APTEL sets aside MERC order for reopening Adani’s coal-compensation dispute, calls conduct “contemptuous”

Adani Power Limited (“APML”) operates a 3,300 MW generating station at Tiroda, Maharashtra, and had entered into four PPAs with Maharashtra State Electricity Distribution Company Limited (“MSEDCL”) for a total contracted capacity of 3,085 MW.

APML sought compensation for Change in Law arising from altered domestic coal supply assurances under the New Coal Distribution Policy, 2007 and the SHAKTI Policy.

In Appeal No. 155 of 2019, the Tribunal, by judgment dated 28 September 2020, held that the SHAKTI Policy constituted a Change in Law, rejected the 25% ceiling on domestic coal shortfall, and directed that compensation be calculated using the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR, whichever was lower, and the actual GCV of coal as received at the plant site.

APML thereafter filed Miscellaneous Application No. 54 of 2020. Instead of merely implementing the Tribunal’s judgment, MERC conducted a fresh hearing and framed additional issues concerning the applicable SHR, GCV ceiling, computation of coal shortfall, advance intimation, normative generation, and the compensation methodology.

APML challenged MERC’s consequential order dated 10 December 2020 in the present appeal.

Whether MERC exceeded the scope of the Tribunal’s directions by reopening and rehearing issues that had already been decided in Appeal No. 155 of 2019, when it had been directed only to issue consequential orders.

Whether MERC could substitute the SHR specified in subsequently notified MYT Regulations for the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR, whichever was lower.

Whether MERC could impose a ceiling on the “as received GCV” of coal for the period from 1 April 2020 onwards, despite the Tribunal’s direction to use the actual GCV as received at the plant site.

Whether MERC could restrict Change in Law compensation to coal required for normative generation or normative PLF.

The Tribunal applied Order XLI Rules 23 and 23A of the Code of Civil Procedure, 1908, which govern appellate remand powers and distinguish between remand for fresh consideration and remand limited to consequential action.

It held that where a matter is remanded exclusively for consequential orders, the lower forum’s authority is “mechanical and restrictive” and is confined to orders that naturally and logically follow from the appellate decision; it cannot reopen facts, rehear arguments, or re-adjudicate issues already decided.

The Tribunal further applied the doctrines of judicial discipline, finality of appellate findings, and compliance with binding directions of a superior adjudicatory forum.

In the underlying judgment dated 28 September 2020, the governing Change in Law principles were that SHAKTI Policy constituted a Change in Law, compensation could not be limited to 25% of the coal shortfall, and compensation had to be based on the SHR under the MERC MYT Regulations, 2011 or actual SHR, whichever was lower, together with actual GCV as received at the plant site.

The Tribunal examined the nature and scope of its earlier remand. It found that the earlier judgment had conclusively determined the relevant substantive issues and had not remanded the matter for a fresh hearing or reconsideration.

The direction to issue “consequential orders” required MERC only to compute and implement the compensation flowing from those findings. MERC therefore lacked authority to frame new issues or reconsider the applicable SHR and GCV methodology.

Its imposition of a GCV ceiling contradicted the earlier direction to use actual GCV as received at the plant site.

The Tribunal also held that the issue of restricting compensation to normative generation had never been raised or remanded in the earlier appeal. MERC consequently ought not to have framed or decided that issue.

By restricting compensation to normative generation and by otherwise adopting methodologies contrary to the earlier judgment, MERC exceeded the limited remand and violated judicial discipline.

The Tribunal characterised this conduct as disobedience of its directions and observed that it was contemptuous in nature, although it refrained from initiating contempt proceedings.

The Tribunal set aside MERC’s consequential order dated 10 December 2020 in Miscellaneous Application No. 54 of 2020.

It held that MERC could not reopen or rehear the issues decided in the Tribunal’s judgment dated 28 September 2020, impose a ceiling on actual GCV, or restrict Change in Law compensation to normative generation.

MERC was directed to issue consequential orders in favour of APML strictly in accordance with the Tribunal’s earlier judgment, within six weeks from receipt of the judgment.

The appeal and pending applications were disposed of accordingly.