Supreme Court rejects Rajasthan discoms' appeal in Adani Power case

Supreme Court upholds Aptel ruling in favour of Adani Power, dismisses Rajasthan discoms' appeal over compensation linked to Coal India's levy under power agreement terms

The Supreme Court on Friday dismissed an appeal filed by Rajasthan’s power distribution companies against a ruling by the Appellate Tribunal for Electricity (Aptel) in favour of Adani Power Rajasthan Ltd (APRL).

 

A bench of Justices M M Sundresh and Rajesh Bindal found no merit in the plea filed by Jaipur Vidyut Vitran Nigam Ltd (JVVNL) and other Rajasthan discoms. The court upheld Aptel’s view that a levy introduced by Coal India Ltd (CIL) constituted a change in law, entitling Adani Power to compensation under the terms of its Power Purchase Agreement (PPA).

 

Background to the dispute 

The case stemmed from a December 2017 notification by CIL, introducing an evacuation facility charge (EFC) of ₹50 per tonne. Adani Power, which had entered into a PPA in 2010 to supply 1,200 MW to the Rajasthan discoms, argued that the levy triggered Article 10 of the PPA, which governed change-in-law provisions.

   

Adani Power notified the discoms about the additional charge and sought compensation. When the matter remained unresolved, the company approached the Rajasthan Electricity Regulatory Commission (RERC), which partially allowed the claim.

 

Both parties then moved Aptel, which in April 2024 ruled in favour of Adani Power, recognising the CIL levy as a change-in-law event. 

 

SC ruling reinforces ‘change in law’ interpretation 

The discoms subsequently appealed to the Supreme Court, which has now sided with Adani Power. Justice Sundresh, writing the 32-page judgment, held that the new statutory levy by a government body like CIL qualified as a change in law, thereby activating the restitution principle under the PPA.

 

The court affirmed that compensation must be awarded to restore the power generator to the economic position it would have been in had the change not occurred.

 

“We find no merit in this appeal. The appeal stands dismissed accordingly,” the judgment concluded.

 

Aptel had earlier ruled that APRL is entitled to full compensation for the change-in-law event related to evacuation facility charges, with effect from the date of the CIL notification.