Introduction

This commentary examines the Supreme Court of India’s judgment in Haryana Power Purchase Centre (HPPC) and Others v. GMR Kamalanga Energy Limited (GKEL) and Others, Civil Appeal Nos. 1929 of 2020 and 3429 of 2020, decided on 8 September 2025. The Court, speaking through the Chief Justice (B.R. Gavai, CJI), dismissed appeals by the Haryana utilities (HPPC/DHBVN/UHBVN) and GRIDCO (Odisha) challenging Appellate Tribunal for Electricity (APTEL) orders that had upheld the Central Electricity Regulatory Commission’s (CERC) directions on pro‑rata allocation of coal and “Change in Law” compensation methodology.

At the core lay two interlocking questions:

• Whether coal obtained under firm linkage and tapering linkage, as well as coal procured from alternate sources (imports and open market) to mitigate shortfall, should be allocated PPA‑wise (e.g., prioritising Haryana) or plant‑wide on a pro‑rata basis across all beneficiaries (Haryana, GRIDCO, Bihar).
• Whether GRIDCO (a Section 62 cost‑plus procurer) was a necessary party to change‑in‑law proceedings under Section 63 (competitive bidding) concerning Haryana and Bihar PPAs.

The case sits within a long timeline of coal linkage/allocation for GKEL’s 3×350 MW thermal power project at Kamalanga, Odisha, and involves intertwined PPAs: (i) GRIDCO’s 25% entitlement under a 2006 MoU-based PPA (Section 62), (ii) Haryana’s 300 MW via PTC under Section 63 PPAs (2008 and back‑to‑back arrangements in 2009), and (iii) Bihar’s 260 MW net (2011) under Section 63. CERC in 2016 (Petition No. 79/MP/2013) set the change‑in‑law relief and methodology, including pro‑rata allocation of coal. Later, in 2018 (Petition No. 105/MP/2017), CERC clarified billing disputes and reiterated pro‑rata apportionment. APTEL affirmed in 2019. These dismissals are now upheld by the Supreme Court.

Summary of the Judgment

• Both appeals (by Haryana utilities and GRIDCO) were dismissed. The Supreme Court upheld APTEL’s judgment and CERC’s orders mandating pro‑rata, plant‑level allocation of all coal (firm linkage, tapering linkage, imports, open market) across beneficiaries based on scheduled/procured energy, with corresponding change‑in‑law compensation to be similarly apportioned.
• The Court reaffirmed that appeals under Section 125 of the Electricity Act, 2003 lie only on substantial questions of law (by importing Section 100 CPC), and that it will be slow to interfere with concurrent findings of expert bodies (CERC/APTEL) absent perversity, arbitrariness, illegality, or extraneous considerations.
• Haryana’s contention for PPA‑specific allocation of firm linkage coal (ring‑fencing 300 MW for Haryana) was rejected as contrary to the FSA’s text, SLC‑LT minutes, and the CERC’s earlier unchallenged methodology. The Court noted Haryana’s approbation and reprobation in earlier proceedings (UHBVN v. Adani Power Mundra).
• GRIDCO was held not to be a necessary or proper party in Section 63 change‑in‑law petitions concerning Haryana and Bihar PPAs. Section 62 (cost‑plus) and Section 63 (bid‑based) tariff proceedings are distinct; GRIDCO’s tariff had been determined separately (Petition No. 77/GT/2013) and affirmed by APTEL.
• Result: The APTEL judgment dated 20 December 2019 was upheld, and CERC’s pro‑rata allocation and billing methodology stood confirmed; supplementary bills are payable with late payment surcharge under the respective PPAs.

Detailed Analysis

A. Factual Matrix and Contractual Framework

GKEL (a GMR group SPV) developed a 3×350 MW thermal station at Kamalanga, with a fourth unit contemplated. Fuel arrangements evolved as follows:

• SLC‑LT approved firm linkage of 2.14 MTPA for 500 MW (2 August 2007), followed by a Letter of Assurance (25 July 2008).
• Captive coal: Ministry of Coal allocated the Rampia & Dip Side Rampia blocks to a consortium including GKEL (letter 17 January 2008), with GKEL’s share of 4.6 MTPA aimed at the 1,000–1,050 MW project.
• Tapering linkage: SLC‑LT granted 2.384 MTPA for 550 MW (12 November 2008; LoA dated 8 July 2009), to bridge until captive coal became available.
• FSA (26 March 2013) with Mahanadi Coalfields Ltd. (MCL) for firm linkage coal expressly tied Annual Contracted Quantity (ACQ) to the percentage of generation under long‑term PPAs and specified usage for the 3×350 MW plant (Clauses 4.1.1 and 4.2). Tapering linkage FSAs followed in May 2014 (MCL) and May 2014 (ECL).
• MCL letters (2 May 2018 and 7 February 2022) confirmed that in cases of multiple PPAs, coal is released for the total PPA capacity and not bifurcated by any specific PPA; allocation is plant‑level and pro‑rata.

On the regulatory side, CERC’s 2016 order (Petition No. 79/MP/2013) addressed multiple change‑in‑law items (royalty on coal, clean energy cess, excise duty, and shortfall in linkage coal necessitating imports/open‑market purchases), set the methodology for compensation including an Energy Charge Rate (ECR) computation requiring pro‑rata allocation of coal among beneficiaries, and mandated auditor certification. That order attained finality vis‑à‑vis Haryana (who paid until June 2016). Later disputes on billing mechanics led to CERC’s clarificatory order in 2018 (Petition No. 105/MP/2017), which reiterated the pro‑rata allocation of both linkage and alternate coal across all PPAs.

B. Core Legal Issues

1. Whether fuel allocation (firm linkage and tapering linkage) and alternate coal procurement to mitigate linkage shortfall should be PPA‑specific (e.g., to Haryana) or plant‑level pro‑rata across all beneficiaries.
2. Whether GRIDCO (a Section 62 procurer) was a necessary/proper party in change‑in‑law proceedings under Section 63 pertaining to Haryana and Bihar PPAs.
3. The scope of appellate review under Section 125 of the Electricity Act, given concurrent findings of CERC and APTEL.

C. Precedents Cited and Their Influence

• Energy Watchdog v. CERC (2017) 14 SCC 80:
  • Set the foundation for “Change in Law” relief under Section 63 PPAs, to restore the generator to the same economic position as if the event had not occurred.
  • Influenced CERC’s 2016 and 2018 orders: relief for shortfall in linkage coal met through alternate sources is permissible and to be worked out via an appropriate methodology.
• Maharashtra State Electricity Distribution Co. Ltd. v. Adani Power Maharashtra Ltd. (2023) 7 SCC 401:
  • Reaffirmed deference to expert regulatory bodies (CERC/APTEL/CEA), limiting judicial intervention to cases of perversity, arbitrariness, illegality, or extraneous considerations.
  • Warned against unwarranted litigation which increases carrying costs ultimately borne by consumers.
• GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401:
  • Again cautioned that appeals under Section 125 lie only on substantial questions of law and criticised repetitive, meritless appeals causing consumer harm.
• Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power (Mundra) Ltd. (2023) 14 SCC 736:
  • Found Haryana guilty of approbation and reprobation for accepting the “GMR methodology” before CERC and then resiling; upheld CERC/APTEL’s approach anchored in GMR Kamalanga’s pro‑rata methodology.
• Reliance Infrastructure Ltd. v. State of Maharashtra (2019) 3 SCC 352:
  • Articulated the limits of judicial review over expert regulators’ tariff determinations; courts do not substitute their own views for expert determinations absent clear legal infirmities.
• Vivek Narayan Sharma (Demonetisation Case – 5J) v. Union of India (2023) 3 SCC 1:
  • Cited to underscore deference to expert/technical decisions where statutory mandates are observed and decisions are not arbitrary.

D. The Court’s Legal Reasoning

The Supreme Court’s reasoning proceeds on three concentric layers: (1) the standard of review under Section 125; (2) the contractual and administrative record on fuel allocation; and (3) equity and systemic consequences.

1. Standard of Review (Section 125/Electricity Act read with Section 100 CPC):
   • Appeals lie only on substantial questions of law. Concurrent findings by expert bodies (CERC/APTEL), especially on technical and factual matters (fuel allocation, ECR computation, coal apportionment) are not to be disturbed absent clear legal infirmities.
   • The Court found no substantial question of law; the appeals predominantly challenged factual determinations and interpretations of sectoral documents within CERC’s expertise.
2. Contractual and Policy Architecture Favouring Plant‑Level Allocation:
   • FSA language controls: Clause 4.1.1 pegs ACQ to “the percentage of generation covered under long term PPAs” executed by the generator; Clause 4.2 states coal under the FSA is for use at the “Power Plant (3×350 MW).” This negates any claim that firm linkage was dedicated PPA‑wise to Haryana.
   • SLC‑LT minutes and MCL letters: The SLC‑LT record (14 February 2012) and MCL correspondence (2 May 2018; 7 February 2022) confirm that linkage/tapering coal was meant for the entire station and released vis‑à‑vis total PPA capacity, not segregated by individual PPAs.
   • Prior CERC methodology (2016): CERC’s ECR‑based pro‑rata allocation among GRIDCO/Haryana/Bihar was unchallenged by Haryana for a significant period and formed a binding backdrop. Supplementary bills raised in line with this method were proper.
   • No priority by chronology or recital: The Court rejected arguments based on the earlier operationalisation of GRIDCO’s PPA or on references to particular fuel sources in specific PPAs; governmental linkage/allocation and FSA terms were station‑centric, not PPA‑centric.
3. Equity, Non‑discrimination, and Systemic Coherence:
   • APTEL correctly observed that allocating firm linkage exclusively to Haryana would unfairly disadvantage GRIDCO and Bihar and lead to cross‑subsidisation, contrary to equal treatment principles (Article 14) and the FSA’s scheme.
   • Ensuring pro‑rata apportionment of both linkage and alternate coal produces a symmetric pass‑through of change‑in‑law costs, protecting all consumer cohorts from inequitable burdens.
4. GRIDCO as a Non‑necessary Party:
   • The Section 63 change‑in‑law petitions concerned tariff adopted by competitive bidding (Haryana/Bihar PPAs). GRIDCO’s tariff is determined on a cost‑plus basis under Section 62 in separate proceedings (Petition No. 77/GT/2013), where CERC’s methodology for GRIDCO was already affirmed by APTEL (judgment dated 1 August 2017).
   • Given the distinct statutory regimes, GRIDCO’s non‑joinder did not vitiate the Section 63 proceedings. The plant‑wide allocation principle can coexist with separate Section 62 determinations without GRIDCO’s participation in the Section 63 change‑in‑law petitions.
5. Appropriation and Reprobation by Haryana:
   • Following UHBVN v. Adani Power (Mundra), the Court noted Haryana’s earlier acceptance of the “GMR methodology” before CERC and subsequent volte‑face, which is impermissible for a State instrumentality.

E. Impact and Forward‑Looking Implications

The ruling consolidates several practical and doctrinal consequences for India’s electricity sector:

• Plant‑level apportionment is the norm: For stations serving multiple beneficiaries under mixed regimes (Section 62 and Section 63), coal from all sources (firm, tapering, import, e‑auction/open market) is to be allocated pro‑rata based on scheduled or contracted energy under long‑term PPAs, absent a contrary statutory directive or explicit, regulator‑approved contractual ring‑fencing.
• Billing and audit discipline: Change‑in‑law supplementary bills must align with CERC’s ECR‑based pro‑rata methodology and be audited. Late payment surcharges apply per PPAs for delayed payments.
• Reduced cross‑subsidisation risk: Disallowing PPA‑wise “priority” to linkage coal prevents cost migration from one state’s consumers to another’s and honours the equal treatment rationale.
• Drafting clarity for future FSAs/PPAs: Parties should:
  • Expressly state plant‑level fuel pooling and pro‑rata allocation across PPAs (or explicitly ring‑fence, if regulator‑approved and consistent with allocation policy).
  • Embed change‑in‑law pass‑through formulas, auditor certification requirements, and clear timelines to mitigate disputes.
• Procedural economy and consumer protection: The Court’s strong reiteration of Section 125’s narrow scope and deference to expert bodies should deter serial, fact‑centric appeals that escalate carrying costs borne by consumers.
• Joinder discipline: Distinguishing Section 62 and Section 63 proceedings, the Court clarifies when a procurer is (not) a necessary party, streamlining adjudication while preserving rights in their appropriate fora.

F. Complex Concepts Simplified

• Section 62 vs Section 63 (Electricity Act, 2003):
  • Section 62: Regulator determines tariff on a cost‑plus basis (e.g., GRIDCO’s PPA). Proceedings are granular to the utility/station.
  • Section 63: Regulator adopts tariff discovered via competitive bidding (e.g., Haryana and Bihar PPAs). “Change in Law” clauses in standard bid documents allow compensation when specified legal/policy changes affect costs.
• Firm Linkage vs Tapering Linkage:
  • Firm linkage: Long‑term assured coal supply from CIL subsidiaries to a plant for a defined capacity.
  • Tapering linkage: Interim supply to bridge the period until captive coal blocks commence production.
• ACQ (Annual Contracted Quantity): The yearly coal quantity contracted under the FSA. In GKEL’s FSA, ACQ scales with the percentage of generation committed under long‑term PPAs and is tied to plant‑level usage (not PPA‑wise allocation).
• ECR (Energy Charge Rate): A rate reflecting energy (variable) cost per unit, built from actual fuel mix and prices; used by CERC for computing change‑in‑law relief and for pro‑rating costs across beneficiaries.
• Change in Law: Under Section 63 PPAs, statutory/tax/policy changes after bid submission that affect costs (e.g., royalty, cess, excise, coal pricing regime changes) trigger compensation to restore the generator to the pre‑change economic position.
• Pro‑rata Apportionment Example: If total coal available under linkage/tapering is 3.63 MTPA for 905 MW of operational long‑term PPAs, and Haryana’s contracted net capacity is 300 MW, Haryana’s share of linkage coal (and of alternate coal costs to cover shortfall) ≈ (300/905) of total, with similar ratios for GRIDCO and Bihar.
• Appropriation and Reprobation: A party cannot accept a position in one proceeding (e.g., endorsing a methodology) and later contradict it for tactical gain. Courts frown upon such inconsistent stances, particularly by State instrumentalities.

Key Documents and Findings Referenced

• CERC, Petition No. 79/MP/2013 (Order dated 3 February 2016): Recognised change‑in‑law events; devised ECR methodology; required pro‑rata allocation across beneficiaries; mandated auditor certification.
• CERC, Petition No. 105/MP/2017 (Order dated 20 March 2018): Reiterated pro‑rata allocation of firm and tapering linkage coal and alternate coal costs across Haryana, GRIDCO, Bihar; directed payment of supplementary bills with LPS.
• APTEL Judgment (20 December 2019): Affirmed CERC’s orders; emphasised that coal supply is to the project, not PPA‑specific; invoked equality concerns.
• MCL Letters (2 May 2018; 7 February 2022): Confirmed that, with multiple PPAs, coal is released against total PPA capacity; not segregated by individual PPAs.
• SLC‑LT Minutes (14 February 2012): Recorded tapering linkage allocation intended for all three beneficiaries.
• FSA (26 March 2013), Clauses 4.1.1 and 4.2: ACQ proportional to percentage of generation under long‑term PPAs; FSA coal is for use at the 3×350 MW plant.

Conclusion

HPPC v. GKEL cements a sectorally consequential rule: fuel linkages and alternate coal procured to remedy linkage shortfall are inherently plant‑level resources, to be shared pro‑rata across all long‑term beneficiaries according to their share of scheduled/contracted energy—not fenced PPA‑by‑PPA based on chronology or recital. The Court’s endorsement of CERC/APTEL’s concurrent, expertise‑driven findings, its insistence on the narrow compass of Section 125 appeals, and its disapproval of inconsistent litigation stances collectively promote regulatory certainty, fair cost allocation, and consumer protection.

For generators, the decision validates pooled fuel management and pro‑rata billing under change‑in‑law regimes. For DISCOMs, it underscores the futility of fact‑centric, serial challenges to expert methodologies and highlights the risk of accruing late payment surcharges and carrying costs. Going forward, clarity in FSAs and PPAs on plant‑level pooling and pro‑rata apportionment, adherence to audited ECR‑based computations, and respect for the distinct procedural silos of Section 62 and Section 63 proceedings will be critical to minimizing disputes and safeguarding end‑consumer interests.

The judgment is thus a significant reaffirmation of both doctrinal restraint (appellate deference to expert regulators) and operational equity (non‑discriminatory, pro‑rata allocation of fuel and costs) in the electricity sector.