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Electricity & Energy LawSupreme Court of India

Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd.

Civil Appeal · 2025 INSC 770Decided 23 May 2025
C.A. No.-004336 - 2025
Justice M.M. Sundresh · Justice Rajesh Bindal

Background

Under a 2010 Power Purchase Agreement, Rajasthan's electricity distribution companies (the Discoms) agreed to buy 1200 MW of power from Adani Power Rajasthan Ltd. at a fixed levelized tariff. In 2017, Coal India Limited imposed a new "Evacuation Facility Charge" of Rs. 50 per tonne on coal dispatches, which the power generator immediately flagged to the Discoms as a "change in law" event under the PPA entitling it to pass through the additional cost. When the Discoms did not respond satisfactorily, the generator approached the Rajasthan Electricity Regulatory Commission (RERC), which granted partial relief; the matter proceeded through further appellate rounds (including before the Appellate Tribunal for Electricity), and the Discoms ultimately appealed to the Supreme Court challenging their liability to pay the resulting supplementary bill.

Decision Breakdown

The Supreme Court examined the PPA's provisions on billing, particularly the distinction between a routine monthly bill and a "supplementary bill" raised for a change-in-law event under Article 10, and held that once a competent forum adjudicates that a change in law has occurred, the other party is contractually bound to pay the supplementary bill: a party cannot resist payment merely by arguing that the bill should have been raised earlier. The Court rejected the Discoms' argument that timing defects in raising the supplementary bill defeated the claim, noting the generator had in fact notified the change-in-law event the very next day after the Coal India notification was issued. Relying on its own precedents on similarly structured PPA disputes and carrying-cost claims, the Court found no merit in reopening issues already settled by binding authority, and upheld the liability fastened on the Discoms. The appeal was dismissed.

Lesson Learnt

In long-term power purchase agreements, a "change in law" cost increase (such as a new statutory levy) validly notified and adjudicated by the competent regulatory forum must be honoured through the contractually prescribed supplementary billing mechanism, and a paying party cannot avoid liability by raising technical objections about the timing of the bill.

Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd. – Legal Case Shots | LegalAware