The Supreme Court on Thursday issued notice in a curative petition of the Gujarat Urja Vikas Ltd (GUVL) against the July 2019 judgment that upheld the termination of the Power Purchase Agreement by Adani Power signed with GUVL as it could not get coal supply on time from the Naini block of Gujarat Mineral Development Corporation (GMDC).
The 5-judge bench of Chief Justice of India N.V. Ramana , Justices U.U. Lalit, A.M. Khanwilkar, B.R. Gavai and Surya Kant observed that there are substantial questions of law raised in the curative petition which require consideration and directed the registry to list the matter in Open Court on September 30.
The case dates to 2010, when the Gujarat Electricity Regulatory Commission (GERC) decided Adani Power Mundra had illegally terminated the PPA the latter had signed with GUVL. This decision of GERC was later upheld by the Appellate Tribunal for Electricity.
Adani contended that GMDC, again a state government entity, did not develop the Naini coal block. The block was allocated to the state agency by the ministry of coal but was de-allocated in 2014. GMDC was supposed to construct a power plant near the coal mine but decided to transport coal to Gujarat for two power units of Adani Power and Torrent Power. Adani Power signed the PPA in 2007 with GUVNL for supply of 1,000 Mw at Rs 2.35/unit from its power project at Korba, Chhattisgarh, based on coal supply from Naini. GMDC had agreed to supply 4 million tonnes of coal a year to Adani.
Later in 2007, Adani told GUVL it would supply power from its Mundra power project in Kutch, Gujarat, instead of from Chhattisgarh, since GMDC was lagging in coal production. However, despite repeated reminders to the Gujarat government, GUVL and GMDC, the coal supply did not start. Due to which, the PPA Adani had signed was terminated. Adani argued the agreement for supply of power was based on the assurance given by GMDC.
GUVL held the company should have supplied power, irrespective of whether it got the coal or not. In appeal, the Apex Court observed that the findings of the Tribunal and Commission that termination clause can be invoked only when there is an agreement between the parties that there is violation of any of the conditions specified is totally incorrect.
The Court allowed the appeal filed by Adani and held that compensatory tariff be paid to Adani based on the principles of economic justice since Adani would have incurred huge losses.The review petition filed by the GUVL was dismissed by the same bench on September 3.
In its 2019 judgment, the Supreme Court has allowed Adani to seek a compensatory rate for electricity it had alternatively supplied to Gujarat from its Korba power project in Chhattisgarh. The rate will be decided by the Central Electricity Regulatory Commission within three months from the date it is approached by the company.