M/s Nabha Power Limited vs Punjab State Electricity Regulatory Commission & Anr on 24 June 2025

JUDGEMENT

PER HON’BLE MR. SANDESH KUMAR SHARMA, TECHNICAL MEMBER

1. The Captioned Appeals have been filed as cross appeals, i.e., Appeal No. 22 of 2020 by Nabha Power Ltd. (in short “NPL”) and Appeal No. 68 of 2021 by Punjab State Power Corporation Ltd. (in short “PSPCL”) assailing the Impugned Order dated 04.12.2019 in Petition No. 28 of 2018 passed by the Punjab State Electricity Regulatory Commission (in short “PSERC” or “Commission”).

2. NPL has challenged the Impugned Order to the limited extent that the PSERC has denied grant of post-facto approval qua a quantum of 1.18005 LMT of alternate coal (out of the total 3.55 LMT) and erroneously enlarged the period in dispute from October 2017-March 2018 to April 2017-March 2018, whereas, PSPCL has challenged the same Impugned Order to the extent that the PSERC has granted post-facto approval and allowed pass-through of cost of procurement of 2.36995 Lakh MT of imported coal.

Description of Parties

3. Nabha Power Ltd. (NPL), the Appellant in Appeal No. 22 of 2020 and Respondent No. 2 in Appeal No. 68 of 2021, is a generating company having set

up a 2 x 700 MW Rajpura Thermal Power Project situated in Nalash village near Rajpura town in Patiala district in the State of Punjab.

4. Punjab State Power Corporation Ltd. (PSPCL), Respondent No. 2 in the first captioned Appeal No. 22 of 2020 and the Appellant in Appeal No. 68 of 2021, is the Distribution Licensee, inter alia, signed a PPA with NPL for procuring the entire power from the Generating Station of NPL.

5. PSERC, Respondent No.1, is the Punjab State Electricity Regulatory Commission, which is the Appropriate Commission under the Electricity Act 2003 to determine the tariff of the Appellant.

Factual Matrix of the Case (Appeal No. 22 of 2020 & Appeal No. 68 of 2021)

6. The factual matrix of the two appeals is the same; the Appellants in the two caption appeals are challenging the same Impugned Order, but for different reasons.

7. The Appellant M/s. Nabha Power Limited, owns and operates 2 x 700 MW Rajpura Thermal Power Project (in short “Project”), situated in Nalash village near Rajpura town in Patiala district in the State of Punjab in terms of the Power Purchase Agreement (in short “PPA”) dated 18.01.2010 entered into with Punjab State Power Corporation Limited. Unit 1 and Unit 2 of the Project achieved commercial operation on 01.02.2014 and 10.07.2014, respectively.

8. The present Project is a Case 2 Scenario 4 project under the Competitive Bidding Guidelines (in short “CBG”) issued by the Ministry of Power, Government of India. Meaning thereby, the procurer, i.e., PSPCL in the instant case, is responsible for arranging land, fuel, water, environmental clearance, forest clearance, and power evacuation, which is also recorded in Clause 1.7 of the RFQ, providing that fuel arrangement was tied up by PSPCL.

9. In terms of the above, PSPCL arranged coal for operation of the Project by way of fuel linkage from a Coal India Limited (in short “CIL”) subsidiary, i.e., South Eastern Coalfields Limited (in short “SECL”), Chhattisgarh through the Letter of Assurance (in short “LoA”) and the Fuel Supply Agreement (in short “FSA”) under the aegis of the New Coal Distribution Policy, 2007 (in short “NCDP”) which mandated that 100% of the normative coal requirement of a Thermal Power Project (in short “TPP”) will be provided.

10. However, the present Project has been and is still facing shortfall in the supply of coal primarily on account of inter alia the shortfall in the linkage provided by PSPCL by way of a LoA for 5.55 MTPA, inadequate supplies under the linkage, restricted allocation by SECL, and also due to the scarcity of railway rakes to transport the coal.

11. In this regard, the Appellant and L&T PDL, on 30.10.2012, filed Petition No. 56 of 2012, before the Respondent Commission inter alia seeking permission to arrange coal from alternate sources to meet the deficit in supply of coal for the Project. However, the Respondent Commission disposed of the aforesaid petition vide its order dated 31.12.2012, with the direction to PSPCL, the Appellant, and

the State Government to take up the matter with the quarters concerned for allocation and supply of adequate quantity/quality/grade of coal for the Project.

12. Accordingly, the Appellant and L&T PDL filed Appeal No. 68 of 2013 before this Tribunal. This Tribunal vide its order dated 21.08.2013 in IA No. 227 of 2013 in Appeal No. 68 of 2013, allowed the Appellant to procure imported coal or coal from alternative domestic sources to meet the expected shortfall in availability of coal for the Project with the following directions:

“12. (A) The Appellants may undertake a transparent competitive bidding process for procurement of imported coal or coal from alternative domestic sources for their projects to meet the expected shortfall in supply from linked sources in order to operate the power plant as per the terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of the first unit of the project on coal subject to the following conditions: ………

(iv) The Appellants will give preference to the coal supplied by CIL/subsidiaries of CIL over coal to be directly arranged by them from alternate sources and will not put any restrictions on supply of coal from the linked sources and accept the entire quantity of coal offered for supply from the linked sources. ……...”

13. Accordingly, the Appellant filed Petition No. 57 of 2013 before the Respondent Commission seeking approval of the terms and conditions for the

actual procurement of coal from alternative sources including imported coal and pass through of the landed cost of such coal as part of tariff under the PPA to PSPCL, which was allowed by the Respondent Commission vide its order dated 19.02.2014, subject to the following terms and conditions:

“35. ….

(i) NPL shall requisition the coal regularly from SECL ………….

(ii) NPL will give preference to the coal supplied by SECL over coal to be directly arranged by it from alternative sources and will not put any restrictions on supply of coal from SECL and accept the entire quantity of coal offered for supply from SECL.

(iii) NPL will not use the coal supply from the alternative sources unless warranted by the exigencies of short supply of coal by SECL in terms of the FSA, that too on ‘Minimal Usage’ basis.

(iv) ……………………..

(v) The coal consumption/stock position will be monitored fortnightly by Chief Engineer/Fuel, PSPCL Patiala from the information available on NPL website for review by PSPCL management. …………. ……………………………..

(vi) As a measure for smooth operation of the plant and to avoid unnecessary litigation, the Commission appoints a Committee comprising of Secretary, Power/Govt. of Punjab, CMD/PSPCL and Chief Executive/NPL as ‘Standing Committee on NPL Project’ to resolve day to day issues. The said Standing Committee shall also be the final authority to

determine the additional cost of coal from alternative sources / imported coal procured by NPL to meet the shortages in coal supplied by CIL or its subsidiaries…”

14. Accordingly, the ‘Standing Committee on NPL Project’ was created and authorized to resolve the day-to-day issues relating to the Project to avoid unnecessary litigation. Thereafter, as Appeal No. 68 of 2013 was still pending adjudication before this Tribunal, during the hearings in Appeal No. 63 of 2014, both the parties requested this Tribunal to convert the aforesaid interim order dated 21.08.2013, read with the Respondent Commission’s order dated 19.02.2014 into the Final Judgment in the said Appeal. Accordingly, this Tribunal vide its order dated 16.03.2016 in Appeal No. 63 of 2014 (in short “Final Judgment”), based on the consent of both the parties, disposed of the said Appeal in terms of its interim order dated 21.08.2013 along with the relevant portion of the Respondent Commission’s order dated 19.02.2014.

15. Thereafter, upon several requests of the Appellant, the Standing Committee held a meeting on 26.05.2017, wherein the Appellant demonstrated the requirement of at least 5.05 Lakh MT of imported coal. However, the Standing Committee allowed procurement of only 1.5 Lakh MT of coal from alternate sources to be utilized in the summer/paddy season only, i.e., during June – September 2017. Further, the Standing Committee undertook to review any requirement of coal beyond 1.5 Lakh MT after 15 days.

16. Due to an acute shortage of coal, the Appellant made repeated requests to convene a meeting of the Standing Committee for approval to procure alternate/imported coal. However, due to the lackadaisical approach of the

Respondent No. 2 in scheduling a meeting of the Standing Committee, the Appellant was constrained to shut down one Unit of the Project for a total period of 54 days (i.e., from 15.09.2017 to 05.10.2017 and then from 11.10.2017 to 13.11.2017). Thereafter, to operate the Project in terms of the PPA, the Appellant was constrained to float a tender and take the proactive step to procure 2.4 Lakh MT of imported coal, as a matter of last resort. Thereafter, the Appellant was once again constrained to procure 0.60 Lakh MT and 0.55 Lakh MT of imported coal from alternate sources in February and March 2018, respectively. The total quantum of such imported coal, i.e., 3.55 Lakh MT, is well within the requirement of 5.05 Lakh MT of imported coal projected by the Appellant and acknowledged by the Standing Committee in its meeting dated 26.05.2017.

17. Whilst procuring the aforesaid quantum of alternate coal, the Appellant complied with all the terms and conditions set out in the Final Judgment and duly provided advance information to PSPCL on all the occasions when imported coal was being procured from alternate sources. However, PSPCL did not respond to any of the Appellant’s letters, but also continued to schedule power from the Project, being fully aware of its implications.

18. Thereafter, the Appellant requested the Standing Committee to grant post facto approval for the procurement of 3.55 Lakh MT of imported coal during October 2017-March 2018; however, the Additional Chief Secretary/Power, GoP, and CMD, PSPCL, directed the Appellant to approach the Respondent Commission for the same.

19. Accordingly, the Appellant on 02.08.2018 filed Petition No. 28 of 2018, before the Respondent Commission inter alia seeking grant of post facto approval for the quantum of 3.55 Lakh MT of imported coal procured by the Appellant and allow a complete pass through of the cost of such imported coal in terms of the Final Judgment, along with interest/carrying cost at the rate of 12% per annum.

20. The Appellant also filed an additional affidavit dated 18.03.2019, submitting the details sought by the Respondent Commission vide its order dated 21.02.2019 for the hearing held on 13.02.2019.

21. However, the Respondent Commission vide the Impugned Order dated 04.12.2019, whilst disposing of the Petition, allowed pass through of only 2.36995 Lakh MT of alternate coal based on flawed assumptive parameters calculated by the Respondent Commission as against the 3.55 Lakh MT sought by the Appellant as per actuals.

22. Accordingly, the Appellant is filing the instant appeal, being aggrieved by the Impugned Order passed by the Respondent Commission, to the extent that the Respondent Commission has:

(i) reduced the quantum of alternate coal from 3.55 Lakh MT to 2.36995 Lakh MT, by disregarding the actual quantities provided by the Appellant (which were as per the Respondent Commission’s order dated 13.02.2019) and proceeding based on assumptive quantities, which are in any case flawed and erroneous; and

(ii) erroneously enlarged the period in dispute from October 2017- March 2018 to April 2017-March 2018, consequent to which the Respondent Commission has wrongly adjudicated on a presumed dispute not raised by the parties at all.

Written Submissions of Appellant

23. NPL had filed the said Petition against PSPCL before the PSERC on 02.08.2018, inter alia, seeking post facto approval for 3.55 Lakh MT of imported coal procured by NPL and for the complete pass through of the actual cost incurred by it in terms of Energy Charge formula of the Power Purchase Agreement dated 18.01.2010 due to absence of the meeting of the Standing Committee on NPL Project during June 2018 to November 2018 and scheduling by PSPCL of power generated by NPL using such imported coal.

24. However, the PSERC vide the Impugned Order partly rejected NPL’s claim and allowed post facto approval for procurement of only 2.36995 Lakh MT of alternate/imported coal for which monthly energy charges are payable to the Applicant along with a late payment surcharge by PSPCL.

25. The Appellant placed a list of dates for various events for our reference, as under: LIST OF DATES S. N. Date Particulars A. Background

1.

Punjab State Electricity Board (“PSEB”), i.e., the predecessor of PSPCL, incorporated Nabha Power Limited as a Special Purpose Vehicle for development of the Rajpura Thermal Power Plant.

2. 11.12.2008

PSEB, being the procurer in the present case, arranged coal for operation of the Project by way of fuel linkage from a Coal India Limited (“CIL”) subsidiary, i.e., South Eastern Coalfields Limited (“SECL”), Chhattisgarh through the Letter of Assurance (“LoA”) and the Fuel Supply Agreement (“FSA”).

3. 10.06.2009 PSEB initiated a competitive bidding process under Section 63 of the Electricity Act in accordance with the "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, 2005" issued by the Ministry of Power, Government of India (“Competitive Bidding Guidelines”) through issuance of a Request for Qualification and Request for Proposal for selecting a successful bidder to build, own, operate, and maintain the Rajpura Thermal Power Project (“Project”) under Case 2 Scenario 4 model. Note: The RfQ and RfP were issued for the capacity of 1200MW +/- 10%. Note 2: As the Project was envisaged to be developed under Case 2 Scenario 4 of the

Competitive Bidding Guidelines, the obligation to obtain adequate fuel linkage vest with PSPCL.

4. 19.11.2009 M/s L&T Power Development Limited (“L&T PDL”) was selected as the Successful Bidder to construct the Project and supply electricity in bulk therefrom to PSEB vide a letter of intent. Note: L&TPDL had submitted its bid for 1320MW capacity.

5. 18.01.2010 NPL, PSEB, and L&T PDL entered into a Share Purchase Agreement, whereby the entire shareholding and management control of NPL was transferred from PSEB to L&T PDL.

6. 18.01.2010

NPL and PSEB entered into a Power Purchase Agreement (“PPA”) for setting out the terms and conditions for the construction, operation, and maintenance of the Project, as well as the sale and supply of the electricity generated therefrom to PSEB for a period of 25 years from the date of commercial operation. The following provisions of the PPA are relevant:

(i) Article 1: Definition of Fuel Note: PPA defined fuel as domestic coal.

(ii) Article 1: Definition of Normative Availability Note: PPA defined normative availability as 85%.

(iii) Article 3.1.1A: Change in Unit Configuration

Note: NPL was entitled to change the unit configuration prior to issuance of Notice to Proceed, subject to the units continuing to meet all functional specifications.

(iv) Article 8: Capacity, Availability, & Dispatch Note: NPL was mandated to comply with CERC (Terms and Conditions of Tariff) Regulations, 2004 and Grid Code regarding intimation of availability. Note 2: As per definition of Availability and Declared Capacity under Regulation 14 of the CERC (Terms and Conditions of Tariff) Regulations, 2004, NPL can declare availability only after taking into consideration the availability of fuel.

(v) Article 11: Billing and Payment Note: Under Article 11, NPL is required to raise monthly bills, which PSPCL is mandated to pay unless PSPCL objects to the same within 30 days. In case of failure to pay by the due date, PSPCL is required to pay late payment surcharge.

(vi) Schedule 7: Tariff Note: Schedule 7 specified two components of monthly tariff, capacity charges and energy charges. While capacity charges were quoted by NPL, energy charges are a complete pass- through in terms of the formula prescribed.

7.

NPL exercised its right under Article 3.1.1A of the PPA and enhanced the Project capacity from 1320MW to 1400MW by changing the Unit configuration to 2x700MW. Note: Accordingly, the Contracted Capacity under the PPA became 1400 MW.

8. 13.04.2010 PSEB approved the change in unit configuration and enhancement of project capacity.

9. 16.04.2010 Upon the unbundling of PSEB vide Notification No. 1/9/08-EB(PR) 196, and in accordance with the Punjab Power Sector Reforms Transfer Scheme, 2010 framed thereunder, PSPCL was constituted as a separate entity succeeding to the generation and distribution businesses of erstwhile PSEB.

10. 10.06.2010 PSEB informed PSERC regarding change in unit configuration and enhancement of project capacity.

A. Proceedings for Shortfall of Coal

11. 30.10.2012 Keeping in view the imminent shortage of coal that the Project would face (on account of inadequate linkage for 5.55 MTPA, short supplies under the inadequate linkage, restricted allocation by SECL, and scarcity of railway rakes), NPL and L&T PDL filed Petition No. 56 of 2012 before PSERC inter

alia seeking permission to arrange coal from alternate sources to meet the deficit in supply of coal (i.e., the required quantum of coal to operate the Project in terms of the PPA less/minus actually supplied domestic coal under the LoA/FSA) for the Project.

12. 31.12.2012

PSERC vide its order disposed of Petition No. 56 of 2012 with the direction that PSPCL and the State Government have to, besides NPL, take up the matter with the quarters concerned for allocation and supply of adequate quantity/quality/grade of coal for the Project to run successfully as per the PPA. Note: PSPCL contended that the extent of coal linkage was made known to all prospective bidders and it was for the bidders to arrange their affairs accordingly. PSPCL also contended that NPL cannot take advantage of its own wrong or otherwise seek to change the bidding conditions. Note 2: The fact that PPA defines fuel as domestic fuel was also raised in these proceedings. Note 2: The order categorically records enhancement of the project capacity to 1400MW. However, the order also records that it would be unfair to presume that PSPCL would provide allocation for 1400MW.

13. 18.02.2013 NPL and L&TPDL filed an appeal, being Appeal No. 68 of 2013, before this Hon’ble Tribunal against the Respondent Commission’s order dated 31.12.2012 in Petition No. 56 of 2012.

14. 08.07.2013 NPL also filed IA No. 227 of 2013, in Appeal No. 68 of 2013 inter alia seeking permission and directions of this Hon’ble Tribunal to carry on/continue with the tender process for procurement of imported coal from alternate sources to meet the exigencies of shortfall in supply of required quantum of coal for the Project.

15. 21.08.2013

This Hon’ble Tribunal appreciating the genuine concern of NPL vide its order in IA No. 227 of 2013, allowed NPL to take advance action in order to meet the expected shortfall in availability of coal for the Project, so that the Project remains available to operate in terms of the PPA for a period of 12 months from the expected commencement of operation of Unit 1 of the Project. Note: PSPCL admitted that PSERC has the jurisdiction to approve import of coal directly by NPL. Note 2: It was held that advance action is required to be taken to meet the expected shortfall in availability of coal from linked

domestic sources, since tendering process for import of coal takes time. Note 3: NPL was permitted to procure alternate/imported coal through bidding subject to fulfilment of certain conditions. The terms and conditions for such procurement as well as modalities for passing through the cost was to be determined by PSERC. Note 4: One of the conditions imposed upon NPL was to give preference to the coal supplied by CIL. Note 5: Order records that it does not give any right to NPL to claim any amounts above the PPA and actual procurement will be subject to the terms and conditions imposed by PSERC.

16. 05.11.2013 NPL filed Petition No. 57 of 2013 before PSERC seeking approval of the terms and conditions for the actual procurement of coal from alternative sources including imported coal and pass through of the landed cost of such coal as part of tariff under the PPA to PSPCL.

17. 01.02.2014 Unit 1 of the Project achieved commercial operation.

18. 19.02.2014

PSERC vide its order in Petition No. 57 of 2013 allowed NPL to undertake a competitive bidding process for procurement of coal from

alternative sources to operate the power plant as per terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of Unit-1 of the Project on coal subject to the terms & conditions recorded therein. Note: PSERC on the basis of speculations observed that NPL may not need to procure coal from alternate source. However, this speculation was restricted to FY 2014-15. Note 2: PSERC directed NPL to requisition coal regularly, give preference to coal supplied by SECL, use alternate coal in case of exigencies of short supply and on Minimal Usage basis. Note 3: NPL and PSPCL were directed to conduct coal stock verifications and upload reports on the website of NPL, and PSPCL was to monitor coal consumption on fortnightly basis. Note 4: The cost of imported coal/coal procured from alternate sources would be a pass through in terms of the LoA/FSA/PPA. Note 5: A mechanism in the form of ‘Standing Committee on NPL Project’ comprising of the Secretary, Power/Govt. of Punjab, CMD/PSPCL and Chief Executive/NPL was created and

authorized to resolve the day to day issues relating to the Project.

19. 10.07.2014 Unit 2 of the Project achieved commercial operation.

20. 03.11.2014 NPL filed another interim application, being IA No. 423 of 2014, in Appeal No. 68 of 2013 before this Hon’ble Tribunal seeking extension of this Hon’ble Tribunal’s interim order dated 21.08.2013 till the disposal of the appeal.

21. 02.12.2014

This Hon’ble Tribunal vide its order allowed IA No. 423 of 2014 in Appeal No. 68 of 2013 filed by NPL. Note: This order was passed on the basis of no objection granted by the counsel for PSPCL.

22. 23.01.2015 NPL filed Petition No. 4 of 2015, before PSERC seeking extension of the order dated 19.02.2014 and certain changes in the modalities of procurement of coal from alternate sources.

23. 11.06.2015

PSERC vide its judgment in Petition No. 4 of 2015:

(i) did not grant extension of its order dated 19.02.2014 due to the reason that the shortage of coal supply from SECL was not on account of less allocation, but on account of non- availability of railway rakes from washeries.

(ii) held that NPL may procure coal from alternate sources and in such an eventuality the cost of coal so procured by NPL or the cost of

domestic coal most recently supplied by SECL/CIL, to be worked out on GCV equivalent basis by the Standing Committee, whichever is lower, shall be applicable.

(iii) regarding changes in the modalities of procurement of coal PSERC referred the same to the Standing Committee. Note: Order records PSPCL’s submission that SECL is to supply a minimum of 65% of the ACQ. Note 2: PSPCL raised the issue that availability for domestic and alternate cosl should be declared separately; however, it was rejected by PSERC. Note 3: This order was meant to cover only FY 2015-16 and has no applicability beyond the said year.

24. 16.03.2016

During the hearings in Appeal No. 68 of 2013, both the parties requested this Hon’ble Tribunal to convert the aforesaid interim order dated 21.08.2013 read with the Respondent Commission’s order dated 19.02.2014 into the final order in the said Appeal. This Hon’ble Tribunal vide its order disposed of the said Appeal (based on the joint consent) in terms of its interim order dated 21.08.2013 along with the relevant portion of PSERC’s order dated 19.02.2014 (“Final Judgment”).

Note: Paragraph 6 of the order specifically records that Hon’ble Tribunal is converting the interim arrangement (which allows NPL to arrange coal from alternative sources including imported coal) into the Final Judgment based on the consent of both the parties. [@ Pg. 260

(280) ] Note 2: Appeal No. 68 of 2013 was filed against PSERC’s order dated 31.12.2012. Therefore, upon disposal of Appeal No. 68 of 2013 by way of the Final Judgment, it was only the Final

Judgment

which continued to survive considering the doctrine of merger.

25. 19.05.2016

Pursuant to the Final Judgment, the Standing Committee in its meeting allowed NPL to procure 6.00 lakh MT of imported coal having GCV of 6300 Kcal/kg during the paddy season in Financial Year 2016-17 (i.e., May 2016 to September 2016) in order to meet the shortfall in supply of coal for the Project. B. Period in Dispute

26. 26.05.2017

Upon several requests of NPL, the Standing Committee held a meeting, wherein NPL demonstrated the requirement of at least 5.05 Lakh MT of imported coal having gross calorific value

(GCV) of 5800 kcal/kg to meet PSPCL’s power requirement. However, the Standing Committee allowed procurement of only 1.5 Lakh MT of coal from alternate sources to be utilized in the summer/paddy season only, i.e., during June – September 2017. Further, the Standing Committee undertook to review any requirement of coal beyond 1.5 Lakh MT after a period of 15 days.

27. 24.04.2017 - 27.09.2017

The Principal Secretary, Department of Power, Government of Punjab (“GoP”) and CMD, PSPCL wrote various letters to CIL/SECL to arrange sufficient quantum of coal in terms of its commitment to NPL. Note: GoP’s letters dated 30.06.2017, 12.09.2017, and 27.09.2017 are of particular significance.

28. 15.06.2017- 13.09.2017

NPL wrote multiple letters to the other two constituents of the Standing Committee, requesting to convene a meeting of the Standing Committee as the coal stock position at the plant was critical and all efforts to augment coal supplied from CIL/SECL had not yielded any results.

29. 02.06.2017- 15.09.2017

Instead of acceding to NPL’s request of convening a meeting, PSPCL vide its letters called upon NPL to take all necessary measures to build up coal

stock in order to ensure 100% availability of the Project. Note: PSPCL vide letter dated 15.09.2017 acknowledged shut down of Unit-2 due to shortage of coal and yet requested NPL to take all necessary steps for ensuring sufficient coal stock to declare full availability.

30. 14.09.2017

NPL vide its letter informed PSPCL that it was constrained to shut down one Unit, i.e., Unit-I of the Project, on account of shortage of coal.

31. 15.09.2017 to 05.10.2017 NPL had to shut down one Unit, i.e., Unit-I of the Project, on account of shortage of coal.

32. 16.09.2017

NPL vide its letter clarified that it had taken all possible steps to ensure maximum quantity of coal under linkage and only approval for arrangement of coal from alternate sources could have ensured availability of coal, which PSPCL and the Standing Committee had failed to give. NPL further highlighted that in terms of the Final Judgment, it was entitled to claim loss of availability from PSPCL.

33. Since the meeting of the Standing Committee was not convened and the Project was facing critical shortfall of coal (which led to shutdown of one Unit), NPL was constrained to procure alternate/imported coal.

34. 18.09.2017- 11.10.2017

NPL vide various letters informed PSPCL about the schedule of the tender process and requested it to depute its representative to attend the bidding process. Note: PSPCL neither replied to NPL’s letters nor deputed its representatives to attend the competitive bidding process for procurement of alternate coal.

35. 05.10.2017

NPL vide its letter informed PSPCL that it had agreed to PSPCL’s request to restart Unit-1, in view of the power shortage being faced by the State of Punjab.

36. 11.10.2017 to 13.11.2017 NPL was constrained to once again shut down one Unit of the Project due to shortage of coal. Note: This resulted in shut down of Unit-1 for 54 days in FY 2017-18.

37. October 2017 NPL took the proactive step to procure 2.4 Lakh MT of imported coal, as a matter of last resort. While procuring the said quantum of alternate coal, NPL complied with all the terms and conditions as set out in the Final Judgment.

38. 14.10.2017, 16.11.2017, and 03.01.2018

NPL vide various letters duly informed PSPCL regarding procurement and usage of imported coal from alternate sources including the likely energy charge using imported coal.

Note: Despite knowing fully well that NPL was procuring alternate/imported coal and utilizing the same to generate electricity, PSPCL scheduled electricity from the Project.

39. 08.11.2017

The Central Electricity Authority issued Guidelines for preparing Daily Coal Reports, whereby power stations situated 1000 KMs away from coal mines, such as the present Project, are required to maintain coal stock of 30 days.

40. 17.11.2017 Due to the reason that the meeting of the Standing Committee was not convened, NPL was constrained to approach this Hon’ble Tribunal by way of filing I.A. No. 1018 of 2017 in Appeal No. 68 of 2013 in order to seek appropriate directions on account of non-compliance of the Final Judgment.

41. 21.11.2017

PSPCL vide its letter informed NPL that a meeting of the Standing Committee had been scheduled on 30.11.2017 regarding the coal issues faced by NPL.

42. 28.11.2017

This Hon’ble Tribunal vide its order dismissed the aforesaid IA No. 1018 of 2017 as withdrawn, with liberty to NPL to take up all the issues/grievances before the Standing Committee and to redress its grievances before the appropriate legal forum, in the event NPL’s grievances are not redressed by the Standing Committee.

43. 30.11.2017

In the meeting of the Standing Committee, the Additional Chief Secretary, Department of Power, GoP and the CMD PSPCL raised a query whether it is within the scope of the Standing Committee to consider and approve procurement of alternate coal to meet the shortfall of coal from linked sources.

44. 18.12.2017

NPL filed I.A No. 1152 of 2017, in Appeal No. 68 of 2013 before this Hon’ble Tribunal, seeking clarification that the Standing Committee is vested with full and complete authority under the Final Judgment, including to determine the quantum of shortfall and consequential additional cost of coal to be procured.

45. 20.12.2017

This Hon’ble Tribunal vide its order disposed of IA No. 1152 of 2017 with liberty to NPL to file necessary application before the Respondent Commission.

46. 27.12.2017

NPL filed Petition No. 67 of 2017 before PSERC, seeking: (i) clarification regarding scope of the Standing Committee and (ii) post facto approval for procurement of 2.4 lakh MT of imported coal.

47. 01.02.2018

PSERC vide its order in Petition No. 67 of 2017 sought various details regarding procurement and utilization of coal from NPL. Note: NPL filed the said details by way of an additional affidavit on 06.02.2018.

48. February 2018 Due to the reason that the aforesaid petition regarding the Standing Committee’s scope was pending adjudication and the Project was once again facing acute shortage of coal, NPL was constrained to take proactive steps to procure 0.60 Lakh MT of imported coal in addition to 2.4 Lakh MT of imported coal already procured by it, to meet the then existing shortfall for the period of said month.

49. 12.02.2018

NPL while procuring alternate coal, complied with all the terms and conditions as set out in the Final Judgment read with PSERC’s order dated 19.02.2014 and duly informed PSPCL regarding the same.

50. 06.03.2018

PSERC vide its order clarified that ‘Standing Committee on NPL Project’ shall be operative for the term of the PPA. Further that as the additional cost of coal to be procured is consequential to the determination of the quantum of shortfall, the ‘Standing Committee on NPL Project’ shall be the final authority to decide the shortfall of domestic coal from CIL or its subsidiaries for operation of the plant in terms of PPA. Note: PSERC held that the essence of the Final Judgment is to ensure availability of sufficient quantum of coal required for operation of the plant in terms of the PPA.

Note 2: PSERC did not decide the issue of post facto approval for procurement of 2.4 lakh MT of imported coal since it was beyond the scope of APTEL’s order dated 20.12.2017 in I.A. No. 1152 of 2017 in Appeal No. 68 of 2013.

51. 10.03.2018

In order to avoid shut down of Unit(s) of the Project, NPL was once again constrained to procure 0.55 Lakh MT of imported coal from alternate sources. Whilst procuring the aforesaid quantum of 0.55 Lakh MT of coal, NPL complied with all the terms and conditions set out in the Final Judgment and duly informed PSPCL vide its letter.

52. 15.03.2018

NPL circulated an agenda note for the meeting of the Standing Committee scheduled on 23.03.2018 and requested the Standing Committee to grant post facto approval for procurement of 3.55 Lakh MT of imported coal during October 2017-March 2018, direct PSPCL to pay the capacity charges for the period of shutdown of the Unit(s) on account of shortage of coal not attributable to NPL, and approve procurement of alternate coal to the tune of 12.40 Lakh MT to meet the expected shortfall from linked sources for the FY 2018-19.

53. 28.03.2018 and 29.05.2018 The Standing Committee in its meetings approved procurement of coal from alternative sources to the tune of 4.5 Lakh MT to be utilized during April 2018-

Spetmber 2018, as per the bids dated 27.03.2018, which was duly witnessed by PSPCL.

54. 11.06.2018 [A-30/V-2/ @ Pg. 459 (479)] The Standing Committee in its meeting approved coal procurement of additional 2 Lakh MT from alternate sources as per bids dated 27.03.2018, however, the said coal was to be utilized in the summer/paddy season only, i.e., during April 2018- September 2018. Further, the Additional Chief Secretary/Power, GoP and CMD, PSPCL directed NPL to approach PSERC with respect to post facto approval for procurement of 3.55 Lakh MT of imported coal from alternate sources during October 2017-March 2018. C. Impugned Proceedings

55. 02.08.2018

NPL filed Petition No. 28 of 2018 before PSERC inter alia seeking grant of post facto approval for the quantum of 3.55 Lakh MT of imported coal procured by NPL during the period October 2017 to March 2018 and allow a complete pass through of the cost of such imported coal in terms of the Final Judgment, along with interest/carrying cost at the rate of 12% per annum.

56. 28.12.2018

Standing Committee on NPL Project during its meeting deliberated on the issue of grant of post facto approval for purchase of 3.55 Lakh MT coal

by 31.10.2018. However, due to the divergent views of NPL and PSPCL, the Standing Committee could not reach on a consensus with respect to the said issue.

57. 21.02.2019

PSERC vide its daily order sought information from NPL regarding actual utilization of coal in a prescribed format. Note: NPL filed all the details/information sought herein

58. 02.09.2019

PSERC vide its daily order sought information from NPL as well as PSPCL regarding actual utilization of coal. Note: PSPCL and NPL filed all the details/information sought herein.

59. 04.12.2019

PSERC vide the Impugned Order whilst disposing of the Petition allowed pass through of only 2.36995 Lakh MT of alternate coal as against the 3.55 Lakh MT sought by NPL as per actuals. Note: PSERC recognized that NPL was the highest off-taker of coal and procured linkage coal to the tune of 90.37% of ACQ. Note 2: PSERC records that the availability of the Project during FY 2017-18 was 85.10%. Despite having procured 3.55 LMT of alternate coal, NPL could only achieve availability of 85.10%. This itself

establishes that procurement of imported coal was necessitated. Note 3: PSERC holds that NPL took up the matter consistently with SECL to supply coal for full linkage instead of curtailed linkage of 75% and maximized supply of coal. Note 4: PSERC records that 1.5 Lakh MT was permitted to be procured and utilized during paddy season. Note 5: PSERC used flawed and assumptive parameters and infact enlarged the dispute period from October 2017 to March 2018 to entire FY 2017-2018.

60. 14.01.2020

NPL filed Appeal No. 22 of 2020 inter alia seeking:

(a) Allow the Appeal and set aside the Impugned Order; (b) Grant post facto approval for the balance quantum of 1.18005 Lakh MT of imported coal procured by NPL and allow a complete pass through of the cost of such imported coal in terms of this Hon’ble Tribunal’s order dated 16.03.2016 in Appeal No. 68 of 2013, along with interest/carrying cost in terms of the PPA; and

(c) Pass any other or further order(s) as this Hon’ble Tribunal deems fit and proper in the facts and circumstances of the present case.

61. 03.02.2020

PSPCL, after lapse of 2 months from the Impugned Order and expiry of statutory period of 45 days for filing appeal against the same, filed Review Petition No. 1 of 2020 before the Respondent Commission inter alia seeking:

(i) Review the findings and determination of requirement of imported coal by Respondent as allowed under the Order dated 04.12.2019 in view of the grounds raised in para 6 of the petition;

(ii) Disallow the cost of any imported coal used by the Petitioner between October 2017 and March 2018 to be passed on to the Petitioner and its consumers; and

(iii) Pass any further order or orders as may deem just and proper.

62. 09.09.2020

PSERC vide its order dismissed the review petition filed by PSPCL by holding that it had passed a detailed and reasoned Order after considering all submissions, pleadings, record and arguments of the parties after discussing all the points and the same needs no reconsideration in this review, as the facts and evidence remains the same and there is no error apparent on the face of record.

63. 09.10.2020 PSPCL filed Appeal No. 68/2021 after lapse of 30 days from the date of PSERC’s order dismissing the

review petition, inter alia seeking setting aside of the Impugned Order dated 04.12.2019 in Petition No. 28 of 2018. Along with the Appeal, PSPCL also filed I.A. No. 1394 of 2020 seeking stay on the operation of the Impugned Order.

26. The Appellant invited our attention to the past Orders also on the issue of procurement of alternate/imported coal and the final settlement of the issue vide order 16.03.2016 by this Tribunal.

27. It is submitted that the issue between the parties about the procurement and utilization of imported/alternate coal was dealt with in various orders passed by this Tribunal as well as the PSERC. The said issue was finally settled by this Tribunal by consent order dated 16.03.2016 in Appeal No. 68 of 2013 (Final Judgment). The details of the various orders passed by PSERC and this Tribunal are quoted as under:

A. ORDER dated 31.12.2012 in Petition No. 56 of 2012

(i) NPL and L&T PDL had filed Petition No. 56 of 2012 before the PSERC inter alia seeking permission to arrange coal from alternate sources to meet the deficit in supply of coal (i.e., the required quantum of coal to operate the Project in terms of the PPA less/minus domestic coal supplied under the LoA/FSA) for the Project.

(ii) However, PSERC vide its order dated 31.12.2012, disposed of the petition observing as under:

“The Commission notes that at this point of time, SECL is assuring to supply 80% of the ACQ of coal. The petitioners’ apprehensions regarding not being able to operate the plant beyond a certain PLF are not entirely unfounded. A significant investment having been made by the developer in the Project, the respondent and the State Government have to, besides the developer, take up the matter with the quarters concerned for allocation and supply of adequate quantity/quality/grade of coal for the generating station to run successfully as per PPA. The Commission is mandated to strive for maintaining a balance of the equities between the interests of the consumers, the distribution utility and the generators in the State. The Commission, therefore, holds that the remedies to the issues raised in the petition are duly covered under various Articles of the PPA, which is a comprehensive document, including the Force Majeure and Change in Law provisions. The petitioners are free to approach the competent authorities as per PPA having jurisdiction to adjudicate upon issue(s) at the appropriate time, as and when these arise.” [Emphasis Supplied]

B. Order dated 21.08.2013 in I.A. No. 227 of 2013 in Appeal No.

(i) Being aggrieved against the above order dated 31.12.2012, NPL and L&T PDL filed Appeal No. 68 of 2013 before this Tribunal.

(ii) NPL also filed I.A. No. 227 of 2013 in Appeal No. 68 of 2013 inter alia seeking permission and directions of this Tribunal to carry on/continue with the tender process for procurement of imported coal from alternate sources to meet the exigencies of shortfall in supply of required quantum of coal for the Project.

(iii) This Tribunal, appreciating the genuine concern of NPL vide its order dated 21.08.2013, allowed I.A. No. 227 of 2013, observing as under:

“4. Shri Parag Tripathy, learned Sr. Counsel for the Applicant/Appellant in I.A. no. 227 of 2013 in Appeal no. 68 of 2013 pressed for interim directions of the Tribunal in view of following: …

(d) It takes about 7-8 months to receive first shipment of coal from the date of publication of NIT. …

9. We agree with the Learned Sr. counsel for the Appellants that advance action is required to be taken to meet the expected shortfall in availability of coal from the linked domestic sources during the pendency of these Appeals

as tendering process for import of coal takes time. We, therefore, directed both the parties to suggest the safeguards to be followed by the Appellants in procurement process and supply of imported coal. Accordingly, both the parties filed their affidavits giving their suggestions. We have heard their submissions also.

10. On going through those suggestions and having considered the submissions, we find that the balance of convenience lies in favour of the Applicants/Appellants to take advance action for procurement of coal from alternative sources to meet the anticipated shortfall from the linked sources of coal in order to operate the power plant as per the PPA.” [Emphasis Supplied]

(iv) In view of the above observations, this Tribunal vide the aforesaid order allowed NPL to take advance action in order to meet the expected shortfall in availability of coal for the Project, so that the Project remains available to operate in terms of the PPA for a period of 12 months from the expected commencement of operation of Unit 1 of the Project.

(v) This Tribunal permitted NPL to procure alternate/imported coal through bidding, subject to the fulfilment of certain conditions and subject to the terms and conditions imposed by PSERC.

C. Order dated 19.02.2014 in Petition No. 57 of 2013

(i) Accordingly, NPL filed Petition no. 57 of 2013 before the PSERC seeking approval of the terms and conditions for procurement of coal from alternative sources and passing through the landed cost of such coal as part of the tariff under the PPA to PSPCL.

(ii) PSERC vide its order dated 19.02.2014 in Petition No. 57 of 2013 held that:

“35. Although under the Act, the Commission is not mandated to approve procurement of material yet taking a holistic view and considering that the competitive bidding process has been overseen by PSPCL and its representatives signed the technical and price bids opened on 27.09.2013 & 08.10.2013 for supply of imported coal and 18.12.2013 & 26.12.2013 for domestic coal during bid opening, the Commission approves the competitive bidding process undertaken by NPL for procurement of coal from alternative sources to operate the power plant as per terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of Unit-1 of the Project on coal subject to the following terms & conditions and modalities for passing through cost of this coal: ….” [Emphasis Supplied]

(iii) Thus, PSERC allowed NPL to undertake a competitive bidding process for procurement of coal from alternative sources to operate the power plant as per terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of Unit-1 of the Project on coal subject to the terms & conditions recorded therein which includes the conditions:

a. NPL to requisition coal regularly, give preference to coal supplied by SECL, use alternate coal in case of exigencies of short supply, and on a Minimal Usage basis.

b. NPL and PSPCL were directed to conduct coal stock verifications and upload reports on the website of NPL, and PSPCL was to monitor coal consumption on a fortnightly basis.

c. The cost of imported coal/coal procured from alternate sources would be a pass-through in terms of the LoA/FSA/PPA.

(iv) Further, PSERC constituted a Standing Committee on NPL Project comprising the Secretary, Power/Govt. of Punjab, CMD/PSPCL, and Chief Executive/NPL to resolve the day-to-day issues relating to the Project. This said Standing Committee was also held to be the final authority to determine the additional cost of coal from alternative sources / imported coal procured by NPL to meet the shortages in coal supplied by CIL or its subsidiaries.

D. Order dated 02.12.2014 in I.A. No. 423 of 2014 in Appeal No. 68 of 2013

(i) As the interim order dated 21.08.2013 passed by this Tribunal was valid only for a period of 12 months, NPL filed I.A. No. 423 of 2014, in Appeal No. 68 of 2013 before this Tribunal seeking extension of this Tribunal’s interim order dated 21.08.2013 till the disposal of the appeal.

(ii) This Tribunal vide its order dated 02.12.2014 allowed I.A. No. 423 of 2014 in Appeal No. 68 of 2013 in the following terms:

“We have heard Mr. Sakya Singha Chaudhuri, the learned counsel appearing on behalf of the Appellants and also Mr. Anand K. Ganesan, the learned counsel appearing on behalf of the Respondents. Mr. Ganesan has no objection in allowing the IA-423 of 2014 and to continue the aforesaid interim order. Consequently, IA-423 of 2014 in Appeal No. 68 of 2013 praying for continuance of the aforesaid directions is allowed and the said interim order, dated 21.8.2013, shall continue till the final disposal of this Appeal.” [Emphasis Supplied]

(iii) Thus, the interim order was allowed to be continued based on ‘No Objection’ granted by the counsel for PSPCL.

E. Order dated 11.06.2015 in Petition No. 4 of 2015

(i) In view of the above, NPL filed Petition No. 4 of 2015 before PSERC seeking extension of the order dated 19.02.2014 and certain changes in the modalities of procurement of coal from alternate sources.

(ii) However, PSERC vide its order dated 11.06.2015 in Petition No. 4 of 2015 did not grant extension of its order dated 19.02.2014 and held that:

“… the Commission is not inclined to allow the prayer of NPL with regard to allowing continuance of the directions issued by the Commission vide its Order dated 19.02.2014 in petition no.57 of 2013 on the same terms and conditions as provided therein. However, in case NPL still insists on procuring coal from alternate sources, it may do so, but in that eventuality, the cost of coal so procured by NPL or the cost of domestic coal most recently supplied by SECL/CIL, to be worked out on GCV equivalent basis by the Standing Committee on NPL Project appointed by the Commission in its aforementioned Order dated 19.02.2014, whichever is lower, shall be applicable.” [Emphasis Supplied]

(iii) Thus, from the perusal of the above, it is evident that the PSERC has held that if NPL procures coal from alternate sources even in

the absence of extension of the order dated 19.02.2014 then in that eventuality the cost of coal so procured by NPL or the cost of domestic coal whichever is lower shall be applicable.

(iv) However, the said order dated 11.06.2015 in Petition No. 4 of 2015 was restricted to FY 2015-16 and has no applicability beyond the said year. The fact that the PSERC’s order dated 11.06.2015 is restricted to FY 2015-16 was admitted by PSPCL before the PSERC, as recorded in the Impugned Order. The relevant excerpts of the Impugned Order are being reproduced below for ready reference:

“….PSPCL submitted that this shortfall in domestic coal availability is based on 85% plant availability for the year as usage of coal from alternate sources is to be only on minimal basis and further full fixed charges of NPL gets recovered at 85%. NPL has not shown any steps taken against SECL for the shortfall of the supply and compensation claimed as the coal supply from SECL was marginally below 75% at which compensation is payable by SECL to NPL. In the Commission‟s Order dated 11.06.2015, it was held that NPL would be entitled to only the domestic coal prices in case it decides to use only imported coal. Though this Order was for the year 2015-16, there being no approval for the year in issue for imported coal, the same principle was applied….” [Emphasis Supplied]

(v) In any case, the aforesaid order dated 11.06.2015 has no implication on the procurement from alternate/imported sources after the passing of the Final Judgment dated 16.03.2016 based on consent of both the parties, whereby this Tribunal made the interim order dated 21.08.2013 along with relevant part of the PSERC’s order dated 19.02.2014 in Petition No. 57 of 2013 absolute. Clearly, once the interim order dated 21.08.2013, read with PSERC’s order dated 19.02.2014, was made absolute, there was no requirement for extension of the same.

(vi) Without prejudice to the above, the PSERC’s order dated 11.06.2015 in Petition No. 4 of 2015 insofar as it does not grant extension of its order dated 19.02.2014 is contrary to this Tribunal’s order dated 02.12.2014 in IA No. 423 of 2014 in Appeal No. 68 of 2013 and is thus, liable to be disregarded by this Tribunal.

F. Final Judgment dated 16.03.2016 in Appeal No. 68 of 2013

(i) Subsequently, when Appeal No. 68 of 2013 came up for hearing before this Tribunal, both the parties requested this Tribunal to make the aforesaid interim order dated 21.08.2013 read with the PSERC’s order dated 19.02.2014 absolute.

(ii) Accordingly, this Tribunal vide its Final Judgment dated

16.03.2016 disposed of the said Appeal (based on the joint consent) in terms of its interim order dated 21.08.2013, along with the relevant portion of PSERC’s order dated 19.02.2014. The relevant paragraphs of the Final Judgment are reproduced below for ready reference:

“5) The learned counsel for the contesting parties have agreed to the situation that the Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal be hereby made absolute and be given effect to finally along with the relevant part quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013.

Hence, with the consent and agreement of learned counsel for the parties, we hereby dispose of this appeal with the aforesaid directions given in our Interim Order dated 21.08.2013 and State Commission’s order dated 19.02.2014 with one clarification, though, the State Commission is of the view that there is no shortage of coal at present, if there is any shortage of coal in future, at any point of time, for the reasons like shortage of any kind of coal namely, domestic coal or shortage of railway rakes or shortage of any other kind of transport not attributable to the appellant(s) then the State Commission is directed to consider the reasons and pass appropriate order at appropriate stage without any procrastination or undue

delay. With these terms, the instant appeal is hereby disposed of.” Emphasis Supplied

(iii) Thus, from the perusal of the above, it is crystal clear that the PSERC’s order dated 19.02.2014 and order dated 31.12.2012 in Petition No. 32 of 2012 stood merged with the Final Judgment dated 16.03.2016.

(iv) It is a settled proposition of law that when an appeal is provided from a decision of a Tribunal and the appellate court, after hearing the appeal, passes an order, the order of the original court ceases to exist and is merged into the order of the appellate court. The doctrine is based on the simple reasoning that there cannot be, at the same time, more than one governing order governing the same subject matter. Reliance is placed on the decision of the Hon’ble Supreme Court in Balbir Singh & Ors. v. Baldev Singh (D) through His Lrs & Ors., reported as AIR 2025 SC 632.

(v) Accordingly, the Final Judgment passed by this Tribunal is the only order that governs the issue of the procurement of coal through alternate sources by NPL. The imported coal in the present case is procured after the passing of the Final Judgment dated 16.03.2016, and thus, the entire issue is governed by the Final Judgment dated 16.03.2016.

28. The NPL also raised the issue on the Role and Authority of the Standing Committee

29. It is submitted that even after the passing of the Final Judgment, NPL was constrained to file I.A. No. 1152 of 2017 in Appeal No. 68 of 2013 before this Tribunal inter alia seeking clarification that the Standing Committee is vested with full and complete authority under the Final Judgment, including to determine the quantum of shortfall and consequential additional cost of coal to be procured.

30. However, this Tribunal vide its order dated 20.12.2017, disposed of I.A. No. 1152 of 2017 with liberty to NPL to file a necessary application before the PSERC.

31. Accordingly, NPL filed Petition No. 67 of 2017 before PSERC inter alia seeking clarification regarding the scope of the Standing Committee and post facto approval for the procurement of imported coal.

32. However, PSERC vide its order dated 06.03.2018 did not decide the issue of post-facto approval and only clarified that the Standing Committee on NPL Project shall be operative for the term of the PPA. Further, that as the additional cost of coal to be procured is consequential to the determination of the quantum of shortfall, the ‘Standing Committee on NPL Project’ shall be the final authority to decide the shortfall of domestic coal from CIL or its subsidiaries for operation of the plant in terms of PPA.

33. However, despite the above, the PSERC by way of the Impugned Order has travelled beyond the dispute raised by the said Petition (i.e., procurement of imported coal during the period October 2017 to March 2018) and has reduced the quantum of imported coal procured and utilized by NPL during the paddy season, i.e., May to September 2017, from 1.5 Lakh MT approved by the Standing Committee vide meeting held on 26.05.2017 to 0.65359 Lakh MT.

34. It is a matter of record that the procurement and utilization of imported coal during the period from May to September 2017 was not in dispute. Rather, PSPCL had made payment of the incremental charges incurred towards the same, as admitted by it in paragraph 9.14 of its Reply. The relevant excerpt of PSPCL’s Reply is reproduced below for ease of reference:

“9.14 The contents of paragraph 9.14 are wrong, misconceived and hence denied. The Commission failed to appreciate the fact that PSPCL had even made payment for power generated as per schedule given by PSPCL for the period May 2017 to September 2017 during which the imported coal to the tune of 1.50 Lakh MT was used. It is a matter of record that the said period and payment were not the subject matter of controversy and/or dispute before the Respondent Commission.” [Emphasis supplied]

35. PSERC vide its order dated 06.03.2018 also held that the essence of the Final Judgment is to ensure availability of sufficient quantum of coal required for operation of the plant in terms of the PPA.

36. In view of the above, it is clear that it is only this Tribunal’s Final Judgment dated 16.03.2016 in Appeal No. 68 of 2013, which reaffirms the conditions imposed by this Tribunal’s order dated 21.08.2013 and PSERC’s order dated 19.02.2014 for the term of the PPA. The same governs the relationship between the parties qua procurement of alternate/imported coal, including during the period in dispute.

37. The Appellant, further, raised the issue of the requirement of Imported Coal beyond the Paddy Season.

38. The Appellant submitted that PSPCL’s contentions challenging the requirement of imported coal beyond the paddy season during the Financial Year 2017-18 are misconceived, misplaced, and untenable.

39. This Tribunal’s Final Judgment dated 16.03.2016 in Appeal No. 68 of 2013 and order dated 21.08.2013, as well as PSERC’s order dated 19.02.2014, do not distinguish between the requirement of imported coal vis-à-vis paddy season or non-paddy season. On the contrary, NPL has been allowed to procure the coal from the alternate sources to meet the anticipated shortfall from the linked sources of coal in order to operate the power plant as per the PPA. The PPA between NPL and PSPCL is for a period of 25 years for a base load plant and not a seasonal plant.

40. Further, the entire capacity of NPL’s Project is tied up for supply to PSPCL. Meaning thereby, the entire power generated at NPL’s Project is supplied to PSPCL, including during the period in dispute.

41. The fact that imported coal was required by NPL during the non-paddy season in the Financial Year 2017-18 is abundantly clear from the following undisputed facts:

(i) Unit I of NPL’s Project was shut down for a period of 54 days during the Financial Year 2017-18 due to a shortfall of coal;

(ii) Despite the utilization of imported coal, the availability of NPL’s Project during the Financial Year 2017-18 was 85.10%, i.e., a mere 0.10% above the Normative Availability.

(iii) NPL vide letter 13.09.2017 highlighted the fact that the expected shortfall for the remaining part of the year, i.e., October 2017 to March 2018, is 11 lakh MT and requested to convene a meeting of the Standing Committee.

42. Thus, PSPCL’s stand that NPL never requested to convene a meeting for the procurement of coal from alternate sources beyond the paddy season is false and incorrect.

43. It is also relevant to mention here that during the contemporaneous period, PSPCL itself vide its email dated 02.10.2017 and during the meeting held on 04.10.2017 (i.e., after the paddy season was over) admitted shortage of power

caused due to shut down of Unit I of NPL’s Project. This is abundantly clear from a bare perusal of NPL’s letter dated 05.10.2017.

44. Further, in terms of the mechanism developed by way of PSERC’s order dated 19.02.2014 in Petition No. 57 of 2013, particularly in paragraph 35(iv)-(vi), PSPCL was duly aware about the coal stock position at the Project vis-à-vis domestic as well as alternate/imported coal and never disputed the same.

45. Accordingly, it is clear that PSPCL’s allegation that there was no requirement of alternate/imported coal during non-paddy season in Financial Year 2017-18, being raised now, is merely an afterthought in an attempt to evade liability towards NPL for payment of legitimate dues.

46. Concerning the Utilization of Imported Coal, the Appellant submitted that imported coal is used for the supply of electricity to PSPCL only against the schedule given by PSPCL.

47. It is submitted that, in addition to the above, PSPCL’s contention that PSPCL is not liable to make payment of costs incurred by NPL towards alternate/imported coal is also false and misleading. NPL has utilized the said coal for generating the electricity scheduled by PSPCL, and NPL is entitled to the actual cost of coal for the same in terms of the PPA.

48. In the present case, NPL is claiming payment of the incremental cost incurred towards the procurement of 3.55 Lakh MT of imported coal during the period October 2017-March 2018.

49. The fact that NPL actually procured and utilized 3.55 Lakh MT of imported coal during the period October 2017-March 2018 was never disputed by PSPCL before the arguments in the present matter on 03.04.2025.

50. In fact, PSPCL, before the PSERC during the course of adjudication of Petition No. 28 of 2018, as well as in its pleadings before this Tribunal in Appeal No. 22 of 2020, has categorically admitted that 3.55 Lakh MT of imported coal was utilized by NPL during the period October 2017-March 2018. The contents of Para 9.11 of the Para-wise reply filed by PSPCL before this Tribunal reads as under:

“9.11 The contents of paragraph 9.11 are wrong, misconceived and hence denied. It is submitted that the actual quantity used by the Appellant is not disputed but the pass through of cost for the same cannot be permitted in view of the submissions made hereinabove.” [Emphasis Supplied]

51. The above response was given by PSPCL in respect of Para 9.11 of the Appeal, which reads as under:

“9.11 For that the Respondent Commission has failed to appreciate that there was no need to calculate the requirement of imported coal for allowing pass through of cost of imported coal procured by the Appellant, as the actual quantity of coal

utilized by the Appellant was in the knowledge of PSPCL vide the monthly invoices raised by the Appellant as per the PPA, which were not disputed by PSPCL and thus became conclusive as per Article 11.6.1 of the PPA.” [Emphasis Supplied]

52. Thus, it is clear that PSPCL has admitted that a quantum of 3.55 Lakh MT of imported coal was utilized by NPL for the generation of electricity scheduled by it, but refused to make the payment of the actual cost of coal utilized by NPL.

53. In this regard, it is also pertinent to highlight that NPL in paragraph 9.12 of the Appeal has averred that it has utilized/consumed 3.55 Lakh MT of imported coal during the period October 2017-March 2018 for the generation of electricity scheduled by PSPCL.

54. Further, NPL vide its affidavit dated 18.03.2019 filed in compliance with PSERC’s order dated 21.02.2019 has demonstrated that it has actually utilized/consumed 3.55 Lakh MT of imported coal during the period October 2017-March 2018. This remained undisputed by PSPCL through the course of the adjudication of Petition No. 28 of 2018 before the PSERC.

55. It is also relevant to mention here that the imported coal was procured by NPL under a transparent bidding process, and PSPCL was invited to participate in the same vide various letters, but PSPCL chose not to participate. Even the rates discovered from the tender process were also disclosed to PSPCL vide letter dated 14.10.2017.

56. Once the power generated by NPL using the imported coal was admitted by PSPCL and the said power was utilized by it to supply the same to its consumers, PSPCL cannot absolve itself from making the payment of the same to NPL.

57. Therefore, NPL is entitled for actual cost of coal in terms of Energy Charges formula provided under Schedule 7 of PPA as held by the Hon’ble Supreme Court vide its judgment dated 05.10.2017 in Civil Appeal No. 179 of 2017 titled Nabha Power Limited v. Punjab State Power Corporation Limited, reported as (2018) 11 SCC 508.

58. Accordingly, it is clear that PSPCL’s allegation that NPL did not utilize 3.55 Lakh MT of alternate/imported coal during October 2017-March 2018 is merely an afterthought and an attempt to evade liability towards NPL for payment of legitimate dues.

59. The Appellant also challenged the PSPCL’s intention to procure electricity at rates of domestic coal during the period in dispute.

60. In addition to the above, PSPCL’s contention that it scheduled electricity during the period in dispute on the basis of merit order, considering the price of domestic coal, is also misplaced and untenable.

61. As mentioned hereinabove, in terms of the mechanism developed by way of PSERC’s order dated 19.02.2014 in Petition No. 57 of 2013, particularly in

paragraph 35(iv)-(vi), PSPCL was duly aware about the coal stock position at the Project vis-à-vis domestic as well as alternate/imported coal and never disputed the same.

62. Further, NPL vide its letters dated 18.09.2017, 21.09.2017, 27.09.2017, and 03.10.2017, as well as email dated 11.10.2017, duly kept PSPCL informed regarding the procurement of imported coal. Additionally, NPL vide its letters dated 14.10.2017, 16.11.2017, 03.01.2018, 12.02.2018, and 10.03.2018, duly informed PSPCL regarding the procurement and usage of alternate/imported coal for the generation of electricity and the impact of the same on energy charges.

63. Therefore, PSPCL cannot now feign ignorance over the impact on energy charges during the contemporaneous period.

64. Moreover, the order dated 19.02.2014 passed by the PSERC stood merged with the Final Judgment dated 16.03.2016 passed by this Tribunal, and once the interim order is made absolute, there is no requirement for getting the extension of the same. Accordingly, the order dated 11.06.2015 passed in Petition 4 of 2015 has no application, and PSPCL is liable to make the payment of the actual cost of coal in terms of the Energy Charges formula enshrined in Schedule 7 of the PPA.

65. The Appellant also placed reliance on the Judgment dated 19.07.2021 in Appeal No. 220 of 2019, which has been countered by PSPCL.

66. In addition to the above, PSPCL’s contention that this Tribunal’s judgment dated 19.07.2021 in Appeal No. 220 of 2019 and Appeal No. 317 of 2019 titled Talwandi Sabo Power Limited v. Punjab State Electricity Regulatory Commission & Anr. does not apply to the present case is also misconceived and erroneous.

67. PSPCL has contended that the aforesaid judgment dated 19.07.2021 pertains to its liability to make payment of deemed capacity charges. However, from a bare perusal of the following excerpt of the said judgment, it is abundantly clear that this Tribunal’s aforesaid judgment pertains to PSPCL’s liability to make payment of the incremental cost of procurement of alternate/imported coal in a similar factual scenario:

“1. In Appeal No.220 of 2019, the Appellant - Talwandi Sabo Power Limited (“TSPL”) has challenged the legality, validity and propriety of Order dated 11/04/2019 passed by the Punjab State Electricity Regulatory Commission (“Respondent No.1/State Commission”) disallowing the incremental cost incurred by TSPL in procurement of alternate/imported coal on behalf of Punjab State Power Corporation Limited (“PSPCL”/“Respondent No. 2”) during the month of June 2017 to September 2017 (peak paddy season) for supplying power to PSPCL whereas in Appeal No.317 of 2019, the Appellant has challenged Order dated 30/08/2019 passed by the State Commission disallowing the incremental cost incurred by TSPL in procurement of alternate/imported coal on behalf of PSPCL for the period from September 2016 to May 2017 and

October 2017 onwards for supplying power to PSPCL and Deemed Capacity Charges. ……

177. It is not in dispute that the power generated by TSPL by using alternate or imported coal was utilised by the PSPCL to supply the same to its consumers. Then the PSPCL is obliged to make payments to the Appellant. As a matter of fact, Respondent No.2 undertook before the Hon’ble Apex Court that it will pay energy charges to the Appellant, which includes fuel charges. But cost of coal used to supply power to Respondent No.2, TSPL is entitled to recover entire cost incurred by it for arranging alternate or imported coal to supply power to PSPCL. We place reliance for this on the judgment of Hon’ble Supreme Court, already referred to above, in the case of Nabha Power. We also place reliance on the judgment of the Apex court dated 02.07.2019 in the case of M/s Adani Power (Mundra) Limited v. Gujarat Electricity Regulatory Commission and Ors. (Civil Appeal No. 11133 of 2011) wherein it was held that principles of economic justice and business efficacy requires that the expenditure incurred by the generating company towards running the project including expenditure in obtaining coal from open market has to be taken into consideration and must be paid for the same along with interest, if the payment is delayed. It is also seen that in the past, TSPL was allowed usage of imported coal by the PSPCL and payments were made in that regard. After giving intimation to

PSPCL alternate coal was procured through competitive bidding process, which was never objected to by PSPCL. …..

200. Therefore, for the reasons stated above, after analysing the facts and various judgments referred to in our discussion, we are of the opinion that the impugned orders passed by the Commission deserve to be set aside and accordingly are set aside as under:

i) The impugned order dated 11.04.2019 is set aside. We direct the Respondent-PSPCL to make payment of differential amount as sought in the appeal No. 220 of 2019 along with late payment surcharge in terms of provisions of PPA from the date of billing for the period June 2017 to September 2017 till payments are made.

ii) The impugned order dated 30.08.2019 pertaining to Appeal No. 317 of 2019 is set aside. We direct Respondent-PSPCL to pay the cost of alternate/imported coal incurred by the Appellant along with late payment surcharge in terms of PPA from the date of billing till payment is made.

iii) We also direct the PSPCL to pay deemed capacity charges from October 2017 onwards along with late payment surcharge.” [Emphasis Supplied]

68. In the present case also PSPCL has not disputed the fact that power generated by NPL using imported coal was scheduled by PSPCL. Once PSPCL has utilized the power so generated for supplying the same to its consumers, PSPCL is obligated to make the payment for the same to NPL.

69. The Appellant also submitted that in terms of the Final Judgment, NPL was mandated to procure and utilize alternate/imported coal on a minimal usage basis. However, the PSERC in the Impugned Order has determined the purported requirement of alternate/imported coal on a scheduled generation basis and not on a minimal usage basis. This has also been admitted by PSPCL in paragraph 29 of its Reply to Appeal No. 22 of 2020 and paragraph 9.19 of Appeal No. 68 of 2021.

70. The PSERC’s computation of the purported requirement of alternate/imported coal results in a blending ratio of domestic vis-à-vis alternate coal between 10.42% to 26.53% during the period from October 2017 to March 2018. Whereas, NPL’s actual procurement and utilization of alternate/imported coal during October 2017 to March 2018 resulted in a blending ratio of domestic vis-à-vis alternate coal between 8% to 23%. Thus, on this account, the calculations made by PSERC are liable to be rejected and set aside.

71. In view of the above, it is most humbly prayed that this Tribunal may graciously be pleased to allow Appeal No. 22 of 2020 and dismiss Appeal No. 68 of 2021.

Written Submissions of Respondent No. 2, PSPCL

72. The Rajpura thermal power project has been developed by NPL pursuant to a competitive bidding process carried out by PSPCL under section 63 of the Electricity Act, 2003. The project was bid out under a Case II scenario where

PSPCL, as the procurer, was responsible for arranging only the coal linkage for the specific quantum. For the purpose of the project and in accordance with the bidding guidelines, PSPCL had secured a letter of assurance for 5.55 MT per annum of F-grade coal for the 1200 MW Rajpura thermal power plant. Bidders were required to indicate, amongst other things, the capacity of the power plant at 1200 MW ± 10%. The letter of assurance dated 18.12.2008 was part of the bid documents.

73. NPL had quoted for 1320 MW (1200 + 10%) of the plant capacity and was the successful bidder for the project. Subsequently, NPL increased the project capacity from 1320 MW to 1400 MW. The power purchase agreement was entered into between NPL and PSPCL on 18.01.2010. Schedule 7 of the PPA outlined the method for determining tariff payments for the supply of electricity from the project for any contract year. Clause 1.2.3 of Schedule 7 of the PPA specifies the methodology for monthly energy charges, which is determined according to the scheduled energy during the concerned month.

74. The entire electricity generated from the project was to be supplied to PSPCL.

75. At the outset it is pertinent to point out that the load profile of the state of Punjab experiences a significant increase during the paddy season of June to September of every year, when there is an increased requirement of power and PSPCL carries out maximum procurement of power from each of the power plants in the state during such period. Since the fuel for NPL’s project is specified as domestic coal, PSPCL, in order to secure 100% generation capacity from the

project during the paddy season, in case of shortage of supply of domestic linkage coal agrees to the use of imported coal/alternate coal during such period which involve significantly higher fuel cost in comparison to the domestic linkage coal.

76. A Standing Committee comprising of Secretary, Power/ Government of Punjab, the CMD/ PSPCL, and the Chief Executive NPL was constituted by the Commission by its order dated 19.02.2014 in Petition No. 57 of 2013 to resolve day-to-day issues related to the project. The Standing Committee was the final authority to determine the additional cost of coal from alternative sources/ imported coal procured by NPL to meet the shortages in coal supplied by CIL or its subsidiaries.

77. For FY 2017-18, the Standing Committee had allowed procurement of 1.5 lac MT of imported coal for the paddy season during June-September 2017, while NPL had proposed importation of 5.05 lac MT of imported coal.

78. The gist of the dispute in the present case relates to the balance 3.55 lac MT of coal that was imported by NPL after the paddy season, for which NPL is claiming a pass-through of the cost of coal. This is when there is no approval by the Standing Committee for such procurement of imported coal, the said procurement was not in accordance with the protocol laid down by the orders of this Tribunal and by the PSERC; NPL knowing full well that the supply of power using imported coal/ alternate coal during non-paddy season at higher coal cost would lead to such supply being out of the merit order despatch and there being a specific stipulation contained in the order dated 11.06.2015 of PSERC that such

nature of supply using imported coal will be paid for only at the actual cost of purchase of fuel or the rate equivalent to domestic linkage coal whichever is less.

79. In the premise, NPL is entitled to claim for use of imported coal during the non-paddy season of November 2017 to March 2018 only qua the domestic linkage coal rate for the 2.36995 lac MT assessed by the PSERC based on the GCV and other applicable parameters. The balance of 1.18005 Lakh MT was held to be not required to be used for electricity generated and supplied, and cannot be considered for any payment of tariff or for any compensation. There cannot be any claim towards the price of imported coal only based on the same having been procured. The price of imported coal can be claimed only if the coal is prudently used as per the parameters to convert the same into units of electricity, and the tariff is strictly claimed as monthly energy charges as per Schedule VII of the PPA.

RELEVANT DATES 09.04.2007 Nabha Power Limited (‘NPL’), established as a Special Purpose Vehicle (‘SPV’) for a power project of 2x600 MW to be established at Rajpura, Punjab, by selecting a project developer through a tariff-based competitive bidding process under S. 63 of the Electricity Act 2003. 11/ 18.12.2008 South Eastern Coalfields Limited (SECL) issued a letter of assurance to NPL for 5.55 MT per annum. 18.01.2010

Pursuant to a competitive bidding process, L&T Power Development Limited was selected, and it acquired the shares of NPL. PPA between NPL and PSPCL for the generation and

supply of electricity in the terms and conditions contained in the PPA. The obligations of the respective parties in regard to the Fuel dealt with in the PPA. PSPCL's obligation is to provide, as part of the Initial consent, the long-term coal linkage. FSA to be entered into by NPL. 31.12.2012

Order was passed by the PSERC in Petition No. 56 of 2012 filed by NPL regarding the availability of coal for the revised capacity of 2x700 MW. The Tribunal held that the bidding was done on the basis of the LOA issued by SECL/CIL, and PSPCL cannot be made liable to arrange for the coal requirement for the increased capacity of the plant at 2X700 MW. The operative part of the order reads as under:

“Conclusively, the Commission holds LoA and PPA are to be treated as one document/contract and followed/operated in tandem. NPL to vigorously pursue the matter with all concerned Government authorities e.g. SECL, CIL, Ministry of Coal, MoP and CEA etc. for maintaining the status quo with regard to the supply of the coal committed as per the LoA as also for additional allocation of coal required for running the plant as per PPA. On its part, PSPCL will fully co-ordinate and co-operate with the petitioners to pursue the matter at the highest level, with the State as well as Central Government to fulfil the assurance contained in the LoA. Similarly, PSPCL to co-ordinate and co- operate with the NPL to pursue the matter for getting additional allocation of coal to run the plant as per PPA.

…….” 21.08.2013

In Appeal filed by NPL being Appeal No. 68 of 2013, in IA No. 227 of 2013, this Tribunal passed a consent order in regard to procurement and use of coal in case of shortfall in availability of linkage coal from SECL. 19.02.2014

PSERC’s order in petition nos. 57 of 2013 and 04 of 2015 filed by NPL providing the protocol for the purchase of alternate coal with reference to the consent terms dated 21.08.2013 recorded by the Tribunal. 11.06.2015

PSERC’s order in Petition No. 4 of 2015 filed by NPL inter alia concludes as under: In view of sub-paras (a), (b) and (c) above, the Commission is not inclined to allow the prayer of NPL with regard to allowing continuance of the directions issued by the Commission vide its Order dated 19.02.2014 in petition no.57 of 2013 on the same terms and conditions as provided therein. However, in case NPL still insists on procuring coal from alternate. sources, it may do so, but in that eventuality, the cost of coal so procured by NPL or the cost of domestic coal most recently supplied by SECL/CIL, to be worked out on GCV equivalent basis by the Standing Committee on NPL Project appointed by the Commission in its aforementioned Order dated 19.02.2014, whichever is lower, shall be applicable. 16.03.2016

This Tribunal, based on the consent of the parties, decided the Appeal by Final Judgment based on the interim order dated 21.08.2013 passed by it.

26.05.2017

Standing Committee constituted under the orders of the PSERC decided on NPL getting 1.50 lakh MT of imported coal for its requirement during the paddy season of FY 2017-18. 06.03.2018

PSERC in petition no. 67 of 2017 filed by NPL stated that the decision of the Standing Committee on the quantum of shortfall for coal requirements of NPL is final. 04.12.2019

Impugned Order passed by the State Commission. In the Impugned Order, the State Commission has allowed NPL to procure an additional quantum of 2.36995 MT (in addition to 1.5 MT) as against the claim of NPL of 3.55 MT.

80. In the facts and circumstances mentioned above, the following issues arise for consideration in the present proceedings:

i. Whether the cost of imported coal used by NPL during the period November 2017 to March 2018 is liable to be a pass-through under the PPA to PSPCL at the imported coal rate and not restricted to the domestic linkage coal rate?

ii. Whether the requirement of alternate coal/ imported coal is to be considered based on the quantum of import or according to scheduled generation as provided under Schedule 7 of the PPA?

PPA provides for domestic coal, and imported coal can be availed based on the pass-through of cost only by consent of the parties:

81. The PPA dated 18.01.2010 has been entered between NPL and PSPCL pursuant to a competitive bidding process under section 63 of the 2003 Act. The law is settled that a contract can be altered only by the parties to the contract, and the same cannot be varied by any court of law. The PPA in the present case defines ‘fuel’ as domestic coal. Any variation in terms of fuel, namely, imported coal, can be made only with the mutual consent of the contracting parties.

82. The constitution of the Standing Committee clearly underlines the position that any approval on the import of coal for the project can be given only with the consent of the contracting parties who are duly represented in the Standing Committee.

83. In view of the above, neither the Standing Committee nor the Commission can allow any recovery of the cost of imported coal to NPL if such importation has not been agreed upon by both the contracting parties, i.e., NPL and PSPCL, through the Standing Committee.

84. In the present case, it is the stated position that PSPCL was not agreeable to the importation of any coal beyond 1.5 lac MT, and even that only during the paddy season, i.e., June-September 2017. After the approval for 1.5 lac MT decided by the Standing Committee on 26.05.2017, there was no occasion for NPL to seek and the Standing Committee to hold any further meeting to consider any quantum in excess of 1.5 lac MT related to the paddy season of June- September 2017. In other words, the provision in the Minutes of Meeting of the Standing Committee while approving the 1.5 lac MT, that if there is a need a further meeting could be held, was with reference to the paddy season only and

the same could not be a subject matter for considering any coal requirement beyond the paddy season. In such circumstances, NPL could not have unilaterally proceeded to procure 3.55 lac MT of imported coal and cannot be allowed to pass on the cost of such imported coal to PSPCL, with reference to the non-paddy season from October 2017 to March 2018.

Approval of importation of 1.5 lac MT coal by Standing Committee:

85. The generation and sale of electricity using alternative coal, i.e., imported coal, e-auction coal, etc., other than linked coal, results in high per unit energy charges, i.e., cost of fuel, and therefore, PSPCL opts to take the supply of electricity only when it considers necessary. This is generally in peak paddy season when the load in Punjab is significantly higher. The non-scheduling of energy by PSPCL for generation using higher cost of coal is a prerogative of PSPCL; the only right of NPL is then to get deemed generation-fixed charges as per Schedule 7 of the PPA.

86. NPL is required to declare availability of capacity on imported coal only after getting the approval of the Standing Committee to use imported coal and if such imported coal is used in terms of the agreed protocol. The relief for energy charges cannot be granted if NPL had generated electricity through the use of imported coal or e-auction coal which had not been approved by the Standing Committee or contrary to the decision taken by the Standing Committee.

87. As mentioned hereinabove, during the relevant period, the Standing Committee had approved the procurement of imported coal/alternate coal only to

the extent of 1.5 MT., and not a quantum in excess thereof. This was for the peak paddy season generation. Nobody had allowed much less compelled NPL to generate any quantum by use of imported coal in excess thereof, particularly during the period October 2017 to March 2018, the off-peak period in Punjab. NPL cannot subject PSPCL/consumers to pay higher costs for electricity by using imported coal when NPL has not followed the due process.

88. If NPL had proceeded on its own without the sanction of the Standing Committee to procure an additional quantum of imported/ alternate coal and used it for declaration of availability, the consequence as provided in the PSERC Order dated 11.06.2015 should follow and NPL should be entitled to energy charges only at the rate equivalent to domestic linkage coal price and not the price of imported/ alternate coal. NPL cannot take advantage of its own wrong in not acting in accordance with the prescribed process/ protocol.

89. The minutes of the meeting of the Standing Committee dated 26.05.2017 are available at page 264 of Vol. II of Appeal No. 22 of 2020. It is evident and obvious on a complete reading of the document that it discusses the issue of procurement of coal from alternative sources during the paddy season (June- September 2017). It is pertinent to note that the discussion starts with the heading “Coal requirement during Summer/ Paddy season by NPL”. The basis of the discussion is clear from the reference to PSPCL memo No. 195 dated 10.03.2017, requesting NPL to arrange 100% availability of the plant during the paddy season. The table provided in para 4 of the document for the computation of shortfall in coal relates to the paddy season. This is evident from Sr. No. 1 of the table, which shows PLF @95%, i.e., the higher PLF desirable during paddy

season over and above the normative PLF of 85%. The washed coal requirement has been shown at @20.35 lac MT, which is less than the ACQ of 5.55 MTPA of domestic coal provided by SECL/ CIL for the project. Further, the paragraph immediately after the table clearly shows that NPL had conducted a bid process for procuring up to 5 lac MT of imported coal to meet “the demand of 100% availability as indicated by PSPCL vide aforesaid memo”.

90. The approval of the Standing Committee has been recorded at page 265 (Vol II of Appeal 22 of 2020). The first paragraph of the approval clearly shows that a quantity of only 1.5 lac MT has been allowed to be utilized during June- September 2017. Para 2 clearly states that NPL will procure and schedule the imported coal as per their requirement and ensure its use in the summer/ paddy season only, i.e., up to 30.09.2017. It is with regard to the requirement of imported coal during the paddy season that para 4 states that the Standing Committee will review the position after 15 days. Having regard to the subject matter of the discussion and the approval, it is clear that only 1.5 lac MT of coal has been allowed to be imported by NPL for meeting PSPCL’s requirement of 100% availability during the paddy season.

91. An argument was advanced by the counsel for NPL that para 4 does not limit itself to the paddy season but also relates to the balance of the 5.05 lac MT of coal for which bidding has been conducted on 13.05.2017. From the submissions in the paragraphs above, it is clear that the proposal for 5.05 lac MT of imported coal was made specifically for the paddy season and not for the entire financial year.

92. Further, the submissions of NPL with regard to the procurement of 5.05 lac MT of coal through bidding process dated 13.05.2017 as recorded in the minutes, would clearly demonstrate that NPL had proceeded with the procurement of 5.05 lac MT of imported coal without prior permission/ approval of the Standing Committee and without even first referring the matter to it. In other words, the procurement should have been restricted to 1.5 lac MT in terms of the protocol already settled and being implemented. To this end, it is clear that the entire procurement in excess of 1.5 lac MT of coal was done in an unauthorized manner, and only 1.5 lac MT of coal approved by the Standing Committee for the paddy season can be considered for pass-through of cost. It is also clear that NPL, having already proceeded with the tender for 5.05 lac MT of coal on 13.05.2017, is now trying to pass through the cost of the additional coal that had been procured even before referring the matter to the Standing Committee.

93. Counsel for NPL had also relied on the minutes of the meeting of the Standing Committee dated 19.05.2016 to emphasize that even on earlier occasions, a higher quantity of imported coal up to 6 lac MT was allowed by the Standing Committee. It is pointed out that the document of approval dated 19.05.2016, relied upon by NPL, clearly shows that the amount of 6 lac MT of coal was allowed to be imported only for the paddy season up to 30.09.2016. This is clear from para 2 of the approval at page 262. It is also important to point out that at para 1 of the approval, the Standing Committee has clearly directed that in case the quantity of imported coal procured through CIL and the coal imported directly by NPL exceeds 6 lac MT, then the cost of such excess coal has to be worked out as per the order of the Commission dated 11.06.2015 in petition no. 4 of 2015. In contrast, as against 6 lac MT for FY 2016-2017, mutatis mutandis,

the approval for FY 2017-18 (in both cases paddy season) was only 1.5 lac MT and not more than that.

94. The order of the Commission dated 11.06.2015 in petition no. 4 of 2015 has been relied upon by NPL and referred to in para 7.23 of Vol I Appeal No. 22 of 2020. Amongst other things, the Commission in such order has indicated that if NPL insists on procuring coal from alternate sources, the cost of coal so procurement by NPL or the cost of domestic coal most recently supplied by SECL/ CIL to be worked out on GCV equivalent basis by the Standing Committee, whichever is lower, shall be applicable. The relevant extract from the Order dated 11.06.2015 is as under:

“In view of sub-paras (a), (b) and (c) above, the Commission is not inclined to allow the prayer of NPL with regard to allowing continuance of the directions issued by the Commission vide its Order dated 19.02.2014 in petition no.57 of 2013 on the same terms and conditions as provided therein. However, in case NPL still insists on procuring coal from alternate. sources, it may do so, but in that eventuality, the cost of coal so procured by NPL or the cost of domestic coal most recently supplied by SECL/CIL, to be worked out on GCV equivalent basis by the Standing Committee on NPL Project appointed by the Commission in its aforementioned Order dated 19.02.2014, whichever is lower, shall be applicable.”

95. It is important to point out that the approval relied upon by NPL is dated 19.05.2016, which is post the consent order passed by this Commission dated

16.03.2016, which upholds that “Standing Committee shall also be the final authority to determine the additional cost of coal from alternative sources/ imported coal procured by NPL to meet the shortages in coal supplied by CIL or its subsidiaries”. Therefore, the directive of the Standing Committee with regard to excess coal, as indicated in the above paragraph, is binding on NPL as part of the terms and conditions for the procurement of alternate/ imported coal.

Consent order passed by this Tribunal dated 16.03.2016:

96. This Tribunal in the consent order has taken note of the interim order dated 21.08.2013 that was earlier passed by the Full Bench of this Tribunal in Appeal No. 56 of 2013. The interim order had been passed in view of the limited availability of 65% of the ACQ of domestic coal during the first year of operation of the plant. This Tribunal also extracted the interim order passed by the Commission vide order dated 19.02.2014 in Petition No. 57 of 2013, which dealt with the protocol set out by the Commission for the procurement of imported coal. These two orders were made part of the Final Judgment. This Tribunal further noted that in the event of any shortage of coal in the future for reasons like shortage of any kind of coal, namely, domestic coal, or shortage of railway rakes or any other kind of transport not attributable to the Appellant, the Commission was directed to consider such reasons and pass appropriate orders at appropriate stage without undue delay.

97. A reading of the above order has been sought to be given by the Counsel for NPL to suggest that it was binding on the Commission to not only allow importation of coal in case of any shortage of domestic coal but also to allow the

cost of such imported coal to be recovered from PSPCL. Contrary to such submissions, no such direction has been issued by this Tribunal. The order merely directs the Commission to consider the reasons for the shortage and pass appropriate orders at an appropriate stage. It is most respectfully submitted that such a direction cannot be read to be a carte blanche to the Commission to pass any orders allowing importation or the cost of imported coal without the approval of PSPCL, as that would amount to altering the terms of the PPA. In view of the above, NPL’s submission that the State Commission has proceeded contrary to the orders of the Tribunal is misplaced and contrary to records.

Communications relied upon by NPL:

98. NPL has relied on various correspondences addressed by itself, NPL, and the Government of Punjab to the Ministry of Coal, as well as Coal India Ltd., for securing maximum supply of domestic coal, as a justification for allowing the cost of imported coal to the extent of 3.55 lac MT. It is submitted in this regard that a plain reading of these letters would show that the parties were following up with MOC/ CIL with regard to the shortfall in the supply of domestic coal and the requirement of additional domestic coal, having regard to the demand situation in the state. The said letters have no correlation whatsoever with the importation of coal or even suggestive of any approval/ consent on the part of PSPCL for the use of imported coal by NPL beyond the paddy season.

99. It is pertinent to point out that PSPCL under the PPA has the option not to avail supply of electricity from NPL during any period for which it may be liable for payment of fixed charges in accordance with the terms of the PPA. However,

PSPCL is not under any compulsion to agree to NPL’s request for the use of imported coal. The use of imported coal would result in an increase in tariff, which would have a cascading effect on the consumer tariff. PSPCL, as the distribution company, has the right not to schedule power using imported coal to avoid the increased cost of supply to consumers.

100. It is relevant to point out in this regard that the submissions of PSPCL with regard to their decision to schedule power from NPL’s project for the period post September 2017 using imported coal, have not been dealt with and addressed by the Commission, even though PSPCL’s submissions in this regard have been recorded at para 3.6 and para 3.9 of the impugned order:

“3.6 PSPCL had also considered the energy based on the merit order purchase at the domestic coal price. In the circumstances, for such period when NPL was not required to use the imported/ alternate coal in view of the available stock of the domestic coal to meet the requirements of the energy scheduled by PSPCL, there cannot be any claim for higher variable cost on account of the use of imported coal by PSPCL. Otherwise, it would amount to varying the merit order considered by PSPCL at the time of scheduling the electricity. … … … …

3.9 PSPCL was directed vide order dated 09.02.2019 to provide the following: … … … …

(iv) In the submissions dated 05.02.2019, PSPCL had enclosed a copy of minutes of Standing Committee Meeting on NPL project held on 28.12.2018. In the minutes PSPCL while giving reference of the Commission’s Order dated 11.06.2015 in petition no. 04 of 2015 recorded that it has already paid energy charges of the units generated by NPL from November 2017 to March 2018, using imported coal by considering coal of lower value based on the above- mentioned order of PSERC. As the facts and circumstances in the said order/ petition were specified for the period from April 2014 to October 2014, it may be explained by PSPCL as to how the same was made applicable for making payment of energy charges for the units generated by NPL using imported coal for the project for the period mentioned in the instant petition. … … … …

3.10 That for the year 2017-18, considering the coal requirement of NPL and the quantum of domestic linkage coal procured by NPL, there is a quantum of 2.10 lac MT of alternate coal required to be procured by NPL. Out of the above, 1.5 lac MT was already permitted to be procured for the paddy season. The balance quantum required by the Petitioner for the year was only 0.60 lac MT from alternate sources as against the higher claim by the Petitioner i.e. 3.55 lac MT. The above shortfall in the domestic coal availability is based on 85% plant availability for the year. This is on account of the fact that the alternate coal procurement and usage is only on minimal basis and further the full fixed charges of NPL get recovered at 85%. The

normative availability of 85% is to be determined on an annual basis. If NPL operates the power plant at a capacity more than 85% during paddy season, suitable adjustment is available during non-paddy season and NPL should as a prudent utility arrange for the coal requisition of domestic coal accordingly. In this regard, the requisition of quantum of domestic coal can also be arranged in a phased manner to meet paddy season higher generation. NPL cannot be permitted to gain incentive by use of alternate coal, citing the shortfall in domestic coal availability.”

101. NPL has also argued that it had sent multiple letters to convene the meeting of the Standing Committee for consideration of additional imported coal. NPL then alleges that no meeting was convened by the Standing Committee, as a result of which NPL was perforce required to import coal since one of the units of the plant was facing a shutdown from 15.09.2017 to 05.10.2017. Such an argument is totally misplaced, as in this regard no grievance had been raised by NPL in these proceedings with regard to non-availability of coal during the paddy season, requiring the use of imported coal in excess of 1.5 lac MT. The only dispute is in relation to the imported coal used by NPL for the period from November 2017- March 2018, which was after the paddy season, there is distinctive requirement of power in Punjab during paddy season vis-à-vis non-paddy season, the earlier years also exhibit the need of power by PSPCL during paddy season, such distinguishing features of the paddy season cannot be equated and claimed to be applicable for the non-paddy season. In these circumstances, PSPCL never agreed to such imported coal being used during the non-paddy season. Since imported coal is allowed only for the paddy season, the lack of any meeting of the

Standing Committee would not have been of any relevance, given the lack of consent by PSPCL.

The Commission’s decision to allow 2.36995 lac MT of alternate/ imported coal above 1.5 lac MT:

102. In view of the submissions made above in the written submissions, it is most respectfully submitted that the Commission has exceeded its jurisdiction by allowing recovery of cost of imported coal over and above what was allowed by the Standing Committee, since it does not have the power to alter the terms of the PPA, which provides for use of domestic coal for the project. It is submitted that the Standing Committee cannot be said to be acting as a representative of the Commission and, therefore, the Commission had the power to determine either the quantity or the cost of imported coal beyond what was consented to by the contracting parties.

103. As pointed out earlier, the Standing Committee consisted of representatives of the contracting parties, i.e., NPL and PSPCL. As a result, the Standing Committee could approve the importation of coal in variation with the terms of the PPA where both the contracting parties consent to such imports.

104. NPL has submitted that the Commission has erred in not allowing recovery of the cost of the entire amount of additional imported coal of 3.55 lac MT, even though the parties have agreed that such coal was actually utilized. In support of its contention, NPL has relied on PSPCL’s reply dated 06.08.2020 wherein reply to para 9.11 of the Appeal, wherein PSPCL has submitted that the actual quantity

used by NPL is not disputed, but the pass through of the same cannot be permitted. It is pointed out in this regard that the factum of import of 5.05 lac MT of imported coal is one borne by records and cannot be denied. This cannot be interpreted out of context that PSPCL agreed that the entire quantum of 3.55 lac MT was consumed by NPL for the electricity generated and supplied during the non-paddy season in a prudent manner, de-hors the parameters, including GCV of the coal. The reference of PSPCL at the relevant time was to be construed in the context that whatever the imported coal prudently consumed by NPL for generation and supply of electricity during non-paddy season can be eligible only for the domestic linkage coal rate and not that NPL could on its own incur any quantum of coal to generate such electricity. Such are the submissions of the parties that do not debar the Commission from carrying out its prudence check with regard to the actual coal used for generation, having regard to the scheduled generation from the plant for the relevant period.

105. Further, the submission of NPL that the entire amount of coal imported should have been considered without having regard to the scheduled generation from the plant is contrary to the express terms of Schedule 7 of the PPA and lacks merit.

Judgment of this Tribunal dated 19.07.2021 in the case of Talwandi Sabo Power Ltd.:

106. NPL has sought to rely on paragraphs 175 to 177 of the judgment to support its arguments that NPL is entitled to recover the entire cost of the imported coal.

The judgment in the Talwandi Sabo case is clearly distinguishable from the facts of the present case on two counts:

(i) In the Talwandi Sabo project, the coal available for the project, as indicated in the RfP, was E-grade coal with GCV of 4500-4600 Kcal/ Kg with ash content of 33-34%. However, subsequently, MCL had issued an LOA in the name of Talwandi Sabo, which was not provided to the successful bidder till after the execution of the PPA. The coal supplied by MCL was ultimately in the range of 2900-3000 Kcal/ Kg, having an ash content of approximately 42%. As a result, the quantum of coal supplied by MCL was not sufficient to meet the requirement of 100% availability that was indicated by PSPCL. As against this, the LOA provided by SECL/ CIL with grade F coal of 5.55 MTPA, adequate for a 1200 MW plant, was made available to the bidders at the time of bidding for the Rajpur thermal power plant. NPL bid for a 1320 MW plant based on the LOA and subsequently, enhanced the capacity to 1400 MW.

It is interesting to note that the Commission in its order dated 31.12.2012 had taken note of these facts and in its findings has held the following:

“The Commission is of the view that since LTPDL was in full knowledge of the quantity as well as quality/ grade and even origin of coal allocated for the Project at the time of issuance

of RfQ/ RfP and submitted its bid for 1320 MW (enhanced to 1400 MW) of its own volition, it would be unfair to presume that the procurer (PSPCL) would provide allocation beyond the said quantum especially when there was no representation/ assurance on this account by the procurer in the bid documents. Moreover, NPL signed the PPA on the same day of signing the SPA although there was no compulsion on this account. The Commission is of the opinion that having acquired NPL, in whose name the LoA was issued, with all its rights and obligations, the petitioners cannot now after more than 33 months, put the entire responsibility of arranging the coal on the respondent. Accordingly, the petitioners have to take action ac required for arranging the coal quantity in excess of the coal linkage as per LoA for achieving energy generation as per PPA.”

This finding of the Commission has not been set aside by this Tribunal in its judgement dated 16.03.2016.

ii) As far as non-availability of domestic coal is concerned, this Tribunal at para 178 of the Talwandi Sabo judgment has upheld the right of the generator to seek payment of deemed capacity charges on account of non-availability of coal. However, PSPCL cannot be forced to bear the cost of imported coal when the same has been procured without its consent.

Our Observations and Conclusions

107. The two captioned appeals are assailing the same Impugned Order dated 04.12.2019 in Petition No. 28 of 2018 passed by the State Commission.

108. NPL had filed the first captioned appeal, being aggrieved by the decision of the PSERC vide the Impugned Order partly rejecting NPL’s claim and consenting post facto approval for procurement of only 2.36995 Lakh MT of alternate/imported coal for which monthly energy charges are payable to the Applicant along with a late payment surcharge by PSPCL as against a claim of 3.55 Lakh MT of imported coal.

109. On the contrary, PSPCL has challenged the aforesaid decision of allowance of 2.36995 Lakh MT of alternate/imported coal through the second captioned appeal.

110. Therefore, the only issue before us is “Whether the State Commission has appropriately allowed 2.36995 Lakh MT of imported coal as against the claim of 3.55 Lakh MT of imported coal, or should have allowed 3.55 MT.”

111. The Appellant submitted that the brief issue raised in this Appeal is whether PSERC ought to have proceeded to undertake an independent calculation of the requirement of quantum of imported coal once it was held that the two preconditions for procurement of alternate/imported coal prescribed in the Final Judgment had been met, and the data of actual coal usage was provided in compliance with PSERC’s orders dated 13.02.2019.

112. It is, therefore, important to examine first the Impugned Order in the light of the issue raised by NPL in Appeal No. 22 of 2020, the relevant extract of the Impugned Order is quoted as under:

“Findings and Decision As per the data furnished by NPL, it received a total quantum of 41.31451 Lakh MT of coal from linkage and ad-hoc sources. NPL has sufficiently demonstrated through its submissions that it took up the matter consistently with SECL to supply coal for full linkage instead of curtailed linkage of 75%. The matter was also pursued by PSPCL and Govt. of Punjab with CIL/SECL for supply of additional/full linkage coal. NPL also procured coal from ad-hoc sources and tried to maximize the supply of coal. The Standing Committee in its meeting held on 26.05.2017 permitted NPL to procure 1.5 Lakh MT of imported coal for the paddy season from June, 2017 to September, 2017 against the projected shortfall of 5.05 Lakh MT stating that any requirement beyond 1.5 Lakh MT of imported coal shall be reviewed after 15 days. However, it did not convene another meeting till end November, 2017 despite several attempts by NPL. In the meeting convened on 30.11.2017 after NPL approached Hon’ble APTEL, the matter was again not decided, rather a query was raised with regard to the scope of the Standing Committee. The Commission clarified the same in its Order dated 06.03.2018 in petition no. 67 of 2017 subsequently filed by NPL that the Committee shall be operative for the term of the PPA

and also be the final Authority to decide the shortfall of domestic coal from CIL or its subsidiaries for operation of the Plant in terms of the PPA. In the interim Order dated 11.10.2018 in this petition, the Commission directed the Standing Committee to submit its recommendations regarding the post facto approval for purchase of 3.55 Lakh MT coal from alternate sources by NPL, by 31.10.2018. PSPCL vide its submissions dated 05.02.2019 submitted the minutes of the Standing Committee meeting held on 28.12.2018 wherein the Committee had recommended that in view of the divergent views of NPL and PSPCL, consensus was not reached. As per the monthly data submitted by NPL for FY 2017-18 and brought out in the calculations herein below, the Commission observes that the scheduled generation during this period was 8680.441 MUs. The linkage coal requirement for the same works out to 47.81938 Lakh MT. As against this, the coal available from linkage sources was 42.48680 Lakh MT i.e. 41.31451 Lakh MT received during FY 2017-18 and the opening balance of 1.17229 Lakh MT in April, 2017. The coal requirement from alternate/imported sources has been worked out by considering the GCV of linkage coal as well as alternate/ imported coal on weighted average basis for the coal received during the period from April, 2017 to March, 2018 which works out to 4117 kCal/kg and 5673 kCal/kg respectively. Also, the quantity of the coal procured from alternate/imported sources of weighted average GCV 5673 kCal/kg have been converted to the weighted average GCV of

linkage coal i.e. 4117 kCal/kg for calculation purpose. Accordingly, the alternate/imported coal required by NPL for FY 2017-18 considering the NPL’s Quoted Net Heat Rate of 2268 kCal/kWh and so mentioned in the PPA dated 18.01.2010 works out to 5.33258 Lakh MT. This translates back to 3.86995 Lakh MT of alternate/imported coal of weighed average GCV of 5673 kCal/kg. Thus, as the coal required for scheduled generation was more than that available from linkage and ad-hoc domestic sources and also more than that allowed by the Standing Committee, there is a case for allowing the coal procured from alternate/imported sources in excess of 1.5 Lakh MT allowed by the Standing Committee. The quantum has been worked out in the following table.-----"

113. From the above, it can be seen that the Appellant has consistently followed up with SECL to provide more linkage coal due to the continuous shortfall faced in the power plant.

114. NPL also projected a shortfall of 5.05 Lakh MT of imported coal; however, the Standing Committee in its meeting on 26.05.2017 only approved 1.5 Lakh MT, stating that any requirement beyond 1.5 Lakh MT will be reviewed after 15 days.

115. However, the Standing Committee failed to convene a meeting till 30.11.2017, wherein the Standing Committee could not decide the matter, on the pretext of raising a query, whether it is competent to decide the shortage of coal, that to after deciding the issue earlier.

116. Further, complying with the directions passed by the Commission vide its Interim Order dated 11.10.2018 directing the Standing Committee to submit its recommendation latest by 31.10.2018, PSPCL vide letter dated 05.02.2019 submitted the minutes of the Standing Committee meeting held on 28.12.2018, wherein the Committee had recommended that in view of the divergent views of NPL and PSPCL, consensus was not reached.

117. We find the conduct of the Standing Committee and the PSPCL completely uncalled for, unjust, and perverse, inter alia, against the decision of this Tribunal directing the State Commission to decide such issues within 60 days.

118. There was an unambiguous and clear direction to the State Commission to decide such matters, to consider the reasons, and pass an appropriate order at the appropriate stage without any procrastination or undue delay. Whereas in terms of Order dated 21.08.2013, this Tribunal has held that “The State Commission shall then decide the matter and pass the order accordingly as per law as expeditiously as possible but not later than 60 days from the date of the filing of the application.”, an Order merged with the Final

Judgment.

119. NPL cannot be penalized for the failure on the part of the State Commission, PSPCL, and the Standing Committee, specifically in light of non-compliance with the directions issued by this Tribunal.

120. NPL also submitted that it had to shut down Unit-1 of the Project on two instances for a cumulative period of 54 days due to the acute shortage of coal, which arose only because the meeting of the Standing Committee was not convened, a fact as noted by the State Commission in the Impugned Order.

121. Further, pleaded that under these circumstances, NPL was constrained to take proactive steps to arrange for imported coal on its own, to be in a state of readiness to declare availability to at least achieve the Normative Availability for the FY 2017-18 as per the PPA.

122. We agree that the decision of the NPL to take proactive steps is consistent with this Tribunal’s Final Judgment.

123. This Tribunal, vide the Final Judgment, also allowed the procurement of coal to meet the shortfall from the linkage coal, even, the Cabinet Committee on Economic Affairs (CCEA) taking into account the overall domestic availability and actual requirements of coal has also decided that to meet the balance FSA obligations, Coal India Limited (‘CIL’) may import coal and supply the same to the willing thermal power project on cost plus basis. The Thermal Power Projects may also import coal themselves. The Cabinet Committee also decided that the higher cost of imported coal is to be considered for pass-through as per the modalities suggested by the Central Commission.

124. The NPL submitted that the Final Judgment mandated two pre-conditions for allowing the cost of coal from alternative sources which are: (i) NPL is to give preference to the coal supplied by SECL over coal to be directly arranged by it

from alternative sources; and (ii) NPL is not to use the coal supply from the alternative sources unless warranted by the exigencies of short supply of coal by SECL in terms of the FSA, that too on ‘Minimal Usage’ basis.

125. NPL argued that it has complied with the above two conditions as laid down by this Tribunal, and none of the contesting parties challenge such facts. Also submitted that it has complied with the condition of use of alternate coal due to exigencies of short supply and on a minimal usage basis, as is evident from the following: i. Unit I of the Project was under shutdown for 54 days due to the unavailability of coal; ii. Despite procurement of 5.05 Lakh MT of alternate coal by NPL during the Financial Year 2017-18, to meet the shortfall of coal from linkage, the availability of the Project for Financial Year- 2017-18 was only 85.10%, which is merely 0.10% above the normative availability of the Project stipulated in the PPA; iii. NPL utilized alternate coal on a ‘Minimal Usage’ basis, which is substantiated by the blending ratio of the alternate/imported coal utilized by NPL with the linkage coal provided by SECL/CIL. Blending ratio for the Project during the disputed period of October 2017-March 2018 is 0%, 8%, 18%, 19%, 17%, and 23%, respectively, and this fact was duly submitted to PSERC vide the additional affidavit filed by the Appellant on 18.03.2019.

126. The above factual position submitted by the NPL was not challenged by PSPCL before this Tribunal.

127. In fact, PSPCL has admitted the actual quantity of alternate/imported coal procured by NPL during October 2017- March 2018 in paragraph 9.11 of the Reply and the fact that NPL has utilized the said coal on a Minimal Usage basis in paragraph 9.7 of the Reply, as under:

“9.7 ----- It is submitted that the Appellant may have utilized alternate coal on ‘Minimal Usage’ basis as prescribed by the Ld. Commission, but the minimal usage for an enhanced generation capacity and the additional coal requirement thereafter is the sole responsibility of the Appellant. It is submitted that the blending ratio for the Appellant’s Project during the disputed period of October 2017-March 2018 is 0%, 8%, 18%, 19%, 17%, and 23%, respectively and this fact was duly submitted to the Respondent Commission vide the additional affidavit tiled by the Appellant on 18.03.2019. ------- 9.11 ------ It is submitted that the actual quantity used by the Appellant is not disputed but the pass through of cost for the same cannot be permitted in view of the submissions made hereinabove.”

128. The objection raised by PSPCL on the issue of the enhanced capacity of the power plant cannot be accepted as the enhancement in the project capacity is as per the terms of the PPA, without affecting the obligation of arrangement of coal by the PSPCL; otherwise also this Tribunal vide Final Judgment has mandated procurement of imported coal in case of shortage in the linkage coal.

129. The PSPCL, in its Written Submission, has submitted that “the Rajpura thermal power project has been developed by NPL pursuant to a competitive bidding process carried out by PSPCL under section 63 of the Electricity Act, 2003 (herein “2003 Act”). The project was bid out under a Case II scenario where PSPCL as the procurer was responsible for arranging only the coal linkage for the specific quantum.”

130. The phrase “specific quantum” has not been defined at any place, however, it can only be the quantum required for the power plant to operate at 100% capacity, and once the enhanced capacity of 1400 MW has been accepted by the PSPCL, there is no reason to continue with the original capacity of 1200 MW.

131. We agree with the NPL that PSPCL accepted the bid for a contracted capacity of 1320 MW power plant, which was enhanced with the knowledge and consent of PSPCL way back in 2010 to the actual installed capacity of 1400 MW capacity, and despite a lapse of ten years PSPCL has now for the first time raised issues with respect to the same.

132. From the records, it is seen that NPL has procured and PSPCL has been paying for the procurement of imported coal at a capacity of 1400 MW since FY 2014-15. NPL has procured imported coal between 5.5 Lakh MT to 9.5 Lakh MT per year, every order since 2014, reflects project capacity as 1400 MW.

133. It is also the submission of PSPCL that “Since the fuel for NPL’s project is specified as domestic coal, PSPCL, in order to secure 100% generation capacity from the project during the paddy season, in case of shortage of

supply of domestic linkage coal agrees to the use of imported coal/alternate coal during such period which involve significantly higher fuel cost in comparison to the domestic linkage coal.”

We agree with the submissions of NPL that there was no reason for PSERC to have proceeded to itself undertake independent calculation of the requirement of quantum of imported coal more so specifically, given the data of actual coal usage provided and submissions made in relation thereto by NPL (in compliance of the orders dated 13.02.2019 and 02.09.2019, which clearly showed that NPL faced acute shortfall of domestic coal and that it used 3.55 Lakh MT of imported coal to meet such shortfall. Such facts were also accepted by PSPCL in their reply, “9.11 ------ It is submitted that the actual quantity used by the Appellant is not disputed”.

134. We observed that the monthly Coal Stock Physical Verification Reports certified by NPL and PSPCL as well as the coal status reports (comprising of quantity of coal received, coal consumption, coal stock of each day, including imported coal were uploaded on the website of NPL in terms of the order dated 19.02.2014, as merged with this Tribunal’s Final Judgment.

135. Also, the actual quantity of coal utilized by NPL was in the knowledge of PSPCL, vide the monthly invoices raised by NPL as per the PPA, which were not disputed by PSPCL and thus became conclusive as per Article 11.6.1 of the PPA.

136. The PSPCL also submitted that the procurement of the disputed quantity of 3.55 Lakh MT was not in accordance with the protocol laid down by the orders of this Tribunal and by the PSERC, further added that:

a. NPL knowing full well that the supply of power using imported coal/ alternate coal during non-paddy season at higher coal cost would lead to such supply being out of the merit order despatch, and b. there being a specific stipulation contained in the order dated 11.06.2015 of PSERC that such nature of supply using imported coal will be paid for only at the actual cost of purchase of fuel or the rate equivalent to domestic linkage coal, whichever is less.

137. The PSERC’s Order dated 11.06.2015 will be dealt with separately in the following paragraphs; however, we find no merit in the objections raised by PSPCL. This Tribunal vide the Final Judgment has given specific direction to consider and decide the shortage of coal vis-à-vis procurement of imported coal in a time-bound manner without any procrastination, but within 60 days. Therefore, the failure of the State Commission and the Standing Committee cannot be taken as a ground that the Generator has not complied with the protocol laid down by this Tribunal.

138. The Generator must always keep the plant ready and available during the contractual period, and any prudent expenditure or compliance by it must be allowed.

139. Regarding the merit order despatch, PSPCL has submitted that it has not prepared the merit order for imported coal and, as such, cannot be allowed to raise this contention now.

140. The reliance of the PSPCL on the State Commission’s Order dated 11.06.2015 is to be dealt with in the light of various judgments/ orders passed in this case.

141. The Appellant invited our attention to the past Orders on the issue of procurement of alternate/imported coal and the final settlement of the issue vide order 16.03.2016 by this Tribunal. The Appellant referred to the following judgments/ orders:

a) Commission’s Order dated 31.12.2012 in Petition No. 56 of 2012

“The Commission, therefore, holds that the remedies to the issues raised in the petition are duly covered under various Articles of the PPA, which is a comprehensive document, including the Force Majeure and Change in Law provisions. The petitioners are free to approach the competent authorities as per PPA having jurisdiction to adjudicate upon issue(s) at the appropriate time, as and when these arise.”

b) Tribunal’s Order dated 21.08.2013 in I.A. No. 227 of 2013 in Appeal No. 68 of 2013

“9. We agree with the Learned Sr. counsel for the Appellants that advance action is required to be taken to meet the expected shortfall in availability of coal from the linked domestic sources during the pendency of these Appeals as tendering process for import of coal takes time. We, therefore, directed both the parties to suggest the safeguards to be followed by the Appellants in procurement process and supply of imported coal. Accordingly, both the parties filed their affidavits giving their suggestions. We have heard their submissions also.

10. On going through those suggestions and having considered the submissions, we find that the balance of convenience lies in favour of the Applicants/Appellants to take advance action for procurement of coal from alternative sources to meet the anticipated shortfall from the linked sources of coal in order to operate the power plant as per the PPA.”

c) Commission’s Order dated 19.02.2014 in Petition No. 57 of 2013

PSERC allowed NPL to undertake a competitive bidding process for the procurement of coal from alternative sources to operate the power plant as per the terms and conditions of the PPA for a period of 12 months from the

expected commencement of operation of Unit-1 of the Project on coal, subject to the terms & conditions recorded therein.

d) Tribunal’s Order dated 02.12.2014 in I.A. No. 423 of 2014 in Appeal No. 68 of 2013

“-----Mr. Ganesan has no objection in allowing the IA-423 of 2014 and to continue the aforesaid interim order. Consequently, IA-423 of 2014 in Appeal No. 68 of 2013 praying for continuance of the aforesaid directions is allowed and the said interim order, dated 21.8.2013, shall continue till the final disposal of this Appeal.” Thus, the interim order was allowed to be continued based on ‘No Objection’ granted by the counsel for PSPCL.

e) Commission’s Order dated 11.06.2015 in Petition No. 4 of 2015

“… the Commission is not inclined to allow the prayer of NPL with regard to allowing continuance of the directions issued by the Commission vide its Order dated 19.02.2014 in petition no.57 of 2013 on the same terms and conditions as provided therein.

f) Tribunal’s Final Judgment dated 16.03.2016 in Appeal No. 68 of

“5) The learned counsel for the contesting parties have agreed to the situation that the Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal be hereby made absolute and be given effect to finally along with the relevant part quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013.

Hence, with the consent and agreement of learned counsel for the parties, we hereby dispose of this appeal with the aforesaid directions given in our Interim

Order

dated 21.08.2013 and State Commission’s order dated 19.02.2014 with one clarification, though, the State Commission is of the view that there is no shortage of coal at present, if there is any shortage of coal in future, at any point of time, for the reasons like shortage of any kind of coal namely, domestic coal or shortage of railway rakes or shortage of any other kind of transport not attributable to the appellant(s) then the State Commission is directed to consider the reasons and pass appropriate order at appropriate stage without any procrastination or undue delay. With these terms, the instant appeal is hereby disposed of.”

142. From the above, it is seen that the State Commission passed the order dated 11.06.2015 contrary to its earlier order 19.02.2014 passed in 57 of 2013

allowing the Appellant to procure imported coal, even to the fact that the matter is sub-judice in this Tribunal and an interim order dated 02.12.2014 was in place, with a direction that “Consequently, IA-423 of 2014 in Appeal No. 68 of 2013 praying for continuance of the aforesaid directions is allowed and the said interim order, dated 21.8.2013, shall continue till the final disposal of this Appeal.”

143. The State Commission cannot alter or modify the said interim order dated 02.12.2014 passed by this Tribunal by passing an order (order dated 11.06.2015), which is directly in the teeth of this Tribunal’s Order.

144. It is also to be noted that this Tribunal’s aforesaid Order was passed after the IA had not been objected to by PSPCL.

145. Under such circumstances, the decision of the Commission vide order dated 11.06.2015 cannot be allowed to be sustained and deserves to be rejected as perverse and unwarranted, inter alia, against the judicial discipline.

146. Undoubtedly, this Tribunal vide Final Judgment dated 16.03.2016 in Appeal No. 68 of 2013 has made the Interim Order dated 21.08.2013 as absolute, also merging para 35 of the State Commission’s Order dated 19.02.2014 as part of the Final Judgment, the relevant decision of this Tribunal is quoted again for clarity:

“The learned counsel for the contesting parties have agreed to the situation that the Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal be hereby made absolute and be given effect to finally along with the relevant part quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013.”

147. It is a settled principle of law that when an order is passed by a higher authority, the lower authority is bound thereby, keeping in view the principles of judicial discipline. Therefore, as of the date, the above Judgment is final and binding on the Commission, and it cannot pass any Order contrary to/ inconsistent with this Judgment, as the Tribunal’s Interim Order dated 21.08.2013 read with this Tribunal’s Order dated 02.12.2014 was in place.

148. Further, both the Appellants in the two captioned appeals have made their arguments based on the ‘Final Judgment’ dated 16.03.2016 passed by this Tribunal in Appeal No. 68 of 2013.

149. It is also submitted and agreed by the parties that the said Final Judgment is passed with their consent. It is, therefore, important to take note of the said judgment:

“JUDGMENT The instant appeal, being Appeal No.68 of 2013, under Section 111 of the Electricity Act, 2003 has been filed by the appellant

namely, Nabha Power Ltd. & Anr. (in short ‘NPL’) and L&T Power Development Ltd., against the Impugned Order dated 31.12.2012 in Petition No.56 of 2012, passed by the learned Punjab State Electricity Regulatory Commission (hereinafter referred to as the ‘State Commission’). The only issue involved in this appeal is that the appellant is a Special Purpose Vehicle and bidding under section 63 of the Electricity Act, 2003 was conducted. The controversy is about the coal arrangement as to who should arrange the coal and how fuel supply agreement is to be signed. The present tariff order is based on competitive bidding.

We have heard Mr. Parag Tripathi, learned Senior Advocate, assisted by Mr.Aniket Prasoon, for the appellant. We have also heard Mr.M.G.Ramachandran, assisted by Mr. Anand K. Ganesan and have gone through the material on record, including the Interim Order dated 21.08.2013 on IA No.226 of 2013 in Appeal No.56 of 2013 and IA No.227of 2013 in Appeal No.68 of 2013 and IA No. 130 of 2013 in Appeal No.84 of 2013, passed by a full Bench of this Appellate Tribunal.

The full Bench of this Appellate Tribunal vide Interim Order dated 21.08.2013 had ordered as under: “12. After considering the submissions of both the parties, we feel that suitable interim directions may be issued pending disposal of the above Appeals. Those are following: (A) The Appellants may undertake a transparent competitive bidding process for procurement of imported coal or coal from alternative domestic sources for their projects to meet the

expected shortfall in supply from linked sources in order to operate the power plant as per the terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of the first unit of the project on coal subject to the following conditions:

(i) The bids received from the intended suppliers pursuant to the tender process will be opened in the presence of the nominee of PSPCL (R-1).

(ii) The Appellants will select the prospective supplier of coal based on the lowest price discovered through the competitive bidding process.

(iii) No ‘take or pay liability’ or any compensation regarding off- take of coal supply or any loss on account of their obligations to third parties under the contracts entered into by the Appellants for procurement of coal from alternative sources will be passed on to PSPCL.

(iv) The Appellants will give preference to the coal supplied by CIL/subsidiaries of CIL over coal to be directly arranged by them from alternate sources and will not put any restrictions on supply of coal from the linked sources and accept the entire quantity of coal offered for supply from the linked sources.

(v) The Appellants immediately after opening of the price bids shall approach the State Commission by filing application to take approval of the State Commission regarding terms and conditions for procurement of coal and modalities for passing

through the cost of coal procured from alternative sources to PSPCL. The State Commission shall then decide the matter and pass the order accordingly as per law as expeditiously as possible but not later than 60 days from the date of the filing of the application. (B) We want to make it clear that the above interim order is to enable the Appellants to take advance action for procurement of coal from alternative sources and this will not give any right to the Appellants to raise any charges over and above that admissible to them as per the terms and conditions of the PPA. The actual procurement of coal from the alternative sources will be subject to the terms and conditions imposed by the State Commission. (C) The above interim order is without prejudice to the inter-se claims of the parties in these Appeals.

13. Thus, the IA nos. 226 of 2013 in Appeal no. 56 of 2013, 130 of 2013 in Appeal no. 84 of 2013 and 227 of 2013 in Appeal no. 68 of 2013 are disposed of with the above directions.”

After the passing of the aforesaid Interim Order by this Appellate Tribunal the learned State Commission, vide order dated 19.02.2014 in Petition No.57 of 2013 has observed as under: “35. Although under the Act, the Commission is not mandated to approve procurement of material yet taking a holistic view and considering that the competitive bidding process has been overseen by PSPCL and its representatives signed the technical and price bids opened on 27.09.2013 & 08.10.2013

for supply of imported coal and 18.12.2013 & 26.12.2013 for domestic coal during bid opening, the Commission approves the competitive bidding process undertaken by NPL for procurement of coal from alternative sources to operate the power plant as per terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of Unit-1of the Project on coal subject to the following terms & conditions and modalities for passing through cost of this coal: i. NPL shall requisition the coal regularly from SECL as per clause 4.5 ‘Scheduled Quantity’ of the FSA. ii. NPL will give preference to the coal supplied by SECL over coal to be directly arranged by it from alternative sources and will not put any restrictions on supply of coal from SECL and accept the entire quantity of coal offered for supply from SECL. iii. NPL will not use the coal supply from the alternative sources unless warranted by the exigencies of short supply of coal by SECL in terms of the FSA, that too on ‘Minimal Usage’ basis. iv. NPL will daily upload on its website, the inventory of coal received from SECL as well as alternative sources. The same shall, source-wise, include quantity requisitioned, quantity received, quantity used, balance quantity and quantity of coal form alternative sources used as a percentage of coal from SECL, on daily basis.

v. The coal consumption/stock position will be monitored fortnightly by Chief Engineer/Fuel, PSPCL Patiala from the information available on NPL website for review by PSPCL management. For the purpose, the officer so appointed may also visit the power plant, at least once a month and NPL shall provide access to the coal stockyard and relevant record to him. vi. Joint sampling and testing of coal ‘as received’ and ‘as fired’ shall be conducted and certified by NPL and PSPCL. For this purpose, a PSPCL team shall be permanently posted at NPL premises. vii. No ‘take or pay liability’ or any compensation regarding off- take of coal supply or any loss on account of NPL’s obligations to suppliers under the contracts entered into by it for procurement of coal from alternative sources will be passed on to PSPCL. viii. Coal from alternative sources/imported coal shall be procured by NPL at lowest prices arrived at through its tender overseen and signed by PSPCL on 27.09.2013 & 08.10.2013 for imported coal and 18.12.2013 & 26.12.2013 for domestic coal. Taxes and duties shall be payable/pass through as applicable. ix. As decided by Hon’ble APTEL in Para 12(B) of its Order dated 21.08.2013 this procurement of coal form alternative sources, as an advance action, will not give any right to NPL to raise any charges over and above those admissible to it

as per the terms and conditions of the PPA. The Commission has held in its Order dated 31.12.2012 in Petition No.56 of 2012 that LoA and PPA are to be treated as one document/contract and followed/operated in tandem. Now FSA has followed the LoA and both FSA as well as LoA provide a window for supply of imported coal. Thus the cost of imported coal/coal procured from alternative sources would be a pass through in terms of LoA/PPA. x. As a measure for smooth operation of the plant and to avoid unnecessary litigation, the Commission appoints a Committee comprising of Secretary, Power/Govt. of Punjab, CMD/PSPCL and Chief Executive/NPL as ‘Standing Committee on NPL Project’ to resolve day to day issues. The said Standing Committee shall also be the final authority to determine the additional cost of coal from alternative sources / imported coal procured by NPL to meet the shortages in coal supplied by CIL or its subsidiaries.

The learned counsel for the contesting parties have agreed to the situation that the Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal be hereby made absolute and be given effect to finally along with the relevant part quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013.

Hence, with the consent and agreement of learned counsel for the parties, we hereby dispose of this appeal with the aforesaid directions given in our Interim Order dated 21.08.2013 and State

Commission’s order dated 19.02.2014 with one clarification, though, the State Commission is of the view that there is no shortage of coal at present, if there is any shortage of coal in future, at any point of time, for the reasons like shortage of any kind of coal namely, domestic coal or shortage of railway rakes or shortage of any other kind of transport not attributable to the appellant(s) then the State Commission is directed to consider the reasons and pass appropriate order at appropriate stage without any procrastination or undue delay. With these terms, the instant appeal is hereby disposed of.”

150. From the above, it can be seen that this Tribunal decided the matter on the consent given by the Appellant and Respondent No. 2, PSPCL, herein, inter alia, directed as under:

i. Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal is made absolute, ii. Shall become the Final Judgment along with the relevant part (para 35) quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013. iii. Any shortage of coal in future, because of shortage of any kind in supply of domestic coal or shortage of railway rakes or shortage of any other kind of transport not attributable to the appellant(s), shall be considered by the State Commission and pass appropriate order at appropriate stage without any procrastination or undue delay.

151. Therefore, the directions vide Order dated 21.08.2013 has been made effective and final, thereby the Appellants may procure imported coal or coal from alternative domestic sources through a transparent competitive bidding process to meet the expected shortfall in supply from linked sources, to operate the power plant as per the terms and conditions of the PPA.

152. Certain conditions have been imposed for the Appellant, including:

i. The competitive process shall be conducted in the presence of the nominee of PSPCL, ii. The prospective supplier of coal based on the lowest price, iii. No ‘take or pay liability’ or any compensation regarding off-take of coal supply or any loss on account of their obligations to third parties under the contracts shall be passed on to the PSPCL, iv. Preference shall be given to the coal supplied by CIL/subsidiaries of CIL, and all the quantity supplied shall be consumed first, and v. To approach the State Commission for approval regarding terms and conditions for the procurement of coal and modalities for passing through the cost of coal procured from alternative sources to PSPCL.

153. The State Commission was directed to decide the matter within 60 days from the date of the filing of the application.

154. It is, thus, clear that the State Commission is bound to comply with the aforesaid Final Judgment of this Tribunal in strict terms without any deviations or modifications.

155. It is also noted in the Final Judgment that the Commission approved the competitive bidding process undertaken by NPL for procurement of coal from alternative sources to operate the power plant as per terms and conditions of the PPA for a period of 12 months from the expected commencement of operation of Unit-1 of the Project on coal subject to the following terms & conditions and modalities for passing through cost of this coal.

156. This Tribunal also noted the conditions put forth by the State Commission vide paragraph 35 of the order dated 19.02.2014 in Petition No.57 of 2013, and directed as under:

“---the contesting parties have agreed to the situation that the Interim Order dated 21.08.2013, passed by this Appellate Tribunal in the instant appeal be hereby made absolute and be given effect to finally along with the relevant part quoted above of the order dated 19.02.2014 of the State Commission in Petition No.57 of 2013.”

157. Thus, this Tribunal’s Interim Order dated 21.08.2013, along with paragraph 35 of the Order dated 19.02.2014 passed by the State Commission in Petition No. 57 of 2013, was made absolute through the ‘Final Judgment’ as quoted above.

158. This Tribunal also directed the State Commission to consider the reasons and pass appropriate order at appropriate stage without any procrastination or undue delay, if there is any shortage of coal in future, due to shortage of domestic coal or shortage of railway rakes or shortage of any other kind of transport not attributable to the Appellant.

159. It is also important to note the reasons for the passing of this Tribunal Order dated 21.08.2013, as under:

“

(a) The Cabinet Committee on Economic Affairs (CCEA) taking into account the overall domestic availability and actual requirements of coal has decided on 21.6.2013 that Fuel Supply Agreements (“FSA”) have to be signed for domestic coal quantity of 65%, 65%, 67% and 75% of Annual Contracted Quantity (ACQ) for the Remaining four years of the 12th Five Year Plan and to meet the balance FSA obligations, Coal India Limited (‘CIL’) may import coal and supply the same to the willing thermal power project on cost plus basis. The Thermal Power Projects may also import coal themselves. The Cabinet Committee also decided that higher cost of imported coal is to be considered for pass through as per modalities suggested by the Central Commission.

(b) Punjab State Corporation, the Respondent no. 1 in reply to the IA has reiterated that it is not responsible for arranging coal to meet the requirement of the project. Therefore, the Appellant

has taken upon itself to make arrangements by direct import of coal to meet the expected shortfall in supply of coal from the linked sources.

(c) The Appellant has signed FSA for Unit no. 1 of the Project on 11.5.2013 and also sought supply of imported coal from CIL. However, M/s. SECL, the coal company and subsidiary of CIL, in its letter dated 19.6.2013 has highlighted that the Appellant will be eligible to receive imported coal from CIL/SECL only after completion of “build up period” of 12 months. For Appellant’s Project, the build up period for imported coal is November-December 2014. Thus, for one year period the CIL/SECL’s commitment is neither enforceable nor redressable by the Appellant in terms of seeking damages, in case of short supply of coal.

(d) It takes about 7-8 months to receive first shipment of coal from the date of publication of NIT.”

160. Therefore, PSPCL itself has submitted in its reply, as noted in the Order dated 21.08.2013, that “the Respondent no. 1 in reply to the IA has reiterated that it is not responsible for arranging coal to meet the requirement of the project.”

161. However, the responsibility of arranging coal, under Case 2 Scenario 4 is with the procurer, that is, PSPCL, and its failure to arrange the same places PSPCL’s obligation under the contract to be carried out by the Appellant, and as such cannot be made to pay for the default of the procurer, PSPCL.

162. It is also a fact that there was a shortage of coal, and the Learned Senior Counsel on behalf of PSPCL admitted that the imported coal may have to be used at the Appellants’ power plants to meet the shortfall in domestic coal supply. However, submitted that the Appellant should approach the State Commission by filing a separate petition for approval to import coal.

163. Undisputedly, the State Commission also recognized the problem of a shortfall in the supply of coal from the linked source, as observed by this Tribunal under paragraph 7 of the aforesaid order, the State Commission has held as under:

“The Commission notes that at this point of time, SECL is assuring to supply 80% of the ACQ of coal. The petitioners’ apprehensions regarding not being able to operate the plant beyond a certain PLF are not entirely unfounded. A significant investment having been made by the developer in the Project, the respondent and the State Government have to, besides the developer, take up the matter with the quarters concerned for allocation and supply of adequate quantity/quality/grade of coal for the generating station to run successfully as per PPA.”

164. It is also the reasons that this Tribunal passed the afore said Judgment that on the use of imported coal from international markets as well as domestic e- auction of coal for running the project as per PPA, inter alia, decided that the relevant decisions and actions are required to be taken by the Appellant and they

could approach the State Commission for approval as per terms of the PPA at the appropriate time.

165. Undoubtedly, as noted also by this Tribunal, an advance action is required to be taken to meet the expected shortfall in availability of coal from the linked domestic sources during the pendency of these Appeals as tendering process for import of coal takes time, accordingly, directed both the parties to suggest the safeguards to be followed by the Appellants in procurement process and supply of imported coal, thereafter, obtaining the suggestions on affidavits giving their suggestions, the Tribunal passed the Order dated 21.08.2013, which has been made absolute.

166. This Tribunal also found the balance of convenience in favour of the Applicants/Appellants to take advance action for the procurement of coal from alternative sources to meet the anticipated shortfall from the linked sources of coal in order to operate the power plant as per the PPA.

167. Accordingly, the ‘Final Judgment’ passed by this Tribunal is a binding judgment for the State Commission; it is a settled principle of law that the judgments/Orders passed by the higher courts have to be complied with by the subordinate courts.

168. Any Order inconsistent or contrary to the judgment passed by the higher court is bad in law and deserves to be set aside.

169. It is a settled principle of law that “The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities.” (Reference: (para 6 of Union of India v. Kamlakshi Finance Corpn. Ltd., 1992 Supp (1) SCC 443 at page 445), it is also held that:

“7.------ The position now, therefore, is that, if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them.”

170. Further, in Jain Exports (P) Ltd. v. Union of India, (1988) 3 SCC 579, it is observed that:

“9. -----In a tier system, undoubtedly decisions of higher authorities are binding on lower authorities and quasi-judicial tribunals are also bound by this discipline.”

171. In CIT v. Ralson Industries Ltd., (2007) 2 SCC 326, it is held as under:

“When an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. This aspect of the matter has been highlighted by this Court in Bhopal Sugar Industries Ltd. v. ITO [AIR 1961 SC 182 : (1960) 40 ITR 618] in the following terms: (AIR p. 185, paras 8-9) “8. … If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal.

9. It must be remembered that the order of the Tribunal dated 22-4-1954, was not under challenge before the Judicial Commissioner. That order had become final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income Tax had made an application for a reference, which application was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal

over the Tribunal and we do not think that in the circumstances of this case it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier such a view is destructive of one of the basic principles of the administration of justice.””

172. In Mary Pushpam v. Telvi Curusumary, (2024) 3 SCC 224: (2024) 1 SCC (Civ) 761: 2024 SCC OnLine SC 9 at page 226, the Hon’ble Supreme Court has held as under:

“The rule of “Judicial Discipline and Propriety” and the doctrine of precedents has a merit of promoting certainty and consistency in judicial decisions providing assurance to individuals as to the consequences of their actions. The Constitution Benches of this Court have time and again reiterated the rules emerging from judicial discipline. Accordingly, when a decision of a coordinate Bench of the same High Court is brought to the notice of the Bench, it is to be respected and is binding subject to right of the Bench of such co-equal quorum to take a different view and refer the question to a larger Bench. It is the only course of action open to a Bench of co-equal strength, when faced with the previous decision taken by a Bench with same strength.”

173. Therefore, the Order dated 11.06.2015, being in contravention of the Interim Order dated 02.12.2014 and the Final Judgment passed by this Tribunal, has to be ignored/ set aside.

174. The PSPCL contended that the PPA dated 18.01.2010 has been entered into between NPL and PSPCL pursuant to a competitive bidding process under section 63 of the 2003 Act. The law is settled that a contract can be altered only by the parties to the contract, and the same cannot be varied by any court of law. The PPA in the present case defines ‘fuel’ as domestic coal. Any variation in terms of fuel, namely, imported coal, can be made only with the mutual consent of the contracting parties.

175. We find the above contention as unwarranted and irrational. PSPCL is one of the members of the Standing Committee responsible for approving the procurement of imported coal; further, before this Tribunal, PSPCL itself has given its consent to the passing of the Final Judgment having the main direction on the procurement of imported coal during the shortage of linkage coal, in fact there is no mention of paddy or non-paddy season.

176. Now, at this stage, we find such arguments misleading and baseless. NPL utilized/consumed 3.55 Lakh MT of alternate/imported coal during the disputed period from October 2017 to March 2018 for the generation of electricity scheduled by PSPCL, despite PSPCL being aware that the said energy was being generated from alternate/imported coal and would attract additional implications on the tariff. We could not find a single letter denying the supply of power using the imported coal. In fact, PSPCL in its reply has submitted that:

“9.11 The contents of paragraph 9.11 are wrong, misconceived and hence denied. It is submitted that the actual quantity used by the Appellant is not disputed but the pass through of cost for the same cannot be permitted in view of the submissions made hereinabove.” “9.14 The contents of paragraph 9.14 are wrong, misconceived and hence denied. The Commission failed to appreciate the fact that PSPCL had even made payment for power generated as per schedule given by PSPCL for the period May 2017 to September 2017 during which the imported coal to the tune of 1.50 Lakh MT was used. It is a matter of record that the said period and payment were not the subject matter of controversy and/or dispute before the Respondent Commission.”

177. It is noted here that PSPCL was duly informed in advance by NPL regarding the procurement of coal from alternate sources, and the additional implication of the same on the tariff by way of letters dated 16.11.2017 and 10.03.2018, and despite being aware of the same, PSPCL had scheduled power from the Project. The State Commission has also taken note of the same.

178. The PSPCL also argued that in case NPL had proceeded on its own without the sanction of the Standing Committee to procure an additional quantum of imported/ alternate coal and used it for declaration of availability, the consequence as provided in the PSERC Order dated 11.06.2015 should follow

and NPL should be entitled to energy charges only at the rate equivalent to domestic linkage coal price.

179. We decline to accept the above argument, as the order dated 11.06.2015 is contrary to the Final Judgment passed by this Tribunal, and as such has to be ignored, as the only Order that stands today is the Final Judgment.

180. It is also clear that the Final Judgment renders a decision that the imported coal need be procured in case there is a shortage of coal, irrespective of whether it is during the paddy or non-paddy season; therefore, any contention restricting procurement during paddy season is in direct non-compliance of the Final Judgment and must be rejected.

181. The Standing Committee cannot act contrary to this Tribunal’s directions in the matter.

182. We also agree with the submissions of the NPL that the Post facto approval for procurement of coal was sought only for the disputed period from October 2017 to March 2018, and that there was no dispute between NPL and PSPCL with respect to procurement of alternate/imported coal of 1.5 Lakh MT from May 2017 to September 2017 which the Standing Committee specifically mandated vide its MoM dated 26.05.2017.

183. As already recorded in the preceding paragraphs, PSPCL had even made payment for power generated as per the schedule given by PSPCL for the period

May 2017 to September 2017, during which the imported coal to the tune of 1.50 Lakh MT was used.

184. Therefore, there was no reason for the State Commission to enlarge the disputed period as the said period of May 2017 to September 2017, and payments were not the subject matter of controversy and/or dispute before PSERC.

185. However, PSERC has erred in including the undisputed period, i.e., from April to September 2017, in its calculations for the quantum of coal required by NPL to meet the shortfall in coal, thereby wrongfully enhancing the period of dispute, thus PSERC travelled beyond the dispute between the parties and proceeded to adjudicate a non-existent dispute, which even the parties were not aware of.

186. We are satisfied that the NPL’s contention has merit, and PSERC ought to have determined the additional coal requirement only for October 2017 to March 2018, strictly in terms of Schedule 7 of the PPA.

187. However, there is no dispute regarding the quantity of imported coal procured and utilised by the NPL, as confirmed by PSPCL vide their reply (para 9.11) and also recorded in the Impugned Order.

188. Undoubtedly, a certain stock of coal is required to be maintained at the Plant site, as also provided by CEA guidelines for maintaining coal stocks at thermal power plants; however, PSERC has proceeded on the assumption that NPL could

operate the Project even when 1 MT of coal was available in stock without taking into consideration the actual units of electricity to be generated. We find such an assumption flawed and deserving of rejection.

189. It is a settled principle of law that calculations impacting claims by a party should be made based on factual data/parameters, and assumptions can only be made where such parameters are not available.

190. The State Commission vide footnote no. 2 in the table on internal page 47 of the Impugned Order stated that “For simplification purpose, the coal requirement from alternate/imported source has been worked out by considering the GCV of linkage coal as well as alternate/imported coal on weighted average basis, which work out to 4117 kCal/kg and 5673 kCal/kg respectively”.

191. We find the above erroneous and without any merit. Once actual details were available, the State Commission should have proceeded on that basis, as contended by NPL. Further, there was no dispute regarding the quantum of imported coal as noted in the preceding paragraphs.

192. In the light of above, undisputedly, the disputed quantity of imported coal i.e., 3.55 Lakh MT has been procured by the NPL for the period October 2017 to March 2018 with the knowledge of PSPCL, inter alia, utilised for generating electricity against the schedule provided by the PSPCL complying with the directions passed by this Tribunal in the Final Judgment.

193. It is also factually correct that the electricity generated by using the imported coal has been supplied to and utilised by PSPCL as against the schedule given by PSPCL.

194. We also record that the Standing Committee has failed in performing its function and duty by raising unwarranted queries and delaying the process even after committing to a schedule.

195. It cannot be disputed now that the coal quantity and the imported coal price has been verified and noted in the order dated 04.12.19 (refer- Finding and Decision at page 49 of the Impugned Order), therefore this issue stands settled regarding the quantum and price to be made pass through to be paid to NPL by PSPCL, as per the energy generated against that coal (in terms of corresponding energy charges). The relevant extract of the Impugned Order is quoted as under:

“As regards the price of the imported/alternate coal, PSPCL did not participate in the bidding process for the procurement of the same even though invited by NPL. The price of coal discovered in the competitive bidding process be used for settling the account. With regard to the interest/carrying cost claimed by NPL, the same shall be payable by PSPCL to NPL as per the terms of the PPA."

196. The NPL is entitled to pass through the cost of the imported coal, i.e., 3.55 Lakh MT, in terms of the PPA for the energy supplied against the schedule given by PSPCL, for the period October 2017 to March 2018, in terms of the bills raised

by NPL. PSPCL is directed to settle the same within the next three months, along with the applicable carrying cost as per the PPA.

197. We therefore direct PSPCL to pay the differential amount within 3 months from the date of this judgement, along with carrying cost at LPS rate specified in the PPA till date the payment is effectively made.

ORDER

For the foregoing reasons as stated above, we are of the considered view that the captioned Appeal No. 22 of 2020 has merit and is allowed; however, Appeal No. 68 of 2021 is dismissed as being devoid of merit.

PSPCL is directed to pay the differential amount within 3 months along with carrying cost at the LPS rate specified in the PPA till date the payment is effectively made.

The Captioned Appeal and pending IAs, if any, are disposed of in the above terms.

PRONOUNCED IN THE OPEN COURT ON THIS 24th DAY OF JUNE, 2025.

(Virender Bhat) Judicial Member (Sandesh Kumar Sharma) Technical Member

REPORTABLE / NON-REPORTABLE pr/mkj/kks