2023 (4) TMI 1318 - SC - Indian Laws

Change in Law relief on account of New Coal Distribution Policy, 2013 (NCDP 2013) - should be on actuals viz. as against 100% of normative coal requirement assured in terms of New Coal Distribution Policy, 2007 (NCDP 2007) or restricted to trigger levels in NCDP 2013 viz. 65%, 65%, 67% and 75% of ACQ? - for computing 'Change in Law' relief, the operating parameters should be considered on 'actuals' OR as per technical information submitted in bid? - 'Change in Law' relief compensation is to be granted from 1st April 2013 (start of Financial Year) or 31st July 2013 (date of NCDP 2013)? HELD THAT - 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. 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 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 held that the explicit terms of a contract are always the final word with regard to the intention of the parties. This Court has reiterated that 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. 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 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 and application of restitutionary principles and privity of contractual obligations between the parties as contained in the PPAs, it is not found that the view taken by the learned APTEL with regard to carrying cost warrants interference. Thus, 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 allowed.

Summary

Issues Involved:

1. Change in Law Relief on Account of New Coal Distribution Policy, 2013 (NCDP 2013).
2. Computation of Change in Law Relief - Operating Parameters.
3. Change in Law Relief Compensation Start Date.
4. Additional Issues: Busy Season Surcharge, Development Surcharge, Port Congestion Surcharge, MoEF Notification on Coal Quality, Shortfall in Linkage Coal, Forest Tax, Add on Premium Price, Evacuation Facility Charges (EFC), and Carrying Cost.

Summary:

I. Change in Law Relief on Account of New Coal Distribution Policy, 2013 (NCDP 2013):

The Supreme Court held that the 'Change in Law' relief for domestic coal shortfall should be on 'actuals' as against 100% of normative coal requirement assured in terms of NCDP 2007.

II. Computation of Change in Law Relief - Operating Parameters:

The Court decided that the Station Heat Rate (SHR) and Auxiliary consumption should be considered as per the Regulations or actuals, whichever is lower.

III. Change in Law Relief Compensation Start Date:

The start date for the 'Change in Law' event for NCDP 2013 is 1st April 2013.

IV. Additional Issues:

Busy Season Surcharge, Development Surcharge, and Port Congestion Surcharge:
The Court upheld the finding that the revision of charges to be paid on Busy Season Surcharge, Development Surcharge, and Port Congestion Charges by the Railway Board would come within the ambit of 'Change in Law'.

MoEF Notification on Coal Quality:
The Court confirmed that the MoEF notification mandating power projects to use beneficiated coal with ash content lower than 34% amounts to 'Change in Law'.

Shortfall in Linkage Coal due to Change in NCDP:
The Court reaffirmed that changes in the NCDP issued by the Ministry of Coal amount to 'Change in Law'.

Forest Tax:
The imposition of Forest Tax by the Chhattisgarh State Government was considered a 'Change in Law' event.

Add on Premium Price:
The Court found that 'add on premium' required due to the cancellation of captive coal blocks and delays on account of Go-No-Go policy amounts to 'Change in Law'.

Evacuation Facility Charges (EFC):
The imposition of EFC by CIL was held to be a 'Change in Law' event.

Carrying Cost:
The Court upheld the principle that carrying cost should be paid at the rate specified for late payment surcharge, emphasizing the restitutionary principle to restore the affected party to the same economic position as if the 'Change in Law' had not occurred.

Conclusion:
The appeals were dismissed, with the Court emphasizing the need for timely payment by DISCOMS to avoid unnecessary litigation and additional costs being passed to end consumers. The Court also appealed to the Ministry of Power to evolve mechanisms to ensure timely payments and reduce unwarranted litigation.