TMI Blog2019 (2) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... lect the changed tariff. On the facts of the present case, it is clear that the respondents were entitled to adjustment in their monthly tariff payment from the date on which the exemption notifications became effective. This being the case, the restitutionary principle contained in Article 13.2 would kick in for the simple reason that it is only after the order dated 04.05.2017 that the CERC held that the respondents were entitled to claim added costs on account of change in law w.e.f. 01.04.2015. This being the case, it would be fallacious to say that the respondents would be claiming this restitutionary amount on some general principle of equity outside the PPA. Since it is clear that this amount of carrying cost is only relatable to Article 13 of the PPA, we find no reason to interfere with the judgment of the Appellate Tribunal. The restitutionary principle contained in Clause 13.2 must always be kept in mind even when compensation for increase/decrease in cost is determined by the CERC. Appeal dismissed. - CIVIL APPEAL NO. 5865 OF 2018, CIVIL APPEAL NO. 6190 OF 2018 - - - Dated:- 25-2-2019 - R. F. Nariman And Navin Sinha, JJ. JUDGMENT R.F. NARIMAN, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to withdrawal of the exemption notifications thus: 35. However, the change in rates of custom duty, excise duty, withholding tax and service tax on taxable services which have been imposed pursuant to the Acts passed by the Parliament shall be covered under Change in Law. As regards the Green Energy Cess, it was imposed after the cut-off date and satisfied the requirements of Change in Law. Accordingly, the Petitioner shall therefore be entitled for reimbursement of custom duty, excise duty on import/procurement of any other goods and service tax on the spares and consumables payable by it from 1.4.2015 on account of the withdrawal of exemption to the power plants located in the SEZ by the Ministry of Commercial [sic Commerce] and Industry only to the extent of difference in the duty or tax as on the cut-off date and as prevailing as on 1.4.2015 and thereafter. However, the CERC followed its earlier order dated 06.02.2017 in Petition No.156/MP/2014, in which it stated that carrying cost under Article 13 of the PPA must be given to the respondent as it is to be restored to the same economic position as if the change in law which is withdrawal of the exemption noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal ought to be set aside. 3. On the other hand, Mr. Mukul Rohatgi, learned Senior Advocate appearing on behalf of the respondent, supported the Appellate Tribunal judgment and stated that the Appellate Tribunal has not gone outside the four corners of the PPA. Since Article 13.2, in particular, expressly provides a restitutionary principle, the respondents are entitled to avail of the same. 4. In order to appreciate the respective contentions of the parties, it is necessary to set out certain provisions of the PPAs. Thus, Articles 11.3.1 and 11.3.4 state as follows: 11.3 Payment of Monthly Bills 11.3.1 The Procurer shall pay the amount payable under Monthly Bill on the Due Date to such account of the Seller, as shall have been previously notified by the Seller to the Procurer in accordance with Article 11.3.3 below. All payments made by the Procurer shall be appropriated by the Seller in the following order of priority: 1. towards Late Payment Surcharge, payable by the Procurer, if any; 2. towards earlier unpaid Monthly Bill, if any; and 3. towards the then current Monthly Bill. xxx xxx xxx 11.3.4. In the event of delay in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault of the Seller, which results in any change in any cost of or revenue from the business of selling electricity by the Seller to the Procurer under the terms of this Agreement; but shall not include (i) any change in any withholding tax on income or dividends distributed to the shareholders of the Seller, or (ii) change in respect of UI Charges or frequency intervals by an Appropriate Commission. Provided that if Government of India does not extend the income tax holiday for power generation projects under Section 80 IA of the Income Tax Act, upto the Scheduled Commercial Operation Date of the Power Station, such non-extension shall be deemed to be a Change in Law (applicable only in case the Seller envisaging supply from the Project awarded the status of Mega Power Project by Government of India). 13.1.2 Competent Court means: The Supreme Court or any High Court, or any tribunal or any similar judicial or quasi-judicial body in India that has jurisdiction to adjudicate upon issues relating to the Project. 13.2 Application and Principles for computing impact of Change in Law While determining the consequence of Change in Law under this Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is beneficially affected by a Change in Law. Without prejudice to the factor of materiality or other provisions contained in this Agreement, the obligation to inform the Procurer contained herein shall be material. Provided that in case the Seller has not provided such notice, the Procurer shall have the right to issue such notice to the Seller. 13.3.3 Any notice served pursuant to this Article 13.3.2 shall provide, amongst other things, precise details of: (a) the Change in Law; and (b) the effects on the Seller of the matters referred to in Article 13.2 13.4 Tariff Adjustment Payment on account of Change in Law 13.4.1 Subject to Article 13.2, the adjustment in Monthly Tariff Payment shall be effective from: (i) the date of adoption, promulgation, amendment, re-enactment or repeal of the Law or Change in Law; or (ii) the date of order/judgment of the Competent Court or tribunal or Indian Governmental Instrumentality, if the Change in Law is on account of a change in interpretation of Law. 13.4.2 The payment for Changes in Law shall be through supplementary bill as mentioned in Article 11.8. However, in case of any change in Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined and effected from such date as is decided by the appropriate Commission. Here again, this compensation is only payable for increase/decrease in revenue or cost to the seller if it is in excess of an amount equivalent to 1% of the Letter of Credit in aggregate for a contract year. What is clear, therefore, from a reading of Article 13.2, is that restitutionary principles apply in case a certain threshold limit is crossed in both sub-clauses (a) and (b). There is no dispute that the present case is covered by sub-clause (b) and that the aforesaid threshold has been crossed. The mechanism for claiming a change in law is then set out by Article 13.3 of the PPA. 9. In Civil Appeal No. 6190 of 2018, the PPA contains Article 13.4 as follows: 13.4 Tariff Adjustment Payment on account of Change in Law 13.4.1 Subject to Article 13.2, the adjustment in Monthly Tariff Payment shall be effective from: (a) the date of adoption, promulgation, amendment, re-enactment or repeal of the Law or Change in Law; or (b) the date of order/judgment of the Competent Court or tribunal or Indian Governmental Instrumentality, if the Change in Law is on account of a change in inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhya Pradesh and Ors., (2003) 8 SCC 648 [ South Eastern Coalfields ], this Court held that interest is payable in equity in certain circumstances and finally concluded: 24. We are, therefore, of the opinion that in the absence of there being a prohibition either in law or in the contract entered into between the two parties, there is no reason why the Coalfields should not be compensated by payment of interest for the period for which the consumers/purchasers did not pay the amount of enhanced royalty which is a constituent part of the price of the mineral for the period for which it remained unpaid. The justification for award of interest stands fortified by the weighty factor that the Coalfields themselves are obliged to pay interest to the State on such amount. It will be a travesty of justice to hold that though the Coalfields must pay the amount of interest to the State but the consumers/purchasers in whose hands the money was actually withheld be exonerated from liability to pay the interest. What was argued by Shri Giri was that this judgment cannot be applied to fact situations that arise under the PPA in view of Article 18.17 of the PPA which clearly states t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment pollution, this Court laid down certain principles in paragraph 197. This judgment, again, has no manner of application to the facts of the present case which are confined to the interpretation of Article 13 of the PPAs. 15. The next judgment relied upon by Shri Giri was All India Power Engineer Federation and Ors. v. Sasan Power Ltd. and Ors., (2017) 1 SCC 487. Paragraph 31 of this judgment was relied upon to state that in context of Section 63 of the Electricity Act, the Commission alone can accept amended tariff that would impact consumer interest, and therefore, public interest, and waiver of any rights of one of the parties under the PPA, if it impacts such consumer interest, would have to pass muster under the Commission which would look into all factors and then pass a reasoned order. We fail to see how this judgment has any application on the facts of the present case as, in the present case, we are concerned with the interpretation of Article 13 of the PPAs. 16. Lastly, the judgment of this Court in Energy Watchdog v. Central Electricity Regulatory Commission and Ors., (2017) 14 SCC 80 was also relied upon. In this judgment, three issues were set out and decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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