JVVNL Appeal Dismissed As Supreme Court Affirms Adani Power’s Change‑In‑Law Claims

Summary:

The Supreme Court in the case of Jaipur Vidyut Vitran Nigam Ltd. & Ors. v. Adani Power Rajasthan Ltd. & Anr.[1] held that generators under Power Purchase Agreements (PPA) may claim compensation and Late Payment Surcharge (LPS)–based carrying costs for cost increases arising from regulatory measures. The bench of Justices M.M. Sundresh and Rajesh Bindal reviewed whether Coal India Limited’s Evacuation Facility Charges notification of 19 December 2017 qualified as a change in law under the PPA between Jaipur Vidyut Vitran Nigam Ltd. (JVVNL) and Adani Power Rajasthan Ltd. (APRL). The Court upheld the Appellate Tribunal for Electricity’s finding that the notification was a change in law and that APRL was entitled to tariff adjustment and carrying cost from the notification date.

Case Timeline:

On 28 January 2010, JVVNL and APRL signed a PPA for supply of 1 200 MW at a fixed tariff. On 19 December 2017, Coal India Limited issued a notification imposing Evacuation Facility Charges of ₹50 per tonne. On 20 December 2017, APRL informed JVVNL that the charge was a change in law. In 2018, APRL filed a petition before the Rajasthan Electricity Regulatory Commission. In January 2023, APTEL allowed the delay in filing and re filing of APRL’s appeal. On 18 April 2024, APTEL ruled the notification to be a change in law and awarded compensation and carrying cost at LPS rates from 19 December 2017, remanding the calculation back to RERC. On 9 September 2024, the Supreme Court confined its review to interpretation of Articles 10.2.1 and 10.5. On 23 May 2025, the Court dismissed JVVNL’s appeal.

Issue raised:

The issue was whether Coal India Limited’s Evacuation Facility Charges notification of 19 December 2017 constituted a change in law under the PPA and whether APRL’s right to compensation and LPS‑based carrying cost began on the notification date or only after regulatory or judicial determination. A related question was whether APRL had to raise a supplementary bill before claiming LPS.

Arguments:

JVVNL contended that the notification could not qualify under Article 10.5.1(i) because change in law must result from judicial interpretation under Article 10.5.1(ii), triggering entitlement only from the date of adjudication. It further argued that APRL’s failure to issue a supplementary bill under Article 8.8 precluded any LPS claim. JVVNL maintained that delay by APRL in invoking the change in law and in filing appeals barred any carrying cost. Finally, it asserted that granting compound interest at LPS rates without a billing event would rewrite contractual terms.

APRL argued that the notification imposed new costs and fell under Article 10.5.1(i), which covers statutory or regulatory changes effective from the notification date for cost escalations. It said Article 10.2.1’s restitution principle requires restoration of the generator’s economic position from the change in law date. It maintained that billing procedures follow recognition of the change in law, with APRL notifying JVVNL immediately and adjudication as a precondition for billing. It added that LPS compensates for the cost of delayed recovery at compound rates as part of the restitution mechanism. It cited earlier decisions, including GMR Warora Energy Ltd. v. CERC, to support entitlement from the notification date.

Judgment:

The Court upheld APTEL’s order. It held that Coal India Limited’s Evacuation Facility Charges notification of 19 December 2017 was a change in law under Article 10.5.1(i) of the PPA. APRL was entitled to tariff adjustment and LPS‑based carrying cost from the notification date. The Court rejected the argument that a supplementary bill was required before claiming LPS, noting that Articles 10.5.2 and 8.8 align billing with adjudication of change in law. The restitution principle in Article 10.2.1 requires restoration of the generator’s original economic position. The appeal was dismissed and the case remanded to RERC for calculation of amounts due.

Analysis:

The decision clarifies that PPA clauses distinguish changes arising from statutory or regulatory acts from those arising from interpretational rulings. When a regulatory body issues a notification that imposes costs, clause 10.5.1(i) applies and entitlement to compensation and carrying cost begins on the notification date. Clause 10.5.1(ii) applies only when a court or tribunal issues a ruling that changes the meaning of an existing law. This distinction prevents generators from awaiting final adjudication when a regulatory measure itself imposes new costs.

The restitution principle in Article 10.2.1 creates a legal fiction that restores the generator’s economic position as if no change had occurred. Compensation and LPS‑based carrying cost form a package under this principle. Compound interest at LPS levels adjusts for the time value of money when payment is postponed. This is consistent with previous decisions that compound interest is an element of restitution under change in law clauses.

The procedural obligations for invoicing under Article8 cannot thwart the substantive entitlement of Article10. The right to seek an adjustment is triggered by the recognition of a change in law event; the billing comes after the adjudication. This method does not allow procedural roadblocks to defeat contractual rights. By limiting its review under Section 125 of the Electricity Act, 2003, the Court focused on questions of law rather than re‑examining factual findings already accepted by APTEL. This maintains consistency in PPA interpretation and provides finality in regulatory disputes.

Conclusion:

One of the key decisions by the Supreme Court is that public authority notification which imposes new costs entitles generator to claim compensation and carrying charges from the date of the notification under the terms of the PPA. The ruling validates the restitution approach and also is important in addressing the concept of when billing procedures arise with the recognition of a change in law. This offers a necessary guideline in cost-recovery disputes related to the implementation of regulatory measures under PPAs.

[1] Civil Appeal No. 4336 of 2025.