M/S. Adani Power (Mundra) Ltd. vs Gujarat Electy Reg.Commission .

2. The facts in brief giving rise to the present appeal are as under.

Respondent No. 2, namely, Gujarat Urja Vikas Nigam Ltd. (hereinafter referred to as “the procurer”) is a holding company engaged in the business of bulk purchases from the power generators and supply to the distribution companies in the State of Gujarat. On 01.02.2006, the procurer initiated the process of bidding for supply of power on long term basis, by issuing a Request For Qualification (“RFQ” for short). Three separate bids for purchase of power in accordance with the provisions of Section 63 of the Electricity Act, 2003 were invited. Each of the three bids envisaged purchase of power to the maximum extent of 2000 Mega Watt (“MW” for short). The RFQ was followed by Request For Proposal (“RFP” for short) on 24.11.2006. The present matter concerns bid No. 2 in respect of which the appellant was selected as a successful bidder.

3. On being successful in the bidding process, the procurer issued a Letter of Intent (“LOI” for short) in respect of bid no. 2, to the appellant on 11.01.2007 for supplying 1000 MW power at the rate of Rs. 2.35 per Kwh. Consequently, the Power Purchase Agreement (“PPA” for short) came to be entered into between the procurer and the appellant, for purchase and sale of 1000 MW power from the appellant’s power project at Korba, Chhatisgarh, at the delivery point at Nani Khakhar in the State of Gujarat. 3 Similarly, on 06.02.2007 another PPA came to be executed by the procurer with the appellant in respect of bid No. 1, which project was to be executed by using imported coal. The rate determined was Rs. 2.89 per unit in respect of bid No. 1.

4. On 12.02.2007, the appellant informed the procurer that it would supply power against bid No. 2, from Mundra Power Project in Gujarat instead of Chhatisgarh Project. Accordingly, a supplemental PPA was entered into between the appellant and the procurer on 18.04.2007, to off take the contracted capacity of 1000 MW against bid No. 2, from Mundra Power Project.

5. The appellant contended that, the bid submitted by it in respect of bid No. 2 was on the basis of the assurance given by Gujarat Mineral Development Corporation (“GMDC” for short) to supply 4 million tonnes of coal. It also contended that, the GMDC was not abiding by the said assurance. So it addressed a communication to the Government of Gujarat on 21.05.2007 to find out a solution. Since the Fuel Supply Agreement (“FSA” for short) could not be executed, as contemplated between the appellant and the GMDC; the appellant informed the procurer that the FSA between it and the GMDC had not yet been finalized. Again, a communication came to be addressed by the appellant on 01.05.2008 to the Government of Gujarat, requesting it to 4 impress upon the GMDC to adhere to its assurance and supply the coal from the coal blocks allocated to the GMDC. The procurer, thereafter, in the month of June, 2008, addressed a communication to the appellants stating that, since it had not complied with certain conditions stipulated in the PPA and as such, it should furnish an additional performance bank guarantee. The appellant addressed another communication to the procurer on 17.01.2009, reiterating its inability to supply the power to the procurer in the absence of FSA with GMDC. It also informed that it had no other option except to terminate the PPA. On 27.02.2009, the Government of Gujarat wrote to the GMDC, asking it to supply coal to the appellant from Naini block.

7. The procurer, thereafter, filed a petition under Sections 86(1)(f) and 95 of the Electricity Act, 2003, for adjudication of the dispute between the procurer and the appellant on 01.02.2010 before the Commission. The Commission by its judgment dated 31.08.2010 allowed the petition of the procurer, holding that the termination of the PPA was illegal and directed the appellant herein to supply the power to the procurer at the rate determined in the PPA. Being aggrieved, the appellant approached the Appellate Tribunal for Electricity. By the judgment and order impugned dated 07.09.2011, the Appellate Tribunal dismissed the appeal. Hence, the present appeal. 7

If the Procurer or the Seller elects to terminate this Agreement in the event specified in the preceding paragraph of this Article 3.4.2, the Seller shall be liable to pay to the Procurer an amount equivalent to Rupees Rs. 10.00 lakhs per MW of the Contracted Capacity as liquidated damages. The Procurer shall be entitled to recover this amount of damages by invoking the Performance Guarantee to the extent of an amount equivalent to Rupees 10.00 lakhs per MW of the Contracted Capacity and shall then return the balance Performance Guarantee, if any, to the Seller. If the Procurer is unable to recover the said amount or any part thereof from the Performance Guarantee the amount not recovered from the Performance Guarantee, if any, shall be payable by the Seller to the Procurer within ten (10) days from the end of eight (8) Months period from the due date of completion of conditions subsequent. It is clarified for removal of doubt that this Article shall survive the termination of this Agreement.

2. You are now, therefore requested to go for coal allotment from Morga block with M/s. KSK by way of the detailed FSA and to give 50% coal from Naini block to M/s. Adani and remaining 50% coal to M/s.Torrent Power Ltd., as mentioned above.”

39. It could thus be clearly seen that even the Government of Gujarat has also clearly indicated that the bid submitted by the appellant in the competitive bid was on the basis of the commitment for supply of coal from Morga- II mines by the GMDC. It has, therefore, requested the Managing Director, GMDC to give 50 per cent of coal from 43 Morga block to the appellant. The State Government had, therefore, requested that the Managing Director of the GMDC to go for coal allotment from Morga block.

“15. I submit that, without prejudice to the rights of the Respondent No.2 to contest the present appeal, the answering Respondent with the approval of Government of Gujarat has already shown its willingness to pay compensatory tariff prospectively (from next month of CERC order i.e. March 2014) subject to paras 12 and 13 above to resolve the issue by making suitable adjustments in tariff which till date is not implemented because of non acceptance by Appellant and other stakeholders.

16. I say that without prejudice to its rights in the present appeals the Respondent No.2 is willing to implement the decisions of State Govt. for paying compensatory tariff prospectively (from next month of CERC order i.e. March 2014) to resolve the issue by making suitable adjustment in tariff on the directions of the Hon’ble Court. ...”

51. Hence, the following order:

(iii)The appellant would be at liberty to approach the CERC for determination of the compensatory tariff, including various aspects mentioned in paragraph 49, payable to it from the date of supply of electricity by it to the procurer. The CERC is directed to decide the said issue in the light of what has been observed by us hereinabove and in the light of the provisions of Section 62 of the Electricity Act so also the CERC (Terms and Conditions of Tariff) Regulations, 2009 within a period of three months from the appellant’s approaching it.

(iv) The procurer shall make the payment to the appellant as determined by the CERC within a period of three months from the date of its determination.

(v) The procurer would be entitled to adjust the amount if already paid by it in pursuance of its affidavit dated 23.11.2015 from the amount so determined by the supplier. The procurer shall be entitled to adjust the balance amount recoverable by it from the appellant towards liquidated damages of Rs. 100 Crore.

(vi) No order as to cost.

JULY 2, 2019.