Summary and Analysis of Haryana Power Purchase Centre & Ors vs GMR Kamalanga Energy Ltd & Ors 2025 INSC 1079
1. Heading of the Judgment
Case Title: Civil Appeal No. 1929 of 2020 and Civil Appeal No. 3429 of 2020
Parties: Haryana Power Purchase Centre (HPPC) & Ors. (Appellants) versus GMR Kamalanga Energy Limited (GKEL) & Ors. (Respondents)
Court: Supreme Court of India
Bench: Hon'ble Chief Justice of India B.R. Gavai and Hon'ble Mr. Justice K. Vinod Chandran
Date of Judgment: September 8, 2025
Citation: 2025 INSC 1079
2. Related Laws and Sections
The judgment primarily interprets and applies provisions from the following legal framework:
The Electricity Act, 2003:
Section 62: Deals with the determination of tariff based on a cost-plus model by the regulatory commission.
Section 63: Provides for the adoption of tariff discovered through a transparent process of competitive bidding.
Section 79: Defines the functions of the Central Electricity Regulatory Commission (CERC).
Section 125: Governs appeals to the Supreme Court from orders of the Appellate Tribunal for Electricity (APTEL). It stipulates that an appeal is only tenable on the grounds specified in Section 100 of the Code of Civil Procedure, 1908 (CPC), meaning only on a "substantial question of law."Contractual Framework: The judgment also involves the interpretation of key contractual documents, including:
Power Purchase Agreements (PPAs)
Fuel Supply Agreements (FSAs)
Letters of Assurance (LoA) for coal linkage
Request for Proposal (RfP) documents for competitive bidding.
3. Basic Judgment Details
This case was a confluence of two civil appeals challenging the same common judgment dated December 20, 2019, passed by the Appellate Tribunal for Electricity (APTEL). The APTEL had upheld an order dated March 20, 2018, passed by the Central Electricity Regulatory Commission (CERC).
Civil Appeal No. 1929 of 2020 was filed by the Haryana utilities (HPPC and its distribution companies).
Civil Appeal No. 3429 of 2020 was filed by GRIDCO, the power procurer for the State of Odisha.
The core dispute revolved around the apportionment of additional costs incurred by the power generator, GMR Kamalanga Energy Ltd. (GKEL), due to a "Change in Law" event that led to a shortfall in domestic coal supply, forcing GKEL to use costlier imported and open-market coal.
The specific issue was whether this additional cost should be borne only by the beneficiaries for whom the coal was originally earmarked or be shared pro-rata by all beneficiaries of the power plant.
4. Explanation of the Judgment
Factual Background and the Dispute
GKEL set up a 1050 MW (3x350 MW) thermal power plant in Odisha. It had long-term Power Purchase Agreements (PPAs) to supply power to three utilities:
GRIDCO (Odisha): 262.5 MW under a PPA dated September 28, 2006 (tariff determined under Section 62 of the Electricity Act).
Haryana Utilities: 300 MW through a competitive bidding process (tariff determined under Section 63 of the Act).
Bihar Utilities: 260 MW through a competitive bidding process (tariff determined under Section 63 of the Act).
For fuel, GKEL was allocated coal from two sources:
Firm Linkage: A guaranteed supply of coal from Mahanadi Coalfields Limited (MCL) for 500 MW.
Tapering Linkage: A temporary coal supply from MCL and Eastern Coalfields Limited (ECL) for 550 MW, meant to taper off once coal from a captive mine (Rampia coal block) became available.
Due to a "Change in Law" (changes in government policies like increased royalty, clean energy cess, and excise duty on coal) and other factors, there was a shortfall in the supply of this domestic linkage coal. GKEL had to bridge this gap by purchasing costlier imported and open-market coal, incurring significant additional costs.
GKEL sought compensation for this additional cost from all beneficiaries. The Haryana utilities and GRIDCO refused, each arguing that the other should bear the burden, while the Bihar utilities agreed to a pro-rata sharing. This led to litigation before the CERC and subsequently the APTEL.
The Core Legal Issue
The central question before the Supreme Court was: Should the domestic linkage coal (and consequently, the cost of alternate coal procured to meet the shortfall) be allocated specifically to the PPAs it was initially intended for, or should it be pooled and apportioned pro-rata to all three beneficiaries based on their share of power offtake?
Haryana's Argument: They contended that the firm linkage coal was specifically for their 300 MW PPA and the initial 125 MW for GRIDCO. Therefore, any shortfall in this firm coal should be compensated only by them and GRIDCO, not Bihar. The tapering linkage was for Bihar and GRIDCO's remaining share.
GRIDCO's Argument: They argued that as the first PPA signatory and a party for whom the project was initially set up in Odisha, they had the first right over the firm linkage coal. They also challenged the CERC's earlier orders for not impleading them as a necessary party.
GKEL's Argument (Upheld by CERC & APTEL): The coal linkage was allocated by the government for the entire power plant, not for any specific PPA. Therefore, all coal from all sources must be pooled and apportioned pro-rata to all beneficiaries. The additional cost of alternate coal must also be shared pro-rata. Any other method would lead to one set of consumers cross-subsidizing another.
Supreme Court's Analysis and Directions
The Supreme Court dismissed both appeals and upheld the orders of the CERC and APTEL. Its reasoning was based on the following pillars:
Deference to Expert Bodies: The Court heavily relied on the principle of judicial restraint when reviewing decisions of expert regulatory bodies like the CERC and APTEL. It cited its own precedents (like Maharashtra State Electricity Distribution Company Limited v. Adani Power Maharashtra Limited) to reiterate that unless the expert bodies' decisions are perverse, arbitrary, or in violation of statutory provisions, the Supreme Court should not substitute its own view. The CERC and APTEL had given concurrent findings on facts after examining documents like the Fuel Supply Agreement (FSA), Letters of Assurance (LoA), and minutes of government committee meetings.
Interpretation of Fuel Supply Agreement (FSA): The Court affirmed the CERC's interpretation of Clause 4.1.1 of the FSA, which stated that the Annual Contracted Quantity (ACQ) of coal "shall be in proportion of the percentage of Generation covered under long term Power Purchase Agreements." This clearly indicated that coal was allocated for the plant's total long-term PPA capacity, not earmarked for individual PPAs. A letter from MCL (dated February 7, 2022) was cited, which explicitly confirmed that "in case of multiple PPAs, coal is allocated/released as per the ACQ against the total PPA capacity and not segregated on the basis of any specific PPA."
No Substantial Question of Law: The Court held that the appeal, under Section 125 of the Electricity Act, was required to raise a "substantial question of law." The dispute primarily involved the interpretation of contracts and facts—a domain where expert bodies had already ruled. The Court found no such substantial question of law was involved that warranted its interference.
Estoppel against Haryana Utilities: The Court noted that the Haryana utilities had accepted and paid bills based on the pro-rata methodology dictated by the CERC's first order (dated February 3, 2016, in Petition No. 79/MP/2013) for over two years. They only raised the dispute later. The Court criticized this conduct as "approbation and reprobation" (blowing hot and cold), referencing its earlier judgment in Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. v. Adani Power (Mundra) Ltd. & Ors., where Haryana had similarly changed its stance.
GRIDCO was not a Necessary Party: The Court rejected GRIDCO's contention that it should have been impleaded in the CERC petitions. It reasoned that those petitions were filed under Section 63 of the Act (for competitively bid tariffs) concerning Haryana and Bihar PPAs. GRIDCO's PPA was under Section 62 (cost-plus tariff), which involved separate proceedings. Since the relief sought was under the specific mechanisms of the Section 63 PPAs, GRIDCO's rights were not directly affected in those particular petitions.
Conclusion and Final Order
The Supreme Court concluded that the CERC and APTEL were correct in directing that:
All domestic linkage coal (firm and tapering) supplied to GKEL must be apportioned on a pro-rata basis to all three beneficiaries (Haryana, Odisha, Bihar).
The additional cost incurred for procuring coal from alternate sources (imported/open market) to meet the shortfall must also be apportioned on a pro-rata basis based on the power supplied to each beneficiary.
This ensured equitable sharing of the burden arising from the "Change in Law" event and prevented one state's consumers from unfairly subsidizing the power supplied to another state.
Final Direction: Both appeals were dismissed, and the impugned judgment of the APTEL was upheld.
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