Bench: Pinaki Chandra Ghose,
Rohinton Fali Nariman
Facts:-
In this case, the Adani Enterprises
Consortium, who was selected by GUVNL as the successful bidder indicated that they
already had an arrangement with Gujarat Mineral Development Corporation. And a
Memorandum of Understanding was entered into with German Company and with a
Japanese agent. Adani Power was also declared as the successful bidder in
Haryana on 17th July, 2008. Every act was in
according to the guidelines, which the Central Government issued on 19th
January, 2005, which were amended from time to time.
The Haryana State Commission and The
Gujarat State Commission adopted the tariff on 31st July, 2008 and 20th
December, 2007 respectively. And then, Adani Consortium signed several Power
Purchase Agreements for different projects.
Then, a sudden change in law in
Indonesia occur in 2010 and 2011, which aligned the export price of coal from
Indonesia to international market prices instead of the price that was prevailing
for the last 40 years.
Therefore, Adani Power filed a
petition before the Central Electricity Regulatory Commission seeking relief
either discharge them from the performance of the PPA on account of
frustration, or to evolve a mechanism to restore the petitioners to the same
economic condition prior to occurrence of the change in law in Indonesian
Regulation.
On 16th October, 2012, the Central Commission held that the
Power Purchase Agreements entered into by Adani in both the cases constituted a
composite scheme for generation and sale of electricity. So, being an
appropriate Commission and not the respective State Commissions, it does not had
jurisdiction in the matter.
Then, a review petition was again filled against this order
and on 2nd April, 2013, the Central
Commission passed an order, whereby the claim of Adani Power on the grounds of
force majeure and/or change in law was held not to be admissible but it can
provide redressal of grievances under Section
79 of the Act.
The Committee submitted a report, rejecting
the cross-objection filed by Adani Power and on 31st October, 2014, the
Appellate Tribunal rejected the prayer for condonation of delay. So, Adani
Power filed an appeal before the Supreme Court.
Issue:-
Whether the decision of the
Appellate Tribunal in declining to condone the delay in preferring the appeal
against the order dated 2nd April, 2013 of the Central Commission was correct.
Judgment:-
Supreme Court, in its judgement held:
1) Section
63 of the Electricity Act, 2003 provides for procurement
of power and determination of tariff by a transparent competitive bidding
process. The
appropriate Commission only “adopts” tariff which is already determined through
a transparent process of bidding which must be in accordance with the
guidelines issued by the Central Government. Therefore, the appropriate
Commission certainly has the jurisdiction to look into whether the tariff
determined through the process of bidding accords because of the following
points:-
1.1.
Tariff
has been determined through a transparent process of bidding.
1.2.
Guidelines
have been issued under this Section on 19th January, 2005 by the Central
Government.
2. “Composite scheme” under Section
79(1) (b) is
that the generating companies can have, in any manner, a scheme for generation
and sale of electricity which must be in more than one State.
3. Therefore, in answering about the jurisdiction
of the Central Commission, the Supreme Court finds it necessary to set
out Section 2(5) of the Act which, which gives the definition of appropriate
Government.
4. The Court in dealing with an appeal
arising out of an order in which the Appellate Tribunal declined to condone a
delay of 481 days said that, as long as the appellant is not desirous of
seeking a declaration that the appellant is relieved of the obligation to
perform the contracts in question, the appellant is entitled to argue any
proposition of law, be it “force majeure” or “change of law” in support quantifying
the compensatory tariff.
5. In the context, that the rise in
price of coal consequent to change in Indonesian law would be a force majeure
event which would entitle the respondents to claim compensatory tariff, the
Supreme Court relied on Sections 32 and Section 56 of the Indian
Contract Act,
1872, governing “force majeure”.
The
Court concluded that the Procurer shall pay the Tariff to the Seller, provided
during such period of Natural Force Majeure Event for the balance part of the
Contracted Capacity and the balance part of the Power Station is stated to be available
for scheduling and dispatch as per availability- based tariff for supply of
power.
Hence, the Supreme Court set aside the
Appellate Tribunal’s judgment and the Commission’s orders following the said
judgment and also directed the Central Electricity Regulatory Commission to go
into the matter afresh and determine the relief, which should be granted to
those power generators.
Finally, the Tribunal, agreeing with
the Commission, held that generation and sale of power by Adani Power to more
than one state was a composite scheme within the meaning of Section
79(1) (b)
of the Act and the Central Commission have jurisdiction to proceed further in
the matter. The Commission has determined the amount for the compensatory
tariff to be granted due to force majeure event by its order dated 6th
December, 2016.