Supreme Court Dismisses Adani Power's Late Payment Surcharge Claim Against Rajasthan Discoms

The Supreme Court of India recently delivered a significant judgment in the case of Jaipur Vidyut Vitran Nigam Ltd. & Ors. vs. Adani Power Rajasthan Ltd., where it dismissed Adani Power’s claim for a Late Payment Surcharge (LPS) amounting to ₹1,376.35 crores. The ruling clarifies the limitations of post-disposal applications in settled matters and reinforces the binding nature of previous Supreme Court decisions.

Background of the Case

The dispute stems from a Power Purchase Agreement (PPA) signed on January 28, 2010 between Adani Power Rajasthan Limited (APRL) and Rajasthan Discoms (Jaipur, Jodhpur, and Ajmer Vidyut Vitran Nigam Ltd.). Under this agreement, Adani Power was to supply electricity generated from domestic coal, with imported coal as a backup option.

However, due to the non-availability of sufficient domestic coal, Adani Power had to rely on imported coal from Indonesia, which significantly increased costs. As a result, Adani Power filed claims under the PPA’s Change in Law clause to recover the additional costs from Rajasthan Discoms.

Key Legal Issues

Whether Adani Power was entitled to a Late Payment Surcharge (LPS) under Article 8.3.5 of the PPA.
Whether Rajasthan Discoms’ delay in paying compensation due to ‘Change in Law’ justified the surcharge.
Whether Adani Power could seek further relief through a post-disposal application after the Supreme Court’s final ruling in 2020.

Arguments by the Appellant (Adani Power Rajasthan Ltd.)

Adani Power, represented by Senior Advocate Dr. Abhishek Manu Singhvi, argued that:

The Rajasthan Discoms had delayed payments for ‘Change in Law’ compensation, making them liable for LPS under Article 8.3.5 of the PPA.
The Supreme Court’s August 31, 2020 judgment confirmed their entitlement to compensation, and the LPS should apply from that date.
Despite previous orders, Rajasthan Discoms had not paid the full amount due, justifying the LPS claim.
The payment delays deprived Adani Power of working capital, necessitating strict enforcement of the PPA’s terms.

Arguments by the Respondent (Rajasthan Discoms)

Rajasthan Discoms, represented by Senior Advocate Dushyant Dave, countered that:

Adani Power’s claim for LPS was already settled in the 2020 Supreme Court judgment, and no new relief could be sought through a Miscellaneous Application.
The Discoms had made partial payments per court directives and had not willfully delayed payments.
The 2020 ruling had already modified the LPS rate to 9% per annum instead of 2% above the State Bank Advance Rate (SBAR).
Adani Power’s application was an attempt to reopen a settled issue, violating the Supreme Court’s finality doctrine.

Supreme Court’s Observations and Judgment

1. Reaffirmation of the 2020 Judgment

The Court emphasized that its August 31, 2020 ruling had already addressed the issue of LPS:

“The liability of Rajasthan Discoms for Late Payment Surcharge has already been determined in the 2020 judgment, with interest capped at 9% per annum. The matter cannot be reopened.”

2. Post-Disposal Applications Cannot Modify Final Judgments

The Court ruled that Adani Power could not seek further relief through a post-disposal application:

“A post-disposal application for modification of a settled judgment can only be entertained in rare circumstances where new facts emerge. This case does not meet that standard.”

3. No Grounds for Contempt Against Rajasthan Discoms

Adani Power had previously filed contempt petitions against Rajasthan Discoms, alleging non-compliance with the 2020 ruling. The Court had dismissed those petitions in 2022, stating:

“The alleged non-payment of LPS was not the subject matter of the contempt proceedings, and Adani Power has been directed to seek relief before the appropriate forum.”

4. No Arithmetical or Clerical Errors in the 2020 Judgment

The Court clarified that Adani Power’s claim was not due to any mistake or oversight in the previous ruling:

“This is not a case where an arithmetical or clerical error requires correction. The claim for LPS was explicitly considered and ruled upon in 2020.”

5. Final Ruling

The Supreme Court dismissed Adani Power’s Miscellaneous Application with costs:

The claim for ₹1,376.35 crores as Late Payment Surcharge was rejected.
The Court reaffirmed its 2020 ruling capping interest at 9% per annum.
Adani Power was directed to pay ₹50,000 as costs to the Supreme Court Legal Aid Committee.

Implications of the Judgment

This ruling has significant legal and commercial implications:

Finality of Supreme Court Judgments: Reinforces that settled matters cannot be reopened through post-disposal applications.
Limited Scope for Post-Judgment Relief: Clarifies that modifications are only allowed in cases of clerical errors or new facts.
Protection of Discoms from Excessive Liabilities: Ensures that power distribution companies are not unfairly burdened with additional penalties.
Encourages Compliance with Legal Contracts: Affirms that companies must adhere to PPA terms and judicial decisions.

The ruling sets a precedent for ensuring the sanctity of Supreme Court judgments and provides clarity on the applicability of Late Payment Surcharges in power purchase agreements.

Petitioner Name: Jaipur Vidyut Vitran Nigam Ltd. & Ors..
Respondent Name: Adani Power Rajasthan Ltd..
Judgment By: Justice Aniruddha Bose, Justice Sanjay Kumar.
Place Of Incident: Rajasthan.
Judgment Date: 18-03-2024.

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