Policy Of Inter-Plant Transfer Of Coal By Coal India A “Change In Law Event” : Supreme Court Grants Relief To Haryana Distribution Companies

On 20.04.2023, the bench of Justices B.R. Gavai and Vikram Nath pronounced Judgment in the matter between Uttar Haryana Bijli Vitran Nigam Limited & Anr. (“Haryana Discoms”) and Adani Power (Mundra) Ltd. (“Adani Power”) wherein it has been held that “Inter Plant Transfer” (“IPT”) of coal qualifies as a Change in Law Event in terms of the Power Purchase Agreements (“PPA”) executed between the parties. While doing so, the Supreme Court has ruled in favour of Haryana Discoms and observed that the Coal India Limited (“CIL”) Communication dated 19^th June, 2013 is an instrument having “a force of law” and consequently allowed IPT of coal as a change in law event. 

Vide Communication dated 19^th June, 2013 CIL allowed IPT of domestic coal, in modification of the condition prevalent, where the coal allocated to a specific generating station was prohibited from being used in any other generating stations of the same entity or any group companies.  

Before the Supreme Court, one of fundamental questions of law, therefore was whether the CIL Communication dated 19.06.2013 constituted a “force of law” in terms of the Article 13 of the PPA to be qualified as a change in law event. The Supreme Court took a significantly view and overruled the decision of the Appellate Tribunal and held that “CIL is an instrumentality of the Government of India” and that the “APTEL erred in holding the said communication dated 19^th June 2013 not to amount to ‘Change in Law”. The Supreme Court also noted that “the definition of “Law” is wide enough to include all rules, regulations, orders notification by the Government instrumentalities.”  

The Bench also noted that the Appellate Tribunal’s findings are in contradiction to its own decisions wherein vide Order dated 22.03.2022 in the matter of Rattan India Power Limited v. Maharashtra Electricity Regulatory Commission and Another, Appeal Nos. 118 of 2021 and 40 of 2022, the Appellate Tribunal has held that Coal India Notification dated 19.12.2017 constitutes a force of law and consequently, allowed the Change in Law relief sought with respect to Evacuation Facility Charge. 

While remanding the matter to the Central Electricity Regulatory Commission (CERC), the Supreme Court held that “the savings made in the cost of transportation” “will have to be passed on” to the end consumers. 

Counsel for the Appellant: Mr. Shubham Arya Adv. , Ms. Poorva Saigal, Adv., Mr Nikunj Dayal Adv., Ms Pallavi Saigal Adv. , Mr Ravi Nair Adv. , Ms Reeha Singh Adv. , Ms Shikha Sood Adv. and Ms Anumeha Smiti Adv. 

Counsel for the Respondent: Dr. Abhishek Manu Singhvi (Sr. Adv.), Ms. Poonam Verma,  Mr. Mahesh Agarwal, Adv., Mr. Arshit Anand, Adv., Ms. Sakshi Kapoor, Adv. and Mr. Saunak Rajguru, Adv. 

Case Title : Uttar Haryana Bijli Vitran Nigam Ltd vs Adani Power (Mundra) Ltd.

Citation : 2023 LiveLaw (SC) 339

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