PPA termination: Supreme Court seeks Adani Power response to GUVNL plea in three weeks

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October 01, 2021 1:30 AM

Adani Power, in 2006, had emerged as the successful bidder for supply of 1,000 MW power at the rate of `2.35 per Kwh from its power project at Korba, Chhattisgarh, to GUVNL.

While attorney general KK Venugopal appeared for GUVNL, senior counsel Harish Salve and Mukul Rohatgi represented Adani Power.While attorney general KK Venugopal appeared for GUVNL, senior counsel Harish Salve and Mukul Rohatgi represented Adani Power.

The Supreme Court on Thursday gave three weeks’ time to Adani Power (Mundra) to respond to a curative petition by Gujarat Urja Vikas Nigam (GUVNL) against its 2019 judgement that had upheld termination of a power purchase agreement (PPA) by Adani Power (Mundra).

A five-judge bench of Chief Justice NV Ramana and Justices UU Lalit, AM Khanwilkar, BR Gavai and Surya Kant heard the curative plea in a rare open court hearing. It granted three weeks to Adani and another two weeks thereafter to GUVNL to file the rejoinder, and then posted the matter for further hearing on November 17.

While attorney general KK Venugopal appeared for GUVNL, senior counsel Harish Salve and Mukul Rohatgi represented Adani Power.

The apex court on September 6 had decided to hear the matter in an open court as it was of prima facie opinion that substantial questions of law have been raised in the curative petition that require consideration.

In July 2019, a bench led by Justice Arun Mishra (now retired) had held that the notice of termination of a PPA by Adani Power to GUVNL in 2009 was legal and valid. It had validated Adani Power’s claim for compensatory tariff from GUVNL for additional costs incurred in supplying power from its imported coal-based Mundra plant, after the Gujarat Mineral Development Corporation (GMDC) reneged on its promise to supply local coal from Mogra-II coal block in Chhattisgarh.

The SC had then said, “In order to do economic justice, on the principle of business efficacy, the appellant would be entitled for adjustment of cost of the project and would also be entitled to the interest on the expenditure incurred by it for completion of the project.”

“The expenditure towards running of the project after obtaining the coal from the open market would also be required to be taken into consideration. The appellant would also be entitled to the interest on the delay of payment after it receives payment upon determination of the rate which would be determined by the CERC,” the court had said.

Adani Power, in 2006, had emerged as the successful bidder for supply of 1,000 MW power at the rate of `2.35 per Kwh from its power project at Korba, Chhattisgarh, to GUVNL.

Another agreement was signed in April 2007 for the supply of 1,000 MW against a bid from Mundra Power Project in Gujarat. The bid was submitted on the basis of the assurance given by GMDC to supply 4 million tonne of coal.

Since the fuel supply agreement could not be executed, Adani had written to GUVNL in January 2009, reiterating its inability to supply power to the procurer in the absence of coal supply by from GMDC. It had also said it had no other option except to terminate the PPA.

On December 28, 2009, Adani terminated the PPA. GUVNL challenged the termination before the commission, which directed Adani to supply the power at the rate determined in the PPA. On appeal, Aptel also upheld the CERC’s order.

GUVNL had argued that the procurer was not concerned with the issue as to from where Adani would arrange for its supply of coal. It submitted that it was the responsibility of Adani to arrange alternative sources.

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