Adani Power Limited vs Maharashtra Electricity Regulatory Commission & Anr on 19 August 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. In this appeal, the appellant M/s Adani Power (formerly known as Adani Power Maharashtra Limited) has assailed the order dated 10.12.2020 passed by 1st respondent Maharashtra Electricity Regulatory Commission (hereinafter referred to as “the Commission” or “MERC”) passed in Miscellaneous Application No.54/2020 in Case nos.290/2018.

2. The appellant is a generating company and owns as well as operates a generating station of capacity 3300MW (660X5) at Tiroda in the State of Maharashtra. It has entered into following four Power Purchase Agreements (PPAs) with the 2nd respondent Maharashtra State Electricity Distribution Company Limited (in short MSEDCL) which is a distribution licensee in the State of Maharashtra: -

(i) PPA dated 08.09.2008 for 1320MW;

(ii) PPA dated 31.03.2010 for 1200MW;

(iii) PPA dated 09.08.2010 for 125MW; and

(iv) PPA dated 16.02.2013 for 440MW.

3. The appellant had approached the Commission with the petition bearing no.290/2018 seeking compensation on account of Change in Law events occasioned by the changes in the coal supply assurance contained in the New Coal Distribution Policy, 2007 (“NCDP 2007”) and related matters.

4. The said petition bearing no.290/2019 was disposed of by the Commission vide order dated 07.02.2019 thereby approving shortfall in domestic coal allocation under SHAKTI Policy as a Change in Law event and directed that methodology for computation of compensation shall be the same as approved in its order dated 07.03.2018 in case nos.189/2013 and 140/2014 for coal shortfall on account of amendment of NCDP 2007.

5. Aggrieved by the order of the Commission dated 07.02.2019 passed in petition no.290/2018, the appellant filed appeal no.155/2019 before this Tribunal on the grounds of the operational parameters of SHR & GCV, quantum of shortfall and on the directions of the Commission for prior intimation of estimated energy charge. MSEDCL also challenged the said order vide appeal no.116/2019 on the grounds that SHAKTI Policy does not

constitute Change in Law and no Carrying Cost is admissible on any Change in Law relief de hors the PPAs.

6. Following reliefs were sought by the appellant in its appeal no.155/2019: - “(a) Hold and declare that the impact of Change in Law shall not be linked to the net SHR as submitted in the Bid and instead the impact of Change in Law would be considered on the basis of SHR as per MERC MYT Regulations, 2011, whichever is lower, and modify paragraphs 23 and 24 of the Impugned Order accordingly; (b) Hold and declare that the impact of Change in Law for domestic coal supply should not be computed considering the middle value of GCV range of assured coal grade and instead the impact of Change in Law would be considered on the basis of as received/actual GCV of coal, and modify paragraphs 23 and 24 of the Impugned Order accordingly;

(c) Hold and declare that the Appellant shall be entitled to Change in Law compensation for actual shortfall in supply of domestic coal by CIL and its subsidiaries in accordance with the revised Tariff Policy, 2016 vis-à-vis the quantity of coal assured under the NCDP 2007; and

(d) Hold and declare that the existing methodology of MOD stack of providing energy charge details should be made applicable for the Appellant's generating station irrespective of various fuel source used within the same generating station and modify paragraph 26 accordingly.

(e) Pass such further orders or directions as this Hon'ble Tribunal may deem just and proper in the circumstances of the case.”

7. Both these appeals i.e. appeal nos.155/2019 and 116/2019 were disposed of by this Tribunal vide common judgment dated 28.09.2020 thereby setting aside the Commission’s order dated 07.02.2019 and allowing the claims of the appellant in appeal no.155/2019. The relevant portion of the judgment as well as its operative part/final order is extracted hereinbelow: - “15.1 Issue No.1:-We hold that the introduction of SHAKTI POLICY amounts to change in law and all the ingredients of change in law are duly met under the respective PPAs. The impugned order is therefore affirmed on this issue.

15.2 Issue No.2:- We hold that findings in the impugned order relating to the issue of restricting the quantum of shortfall in domestic coal to a maximum of 25% are

against the basic principles of restitution under the change in law provisions of the PPAs.

15.3 Issue No.3:- In line with our judgment dated 14.09.2020 in Appeal No.182 of 2019, we hold that the change in law compensation shall be calculated based on the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR whichever is lower and actual GCV of coal as received as the plant site. ……….

16. In view of the above, the Appeal No. 155 of 2019 deserves to be allowed and Appeal No. 116 of 2019 is liable to be dismissed.

ORDER

For the foregoing reasons, we are of the considered view that the issues raised in the Appeal No. 155 of 2019 have merits and hence, appeal is allowed. The Appeal No.116 of 2019 is dismissed as devoid of merits.

The impugned order dated 07.02.2019 passed by Maharashtra Electricity Regulatory Commission in Case No. 290 of 2018 is hereby set aside to the extent decided in our findings, stated supra.

The State Commission is directed to issue the consequential orders as expeditiously as possible within a period of three months from the pronouncement of this judgment / order.”

(Emphasis supplied)

8. Manifestly, upon holding the introduction of SHAKTI Policy to be a Change in Law event and reversing the finding of the Commission related to issue of restricting the quantum of shortfall in domestic coal to the maximum of 25% and further holding that the Change in Law compensation shall be calculated based on the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR whichever is lower and actual GCV of coal as received on the plant site, this Tribunal finally directed the Commission to issue consequential orders in this regard as expeditiously as possible.

9. Thereafter, the appellant approached the Commission by way of Miscellaneous Application bearing no.54/2020 seeking consequential reliefs in terms of the above noted judgment of this Tribunal. The application has been disposed of by the Commission vide order dated 10.12.2020 which has been impugned in the instant appeal.

10. Perusal of the impugned order of the Commission would reveal that the Commission has conducted a fresh full-fledged hearing on the following issues framed by it for its consideration: - “a. Whether SHR as specified in MYT Regulations 2011 is to be used or SHR specified in MYT Regulations notified from time to time be used for relevant period?

b. Whether as received GCV is to be used as such or ceiling on degradation in GCV needs to be provided?

c. Whether coal shortfall is to be computed with reference to actual receipt of the coal or coal offered by Coal companies which was not fully lifted by petitioner?

d. Whether advance intimation of cost of fuel is to be given to Discoms?

e. Whether compensation on account of coal supply is to be limited to normative generation?

f. What is modified methodology for computing Change in Law compensation?”

11. On issue no.(a), the Commission has ruled SHR stipulated in MYT Regulations applicable for that relevant period shall be used as reference

SHR. However, FY 2016-17 shall be exception for this rule and as directed in Order dated 7 March 2018, SHR as stipulated in MYT Regulations 2011 (and not MYT Regulations 2015) shall be used as reference for FY 2016-17. Actual SHR or reference SHR as stipulated in applicable MYT Regulations, whichever is lower shall be used for computation of Change in Law compensation.

12. On issue no.(b), the Commission ruled that its ruling given in MA No.53/2020 is squarely applicable in this case and held that (a) Actual SHR or reference SHR as stipulated in applicable MYT Regulations, whichever is lower shall be used for computation of Change in Law compensation. (b) For the period governed by MYT Regulations, 2015, as received GCV shall be considered for computing Change in Law compensation on account of coal shortfall. And for period of 1 April, 2020 onwards, as received GCV with ceiling limit as allowed in MYT Regulations 2019 needs to be considered for computation of Change in Law compensation. (c) Formula agreed by APML and MSEDCL, and approved by the Commission in MA No 53 of 2020 for arriving at as received GCV of coal for circumstances when no actual coal has been received under MoU shall be used in present matter also. (d) Also, APML shall pass on credit notes, incentive or compensation received from coal companies to MSEDCL.

13. On issue no.(c), the Commission has ruled that APML shall be entitled for Change in Law compensation towards actual shortfall in domestic coal supply as assured under SHAKTI Policy.

14. On issue no.(d), the Commission has ruled that although as directed by the APTEL, APML is not required to give advance intimation of estimated energy charge due to alternate coal supply, APML needs to comply with provisions of State Grid Code Regulations 2020 notified on 2 September, 2020 relating to seeking approval of Change in Law impact at the earliest (not later than one month) and include such impact in MoD stack.

15. On issue no.(e), the Commission has ruled that any generation above the normative PLF on annual basis would not be eligible for any compensation on account of coal shortfall.

16. On issue no.(f), the Commission has given the tables containing the formulae for computing Change in Law compensation.

17. Accordingly, the Commission has modified its order dated 07.02.2019 and has formulated a methodology for computation of Change in Law compensation allowed by it vide previous order dated 07.02.2019.

18. Following three grounds have been urged before us on behalf of the appellant in assailing the said impugned order dated 10.12.2020 of the Commission: -

(i) The Commission has committed an error in directing application of SHR specified in MERC MYT Regulations notified from time to time instead of SHR specified in the MERC MYT Regulations, 2011 or actual SHR achieved by the appellant, as held by this Tribunal in judgment dated 28.09.2020;

(ii) The Commission has committed an error in directing a ceiling on “as received GCV” of coal for the period 01.04.2020 onwards despite this Tribunal having directed application of “as received GCV” at the plant site without any ceiling for calculation of Change in Law compensation for the relevant period; and

(iii) The Commission has also erred in restricting the Change in Law compensation to coal required for normative generation/PLF relying on its own order dated 28.11.2020 in case no.132/2020 which was passed subsequent to the judgment dated 28.09.2020 of this Tribunal as the same is

contrary to the said judgment of this Tribunal in which complete restitution was allowed to the appellant without any limitation or ceiling on the quantum of coal shortfall.

19. We have heard Mr. Amit Kapur, learned counsel appearing for the appellant, Mr. Ramji Srinivasan, learned senior counsel appearing for the 1st respondent Commission and Mr. B.P. Patil, learned senior counsel appearing for the 2nd respondent MSEDCL.

20. In the light of rival submissions made by the learned counsels/senior counsels on behalf of the parties, the issue which arises for our consideration in this appeal is as to whether the Commission has traversed beyond the directions issued by this Tribunal in the judgment dated 28.09.2020 in appeal no.155/2019, whereby the case was remanded to the Commission with the directions to issue consequential orders.

21. Rules 23 and 23A of the Code of Civil Procedure, 1908, govern the powers of an appellate court to remand a case back to the court/forum from whose decree/order the appeal was preferred. Rule 23 provides that where the trial court has decided a suit and passed a decree only on a “preliminary issue” without recording any findings on the other issues and subsequently on appeal, the appellate court reverses the decree, the appellate court may

remand the case back to the trial court so as to render decision on the other issues as well which were not decided previously. Rule 23A was inserted in Order 41 through amending Act of the year 1976. This rule enables the appellate court to remand a case even when the trial court or the lower court has decided all the issues on merits other than on the basis of a preliminary point only. Thus, Rule 23A has widened the scope of the powers of appellate court in remanding a case. This Provision empowers the appellate court to remand a case back to the trial court for fresh consideration or reconsideration wherever considered necessary. The phrase used therein is “considered necessary”. While there can be no fixed criteria as to when it would be considered necessary to remand a case back to the trial court, it has been left to the discretion of the appellate court.

22. The remand orders passed by appellate court can be of various types:- (a) Where the original decree/order of the lower court is completely set aside and the case is remanded back for fresh consideration, the lower court has the power to reopen the entire case, rehear the arguments and pass a completely fresh judgment.

(b) Where the appellate court keeps the appeal pending before it and remands only a particular issue to the lower court for fresh hearing, the lower court has only the limited power to try only that specific

issue and return its findings back to the appellate court without passing a fresh judgment.

(c) Where the appellate court remands the matter exclusively for passing consequential order, the power of the lower court becomes more specific, mechanical and restrictive. In that case, the lower court cannot rehear the arguments or re-examine the facts or alter the substantive findings already given by the appellate court. The powers of the lower court would be strictly limited to passing orders that naturally and logically flow from the decision given by the appellate court.

23. We may note that when an appellate court remands a case back to lower court, the powers of lower court are strictly bound and limited by the specific directions, scope and purpose mentioned in the remand order. The lower court cannot go beyond the specific instructions/directions given by the appellate court and cannot reopen the entire case unless expressly permitted by the appellate court. Lower court cannot re-adjudicate the issues that the appellate court has already answered.

24. In the instant case, we have already noted hereinabove that this Tribunal had, in the judgment dated 28.09.2020 given its findings upon

various issues raised by the appellants in the batch of appeals on the following issues: - Issue No. 1:- Whether introduction of SHAKTI Policy does not amount to Change in Law under the PPAs entered into between APML and MSEDCL and whether APML has not provided notice of such Change in Law to the Respondent MSEDCL.

Issue No. 2:- Whether the MERC is correct in holding that for the purpose of Change in Law compensation, shortfall in domestic coal shall be limited to a maximum of 25% of ACQ after the introduction of SHAKTI Policy?

Issue No. 3:- (a) Whether the MERC was correct in holding that the net SHR submitted by the Appellant in its bid or SHR and Auxiliary Consumption norms specified for new generating stations under the MYT Regulations, 2011, whichever is superior shall form the basis for computing Change in Law compensation under the PPAS?

(b) Whether the MERC was correct in holding that the reference GCV of domestic coal supplied by CIL shall be the middle value

of GCV range of assured coal grade in LoA/FSA/MoU and not the GCV as received?

Issue No.4:- Whether the MERC was justified in directing APML to provide advance intimation of impact on energy charge by using alternate coal for the purpose of Merit Order purchase?

Issue No.5:- Whether the Respondent MSEDCL is justified in contesting APML's entitlement to Carrying Cost.

25. The above issues were summarized and answered by this Tribunal in the said judgment as under: - “15.1 Issue No.1:-We hold that the introduction of SHAKTI POLICY amounts to change in law and all the ingredients of change in law are duly met under the respective PPAs. The impugned order is therefore affirmed on this issue.

15.2 Issue No.2:- We hold that findings in the impugned order relating to the issue of restricting the quantum of shortfall in domestic coal to a maximum of 25% are

against the basic principles of restitution under the change in law provisions of the PPAs.

15.3 Issue No.3:- In line with our judgment dated 14.09.2020 in Appeal No.182 of 2019, we hold that the change in law compensation shall be calculated based on the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR whichever is lower and actual GCV of coal as received as the plant site.

15.4 Issue No.4:- We find that the directions issued by the State Commission regarding advance intimation requirement is not consistent with normal Rules of MOD preparation and also does not provide a level playing field for IPPs.

15.5 Issue No.5:- We find that allowance of carrying cost is a settled position of law and the State Commission has already allowed the same to the Appellant, APML.”

26. The final order of this Tribunal in the said judgment is very material and is reproduced hereinbelow: -

“ORDER For the foregoing reasons, we are of the considered view that the issues raised in the Appeal No. 155 of 2019 have merits and hence, appeal is allowed. The Appeal No.116 of 2019 is dismissed as devoid of merits.

The impugned order dated 07.02.2019 passed by Maharashtra Electricity Regulatory Commission in Case No. 290 of 2018 is hereby set aside to the extent decided in our findings, stated supra.

The State Commission is directed to issue the consequential orders as expeditiously as possible within a period of three months from the pronouncement of this judgment / order.

In view of the disposal of the Appeal, the relief sought in the IA No.505 of 2019 in Appeal No. 116 of 2019 does not survive for consideration and accordingly,stands disposed of.

No order as to costs.” (Emphasis supplied)

27. We may note that issue “whether compensation on account of coal supply is to be limited to normative generation” as framed by the Commission in the impugned order upon which findings have been returned against the

appellant, was never raised before this Tribunal during the hearing of the appeal no.155/2019 which was allowed vide judgment dated 28.09.2020. Therefore, the Commission ought not to have either framed such issue for its consideration or proceeded to give its findings on the same for the simple reason that no such issue was remanded to the Commission for consideration/fresh decision by this Tribunal vide judgment dated 28.09.2020.

28. Further, it is crystal clear that upon giving its findings on the issues raised by the appellant in the appeal, this Tribunal directed the Commission to issue consequential orders in the light of findings returned on these issues in the said judgment. Therefore, it was not a case where this Tribunal had remanded the case back to the Commission for fresh hearing/fresh consideration and for passing a fresh order. The remand was very specific and limited i.e. just to pass consequential orders in terms of the decision rendered by this Tribunal in the said judgment. What the Commission was required to do was only to make computations with regards to the benefits to which the appellant was entitled on account of the Change in Law events as decided and allowed by this Tribunal in the said judgment dated 28.09.2020. On the contrary, what the Commission has done is that it has reopened the case altogether and has conducted the hearing afresh on all the issues,

which had already been decided by this Tribunal and has passed a fresh order which runs contrary to the said judgment dated 28.09.2020 of this Tribunal.

29. It is inexplicable to us as to how the Commission ventured beyond the remit of this Tribunal in conducting a fresh hearing of the case and returning findings contrary to what has been decided by this Tribunal. The Commission was only required to pass consequential orders in terms of the findings returned on the issues by this Tribunal in the said judgment and ought not to have conducted a fresh hearing thereby violating the judicial discipline. The conduct of the Commission in doing so is not only deplorable and reprehensible but also contemptuous in nature. The Commission has totally disobeyed and disregarded the directions issued by this Tribunal in the judgment dated 28.09.2020 not only by reopening the entire case and conducting a fresh hearing but also by contradicting the decision of this Tribunal and returning findings which are absolutely contrary to those rendered by this Tribunal. In our considered opinion, the Commission has committed contempt of this Tribunal. However, we refrain from initiating any contempt proceedings against the Commission in the hope that the Commission would adhere to the judicial discipline and would comply with the judgments/orders/directions of this Tribunal in letter and spirit in future.

30. In view of above discussion, the impugned order of the Commission cannot be sustained. The same is hereby set aside. The Commission is again directed to issue consequential orders in favour of the appellant in the light of the judgment of this Tribunal dated 28.09.2020 in appeal no.155/2019 within a period of six weeks from the date of receipt of this judgment positively.

31. The appeal as well as pending applications, if any, stand disposed of accordingly.

Pronounced in the open court on this the 19th day of August, 2026.

(Virender Bhat) Judicial Member

(Seema Gupta) Officiating Chairperson

REPORTABLE / NON-REPORTABLE

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