Adani Power Limited vs Maharashtra Electricity Regulatory Commission & Ors 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.53/2020 in Case nos.189/2013 and 140/2014.

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.189/2013 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 was disposed of by the Commission vide order dated 15.07.2014 thereby approving a framework for determination of compensatory fuel charge considering the decision dated 21.06.2013 of the Cabinet Committee on Economic Affairs (CCEA) and the advice dated 31.07.2013 issued by the Ministry of Power, Govt. of India to all the Electricity

Regulatory Commissions. In compliance of the said order dated 15.07.2014, the appellant filed another petition bearing case no.140/2014 praying therein, inter alia, for approving a mechanism for determination of compensatory tariff and to recognize the CCEA decision, NCDP amendment of 2013 and advice dated 31.07.2013 issued by Ministry of Power, Govt. of India as Change in Law events as per the provisions of the Power Purchase Agreements. Vide order dated 20.08.2014 passed in the said petition, the Commission formulated a mechanism for passthrough of compensatory fuel charges that had been allowed in case no.189/2013. The review petition filed by the appellant against the said order dated 20.08.2014 was dismissed by the Commission.

5. Two separate appeals bearing appeal nos.129/2016 and 130/2016 were filed by the appellant before this Tribunal against the orders dated 15.07.2014 and 20.08.2014 passed by the Commission in petition nos.189/2013 and 140/2014 respectively. The 2nd respondent MSEDCL also filed cross appeals against these two orders of the Commission vide appeal nos.187/2016 and 188/2016.

6. All these appeals were disposed of by this Tribunal vide judgment dated 04.05.2017 thereby remanding all the issues raised by the parties in these appeals to the Commission for fresh consideration in the light of

judgment dated 11.04.2017 passed by the Hon'ble Supreme Court in Civil Appeal Nos.5399-5400 of 2016 titled Energy Watchdog v. CERC and Ors.

7. The Commission passed a fresh order dated 07.03.2018 in case no.189/2013 and 140/2014 wherein it allowed the claims of the appellant on account of changes in the NCDP 2007 as Change in Law under Article 13 of the PPA dated 08.09.2008 and Article 10 of the remaining three PPAs executed between the parties but at the same time restricted the relief of Change in Law for 1180MW capacity to the extent of minimum supply obligations specified for the CIL subsidiaries in the last four years of the 12th Five Year Plan period i.e. FY 2013-14 to FY 2016-17 as per the NCDP 2013. The Commission also held that the alternate coal quantity for meeting the domestic coal shortfall shall be computed on the basis of Station Heat Rate (SHR) mentioned by the appellant in the bid documents and the middle value of Gross Calorific Value (GCV) range of assured coal grade for domestic coal as per the FSA/LoA/MoU.

8. The said order dated 07.03.2018 of the Commission was assailed by the appellant before this Tribunal by way of appeal no.182/2019. Following reliefs were sought by the appellant in the said appeal: - “(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, or actual, whichever is lower, and modify paragraphs 91 and 92 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 91 and 92 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) Pass such further orders or directions as this Tribunal may deem just and proper in the circumstances of the case.”

9. The appeal was disposed of by this Tribunal vide judgment dated 14.09.2020 thereby setting aside the Commission’s order dated 07.03.2018

and allowing the claims of the appellant. The relevant portion of the judgment as well as its operative part/final order is extracted hereinbelow: - SHR for Change in Law compensation - “7.14 From the aforesaid discussion, it emerges that this Tribunal has already held that the SHR submitted in the bid (when it is not a bid parameter as per the bidding guidelines) by a generating company is not to be used as the basis for computing the coal shortfall requirement and thereby for computation of change in law compensation to be awarded to the generating company. Such linking of change in law compensation to the SHR mentioned in the bid documents would not restitute the affected party to the same economic position as if the approved change in law event had not occurred. This issue is therefore decided in favour of the Appellant and the Respondent No. 2 is directed to allow change in law compensation on the basis of the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR achieved by the Appellant, whichever is lower. This would sufficiently protect the interests of the consumers against any plant inefficiency being passed on to the Discoms or the consumers.”

GCV for Change in Law compensation – “8.9 For the aforesaid reasons, this issue is decided in favour of the Appellant and it is directed that the compensation for the Change in Law approved by the

MERC shall be computed on the basis of actual GCV of coal received. Compensation for actual shortfall in coal 9.12 From the above decision, it is clear that the methodology for compensation in case of shortfall in domestic coal under the NCDP regime cannot be different from the methodology for compensation in case of shortfall under the SHAKTI Policy. This Tribunal has already held that the shortfall in domestic coal supply needs to be measured against 100% supply assurance contained under the NCDP 2007 and when measured against this assurance, restricting Change in law relief to the maximum of 35% to 25% for the respective four years of the 12th plan is not justified. This issue is, therefore, decided in favour of the Appellant and the Impugned Order is set aside to the extent it limits the Change in Law relief to the Appellant with reference to the maximum of

(1) actual quantum of coal offered for offtake by CIL, and

(2) the minimum assured quantum as per the NCDP 2013 for the respective year. We direct that the Respondent MSEDCL shall compute Change in Law compensation on the basis of actual shortfall in supply of domestic coal suffered by the Appellant from the start date approved by the MERC. ………….

ORDER

For the foregoing reasons, we are of the considered view that the issues raised in the instant Appeal No. 182 of 2019 have merits and hence, appeal is allowed.

The impugned order dated 07.03.2018 passed by Maharashtra Electricity Regulatory Commission in Case Nos. 189 of 2013 and 140 of 2014 are hereby set aside to the extent challenged in the Appeal and 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)

10. Manifestly, upon holding that impact of Change in Law shall be considered on the basis of SHR specified in the MERC MYT Regulations, 2011 or actual SHR achieved by the appellant, whichever is lower and directing that the compensation for Change in Law with regards to domestic coal supply to be computed on the basis of actual GCV of coal received as well as actual shortfall in supply of domestic coal suffered by the appellant, this Tribunal finally directed the Commission to issue consequential orders in this regard as expeditiously as possible.

11. In pursuance to these directions of this Tribunal, the appellant approached the Commission with an application bearing Miscellaneous Application No.53/2020 in the month of October, 2020 seeking consequential relief. The application has been disposed of by the Commission vide order dated 10.12.2020 which has been impugned in the instant appeal.

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

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

13. On issue no.(a), the Commission has ruled that SHR stipulated in MYT Regulations applicable for the 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.

14. On issue no.(b), the Commission has held that in MYT Regulations 2019 which has been made applicable from 1 April ,2020 onwards, the Commission has limited the difference between as billed GCV and as received GCV to 300 kCal/kg. Therefore, for period of 1 April, 2020 onwards, as received GCV with ceiling limit as allowed in MYT Regulations 2019 would need to be considered for computation of Change in Law compensation. In the opinion of the Commission this dispensation is also consistent with APTEL judgment which clearly recorded APML’s readiness to use parameter which is beneficial to consumer.

15. On issue no.(c), the Commission has ruled that the appellant shall be entitled for change in law compensation towards actual shortfall in domestic coal supply as assured under NCDP 2007.

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

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

18. Accordingly, the Commission has modified its order dated 07.03.2018 and has formulated a methodology for computation of Change in Law compensation allowed by it vide previous order dated 07.03.2018.

19. Following two 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 as specified in MERC MYT Regulations notified from time to time instead of SHR specified in the MERC MYT Regulations, 2011, which was specified by this Tribunal in the judgment dated 14.09.2020 in appeal no.182/2019;

(ii) The Commission has committed an error in directing a ceiling on “as received GCV” of coal for the period 01.04.2020 onwards when this Tribunal had directed application of “as received GCV” without any ceiling for

calculation of Change in Law compensation for the relevant period.

(iii) The Commission has also erred in restricting the Change in Law compensation to coal required for normative generation/PLF.

20. 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.

21. 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 14.09.2020 in appeal no.182/2019, whereby the case was remanded to the Commission with the directions to issue consequential orders.

22. 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.

23. 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.

24. 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.

25. In the instant case, we have already noted hereinabove that this Tribunal had, in the judgment dated 14.09.2020 given its findings upon

various issues raised by the appellant particularly on the following three issues: -

(i) Whether the Commission was correct in holding that the net SHR submitted by 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? and

(ii) Whether the Commission 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/FAS/MoU and in the GCV as received?

(iii) Whether the Commission was correct in restricting Change in Law compensation to coal required for normative generation/PLF?

26. The issue with regards to the SHR was answered by this Tribunal in the said judgment as under: - “This issue is therefore decided in favour of the Appellant and the Respondent No. 2 is directed to allow change in law compensation on the basis of the SHR specified in the MERC MYT Regulations, 2011 or the actual SHR

achieved by the Appellant, whichever is lower. This would sufficiently protect the interests of the consumers against any plant inefficiency being passed on to the Discoms or the consumers.”

27. The issue with regards to GCV was answered by this Tribunal in the said judgment as under: - “For the foregoing reasons, the issue is decided in favour of the appellant and it is directed that the compensation for Change in Law approved by the MERC shall be computed on the basis of actual GCV of coal received.”

28. The issue with regards to limiting of Change in Law compensation to normative generation was answered by this Tribunal in the said judgment as under: - “We direct that the Respondent MSEDCL shall compute Change in Law compensation on the basis of actual shortfall in supply of domestic coal suffered by the Appellant from the start date approved by the MERC.”

29. 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 instant Appeal No. 182 of 2019 have merits and hence, appeal is allowed.

The impugned order dated 07.03.2018 passed by Maharashtra Electricity Regulatory Commission in Case Nos. 189 of 2013 and 140 of 2014 are hereby set aside to the extent challenged in the Appeal and 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.

No order as to costs. (Emphasis supplied)

30. It is crystal clear that upon giving its findings on the three 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 14.09.2020.

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 14.09.2020 of this Tribunal.

31. 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 14.09.2020 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.

32. 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 14.09.2020 in appeal no.182/2019 within a period of six weeks from the date of receipt of this judgment positively.

33. 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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