Full Judgment Text
REPORTABLE
2026 INSC 202
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.2584-2585 OF 2026
West Bengal State Electricity Distribution Co. Ltd.
….Appellant(s)
Versus
Adhunik Power & Natural Resource Ltd. & Ors.
….Respondent(s)
J U D G M E N T
Joymalya Bagchi, J.
1. The appeals are directed against the judgment and order
dated 04.09.2025 whereby the Appellate Tribunal for
Electricity (‘APTEL’) modified the order dated 29.01.2020
passed by the Central Electricity Regulatory Commission,
Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2026.02.27
15:32:10 IST
Reason:
New Delhi (‘CERC’) and directed that Respondent No.1,
Adhunik Power and Natural Resources Ltd. (‘APNRL’), was
Page 1 of 19
entitled to (i) compensation for coal purchased through e-
auction/import to meet the shortfall in tapering linkage
granted to it pending operationalization of the Ganeshpur
captive coal block, and (ii) compensation on account of
Change in Law events with effect from 25.08.2014 as per
1 2
Article 10.2 of the PPA /PSA , along with carrying costs till
actual payment was made.
2. On 05.01.2011, a PSA was executed between the Appellant,
West Bengal State Electricity Distribution Company Ltd.
3
(‘WBSEDCL’) and Respondent No. 3, PTC India Limited (‘PTC’)
for supply of 100 MW of power for a period of 25 years.
3. As a back-to-back arrangement on 25.03.2011, a PPA was
executed between APNRL and PTC for onward sale of 100 MW
of power to WBSEDCL.
4. The West Bengal Electricity Regulatory Commission vide its
order dated 15.12.2011 approved the PPA/PSA.
1
Power Purchase Agreement.
2
Power Supply Agreement.
3
An inter-state trader of electricity.
Page 2 of 19
Relevant clauses of the PPA/PSA
5. Article 10 of the PPA/PSA defines “Change in Law” events that
entitle the affected party to compensation through monthly
tariff payments in a manner that restores such party to the
same economic position as if the Change in Law had not
occurred. For better appreciation, Article 10 of the PPA/PSA
is extracted hereinbelow:
“ In this Article 10, the following terms shall have the
following meanings:
I. Change in Law means occurrence of
any of the following events:
a) the enactment, coming into effect, adoption,
promulgation, amendment, modification or
repeal (without re-enactment or consolidation)
in India, of any Law, including rules and
regulations framed pursuant to such Law;
b) a change in the interpretation or application
of any Law by any Indian Governmental
Instrumentality having the legal power to
interpret or apply such Law, or any Competent
Court of Law;
c) the imposition of a requirement for obtaining
any Consents, Clearances and Permits which
was not required earlier;
d) change in the terms and conditions
prescribed for obtaining any Consents,
Clearances and Permits or the inclusion of any
new terms or conditions for obtaining such
Consents, Clearances and Permits; except due
to any default of the Seller;
Page 3 of 19
e) any change in tax or introduction of any tax
made applicable for supply of power by the
Seller
f) any change in law relating to Mining laws
and Environment Laws or tax cess or duty
affecting input cost or raw material.
II. But Change in Law shall not include:
a) Any change in any withholding tax on
income or dividends distributed to the
shareholders of the Seller, or
b) Change in respect of UI charges or
frequency intervals by an Appropriate
Commission.
III. Such Change in Law could be but not
restricted to any of the following cases
where it,
a) Results in any change in respect of tax.
b) Affects Seller’s or PTC’s obligation under
this Agreement.
c) Materially affects the construction,
Commissioning or operation of the Project.”
6. Article 2.2 of the PPA/PSA provides that for sale of power
under the Agreement, the buyer shall pay capacity charge,
non-escalable energy charge and escalable energy charge in
accordance with Table A of Schedule A to the PPA/PSA. Article
2.2 of the PPA/PSA is reproduced hereinbelow:
“2.2
For sale of power under this Agreement PTC
shall pay the Capacity Charges, the Non-
Page 4 of 19
Escalable Energy Charges and the Escalable
Energy Charges only as per Table A of Schedule
A.
Seller shall be entitled for recovery of the
Capacity Charges for a Contract Year in
accordance with the formula of Monthly Capacity
Charges payable as per charges mentioned in
schedule A.”
7. Article 2.5 of the PPA/PSA stipulates that if the Seller
procures coal from alternative sources instead of the
designated captive source, it shall not claim any separate
escalation in Escalable Energy Charges on that score. Such
coal will be deemed to have been sourced from the captive
source itself. Article 2.5 of the PPA/PSA is reproduced
hereinbelow:
“2.5 On the ground of sourcing of coal from any
other sources by the Seller, Seller shall not ask
for any separate escalation rate for Escalable
Energy Charges and it will be considered that
such coal has been deemed to be sourced from
the captive source only for the purchasing of
Power by FTC from the Seller under this Agreement.”
(emphasis supplied)
Relevant Correspondences
8. Although the PPA/PSA did not specifically stipulate the
source of coal for electricity generation by APNRL, the Minutes
of Meeting dated 03.01.2011, convened for negotiation of rate
Page 5 of 19
and finalization of PPA for purchase of power, record that
APNRL had a captive coal block at Ganeshpur, Jharkhand,
held in joint venture with M/s. Tata Steel Ltd. (‘TISCO’).
9. Subsequent to the execution of the PPA/PSA, WBSEDCL vide
letter dated 30.04.2012 enquired about the status of work
relating to lifting of coal from Ganeshpur captive coal block
and transportation of such coal, to coal-handling plants.
These materials on record lead to the irresistible conclusion
that the source of coal for generating and supplying electricity
to WBSEDCL under the PPA/PSA was the captive coal block
in Ganeshpur at Jharkhand.
Factual trajectory leading to the dispute
10. As the captive coal block could not be operationalized, APNRL
sourced coal under tapering linkage from Central Coalfields
Ltd. (CCL) and commenced supply of power to WBSEDCL
through PTC. APNRL further contends that it met the shortfall
in tapering linkage by procuring coal through e-auction and
imports.
Page 6 of 19
11. Through various correspondences, APNRL requested PTC/
WBSEDCL to permit pass-through of the additional coal cost
incurred on account of procurement of coal from alternate
sources owing to shortfall under tapering linkage. Referring to
Article 2.5 of PPA/PSA, such prayers were turned down.
12. Meanwhile, this Court in Manohar Lal Sharma v. Principal
4
Secy. & Ors. vide Judgment dated 25.08.2014, cancelled the
allotment of coal blocks made by the Screening Committee of
the Government of India as well as allotments made through
Government dispensation route. This included the Ganeshpur
Captive Coal Block allotted to APNRL. Thereafter, the
Government issued the Coal Mines (Special Provision)
Ordinance, 2014 followed by the Coal Mines (Special
Provision) Act, 2015. Consequently, APNRL unsuccessfully
participated in the bid for allocation of Ganeshpur Captive
Coal Block.
13. In light of such developments, APNRL requested PTC/
WBSEDCL to make payments on the basis of actual energy
purchased, as reflected in bills raised since 31.03.2014. Such
4
(2014) 9 SCC 516.
Page 7 of 19
claim was founded on the contention that cancellation of the
coal block constituted a “
change in the interpretation or
application of any law by any Indian Government
Instrumentality having the legal power to interpret or apply
such law, or any competent court of law ” within the meaning
of Article 10.1.1(b), and that the enactment of the Coal Mines
(Special Provision) Act, 2015, which altered the process of
allocation of coal blocks, amounted to “change in law relating
to Mining Laws and Environmental Laws or tax cess or duty
affecting input cost or raw material” under 10.1.1(f). PTC/
WBSEDCL refuted the aforesaid claim.
14. In these circumstances, APNRL approached the CERC, New
Delhi on 25.10.2017 vide Petition No.305/MP/2015 seeking
directions to WBSEDCL and PTC to permit pass-through of
energy charges based on the actual fuel cost incurred by it.
Findings of the Central Electricity Regulatory Commission
15. Upon hearing the parties, CERC, inter alia, held that Article
2.5 of the PPA/PSA was applicable to cases where the captive
source of coal was operational. It further held that APNRL was
entitled to compensation for procuring coal through e-
Page 8 of 19
auction/imports to meet the shortfall in tapering linkage
granted to it pending operationalization of the captive coal
block. However, CERC did not accept APNRL’s contention that
the cancellation of its coal block pursuant to the judgment
rendered in Manohar Lal (supra) , and enactment of the Coal
Mines (Special Provision) Act, 2015 altering the manner of
allocation of coal blocks, constituted a Change in Law event
under Article 10 of the PPA/PSA. Accordingly, it directed
APNRL to approach CERC through a fresh petition outlining
details of the tapering linkage granted to it, reasons for delay
in development, operationalization of captive coal block and
the coal requirement met through e-auction/imported coal to
meet the shortfall in supply under tapering linkage.
Findings of the Appellate Tribunal for Electricity
16. Both APNRL and WBSEDCL approached APTEL vide Appeal
No.143/2020 and Appeal No.66/2022 respectively. APTEL
vide common impugned order dated 04.09.2025, while
upholding the direction of the CERC that APNRL was entitled
to the actual cost of coal sourced through e-auction/import to
meet shortfall in tapering linkage, reversed its finding vis-à-
Page 9 of 19
vis Change in Law event and held that cancellation of coal
block and the subsequent promulgation of the Coal Mines
(Special Provision) Act, 2015 constituted Change in Law
events within the meaning of Articles 10.1.1(b) and 10.1.1(f)
of the PPA/PSA and remanded the matter to CERC for
awarding appropriate compensation to APNRL as per Article
10.2 of PPA/PSA, along with carrying costs till actual payment
was made.
Arguments at the Bar
17. Mr. Kapil Sibal, Senior Counsel for Appellant has premised
his challenge to the impugned order primarily on the ground
that the PPA/PSA did not expressly stipulate the source of
coal i.e. Ganeshpur Captive Coal Block and that Article 2.5
indemnified WBSEDCL against any escalation of price from
the levelized tariff specified under Table A of Schedule A to the
PPA/PSA on account of procurement of coal from other
sources. It was thus contended that, in the absence of any
express stipulation regarding the captive coal block in the
PPA/PSA, neither its cancellation pursuant to this Court’s
judgment in Manohar Lal (supra) nor the promulgation of the
Page 10 of 19
Coal Mines (Special Provisions) Act, 2015 could constitute a
Change in Law event materially affecting APNRL’s obligations
under the Agreement.
18. On the contrary, Mr. C.A. Sundaram, Senior Counsel for
Respondent No.1 submitted that APTEL vide the impugned
order dated 04.09.2025 rightly granted compensation to
APNRL towards coal procured through e-auction/import to
meet the shortfall in tapering linkage granted to it pending
operationalization of the Ganeshpur Captive Coal Block. It
was further contended that compensation on account of
Change in Law event had also been correctly allowed with
effect from 25.08.2014, together with carrying costs till the
date of actual payment.
Analysis
19. The contention advanced by Mr. Sibal, namely that the PPA/
PSA did not expressly stipulate the source of coal i.e.
Ganeshpur Captive Coal Block, stands squarely rebutted by
the concurrent findings of both CERC and APTEL. Reading
Article 2.5 in conjunction with the Minutes of Meeting dated
03.01.2011 and the subsequent letter dated 30.04.2012,
Page 11 of 19
APTEL affirmed CERC’s finding that PPA/PSA was executed
in the backdrop of the minutes drawn on 03.01.2011 wherein
one of the salient features of the transaction was as follows:
“ 8. APRNL has a captive coal block at Ganeshpur
in Jharkhand and this coal block is a joint venture
with TISCO.”
20. APTEL also noted that immediately after the execution of the
PPA/PSA, WBSEDCL vide letter dated 30.04.2012, had
enquired about the status of work related to lifting of coal from
the coalmine and transportation of coal from the Ganeshpur
coal block allocated to APNRL. We consider it apposite to
extract herein the contents of the said letter:
“Dear Sir,
A PPA has been executed on 05.01.2011 by and
between WBSEDCL and PTC India Ltd. As per
undertaking of APNRL, it is understood that they
have already obtained allocation of Ganeshpur Coal
Block in the State of Jharkhand for captive mining of
coal block jointly with Tata Steel Limited, on equal
sharing, i.e. 50:50 basis.
In this context, I would request you to provide us the
present status of the work related to lifting of coal
from the coalmine and transportation of coal from
captive mine, allocated to APNRL, to the coal
handling plant, within 10.05.2012.”
21. When Article 2.5 of PPA/PSA is read in light of these
correspondences between the parties, there is no escape from
Page 12 of 19
the irresistible conclusion that the ‘captive coal block’ refers
to the Ganeshpur Coal Block at Jharkhand.
22. Mr. Sibal’s argument that a written contract between parties
cannot be qualified with reference to any prior or subsequent
statements/conduct is unfounded. The law in this regard is
crystal clear. Ordinarily, when a contract is reduced to
writing, its terms must be determined from the document
5
itself. However, this rule does not put an embargo on looking
into such facts which (i) establish a link between terms of the
6
contract and existing facts i.e. attending circumstances, or
(ii) impart meaning to a term which may otherwise be
7
meaningless or unworkable. These principles have been
eloquently summarized in Anglo American Metallurgical
8
Coal Pty. Limited v. MMTC Limited wherein this Court
observed:
“ 30. …. Section 92 of the Evidence Act refers to the
terms of a “contract, grant or other disposition of
property or any matter required by law to be reduced
to the form of a document”. In all these cases, under
Proviso (6) read with Illustration (f), any fact may be
proven which shows in what manner the language
5
S.91, The Indian Evidence Act, 1872 (S. 94, The Bharatiya Sakshya Adhiniyam, 2023).
6
See Proviso (6) and illustrations (f) & (g) to S.92, The Indian Evidence Act (S.95, The
Bharatiya Sakshya Adhiniyam, 2023).
7
S.95, The Indian Evidence Act, 1872 (S.98, The Bharatiya Sakshya Adhiniyam, 2023).
8
(2021) 3 SCC 308.
Page 13 of 19
of a document is related to existing facts. Illustration
(f) of Section 92 of the Evidence Act indicates that
facts, which may on the face of it, be ambiguous and
vague, can be made certain in the contextual setting
of the contract, grant or other disposition of property.
Section 94 of the Evidence Act then speaks of
language being used in a document being “plain in
itself”. It is only when such document “applies
accurately to existing facts ”, that evidence may not
be given to show that it was not meant to apply to
such facts. Likewise, the obverse situation is
contained in Section 95 of the Evidence Act, which
then states that when the language used in a
document is plain in itself, but it is “unmeaning in
reference to existing facts”, only then may evidence
be given to show that it was used in a peculiar
sense.”
23. In the present context, we note that Article 2.5 of the PPA/PSA
refers to a ‘captive source’ for coal supply for generation &
supply of power and indemnifies WBSEDCL against any
additional cost arising from procurement of coal from
alternate sources. Though the captive source is not expressly
identified in Article 2.5, its identity is clearly discernible from
the surrounding circumstances, in particular, the Minutes of
Meeting dated 03.01.2011 recording the salient features
underlying the PPA/PSA, which specifically note that APNRL
had a captive coal block at Ganeshpur. Further, the letter
dated 30.04.2012 issued by WBSEDCL enquiring about the
Page 14 of 19
status of work relating to lifting of coal from Ganeshpur
captive coal block and its transportation to the coal handling
plant, reinforces this position. WBSEDCL was a party to these
correspondences and has never disputed their contents. In
these circumstances, it does not lie in the mouth of WBSEDCL
to contend that the PPA/PSA did not prescribe Ganeshpur
Coal Block as the captive coal source for generation and
supply of electricity.
24. With regard to compensation payable on account of additional
coal cost arising due to a Change in Law event i.e. cancellation
of Ganeshpur captive coal block vide this Court’s decision in
Manohar Lal (supra) and the subsequent promulgation of the
Coal Mines (Special Provision) Act, 2015, we are in wholesome
agreement with APTEL that in Manohar Lal (supra), this
Court interpreted the provisions of Coal Mines Nationalization
Act, 1957 (‘CMN Act’) and Mines & Minerals Development and
Regulation Act, 1957 (‘MMDR Act’) in a manner different from
the interpretation adopted by the Government of India, and
consequently cancelled the allotment of coal blocks made by
the Screening Committee as well as through the Government
dispensation route. This change in interpretation of the CMN
Page 15 of 19
Act, 1957 and the MMDR Act, 1957 by this Court resulting in
cancellation of the coal blocks and subsequent promulgation
of the Coal Mines (Special Provision) Act, 2015 falls within
Articles 10.1.1(b) and 10.1.1(f) of the PPA/PSA. There is no
cavil that such Change in Law materially affected the right of
APNRL to procure coal from the cancelled coal block,
compelling it to source coal from other sources at a higher
price. WBSEDCL cannot claim immunity under Article 2.5 of
the PPA/PSA. We say so as Article 2.5 and Article 10 operate
in different fields. While Article 2.5 indemnifies WBSEDCL
9
against escalation in coal price beyond the levelized price
where coal is procured from sources other than the captive
source i.e. the Ganeshpur captive coal block, Article 10 is
triggered when a Change in Law event materially affects the
right of APNRL to operate the coal block and meet its
obligation under the PPA/PSA. Given this situation, APTEL
had rightly reversed the findings of CERC vis-à-vis Change in
Law event and awarded compensation with effect from
25.08.2014, along with carrying costs until the date of actual
payment.
9
Specified in Table A of Schedule A to the PPA/PSA.
Page 16 of 19
25. However, we are unable to agree with APTEL’s view that
APNRL would be entitled to compensation for procurement of
coal through e-auction/imports to meet the shortfall in
tapering linkage prior to the cancellation of the coal block on
25.08.2014. In arriving at this conclusion, APTEL appears to
have lost sight of the fact that the Minutes of Meeting dated
03.01.2011 expressly recorded, as one of the salient features,
that the Ganeshpur Captive Coal block had been allotted to
APNRL in joint venture with TISCO. It was also assured by
APNRL that the said coal block would be operational by the
time power supply to WBSEDCL commenced. In this factual
backdrop, it was incorrect for APTEL to hold that the
indemnity clause contained in Article 2.5 of the PPA/PSA
would be inapplicable as delay in operationalization of the coal
block was attributable to inaction by the lead miner TISCO
and/or owing to ‘go-no-go’ policy of the Ministry of
Environment and Forests. Such restrictive interpretation of
Article 2.5, in our considered opinion, is untenable, as it
would expose WBSEDCL to the vagaries of coal cost escalation
due to unforeseen events, save and except a Change in Law
event under Article 10 of the PPA/PSA. APTEL’s reliance on
Page 17 of 19
its earlier decision in GMR Kamalanga Energy Ltd. and Anr
10
v. CERC and Ors. is also misconceived. The said decision is
clearly distinguishable on facts, inasmuch as the PPA therein
did not contain any clause akin to Article 2.5 indemnifying the
purchaser against cost escalation arising due to procurement
of coal from sources other than the captive source.
Conclusion
26.
In light of such discussion, the appeals are partly allowed and
the impugned order dated 04.09.2025 passed by APTEL is set
aside to the limited extent that it grants compensation for
procurement of coal through e-auction/import to meet
shortfall in tapering linkage granted to it pending
operationalization of the Ganeshpur captive coal block. The
remaining portion of the order awarding compensation on
account of Change in Law events with effect from 25.08.2014
along with carrying costs till the date of actual payment, is
upheld. Though not placed on record during the course of
hearing, we have taken note of the fact that CERC has already
passed a consequential order dated 11.02.2026 for
10
2018 SCC OnLine Aptel 151.
Page 18 of 19
implementation of the impugned order. We direct CERC to
modify its order in terms of the aforesaid directions within
four weeks from the date of this order. No order as to costs.
27. Pending application(s), if any, shall also stand disposed of.
…..…..……...……………………….CJI.
(SURYA KANT)
……..…..……...……………………….J.
(B.V. NAGARATHNA)
……..…..……...……………………….J.
(JOYMALYA BAGCHI)
NEW DELHI,
FEBRUARY 27, 2026
Page 19 of 19
2026 INSC 202
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.2584-2585 OF 2026
West Bengal State Electricity Distribution Co. Ltd.
….Appellant(s)
Versus
Adhunik Power & Natural Resource Ltd. & Ors.
….Respondent(s)
J U D G M E N T
Joymalya Bagchi, J.
1. The appeals are directed against the judgment and order
dated 04.09.2025 whereby the Appellate Tribunal for
Electricity (‘APTEL’) modified the order dated 29.01.2020
passed by the Central Electricity Regulatory Commission,
Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2026.02.27
15:32:10 IST
Reason:
New Delhi (‘CERC’) and directed that Respondent No.1,
Adhunik Power and Natural Resources Ltd. (‘APNRL’), was
Page 1 of 19
entitled to (i) compensation for coal purchased through e-
auction/import to meet the shortfall in tapering linkage
granted to it pending operationalization of the Ganeshpur
captive coal block, and (ii) compensation on account of
Change in Law events with effect from 25.08.2014 as per
1 2
Article 10.2 of the PPA /PSA , along with carrying costs till
actual payment was made.
2. On 05.01.2011, a PSA was executed between the Appellant,
West Bengal State Electricity Distribution Company Ltd.
3
(‘WBSEDCL’) and Respondent No. 3, PTC India Limited (‘PTC’)
for supply of 100 MW of power for a period of 25 years.
3. As a back-to-back arrangement on 25.03.2011, a PPA was
executed between APNRL and PTC for onward sale of 100 MW
of power to WBSEDCL.
4. The West Bengal Electricity Regulatory Commission vide its
order dated 15.12.2011 approved the PPA/PSA.
1
Power Purchase Agreement.
2
Power Supply Agreement.
3
An inter-state trader of electricity.
Page 2 of 19
Relevant clauses of the PPA/PSA
5. Article 10 of the PPA/PSA defines “Change in Law” events that
entitle the affected party to compensation through monthly
tariff payments in a manner that restores such party to the
same economic position as if the Change in Law had not
occurred. For better appreciation, Article 10 of the PPA/PSA
is extracted hereinbelow:
“ In this Article 10, the following terms shall have the
following meanings:
I. Change in Law means occurrence of
any of the following events:
a) the enactment, coming into effect, adoption,
promulgation, amendment, modification or
repeal (without re-enactment or consolidation)
in India, of any Law, including rules and
regulations framed pursuant to such Law;
b) a change in the interpretation or application
of any Law by any Indian Governmental
Instrumentality having the legal power to
interpret or apply such Law, or any Competent
Court of Law;
c) the imposition of a requirement for obtaining
any Consents, Clearances and Permits which
was not required earlier;
d) change in the terms and conditions
prescribed for obtaining any Consents,
Clearances and Permits or the inclusion of any
new terms or conditions for obtaining such
Consents, Clearances and Permits; except due
to any default of the Seller;
Page 3 of 19
e) any change in tax or introduction of any tax
made applicable for supply of power by the
Seller
f) any change in law relating to Mining laws
and Environment Laws or tax cess or duty
affecting input cost or raw material.
II. But Change in Law shall not include:
a) Any change in any withholding tax on
income or dividends distributed to the
shareholders of the Seller, or
b) Change in respect of UI charges or
frequency intervals by an Appropriate
Commission.
III. Such Change in Law could be but not
restricted to any of the following cases
where it,
a) Results in any change in respect of tax.
b) Affects Seller’s or PTC’s obligation under
this Agreement.
c) Materially affects the construction,
Commissioning or operation of the Project.”
6. Article 2.2 of the PPA/PSA provides that for sale of power
under the Agreement, the buyer shall pay capacity charge,
non-escalable energy charge and escalable energy charge in
accordance with Table A of Schedule A to the PPA/PSA. Article
2.2 of the PPA/PSA is reproduced hereinbelow:
“2.2
For sale of power under this Agreement PTC
shall pay the Capacity Charges, the Non-
Page 4 of 19
Escalable Energy Charges and the Escalable
Energy Charges only as per Table A of Schedule
A.
Seller shall be entitled for recovery of the
Capacity Charges for a Contract Year in
accordance with the formula of Monthly Capacity
Charges payable as per charges mentioned in
schedule A.”
7. Article 2.5 of the PPA/PSA stipulates that if the Seller
procures coal from alternative sources instead of the
designated captive source, it shall not claim any separate
escalation in Escalable Energy Charges on that score. Such
coal will be deemed to have been sourced from the captive
source itself. Article 2.5 of the PPA/PSA is reproduced
hereinbelow:
“2.5 On the ground of sourcing of coal from any
other sources by the Seller, Seller shall not ask
for any separate escalation rate for Escalable
Energy Charges and it will be considered that
such coal has been deemed to be sourced from
the captive source only for the purchasing of
Power by FTC from the Seller under this Agreement.”
(emphasis supplied)
Relevant Correspondences
8. Although the PPA/PSA did not specifically stipulate the
source of coal for electricity generation by APNRL, the Minutes
of Meeting dated 03.01.2011, convened for negotiation of rate
Page 5 of 19
and finalization of PPA for purchase of power, record that
APNRL had a captive coal block at Ganeshpur, Jharkhand,
held in joint venture with M/s. Tata Steel Ltd. (‘TISCO’).
9. Subsequent to the execution of the PPA/PSA, WBSEDCL vide
letter dated 30.04.2012 enquired about the status of work
relating to lifting of coal from Ganeshpur captive coal block
and transportation of such coal, to coal-handling plants.
These materials on record lead to the irresistible conclusion
that the source of coal for generating and supplying electricity
to WBSEDCL under the PPA/PSA was the captive coal block
in Ganeshpur at Jharkhand.
Factual trajectory leading to the dispute
10. As the captive coal block could not be operationalized, APNRL
sourced coal under tapering linkage from Central Coalfields
Ltd. (CCL) and commenced supply of power to WBSEDCL
through PTC. APNRL further contends that it met the shortfall
in tapering linkage by procuring coal through e-auction and
imports.
Page 6 of 19
11. Through various correspondences, APNRL requested PTC/
WBSEDCL to permit pass-through of the additional coal cost
incurred on account of procurement of coal from alternate
sources owing to shortfall under tapering linkage. Referring to
Article 2.5 of PPA/PSA, such prayers were turned down.
12. Meanwhile, this Court in Manohar Lal Sharma v. Principal
4
Secy. & Ors. vide Judgment dated 25.08.2014, cancelled the
allotment of coal blocks made by the Screening Committee of
the Government of India as well as allotments made through
Government dispensation route. This included the Ganeshpur
Captive Coal Block allotted to APNRL. Thereafter, the
Government issued the Coal Mines (Special Provision)
Ordinance, 2014 followed by the Coal Mines (Special
Provision) Act, 2015. Consequently, APNRL unsuccessfully
participated in the bid for allocation of Ganeshpur Captive
Coal Block.
13. In light of such developments, APNRL requested PTC/
WBSEDCL to make payments on the basis of actual energy
purchased, as reflected in bills raised since 31.03.2014. Such
4
(2014) 9 SCC 516.
Page 7 of 19
claim was founded on the contention that cancellation of the
coal block constituted a “
change in the interpretation or
application of any law by any Indian Government
Instrumentality having the legal power to interpret or apply
such law, or any competent court of law ” within the meaning
of Article 10.1.1(b), and that the enactment of the Coal Mines
(Special Provision) Act, 2015, which altered the process of
allocation of coal blocks, amounted to “change in law relating
to Mining Laws and Environmental Laws or tax cess or duty
affecting input cost or raw material” under 10.1.1(f). PTC/
WBSEDCL refuted the aforesaid claim.
14. In these circumstances, APNRL approached the CERC, New
Delhi on 25.10.2017 vide Petition No.305/MP/2015 seeking
directions to WBSEDCL and PTC to permit pass-through of
energy charges based on the actual fuel cost incurred by it.
Findings of the Central Electricity Regulatory Commission
15. Upon hearing the parties, CERC, inter alia, held that Article
2.5 of the PPA/PSA was applicable to cases where the captive
source of coal was operational. It further held that APNRL was
entitled to compensation for procuring coal through e-
Page 8 of 19
auction/imports to meet the shortfall in tapering linkage
granted to it pending operationalization of the captive coal
block. However, CERC did not accept APNRL’s contention that
the cancellation of its coal block pursuant to the judgment
rendered in Manohar Lal (supra) , and enactment of the Coal
Mines (Special Provision) Act, 2015 altering the manner of
allocation of coal blocks, constituted a Change in Law event
under Article 10 of the PPA/PSA. Accordingly, it directed
APNRL to approach CERC through a fresh petition outlining
details of the tapering linkage granted to it, reasons for delay
in development, operationalization of captive coal block and
the coal requirement met through e-auction/imported coal to
meet the shortfall in supply under tapering linkage.
Findings of the Appellate Tribunal for Electricity
16. Both APNRL and WBSEDCL approached APTEL vide Appeal
No.143/2020 and Appeal No.66/2022 respectively. APTEL
vide common impugned order dated 04.09.2025, while
upholding the direction of the CERC that APNRL was entitled
to the actual cost of coal sourced through e-auction/import to
meet shortfall in tapering linkage, reversed its finding vis-à-
Page 9 of 19
vis Change in Law event and held that cancellation of coal
block and the subsequent promulgation of the Coal Mines
(Special Provision) Act, 2015 constituted Change in Law
events within the meaning of Articles 10.1.1(b) and 10.1.1(f)
of the PPA/PSA and remanded the matter to CERC for
awarding appropriate compensation to APNRL as per Article
10.2 of PPA/PSA, along with carrying costs till actual payment
was made.
Arguments at the Bar
17. Mr. Kapil Sibal, Senior Counsel for Appellant has premised
his challenge to the impugned order primarily on the ground
that the PPA/PSA did not expressly stipulate the source of
coal i.e. Ganeshpur Captive Coal Block and that Article 2.5
indemnified WBSEDCL against any escalation of price from
the levelized tariff specified under Table A of Schedule A to the
PPA/PSA on account of procurement of coal from other
sources. It was thus contended that, in the absence of any
express stipulation regarding the captive coal block in the
PPA/PSA, neither its cancellation pursuant to this Court’s
judgment in Manohar Lal (supra) nor the promulgation of the
Page 10 of 19
Coal Mines (Special Provisions) Act, 2015 could constitute a
Change in Law event materially affecting APNRL’s obligations
under the Agreement.
18. On the contrary, Mr. C.A. Sundaram, Senior Counsel for
Respondent No.1 submitted that APTEL vide the impugned
order dated 04.09.2025 rightly granted compensation to
APNRL towards coal procured through e-auction/import to
meet the shortfall in tapering linkage granted to it pending
operationalization of the Ganeshpur Captive Coal Block. It
was further contended that compensation on account of
Change in Law event had also been correctly allowed with
effect from 25.08.2014, together with carrying costs till the
date of actual payment.
Analysis
19. The contention advanced by Mr. Sibal, namely that the PPA/
PSA did not expressly stipulate the source of coal i.e.
Ganeshpur Captive Coal Block, stands squarely rebutted by
the concurrent findings of both CERC and APTEL. Reading
Article 2.5 in conjunction with the Minutes of Meeting dated
03.01.2011 and the subsequent letter dated 30.04.2012,
Page 11 of 19
APTEL affirmed CERC’s finding that PPA/PSA was executed
in the backdrop of the minutes drawn on 03.01.2011 wherein
one of the salient features of the transaction was as follows:
“ 8. APRNL has a captive coal block at Ganeshpur
in Jharkhand and this coal block is a joint venture
with TISCO.”
20. APTEL also noted that immediately after the execution of the
PPA/PSA, WBSEDCL vide letter dated 30.04.2012, had
enquired about the status of work related to lifting of coal from
the coalmine and transportation of coal from the Ganeshpur
coal block allocated to APNRL. We consider it apposite to
extract herein the contents of the said letter:
“Dear Sir,
A PPA has been executed on 05.01.2011 by and
between WBSEDCL and PTC India Ltd. As per
undertaking of APNRL, it is understood that they
have already obtained allocation of Ganeshpur Coal
Block in the State of Jharkhand for captive mining of
coal block jointly with Tata Steel Limited, on equal
sharing, i.e. 50:50 basis.
In this context, I would request you to provide us the
present status of the work related to lifting of coal
from the coalmine and transportation of coal from
captive mine, allocated to APNRL, to the coal
handling plant, within 10.05.2012.”
21. When Article 2.5 of PPA/PSA is read in light of these
correspondences between the parties, there is no escape from
Page 12 of 19
the irresistible conclusion that the ‘captive coal block’ refers
to the Ganeshpur Coal Block at Jharkhand.
22. Mr. Sibal’s argument that a written contract between parties
cannot be qualified with reference to any prior or subsequent
statements/conduct is unfounded. The law in this regard is
crystal clear. Ordinarily, when a contract is reduced to
writing, its terms must be determined from the document
5
itself. However, this rule does not put an embargo on looking
into such facts which (i) establish a link between terms of the
6
contract and existing facts i.e. attending circumstances, or
(ii) impart meaning to a term which may otherwise be
7
meaningless or unworkable. These principles have been
eloquently summarized in Anglo American Metallurgical
8
Coal Pty. Limited v. MMTC Limited wherein this Court
observed:
“ 30. …. Section 92 of the Evidence Act refers to the
terms of a “contract, grant or other disposition of
property or any matter required by law to be reduced
to the form of a document”. In all these cases, under
Proviso (6) read with Illustration (f), any fact may be
proven which shows in what manner the language
5
S.91, The Indian Evidence Act, 1872 (S. 94, The Bharatiya Sakshya Adhiniyam, 2023).
6
See Proviso (6) and illustrations (f) & (g) to S.92, The Indian Evidence Act (S.95, The
Bharatiya Sakshya Adhiniyam, 2023).
7
S.95, The Indian Evidence Act, 1872 (S.98, The Bharatiya Sakshya Adhiniyam, 2023).
8
(2021) 3 SCC 308.
Page 13 of 19
of a document is related to existing facts. Illustration
(f) of Section 92 of the Evidence Act indicates that
facts, which may on the face of it, be ambiguous and
vague, can be made certain in the contextual setting
of the contract, grant or other disposition of property.
Section 94 of the Evidence Act then speaks of
language being used in a document being “plain in
itself”. It is only when such document “applies
accurately to existing facts ”, that evidence may not
be given to show that it was not meant to apply to
such facts. Likewise, the obverse situation is
contained in Section 95 of the Evidence Act, which
then states that when the language used in a
document is plain in itself, but it is “unmeaning in
reference to existing facts”, only then may evidence
be given to show that it was used in a peculiar
sense.”
23. In the present context, we note that Article 2.5 of the PPA/PSA
refers to a ‘captive source’ for coal supply for generation &
supply of power and indemnifies WBSEDCL against any
additional cost arising from procurement of coal from
alternate sources. Though the captive source is not expressly
identified in Article 2.5, its identity is clearly discernible from
the surrounding circumstances, in particular, the Minutes of
Meeting dated 03.01.2011 recording the salient features
underlying the PPA/PSA, which specifically note that APNRL
had a captive coal block at Ganeshpur. Further, the letter
dated 30.04.2012 issued by WBSEDCL enquiring about the
Page 14 of 19
status of work relating to lifting of coal from Ganeshpur
captive coal block and its transportation to the coal handling
plant, reinforces this position. WBSEDCL was a party to these
correspondences and has never disputed their contents. In
these circumstances, it does not lie in the mouth of WBSEDCL
to contend that the PPA/PSA did not prescribe Ganeshpur
Coal Block as the captive coal source for generation and
supply of electricity.
24. With regard to compensation payable on account of additional
coal cost arising due to a Change in Law event i.e. cancellation
of Ganeshpur captive coal block vide this Court’s decision in
Manohar Lal (supra) and the subsequent promulgation of the
Coal Mines (Special Provision) Act, 2015, we are in wholesome
agreement with APTEL that in Manohar Lal (supra), this
Court interpreted the provisions of Coal Mines Nationalization
Act, 1957 (‘CMN Act’) and Mines & Minerals Development and
Regulation Act, 1957 (‘MMDR Act’) in a manner different from
the interpretation adopted by the Government of India, and
consequently cancelled the allotment of coal blocks made by
the Screening Committee as well as through the Government
dispensation route. This change in interpretation of the CMN
Page 15 of 19
Act, 1957 and the MMDR Act, 1957 by this Court resulting in
cancellation of the coal blocks and subsequent promulgation
of the Coal Mines (Special Provision) Act, 2015 falls within
Articles 10.1.1(b) and 10.1.1(f) of the PPA/PSA. There is no
cavil that such Change in Law materially affected the right of
APNRL to procure coal from the cancelled coal block,
compelling it to source coal from other sources at a higher
price. WBSEDCL cannot claim immunity under Article 2.5 of
the PPA/PSA. We say so as Article 2.5 and Article 10 operate
in different fields. While Article 2.5 indemnifies WBSEDCL
9
against escalation in coal price beyond the levelized price
where coal is procured from sources other than the captive
source i.e. the Ganeshpur captive coal block, Article 10 is
triggered when a Change in Law event materially affects the
right of APNRL to operate the coal block and meet its
obligation under the PPA/PSA. Given this situation, APTEL
had rightly reversed the findings of CERC vis-à-vis Change in
Law event and awarded compensation with effect from
25.08.2014, along with carrying costs until the date of actual
payment.
9
Specified in Table A of Schedule A to the PPA/PSA.
Page 16 of 19
25. However, we are unable to agree with APTEL’s view that
APNRL would be entitled to compensation for procurement of
coal through e-auction/imports to meet the shortfall in
tapering linkage prior to the cancellation of the coal block on
25.08.2014. In arriving at this conclusion, APTEL appears to
have lost sight of the fact that the Minutes of Meeting dated
03.01.2011 expressly recorded, as one of the salient features,
that the Ganeshpur Captive Coal block had been allotted to
APNRL in joint venture with TISCO. It was also assured by
APNRL that the said coal block would be operational by the
time power supply to WBSEDCL commenced. In this factual
backdrop, it was incorrect for APTEL to hold that the
indemnity clause contained in Article 2.5 of the PPA/PSA
would be inapplicable as delay in operationalization of the coal
block was attributable to inaction by the lead miner TISCO
and/or owing to ‘go-no-go’ policy of the Ministry of
Environment and Forests. Such restrictive interpretation of
Article 2.5, in our considered opinion, is untenable, as it
would expose WBSEDCL to the vagaries of coal cost escalation
due to unforeseen events, save and except a Change in Law
event under Article 10 of the PPA/PSA. APTEL’s reliance on
Page 17 of 19
its earlier decision in GMR Kamalanga Energy Ltd. and Anr
10
v. CERC and Ors. is also misconceived. The said decision is
clearly distinguishable on facts, inasmuch as the PPA therein
did not contain any clause akin to Article 2.5 indemnifying the
purchaser against cost escalation arising due to procurement
of coal from sources other than the captive source.
Conclusion
26.
In light of such discussion, the appeals are partly allowed and
the impugned order dated 04.09.2025 passed by APTEL is set
aside to the limited extent that it grants compensation for
procurement of coal through e-auction/import to meet
shortfall in tapering linkage granted to it pending
operationalization of the Ganeshpur captive coal block. The
remaining portion of the order awarding compensation on
account of Change in Law events with effect from 25.08.2014
along with carrying costs till the date of actual payment, is
upheld. Though not placed on record during the course of
hearing, we have taken note of the fact that CERC has already
passed a consequential order dated 11.02.2026 for
10
2018 SCC OnLine Aptel 151.
Page 18 of 19
implementation of the impugned order. We direct CERC to
modify its order in terms of the aforesaid directions within
four weeks from the date of this order. No order as to costs.
27. Pending application(s), if any, shall also stand disposed of.
…..…..……...……………………….CJI.
(SURYA KANT)
……..…..……...……………………….J.
(B.V. NAGARATHNA)
……..…..……...……………………….J.
(JOYMALYA BAGCHI)
NEW DELHI,
FEBRUARY 27, 2026
Page 19 of 19