submits that when the
Generator had submitted its bid, it was aware that there was a likelihood
of variations on certain payments to be made and the same were factored F
in while submitting the bid. It is, therefore, submitted that the learned
APTEL erred in granting ‘Change in Law’ benefits on the said issues.
Civil Appeal Nos. 4628-4629 of 2021
26. These appeals have been filed by Uttar Haryana Bijli Vitran
Nigam Limited and Dakshin Haryana Bijli Vitran Nigam Limited G
(hereinafter referred to as “Haryana Discoms”) challenging the common
judgment and order dated 7th June 2021 passed by the learned APTEL
in Appeal No.158 of 2017 & I.A. No.575 of 2018 and Appeal No. 316 of
2017. Appeal No.158 of 2017 & I.A. No.575 of 2018 were filed by
Adani Power (Mundra) Limited (hereinafter referred to as “AP(M)L”),
H
204 SUPREME COURT REPORTS [2023] 8 S.C.R.

A being aggrieved by the order passed by the CERC dated 6 th February
2017, whereby the CERC had denied certain claims for compensation
on certain components on account of ‘Change in Law’, whereas Appeal
No.316 of 2017 was filed by Haryana Discoms challenging grant of
claim of compensation on certain components on the ground of ‘Change
in Law’.
B
27. The Chart of claims which were allowed and disallowed by
the CERC is as under:
“107. Based on the above analysis and decisions, the summary of
our decision under the Change in Law during the operating period
of the project is as under:
C

D

E

F

G

H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 205
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

28. Being aggrieved by the order of the CERC, cross-appeals A
were filed by AP(M)L so also by Haryana Discoms before the learned
APTEL. The Haryana Discoms challenged that part of the order of the
CERC which allowed claim on components on the ground of ‘Change in
Law’, whereas AP(M)L challenged that part of the order of the CERC
which disallowed its claim on various components.
B
29. Though AP(M)L had sought ‘Change in Law’ compensation
on various components, the same was allowed by the learned APTEL
by the impugned order only on the ground of:
(i) ‘Busy Season Surcharge and Developmental Surcharge on
transportation of coal’, and C
(ii) ‘Carrying Cost’.
30. The claim of AP(M)L pertaining to increase in Surface
Transportation Charges so also Sizing Charges of coal were denied by
the learned APTEL, concurring with the view taken by the CERC.
D
31. Being aggrieved by the orders passed by the CERC and the
learned APTEL allowing ‘Change in Law’ on certain components, the
Haryana Discoms have approached this Court.
32. We have heard Ms. Poorva Saigal, learned counsel appearing
on behalf of the Haryana Discoms and Dr. A.M. Singhvi, learned Senior
E
Counsel appearing on behalf of AP(M)L.
33. Ms. Poorva Saigal submits that the learned APTEL grossly
erred in reversing the well-reasoned findings of the CERC on the issue
of Busy Season Surcharge and Developmental Surcharge on
transportation of coal. She, therefore, submits that the finding of the
F
learned APTEL with regard to the same needs to be set aside.
34. Dr. A.M. Singhvi, on the contrary, submits that the Busy Season
Surcharge as well as the Developmental Surcharge are revised as per
the Notifications/Circulars issued by the Ministry of Railways and as
such, they would come within the definition of ‘Change in Law’.
G
Civil Appeal Nos. 12055-12056 of 2018
35. These appeals, filed by Jaipur Vidyut Vitran Nigam Ltd., Ajmer
Vidyut Vitaran Nigam Ltd. and Jodhpur Vidhyut Vitaran Nigam Ltd.
(hereafter referred to as “Rajasthan Discoms”), challenge the common
judgment and order dated 14th August 2018, passed by the learned APTEL H
206 SUPREME COURT REPORTS [2023] 8 S.C.R.

A in Appeal No. 119 of 2016 & I.A. Nos. 668 and 674 of 2016 and in
Appeal No.277 of 2016 & I.A. No.572 of 2016.
36. Appeal No. 119 of 2016 & I.A. Nos. 668 & 674 of 2016 were
filed by M/s Adani Power Rajasthan Ltd. (“APRL” for short), being
aggrieved by the judgment and order dated 15th March 2016, passed by
B the Rajasthan Electricity Regulatory Commission (hereinafter referred
to as “State Commission”) thereby disallowing some of its claims on
account of ‘Change in Law’, whereas Appeal No. 277 of 2016 and I.A.
No.572 of 2016 were filed by the Rajasthan Discoms, being aggrieved
by the order of the State Commission of the same date vide which some
of the ‘Change in Law’ claims were allowed by the CERC.
C
37. The ‘Change in Law’ claims which were allowed by the State
Commission are as under:
i. Change in Rate of Royalty Payable on Domestic Coal;
ii. Levy of Service Tax on Transportation of Goods by Indian
D Railways (IR); and
iii. Increase in Fee for ‘Consent to Operate’.
38. The ‘Change in Law’ claims which were not allowed by the
State Commission are thus:
E

F

G

H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 207
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39. Vide the impugned judgment, the learned APTEL dismissed A
the appeal of the Rajasthan Discoms and partly allowed the appeal of
APRL allowing its claims on the ground of ‘Busy Season Surcharge’,
‘Development Surcharge’, ‘Port Congestion Surcharge, ‘Forest Tax’
and ‘Carrying Cost’. Being aggrieved thereby, the Rajasthan Discoms
have approached this Court. B
40. We have heard Mr. V. Giri, learned Senior Counsel appearing
on behalf of the Rajasthan Discoms and Dr. A.M. Singhvi, learned Senior
Counsel appearing on behalf of the APRL.

41. Mr. V. Giri submits that clause 10 in the PPA is referable only
C
to taxes under Article 268 of the Constitution of India. He submits that
the learned APTEL has, therefore, erred in allowing ‘Change in Law’
benefits on the issues related to Busy Season Surcharge, Development
Surcharge, Port Congestion Charges, Forest Tax and Carrying Cost which
are not taxes referable to Article 268 of the Constitution.
D
42. Dr. Singhvi made arguments on similar lines as have been
made in the other appeals.
Civil Appeal Nos. 2935-2936 of 2020

43. These appeals have been filed by the Rajasthan Discoms and E
Rajasthan Urja Vikas Nigam Ltd. challenging the common judgment
and order dated 29th January 2020, passed by the learned APTEL in
Appeal no.284 of 2017 and Appeal No. 09 of 2018.

44. Appeal No. 284 of 2017 was filed by APRL challenging the
order dated 8th June 2017 passed by the State Commission, being F
aggrieved by the disallowance of its claim on some components on the
ground of ‘Change in Law’ and carrying cost, whereas Appeal No.9 of
2018 was filed by Rajasthan Discoms being aggrieved by the claims
which were allowed by the State Commission.

45. The list of the components which were allowed and which G
were not allowed on the ground of ‘Change in Law’ is thus:

H
208 SUPREME COURT REPORTS [2023] 8 S.C.R.

A

B

C

D

E

F
46. As stated above, being aggrieved by that part of the order
which disallowed its claim, APRL preferred the aforesaid Appeal before
the learned APTEL, whereas the Rajasthan Discoms, being aggrieved
by that part of the order which allowed claims on certain components,
also filed an Appeal before the learned APTEL.
G
47. The learned APTEL, while dismissing the appeal of the
Rajasthan Discoms, partly allowed the appeal of the APRL by allowing
compensation on certain other components on the ground of ‘Change in
Law’.
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 209
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

48. The components on which ‘Change in Law’ benefits were A
granted by the learned APTEL are thus:
(i) Coal Terminal Surcharge;
(ii) Chhattisgarh Paryavaran Upkar;
(iii) Chhattisgarh Vikas Upkar; B
(iv) Change in Swacch Bharat Cess at the rare of 0.5% on
Service Tax for Operation Period;
(v) Change in Krishi Kalyan Cess at the rate 5% on Service
Tax for Operation Period;
C
49. In addition to grant of relief on the ground of ‘Change in Law’,
the learned APTEL also granted ‘Carrying Cost’.
50. Arguments similar to the ones advanced in Civil Appeal No.
12055-12056 of 2018 were advanced by Mr. V. Giri, learned Senior
Counsel appearing on behalf of the Rajasthan Discoms, as well as by
D
the learned counsel for the respondents.
Civil Appeal No. 3123 of 2019 and Civil Appeal No.5372 of
2019
51. These are cross appeals. Civil Appeal No.3123 of 2019 has
been filed by Bihar State Power (Holding) Company Ltd. (hereinafter E
referred to as “Bihar Discoms”) and Civil Appeal No.5372 of 2019 has
been filed by GMR Kamalanga Energy Limited and GMR Energy
Limited (hereinafter referred to as “GKEL”), challenging the judgment
and order dated 21st December 2018 passed by the learned APTEL in
Appeal No.193 of 2017 & I.A. No. 449 of 2018.
F
52. Appeal No.193 of 2017 & I.A. No.449 of 2018 were filed by
GKEL challenging the order of the CERC dated 7th April 2017, aggrieved
by the denial of its claims on certain components on the ground of ‘Change
in Law’. The Bihar Discoms have challenged that part of the order of
the learned APTEL which allowed claims of GKEL on the ground of
‘Change in Law’. G

53. By the impugned order, the learned APTEL granted claims on
the ground of:
(i) Change in NCDP (cancellation of Captive Block vis-à-vis
tapering linkage),
H
210 SUPREME COURT REPORTS [2023] 8 S.C.R.

A (ii) busy season surcharge and developmental surcharge,
(iii) carrying cost; and
(iv) add on premium price.
54. We have heard Mr. Vishrov Mukerjee, learned counsel
B appearing on behalf of the GKEL/Generator and Ms. Anushree Bardhan,
learned Counsel appearing on behalf of the Bihar Discoms.
55. Mr. Vishrov Mukerjee submits that the learned APTEL as
well as the CERC have grossly erred in rejecting the claim for
compensation on the ground of:
C (i) change in source of coal from Mahanadi Coalfields Ltd.
(“MCL” for short) to Eastern Coalfields Ltd. (“ECL” for
short) vide Notification dated 26th February 2014 issued by
the CIL;
(ii) change in mode of transportation from rail to road vide
D Notification dated 29th September 2014 issued by MCL;
(iii) increase in levy of Minimum Alternate Tax (“MAT” for
short); and
(iv) interest on working capital.
E 56. Learned counsel submitted that change in source of coal from
MCL to ECL was on account of the notification issued by the CIL,
which is an instrumentality of the State. Similarly, he submitted that the
change in mode of transportation from rail to road was on account of the
notification issued by the MCL. Learned counsel submits that, since, on
account of these notifications, the cost of transportation of coal increased,
F applying the restitutionary principle, the CERC as well as the learned
APTEL ought to have granted claims on the basis of ‘Change in Law’.
He further submits that increase in levy of MAT has also been increased
by the Union of India and, as such, the same would also amount to
‘Change in Law’. It is further submitted that interest on working capital
G was also increased on account of the orders of the instrumentalities of
the State and, as such, compensation also ought to have been granted
for the same.
57. Learned counsel for the Bihar Discoms submits that the CERC
as well as the learned APTEL have grossly erred in allowing claims on
H certain components on the ground of ‘Change in Law’.
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 211
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

Civil Appeal No. 6641 of 2019 A
58. This appeal filed by GKEL arises out of the judgment and
order dated 27th May 2019, passed by the learned APTEL in Appeal
No.195 of 2016, thereby partly allowing the appeal.
59. GKEL filed Petition No.79/MP/2013 before the CERC claiming
compensation on various component on the ground of ‘Change in Law’ B
events.
60. The CERC, vide order dated 3rd February 2016, disallowed
compensation for the following components:
(a) Change from UHV to GCV based pricing of coal pursuant C
to notification issued by the Government of India;
(b) Increase/revision in the railway freight charges pursuant to
notifications issued by Ministry of Railways and Ministry
of Finance;
(c) Increase in the rate of Minimum Alternate Tax (“MAT”) D
rates;
(d) Increase in Value Added Tax in the State of Odisha;
(e) Increase in water charges pursuant to notifications issued
by the Government of Odisha;
E
(f) Incremental increase in interest on working capital on
account of increase in costs during the operating period.
61. Being aggrieved thereby, Appeal No.195 of 2016. was
preferred by GKEL. As stated above, the learned APTEL partly allowed
the appeal and held that GKEL was entitled to compensation on following F
grounds.
(i) Increase/revision in the railway freight charges in terms of
notifications issued by the Ministry of Railways and Ministry
of Finance on account of imposition of development
surcharge, busy season surcharge and service tax; G
(ii) VAT rate enhancement from 4% to 5% from 30.03.2012
onwards;
(iii) Carrying cost/interest on compensation on the above items
after ascertainment of the same by computation, which shall
be assessed from the date of respective notification/circular/ H
212 SUPREME COURT REPORTS [2023] 8 S.C.R.

A order from the concerned Ministry/Department/
Governmental instrumentality till payment is made.
62. Appellant-GKEL, being unsatisfied with the same, has
approached this Court praying for a direction that it is also entitled to
compensation on various other components, viz.,
B (i) Increase in Water Charges;
(ii) Shift from UHV to GCV methodology of pricing of coal;
(iii) Increase in rate of MAT; and
(iv) Interest on working capital.
C
63. Arguments similar to the ones advanced in Civil Appeal No.
3123 of 2019 and Civil Appeal No.5372 of 2019 were advanced by the
learned counsel for the parties.
Civil Appeal Nos. 5583-5584 of 2021
D 64. These appeals, filed by Bihar Discoms, arise out of the judgment
and order dated 6th August 2021, passed by the learned APTEL in Appeal
No. 423 of 2019 and in Appeal No.173 of 2021.
65. In the said case, the learned APTEL, vide order dated 21st
December 2018, had allowed the following claims as ‘Change in Law’
E and remanded the matter back to the CERC to determine compensation
due to GKEL:
(a) Shortfall in linkage coal and deviation in NCDP;
(b) Cancellation of captive coal block;

F (c) Imposition of Busy Season Surcharge and Development
Surcharge;
(d) Levy of Add-On Premium over and above the notified price
of coal; and
(e) Carrying Cost.
G 66. Upon remand, the CERC passed order dated 16 th September
2019, thereby granting compensation on certain components on the ground
of ‘Change in Law’ including carrying cost.
67. Contending that the order passed by the CERC did not give
effect to the ‘Change in Law’ components as directed by the learned
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 213
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

APTEL, an appeal being Appeal No. 423 of 2019 came to be preferred A
by GKEL before the learned APTEL.
68. Bihar Discoms had also filed an appeal being Appeal No.173
of 2021, before the learned APTEL, being aggrieved by the benefits
which were granted by the CERC.
69. By the impugned order, the learned APTEL held that the GKEL B
was entitled to recover expenditure involved in procurement of alternate
coal due to shortfall in domestic coal supply corresponding to scheduled
generation pertaining to the obligations under the Bihar PPA. The learned
APTEL held that this was required to be done in order to restore the
appellant-GKEL to the same economic position as before as if no ‘Change
in Law’ event had occurred. C
70. We have heard Ms. Anushree Bardhan, learned counsel
appearing on behalf of the appellant-Bihar Discoms and Mr. Maninder
Singh, learned Senior Counsel appearing on behalf of GKEL.
71. Ms. Anushree Bardhan submits that the learned APTEL ought
to have granted benefit of ‘Change in Law’ restricting it to shortfall for D
only 894.5 MW, which was the amount specified in the PPA, and not for
the entire 1050 MW, which is the installed capacity. She further submits
that the learned APTEL had also erred in granting add on premium on
account of extension of tapering linkage by three years.
72. Shri Maninder Singh, learned Senior Counsel submits that E
insofar as the first issue with regard to shortfall of coal supply is
concerned, the same is squarely covered by the judgments of this Court
in the cases of Energy Watchdog v. Central Electricity Regulatory
Commission and others2, Jaipur Vidyut Vitaran Nigam Ltd. and
others v. Adani Power Rajasthan Limited and another3(hereinafter
F
referred to as “Adani Rajasthan case”) and MSEDCL v. APML &
Ors. (supra).
73. He further submits that the delay in operationalization of the
captive mines was not on account of any reason attributable to GKEL.
He submits that, since the allotment of coal blocks was cancelled on
account of the judgment of this Court in the case of Manohar Lal G
Sharma v. The Principal Secretary & Ors.4, GKEL was also entitled
for the benefit for the said period.
2
(2017) 14 SCC 80
3
2020 SCC Online SC 697
4
(2014) 9 SCC 516 and 2014 (9) SCC 614 H
214 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 74. Insofar as Busy Season Surcharge is concerned, he submits
that there is a concurrent finding of fact. He submits that, in any case,
the said charges are issued by the Railway Board by issuing Notifications/
Circulars. He submits that since the Railway is an instrumentality of the
State, both the CERC and the learned APTEL have concurrently held
that the Generator would be entitled to compensation on the ground of
B
‘Change in Law’.
Civil Appeal No. 39 of 2021
75. This appeal filed by the DNH-DISCOM arises out of the
judgment and order dated 13th October 2020, passed by the learned
C APTEL in Appeal No.283 of 2019 & I.A. Nos. 2188 & 1229 of 2019,
thereby dismissing the said appeal arising out of the judgment and order
passed by the CERC dated 16th May 2019.
76. The DNH-DISCOM had initiated a competitive bidding
process through issuance of a Request for Proposal (“RFP” for short)
D in March 2012 for procurement of power on Long Term Basis under
Case-1 bidding procedure. As per the RFP, the cut-off date was 1st June
2012.
77. The respondent-GWEL emerged as the successful bidder for
supplying Aggregated Contracted Capacity of 200 MW at a levelized
E tariff of Rs.4.618 per Unit.
78. Accordingly, Letter of Intent (LoI) was issued by DNH-
DISCOM on 14th August 2012. An application/petition being Petition
No.87/2012 came to be filed before the Joint Electricity Regulatory
Commission (hereinafter referred to as “Joint Commission”) for approval
F of the PPA and adoption of tariff. GWEL was also joined as a co-petitioner
in the said Petition. The Joint Commission, vide order dated 19th February
2013, approved the PPA. Accordingly, the PPA came to be executed on
21st March 2013.
79. GWEL filed Petition No. 8/MP/2014 before the CERC seeking
compensation on certain components on the ground of ‘Change in Law’.
G
The same was decided by the CERC vide order dated 1st February
2017. Aggrieved thereby, both the appellant-DNH-DISCOM and the
respondent-GWEL filed appeals before the learned APTEL. In appeal,
the learned APTEL remanded the matter to the CERC vide order dated
14th August 2018 for considering certain issues. Being aggrieved by the
H order dated 14th August 2018, the appellant-DNH-DISCOM filed an
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 215
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

appeal, being Civil Appeal No.11910 of 2018, before this Court. The said A
appeal is also being decided in the present batch of appeals, by this
common judgment.
80. On remand, the CERC passed an order dated 16th May 2019
and allowed the claim of GWEL/Generator on the ground of ‘Change in
Law’ occurring on account of the enforcement of the ‘Scheme for B
Harnessing and Allocating Koyala (Coal) Transparently in India’
(“SHAKTI Policy” for short). Being aggrieved thereby, DNH-DISCOM
had filed an appeal before the learned APTEL. As stated herein above,
the same was dismissed by the learned APTEL vide the impugned
judgment.
C
81. We have heard Mr. C.A. Sundaram, learned Senior Counsel
appearing on behalf of the DNH-DISCOM and Mr. Niranjan Reddy,
learned Senior Counsel appearing on behalf of the respondent-GWEL.
82. Mr. C.A. Sundaram submits that, from the presentation which
was given by the GWEL, it was apparent that it was given on the basis D
that coal supply would be restricted only to 65%. He submits that, as
such, the grant of benefit on account of ‘Change in Law’ on the ground
that there was 100% assurance by CIL is not permissible. He, therefore,
submits that the judgment and order of the learned APTEL deserves to
be set aside to that extent.
E
83. Mr. Niranjan Reddy, on the contrary, submits that the bid of
GWEL was submitted on 8th June 2012, on which date NCDP 2007 was
in force. He submits that, subsequently, the NCDP 2007 was modified
on 31st July 2013 and thereafter SHAKTI Policy has come into effect
on 22nd May 2017 and, as such, judgment and order of the learned APTEL
warrants no interference. F
Civil Appeal No. 5005 of 2022 and Civil Appeal No. 4089 of
2022
84. These appeals challenge the common judgment and order dated
22nd March 2022 passed by the learned APTEL in Appeal No. 118 of
G
2021 and 40 of 2022, filed by Rattan India Power Limited (hereinafter
referred to as “Rattan India”) and Adani Power Maharashtra Limited
(for short, “APML”) respectively, thereby challenging the orders dated
1st January 2019 and 3rd August 2018, passed by Maharashtra Electricity
Regulatory Commission (hereinafter referred to as ‘MERC’) in Case
No. 227 of 2018 and Case No. 124 of 2018 respectively. H
216 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 85. The facts in brief giving rise to the present appeals are as
under:
Rattan India has entered into PPAs dated 22nd April 2010 and 5th
June 2010 with MSEDCL for supply of 1200 MW aggregate power at
levelized tariff of Rs.3.260 KWH for a period of 25 years. It filed a
B petition before MERC, being Case No. 227 of 2018, claiming
compensation on the ground of ‘Change in Law’ occurring on account
of the circular dated 19th December 2017 issued by CIL, vide which it
levied the Evacuation Facility Charges (for short, “EFC”). The same
was rejected by MERC, vide order dated 1st January 2019. A similar
petition being Case No. 124 of 2018 was also filed by APML, raising a
C similar claim before MERC, which was also rejected by MERC, vide its
earlier order dated 3rd August 2018.
86. Being aggrieved thereby, Rattan India had filed an Appeal
No. 118 of 2021 and APML had preferred an Appeal No. 40 of 2022.
By the impugned order, the learned APTEL had held EFC imposed by
D CIL vide Circular dated 19th December 2017 to be a ‘Change in Law’
event and, accordingly, held the Generators to be entitled to compensation
on the said ground. Being aggrieved thereby, the MSEDCL has preferred
these appeals.
87. We have heard Shri Balbir Singh, learned Additional Solicitor
E General (for short, “ASG”) and Shri G. Saikumar, learned counsel
appearing on behalf of the appellant and Shri Sajan Poovayya, learned
Senior Counsel for the respondents in Civil Appeal No. 5005 of 2022
and Shri Vishrov Mukherjee, learned counsel appearing on behalf of the
respondents in Civil Appeal No. 4089 of 2022.
F 88. Shri Balbir Singh, relying on Clause 9.1 of the Coal Supply
Agreement (for short, “CSA”) dated 28th December 2012 entered into
between Southeastern Coalfields Limited and APML, submitted that
CSA defines as to what shall be the base price of coal. He submitted
that Clause 9.2 of the said CSA specifically provides for other charges
G which are permissible. Relying on Clause 9.4 of the CSA, he submitted
that in all cases, the entire freight charges, irrespective of the mode of
transportation of coal supplied, shall be borne by the purchaser. The
learned ASG submitted that the EFC does not partake the character of
a statutory levy. However, he submitted that, in any case, it does not
have the force of law. He, therefore, submitted that APTEL has grossly
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 217
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

erred in holding the circular of CIL dated 19th December 2017 to qualify A
as ‘Change in Law’.
89. Shri Singh further submitted that the direction to pay the
carrying cost at the rate provided for Late Payment Surcharge (for short,
“LPS”) is also not permissible in law. He submitted that this Court, in
Adani Rajasthan case (supra), has directed the carrying cost to be B
paid at the rate of 9% and as such, in the present case, it ought to have
been directed to be paid at the same rate.
90. Shri Singh also relies on the judgment of this Court in the case
of Ashoka Smokeless Coal India (P) Limited and Others v. Union of
India and Others5 in support of the proposition that CIL is free to fix C
the price of coal and that the Union of India has no control over it.
91. Shri Poovayya, on the contrary, submitted that the levy is
mandatory in nature. Unless the said levies are paid, the coal would not
be supplied. He further submitted that since the CIL is an instrumentality
of the Government, the order issued by it would amount to a law within D
the definition of “Law” as defined in the PPA. He further submitted that
insofar as the carrying cost is concerned, there is a specific provision in
the PPA in Article 11.8.3, which is binding on the parties. He submitted
that on account of non-payment of the dues of the generating companies
by DISCOMS, the generating companies are required to borrow the
funds at the market rate and as such, applying the restitutionary principle, E
it is entitled to carrying cost as provided under the agreement.
III. ADDITIONAL ISSUES
92. After hearing the learned counsel for the parties at length, we
find that, apart from the three issues that were already decided by this F
Court in the case of MSEDCL v. APML & Ors. (supra), the issues as to
whether the following components could be considered as ‘Change in
Law’ events fall for consideration herein:
(i) Busy Season Surcharge & Development Surcharge and
Port Congestion Surcharge;
G
(ii) MoEF Notification on coal quality;
(iii) Shortfall in linkage coal due to Change in NCDP;
(iv) Forest Tax;
5
(2007) 2 SCC 640
H
218 SUPREME COURT REPORTS [2023] 8 S.C.R.

A (v) Add on Premium price.
(vi) Evacuation Facility Charges (EFC).
Apart from that, another question that requires consideration is,
as to whether various taxes/charges imposed by various State
Governments would also fall under ‘Change in Law’ events or not.
B
The other question that requires considerations is, as to whether
at what rate the Generators would be entitled to ‘carrying cost’.
IV. CONSIDERATION
93. For appreciating the rival submissions, we will have to construe
C the term “Law”, which has been defined in the PPAs, which reads thus:
“”Law” means, in relation to this Agreement, all laws including
Electricity Laws in force in India and any statute, ordinance,
regulation, Notification or code, rule, or any interpretation of any
of them by an Indian Governmental Instrumentality and having
D force of law and shall further include all applicable rules,
regulations, orders, Notifications by an Indian Governmental
Instrumentality pursuant to or under any of them and shall include
all rules, regulations, decisions and orders of the CERC and the
MERC.”
E 94. Perusal of the definition of the term “Law” itself would clearly
show that the term “Law” would mean all laws including Electricity
Laws in force in India and any statute, ordinance, regulation, Notification
or code, rule, or any interpretation of any of them by an Indian
Governmental Instrumentality and having force of law. It would further
reveal that the term “Law” shall also include all applicable rules,
F
regulations, orders, Notifications by an Indian Governmental
Instrumentality and shall also include all rules, regulations, decisions and
orders of the CERC and the MERC.
95. In any case, the issue as to what would amount to “Law” is
no more res integra. This Court, in the case of Energy Watchdog (supra),
G has observed thus:
“57. Both the letter dated 31-7-2013 and the revised Tariff Policy
are statutory documents being issued under Section 3 of the Act
and have the force of law. This being so, it is clear that so far as
the procurement of Indian coal is concerned, to the extent that
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 219
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

the supply from Coal India and other Indian sources is cut down, A
the PPA read with these documents provides in Clause 13.2 that
while determining the consequences of change in law, parties shall
have due regard to the principle that the purpose of compensating
the party affected by such change in law is to restore, through
monthly tariff payments, the affected party to the economic position
B
as if such change in law has not occurred. Further, for the operation
period of the PPA, compensation for any increase/decrease in
cost to the seller shall be determined and be effective from such
date as decided by the Central Electricity Regulation Commission.
This being the case, we are of the view that though change in
Indonesian law would not qualify as a change in law under the C
guidelines read with the PPA, change in Indian law certainly
would.”
96. The aforesaid view of this Court taken in the case of Energy
Watchdog (supra) has been approved by a Bench of three learned Judges
of this Court in Adani Rajasthan case (supra) and also followed by this D
Court when the two linked matters out of this batch of appeals were
decided by this Court in the case of MSEDCL v. APML & Ors.(supra).
It cannot be denied that CIL is an instrumentality of the Government of
India and its orders, insofar as price of fuel are concerned, are binding
on all its subsidiaries.
E
97. It will further be relevant to refer to Clause 9.0 of the CSA,
which reads thus:
“9.0 PRICE OF COAL:
The “As Delivered Price of Coal” for the Coal supplies pursuant
to this Agreement shall be the sum of Base Price, Other Charges F
and Statutory Charges, as applicable at the time of delivery of
Coal.”
It is thus clear that price of coal includes the sum of base price,
other charges and statutory charges as applicable at the time of delivery
of coal.
G
98. As discussed herein above, the term ‘Law’ would also include
all applicable rules, regulations, orders, Notifications issued by an Indian
Governmental Instrumentality.
99. It would thus be clear that all such additional charges which
are payable on account of orders, directions, Notifications, Regulations, H
220 SUPREME COURT REPORTS [2023] 8 S.C.R.

A etc., issued by the instrumentalities of the State, after the cut-off date,
will have to be considered to be ‘Change in Law’ events. The Generators
would be entitled to compensation on the restitutionary principle on such
changes occurring after the cut-off date.
100. Having held thus, we will now consider some of the
B components which are common in most of these appeals.
Busy Season Surcharge, Development Surcharge And Port
Congestion Surcharge
101. Insofar as increase in Busy Season Surcharge, Development
Surcharge on transportation of coal, and Port Congestion Surcharge by
C the Indian Railways are concerned, the learned APTEL had found that
the Indian Railways is an instrumentality of the State. It has been found
that the Busy Season Surcharge, Development Surcharge and Port
Congestion Surcharge were increased from time to time vide Circulars/
Notifications issued by the Ministry of Railways, through the Railway
Board.
D
102. A Constitution Bench of this Court, in the case of Railway
Board, Government of India v. M/s Observer Publications (P) Ltd.6,
has held the Railway Board to be a State within the meaning of Article
12 of the Constitution of India.
103. As such, no error could be found in the finding of the learned
E
APTEL that the revision of charges to be paid on Busy Season Surcharge,
Development Surcharge and Port Congestion Charges from time to time
by the ‘Railway Board’ would come within the ambit of ‘Change in
Law’.
MoEF Notification on Coal Quality
F
104. Insofar as MoEF notification on coal quality is concerned,
the MoEF, vide Notification dated 2nd January 2014, i.e. subsequent to
the particular cut-off date, i.e. 1st June 2012, has mandated power projects
to use beneficiated coal with ash content lower than 34%. The draft
notification of MoEF dated 11th July 2012 culminated into the final
G Notification dated 2nd January 2014. By no stretch of imagination, can it
be said that MoEF is not an instrumentality of the State.
105. By the said Notification, MoEF has mandated power projects
to use beneficiated coal with ash content lower than 34%. Admittedly,
6
(1972) 2 SCC 266
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 221
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

prior to the cut-off date, the same was not a requirement. It is thus clear A
that the said Notifications dated 11th July 2012 and 2nd January 2014
would amount to “Change in Law’. As such, no fault can be found with
the finding of the learned APTEL that the same would amount to ‘Change
in Law’.
Shortfall in Linkage Coal due to Change in NCDP B
106. Insofar as shortfall in linkage coal due to changes in the
NCDP issued by the Ministry of Coal (“MoC” for short) is concerned,
the issue is no more res integra. This Court in the case of Energy
Watchdog (supra) so also in Adani Rajasthan case (supra) and recently
in MSEDCL v. APML & Ors. (Supra) has held that the change in NCDP C
would amount to ‘Change in Law’.
Forest Tax
107. Insofar as Forest Tax is concerned, perusal of the material
placed on record would reveal that, as on the cut-off date, there was no
Forest Tax applicable on coal mined and transported from South Eastern D
Coalfields Limited (“SECL” for short) mines located in Forest area. For
the first time, vide Notification of the Chhattisgarh State Government,
Department of Forest, under the provisions of Chhattisgarh Transit (Forest
Produce Rule) 2001, a fee at the rate of Rs.7 per ton was levied.
Undisputedly, the said Notification is issued by the Forest Department E
of the Government of Chhattisgarh, which is an instrumentality of the
State. As such, no error can be found with the finding of the learned
APTEL in that regard.
Add on Premium Price
108. Insofar as ‘Add on premium price’ is concerned, undisputedly, F
‘add on premium’ was required to be paid on account of cancellation of
captive coal blocks and inordinate delay on account of Go-No-Go policy.
As such, it cannot be said that the reasoning adopted by the learned
APTEL is perverse and arbitrary.
Evacuation Facility Charges (EFC) G
109. Undisputedly, EFC was imposed by CIL vide its Circular
dated 19th December 2017.
110. As already discussed herein above, CIL is an instrumentality
of the State. It is thus clear that, on the cut-off date, there was no
H
222 SUPREME COURT REPORTS [2023] 8 S.C.R.

A requirement of EFC, which has been brought into effect only on 19th
December 2017. As such, the circular of CIL dated 19th December 2017
would also amount to ‘Change in Law’.
111. As discussed herein above, it is also not in dispute that EFC
has been paid by the generators while paying the base price, other charges
B and statutory charges at the time of delivery of coal. As such, no
interference would be warranted with the said finding.
112. That leaves us with the issue with regard to carrying cost.
Carrying Cost

C 113. This is the issue on which there is a serious contest between
the DISCOMS and the Generators.
114. On one hand, it is the submission of the DISCOMS that
since there is no description of the same in the PPAs, the rate for granting
carrying cost should be a reasonable rate. On the contrary, it is the
D submission of the Generators that there is a specific provision in the
PPAs, which provides that the carrying cost has to be paid at the rate as
per the rate specified for late payment surcharge. It is submitted that
this is provided in the PPA so as to give effect to the restitutionary
principle.
115. For considering the rival submissions, it will be apposite to
E
refer to the following Articles, which are almost common in most of the
PPAs.
“11. Billing and payment.—
***
F 11.3. Payment of monthly bills.—
***
11.3.4. In the event of delay in payment of a monthly bill by any
procurer beyond its due date, a late payment surcharge shall be
G payable by the procurer to the seller at the rate of two (2) per
cent in excess of the applicable SBAR per annum, on the amount
of outstanding payment, calculated on a day to day basis (and
compounded with monthly rest), for each day of the delay.
***
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 223
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

11.8. Payment of supplementary bill.— A
11.8.1. Either party may raise a bill on the other party
(“supplementary bill”) for payment on account of:
(i) Adjustments required by the Regional Energy Account (if
applicable);
B
(ii) Tariff payment for change in parameters, pursuant to provisions
in Schedule 5; or
(iii) Change in law as provided in Article 13 and such Bill shall be
paid by the other party.
*** C
11.8.3. In the event of delay in payment of a supplementary bill
by either party beyond one month from the date of billing, a late
payment surcharge shall be payable at same terms applicable to
the monthly bill in Article 11.3.4.”
D
116. A perusal of Article 11.3.4 of the PPA would reveal that in
the event of delay in payment of a monthly bill by any procurer beyond
its due date, a late payment surcharge shall be payable by the procurer
to the seller at the rate of 2% in excess of the applicable State Bank
Advance Rate (“SBAR” for short) per annum, on the amount of
outstanding payment, calculated on a day to day basis (and compounded E
with monthly rest), for each day of the delay. Article 11.8 of the PPA
deals with Payment of Supplementary Bill. It enables either party to
raise a supplementary bill on the other party for payment on account of
certain events. Clause (iii) of Article 11.8.1 of the PPA deals with ‘Change
in Law’ as provided in Article 13. It requires the bill to be paid by the
F
other party. Article 11.8.3 of the PPA also provides that in the event of
delay in payment of a supplementary bill by either party beyond one
month from the date of billing, a late payment surcharge shall be payable
at same terms applicable to the monthly bill in Article 11.3.4.
117. This Court in the case of Uttar Haryana Bijli Vitran Nigam
Limited (UNHVNL) and another v. Adani Power Limited and G
others7,after considering the provisions of Article 11, which deals with
‘Billing’ and Article 13, which deals with ‘Change in Law’, has observed
thus:
7
(2019) 5 SCC 325
H
224 SUPREME COURT REPORTS [2023] 8 S.C.R.

A “9. It will be seen that Article 13.4.1 makes it clear that adjustment
in monthly tariff payment on account of change in law shall be
effected from the date of the change in law [see sub-clause (i) of
clause 4.1], in case the change in law happens to be by way of
adoption, promulgation, amendment, re-enactment or repeal of the
law or change in law. As opposed to this, if the change in law is on
B
account of a change in interpretation of law by a judgment of a
Court or Tribunal or governmental instrumentality, the case would
fall under sub-clause (ii) of clause 4.1, in which case, the monthly
tariff payment shall be effected from the date of the said order/
judgment of the competent authority/Tribunal or the governmental
C instrumentality. What is important to notice is that Article 13.4.1
is subject to Article 13.2 of the PPAs.
10. Article 13.2 is an in-built restitutionary principle which
compensates the party affected by such change in law and which
must restore, through monthly tariff payments, the affected party
D to the same economic position as if such change in law has not
occurred. This would mean that by this clause a fiction is created,
and the party has to be put in the same economic position as if
such change in law has not occurred i.e. the party must be given
the benefit of restitution as understood in civil law. Article 13.2,
however, goes on to divide such restitution into two separate
E periods. The first period is the “construction period” in which
increase/decrease of capital cost of the project in the tariff is to
be governed by a certain formula. However, the seller has to
provide to the procurer documentary proof of such increase/
decrease in capital cost for establishing the impact of such change
F in law and in the case of dispute as to the same, a dispute resolution
mechanism as per Article 17 of the PPA is to be resorted to. It is
also made clear that compensation is only payable to either party
only with effect from the date on which the total increase/decrease
exceeds the amount stated therein.
G 11. So far as the “operation period” is concerned, compensation
for any increase/decrease in revenues or costs to the seller is to
be determined and effected from such date as is decided by the
appropriate Commission. Here again, this compensation is only
payable for increase/decrease in revenue or cost to the seller if it
is in excess of an amount equivalent to 1% of the Letter of Credit
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 225
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

in aggregate for a contract year. What is clear, therefore, from a A
reading of Article 13.2, is that restitutionary principles apply in
case a certain threshold limit is crossed in both sub-clauses (a)
and (b). There is no dispute that the present case is covered by
sub-clause (b) and that the aforesaid threshold has been crossed.
The mechanism for claiming a change in law is then set out by
B
Article 13.3 of the PPA.”
118. It could thus be seen that this Court has held that insofar as
the “operation period” is concerned, compensation for any increase/
decrease in revenues or costs to the seller is to be determined and effected
from such date as is decided by the appropriate Commission. It has
further been held that the compensation is only payable for increase/ C
decrease in revenue or cost to the seller if it is in excess of an amount
equivalent to 1% of the Letter of Credit in aggregate for a contract year.
It has been held that restitutionary principles apply in case a certain
threshold limit is crossed. It has been held that an in-built restitutionary
principle compensates the party affected by such ‘Change in Law’ and D
the affected party must be restored through monthly tariff payment to
the same economic position as if such ‘Change in Law’ had not occurred.
119. From the perusal of paragraph 9, it would also be clear that
in case the ‘Change in Law’ happens to be by way of adoption,
promulgation, amendment, re-enactment or repeal of the law or ‘Change E
in Law’, it has to be effected from the date on which such change
occurs.
120. In this respect, it will also be apposite to refer to the following
observations of this Court in the case of Maharashtra State Electricity
Distribution Company Limited v. Maharashtra Electricity Regulatory F
Commission and Others8:
“173. The APTEL correctly found that: (Maharashtra Pradesh
Electricity Regulatory Commission case [Maharashtra State
Electricity Distribution Co. Ltd. v. Maharashtra Pradesh
Electricity Regulatory Commission, 2021 SCC OnLine APTEL G
13] , SCC OnLine APTEL para 13)
“13. … On the contrary, there is a conscious exclusion
regarding any suo motu change in the rate to be applied
while calculating LPS, it being incorrect to argue on the
8
(2022) 4 SCC 657 H
226 SUPREME COURT REPORTS [2023] 8 S.C.R.

A assumption that the contract permits automatic change in
system.”
(emphasis supplied)
174. This Court is unable to accept Mr Singh’s submission that
the conclusion of APTEL that LPS is not tariff is erroneous. The
B meaning of the expression tariff has to be considered, and has
rightly been considered by APTEL in the context of the relevant
provision of the power purchase agreements. The dictionary
meaning of tariff may be charge. However, in Article 13 of the
Stage 1 and Article 10 of the Stage 2 power purchase agreements,
C tariff means monthly tariff and tariff adjustment consequential to
change in law, is of monthly tariff in respect of supply of electricity.
175. As argued by the respondent power generating companies
appearing through Mr Rohatgi, Mr Singhvi, Mr Mukherjee and
Ms Anand respectively, LPS is only payable when payment against
D monthly bills is delayed and not otherwise.
176. The object of LPS is to enforce and/or encourage timely
payment of charges by the procurer i.e. the appellant. In other
words, LPS dissuades the procurer from delaying payment of
charges. The rate of LPS has no bearing or impact on tariff.
E Changes in the basis of the rates of LPS do not affect the rate at
which power was agreed to be sold and purchased under the
power purchase agreements. The principle of restitution under
the change in law provisions of the power purchase agreements
are attracted in respect of tariff.

F 177. LPS cannot be equated with carrying cost or actual cost
incurred for the supply of power. The appellant has a contractual
obligation to make timely payment of the invoices raised by the
power generating companies, subject, of course, to scrutiny and
verification of the same. Mr Mukul Rohatgi has a point that if the
funding cost was so much lesser than the rate of LPS, as contended
G by the appellant, the appellant could have raised funds at a lower
rate of interest, made timely payment of the invoices raised by
the power generating companies, and avoided LPS.
178. The proposition that courts cannot rewrite a contract mutually
executed between the parties, is well settled. The Court cannot,
H through its interpretative process, rewrite or create a new contract
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 227
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

between the parties. The Court has to simply apply the terms and A
conditions of the agreement as agreed between the parties, as
observed by this Court in Shree Ambica Medical Stores v. Surat
People’s Coop. Bank [Shree Ambica Medical Stores v. Surat
People’s Coop. Bank Ltd., (2020) 13 SCC 564, para 20] , cited
by Ms Divya Anand. This appeal is an attempt to renegotiate the
B
terms of the PPA, as argued by Ms Divya Anand as also other
counsel. It is well settled that courts cannot substitute their own
view of the presumed understanding of commercial terms by the
parties, if the terms are explicitly expressed. The explicit terms of
a contract are always the final word with regard to the intention
of the parties, as held by this Court in Nabha Power C
Ltd. v. Punjab SPCL [Nabha Power Ltd. v. Punjab SPCL,
(2018) 11 SCC 508, paras 45 and 72 : (2018) 5 SCC (Civ) 1],
cited by Ms Anand.”
121. This Court has clearly held that the DISCOMS have a
contractual obligation to make timely payment of the invoices raised by D
the power generating companies, subject to scrutiny and verification of
the same. This Court has rejected the contention that the funding cost
was much lesser than the rate of LPS. This Court has reiterated the
proposition that the courts cannot rewrite a contract which is executed
between the parties. This Court has emphasized that it cannot substitute
its own view of the presumed understanding of commercial terms by the E
parties, if the terms are explicitly expressed. It has been held that the
explicit terms of a contract are always the final word with regard to the
intention of the parties.
122. As already discussed hereinabove, Article 11.8 of the PPA
entitles either party to raise a supplementary bill on the other party on F
account of ‘Change in Law’ as provided in Article 13 and such bills are
required to be paid by the either party. Article 11.8.3 of the PPA
specifically provides that in the event of delay in payment of a
supplementary bill by either party beyond one month from the date of
billing, a late payment surcharge shall be payable at the same terms G
applicable to the monthly bill in Article 11.3.4. Article 11.3.4 of the PPA
specifically provides a late payment surcharge to be paid by the procurer
to the seller at the rate of 2% in excess of the applicable SBAR per
annum on the amount of outstanding payment calculated on day to day
basis (and compounded with monthly rest), for each day of the delay.
H
228 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 123. Recently, this Court, in the case of Uttar Haryana Bijli
Vitran Nigam Limited and Another v. Adani Power (Mundra)
Limited and Another9, had an occasion to consider the similar issue.
The Court observed thus:
“20. It is clear that the restitutionary principles encapsulated in
B Article 13.2 would take effect for computing the impact of change
in law. We see no reason to interfere with the impugned judgment
[Adani Power (Mundra) Ltd. v. CERC, 2021 SCC OnLine
APTEL 67] , wherein it has been held by the Appellate Tribunal
that Respondent 1 Adani Power had started claiming change in
law event compensation in respect of installation of FGD unit
C along with carrying cost, right from the year 2012 and that it has
approached several fora to get this claim settled. Respondent 1
Adani Power finally succeeded in getting compensation towards
FGD unit only on 28-3-2018, but the carrying cost claim was denied.
The relief relating to carrying cost was granted to Respondent 1
D Adani Power by the Appellate Tribunal vide order dated 13-4-
2018 [Adani Power Ltd. v. CERC, 2018 SCC OnLine APTEL 5]
which was duly tested by this Court and upheld on 25-2-2019
[Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power Ltd.,
(2019) 5 SCC 325 : (2019) 2 SCC (Civ) 657] . Once carrying cost
has been granted in favour of Respondent 1 Adani Power, it cannot
E be urged by the appellants that interest on carrying cost should be
calculated on simple interest basis instead of compound interest
basis. Grant of compound interest on carrying cost and that too
from the date of the occurrence of the change in law event is
based on sound logic. The idea behind granting interest on carrying
F cost is not far to see, it is aimed at restituting a party that is adversely
affected by a change in law event and restore it to its original
economic position as if such a change in law event had not taken
place.
xxx xxx xxx
G 23. We are not persuaded by the submission made on behalf of
the appellants that since no fault is attributable to them for the
delay caused in determination of the amount, they cannot be
saddled with the liability to pay interest on carrying cost; nor is
there any substance in the argument sought to be advanced that
9
H (2023) 2 SCC 624
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 229
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

there is no provision in the PPAs for payment of compound interest A
from the date when the change in law event had occurred.
24. The entire concept of restitutionary principles engrained in
Article 13 of the PPAs has to be read in the correct perspective.
The said principle that governs compensating a party for the time
value for money, is the very same principle that would be invoked B
and applied for grant of interest on carrying cost on account of a
change in law event. Therefore, reliance on Article 11.3.4 read
with Article 11.8.3 on the part of the appellants cannot take their
case further. Nor does the decision in Priya Vart case [Priya
Vart v. Union of India, (1995) 5 SCC 437] have any application
to the facts of the present case as the said case relates to payment C
of compensation under the Land Acquisition Act and the interest
that would be payable in case of delayed payment of
compensation.”
124. It is thus clear that this Court has reiterated that once carrying
cost has been granted, it cannot be urged that interest on carrying cost D
should be calculated on simple interest basis instead of compound interest
basis. It has been held that grant of compound interest on carrying cost
and that too from the date of the occurrence of the ‘Change in Law’
event is based on sound logic. It has been held that it is aimed at restituting
a party that is adversely affected by a ‘Change in Law’ event and restore E
it to its original economic position as if such a ‘Change in Law’ event
had not taken place.
125. The argument that there is no provision in the PPAs for
payment of compound interest from the date when the ‘Change in Law’
event had occurred, has been specifically rejected by this Court. F
126. In view of this consistent position of law and application of
restitutionary principles and privityof contractual obligations between the
parties as contained in the PPAs, we do not find that the view taken by
the learned APTEL with regard to carrying cost warrants interference.
Concurrent Finding of Fact G
127. Apart from the aforesaid issues, there is one another common
thread in all these appeals. Many of these appeals arise out of concurrent
findings recorded by the Central/State Electricity Regulatory Commissions
and the learned APTEL.
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230 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 128. This Court, in the case of MSEDCL v. APML & Ors. (supra),
after considering the statutory provisions in the Electricity Act, 2003,
held that the CERC, SERCs and the learned APTEL are bodies consisting
of experts in the field.
129. This Court, in the said case, observed thus:
B “120. It could thus be seen that two expert bodies i.e. the 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. The CERC as well as the State Regulatory bodies, after
C extensive consultation with the stakeholders, had specified the
SHR norms in respective Tariff Regulations. In addition, insofar
as GCV is concerned, the CEA has opined that the margin of 85-
100 kcal/kg for a non-pit head station may be considered as a loss
of GCV measured at wagon top till the point of firing of coal in
boiler.
D
121. In this respect, we may refer to the following observations
of this Court in the case of Reliance Infrastructure
Limited v. State of Maharashtra [(2019) 3 SCC 352].
“38. MERC is an expert body which is entrusted with the
E 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
F by the statute to consider or has founded its determination of tariffs
on 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
G 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)
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 231
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

“11. We also agree with the High Court [S. Bharat A
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
B
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 cross-subsidy
is essentially a matter of policy and normally a court would
refrain from interfering with a policy decision unless the power C
exercised is arbitrary or ex facie bad in law.”
xxx xxx xxx
123. Recently, the Constitution Bench of this Court in the case
of Vivek Narayan Sharma v. Union of India [2023 SCC OnLine
SC 1] has held that the Courts should be slow in interfering with D
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 E
views with that of the expert bodies.”
130. As is indicated in the aforesaid judgments, this Court should
be slow in interfering with the concurrent findings of fact unless they
are found to be perverse, arbitrary and either in ignorance of or contrary
to the statutory provisions. F
V. CONCLUSION
131. In the light of our aforesaid findings, we will now consider
each of the appeals independently.
Civil Appeal No. 11095 of 2018 and Civil Appeal Nos. 11910-
G
11911 of 2018
132. In these batch of appeals, insofar as the appeal of DNH-
DISCOM is concerned, they are aggrieved by the order of the learned
APTEL allowing Busy Season Surcharge and Development Surcharge,
MoEF Notification on coal quality and Change in NCDP. They are also
H
232 SUPREME COURT REPORTS [2023] 8 S.C.R.

A aggrieved by the finding of the learned APTEL with regard to carrying
cost.
133. Insofar as the compensation on the ground of Change in
NCDP is concerned, as already discussed, the same is squarely covered
by the judgment of this Court in the case of MSEDCL v. APML & Ors.
B (supra)
134. Insofar as the Busy Season Surcharge and Development
Surcharge are concerned, they are issued under the Circulars/Notifications
of Indian Railways. The notification on coal quality is issued by MoEF.
All these are the instrumentalities of the State, and these would, therefore,
C amount to ‘Change in Law’.
135. Insofar as rest of the claims, which are concurrently allowed
and disallowed by both the CERC and the learned APTEL, are concerned,
in view of the judgments of this Court on this issue, as stated above, we
do not find any reason to interfere with the same, not noticing any
perversity, arbitrariness and/or any contravention of the statutory
D
provisions. The appeals of both the Generator and the DNH-DISCOM
are, therefore, liable to be dismissed.
Civil Appeal Nos.4628-4629 of 2021
136. The learned APTEL allowed the claim of the Generator only
on the ground of Busy Season Surcharge and Development Surcharge
E
on transportation of coal, and the Carrying Cost.
137. In view of our finding on the issues as above, no error can be
found with the finding of the learned APTEL in that regard. We find no
merit in the appeals. The appeals are, accordingly, liable to be dismissed.
F Civil Appeal Nos. 12055-12056 of 2018
138. The issue of Busy Season Surcharge, Development
Surcharge and Port Congestion Surcharge have already been considered
by us herein above. All these are charges under the Notifications issued
by the Indian Railways, through the Railway Board. As such, no error
can be found with the finding of the learned APTEL that they would
G
amount to ‘Change in Law’ events.
139. Insofar as levy of ‘Forest Tax’ is concerned, the same is
levied by the State Government under the statutory provisions.
140. The issue with regard to ‘Carrying Cost’ has also been
discussed by us herein above.
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 233
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

141. In that view of the matter, we do not find any reason to A
interfere with the order of the learned APTEL. The appeals are,
accordingly, liable to be dismissed.
Civil Appeal Nos. 2935-2936 of 2020
142. In addition to the ‘Change in Law’ benefits granted by the
State Commission, ‘Coal Terminal Surcharge’, ‘Chhattisgarh Paryavaran B
Upkar’ and ‘Chhattisgarh Vikas Upkar’ were also considered to be
‘Change in Law’ events by the learned APTEL.
143. The ‘Coal Terminal Surcharge’ was levied by the Indian
Railways subsequent to the cut-off date. Similarly, the Government of
Chhattisgarh, under Section 8 of the Chhattisgarh Adhosanrachna Vikas C
Evam Paryavaran Upkar Adhiniyam, 2005, vide Notification dated 16th
June 2015, which is admittedly after the cut-off date, introduced
‘Chhattisgarh Paryavaran Upkar’ and ‘Chhattisgarh Vikas Upkar’. Even
the Change in Swacch Bharat Cess at the rate of 0.5% on Service Tax
for Operation Period and Change in Krishi Kalyan Cess at the rate of D
5% on Service Tax for Operation Period, which had been granted
concurrently by the State Commission and the learned APTEL, were
notified by the Union of India after the cut-off date.
144. It could thus be seen that all these additional taxes or cesses
were introduced by the instrumentalities of the Government of India or E
by the Government of Chhattisgarh. The same are issued under the
provisions of the concerned statutes, rules, notifications, orders, etc. It is
thus clear that they would amount to ‘Law’ within the meaning of the
term ‘Law’ as defined in the PPAs. As such, no error can be found with
the order of the learned APTEL.
F
145. We, therefore, find no merit in the appeals. The appeals are,
accordingly, liable to be dismissed.
Civil Appeal No. 3123 of 2019 and Civil Appeal No.5372 of
2019
146. In the present matter, in addition to the claims granted by the G
CERC, the learned APTEL also granted the following claims:
(i) Change in NCDP (cancellation of Captive Block vis-à-vis
tapering linkage),
(ii) Busy Season Surcharge and Developmental Surcharge,
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234 SUPREME COURT REPORTS [2023] 8 S.C.R.

A (iii) Carrying Cost; and
(iv) Add on Premium Price.
147. Insofar as the issue with regard to change in NCDP is
concerned, this Court in the case of Energy Watchdog (supra)so also
in Adani Rajasthan case (supra) and recently in MSEDCL v. APML
B & Ors.(Supra)has held that the change in NCDP would amount to
‘Change in Law’. As such, the finding in that regard warrants no
interference.
148. Insofar as Busy Season Surcharge and Development
Surcharge are concerned, we have already discussed hereinabove as to
C how it would amount to ‘Change in Law’.
149. Insofar as ‘Add on premium price’ is concerned, undisputedly,
‘add on premium’ was required to be paid on account of cancellation of
captive coal blocks and inordinate delay on account of Go-No-Go policy.
As such, it cannot be said that the reasoning adopted by the learned
D APTEL is perverse and arbitrary.
150. Insofar as the issue with regard to ‘carrying cost’ is
concerned, we have already discussed the issue at length in the foregoing
paragraphs. As such, no interference is warranted on that finding also.
151. Insofar as other claims which were concurrently allowed
E and disallowed by the CERC and the learned APTEL are concerned, in
view of the concurrent findings, we are not inclined to interfere with the
same.
152. The appeals of both DISCOMS as well as Generating
Companies are, therefore, liable to be dismissed.
F Civil Appeal No. 6641 of 2019
153. This appeal is filed by GKEL, being aggrieved by the
concurrent denial of benefits on certain components.
154. As already discussed herein above by us, in view of the
concurrent findings recorded by the CERC as well as the learned APTEL
G for disallowing the claims, we are not inclined to interfere with the same.
The appeal is, accordingly, liable to be dismissed.
Civil Appeal Nos. 5583-5584 of 2021
155. In the present case, the benefit is granted on following
grounds:
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 235
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

(i) Shortfall in domestic coal on account of Change in NCDP; A
(ii) Add on premium on account of existing tapering linkage by
three years;
(iii) Busy Season Surcharge
156. The first issue sands covered by the judgments of this Court B
in the cases of Energy Watchdog (supra), Adani Rajasthan case
(supra) and MSEDCL v. APML & Ors.(supra) and as such, no
interference is warranted.
157. Insofar as Busy Season Surcharge is concerned, apart from
there being concurrent findings of facts, we have already given reasons C
herein above as to how the same would amount to ‘Change in Law’.
158. We do not find any merit in the appeals. The same are,
accordingly, liable to be dismissed.
Civil Appeal No. 39 of 2021
D
159. The CERC has granted benefit on the following grounds.
i. Shortfall in linkage coal on account of NCDP 2013 and
SHAKTI Policy;
ii. Change in coal quality pursuant to amendment of the
Environment (Protection) Rules, 1986; E
iii. Increase in Busy Season Surcharge and Development
Surcharge on transportation of coal by Indian Railways;
and
iv. Carrying cost on allowed ‘Change in Law’ claims.
F
160. The view taken by the CERC has been affirmed by the
learned APTEL. As such, the appeal arises out of the concurrent findings
of fact.
161. Insofar as first issue with regard to benefit of ‘Change in
Law’ event on account of NCDP 2013 is concerned, the same is squarely
G
covered by the judgments of this Court in the cases of Energy Watchdog
(supra), Adani Rajasthan case (supra) and MSEDCL v. APML &
Ors.(supra).
162. Insofar as the benefit of ‘Change in Law’ on account of
SHAKTI Policy is concerned, it is covered by the judgment and order of
H
236 SUPREME COURT REPORTS [2023] 8 S.C.R.

A the even date of this Court in the case of Civil Appeal No. 5684 of
202110 and in the case of Civil Appeal Nos. 677-678 of 202111.
163. The other components, i.e. change in coal quality pursuant to
amendment of the Environment (Protection) Rules, 1986, and increase
in Busy Season Surcharge and Development Surcharge on transportation
B of coal by Indian Railways, have already been considered by us herein
to amount to ‘Change in Law’ events. We have also considered the
issue regarding ‘Carrying Cost’. As such, no interference is warranted
in the concurrent findings by the learned APTEL, especially in view of
the judgments of this Court. The appeal is, accordingly, liable to be
dismissed.
C
Civil Appeal No. 5005 of 2022 and Civil Appeal No. 4089 of
2022
164. The appeals are filed being aggrieved by the order of the
learned APTEL granting compensation on account of ‘EFC’ and ‘carrying
D cost’.
165. Undisputedly, the EFC was imposed by CIL vide its Circular
dated 19th December 2017.
166. As discussed herein above, it is not in dispute that EFC has
been paid by the Generators while paying the base price, other charges
E and statutory charges at the time of delivery of coal. As such, no
interference is warranted with the said finding.
167. Insofar as ‘carrying cost’ is concerned, we have elaborately
discussed the said issue herein above. As such, no interference, therefore,
is warranted on the said issue also.
F
168. We do not find any merit in the appeals. The same are,
accordingly, liable to be dismissed.
VI. EPILOGUE
169. Before we part with the judgment, we must note that we
G 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,
10
Uttar Haryana Bijli Vitran Nigam Limited and another v. Adana Power (Mundra)
Limited and another
11
Maharashtra State Electricity Distribution Company Limited v. Adani Power
H Maharashtra Limited and another
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 237
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

the appeals have been filed only for the sake of filing the same. We also A
find that several rounds of litigation have taken place in some of the
proceedings.
170. Recently, this Court, in the case of MSEDCL v. APML &
Ors.(supra), has noted that one of the reasons for enacting the Electricity
Act, 2003 was that the performance of the Electricity Boards had B
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 the case of Energy Watchdog (supra) that the electricity sector, C
having been privatized, 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. D
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.
E
171. 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.
172. It will be relevant to note the following observations of the F
CERC in its judgment and order dated 16th May 2019, passed in Petition
No. 8/MP/2014, which falls for consideration in Civil Appeal No. 39 of
2021 before this Court:
“(d) Approaching the Commission every year for allowance of
compensation for such Change in Law is a time-consuming G
process. Accordingly, the mechanism prescribed above may be
adopted for payment of compensation due to Change in Law
events allowed as per PPA for the subsequent period as well.”
173. It will also be relevant to refer to some of the observations of
the learned APTEL in its order dated 21st December 2021, which falls
H
238 SUPREME COURT REPORTS [2023] 8 S.C.R.

A for consideration in Civil Appeal No.2908 of 2022 before this Court,
which read thus:
“115. The Standing Committee of Parliament in its Report (dated
07.03.2018) on Energy titled ‘Stressed/ Non-Performing
Assets in Electricity Sector’ has recognized the financial
B stress faced by generating companies on account of delay
in recovery of Change in Law compensations and has
recommended thus:
“The Committee, therefore, recommend that
appropriate steps should be taken to ensure that
C there should be consistency and uniformity with
regard to orders emanating from the status of
change in law. Provisions should also be made for
certain percentage of payments of regulatory dues
to be paid by Discoms in case the orders of
regulators are being taken to APTEL/ higher
D judiciary for their consideration and decision”
116. The Report lays stress on the obligation of the distribution
companies to pay the approved Change in Law
compensation even while Regulatory Commission’s orders
are challenged. The Policy directive dated 27.08.2018
E issued in terms of Section 107 of the Electricity Act,
2003 by the Ministry of Power (MoP) to the CERC
emphasized on the need to ensure expeditious recovery
of Change in Law compensation. The desirability of this
was recognized by this tribunal in its judgment dated
F 14.09.2019 in Jaipur Vidyut Vitran Nigam Limited vs.
RERC & Ors, 2019 SCC Online APTEL 98. It is against
such backdrop that Electricity (Timely Recovery of Costs
due to Change in Law) Rules, 2021, notified by MoP on
22.10.2021, providing for timely recovery of
compensation on account of occurrence of Change in
G Law events have been framed. The MoP, vide notification
dated 09.11.2021, put in public domain the policy directive
on “Automatic pass through of the fuel and power
procurement cost in tariff for ensuring the viability of
the power” recognizing that in order to ensure that the
H power sector does not face any constraints in maintaining
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 239
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

assured power supply to meet the demand, all the A
stakeholders in the value chain of power sector must ensure
that there is timely recovery of cost. This involves the cost
pass through by the generating companies to the distribution
companies.
117. In sharp contrast, it is seen from the factual narrative of B
the events leading to the appeal at hand that the appellants
(Haryana Utilities) have been adopting dilatory tactics which
not only defeats the public policy but also has the undesirable
fall-out of adding to the burden of the end-consumers they
profess to serve on account of increasing Carrying Cost.
C
118. Concededly, in compliance with the Taxes and Duties Order
dated 06.02.2017, the appellants paid to the generator the
taxes and duties for certain period but, thereafter, unilaterally
withheld such claims, raising issues (found merit-less)
regarding IPT of coal for first time in January 2018. It is
after the impugned order was passed that the appellants D
are stated to have started complying, to an extent, by making
payments. It is the case of the first respondent that the
appellants have withheld past payments including towards
taxes and duties its entitlement to recover corresponding
Late Payment Surchage (“LPS”) being over and above the E
same to be computed after discharge of the former liability.
We agree that such withholding is in violation of Articles
11.3.2 and 11.6.9 of the PPAs (quoted earlier) which
cast a specific mandate on the procurer (Haryana
Utilities) to honor the invoices raised, irrespective of
dispute, and impose a specific bar against unilateral F
deductions/setting off.
119. We find the dilatory conduct of the Haryana Utilities, to
delay the implementation of the binding orders concerning
compensation on account of coal shortfall and corresponding
taxes and duties, detrimental to the interest of end G
consumers since it burdens the consumers with incremental
LPS for delay in making payments to the generator. This
cannot be countenanced, given the earlier dispensation on
the subject by the statutory regulator and appellate forum(s),
since it smacks of approach that is designed to frustrate H
240 SUPREME COURT REPORTS [2023] 8 S.C.R.

A the legislative command, and extant State policy, as indeed
constitutes abject indiscipline infringing the rule of law.
Borrowing THE WORDS OF Hon’ble Supreme Court in
SEBI vs. Sahara India Real Estate Corpn. Ltd., (2014) 5
SCC 429 “non-compliance with the orders passed …
shakes the very foundation of our judicial system and
B
undermines the rule of law” which this tribunal is also
duty-bound to “honour and protect”, so essential “to
maintain faith and confidence of the people of this
country in the judiciary”.”
[emphasis supplied]
C
174. It could thus be seen that even the Standing Committee of
Parliament, in its report, has recommended that there should be
consistency and uniformity with regard to orders emanating from the
status of ‘Change in Law’. It has also recommended that the provisions
should also be made for certain percentage of payments of regulatory
D dues to be paid by DISCOMS in case the orders of regulators are being
taken to learned APTEL/higher judiciary for their consideration and
decision. The learned APTEL has also referred to the Policy Directive
dated 27th August 2018 issued in terms of Section 107 of the Electricity
Act, 2003 by the MoP to the CERC, where it emphasized the need to
E ensure expeditious recovery of ‘Change in Law’ compensation. The
learned APTEL has also referred to the Electricity (Timely Recovery of
Costs due to Change in Law) Rules, 2021, notified by MoP on 22 nd
October 2021, which provide for timely recovery of compensation on
account of occurrence of ‘Change in Law’ events. The learned APTEL
found that the Haryana Utilities have been adopting dilatory tactics, which
F not only defeat the public policy but also have the undesirable fallout of
adding to the burden of the end-consumers they profess to serve on
account of increasing ‘Carrying Cost’. The learned APTEL further found
that withholding of past payments, including towards taxes and duties by
the DISCOMS, is in violation of the provisions of the PPAs, which casts
G a specific mandate on the procurer to honour the invoices raised,
irrespective of dispute, and impose a specific bar against unilateral
deductions/setting off.
175. It is further to be noted that this Court, in the case of Uttar
Haryana Bijli Vitran Nigam Limited (UNHVNL) and another v.
H
GMR WARORA ENERGY LTD. v. CENTRAL ELECTRICITY 241
REGULATORY COMMISSION (CERC) [B. R. GAVAI, J.]

Adani Power Limited and others12, has specifically observed that the A
‘Change in Law’ events will have to accrue from the date on which
Rules, Orders, Notifications are issued by the instrumentalities of the
State. Even in spite of this finding, the DISCOMS are pursuing litigations
after litigations.
176. We find that, when the PPA itself provides a mechanism for B
payment of compensation on the ground of ‘Change in Law’, unwarranted
litigation, which wastes the time of the Court as well as adds to the
ultimate cost of electricity consumed by the end consumer, ought to be
avoided. Ultimately, the huge cost of litigation on the part of DISCOMS
as well as the Generators adds to the cost of electricity that is supplied
to the end consumers. C
177. We further find that non-quantification of the dues by the
Electricity Regulatory Commissions and the untimely payment of the
dues by the DISCOMS is also detrimental to the interests of the end
consumers. If timely payment is not made by DISCOMS, under the
clauses in the PPA, they are required to pay late payment surcharges, D
which are much higher. Even in case of ‘Change in Law’ claims, the
same procedure is required to be followed.
178. Ultimately, these late payment surcharges are added to the
cost of electricity supplied to the end consumers. It is, thus, the end
consumers who suffer by paying higher charges on account of the E
DISCOMS not making timely payment to the Generators.
179. 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 F
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 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 G
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.
12
(2019) 5 SCC 325 H
242 SUPREME COURT REPORTS [2023] 8 S.C.R.

A 180. To a pointed query, the learned counsel for the DISCOMS
fairly conceded the position that the prices at which the electricity is
purchased from the ‘Independent Power Producers’ is substantially lesser
than the power purchased from the ‘State Generating Companies’.
181. We, therefore, appeal to the Union of India through Ministry
B of Power (“MoP” for short) to evolve a mechanism so as to ensure
timely payment by the DISCOMS to the Generating Companies, which
would avoid huge carrying cost to be passed over to the end consumers.
182. The Union of India, through MoP, may also evolve a
mechanism to avoid unnecessary and unwarranted litigation, the cost of
C which is also passed on to the ultimate consumer.
183. Before we part with the judgment, we place on record our
appreciation for the valuable assistance rendered by Mr. Balbir Singh,
learned Additional Solicitor General, Dr. A. M. Singhvi, Mr. V. Giri, Mr.
M.G. Ramachandran, Mr. C.A. Sundaram, Mr. Maninder Singh, Mr.
D Sajan Poovayya and Mr. Niranjan Reddy, learned Senior Counsel, and
Mr. Vishrov Mukerjee, Ms. Poorva Saigal, Ms. Anushree Bardhan, and
Ms. Poonam Sengupta, learned counsel.
184. In view of the above, all the appeals are dismissed. No costs.

E Divya Pandey Appeals dismissed.
(Assisted by : Roopanshi Virang, LCRA)

F

G

H