“From Notification to Restitution” – Supreme Court Fixes the Clock for Tariff Adjustment under Article 10.5 of Power-Purchase Agreements

1. Introduction

The decision in Jaipur Vidyut Vitran Nigam Ltd. & Ors. v. Adani Power Rajasthan Ltd. & Anr. (2025 INSC 770) is the latest – and arguably the most definitive – pronouncement by the Supreme Court of India on the “change-in-law” machinery contained in long-term power-purchase agreements (PPAs) executed under the 2006 Competitive Bidding Guidelines.

The appellants are the three Rajasthan distribution companies (DISCOMs) and their holding entity. The first respondent, Adani Power Rajasthan Ltd. (APRL), is the 1,200 MW generating company at Baran supplying power to the DISCOMs. The core controversy arose when Coal India Limited (CIL) by a price notification dated 19 December 2017 levied Evacuation Facility Charges (EFC) of ₹50/tonne on coal supplies – a cost that generators inevitably pass through to DISCOMs, if it qualifies as a “change in law”.

While the State Commission (RERC) partially allowed APRL’s petition, the Appellate Tribunal for Electricity (APTEL) granted full relief, including carrying cost on a compounding basis. The DISCOMs approached the Supreme Court under Section 125 of the Electricity Act, 2003; however, the Court limited the appeal to a single substantial question of law: the correct interpretation of Articles 10.2.1 and 10.5 of the PPA, specifically sub-clause 10.5.1(ii).

2. Summary of the Judgment

CIL’s 19-12-2017 notification is a “change in law” event within the meaning of Article 10.
Article 10.5.1(i) – not Article 10.5.1(ii) – governs the effective date; therefore tariff adjustment is due from 20-12-2017 (00:00 hrs).
“Change in interpretation” under sub-clause (ii) is attracted only where a court/tribunal order itself modifies the meaning of law; a mere dispute on applicability does not postpone relief.
Supplementary bills are to be raised after adjudication; lack of an earlier bill cannot defeat restitution.
Carrying cost is payable at Late Payment Surcharge (LPS) rates on a compounding basis from the date of change in law, save for the 332-day delay in filing the APTEL appeal (already deducted).
Scope of Supreme Court’s intervention under Section 125 is restricted to substantial questions of law akin to Section 100 CPC; factual re-appreciation was declined.
The appeal was dismissed; APTEL’s directions and RERC’s consequential order dated 19-06-2024 stand affirmed.

3. Analytical Commentary

3.1 Precedents Cited and Their Influence

GMR Warora Energy Ltd. v. CERC (2023) 10 SCC 401 — The Court had already ruled that CIL’s EFC is a change in law and laid down that restitution must run from the date of notification. This case was the “lodestar” for both APTEL and the Supreme Court.
UHBVNL v. Adani Power Ltd. (2019) 5 SCC 325 — Clarified that adjustments for notifications (as opposed to judicial reinterpretations) start from the date of notification (Art. 13.4.1(i) in that PPA; textually identical to Art. 10.5.1(i) here).
UHBVNL v. Adani Power (Mundra) Ltd. (2023) 2 SCC 624 — Endorsed compound interest on carrying cost as the only way to effectuate restitution.
MSEDCL v. MERC (2022) 4 SCC 657 — Emphasised that Late Payment Surcharge (LPS) is contractual and not “tariff”; courts cannot rewrite PPAs.
Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Ltd. (2021) 20 SCC 200 — Cited by appellants but found inapposite; concerned general contractual claims, not structured change-in-law regimes.

3.2 Court’s Legal Reasoning

“Recognising a change in law is different from interpreting a notification … so long as there is no reinterpretation, clause (ii) of Article 10.5.1 will have no application.”

Statutory Framework. Section 111 gives APTEL final authority on facts & law; Section 125 confines the Supreme Court to substantial questions of law patterned on Section 100 CPC. The Court declined to travel beyond the single question framed earlier.
Restitutionary Principle (Art. 10.2.1). The object is to restore the affected party to its pre-change economic position. That substantive mandate guides the interpretation of procedural sub-clauses.
Dichotomy within Art. 10.5.1.
- (i) covers changes flowing from legislative or executive instruments (notifications, circulars, etc.).
- (ii) covers changes flowing from interpretation by courts/tribunals/instrumentalities.
The Court stressed that mere disagreement between parties is not an “interpretation change”. Only a ruling that alters the meaning of law would trigger clause (ii).
Supplementary Bill Placement. Article 8.8 permits a bill after the change-in-law determination; therefore absence of an earlier bill cannot delay liability.
Carrying Cost. Relying on the trilogy of GMR Warora, UHBVNL 2019 and UHBVNL 2023, the Court reiterated compound interest at LPS rates as a natural corollary of restitution (“time-value of money”).

3.3 Impact Assessment

Effective-Date Certainty. Generators and DISCOMs now have a bright-line rule: if the change in law emanates from a statutory/executive notification, relief flows from that date irrespective of litigation timelines.
Reduced Litigation. By denying DISCOMs the argument that “interpretation disputes” postpone relief, the Court removes a standard defence, likely trimming future appellate dockets.
Financial Forecasting. The judgment allows generators to factor restitution from day-zero, thereby improving bankability of projects. DISCOMs may need to improve provisioning for foreseeable change-in-law exposures.
Regulatory Conduct. Commissions (RERC/CERC) can now safely compute compensation without awaiting Supreme Court clarification, accelerating regulatory timelines.
Section 125 Discipline. The Court’s meticulous exposition on the limited scope of second appeals may chill fact-intensive challenges and shift emphasis to proper pleading before APTEL.

4. Complex Concepts Simplified

Change in Law

An event (statute, regulation, executive order, court decision) occurring after the “cut-off date” that changes costs or revenues under a PPA.

Restitutionary Principle

The contractual promise that the affected party will be placed financially as if the change in law never happened. Practically achieved by adjusting tariff and granting carrying cost.

Carrying Cost vs. LPS

Carrying cost is interest for the period between the event and payment; LPS is the contractually prescribed rate (usually SBAR+2%) applied to delayed payments, employed here as the benchmark for carrying cost.

Art. 10.5.1(i) vs. (ii)

(i) — automatic application from the date of notification / legislative change.
(ii) — application from the date of a judgment that changes the pre-existing legal interpretation.

Section 125 Appeal

An appeal to the Supreme Court lies only on “substantial questions of law” (akin to second appeals under Section 100 CPC). The Court will not re-open facts or discretionary relief already settled by APTEL.

5. Conclusion

The Supreme Court’s dismissal of the Jaipur DISCOMs’ appeal cements a critical doctrinal boundary: the trigger date for tariff restitution is the date of the impugned notification itself, unless the law’s meaning is subsequently altered by a judicial or quasi-judicial pronouncement. The ruling also re-affirms that carrying cost is inseparable from restitution and must mirror the contractual LPS framework on a compounding basis.

Beyond the immediate financial consequences for Rajasthan, the judgment strengthens certainty in India’s power-sector contracts, curtails dilatory litigation strategies, and clarifies the Supreme Court’s own appellate threshold under Section 125. Future change-in-law disputes will now revolve around quantum rather than timing, streamlining regulatory and commercial outcomes in the electricity market.