DATE OF ORDER
APRIL 20, 2023.
BENCH
HON’BLE JUSTICE MR. B.R. GAVAI,
PARTIES
APPELLANT- MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LIMITED
RESPONDENT- ADANI POWER MAHARASHTRA
LIMITED AND OTHERS
SUBJECT- The court examines whether deallocation of coal blocks to the respondent can be declared as ‘change in law’ event under the Power Project Agreements between the parties.
OVERVIEW
- The present appeal is preferred by MSEDCL against the judgement and order passed by the Appellate Tribunal for Electricity (APTEL) on 5th October,2020.
- The fact of the case is such that APML and MSEDCL have entered into four Power Project Agreements.
- Before entering into the Agreements, APML on January 10,2007 applied to Ministry of Coal for allocation of Lohara Coal Blocks. Eventually, the ministry issue a Letter of Allocation to the respondent allocating the area as source of fuel.
- Through notification dated 14th September 2006, Ministry of Environment, Forests and Climate Change, granted Terms of Reference (TOR) to APML for mining in the allocated Coal blocks.
- The dispute arose when the revised proposal of the Conservator of the Tadoba Andheri Tiger Reserve for creating a buffer zone circumventing the core area of the tiger reserve was accepted and declared by the Maharashtra Government on 5th May,2010.
- This buffer zone included a lease area of about 176 hectares of the coal blocks allocated to the APML. The respondent informed MSEDCL about the insufficiency in coal supply due to inability in Utilization of the coal blocks and issued a termination notice to the appellant due to occurrence of force majeure, in terms of PPA.
- Series of appeals took place before MERC and APTEL regarding ‘Change in law’ event and compensation to APML.
- ARGUMENTS ADVANCED BY APPLLEANT
- The learned counsel vehemently submitted that the MERC as well as APTEL have erred in declaring deallocation of the Lohara Coal Blocks as an event of ‘change in law’.
- It was submitted that the matter of deallocation is between APML and Coal India Limited. Thus, MSEDCL should not suffer loss due to them.
- The counsel contended that APTEL has erred in granting compensation for additional cost of transport to APML. As per the PPA, APML had the responsibility of coal transportation.
ARGUMENTS ADVANCED BY RESPONDENT
- The leaned counsel referred to the Energy Watchdog case,2023 and submitted that the apex court in this case has clearly mentioned about ‘change in law’ event which shall be applicable in the facts and circumstances of the present case.
- The counsel submitted that the respondent incurred additional costs for obtaining coal from other sources due to deallocation of coal blocks.
- The counsel raised the point that the MSEDCL participated in the Expert Committee Meeting wherein it held that APML was entitled for compensation due to deallocation.
JUDGEMENT
- The bench found the appeals without merit and consequently dismissed the present appeals.
- Court held that it is undisputed that the declaration of specified area of Lohara Coal Blocks under the buffer zone of the tiger reserve came seven days later from the cut-off date of bid.
- Court held that it was through State Government’s notification on 5th May 2010 which declared the said area of coal blocks as part of buffer zone thus, it would amount to ‘change in law’.
- Court said that the respondent participated in the bid as he was assured to obtain coal from the Lohara Coal Blocks.
- Court said that issuance letter from the ministry and Terms of interest granted by MoEF clears that the allocation of the Lohara Coal Blocks were done to meet the energy requirements.
- It was held that the MSEDCL cannot take contrary stand for compensation to APML when it had already participated in the Expert Committee Meeting.
- Court accepted the report of the Expert Committee which provided reasonable approach and method for determining cost of mining from the Lohara Coal Blocks.
- Court upheld the findings of APTEL and MERC .
CONCLUSION
Through the present appeals, it was affirmed by the Court that ‘change in law’ event is a crucial point to determined. Court referred to its judgement passed I the case of MSEDCL v. APML and Others and upheld the view of MERC and APTEL.
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