Holding

The RBI notifications altering interest rate benchmarks do not constitute a change in law for the purposes of the PPAs, and the appeal does not raise a substantial question of law, so the lower orders directing payment of LPS based on SBAR stand.

Summary

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) appealed against the Maharashtra Electricity Regulatory Commission (MERC) and the Appellate Tribunal for Electricity (APTEL) which had ordered it to pay Late Payment Surcharge (LPS) to power generators based on the State Bank of India Prime Lending Rate (SBAR). MSEDCL argued that RBI's shift from PLR to Base Rate and MCLR constituted a "change in law" under its Power Purchase Agreements (PPAs) and should alter the LPS calculation. The Supreme Court held that the RBI notifications, while law, do not affect the PPAs because the contracts expressly tie LPS to SBAR and exclude automatic incorporation of RBI rate changes. The Court also ruled that the appeal did not raise a substantial question of law, and it would not re‑examine factual findings of MERC or APTEL. Consequently, the appeal was dismissed and the lower orders upheld.

Issues considered

The applicability of RBI's Base Rate and MCLR notifications as a "change in law" under the PPAs.
Whether the LPS rate must be calculated on the basis of SBAR (SBI PLR) or the RBI's newer rate regimes.
Whether the appeal under Section 125 of the Electricity Act, 2003, involves a substantial question of law as required by Section 100 of the CPC.
The power of MERC and APTEL to direct payment of LPS and whether such directions can be interfered with by the Supreme Court.

Legislation cited

Banking Regulation Act, 1949s. 21, s. 35, s. 46
Code of Civil Procedure, 1908s. 100
Electricity Act, 2003s. 100, s. 111, s. 120, s. 125, s. 61, s. 62, s. 63, s. 86
Right to Information Act, 2005

Subjects

electricity lawlate payment surchargechange in lawpower purchase agreementRBI interest rate reformscontract interpretationregulatory commissionappellate jurisdictionsubstantial question of law

Judgment

1056 [2021]
SUPREME COURT 5 S.C.R. 1056
REPORTS [2021] 5 S.C.R.

A MAHARASHTRA STATE ELECTRICITY DISTRIBUTION
COMPANY LIMITED
v.
MAHARASHTRA ELECTRICITY REGULATORY
COMMISSION & ORS.
B (Civil Appeal No.1843 of 2021)
OCTOBER 08, 2021
[INDIRA BANERJEE AND V. RAMASUBRAMANIAN, JJ.]
Electricity Act, 2003:
C s.125 – Appeal to Supreme Court – Interference with – Power
purchase agreements – Change in law –On facts, petition u/s. 86 by
the appellant-State Electricity Distribution Company seeking that
the change in interest rate system by the RBI from Prime Lending
Rate (PLR) to Base Rate and then to Marginal cost of funds based
D lending rate (MCLR) constituted change in law under the power
purchase agreements between the appellant and the “Power
Generating Companies”, so as to alter the rate of Late Payment
Surcharge(LPS) payable by the appellant to the power generating
companies – Dismissed by the Maharashtra Electricity Regulatory
Commission(MERC)and issuance of direction to the appellant to
E make payment of LPS within the time stipulated – Said order upheld
by the Appellate Tribunal for Electricity – On appeal, held: Existence
of substantial question of law is sine qua non for second appeal u/
s 125 r/w s. 100 CPC – This Court would not make a factual enquiry
into the mode and manner in which the Power Generating Companies
F meet their working capital requirements and interest that individual
Power Generating Companies pay to their lenders – Thus, no
substantial question of law involved in the instant appeal – RBI
notifications would tantamount to a change in law, however the
notification relating to alteration of the lending rates chargeable
by banks and financial institutions are not laws which relate to the
G Power Purchase Agreements and are not applicable to the appellant
or to the Power Generating Companies engaged in distribution of
electricity and not of advancing loans –Furthermore, courts cannot
rewrite contract mutually executed by parties – Explicit terms of
contract always the final word with regard to intention of parties –
H Thus, MERC acted within the scope of its power of regulatory
1056
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1057
LTD. v. MERC & ORC.

supervision in directing the appellant to make payment of LPS within A
the time stipulated – APTEL rightly upheld the direction – In any
case, such a direction cannot be interfered with in exercise of powers
u/s. 125 – Code of Civil Procedure, 1908 – s. 100.
s. 125 – Appeal to Supreme Court – Grounds for – Held:
Appeal lies to this Court u/s 125 only on grounds permitted u/s 100 B
CPC – Condition precedent for entertaining an appeal u/s 124 is
the existence of a substantial question – Code of Civil Procedure,
1908 – s. 100.
Maharashtra Electricity Regulatory Commission(MERC) –
Power of – Held: MERC constituted under the Electricity Act, 2003 C
has all the trappings of a Court – MERC is a substitute for a Civil
Court in respect of all disputes between licensees and Power
Generating Companies.
Dismissing the appeal, the Court
HELD : 1.1 An appeal lies to this Court under Section 125 D
of the Electricity Act, 2003 only on grounds permitted in Section
100 of the Code of Civil Procedure, 1908. On a conjoint reading
of Section 125 of the 2003 Act with Section 100 CPC, it is
absolutely clear that an appeal to this Court lies on a substantial
question of law. The condition precedent for entertaining an appeal E
under Section 125 is the existence of a substantial question.
[Para 148, 152][1122-C; 1123-E-F]
State Bank of India and Ors. v. S.N. Goyal (2008) 8
SCC 92 : [2008] 7 SCR 631; Nazir Mohamed v. J.
Kamala and Others 2020 SCC OnLine SC 676; Wardha F
Power Company Limited v. Maharashtra State Electricity
Distribution Co. Limited and Another (2016) 16 SCC
541; Tuppadahalli Energy India Private Limited v.
Karnataka Electricity Regulatory Commission and Anr
(2017) 11 SCC 194; Ramanuja Naidu v. V. Kanniah
Naidu and Another (1996) 3 SCC 392 : [1996] 3 SCR G
239; Navaneethammal v. Arjuna Chetty (1996) 6 SCC
166 : [1996] 5 Suppl. SCR 582 – referred to.
1.2 It is not for this Court to re-analyze evidence adduced
before the forums below or to sit in appeal over concurrent findings
of facts. [Para 159][1128-G] H
1058 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 1.3 There can be no doubt that a notification issued by the
Reserve Bank of India constitutes law. A Reserve Bank of India
notification which alters, modifies, cancels or replaces an earlier
notification would tantamount to a change in law. However the
notification relating to alteration of the lending rates chargeable
by banks and financial institutions are not laws which relate to
B
the Power Purchase Agreements in question, and therefore do
not attract, as the case may be, Article 13 of the Stage 1
Agreements or Article 10 of the Stage 2 Agreements.
[Para 160][1128-H; 1129-A-B]
1.4 The RBI circulars/guidelines referred to, are admittedly
C instructions issued to banks and financial institutions and are not
applicable to the appellant or to the respondent-Power Generating
Companies, who are engaged in the business of production, sale/
purchase and/or distribution of electricity and not of advancing
loans. Moreover, State Bank Advanced Rate (SBAR) as defined
D in the Power Purchase Agreements is admittedly not linked to
any RBI guidelines or circulars. The guidelines/circulars are thus
not relevant to the issues involved in this appeal. [Para 161]
[1129-B-C]
1.5 The RBI circulars/guidelines to banks, advising the
E banks to follow certain norms, while setting their benchmark
reference rates for loans, and the amendments thereto, have no
legal consequence on the contract between the parties. This has
been correctly appreciated by both the forums below.
[Para 162][1129-D]

F B.O.I. Finance Limited v. Custodian and Ors. (1997)
10 SCC 488 : [1997] 3 SCR 51 – referred to.
1.6 SBI has been notifying and continues to notify Prime
Lending Rates(PLR) for its loans. The appellant itself has given
the average PLR notified by SBI from 2010 till date in its
G application being I.A. No. 69796 of 2021. Therefore, Late
Payment Surcharge(LPS) as per the Power Purchase Agreement
has been calculated at the rate of 2% in excess of the SBI notified
Prime Lending Rate.From the impugned judgment and order of
the APTEL, it appears that the appellant conceded before the
APTEL that the SBI continues to issue the PLR rates till date.
H [Para 164, 165][1129-F-H]
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1059
LTD. v. MERC & ORC.

1.7 The definition of SBAR is clear and has been correctly A
applied by both the forums below. There are concurrent findings
of fact that the SBI PLR (i.e. the benchmark reference rate
mentioned in the PPA) is still being published and is available.
The Court cannot, at this stage of a second appeal under Section
125 of the Electricity Act reopen the factual question of whether
B
at all PLR rates were being notified by SBI for short term loans.
Therefore, there is no substantial question of law involved in
this appeal filed under section 125 of the Electricity Act, 2003.
[Para 166, 167][1130-B-C]
1.8 The definition of SBAR in the Power Purchase
Agreements is clear. SBAR is the Prime Lending Rate per annum C
fixed by the State Bank of India (SBI) from time to time for loans
with one year maturity. LPS is to be calculated at the rate of 2%
in excess of the PLR for loans with 1 year maturity, as fixed from
time to time by SBI. Moreover, the parties have consciously
agreed that in the absence of such rate, the LPS rate shall be D
mutually agreed to by the Parties. [Para 168][1130-D-E]
1.9 The provision in the Power Purchase Agreement,
whereby the parties are to mutually agree on a rate of interest, in
case there is no SBI Prime Lending Rate, in itself excludes the
applicability of the general provision for Change in Law contained E
in Article 13 of the Power Purchase Agreement to Late Payment
Surcharge. [Para 170][1130-F]
1.10 This Court is unable to accept the submission that the
conclusion of APTEL that LPS is not tariff is erroneous. The
meaning of the expression tariff has to be considered, and has F
rightly been considered by APTEL in the context of the relevant
provision of the Power Purchase Agreements. The dictionary
meaning of tariff may be charge. However, in Article 13 of the
Stage 1 and Article 10 of the Stage 2 Power Purchase Agreements,
tariff means monthly tariff and tariff adjustment consequential to
change in law, is of monthly tariff in respect of supply of electricity. G
[Para 173][1131-B-C]
1.11 It was submitted by the Power Generating Companies
respectively, LPS is only payable when payment against monthly

H
1060 SUPREME COURT REPORTS [2021] 5 S.C.R.

A bills is delayed and not otherwise.The object of LPS is to enforce
and/or encourage timely payment of charges by the procurer, i.e.
the appellant. In other words, LPS dissuades the procurer from
delaying payment of charges. The rate of LPS has no bearing or
impact on tariff. Changes in the basis of the rates of LPS do not
affect the rate at which power was agreed to be sold and purchased
B
under the Power Purchase Agreements. The principle of
restitution under the Change in Law provisions of the Power
Purchase Agreements are attracted in respect of tariff. [Para 174,
175][1131-D-F]
1.12 LPS cannot be equated with carrying cost or actual
C cost incurred for the supply of power. The appellant has a
contractual obligation to make timely payment of the invoices
raised by the Power Generating Companies, subject, of course,
to scrutiny and verification of the same. The counsel for the
respondent has a point that if the funding cost was so much lesser
D than the rate of LPS, as contended by the appellant, the appellant
could have raised funds at a lower rate of interest, made timely
payment of the invoices raised by the Power Generating
Companies, and avoided LPS. [Para 176][1131-F-G]
1.13 The proposition that Courts cannot rewrite a contract
E mutually executed between the parties, is well settled. The Court
cannot, through its interpretative process, rewrite or create a
new contract between the parties. The Court has to simply apply
the terms and conditions of the agreement as agreed between
the parties. As submitted, this appeal is renegotiate the terms of
the PPA. It is well settled that Courts cannot substitute their
F own view of the presumed understanding of commercial terms
by the parties, if the terms are explicitly expressed. The explicit
terms of a contract are always the final word with regard to the
intention of the parties. [Para 177][1131-H; 1132-A-C]
Shree Ambica Medical Stores and Others. v. Surat
G People’s Cooperative Bank Limited and Others (2020)
13 SCC 564 : [2020] 3 SCR 359; Nabha Power Limited
v. Punjab State ower Corporation Limited (PSPCL) And
Another (2018) 11 SCC 508 : [2017] 14 SCR 301 –
referred to.
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1061
LTD. v. MERC & ORC.

1.14 The appellant is obliged to seek amendment of the A
provisions of the Power Purchase Agreement only in accordance
with the agreed procedure for amendment of the terms thereof.
The agreed rate of Late Payment Surcharge can only be amended
in the absence of SBI PLR and that too with the mutual consent
of the parties to the Power Purchase Agreement.The submission
B
that the Power Generating Companies are availing loans at a
lesser rate of interest, but charging LPS on the basis of a higher
rate of interest, leading to unjust enrichment, is untenable in law.
LPS under the Power Purchase Agreements do not correspond
to the actual interest paid by the Power Generating Companies
for funds raised by them. The payment of Late Payment Surcharge C
LPS penalty suffered by the Procurer, that is, the appellant, on
account of default in timely payment. [Para 178, 179][1132-D-E]
1.15 The parties to the Power Purchase Agreements have
mutually and consciously agreed to the incorporation of the PLR
as notified by SBI from time to time, as the rate for levy of LPS. D
Therefore, by virtue of the doctrine of incorporation, the PLR as
notified by SBI each year gets incorporated in the Power
Purchasing Agreements, as binding between the parties. Thus,
any other system notified by the Reserve Bank of India by its
circulars has no bearing on the terms of the Power Purchase
Agreement and cannot be deemed to be incorporated in the Power E
Purchase Agreement, except in case of mutual agreement
between the parties, in the event of absence of SBI PLR, and
approved by the MERC. [Para 180][1132-F-H]
1.16 As submitted, conceptually, PLR, Base Rate and
MCLR are not comparable. The submission that the definition F
of SBAR should be read in the context of MCLR instead of PLR,
is therefore not tenable. PLR is the internal benchmark rate for
charging of interest on floating rate loans, calculated on the basis
of average cost of funds and the loans were offered at a discount
on their existing PLR. However, Base Rate is the lending rate G
calculated based on the total cost of funds of the banks and is the
minimum interest rate at which a bank can lend, except for loans
to its own employees, its retired employees and against bank’s
own deposits. MCLR is a lending rate calculated on the cost of

H
1062 SUPREME COURT REPORTS [2021] 5 S.C.R.

A raising new funds for the bank which include the cost of
maintaining CRR/SLR (Credit Reserve Ratio/Statutory Liquidity
Ratio), operating costs of banks and tenor premium. MCLR is
the lowest interest rate that a bank or lender can offer. Thus,
loans are offered at a markup on the MCLR. Thus, the basis of
both the rates are different and cannot be compared, as has been
B
sought to be done by the appellant. When PLR, Base Rate and
MCLR are compared side by side. The difference is that very
stark. Loans are advanced at a mark-up over Base Rate and
MCLR, while during the PLR regime, loans were offered at a
discount on PLR. [Para 181][1133-A-D]
C 1.17 In any case, the appellant cannot submit that the
Reserve Bank of India circulars are to be considered as Change
in Law, since Article 13.3.1 of the Stage 1 agreements
corresponding to Article 10.4.1 of the Stage 2 agreements
provides that notices of Change in Law events are to be issued
D by the affected party, as soon as reasonably practicable, after the
affected party becomes aware of Change in Law event or when it
should reasonably have known of the Change in Law.In this case,
the changes cited by the appellant were effected by RBI from
July 2010 and April 2016 and notified in advance. The appellant
issued notices of Change in Law as late as in September 2016,
E more than six years after the Reserve Bank of India introduced
the base rate system in place of the BPLR system. Furthermore,
while the guidelines on the base rate system were published on
9th April 2010 and introduced with effect from 01.07.2010, the
appellant entered into Power Purchase Agreements with the
F Respondent No. 2 on 9th August 2010 and on 16th February 2013
incorporating PLR as the Late Payment Surcharge rate for supply
of contracted quantum of electricity to the appellant.
[Para 182, 183][1133-E-H]
1.18 Significantly, the appellant charges interest from its
G consumers for delay in payment @ 1.25% per month and/or in
other words 15% per annum as per the MYT Regulations of
MERC. This also shows that interest rate is not co-related to
the actual interest rate on loans taken by the appellant or by
Power Generating Companies. According to the Respondent-

H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1063
LTD. v. MERC & ORC.

Power Generating Companies, no other distribution licencee A
other than the appellant has raised the claim of Change in Law.
All other Distribution Licencees procuring electricity from
producers of electricity pay LPS in accordance with the respective
Power Purchase Agreements.Admittedly, the appellant has landed
itself in its present predicament, due to delay in making timely
B
payments to the respondent Power Generating Companies. There
was no pandemic at the time of filing of the petition before the
MERC in 2017 and the Appeal before the APTEL in 2018. It,
cannot, therefore be said that the appellant defaulted in payment
of bills by reason of its financial predicament as a result of the
outbreak of COVID 19 in India, which was in March 2020. C
[Para 184, 186][1134-A-B]
1.19 Extensive submissions that the appellant committed
default in payment of the bills raised by the Power Generating
Companies on account of various circumstances, beyond its
control. The various circumstances mentioned by the appellant, D
which allegedly impacted the financial position of the appellant,
have no bearing on the merits of the Appeal. The counsels
submitted in one voice that the delays in payment and/or non-
payment of the invoices raised by the Power Generating
Companies for the supply of power to the appellant, had put the
respondent-Power Generating Companies under immense E
financial stress, as their source of revenue is from the sale and
supply of power generated from their power plants. The
respondent Power Generating Companies cannot be burdened
with the consequences of the appellant’s defaults.
[Para 187][1134-F-H; 1135-A] F
M/s Kailash Nath Associates v. Delhi Development
Authority and Anr (2015) 4 SCC 136 : [2015] 1 SCR
627 – distinguished.
Halliburton Offshore Services Inc. v. Vedanta Limited
& Anr., O.M.P (I) (COMM.) No. 88/2020, decided on G
29.05.2020 – referred to.
1.20 In this case, the appellant admittedly did not pay the
bills raised by the Power Generating Companies within time. The

H
1064 SUPREME COURT REPORTS [2021] 5 S.C.R.

A Power Purchase Agreements provided for Late Payment
Surcharge on the presumption that delayed payment of bills causes
prejudice and loss to the seller whose bill remains outstanding.
Accordingly, the appellant also imposes delayed payment charges
on its consumers, who pay their bills after the stipulated due date
for payment of the bills at the rate of 1.5% per month and/or in
B
other 18% per annum. LPS rate of 2% above the SBAR is neither
unreasonably exorbitant nor arbitrary. It cannot be said that the
LPS agreed upon is not a genuine pre estimate of damages.
[Para 189][1135-C-E]
Union of India v. Association of Unified Telecom Service
C Providers of India & Ors. 2020 (3) SCC 525 : [2019]
16 SCR 672; Hindustan Steel Ltd. v. State of Orissa
1969 (2) SCC 627 : [1970] 1 SCR 753; Akbar Badrudin
Giwani v. Collector of Customs 1990 (2) SCC 203 :
[1990] 1 SCR 369; Jaiprakash Industries Ltd. v.
D Commissioner of Central Excise, Chandigarh 2003 (1)
SCC 67; Tecumseh Products India Ltd. v. Commissioner
of Central Excise, Hyderabad 2004 (6) SCC 30 : [2004]
2 Suppl. SCR 202; J.K. Synthetics Ltd. v. Commercial
Taxes Officer 1994 (4) SCC 276:[1994] 3 SCR 964 ;
Central Bank of India v. Ravindra and Others 2002 (1)
E SCC 367 : [2001] 4 Suppl. SCR 323; M/s Kailash Nath
Associates v. Delhi Development Authority and Anr
(2015) 4 SCC 136 : [2015] 1 SCR 627 – referred to.
1.21 It would perhaps be pertinent to note that stereotype
Power Purchase Agreements containing identical terms and
F conditions are executed by the appellant with different Power
Generating Companies. It is patently obvious that the Power
Generating Companies only agree to terms and conditions of an
agreement prepared by the appellant. It is difficult to accept that
the appellant should incorporate in their stereotype Power
G Purchase Agreements, a provision for payment of LPS at a rate
2% higher than the SBAR, in case of late payment of invoices/
bills, without any pre-estimation of the loss likely to be suffered
by a Power Generating Company, by reason of non payment of
bills in time, more so when the Late Payment Surcharge is linked

H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1065
LTD. v. MERC & ORC.

to the rate of interest in respect of specific types of loan, charged A
by a leading nationalised bank with the largest numbers of
branches spread all over the country including in mofussil and
rural areas. [Para 192][1137-C-E]
1.22 In any case, in this second appeal under Section 125
of the Electricity Act 2003, which is only to be heard on a B
substantial question of law, this Court would not embark upon
the exercise of making a factual enquiry into the mode and manner
in which the Power Generating Companies meet their working
capital requirements and interest that individual Power
Generating Companies pay to their lenders. [Para 193]
[1137-E-F] C

1.23 It is axiomatic that the Power Purchase Agreements
provide for computation of Late Payment Surcharge in a particular
manner to avoid the time consuming exercise of assessing the
losses of individual Power Generating Companies by reason of
late payment of their bills. The SBAR has been made the bench D
mark for computation of Late Payment Surcharge, irrespective
of whether the Power Generating Companies are financed by the
State Bank of India or any of its subsidiaries. The LPS provision
is in the nature of a caution to arrange their affairs and finances
keeping the upper limit of LPS of 2% above the SBAR in view, E
so that the Power Generating Company desists from borrowing
at uneconomic rate of interest. [Para 194][1137-G-H]
1.24 There being no dispute in the instant case with regard
to the principal sums due under the monthly bills, interest on
delayed payment at 2% in excess of SBI PLR cannot be said to F
be arbitrarily high. There is no reason for this Court to reduce
the contractual rate of interest and thereby alter or modify the
contract between the parties, in exercise of its powers under
Article 142 of the Constitution of India. [Para 195][1138-B]
1.25 The question whether or not the appellant has funds G
to clear its interest liability are not gone into. The appellant cannot
continue to get supply of electricity without having appropriate
funds. The appellant would necessarily have to raise funds to
clear its contractual obligations. [Para 196][1138-C]

H
1066 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 1.26 Even assuming that the burden of interest would have
to be passed on to the consumers, that cannot be the ground for
the appellant to resile from its contractual commitment to the
Power Generating Companies. The appellant cannot pass on the
burden for delay in making payment to the Power Generating
Companies. In any case the claims pertains to a period of three
B
years before filing of the petition before the MERC on 2nd
December, 2016 and therefore barred by limitation.
[Para 197][1138-D]
1.27 Reliance by the appellant, upon the tariff regulations
framed by MERC for determination of tariff for Power Generating
C Companies under Section 62 of the Electricity Act 2003, is
untenable since the Tariff Regulations have no application in this
case where PPAs have been executed pursuant to a bidding
process, under Section 63 of the Electricity Act. [Para 198][1138-
E-F]
D 1.28 The challenge to the impugned judgment and order
on the ground of the directions on the appellant to make payment
of the LPS found due and payable, within a stipulated date, is also
not sustainable. [Para 203][1140-B-C]
1.29 APTEL is not bound by the procedure laid down in the
E Civil Procedure Code. Directions for time bound payment within
a prescribed time frame are in conformity with the judgment of
this Court in Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power’s
case which has been upheld by this Court. Moreover, one of the
objectives of the Electricity Act is time bound disposal of matters.
F This is evident from various provisions of the said Act including
in particular Section 111(5) of the Act. Since APTEL and MERC
are not bound by the procedure as laid down in the Civil Procedure
Code, it was open to APTEL to pass such orders as would finally
put an end to litigation. [Para 204][1140-C-D]

G Jaipur Vidyut Vitaran Nigam Limited & Ors. v. Adani
Power Rajasthan Limited and Anr 2020 SCC Online
SC 697 – distinguished.
1.30 An Electricity Regulatory Commission such as MERC
constituted under the Electricity Act, 2003 has all the trappings
of a Court. The MERC is a substitute for a Civil Court in respect
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1067
LTD. v. MERC & ORC.

of all disputes between licensees and Power Generating A
Companies. MERC acted within the scope of its power of
regulatory supervision in directing the appellant to make payment
of LPS within the time stipulated in the order of MERC. The
APTEL rightly upheld the direction. In any case, such a direction
cannot be interfered with in exercise of powers under Section
B
125 of the Electricity Act which corresponds to the power of
Second Appeal under Section 100 of the CPC, since the sine qua
non for entertaining an appeal is the existence of a substantial
question of law. [Page 205, 207][1140-E-F; 1141-B-C]
Tamil Nadu Generation & Distribution Corporation Ltd.
v. PPN Power Generating Company Private Limted C
(2014) 11 SCC 53 : [2014] 4 SCR 667; Andhra Pradesh
Power Coordination Committee & Others v. Lanco
Kondapalli Power Ltd & Ors. (2016) 3 SCC 468 :
[2015] 12 SCR 447; Gujarat Urja Vikas Nigam Limited
v. Amit Gupta and Others (2021) SCC OnLine 194; D
State of Karnataka v. Vishwabharathi House Building
Cooperative Society and Others (2003) 2 SCC 412 :
[2003] 1 SCR 397; All India Power Engineering
Federation & Ors. vs. Sasan Power Limited & Others
(2017) 1 SCC 487 : [2016] 9 SCR 901 – referred to.
E
1.31 After the the hearing of this appeal was concluded and
the appeal was reserved for judgment, the appellant filed an
application to bring on record additional facts and documents in
the form of queries under the Right to Information Act, 2005
made to the State Bank of India and the responses thereto in an
attempt to show that PLR would not apply to short term loans F
advanced by SBI after transition to the Base Rate/MCLR system.
This Court cannot take note of any documents sought to be
introduced after the conclusion of hearing. In any case, this Court
cannot in a second appeal under Section 125 of the Electricity
Act, 2003 interfere with concurrent factual findings arrived at by G
MERC and APTEL on the basis of facts admitted by the appellant.
The appellant had been accepting the invoices raised by the
respondent–Power Generating companies and accounts had duly
been reconciled by the appellant. The LPS charged by the

H
1068 SUPREME COURT REPORTS [2021] 5 S.C.R.

A respondent Power Generating Companies was never disputed.
Further more, this Court cannot look into documents introduced
for the first time in this second appeal, which were not tendered
in evidence before the MERC or the APTEL. Even otherwise,
queries made by a rank outsider as late as on 12th July 2021 or
replies thereto cannot be relied upon in evidence, by the
B
appellant. [Para 208][1141-C-F]
1.32 There is no ground to interfere with the judgment and
order of the APTEL confirming the judgment and order passed
by MERC. [Para 209][1141-G]
C DSR Steel (P). Ltd. v. State of Rajasthan and others
(2012) 6 SCC 782 : [2012] 5 SCR 583; Power Grid
Corporation of India and Ors. v. Tamil Nadu Generation
and Distribution Company Limited and Others. (2019)
7 SCC 34 : [2019] 7 SCR 724; Bharat Sanchar Nigam
Ltd. v. Pawan Kumar Gupta (2016) 1 SCC 363 : [2015]
D 11 SCR 402; Adani Power (Mundra) Ltd. v. Gujarat
Electricity Regulatory Commission and Others (2019)
19 SCC 9; Uttar Haryana Bijli Vitran Nigam Limited
and Another v Adani Power Limited and Others (2019)
5 SCC 325 : [2019] 4 SCR 487; CLP India Private
E Limited v. Gujarat Urja Vikas Nigam Limited and
Another 2020 (5) SCC 185; Transmission Corporation
of Andhra Pradesh Ltd . And Others v. GMR Vemagiri
Power Generation Ltd. And Another (2018) 3 SCC 716;
Indian Council for Enviro-Legal Action v. Union of India
(2011) 8 SCC 161 : [2011] 9 SCR 146; Gujarat Urja
F Vikas Nigam Ltd. v. Essar Power Limited (2008) 4 SCC
755 : [2008] 4 SCR 822 – referred to.
https://www.merriam-webster.com/dictionary/tariff –
referred to.

G Case Law Reference
[2012] 5 SCR 583 referred to Para 72
[2019] 7 SCR 724 referred to Para 73
[2015] 11 SCR 402 referred to Para 74
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1069
LTD. v. MERC & ORC.

(2019) 19 SCC 9 referred to Para 95 A
[2019 ] 4 SCR 487 referred to Para 112
2020 (5) SCC 185 referred to Para 115
(2018) 3 SCC 716 referred to Para 117
B
[2011] 9 SCR 146 referred to Para 128
[2008] 4 SCR 822 referred to Para 139
[2008] 7 SCR 631 referred to Para 151
(2016) 16 SCC 541 referred to Para 154
C
(2017) 11 SCC 194 referred to Para 155
[1996] 3 SCR 239 referred to Para 156
[1996] 5 Suppl. SCR 582 referred to Para 157
[1997] 3 SCR 51 referred to Para 163 D
[2017] 14 SCR 301 referred to Para 177
[2020] 3 SCR 359 referred to Para 177
[2015] 1 SCR 627 distinguished Para 188
E
[2019] 16 SCR 672 referred to Para 190
[1970] 1 SCR 753 referred to Para 191
[1990] 1 SCR 369 referred to Para 191
2003 (1) SCC 67 referred to Para 191
F
[2004] 2 Suppl. SCR 202 referred to Para 191
[1994] 3 SCR 964 referred to Para 191
[2001] 4 Suppl. SCR 323 referred to Para 191
[2014] 4 SCR 667 referred to Para 205 G
[2015] 12 SCR 447 referred to Para 205
[2003] 1 SCR 397 referred to Para 206
[2016] 9 SCR 901 referred to Para 206
H
1070 SUPREME COURT REPORTS [2021] 5 S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal No.1843
of 2021.
From the Judgment and Order dated 27.04.2021 of the Appellate
Tribunal for Electricity at New Delhi in Appeal No.77 of 2018.
Vikas Singh, Sr. Adv., G. Saikumar, Samir Malik, Rahul Sinha,
B Ms. Himangini Mehta, Ms. Deepika Kalia, Satwik Mishra, Ms. Farha
Malik, Chandra Prakash, M/s D. S. K. Legal, Advs. for the Appellant.
Mukul Rohatgi, Sr. Adv., Aman Anand, Vivek Singh, Aman Dixit,
Mahesh Agarwal, Ms. Parul Shukla, Arshit Anand, Nishant Rao, E. C.
Agrawala, Vishrov Mukherjee, Gaurav Ray, Alok Shankar, Ms. Divya
C Anand, Advs. for the Respondents.
The Judgment of the Court was delivered by
INDIRA BANERJEE, J.
This appeal, under Section 125 of the Electricity Act 2003, is against
D a judgment and order dated 27th April 2021 passed by the Appellate
Tribunal for Electricity, hereinafter referred to, in short, as ‘APTEL’,
dismissing Appeal No.77 of 2018 filed by the Appellant, Maharashtra
State Electricity Distribution Company Ltd., and affirming an order dated
16th November, 2017 passed by the Maharashtra Electricity Regulatory
Commission, hereinafter referred to, in short, as ‘MERC’, whereby
E
MERC dismissed the petition filed by the Appellant under Section 86 of
the Electricity Act, being Case No.24 of 2017, rejecting the contention
of the Appellant that, introduction by Reserve Bank of India of the Base
Rate system and the Marginal Cost of Funds Based Lending Rate system
constituted a change in law, within the meaning of the expression ‘Change
F in Law’ as defined in the respective Power Purchase Agreements
between the Appellant and the Respondent Nos.2, 3, 4 and 5, hereinafter
collectively referred to as the “Power Generating Companies”, so as to
alter the rate of Late Payment Surcharge(LPS) payable by the Appellant
to the Power Generating Companies under the respective Power
Purchase Agreements.
G
2. The Appellant, incorporated under the Companies Act, 1956,
pursuant to the decision of the Government of Maharashtra to reorganize
erstwhile Maharashtra State Electricity Board, is a Distribution Licensee
under the provisions of the Electricity Act, 2003, with license to supply
electricity all over the State of Maharashtra, except some parts of the
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1071
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

city of Mumbai. The Appellant is a bulk purchaser of electricity from A
generators of electricity.
3. The Appellant had, from time to time, issued Tender Notices,
inviting bids for bulk supply of electricity to the Appellant, pursuant to
which, the Power Generating Companies submitted their bids.
4. The Appellant has executed Power Purchase Agreements with B
the Power Generating Companies, arrayed as Respondent Nos. 2 to 5 in
this appeal in two stages. The two sets of Power Purchase Agreements,
hereinafter referred to as the stage 1 and stage 2 Power Purchase
Agreements, contain almost identical terms and conditions. The respective
dates and brief particulars of the respective agreements (five in number) C
are as follows:-
“Stage 1-PPA

D

E
Stage 2-PPA

F

5. The relevant terms and conditions of the Stage 1 Power
G
Purchase Agreements are set out hereunder:-
“Article 1 : Definitions and interpretation
Change in law – shall have the meaning ascribed thereto in
Article 13.1.1 of this agreement.
H
1072 SUPREME COURT REPORTS [2021] 5 S.C.R.

A Indian Governmental instrumentality – means the GoI,
Government of Maharashtra and any ministry or, department
of or, board, agency or other regulatory or quasi-judicial
authority controlled by GoI or Government of States where
the procurer and project are located and includes the CERC
and MERC.
B
Late Payment Surcharge – shall have the meaning ascribed
there to in Article 11.3.4
Law – means, in relation to this Agreement, all laws including
Electricity Laws in force in India and any stature, ordinance,
C regulation, notification or code, rule, or any interpretation
of any of them by an Indian Government Instrumentality and
having force of law and shall further include all applicable
rules, regulations, orders, notifications by an Indian
Governmental Instrumentality pursuant to or under any of
them and shall include all rules, regulations, decisions and
D orders of the CERC and the MERC.
SBAR – means the prime lending Rate per annum applicable
for loans with one (1) year maturity as fixed from time to time
by the State Bank of India. In the absence of such rate, any
other arrangement that substitutes such prime lending rate
E as mutually agreed to by the parties.
Article 11: Billing and Payment
.
.
F
.
11.3.4 In the event of delay in payment of a monthly bill by
the procurer beyond its due date month billing, a Late Payment
Surcharge shall be payable by the procurer to the seller at
the rate of two (2) percent in excess of applicable SBAR per
G annum, on the amount of outstanding payment, calculated
on a day to day basis (and compounded with monthly rest)
for each date of the delay.
..

H Article 13 : Change in Law
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1073
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

13.1. Definitions A
In this Article 13, the following terms have the following
meanings.
13.1.1 “Change in Law” means the occurrence of any of the
following events after the date, which is seven (7) days prior,
to the Bid Deadline: B

(i) the enactment, bringing into effect, adoption, promulgation,
amendment, modification or repeal or any law or
(ii) a change in interpretation of any law by a competent court
of law, tribunal or Indian governmental instrumentality C
provided such court of law, tribunal or Indian governmental
instrumentality is final authority under law for such
interpretation.
But shall not include (i) any change in any withholding tax
on income or dividends distributed to the shareholders of the D
seller, or (ii) Change in respect of UI charges or frequency
intervals by an Appropriate Commission.
.
.
. E

13.2 Application and principal for computing impact of
Change in Law
While determining the consequence of Change in Law under
this Article 13, the parties shall have due regard to the F
principle that the purpose compensating the party affected
by such change in law, is to restore through monthly tariff
payments to the extent contemplated in this Article 13, the
affected party to the same economic position as if such
Change in Law has not occurred.
G
a) …………
b) Operation Period –
As a result of change in Law, the compensation for any
increase/decrease in revenue or cost to the seller shall be
determined by the Maharashtra State Electricity Regulatory H
1074 SUPREME COURT REPORTS [2021] 5 S.C.R.

A Commission whose decision shall be final and binding on both
the parties, subject to right of appeal provided under
applicable law and effective from the date specified in 13.4.1
13.3. Notification of Change in Law:
13.3.1. If the seller is affected by a Change in Law in
B accordance with Article 13.2 and the Seller wishes to claim a
Change in Law under this Article, it shall give notice to the
Procurer of such Change in Law as soon as reasonably
practicable after becoming aware of the same or should
reasonably have known of the Change in Law.
C 13.3.2.Notwithstanding Article 13.3.1, the seller shall be
obliged to serve notice to the Procurer under this Article 13.3.2
if it is beneficially affected by a Change in Law. Without
prejudice to the factor of materiality or other provisions
contained in this Agreement, the obligation to inform the
D procurer contained herein shall be material.
Provided that in case the seller has not provided such notice,
the Procurer shall have the right to issue such notice to the
seller.
13.3.3 Any notice served pursuant to this Article 13.3.2 shall
E provide, amongst other things, precise details of:
a) The Change in Law; and
b) The effects on the Seller of the matters referred to in Article
13.2
F 13.4.Tariff adjustment payment on account of Change in Law
13.4.1. subject to Article 13.2, the adjustment in monthly tariff
payment shall be effective from:
(i) the date of adoption, promulgation, amendment, re-
enactment, repeal of the Law or Change in Law, or
G
(ii) the date of order/judgment of the competent court or
tribunal or Indian Governmental Instrumentality, if the Change
in Law is on account of a change in interpretation of law.”
6. The Stage 2 Power Purchase Agreements, as stated
hereinbefore, contain terms and conditions almost identical to those of
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1075
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

the first set of agreements. The relevant provisions of the second set of A
agreements (Stage 2) are as follows:-
“Article 1 : Definitions and Interpretation
Change in law – shall have the meaning ascribed thereto in
Article 10.1.1 of this agreement.
B
Indian Governmental Instrumentality – shall mean the
Government of India, Governments of state(s) of
Maharashtra, and any ministry, department, board, authority,
agency, corporation, commission under the direct or indirect
control of Government of India or any of the above State
Government(s) or both, any political sub-division of any of C
them including any court or Appropriate Commission(s) or
tribunal or judicial or quasi-judicial body in India but
excluding the Seller and the Procurer.
Late Payment Surcharge – shall have the meaning ascribed
thereto in Article 8.3.5 of this Agreement. D
Law – Shall mean in relation to this Agreement, all laws
including Electricity Laws in force in India and any statute,
ordinance, regulation, notification or code, rule or any
interpretation of any of them by an Indian Governmental
instrumentality and having force of law and shall further E
include without limitation all applicable rules, regulations,
orders, notifications by an Indian Governmental
instrumentality pursuant to or under any of them and shall
include without limitation all rules, regulations, decisions and
orders of the Appropriate Commission. F
SBAR – Shall mean the prime lending Rate per annum
applicable for loans with one (1) year maturity as fixed from
time to time by the State Bank of India. In the absence of such
rate, SBAR shall mean any other arrangement that substitutes
such prime lending rate as mutually agreed to by the parties.
G
Article 8 : Billing and Payment
.
.
. H
1076 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 8.3.5 In the event of delay in payment of a monthly bill by the
procurer beyond its due date, a Late Payment Surcharge shall
be payable by such procurer to the seller at the rate of two
(2) percent in excess of applicable SBAR per annum, on the
amount of outstanding payment, calculated on a day to day
basis (and compounded with monthly rest) for each date of
B
the delay. The Late Payment Surcharge shall be claimed by
the Seller through the Supplementary Bill.
.
.
C .
Article 10 : Change in Law
10.1 Definitions
In this Article 10, the following terms have the following
D meanings
10.1.1. “Change in Law” means the occurrence of any of the
following events after the date, which is seven (7) days prior,
to the Bid Deadline resulting into any additional recurring/
non-recurring expenditure by the Seller or any income to the
E Seller:
* the enactment, coming into effect, adoption, promulgation,
amendment, modification or repeal (without re-enactment or
consolidation) in India, of any Law, including rules and
regulations framed pursuant to such Law;
F * a change in interpretation or application of any law by any
Indian Governmental Instrumentality having the legal power
to interpret or apply such Law, or any Competent Court of
Law;
* the imposition of requirement for obtaining any Consents,
G Clearances and Permits which was not required earlier;
* a change in the terms of conditions prescribed for obtaining
any Consents, Clearances and Permits or the inclusion of
any new terms or conditions for obtaining such Consents,
Clearances and Permits; except due to any default of the
H Seller;
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1077
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

* any change in tax or introduction of any tax made A
applicable for supply of power by the Seller as per the terms
of this Agreement but shall not include (i) any change in any
withholding tax on income or dividends distributed to the
shareholders of the Seller, or (ii) Change in respect of UI
Charges or frequency intervals by an Appropriate Commission
B
or (iii) any change on account of regulatory measures by the
Appropriate Commission including calculation of Availability.
10.2. Application and Principles for computing impact of
Change in Law
10.2.1. While determining the consequence of Change in Law C
under this Article 10, the parties shall have due regard to the
principle that the purpose compensating the party affected
by such Change in Law, is to restore through monthly tariff
Payment, to the extent contemplated in this Article 10, the
affected party to the same economic position as if such
Change in Law has not occurred. D

10.3 Relief for Change in Law
10.3.2 During Operation Period
The compensation for any decrease in revenue or increase in
expenses to the Seller shall be payable only if the decrease in E
revenue or increase in expenses of the Seller is in excess of
an amount equivalent to 1% of the value of the Letter of Credit
in aggregate for the relevant Contract Year.
10.4 Notification of change in Law:
F
10.4.1. If the seller is affected by a Change in Law in
accordance with Article 10.1 and the Seller wishes to claim a
Change in Law under this Article 10, it shall give notice to
the Procurer of such Change in Law as soon as reasonably
practicable after becoming aware of the same or should
reasonably have known of the Change in Law. G
10.4.2 Notwithstanding Article 10.4.1, the Seller shall be
obliged to serve notice to the Procurer under this Article
10.4.2, even if it is beneficially affected by a Change in Law.
Without prejudice to the factor of materiality or other
H
1078 SUPREME COURT REPORTS [2021] 5 S.C.R.

A provisions contained in this Agreement, the obligation to inform
the procurer contained herein shall be material.
Provided that in case the Seller has not provided such notice,
the Procurer shall have the right to issue such notice to the
Seller.
B 10.4.3. Any notice served pursuant to this Article 10.4.2 shall
provide, amongst other things, precise details of:
a) The Change in Law; and
b) The effects on the Seller.
C 10.5. Tariff Adjustment Payment on account of Change in
Law
10.5.1. Subject to Article 10.2, the adjustment in monthly Tariff
Payment shall be effective from:
(i) the date of adoption, promulgation, amendment, re-
D
enactment, repeal of the Law or Change in Law, or
(ii) the date of order/ judgment of the Competent Court or
tribunal or Indian Governmental Instrumentality, if the Change
in Law is on account of a change in interpretation of Law.
E 10.5.2. The payment for Change in Law shall be through
Supplementary Bill as mentioned in Article 8.8. However, in
case any change in Tariff by reason of Change in Law, as
determined in accordance with this Agreement, the Monthly
Invoice to be raised by the Seller after such change in Tariff
shall appropriately reflect the changed tariff.”
F
7. With the object of bringing transparency in the lending rates,
that is, the rates of interest charged by banks on loans and advances, the
Reserve Bank of India had introduced the Benchmark Prime Lending
Rate (BPLR) system in 2003.

G 8. By a notification dated 1st July 2010, the Reserve Bank of India
introduced the Base Rate System, replacing the BPLR system with
immediate effect. The relevant extracts of the notification dated
01.07.2010 are set out hereinbelow :-
“2.2.1 The Base Rate system, as detailed below and in Annex
1 will replace the BPLR system with effect from July 1, 2010.
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1079
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

For loans sanctioned up to June 30, 2010, BPLR will be A
applicable, as given in Annex 3 and 4. However, for those
loans sanctioned up to June 30, 2010 which come up for
renewal from July 1, 2010 onwards, Base Rate would be
applicable…..
2.3.6. The Base Rate system would be applicable for all new B
loans and for those old loans that come up for renewal. Existing
loans based on the BPLR system may run till their maturity. In
case existing borrowers want to switch to the new system, before
expiry of existing contracts, an option may be given to them,
on mutually agreed terms. Banks, however, should not charge
any fee for such switch-over. C

2.3.7 Interest rates under the BPLR system are applicable to
all existing loans sanctioned up to June 30, 2010. However,
wherever loans sanctioned up to June 30, 2010 come up for
renewal from July 1, 2010 the Base Rate system would be
applicable. The guidelines on Benchmark Prime Lending Rate D
(BPLR) and Spreads and its determination for existing loans
sanctioned up to June 30, 2010 are given in Annex 3 and
Annex 4.” (Emphasis supplied)
9. Later by a further notification dated 3rd March 2016, the Reserve
Bank of India introduced the Marginal Cost of Funds Based Lending E
Rate (MCLR) replacing the Base Rate System with effect from 1st
April 2016. The notification dated 03.03.2016 provided:
“6 (a) (i) All floating rate rupee loans sanctioned and renewed
between July 1, 2010 and March 31, 2016 shall be priced
with reference to the Base Rate which will be the internal F
benchmark for such purposes.
………..
6 (b) (i) All floating rate rupee loans sanctioned and renewed
w.e.f. April 1, 2016 shall be priced with reference to the G
Marginal Cost of Funds based Lending Rate (MCLR) which
will be the internal benchmark for such purposes subject to
the provisions contained in paragraph 7 of this Master
Direction. “(Emphasis supplied)
H
1080 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 10. There can be no dispute that the obligation to pay Late Payment
Surcharge (LPS) in case of delay in payment of bills raised by the Power
Generating Companies on the Appellant arises from the Power Purchase
Agreements, the relevant clauses being Article 11.3.4 of the Stage 1
Power Purchase Agreements and Article 8.3.5 of the Stage 2 Power
Purchase Agreements.
B
11. LPS is payable at the rate agreed upon by the parties to the
Power Purchase Agreements. The Power Purchase Agreements
stipulate that LPS for delay in payment of bills is to be computed on the
basis of the Prime Lending Rate fixed as per SBAR, that is, the State
Bank Advance Rate.
C
12. The expression SBAR (State Bank Advance Rate) refers to
the Prime Lending Rate notified by the State Bank of India (hereinafter
referred to as ‘SBI’) from time to time, that is applicable per annum for
loans with one year maturity, advanced by SBI. It is only in the absence
of SBAR that the rate of LPS may be substituted by some other
D arrangement, by mutual agreement.
13. On 23.09.2016, the Appellant issued notice of ‘Change in Law’
to independent power producers including the Power Generating
Companies impleaded as Respondent Nos.2 to 5.

E 14. On 02.12.2016, the Appellant filed Case No.24 of 2017 before
the MERC claiming that the introduction of the Base Rate and MCLR
qualifies as Change in Law. Case No.24 of 2017 has been dismissed by
a judgment and order dated 16.11.2017, which has been affirmed by the
APTEL in Appeal No.77 of 2018, by the judgment and order impugned
in this Appeal under Section 125 of the Electricity Act, 2003.
F
15. Mr. Vikas Singh appearing on behalf of the Appellant submitted
that this appeal raises the following substantial questions of law:
(a) Whether Late Payment Surcharge (LPS) can be determined
on the basis of the Prime Lending Rate (PLR) methodology,
particularly when:-
G
(i) Reserve Bank of India discontinued the PLR
methodology and shifted to Base Rate system by its
notification dated 01.07.2010 and Marginal Cost of
Fund-based Lending Rate System (MCLR) by its
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1081
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

notification dated 03.03.2016 as methodologies for A
calculation of rate of interest?
(ii) Should the State Bank Advance Rate (SBAR) as
defined in the Power Purchase Agreement be
determined only on the basis of PLR even though
SBAR is for loans with one year maturity (i.e., short B
term loans) and not for long term loans?
(b) Whether the notifications dated 01.07.2010 and 03.03.2016
issued by the Reserve Bank of India are an event of change
in law in terms of Article 13 and Article 10 of the two sets
of Power Purchase Agreements executed by the Appellant C
with the Power Generators?
(c) Whether LPS, which admittedly is compensatory in nature,
can in law be awarded to the Respondents without any
evidence of actual loss (equivalent to the LPS determined
at the rate of PLR +2%), particularly when Power D
Generators are availing working capital loan at much lower
rate of interest, based on Base Rate or MCLR?
(d) Whether LPS, which is admittedly compensatory in nature,
can in law be awarded in such a manner that it results in
unjust enrichment of the Power Generators, especially since E
the interest is to be paid by compounding monthly?
16. Mr. Singh argued that none of the above questions of law
have yet been decided by this Court, in the context of LPS. All these
questions of law go to the root of the dispute between the Appellant and
the Power Generating Companies and have a direct bearing on the F
outcome of the lis between the parties. If any of these substantial
questions of law are decided either way, the same shall not only be
determinative of inter-se rights between the parties during the entire
term of the Power Purchase Agreements but shall also have wide
ranging impact across the entire electricity sector.
G
17. In support of his argument that this Appeal involves a substantial
question of law, well within the four corners of Section 125 of the
Electricity Act, 2003 Mr. Singh cited State Bank of India and Ors. v.
S.N. Goyal1, where this Court held:-
1
(2008) 8 SCC 92
H
1082 SUPREME COURT REPORTS [2021] 5 S.C.R.

A “13. Second appeals would lie in cases which involve
substantial questions of law. The word “substantial” prefixed
to “question of law” does not refer to the stakes involved in
the case, nor intended to refer only to questions of law of
general importance, but refers to impact or effect of the
question of law on the decision in the lis between the parties.
B
“Substantial questions of law” means not only substantial
questions of law of general importance, but also substantial
question of law arising in a case as between the parties. In
the context of Section 100 CPC, any question of law which
affects the final decision in a case is a substantial question of
C law as between the parties. A question of law which arises
incidentally or collaterally, having no bearing on the final
outcome, will not be a substantial question of law. Where there
is a clear and settled enunciation on a question of law, by this
Court or by the High Court concerned, it cannot be said that
the case involves a substantial question of law. It is said that a
D
substantial question of law arises when a question of law,
which is not finally settled by this Court (or by the High Court
concerned so far as the State is concerned), arises for
consideration in the case. But this statement has to be
understood in the correct perspective. Where there is a clear
E enunciation of law and the lower court has followed or rightly
applied such clear enunciation of law, obviously the case
will not be considered as giving rise to a substantial question
of law, even if the question of law may be one of general
importance. On the other hand, if there is a clear enunciation
of law by this Court (or by the High Court concerned), but
F
the lower court had ignored or misinterpreted or misapplied
the same, and correct application of the law as declared or
enunciated by this Court (or the High Court concerned) would
have led to a different decision, the appeal would involve a
substantial question of law as between the parties. Even where
G there is an enunciation of law by this Court (or the High Court
concerned) and the same has been followed by the lower court,
if the appellant is able to persuade the High Court that the
enunciated legal position needs reconsideration, alteration,
modification or clarification or that there is a need to resolve
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1083
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

an apparent conflict between two viewpoints, it can be said A
that a substantial question of law arises for consideration.
There cannot, therefore, be a straitjacket definition as to when
a substantial question of law arises in a case. Be that as it
may.” (Emphasis supplied)
18. Mr. Singh also cited Nazir Mohamed v. J. Kamala and B
Others2, authored by one of us (Indira Banerjee, J), where this Court
reiterated that :-
“32. To be “substantial”, a question of law must be debatable,
not previously settled by the law of the land or any binding
precedent, and must have a material bearing on the decision C
of the case and/or the rights of the parties before it, if answered
either way.” (Emphasis supplied)
19. Mr. Singh submitted that the LPS under the Power Purchase
Agreements must be calculated at prevailing Base Rate/ MCLR Rates
as issued by the RBI from time to time. Mr. Singh argued that, as per the D
definition of SBAR in the Power Purchase Agreement, SBAR means
the Prime Lending Rate per annum applicable for loans with one (1)
year maturity, as fixed from time to time by the State Bank of India, and
in the absence of such rate, any other arrangement that substitutes such
Prime Lending Rate, as mutually agreed to by the parties.
E
20. Mr. Singh argued that the definition of SBAR as provided
under the Power Purchase Agreements expressly refers to the interest
rate that is applicable for loans with one year maturity. The interest rate
is therefore, to be renewed on a yearly basis, and further, only the interest
rates for short term loans would be applicable to LPS under the Power
Purchase Agreements. Upon renewal of the loan, the Base Rate system F
and/or MCLR system, as the case may be, is to be applicable, for the
relevant period for which LPS is to be calculated.
21. Mr. Singh submitted that no PLR rates are being notified by
SBI for short term loans. The PLR rates issued by SBI, after notification
of the Base Rate system and the MCLR rates by the RBI, are only for G
long term loans that have not come up for renewal, and for those loans
which are running to maturity. Even in case of loans there is option of
switching to the Base Rate / MCLR system.

2
2020 SCC OnLine SC 676 H
1084 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 22. Mr. Singh submitted that in Jaipur Vidyut Vitaran Nigam
Limited & Ors. v. Adani Power Rajasthan Limited and Anr3., this
Court has capped the interest rate on LPS at 9% per annum, inclusive of
the 2% in excess of the applicable interest rate. Moreover, this Court
has directed that the interest should be compounded annually and not
monthly as provided in the clause therein. The relevant portion of the
B
said judgment cited to by Mr. Singh, is reproduced hereunder:
“71. Considering the facts of this case and keeping in view
that the RERC and APTEL have given concurrent findings in
favour of the respondent with regard to change in law, with
which we also concur, we may now deal with the question of
C liability of appellants- Rajasthan Discoms with regard to late
payment surcharge. In this regard, the following Articles 8.3.5
and 8.8 of PPA, which are relevant for the present purpose,
are extracted hereunder:
“8.3.5. In the event of delay in payment of a Monthly Bill
D by the Procurers beyond its Due Date, a Late Payment
Surcharge shall be payable by such Procurers to the Seller
at the rate of two percent (2%) in excess of the applicable
SBAR per annum, on the amount of outstanding payment,
calculated on a day to day basis (and compounded with
E monthly rest), for each day of the delay. The Late Payment
Surcharge shall be claimed by the Seller through the
Supplementary Bill.
72. Liability of the Late Payment Surcharge which has been
saddled upon the appellants is at the rate of 2% in excess of
F applicable SBAR per annum, on the amount of outstanding
payment, calculated on a day to day basis (and compounded
with monthly rest) for each day of the delay. Therefore, there
shall be huge liability of payment of Late Payment Surcharge
upon the appellants-Rajasthan Discoms.

G 73. With regard to the question of interest/late payment
surcharge, we notice that the plea of change in law was
initially raised by APRL in the year 2013. A case was also
filed by APRL in the year 2013 itself raising its claim on such
basis. However, the appellants- Rajasthan Discoms did not
3
2020 SCC Online SC 697
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1085
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

allow the claim regarding change in law, because of which A
APRL was deprived of raising the bills with effect from the
date of change in law in the year 2013. We are, thus, of the
opinion that considering the totality of the facts of this case
and in order to do complete justice and to reduce the liability
of the appellants-Rajasthan Discoms, payment of 2 per cent
B
in excess of the applicable SBAR per annum with monthly
rest would be on higher side. In our opinion, it would be
appropriate to direct the appellants-Rajasthan Discoms to pay
interest/late payment surcharge as per applicable SBAR for
the relevant years, which should not exceed 9 per cent per
annum. It is also provided that instead of monthly rest, the C
interest would be compounded per annum.
74. We accordingly direct that the rate of interest/late payment
surcharge would be at SBAR, not exceeding 9 per cent per
annum, to be compounded annually, and the 2 per cent above
the SBAR (as provided in Article 8.3.5 of PPA) would not be D
charged in the present case.”
23. Mr. Singh argued that the provisions of the Power Purchase
Agreement considered in Jaipur Vidyut Vitaran Nigam Ltd. (supra)
with regard to LPS are in pari materia with the corresponding provisions
in the Power Purchase Agreements under consideration in this case. E
Thus, the aforesaid judgment squarely covers the present case.
24. Mr. Singh argued that, in terms of Article 1 of the Power
Purchase Agreements, “law means all laws including Electricity Laws
in force in India and any statute, ordinance, regulation, notification
or code, rule, or any interpretation of any of them by an Indian F
Governmental Instrumentality and having force of law and shall
further include all applicable rules, regulations, orders, notifications
by an Indian Governmental Instrumentality pursuant to or under
any of them and shall include all rules,” Change in Law has been
defined to include the enactment, bringing into effect, adoption,
promulgation, amendment, modification or repeal of any law. G
25. Mr. Singh further argued that the Reserve Bank of India is an
Indian Government Instrumentality. The Notifications referred to above,
were issued by the Reserve Bank of India under Sections 21 and 35A of
the Banking Regulation Act, 1949 and have the force of law. Thus, these
H
1086 SUPREME COURT REPORTS [2021] 5 S.C.R.

A Notifications are well within the definition of law provided in the Power
Purchase Agreements.
26. Mr. Singh emphatically argued that the Reserve Bank of India
Notifications dated 01.07.2010 and 03.03.2016, issued after execution
of the Power Purchase Agreements with the Respondent Nos. 2 to 5
B constituted change in Law, as contemplated in the Power Purchase
Agreements.
27. Mr. Singh submitted that the APTEL has erroneously come to
the conclusion that LPS is not tariff and also not part of the income of
the Respondent Power Generating Companies and thus does not
C constitute change in law. Mr. Singh submitted that any payment made
by a procurer of electricity to the generator of electricity is nothing but a
facet of the tariff payable under the Power Purchase Agreement. The
term ‘tariff’ cannot be restricted to only two facets of tariff, i.e., per unit
energy charge and fixed energy charge on the basis of production capacity
(capacity charge). All payments that are payable to a generator of
D electricity for supply of electricity under the Power Purchase Agreements
including LPS are different facets of tariff. Tariff will also include what
the distribution licencees would ultimately charge the consumers.
28. Referring to the meaning of the word ‘tariff’ as given in
Merriam Webster Dictionary, as downloaded from the website https://
E www.merriam-webster.com/dictionary/tariff on 29.07.2021, which
includes a charge, Mr. Singh argued that LPS is part of the charges that
are payable by the Appellant to the Respondent Generating Companies
under their respective Power Purchase Agreements, and is therefore
tariff.
F 29. Mr. Singh submitted that interest income is considered as
income under the Income Tax Act, 1961. LPS is nothing but interest on
account of delay in payment of the tariff under the Power Purchase
Agreements, and is payable as a part of the said tariff. However, APTEL
has by its impugned judgment and order wrongly held that LPS neither
G has any bearing on the income of the Respondent Power Generating
Companies nor is part of the tariff. APTEL has erroneously held that
change in methodology in computation of the rate of interest is not change
in law.
30. Mr. Singh further argued that the LPS, as a concept, is
compensatory in nature for delayed payment, if any. The Order dated
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1087
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

16.11.2017 passed by the MERC in Case No.24 of 2017 also holds that A
LPS is essentially compensatory in character, in terms of the effect
on the seller on account of delay by the procurer in making
payments.
31. Mr. Singh further argued that LPS is paid to compensate a
power generator for delay in making payments of invoices, because the B
power generator would have to arrange additional working capital loan
to the extent of the amount of outstanding delayed invoice(s). Thus, to
offset the loss that may have been caused on account of additional interest
on such additional working capital loan, the Power Purchase Agreements
contain a provision for LPS. The fact that LPS is to be compounded
monthly is a further benefit to the Power Generating Companies. Thus, C
LPS in essence is nothing but a kind of liquidated damages for delay in
payment of invoice(s).
32. Mr. Singh emphatically argued that LPS being compensatory
in nature, the same cannot be claimed as a windfall gain. A comparative
analysis of the LPS rate claimed by the Respondents, with the prevailing D
rates of interest for availing working capital loans would reveal that the
Respondent Power Generating Companies were making profit from LPS,
at the cost of the Appellant, contrary to the concept of compensation
and/or damages.
33. Mr. Singh submitted that it is well settled that law does not E
permit any windfall gain, while awarding any compensation. In this context
Mr. Singh cited M/s Kailash Nath Associates v. Delhi Development
Authority and Anr.4 where this court held :-
“43. …..On a conspectus of the above authorities, the law on
compensation for breach of contract under Section 74 can F
be stated to be as follows:-
43.1. Where a sum is named in a contract as a liquidated
amount payable by way of damages, the party complaining
of a breach can receive as reasonable compensation such
liquidated amount only if it is a genuine pre-estimate of G
damages fixed by both parties and found to be such by the
Court. In other cases, where a sum is named in a contract as
a liquidated amount payable by way of damages, only
reasonable compensation can be awarded not exceeding the
4
(2015) 4 SCC 136 H
1088 SUPREME COURT REPORTS [2021] 5 S.C.R.

A amount so stated. Similarly, in cases where the amount fixed
is in the nature of penalty, only reasonable compensation can
be awarded not exceeding the penalty so stated. In both cases,
the liquidated amount or penalty is the upper limit beyond
which the Court cannot grant reasonable compensation.”
B 43.2. Reasonable compensation will be fixed on well-known
principles that are applicable to the law of contract, which
are to be found inter alia in Section 73 of the Contract Act.
43.3. Since Section 74 awards reasonable compensation for
damage or loss caused by a breach of contract, damage or
loss caused is a sine qua non for the applicability of the
C section. 43.4. The section applies whether a person is a
plaintiff or a defendant in a suit. 43.5. The sum spoken of
may already be paid or be payable in future. 43.6. The
expression “whether or not actual damage or loss is proved
to have been caused thereby” means that where it is possible
D to prove actual damage or loss, such proof is not dispensed
with. It is only in cases where damage or loss is difficult or
impossible to prove that the liquidated amount named in the
contract, if a genuine pre-estimate of damage or loss, can be
awarded.
E 43.7. Section 74 will apply to cases of forfeiture of earnest
money under a contract. Where, however, forfeiture takes
place under the terms and conditions of a public auction
before agreement is reached, Section 74 would have no
application.

F 44. The Division Bench has gone wrong in principle. As has
been pointed out above, there has been no breach of contract
by the appellant. Further, we cannot accept the view of the
Division Bench that the fact that DDA made a profit from re-
auction is irrelevant, as that would fly in the face of the most
basic principle on the award of damages—namely, that
G compensation can only be given for damage or loss suffered.
If damage or loss is not suffered, the law does not provide for
a windfall” (emphasis supplied)”
34. To impress upon this Court that the Respondents were making
a huge gain from LPS as claimed by them, Mr. Singh emphasized the
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1089
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

difference between LPS rates as claimed by the Respondents and the A
rates of LPS which the Appellant seeks, based on rates of interest on
loans (excluding an additional 2% as payable in terms of the Power
Purchase Agreements) as given in the Table below:-

B

C

D

E
35. Mr. Singh also relied on a table reproduced below, of the
monetary difference between the LPS claimed by the Respondents and
the LPS if charged as per Base Rate/MCLR methodologies :-

F

G

H
1090 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 36. Mr. Singh emphatically submitted that the Respondent Power
Generating Companies have been availing their working capital loans at
interest computed in accordance with the Reserve Bank of India
Notifications, but are claiming LPS applying archaic and discontinued
PLR methodology. There are, however, no materials on record to
substantiate the contention that the Respondent Power Companies are
B
availing working capital loans at interest computed in accordance with
the Notification dated 3rd March, 2016 of the Reserve Bank of India.
37. Mr. Singh submitted that the Respondent No.2 sought for bill
discounting from the Appellant during the financial year 2020-2021. Such
bill discounting was done at the rate of 7% per annum. He pointed out
C that other Power Generators had also discounted their energy bills at
interest rates varying from 4 to 6.5%. However, those Power Generators
are not parties to this appeal.
38. Mr. Singh adverted to the Independent Auditor’s Certificate
on computation of actual rate of interest on short term borrowings for
D Coastal Gujarat Power Limited (CGPL), which is also an Independent
Power Producer. The actual rates of interest on short term borrowings
by CGPL between 01.04.2018 to 25.01.2021 are as follows:

E

CGPL not being a party to these proceedings its borrowings or
F the interest paid by them on borrowings is inconsequential.
39. Mr. Singh further submitted that the Appellant is a revenue
neutral entity. The Annual Revenue Requirement of the Appellant is
required to be approved by the MERC. Expenditure not allowed by the
MERC is excluded from the Annual Revenue Requirement that is
G approved by the MERC. The delay in payments made under the Power
Purchase Agreements is due to several extraneous and unavoidable
circumstances, which are beyond the control of the Appellant, including
but not limited to delayed recovery of dues from the consumers of the
Appellant. Even before the outbreak of the COVID-19 pandemic, the
H Appellant had been suffering major cashflow crunches.
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1091
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

40. Mr. Singh submitted that the Appellant has been facing severe A
cash flow issues, as the tariff hike approved by the MERC is much
lower than the required tariff hike. The same is evident from the gap in
the revenue sought by the Appellant as against the revenue allowed by
the MERC, the figures of which are as follows:
B

C
41. Mr. Singh argued that a Revenue gap of Rs.2433 Crores has
not been approved by the MERC for the Financial Years 2015-16, 2016-
17 and 2017-18. Furthermore, the Appellant has projected/claimed
Revenue Gap of Rs. 34,646 Crores upto the Financial Year 2019-20
(including past period revenue gap, from 2015-16 to FY 2017-18). D
However, the MERC has determined the total Revenue Gap at Rs.
20,651 Crores only vide its Order dated 12.09.2018 passed in a Mid-
term Review Petition being Case No. 195 of 2017 out of which Rs.
8,269 Crores was allowed to be recovered in tariff. As per the order of
the MERC a “Regulatory Asset” has been created, in respect of the
balance amount Rs.12,382 Crores. There is, however, no timeline or E
stipulations provided in the order of the MERC for recovery of the
aforesaid amount. This has led to severe financial problems for Appellant.
42. Mr. Singh submitted that the MERC has disallowed various
components of Annual Revenue Requirement sought by the Appellant,
such as Agriculture (AG) Sales. The MERC has suo motu disallowed F
sale of agriculture units for the Financial Years 2014-15 and 2015-16 by
2414 and 3399 units respectively, thereby penalizing the Appellant for
Rs.935 Crores & 2286 Crores, for each of the years, which has widened
the revenue gap and cannot be met unless the MERC allows the Revenue
Gap in terms of Case No. 195 of 2017 (supra). Mr. Singh has referred G
to the yearwise approval of total sales and AG sale, which are not relevant
to this appeal and therefore not reproduced in this judgment, to avoid
prolixity.
43. Mr. Singh submitted that, even though the AG Sales figures
submitted by the Appellant were based on actual consumption, the MERC
H
1092 SUPREME COURT REPORTS [2021] 5 S.C.R.

A was of the opinion that the methodology followed by the Appellant needed
to be revisited and validated. Pending the enquiry into the methodology,
the MERC mechanically devised its own methodology to calculate AG
Sales, which does not take into consideration the details / actual figures
submitted by the Appellant. This led to disallowance of a quantum of AG
sales. The difference between the AG Sales claimed by the Appellant,
B
as against the quantum allowed, has led to shortfall in cash flow and
inability of the Appellant to make payments.
44. Mr. Singh further submitted that the tariff for the Financial
Year 2016-2017 came into effect from 01.11.2016 instead of 01.04.2016
in view of Tariff Order dated 03.11.2016 passed by the MERC in Case
C No.48 of 2016, leading to the older tariff to continue to remain in effect
after 7 months of commencement of the Financial Year.
45. Mr. Singh submitted that the shortfall in actual revenue vis-à-
vis the approved revenue requirement was made up after almost 2 years,
by an order dated 12.09.2018 in Case No. 195 of 2017. The Appellant
D has therefore been constrained to take loans, the interest component of
which is not allowed to be passed on as a tariff component.
46 Mr. Singh submitted that the actual growth in sales of the
Appellant in relation to subsidized categories (e.g. HT industrial and
Commercial) was very low. Further, tariff subsidy for making prompt
E payment has widened the gap between expenditure and revenue receipts,
so has the rise in the number of consumers from different categories,
who delay payment of their dues.
47. Mr. Singh argued that the MERC determines tariff upon
consideration of actual gains and losses. He argued that the MERC
F considered the Gains/Losses of the Appellant at time of passing the
Multi Year Tariff (MYT) Order instead of considering the same at the
time of true up of the Appellant as specified in MYT regulations, which
resulted into loss of revenue to the Appellant.
48. Mr. Singh further argued that the data submitted and approved
G in determining Multi Year tariff (MYT) and/or Annual Revenue
Requirement (ARR) is based on estimation/ projections/ norms, as against
the data which is submitted at the time of True-up Petition, which is
based on audited accounts and figures which are actually frozen, as per
Regulation 11 of the Maharashtra Electricity Regulatory Commission
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1093
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

(Multi Year Tariff) Regulations, 2015, referred to hereinafter as the ‘MYT A
Regulations’.
49. By way of example, Mr. Singh pointed out that, if a particular
expense is approved at a certain amount but during true-up exercise, the
actual expenditure is higher than that approved by the MYT Order, the
Appellant ends up borrowing additional working capital for which the B
interest is not approved by the MERC, if it crosses the normative working
capital. As per the MYT Regulations, the difference would be subject to
treatment of sharing of gains or loss as envisaged under Regulation 11.
In other words, only 1/3rd of the loss and/or difference would be permitted
to be recovered through tariff, and the balance 2/3rd amount would have
to be borne by the Appellant as financial loss. This led to further cashflow C
crunch for the Appellant.
50. Mr. Singh submitted that the time gap between the approval
of the Annual Revenue Requirement and the final true up has resulted in
grave mismatch in revenue and expenditure thereby increasing the
working capital requirement of the Appellant. The Appellant has been D
constrained to borrow from Financial Institutions/ Banks, on an interest
component, which is not passed through in its Annual Revenue
Requirement.
51. Mr. Singh argued that another important factor that has
deepened the financial crisis of the Appellant is low recovery of dues E
from agricultural consumers who consume about 30% of the electricity
supplied through the Appellant. Similarly, the arrears on account of supply
of electricity to Government departments, public water works and for
street-lights have also accumulated. Under the MYT Regulations MERC
allows a provision for bad debts to the extent of 1.5% of receivables F
only, even though the largest consumer base of the Appellant is in rural
areas where consumers are less likely to pay bills on time.
52. Mr. Singh submitted that these issues are not within the control
of the Appellant, but has continued to deeply impact the financial position
of the Appellant for many years. It is not that the Appellant has been G
realising its dues from its consumers in time, but not making payments to
the Power Generating Companies. The Appellant is itself in a precarious
financial position which becomes worse by levy of interest beyond rates
prescribed in RBI Notifications for delay, which is not in the control of
the Appellant.
H
1094 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 53. Mr. Singh submitted that the COVID 19 pandemic has also
severely affected the financial viability of the Appellant, and has led to
the Appellant incurring losses to the tune of Rs.7500 crores. Further, the
financial position of the Appellant has also been affected by the measures
taken to alleviate difficulties of the consumers during the pandemic. The
Appellant has given rebate of 2% to all residential consumers for timely
B
payment of all bills (including arrears) of June-20 and July-20 in full,
based on actual readings. Further, residential category consumers who
were not able to pay the electricity bills of June-20 and July-20 at one
go, were allowed to pay bills in three equal instalments, without interest
or delayed payment charges.
C 54. Mr. Singh further submitted that on 26.03.2020 the MERC
issued the following ‘Practice Direction- Measures to Minimize Public
Interface in View of the Coronavirus Epidemic’.
(a) Distribution Licensees were to ensure continuity of supply.
Complaints related to restoration of supply as also safety
D related complaints were to continue to be attended by the
Distribution Licensee.
(b) The Distribution Licensees might suspend other non-
essential services which required visit to premises of
consumers or meeting consumers in person i.e., Meter
E reading, Billing, Offline Bill Collection at Bill Payment
Centres, release of new connections etc.
(c) Automated Meter Reading facility whenever available was
to be used for meter reading.

F (d) In the absence of Meter reading, the Consumers were to
be intimated through digital channels such as email, sms,
mobile app about their estimated bill, computed on average
basis, as per Supply Code Regulations.
(e) For bill payment, Distribution Licensee was required to
facilitate and update alternate payment modes i.e. digital
G
payment mode.
(f) All the above measures were directed to be communicated
through social media, electronic media and print media for
wider publicity.
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1095
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

55. Later, on 30.03.2020, the MERC issued an order approving a A
moratorium for consumers under the Industrial and Commercial category,
on payment of electricity bills for three billing cycles beginning from the
lockdown date of 25.03.2020. Mr. Singh submitted that the said moratorium
granted by the MERC has badly affected the revenue mechanism of the
Appellant as the Appellant continued to incur expenditure due to its
B
universal service obligations whilst the recovery got badly hit. Further,
the MERC, through its practice directions issued on 09.05.2020 and
21.05.2020, gave the following relaxations and/or reliefs to the consumers:
(a) It was clarified that moratorium of 3 billing cycles had been
given to the industrial and commercial establishments for
payment of fixed charges, which they would be liable to C
pay in the subsequent three billing cycles, in equal interest
free instalments.
(b) If the consumers chose to pay the entire moratorium amount
in one go, rebate of 1% would be given to such consumers.
D
(c) HT Industrial and HT Commercial consumers were allowed
to revise their contract Demand upto 3 times in a Billing
Cycle.
(d) Low Tension Industrial and Low Tension Commercial
consumers having demand-based tariff were allowed to
revise their Contract Demand up to 2 times in a Billing E
Cycle.
(e) for Industrial and Commercial consumers, only a token
amount of 10% of the average energy consumption was to
be billed in respect of premises under Lockdown.
56. Mr. Singh argued that these factors clearly show that the F
Appellant could not make timely payments for reasons beyond its control,
for which the Appellant cannot be blamed. It is for this delay that
compensation is prescribed under the Power Purchase Agreements by
way of LPS. Mr. Singh emphatically reiterated his submission that such
compensation cannot in law be a windfall gain or unjust enrichment of G
the Respondents at the cost of the Appellant, and the consumers including
marginalised consumers i.e., agricultural consumers, people living in slums
and the downtrodden strata of the society.
57. Mr. Singh finally argued that the claim of the Appellant is not
time barred, as contended by the Power Generators. In terms of Article H
1096 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 13.3.2 of the Power Purchase Agreements, the seller is obligated to
serve the Change in Law notice to the procurer, if it is beneficially affected
by a Change in Law. The Respondent Nos. 2 to 5 however, failed
to issue any such notice, and are now attempting to take advantage
of their own wrong, in contravention of settled principles of law
to this effect. Moreover, on account of the failure of the Respondent
B
Power Generating Companies to issue Change in Law notices under the
Power Purchase Agreements, the Appellant herein was constrained to
issue the Change in Law notices to the Respondent Generating
Companies.
58. In conclusion, Mr. Singh submitted the argument that APTEL
C erred in law in issuing directions on the Appellant for payment of LPS as
claimed. Such directions to make payment to the Respondent Power
Generators could not have been made, more so in the Appellant’s appeal.
No monetary relief could be granted in the Appellant’s appeal. The
Respondents should have been remitted to MERC for execution and
D quantification of the Change in Law claims.
59. The only issue in this appeal is whether the change in interest
rate system by the RBI from Prime Lending Rate (PLR) to Base Rate
and then to MCLR amounts to Change in Law under the Power Purchase
Agreements.
E 60. Mr. Mukul Rohatgi, Senior Advocate appearing on behalf of
the Respondent No.2, followed by Dr. Abhishek Manu Singhvi, Senior
Advocate appearing on behalf of the Respondent No.3, Mr. Vishrov
Mukherjee appearing on behalf of the Respondent No.4 and Ms. Divya
Anand appearing on behalf of the Respondent No.5 advanced arguments,
F opposing the appeal. There being some overlapping of arguments of the
respective Counsel, this Court has not recorded the submission of all
Counsel in entirety, to avoid unnecessary repetition.
61. Mr. Rohatgi, Mr. Singhvi, Mr. Vishrov Mukerjee and Ms. Divya
Anand all argued in one voice that this Appeal under Section 125 of the
G Electricity Act 2003, is not maintainable, there being no question of law,
not to speak of substantial question of law raised by the Appellant.
62. Mr. Rohatgi appearing for the Respondent No.2, Mr. Singhvi
appearing for Respondent No.3, Mr. Mukerjee appearing for the
Respondent No.4 and Ms. Divya Anand appearing for the Respondent
No.5 submitted that Article 8.3.5 of the Stage 2 Power Purchase
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1097
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

Agreements corresponding to Article 11.3.4 of the Stage 1 Power A
Purchase Agreements between the Distribution Licensee, that is, the
Appellant, as purchaser, and the Power Generating Companies being
the Respondent Nos.2 to 5, for supply of electricity, governs the LPS
payable by the Appellant to the Power Generating Companies, whenever
there is delay in payment of bills. Article 11.3.4. of the Stage 1 Power
B
Purchase Agreement, and Article 8.3.5 of the Stage 2 Power Purchase
Agreement have been set out earlier in this Judgment.
63. Mr. Rohatgi submitted that the SBAR which is actually the
rate of interest for grant of loan/finance by the State Bank of India, has
been incorporated in the Power Purchase Agreements and the agreed
rate for LPS is 2% above the SBAR. This SBAR keeps changing. LPS C
is therefore 2% in excess of the applicable SBAR during the billing
period.
64. Mr. Rohatgi pointed out that the SBI rate is existing even
today, as pleaded by the Respondent No.2 at pages 48 to 50 of its Reply
to the application for stay being I.A. No. 69796 of 2021 filed by the D
Appellant. The SBAR for the month of March 2021 is 12.15%.
65. Ms. Divya Anand appearing on behalf of the Respondent No.5,
drew the attention of this Court to Clause 10 of the Notification dated
03.03.2016 of the Reserve Bank of India, introducing the MCLR system
with effect from 01.04.2016, in place of the Base Rate System, in terms E
whereof existing loans based on the PLR system were to continue under
the PLR System till maturity. She submitted that MCLR System was to
apply to loans sanctioned after 01.04.2016, and not loans already in
existence as on that date.
66. Ms. Divya Anand submitted that the State Bank of India has F
been notifying all three rates, that is, PLR, Base Rate and MCLR as
demonstrated in the Table of interest rates of the State Bank of India
during the year 2020 which is reproduced below:-

G

H
1098 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 67. Mr. Rohatgi argued that, the contention of the Appellant that,
the contractual rate, as incorporated in the Power Purchase Agreements,
which is the SBI Rate, will stand altered by introduction by the Reserve
Bank of India of the MCLR w.e.f. from 2016, is completely
misconceived. The Power Purchase Agreement cannot be deemed to
be amended by introduction of the MCLR. It is open to the Appellant, a
B
Government entity, to take a loan at a cheaper rate if it wants to, and
clear the bills raised by the Power Generating Companies.
68. Mr. Rohatgi submitted that the Appellant is purporting to portray
late payments as an act of virtue. If the Appellant did not delay payment,
it would not have to pay any LPS. LPS is attracted only in the event of
C delay in payment beyond the due date. The Appellant cannot circumvent
the provisions of the Power Purchase Agreement which is a binding
contract.
69. Mr. Rohatgi argued that the APTEL has, by its impugned
Judgment and order dated 27.04.2021, correctly dismissed the Statutory
D Appeal filed by the Appellant, and upheld the order of the MERC dated
16.11.2017. The limited issue involved in the present Civil Appeal is,
whether the Appellant is liable to pay LPS calculated as per the SBAR
(State Bank Advance Rate) as provided in the Power Purchase
Agreements executed between the Appellant and Mr. Rohatgi’s client
E or as per the Base Rate System introduced in 2010 and Marginal Cost
of Funds Based Lending Rate System(MCLR) introduced in 2016 as
notified by the Reserve Bank of India. Mr. Rohatgi pointed out that the
Appellant had not, at any stage, denied that it had committed a series of
defaults in timely payments.

F 70. Mr. Rohatgi emphatically argued that the APTEL had, by the
impugned judgment and order, very rightly held that the notifications,
guidelines or circulars issued by the Reserve Bank of India, including
the Notifications dated 09.04.2010 introducing the Base Rate and
03.03.2016 introducing the MCLR, after execution of the Power Purchase
Agreements dated 14.08.2008, 31.03.2010, 09.08.2010 and 16.02.2013
G between the Appellant and the Respondent No.2 would not qualify as
Change in Law. He argued that the APTEL had correctly held that the
payment of LPS along with interest calculated on the SBAR, has
authorisation in the express terms of the aforesaid Power Purchase
Agreements. Moreover, since the Circulars dated 09.04.2010 of the
H Reserve Bank of India, introducing Base Rate had been in existence
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1099
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

since 2010, the Change in Law notice, issued only on 23.09.2016, had A
rightly been held to be time barred.
71. Mr. Rohatgi submitted that this Appeal does not meet the
requirement of Section 125 of the Electricity Act, 2003, which only permits
grounds as specified under Section 100 of the Code of Civil Procedure,
1908 (hereinafter referred to as “CPC”). Section 100 of the CPC B
mandates that the first Appellate Court is the final Court of facts. Section
100 of the CPC does not permit interference with findings of fact of the
first Appellate Court.
72. Mr. Rohatgi submitted that contrary to the grounds permitted
in Section 100 of the CPC, in this Appeal under Section 125 of the C
Electricity Act, 2003, the Appellant has raised pure questions of fact,
which have been concurrently decided in favour of the Power Generating
Companies. This Appeal is, therefore not maintainable. In support of the
aforesaid argument, Mr. Rohatgi cited DSR Steel (P). Ltd. v. State of
Rajasthan and others 5, Tamil Nadu Generation & Distribution
Corporation Ltd. v. PPN Power Generating Company Private Limted 6 D
and Wardha Power Company Limited v. Maharashtra State
Electricity Distribution Co. Limited and Another7.
73. Mr. Vishrov Mukherjee cited DSR Steel (P) Ltd. v. State of
Rajasthan and Ors. (supra) referring to paras 4, 14, 15, 16, 18 & 19
and Power Grid Corporation of India and Ors. v. Tamil Nadu E
Generation and Distribution Company Limited and Others.8 in
support of the argument that this appeal under Section 125 of the Electricity
Act, 2003 is liable to be dismissed as it does not involve any substantial
question of law.
74. Mr. Mukherjee also cited Bharat Sanchar Nigam Ltd. v. F
Pawan Kumar Gupta9, Wardha Power Co. Ltd. v. MSEDCL & Anr.,
(supra) and Tuppadahalli Energy India Private Limited v. Karnataka
Electricity Regulatory Commission and Anr. 10, where this Court
dismissed statutory appeals on the ground of absence of any substantial
question of law. G
5
(2012) 6 SCC 782 (para 14)
6
(2014) 11 SCC 53 (paras 53 and 70)
7.
(2016) 16 SCC 541 (para 5)
8.
(2019) 7 SCC 34 (para 1 and 6)
9.
(2016) 1 SCC 363
10.
(2017) 11 SCC 194 H
1100 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 75. Mr. Rohatgi pointed out that both the MERC and the APTEL
have rendered concurrent findings against the Appellant as shown in the
tabular statement given below:

B

C

D

76. Mr. Rohatgi argued that the Appellant is seeking to raise the
above issues which have been concurrently decided, once again. No
substantial question of law has arisen in this Appeal filed under Section
E 125 of the Electricity Act, 2003 warranting interference by this Court.
Mr. Rohatgi cited Ramanuja Naidu v. V. Kanniah Naidu and Another11
and Navaneethammal v. Arjuna Chetty12 in support of his aforesaid
argument.
77. Mr. Rohatgi argued that since SBAR continues to be in
F operation, it cannot be said that there is any change in law. The Respondent
No.2 and the Appellant have entered into four Power Purchase
Agreements, the first dated 14.08.2008 for supply of 1320 MW, the
second dated 31.03.2010 for supply of 1200 MW, the third dated
09.08.2010 for supply of 125 MW and the fourth dated 16.02.2013 for
G supply of 440 MW of electricity, pursuant to the competitive bidding
process initiated by the Appellant. Article 8.3.5 of the Power Purchase
Agreements dated 31.03.2010, 09.8.2010 and 16.02.2013, executed after
introduction of the Base Rate System, specially provide for computation
11.
(1996) 3 SCC 392 (para 11)
12.
H (1996) 6 SCC 166 (para 11)
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1101
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

of LPS as per the SBAR, in invocation of the principle of incorporation A
by reference. There is a specific reference to the SBAR in the Power
Purchase Agreements, binding on the parties for the entire term of the
contract i.e., 25 years. The Power Purchase Agreement dated 14.08.2008
for supply of 1320 MW entered into between the Appellant and the
Respondent No.2 also contains similar provision for LPS.
B
78. Mr. Rohatgi further argued that the Power Purchase
Agreements define SBAR to mean “the prime lending rate per annum
applicable for loans with one (1) year maturity as fixed from time to
time by the State Bank of India. In the absence of such rate, SBAR
shall mean any other arrangement that substitutes such prime
lending rate as mutually agreed to by the parties”. C

79. Mr. Rohatgi submitted that the definition of SBAR in the Power
Purchase Agreements makes it clear that any reference in the Power
Purchase Agreements to SBAR has to be construed as reference to the
Prime Lending Rate as fixed by State Bank of India. These provisions
have no reference at all to the Reserve Bank of India. Further, the Power D
Purchase Agreements do not contemplate automatic shift to Base Rate
/ MCLR notified by RBI, even if SBI PLR ceased to be in existence.
The agreed position in such situation is for the contracting parties to
substitute SBI PLR with any other mutually agreed arrangement. Having
agreed to such an arrangement in the Power Purchase Agreements, the E
claim of Appellant for treating Base Rate/MCLR as Change in Law
event cannot be entertained.
80. Mr. Rohatgi argued that, while introducing the Base Rate
system in 2010 and the MCLR system in 2016, the Reserve Bank of
India had provided for the continuation of the earlier Benchmark Prime F
Lending Rate (BPLR) dispensation for existing loans. Consequently, the
SBAR Rate referred to in Clause 8.3.5 and/or 11.3.4 of the two sets of
Power Purchase Agreements, which is the SBI PLR for loans with
maturity of one year, continues to be notified even to this day. The same
is evident from the Notification dated 03.03.2016 of the Reserve Bank
of India. G
81. Mr. Rohatgi further argued that, in terms of the relevant clauses
in the Power Purchase Agreements regarding Change in Law, the pre-
requisites are that the event in question must be one that is covered by
Clause 10.1.1 of the Stage 2 Power Purchase Agreements corresponding
H
1102 SUPREME COURT REPORTS [2021] 5 S.C.R.

A to Clause 13.1.1. of the Stage 1 Power Purchase Agreements, that is, it
must be a new enactment, or amendment of existing legislation, or new
interpretation by a competent court, the event must have occurred after
the Cut-off Date, which is in this case, concededly 31.07.2009, that is,
the date seven days prior to the Bid Deadline date, which is 07.08.2009
and such event must have resulted in additional recurring or non-recurring
B
expenditure or income for the Seller. The first and third of these conditions
are not fulfilled by the Appellant since the LPS Rate under the Power
Purchase Agreements is not linked to Reserve Bank of India circulars
or guidelines and the RBI notifications referred to are not shown to have
resulted in any additional income or expenditure for the Power Generating
C Companies. The introduction of Base Rate in 2010 and MCLR in 2016
by the Reserve Bank of India by its Notifications/Circulars does not,
therefore, amount to Change in Law. Therefore, the contention of the
Appellant that Reserve Bank of India Directive of 2016 amounts to
“Change in Law” is erroneous and misleading. The Appellant is, therefore,
liable to pay the LPS as per SBAR as rightly held by the MERC and the
D
APTEL.
82. Refuting the argument of Mr. Singh that the RBI circulars are
to be considered as Change in Law, Mr. Rohatgi advanced an alternate
submission that the Appellant is not entitled to claim Change in Law
since Clause 13.3.1 of the Power Purchase Agreement dated 14.08.2008
E for supply of 1320 MW and Article 10.4.1 of the other three Power
Purchase Agreements provides that notices of Change in Law events
are to be issued by the affected party as soon as reasonably practicable
after becoming aware of the Change in Law. While the changes cited
by the Appellant were effected by Reserve Bank of India from July,
F 2010 and again April, 2016 and notified in advance, the Appellant issued
notices of Change in Law to the Respondent No.2 only in September
2016 i.e. more than 6 years after Reserve Bank of India introduced the
Base Rate system in place of the BPLR system. The Appellant could
not have been unaware of the revision effected by the Reserve Bank of
India at that time. Nor has it explained this inordinate delay in raising its
G claim. Further, while Base Rate was introduced on 09.04.2010, the
Appellant entered into Power Purchase Agreements with the Respondent
No.2 on 09.08.2010 and 16.02.2013 incorporating PLR as the LPS rate
for supply of contracted quantum of 125 MW and 440 MW of electricity
respectively to the Appellant. As such, the Appellant’s claim is
H inadmissible, the same being barred by limitation.
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1103
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

83. Mr. Rohatgi emphatically reiterated that Late Payment A
Surcharge ( LPS) is imposed only when there is delay in the payment of
bills. The liability towards LPS was therefore, within the control of the
Appellant, for there would be no LPS liability, if the Appellant did not
delay payment of monthly or supplementary bills beyond the due date.
Mr. Rohatgi argued that, LPS is a penalty to which the Appellant has
B
voluntarily agreed, in case it delays payment to the Power Generating
Companies. Any changes by the Reserve Bank of India in respect of
interest on loans advanced by Banks and Financial Institutions, do not
affect in any manner the rates at which power was agreed to be sold
and purchased or the rate at which LPS is chargeable. Mr. Rohatgi
emphatically argued that LPS is a deterrent to inculcate payment C
discipline and is also entirely avoidable.
84. Mr. Rohatgi pointed out that the APTEL has, by its impugned
judgment and order (para 21) categorically rejected the Appellant’s
contention of there being unjust enrichment of the Respondent Power
Generating Companies, on account of LPS being calculated at SBAR D
Rate. The APTEL has held :-
(i) In order to be termed as unjust enrichment, benefit gained
by a party must be such as to have been retained without
any legal basis;
(ii) The primary purpose of LPS being to compensate the Power E
Generators for the time value of money lost on account of
delay in payment by the Appellant, it cannot be said that
recovery of LPS results in the generators being unjustly
enriched;
(iii) The payment of LPS, with interest calculated on the Prime F
Lending Rate, has authorisation in the express terms of the
Power Purchase Agreements;
(iv) The claim of LPS does not represent any benefit accruing
to the Respondent Power Generating Companies, but is
compensatory in nature. Moreover, LPS is not economic G
restitution but is a disincentive;
(v) It is wrong to equate LPS with carrying cost or actual cost
incurred because any interest paid for finances raised cannot
have any nexus to the LPS as it is not the same as a loan
advanced, but is a penalty for delay; H
1104 SUPREME COURT REPORTS [2021] 5 S.C.R.

A (vi) The LPS payable in terms of legally enforceable contracts
cannot be termed as unjust enrichment, as payment of LPS
is due to default by the Appellant and not for any action
taken by the Power Generators. That being the factual
position, it is incorrect on the part of Appellant to allege
unjust enrichment.
B
85. Mr. Rohatgi drew the attention of this Court to Paragraph 35
of the impugned judgment and order of the APTEL recording its
categorical finding that the Appellant had never denied the serious defaults
it committed, by inordinately delaying the payment of bills to the
Respondent Power Generating Companies. The APTEL found that the
C Appellant was indisputably liable to pay LPS.
86. Mr. Rohatgi finally argued that even though the proceedings
were initiated before the MERC in 2017, the Appellant is now citing the
pandemic related financial hardships caused during the year 2020 to
renege on its contractually binding obligation of payment of LPS in terms
D of the Power Purchase Agreements and somehow seeking to unilaterally
amend the terms of the Power Purchase Agreements so that they are
favourable to them, which is impermissible in law.
87. Mr. Rohatgi submitted that LPS is calculated on compounding
basis with monthly rests in terms of the Power Purchase Agreements
E and further the same cannot be passed on to consumers in view of the
Order dated 29.08.2020 of MERC in Case No.45 of 2020.
88. Mr. Rohatgi argued that by way of this Appeal, the Appellant
is, in fact, seeking a downward revision of a contractually determined
penalty in order to unjustly enrich itself at the cost of the Respondent
F Power Generating Companies, more so, since admittedly the Appellant
recovers delayed payment surcharge from its consumers at much higher
rates than the SBI PLR.
89. Mr. Singhvi appearing on behalf of the Respondent No.3
referred to the Power Purchase Agreement dated 23.02.2010 executed
G by and between the Appellant and the Respondent No.3 for supply of
electricity to the Appellant. Mr. Singhvi pointed out that the Power
Purchase Agreement was executed pursuant to a bidding process carried
out by the Appellant under the aegis of the MERC under Section 63 of
the Electricity Act, 2003. The tariff was adopted by the MERC
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1105
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

(Respondent No.1) and the Power Purchase Agreement was approved A
by the MERC.
90. Mr. Singhvi argued that, it was not in dispute that payment
against monthly bill for electricity charges raised by the Respondent
No.3, was agreed to be made by the Appellant within 30 days. It is also
not disputed that in the event of delay in payment of a monthly, beyond B
its due date, that is, 30 days, the Appellant would be bound to pay a Late
Payment Surcharge (LPS). In this context, Mr. Singhvi referred to Clause
11.3.4 of the Power Purchase Agreement which has already been
reproduced hereinbefore.
91. Mr. Singhvi submitted that in this case too the rate of LPS C
was 2% in excess of SBAR. Mr. Singhvi referred to the definition of
SBAR in the concerned Power Purchase Agreement, defining SBAR
to mean the prime lending rate per annum applicable for loans with one
(1) year maturity as fixed from time to time by the State Bank of India.
Mr. Singhvi pointed out that it was only in the absence of any prime
lending rate that the rate of LPS could be fixed at such rate as might D
be mutually agreed to by the parties.
92. Mr. Singhvi questioned the legality of the argument of the
Appellant that the purpose of publication of the SBI PLR having undergone
a change in view of the RBI circulars/notifications, the SBI PLR, which
admittedly continues to be published, can no longer be used as a E
benchmark reference in a Power Purchase Agreement, that the Power
Purchase Agreement reference benchmark rate should be modified in
accordance with the RBI circulars/guidelines. Mr. Singhvi argued that
the arguments of the Appellant neither had legal nor contractual basis.
Both the forums below have rightly rendered concurrent decisions holding F
that the RBI circulars/guidelines have no impact on the rate of LPS in
the contract and the agreed terms of a contract cannot be rewritten.
93. Mr. Singhvi argued that the Power Purchase Agreement for
sale and purchase of power, was between a power generating company
and a procurer of electricity, to which the circulars/guidelines of RBI G
applicable to banks and financial institutions can have no application.
The Power Purchase Agreement does not incorporate or refer to any
RBI circulars or guidelines. Mr. Singhvi cited the judgment of this Court
in B.O.I. Finance Limited v. Custodian and Ors.13 where this Court
13. (1997) 10 SCC 488
H
1106 SUPREME COURT REPORTS [2021] 5 S.C.R.

A held that RBI circulars/instructions/guidelines cannot result in invalidation
of a contract even between a bank and a third party and the consequence
for violation is penalty as provided for in Section 46 of the Banking
Regulation Act. The RBI circulars/guidelines cannot therefore vary or
modify a contract between two parties, none of which is a bank or a
financial institutions.
B
94. Mr. Singhvi argued that reliance by the Appellant on the RBI
circulars/guidelines, in the context of the agreement between the Appellant
and the Respondent is totally misplaced. The RBI circulars/guidelines
are admittedly instructions issued to banks and financial institutions and
are not applicable to either the Appellant or the Respondent, who are
C engaged in the business of sale and purchase of electricity and not of
advancing loans. Further, SBAR as defined under the PPA is also
admittedly, not linked to the RBI circulars/guidelines. Therefore, the
impact of the RBI circulars/guidelines on the purpose for which the
SBI PLR continues to be notified, is totally irrelevant for the purposes of
D the present case.
95. Mr. Singhvi emphatically argued that the agreement provides
for the parties to mutually agree on a substitute of SBI PLR, in case of
its absence. This dispensation is contained in the definition of SBAR
itself. This special provision in the agreement applicable to the specific
E case of absence of SBI PLR, excludes the applicability of the general
‘Change in Law’ provision contained in Article 13 of the PPA. In the
context of his arguments Mr. Singhvi cited Adani Power (Mundra)
Ltd. v. Gujarat Electricity Regulatory Commission and Others14 the
relevant paragraph whereof is reproduced herein below:-

F “38. In the present case, the perusal of various Articles would
reveal that the provisions under Article 14 are general in
nature. The provision under Article 3.4.2 is specific, only to
be invoked in the case of non-compliance with any of the
conditions as provided under Article

G 3.1.2. As such, the special provision made in Article 3.4.2
will exclude the applicability of general provisions contained
in Article 14 of the contract.”
96. Mr. Singhvi argued that the general provisions of the Change
in Law clause have been consciously kept out by the parties, in relation
14.
H (2019) 19 SCC 9
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1107
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

to a situation arising out of absence of the SBI PLR and the consequent A
calculation of LPS. Therefore, the Hon’ble APTEL correctly found as
under:
“13.... On the contrary, there is a conscious exclusion
regarding any suo moto change in the rate to be applied while
calculating LPS, it being incorrect to argue on the assumption B
that the contract permits automatic change in system.”
97. Mr. Singhvi submitted that the consequence of a change in
law event under the Power Purchase Agreement is determination of
compensation for any increase/decrease in revenues of cost to the Seller
by the MERC. Late payment surcharge is payable only in case payment C
against the monthly bills is delayed by the Procurer. As such, the LPS
rate does not in any manner affect the tariff at which electricity is agreed
to be sold and purchased. Therefore, there is absolutely no increase/
decrease in the revenues or cost to the Respondent, connected with the
object of the agreement, i.e. generation and sale of electricity, as a result
of the RBI notification/circulars. Consequently, the RBI notifications/ D
circulars relied upon by the Appellant, in the context of LPS, do not
require any determination of change in law compensation.
98. Mr. Singhvi pointed out that the MERC had, in its order dated
16.11.2017, rightly rejected the claim of the Appellant inter alia
observing:- E

“12. However, the LPS provision is attracted only when the
payments are not made by MSEDCL against the Monthly Bills
of the Seller within the time stipulated in the PPAs Any changes
in the basis of the LPS rates consequent to revisions by the
RBI do not affect in any manner the rates at which power F
was agreed to be sold and purchased under the PPAs and in
the consequent financial implications for either Party resulting
in a liability to compensate the affected Party “
99. Mr. Singhvi submitted that the APTEL, aptly concurred with
the finding of the MERC and held:- G
“16. Having regard to the terms of the contract (PPA) as a whole,
there is no doubt that provision for compensation to the affected
party for a Change in Law event is essential with regard to tariff
only. The rate of LPS has no bearing or impact on tariff. Any
H
1108 SUPREME COURT REPORTS [2021] 5 S.C.R.

A possible changes in the basis of the LPS rates consequent to
revisions by the RBI, or for that matter, SBI would not affect the
rate at which power was agreed to be sold and purchased under
the PPAs and consequently there is no financial implications on
expenditure or income for either Party. The LPS only recompenses
what was lost in terms of real value of money due to delay in
B
payment.”
100. Mr. Singhvi argued that the Appellant has till 24.06.2016,
signed reconciliation statements with the Respondent No.3 in which the
Appellant calculated the LPS on the basis of the PLR published by the
State Bank of India and not the Base Rate or the MCLR, as is now
C being claimed by the Appellant. It is, therefore, clear that in this case,
there has never been any dispute whatsoever with regard to the principal
liability of the Appellant towards energy charges, and no dispute was
raised regarding LPS for over 5 years.
101. Mr. Rohatgi, Mr. Singhvi, Mr. Mukherjee and Ms. Anand all
D submitted that the contentions of the Appellant are liable to be rejected
outright, since LPS provision in the Power Purchase Agreements, is not
linked to the rate at which the affected party is able to get loans from
Banks or Financial Institutions. The Appellant having agreed to pay LPS
at SBI PLR, till such time it exists, cannot now seek any other rate such
E as MCLR or actual interest rates at which the Respondent Power
Generating Companies obtain financial accommodation. On behalf of
the Respondent No.3 Mr. Singhvi supported the submissions of Mr.
Rohatgi.
102. Mr. Singhvi distinguished the judgment of this Court in Jaipur
F Vidyut Vitran Nigam Limited v. Adani Power Rajasthan Ltd. And
Anr. (supra) and argued that there is no bona fide dispute in this case.
The Appellant has acted in conscious disregard of its obligations under
the Power Purchase Agreements. Mr. Singhvi cited the decision of this
Court in Union of India v. Association of Unified Telecom Service
Providers of India & Ors.15 where this Court considered an identical
G interest clause in the license. The interest clause, which has been
reproduced in Paragraph 182 of the judgment of this Court, reads:
“In re: Levy of interest, penalty, and interest on penalty. Para
182. Levy of licence fee is provided in Clause 20.2. In case
15
H 2020 (3) SCC 525
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1109
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

of any delay in payment of licence fee beyond the stipulated A
period would attract penalty at the rate, which would be 2%
above the prime lending rate (PLR) of State Bank of India. As
per Clauses 20.5 and 20.8, if the licensee does not pay the
demand, consequences would follow. The clauses are
extracted hereunder:
B
“20.5. Any delay in payment of licence fee payable or any
other dues payable under the Licence beyond the stipulated
period will attract interest at a rate which will be 2% above
the prime lending rate (PLR) of State Bank of India existing
as on the beginning of the financial year (namely 1st April)
in respect of the licence fees pertaining to the said financial C
year. The interest shall be compounded monthly and a part of
the month shall be reckoned as a full month for the purposes
of calculation of interest. A month shall be reckoned as an
English calendar month.”
103. Mr. Singhvi submitted that in the case of Association of D
Unified Telecom Service Providers of India (supra), it was contended
by the Distribution licensee that under section 74 of the Contract Act,
compensation must only be reasonable compensation. For this, reliance
was placed on Hindustan Steel Ltd. v. State of Orissa 16, Akbar
Badrudin Giwani v. Collector of Customs17, Jaiprakash Industries E
Ltd. v. Commissioner of Central Excise, Chandigarh18, Tecumseh
Products India Ltd. v. Commissioner of Central Excise,
Hyderabad19, J.K. Synthetics Ltd. v. Commercial Taxes Officer20,
Kailash Nath Associates v. Delhi Development Authority and
Another21 and Central Bank of India v. Ravindra and Others22.
However, this Court found that the dispute raised by the Distribution F
Licensee with regard to the definition of gross revenue, in that case,
was not bona fide and had only been raised to delay payment in
accordance with the Power Purchase Agreement. This Court,
accordingly, held that none of the above decisions would come to the aid
16
1969 (2) SCC 627
G
17
1990 (2) SCC 203
18
2003 (1) SCC 67
19
2004 (6) SCC 30
20
1994 (4) SCC 276
21
2015 (4) SCC 136
22
2002 (1) SCC 367 H
1110 SUPREME COURT REPORTS [2021] 5 S.C.R.

A of the Distribution Licensee and concluded that since there is a
contractual stipulation, the interest can be levied and compounded. Mr.
Singhvi referred to the part of said judgment reproduced hereinbeow:-
“192....The ratio of the case, it is not attracted for the reason
that in the instant matter, it is the contractual rate of interest
B and penalty agreed to which cannot be said to be arduous in
any manner. The rate of interest has been agreed and
particularly since it is a revenue sharing regime, and the
licensees have acted in conscious disregards of their
obligation. Thus on the anvil of the decision above also, they
are liable to pay the dues with interest and penalty……
C
…… There is no such discretion available when the parties
have agreed in default what amount is to be paid. It
automatically follows that it is not to be determined by the
licensor once over again. Parties (licensor and licensees) are
bound by the terms and conditions of the contract. There is
D no enabling clause to vary either the rate of interest or the
penalty provided therein and even if permissible, it is not called
for to vary interest or penalty fixed under the agreement in
the facts and circumstances of the case……
197. It is not levy of penal interest which is involved in the
E instant case. Thus, based on the decision mentioned above,
we find that when there is contractual stipulation, the interest
can be levied and compounded”
104. Mr. Singhvi submitted that there being no dispute in this case,
regarding the principal sums due under the monthly bills; and this Court
F having taken a view in Association of Unified Telecom Providers of
India (supra) that interest on delayed payment at 2% in excess of SBI
PLR is not arduous, there is no case made out for this Court to reduce
the contractually agreed rate of interest, in exercise of powers under
Article 142 of the Constitution of India. On the other hand, facts would
G reveal that in this case the Appellant has deliberately and consciously
been disregarding its obligation and raising frivolous disputes as an
afterthought, only with a view to further delay payment in accordance
with the terms of the Power Purchase Agreement. No indulgence need,
therefore, be granted to the Appellant.

H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1111
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

105. Mr. Singhvi submitted that the Appellant has the funds to A
clear the interest liability. This is apparent from the fact that the Appellant
had, itself made an offer before the MERC, to clear all dues of the
Respondent No. 3 in 1 weeks’ time. The Appellant is, therefore not
entitled to further time.
106. Mr. Singhvi submitted that, it is wrong for the Appellant to B
suggest that the burden of interest shall be passed on to the consumers.
The MERC has already held that as the Appellant solely is responsible
for the delay in making payment and therefore the said burden cannot
be passed on to the consumers.
107. Mr. Singhvi further submitted that in any case, claims C
pertaining to the period of 3 years prior to the filing of the Petition before
the MERC that is, before 02.12.2016, are clearly barred by limitation.
108. Mr. Singhvi concluded his arguments with the submission
that the Regulations relied upon by the Appellant were the Tariff
Regulations, framed by the MERC for the purpose of determination of D
tariff for generating stations under Section 62 of the Act, which have no
application in this case, where the Power Purchase Agreements have
been executed pursuant to a bid process under Section 63 of the Electricity
Act. Mr. Singhvi submitted that the Appellant as purchaser was in no
way concerned with how the Respondent manages the shortfall in
working capital, whether from internal accruals, additional equity infusion, E
foreign loans, domestic loans etc. in a bid out tariff, adopted by the MERC
under Section 63 of the Electricity Act.
109. Mr. Singhvi submitted that the second appeal filed by the
Appellant should be dismissed with directions to the Appellant to make
payment of the balance reconciled outstanding interest liability of Rs.48.55 F
crore (i.e. 47.79 crore + Rs. 0.76 crore as per the Appellant’s affidavit
dated 29.06.2021 I.A. No.73474/2021.
110. Mr. Vishrov Mukherjee, appearing on behalf of the
Respondent No.4, adopted the arguments advanced by Mr. Rohatgi and
Mr. Singhvi, and also argued that the Appellant’s contention that the G
PLR had been replaced with other interest rate systems was incorrect.
He argued that Reserve Bank of India had introduced Base Rate and
MCLR prospectively. Referring to Annexure R-2 of the reply of the
respondent no.4 to the appellant’s stay application being IA 69709/2021,
H
1112 SUPREME COURT REPORTS [2021] 5 S.C.R.

A Mr. Mukherjee pointed out that the PLR system was still continuing. He
submitted that SBI continues to notify PLR on quarterly basis.
111. Mr. Mukherjee reiterated the submission of Mr. Rohatgi and
Mr. Singhvi that the introduction of Base Rate and MCLR interest rate
system does not constitute a Change in Law under the Power Purchase
B Agreements. Mr. Mukherjee argued that in terms of Article 13.1.1 of
the agreement dated 23.02.2010, between the Appellant and the
Respondent No.4, the Change in Law evaluation is a two step process
being:
a) Occurrence of an event described as a change in law event in
C Article 13.1.1 and;
b) Such change in law has to result in any increase/ decrease
in cost / revenue of the Seller, i.e.,the Power Generating
Company i.e. the Respondent no.4 [Art. 13.2(b)].
112. Referring to Uttar Haryana Bijli Vitran Nigam Limited
D and Another v Adani Power Limited and Others23 Mr. Mukherjee
argued that a change or amendment in the LPS rate does not constitute
Change in Law because there is no impact on cost or revenue of the
Generating Company. LPS is payment for a default committed by the
Appellant in making timely payment. It has no impact on the cost incurred
E or the revenue received by the Generating Company. It is in the nature
of a contingent liability incurred by the Appellant for failing to adhere to
its contractual obligations under the PPA.
113. Mr. Mukherjee argued that compensation to the Affected
Party for a Change in Law event is by adjustment of tariff. LPS has no
F bearing or impact on tariff., Therefore, the Appellant’s claim does not
qualify as a Change in Law event, as change in the LPS rates do not
affect the tariff under the Power Purchase Agreements, and consequently
there are no financial implications on expenditure/income for either Party.
In support of his argument, Mr. Mukherjee referred to paragraphs of
Adani Power Ltd. (supra).
G
114. Mr. Mukherjee reiterated the submission of Mr. Rohatgi and
Mr. Singhvi that the LPS rate under the Power Purchase Agreements,
is not linked to RBI Notifications/Circulars/Guidelines. The applicable
interest rate for payment of LPS is contractually defined, and linked to
23.
H (2019) 5 SCC 325 (para 11)
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1113
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

PLR rates notified by State Bank of India. This is independent of any A
RBI Notification/Circular/Guideline. Citing Union of India v. Association
of Unified Telecom Service Providers of India and Others24, Mr.
Mukherjee argued that, once a term has been defined contractually, parties
cannot vary such terms.
115. Mr. Mukherjee reiterated the submission of Mr. Rohatgi and B
Mr. Singhvi that in terms of Article 11.3.4 read with the definition of
SBAR, the parties have agreed to apply the Prime Lending Rate
applicable for loans with one year maturity as fixed from time to
time by State Bank of India in fixing the applicable LPS rate and the
parties have also agreed that in case SBI PLR is not available, the parties
are to mutually agree to the interest rate. Therefore, the parties have, by C
doctrine of incorporation, included a particular interest rate for calculation
of LPS.
It is not open to the Appellant to seek an interest rate different
from what has been contractually agreed, as held in CLP India Private
Limited v. Gujarat Urja Vikas Nigam Limited and Another25. D

116. Mr. Mukerjee argued that State Bank of India is, in any event,
still notifying the Prime Lending Rate. Mr. Mukerjee submitted that the
rate so notified is applicable to all cases and instances irrespective of the
tenor, duration and type of transaction, including loans of one year maturity.
E
117. Mr. Mukherjee further argued that Power Purchase
Agreements are complex technical documents which the parties having
knowingly executed. The express terms of the Power Purchase
Agreements must be given effect. Citing Nabha Power Limited v.
Punjab State Power Corporation Limited (PSPCL) And Another 26,
Transmission Corporation of Andhra Pradesh Ltd. And Others v. F
GMR Vemagiri Power Generation Ltd. And Another27, and Shree
Ambica Medical Stores and Others. v. Surat People’s Cooperative
Bank Limited and Others28, Mr. Mukherjee submitted that it is settled
law that Courts will neither rewrite nor substitute the terms of a Contract.
118. Mr. Mukherjee argued that, if Change in Law is applied to G
change in interest rate it would render the provision relating to parties
24.
2020 (3) SCC 525
25.
2020 (5) SCC 185 (paras 32 & 34)
26
(2018) 11 SCC 508 (paras 45 & 72)
27
(2018) 3 SCC 716
28
(2020) 13 SCC 564 (para 20) H
1114 SUPREME COURT REPORTS [2021] 5 S.C.R.

A having to mutually agree on a different interest rate redundant. Mr.
Mukherjee adverted to Article 1.2.13 of the Power Purchase Agreements,
which states that different provisions of the Power Purchase Agreements
have to be read and interpreted harmoniously in order to give effect to
all provisions. Treating change in interest rate system as change in law
(despite parties having agreed to mutually decide on the consequences)
B
will render the latter part of the SBAR definition otiose since only the
Regulatory Commission can decide change in law claims.
119. Mr Mukerjee submitted that Base Rate was introduced with
effect from 09.04.2010 whereas the appellant entered into the Power
Purchase Agreements with the Respondent No.4 on 22.04.2010 and
C 05.06.2010. This further establishes the point that parties have consciously
agreed to apply a particular interest rate (SBI PLR) and not the Reserve
Bank of India notifed interest rate.
120. Mr.Mukherjee submitted that the present Power Purchase
Agreement has been entered into under Section 63 of the Electricity Act
D pursuant to competitive bidding, based on quoted tariff alone. There is
no separate element of interest on working capital. Irrespective of the
expenditure / cost incurred by the generating company, it only receives
the bid tariff. Therefore, the argument that generating companies are
benefitting on account of an arbitrage between the LPS Rate and interest
E rates being paid by them is incorrect.
121. Mr. Mukherjee finally argued that the APTEL and the MERC
have rightly held that payment / imposition of LPS is within the control
of the Appellant. Mr. Mukherjee submitted that, being in default
admittedly, the Appellant ought not to be permitted to benefit from its
F default and seek a lower penalty for failure to comply with its obligations
of making timely payment. The defaults were during 2011 to 2017 during
which time there was no pandemic. The Appellant has recovered the
amount it was supposed to pay to the Respondent No. 5 during the
period in question. Despite recovering this amount as part of its tariff, it
deliberately and wilfully delayed in payment of these amounts to the
G Respondent Power Generating Companies. In light of the admitted
default, the Appellant is not entitled to relief, let alone relief in exercise
of jurisdiction under Article 142 of the Constitution.
122. In response to the submission of the Appellant that the
Respondent No.2 and other Power Generating Companies had unjustly
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1115
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

enriched themselves by availing bill discounting from the Appellant during A
the Financial Year 2020-21, at the rate of 7% per annum, which rate is
substantially lower than the LPS calculated at MCLR, let alone PLR,
Mr. Rohatgi submitted that if the Appellant’s contention were to be
believed then being a government entity, the Appellant could easily avail
loans at much lower rate than the rate of LPS in terms of the Power
B
Purchase Agreements and pay the bills raised by the Power Generating
Companies promptly, rather than end up paying LPS. There is no
impediment to the Appellant raising loans to promptly clear the bills due
to the Respondent Power Generating Companies.
123. Mr. Mukerjee also pointed out that the Appellant had been
charging interest for delay in payment from its consumers @ 1.25% per C
month, i.e. 15% on an annual basis as per MERC MYT Regulations,
2019. This belies the argument of the Appellant that LPS rate is correlated
to the actual interest rate on loans taken by the Appellant or generating
companies.
124. Mr. Mukerjee argued that at no stage had the Appellant denied D
that the Reserve Bank of India was continuing to notify PLR. It is only
before this Hon’ble Court that the Appellant has submitted that PLR is
not available. The Appellant is precluded from raising such a plea at this
belated stage. Further, such plea is factually incorrect since SBI is
notifying PLR. E
125. Mr. Mukherjee submitted that the Appellant is the only Discom
in the country to raise this claim of change in law. None of the other
Discoms in Maharashtra or other States have claimed this as a change
in law.
126. Mr. Mukherjee further submitted that, during the period of F
the alleged financial hardship, the Appellant has not only paid NTPC and
other Central Generating Stations, but has also entered into several Power
Purchase Agreements, for additional power.
127. Mr. Mukherjee argued that the Appellant’s contention that
the consumers in the State of Maharashtra will ultimately bear the alleged G
charges is incorrect. As per the MERC Tariff Regulations, only such
expenditure as is prudently incurred can be claimed as part of tariff. In
case the expenditure is on account of the Appellant’s imprudence or
default, such amounts cannot be claimed by the Appellant as part of
tariff. Mr. Mukerjee submitted that Mr. Singh’s argument of bill
H
1116 SUPREME COURT REPORTS [2021] 5 S.C.R.

A discounting has no bearing on this case at hand since RattanIndia is not
availing of bill discounting.
128. Ms. Divya Anand adopted the submissions of Mr. Rohatgi
and Mr. Singhvi and added that Court has defined ‘unjust enrichment’ as
the unjust retention of a benefit to the loss of another, or the retention of
B money or property of another against the fundamental principles of justice
or equity and good conscience. She argued that a person is enriched if
he has received a benefit, and he is unjustly enriched if retention of the
benefit would be unjust. In support of her argument, Ms. Anand cited
Indian Council for Enviro-Legal Action v. Union of India29.
C 129. Justifying the direction of APTEL on the Appellant to make
payment in terms of the order of MERC, Mr. Rohatgi referred to an
Office Memorandum dated 08.03.2019 of the Ministry of Power,
Government of India mandating that Electricity Regulatory Commissions
must ensure payment of LPS as per the Power Purchase Agreements
where payment is delayed. Mr. Rohatgi argued that it is in the interest of
D the Appellant to liquidate the outstanding dues of the Respondent Power
Generating Companies including LPS, at the earliest. This will also enable
the Respondent No.2 and other Power Generating Companies to comply
with their obligations under the Power Purchase Agreements, of supplying
uninterrupted power by procuring coal with available funds.
E 130. Mr. Rohatgi argued that under Section 111 (3) of the Electricity
Act, 2003, the APTEL is empowered to pass an order either confirming,
modifying or setting aside the order appealed against. The APTEL acted
within the scope of its powers under Section 111 (3) by directing payment
of the LPS dues to the Respondent Generating Companies. Further, in
F terms of Section 120 of the Electricity Act, 2003, the APTEL has the
power to direct the Appellant to pay the outstanding LPS amounts in a
time bound manner to ensure that the principles laid down under Section
61 of the Electricity Act, 2003 are achieved.
131. Mr. Rohatgi argued that the APTEL directed the Appellant
G to pay the LPS within the time stipulated in the impugned judgment and
order, in keeping with the objective of the Electricity Act which is aimed
at taking measures conducive to development of the power sector while
protecting the interest of consumers. Mr. Rohatgi submitted that this is
also consistent with the principles set out in Section 61 of the Electricity
29.
(2011) 8 SCC 161
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1117
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

Act, specifically Sections 61(b) and (d) i.e., to conduct generation, A
transmission and distribution of electricity on commercial principles and
at the same time safeguard consumer interest while ensuring reasonable
recovery of the cost of electricity in a reasonable manner.
132. Mr. Rohatgi submitted that any further delay in payment of
LPS would not be in the interest of the Respondent Generating Companies B
as they have been deprived of their legitimate dues for long. Further
delay would also be detrimental to the interest of the Appellant as it is
not allowed to pass on LPS to end consumers in terms of the order
dated 29.08.2020 of the MERC in Case No. 45 of 2020, which has
attained finality.
C
133. Mr. Mukerjee submitted that the directions given by the
APTEL in Paragraphs 35 and 36 of the Impugned Judgment are aimed
at quantification rather than execution. The time period for compliance
under the Impugned Judgment was 90 days whereas the period of
limitation for filing an appeal under Section 125 of the Electricity Act is
60 days. D

134. Mr. Mukerjee further submitted that, in terms of Section 120
of the Electricity Act, the APTEL is not bound by the procedure laid
down by the Code of Civil Procedure 1908. The directions for time
bound payment or payment within the prescribed timeframe is consistent
with past judgments of the APTEL including the judgment dated E
14.09.2019 in Appeal 202 of 2018, which was upheld by this Hon’ble
Court in Jaipur Vidyut Vitran Nigam Limited v. Adani Power
Rajasthan Limited (supra).
135. Mr. Mukerjee submitted that, one of the objectives of the
Electricity Act is time-bound disposal of matters. This is evident from F
Section 111(5) of the Electricity Act. Any direction for payment, is only
in furtherance of such direction.
136. Mr. Mukerjee further argued that the Paragraphs 27 to 34 of
the Impugned Judgment deal with sectoral issues including delay in
adjudication of claims. In this case, the delay in adjudication has resulted G
in severe stress in the power sector in addition to financial impact in the
form of carrying cost and LPS. However, the APTEL held that since
the Electricity Act does not have a specific provision granting power to
the Electricity Regulatory Commission to execute its orders, it requires
legislative intervention. [Para 33 & 34 @ Pg. 22 - 24 of the Appeal].
H
1118 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 137. Mr. Mukerjee submitted that this is a fit case for this Hon’ble
Court to consider interpreting the regulatory powers of regulatory
commissions under Section 79 / 86 of the Electricity Act to include the
power to execute their own orders. Mr. Mukerjee cited Gujarat Urja
Vikas Nigam Limited v. Amit Gupta and Others30, wherein this
B Hon’ble Court held that pending legislative action, the courts can devise
a workable formula that advances the goals and objective of the legislation.
138. Mr. Mukerjee submitted that, while the Electricity Act, 2003
does not have a specific provision on execution of decrees/orders by the
Regulatory Commissions, Regulatory Commissions have been held to
C be “courts”. In Tamil Nadu Generation & Distribution Corporation
Ltd. vs. PPN Power (supra), this Court held that the State Electricity
Regulatory Commissions have the trappings of a court. The relevant
portion of the aforesaid judgment is reproduced below:-
“59. In view of the aforesaid categorical statement of law, we
D would accept the submission of Mr Nariman that the tribunal
such as the State Commission in deciding a lis, between the
appellant and the respondent discharges judicial functions
and exercises judicial power to the State. It exercises judicial
functions of far-reaching effect. Therefore, in our opinion,
E Mr Nariman is correct in his submission that it must have
essential trapping of the court. This can only be achieved by
the presence of one or more judicial members in the State
Commission which is called upon to decide complicated
contractual or civil issues which would normally have been
decided by a civil court. Not only the decisions of the State
F Commission have far-reaching consequences, they are final
and binding between the parties, subject, of course, to judicial
review.”
139. Mr. Mukerjee referred to the judgment of this Court in Andhra
Pradesh Power Coordination Committee & Others v. Lanco
G
Kondapalli Power Ltd & Ors.31, where the court held that in view of
its judgment in Gujarat Urja Vikas Nigam Ltd. v. Essar Power
Limited32, the Commission has been elevated to the status of a substitute
30.
(2021) SCC OnLine 194 (paras 142 & 188)
31.
(2016) 3 SCC 468
32.
H (2008) 4 SCC 755
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1119
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

for Civil Court in respect of all disputes between the licensees and the A
generating companies.
140. It is a settled position of law that Courts have the power to
execute their own orders. The aforesaid position has been confirmed by
the Hon’ble Supreme Court in State of Karnataka v. Vishwabharathi
House Building Cooperative Society and Others33. B
141. Mr. Mukerjee argued that the Electricity Act, 2003 has to be
interpreted to also include and incorporate the power to execute by steps
such as attachment of accounts, suspension/revocation of license etc.
Mr. Mukerjee further argued that the role and function of Electricity
Regulatory Commissions should not be viewed from the perspective of C
‘civil courts’ alone. Unlike Civil Courts which assume jurisdiction only
when a dispute arises, the Regulatory Commissions have an overarching
regulatory power over licensees. The Regulatory Commissions continue
to exercise continuous regulatory supervision over the parties (licensees)
especially over tariff. In support of his submission Mr. Mukherjee cited
All India Power Engineering Federation & Ors. vs. Sasan Power D
Limited & Others34 . This will protect the financial health of the sector
while protecting public interest by abusing the financial liability in the
form of carry cost/ sign value for money. This approach is also consistent
with the Preamble to the Electricity Act, 2003 which stipulates that it is
aimed at taking measures conducive to development of the power sector E
while protecting the interest of consumers.
142. Distinguishing the judgment of this Court in Jaipur Vidyut
Vitran Nigam Ltd v. Adani Power Rajasthan Ltd (supra) Mr. Rohatgi
argued that the issue involved in that case, was the rate at which interest
on carrying cost is to be paid. While a specific rate is stipulated in the F
Power Purchase Agreement for LPS the interest on delayed payment
of carrying cost is not specified in Power Purchase Agreement.
Therefore, APTEL directed that charges for deferred payment of
carrying cost should be paid at the same rate as LPS, since both are
meant for time value of money. This was disputed in the Appeal. This
Court, keeping in view the peculiarities of the facts of the case, where G
the power generator was unable to raise bills while the question of change
in law raised by the power generator was pending adjudication before
the MERC and the APTEL reduced the rate of interest on carrying cost
33.
(2003) 2 SCC 412 (paras 59 to 62)
34.
(2017) 1 SCC 487 (para 31) H
1120 SUPREME COURT REPORTS [2021] 5 S.C.R.

A to 9%. Mr. Rohatgi submitted that it is important to note that there was
no dispute in relation to Late Payment Surcharge in the case of Jaipur
Vidyut Vitran Nigam Limited (supra).
143. Mr. Singhvi also submitted that Jaipur Vidyut Vitran Nigam
Ltd. v. Adani Power Rajasthan Ltd. (supra) was distinguishable. In
B Jaipur Vidyut Vitran Nigam Ltd. (supra), there were change in law
claims for cost of imported coal, made by the generator which were
disputed by the distribution licensee on the ground that the bid submitted
by the generator itself was premised on imported coal. Since the principal
claim was disputed by the distribution licensee in the first instance, the
generator could not raise any supplementary bills, for change in law
C compensation.
144. In contrast, in this case the bills, payment against which has
been delayed, are energy bills, pertaining to energy supplied to the
Appellant; and supplied further by the Appellant to its consumers against
payment of retail tariff. Secondly, the energy bills in question, raised by
D the Respondent Generating Companies have never been disputed by the
Appellant. This has duly been noticed by the APTEL in its judgment and
order impugned in Paragraph 24, reproduced below:-
24. It is submitted by the contesting respondents (generators)
that LPS liability of the appellant on account of defaults in
E timely payments for the period between 01.07.2010 and
31.03.2017 had crystallized and the dispute as to the rate of
LPS was raised to vex it further. It is not denied that the appellant
had not disputed any of the Monthly Bills or Supplementary Bills
as per the procedure prescribed under the PPA. This rendered
F the demands to have become final and conclusive. The notice
based on plea of CIL was issued in 2016, the issue having
remained pending for 5 years, depriving the generators of
the recompense for the loss suffered. Payment of LPS is
triggered only when there is a default by MSEDCL. LPS is
levied under the PPAs which were duly executed by MSEDCL.
G In these circumstances, it is inappropriate to project the
outstanding liability towards LPS as an additional burden
being placed upon MSEDCL.. “
145. Mr. Mukerjee submitted that the judgment in Jaipur Vidyut
Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd. (supra) to contend
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1121
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

that the LPS rate should be limited to 9% is misconceived. He submitted A
that reliance of the Appellant, on the judgment is inapplicable in the facts
of the present case for the following reasons:-
(i) The matter pertained to a change in law claim which required
prior adjudication by the Rajasthan Electricity Regulatory
Commission. The liability to pay arose only after the APTEL B
dismissed the Appeal filed by the Rajasthan Distribution
companies and directed payment of change in law amount.
To Adani Power Rajasthan Ltd. [Paras 24, 70 & 73].
(ii) The judgment in Jaipur Vidyut Vitran Nigam Ltd. (supra)
is in the context of carrying cost payable by the Rajasthan C
Distribution Companies and not in the context of LPS. This
is evident from Paragraphs 62, 69, 70, 71 and 73 of the
judgment. The LPS rate is referenced for determining the
carrying cost rate that would apply given the inordinate delay
in adjudication of claims and the inability of Adani Power
Rajasthan Ltd. to raise bills till the adjudication was D
completed.
(iii) This Hon’ble Court limited the interest rate in the facts of
that case and in order to do complete justice. There was no
default on the part of the Distribution Licencee, Jaipur
Vidyut Vitran Nigam Ltd. E

(iv) In this case, the Appellant has admitted that it delayed
payment. No adjudication was required prior to payment of
monthly bills. Therefore, the judgment is inapplicable.
Reduction of LPS rate will result in rewarding the Appellant
for repeatedly defaulting on its obligations. F
146. Mr. Rohatgi, Mr. Singhvi, Mr. Mukherjee and Ms. Anand all
submitted that in Jaipur Vidyut Vitran Nigam Ltd v. Adani Power
Rajasthan Ltd. (supra), this Court had reduced the rate of interest to
SBAR not exceeding 9% per annum, to be compounded annually, in
exercise of its power under Article 142 of the Constitution to do complete G
justice. A direction given in the facts and circumstances of any particular
case, to do complete justice under Article 142 of the Constitution does
not operate as a precedent.
147. This appeal is under Section 125 of the Electricity Act, 2003
which is set out out hereinbelow for convenience:- H
1122 SUPREME COURT REPORTS [2021] 5 S.C.R.

A “125. Appeal to Supreme Court.—Any person aggrieved by
any decision or order of the Appellate Tribunal, may, file an
appeal to the Supreme Court within sixty days from the date
of communication of the decision or order of the Appellate
Tribunal, to him, on any one or more of the grounds specified
in Section 100 of the Code of Civil Procedure, 1908:
B
Provided that the Supreme Court may, if it is satisfied that the
appellant was prevented by sufficient cause from filing the
appeal within the said period, allow it to be filed within a
further period not exceeding sixty days.”
C 148. An appeal lies to this Court under Section 125 only on grounds
permitted in Section 100 of the Code of Civil Procedure, 1908 (CPC).
Section 100 of CPC is set out hereinbelow:-
“100. Second appeal.—(1) Save as otherwise expressly
provided in the body of this Code or by any other law for the
D time being in force, an appeal shall lie to the High Court from
every decree passed in appeal by any Court subordinate to
the High Court, if the High Court is satisfied that the case
involves a substantial question of law.
(2) An appeal may lie under this section from an appellate
E decree passed ex parte.
(3) In an appeal under this section, the memorandum of appeal
shall precisely state the substantial question of law involved
in the appeal.
(4) Where the High Court is satisfied that a substantial
F question of law is involved in any case, it shall formulate that
question.
(5) The appeal shall be heard on the question so formulated
and the respondent shall, at the hearing of the appeal, be
allowed to argue that the case does not involve such question:
G Provided that nothing in this sub-section shall be deemed to
take away or abridge the power of the Court to hear, for
reasons to be recorded, the appeal on any other substantial
question of law, not formulated by it, if it is satisfied that the
case involves such question.”
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1123
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

149. As held by this Court in State Bank of India and Ors. v. A
S.N. Goyal (supra) cited by Mr. Singh, the word “substantial question of
law” means not only a substantial question of law of general importance,
but also any substantial question of law arising in a case between the
parties on which the decision in the lis depends. A question of law which
arises incidentally or collaterally and has no bearing on the final outcome,
B
will not be a substantial question of law. Whether the question raised is
a question of law and if so, whether the question is a substantial question
of law is also not determined by the enormity of the stakes involved in
the case.
150. In Nazir Mohamed v. J. Kamala and Others (supra), also
cited by Mr. Singh, this Court held that, to be “substantial”, a question of C
law must be debatable, not previously settled by the law of the land or
any binding precedent, and must have a material bearing on the decision
of the case and/or the rights of the parties before it, if answered either
way.
151. The proposition of law laid down in Nazir Mohamed v. J. D
Kamala and Others (supra) and State Bank of India v. S.N. Goyal
(supra) is well settled. The aforesaid judgments do not, however support
the contention of Mr. Singh that there is a substantial question of law
involved in this appeal. Rather, the judgments lend support to the
contention of the Respondent-Power Generating Companies that there E
is no substantial question of law involved in this appeal.
152. On a conjoint reading of Section 125 of the Electricity Act
with Section 100 of the CPC, it is absolutely clear that an appeal to this
Court lies on a substantial question of law. The condition precedent for
entertaining an appeal under Section 125 of the Electricity Act, 2003 is F
the existence of a substantial question.
153. In DSR Steel (P) Ltd. v. State of Rajasthan (supra) cited
by Mr. Singhvi, this Court held:-
“14. An appeal under Section 125 of the Electricity Act, 2003
is maintainable before this Court only on the grounds specified G
in Section 100 of the Code of Civil Procedure. Section 100
CPC in turn permits filing of an appeal only if the case
involves a substantial question of law. Findings of fact
recorded by the courts below, which would in the present case,
imply the Regulatory Commission as the court of first instance
H
1124 SUPREME COURT REPORTS [2021] 5 S.C.R.

A and the Appellate Tribunal as the court hearing the first
appeal, cannot be reopened before this Court in an appeal
under Section 125 of the Electricity Act, 2003. Just as the
High Court cannot interfere with the concurrent findings of
fact recorded by the courts below in a second appeal under
Section 100 of the Code of Civil Procedure, so also this Court
B
would be loath to entertain any challenge to the concurrent
findings of fact recorded by the
Regulatory Commission and the Appellate Tribunal. The
decisions of this Court on the point are a legion. Reference
to Govindaraju v. Mariamman [(2005) 2 SCC 500 : AIR 2005
C SC
1008] , Hari Singh v. Kanhaiya Lal [(1999) 7 SCC 288 : AIR
1999 SC 3325] , Ramaswamy Kalingaryar v. Mathayan
Padayachi [1992 Supp

D (1) SCC 712 : AIR 1992 SC 115] , Kehar Singh v. Yash Pal
[AIR 1990 SC 2212] and Bismillah Begum v. Rahmatullah
Khan [(1998) 2 SCC 226 : AIR 1998 SC 970] should, however,
suffice.”
154. In Wardha Power Co. Ltd. v. Maharashtra State
E Electricity Distribution Co. Ltd. (supra) also cited by Mr. Singhvi, this
Court held:-
“5. Under Section 125 of the Electricity Act, 2003, an appeal
to this Court lies only when there is a substantial question of
law, as required for a second appeal under Section 100 of
F the Code of Civil Procedure, 1908. Though the appellant has
raised 34 questions, they are actually grounds for attacking
the appellate order. Grounds for attacking an order are
different from substantial question of law evolved in the
appeal. On appreciation of the correspondence between the
parties during the subsistence of the agreement, both the
G Commission and the Appellate Tribunal have held against the
appellant.”
155. In Tuppadahalli Energy India (P) Ltd. v. Karnataka
Electricity Regulatory Commission and Anr. (supra), this Court held
that the view taken by the Kerala State Electricity Regulatory Commission
H and APTEL in interpreting of Clause 6(5) of the Power Purchase
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1125
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

Agreement as an incentive, being a plausible view, there was no A
substantial question of law to warrant interference under Section 125 of
the Electricity Act.
156. In Ramanuja Naidu v. V Kanniah Naidu and Another35,
cited by Mr. Rohatgi, this Court held:-
B
“7. The scope of Section 100 of Civil Procedure Code even
before the amendment of the section in 1976 has been neatly
summarised in Mulla’s Code of Civil Procedure (15th Edn.,
Vol. I) at p. 703. It is stated therein as follows:
“The section even as it stood before its recent C
amendment allowed a second appeal only on the grounds set
out in clauses (a), (b) or (c). Therefore, whereas a Court of
First Appeal is competent to enter into questions of fact and
decide for itself whether the findings of fact by the lower
Court are or are not erroneous, a Court of Second Appeal
was not and is not competent to entertain the question as to D
the soundness of a finding of fact by the court below. A second
appeal, accordingly, could lie only on one or the other
grounds specified in the section. ....
8. In Madamanchi Ramappa v. Muthalur Bojjappa
[(1964) 2 SCR 673 : AIR 1963 SC 1633] , speaking for a E
three-member Bench, Gajendragadkar, J. summarised the law
thus: (SCR pp. 683-85)
“The question about the limits of the powers conferred
on the High Court in dealing with second appeals has been
considered by High Courts in India and by the Privy Council F
on several occasions. One of the earliest pronouncements of
the Privy Council on this point is to be found in the case of
Durga Choudhrain [17 IA 122 : ILR (1891) 18 Cal 23 (PC)].
In the case of Deity Pattabhiramaswamy v. S. Hanymayya
[AIR 1959 SC 57 : 1958 Andh LT 834] , this Court had
G
occasion to refer to the said decision of the Privy Council
and it was constrained to observe that ‘notwithstanding such
clear and authoritative pronouncements on the scope of the
provisions of Section 100, CPC, some learned Judges of the
35
(1996) 3 SCC 392
H
1126 SUPREME COURT REPORTS [2021] 5 S.C.R.

A High Courts are disposing of second appeals as if they were
first appeals. This introduces, apart from the fact that the
High Court assumes and exercises a jurisdiction which it does
not possess, a gambling element in litigation and confusion
in the mind of the litigant public.’ On this ground, this Court
set aside the second appellate decision which had been
B
brought before it by the appellants.
In R. Ramachandran Ayyar v. Ramalingam Chettiar
[(1963) 3 SCR 604 : AIR 1963 SC 302] , this Court had
occasion to revert to the same subject once again. The true
legal position in regard to the powers of the second appellate
C court under Section 100 was once more examined and it was
pointed out that the learned Judges of the High Courts should
bear in mind the caution and warning pronounced by the
Privy Council in the case of Durga Choudhrain and should
not interfere with findings of fact.
D It appears that the decision of this Court in Deity
Pattabhiramaswamy, was in fact cited before the learned
Single Judge, but he was inclined to take the view that some
aspects of the provisions contained in Section 100 of the Code
had not been duly considered by this Court and so, he thought
E that it was open to him to interfere with the conclusions of the
courts below in the present appeal. According to the learned
Judge, it is open to the second appellate court to interfere
with the conclusions of fact recorded by the District Judge
not only where the said conclusions are based on no evidence,
but also where the said conclusions are based on evidence
F which the High Court considers insufficient to support them.
In other words, the learned Judge seems to think that the
adequacy or sufficiency of evidence to sustain a conclusion
of fact is a matter of law which can be effectively raised in a
second appeal. In our opinion, this is clearly a misconception
G of the true legal position. The admissibility of evidence is no
doubt a point of law, but once it is shown that the evidence
on which courts of fact have acted was admissible and relevant,
it is not open to a party feeling aggrieved by the findings
recorded by the courts of fact to contend before the High
Court in second appeal that the said evidence is not sufficient
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1127
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

to justify the findings of fact in question. It has been always A
recognised that the sufficiency or adequacy of evidence to
support a finding of fact is a matter for decision of the court
of facts and cannot be agitated in a second appeal. Sometimes,
this position is expressed by saying that like all questions of
fact, sufficiency or adequacy of evidence in support of a case
B
is also left to the jury for its verdict. This position has always
been accepted without dissent and it can be stated without
any doubt that it enunciates what can be properly
characterised as an elementary proposition. Therefore,
whenever this Court is satisfied that in dealing with a second
appeal, the High Court has, either unwittingly and in a casual C
manner, or deliberately as in this case, contravened the limits
prescribed by Section 100, it becomes the duty of this Court
to intervene and give effect to the said provisions. It may be
that in some cases, the High Court dealing with the second
appeal is inclined to take the view that what it regards to be
D
justice or equity of the case has not been served by the
findings of fact recorded by courts of fact; but on such
occasions it is necessary to remember that what is administered
in courts is justice according to law and considerations of
fair play and equity however important they may be, must
yield to clear and express provisions of the law. If in reaching E
its decisions in second appeals, the High Court contravenes
the express provisions of Section 100, it would inevitably
introduce in such decisions an element of disconcerting
unpredictability which is usually associated with gambling;
and that is a reproach which judicial process must constantly
F
and scrupulously endeavour to avoid.”
9. In Dudh Nath Pandey v. Suresh Chandra Bhattasali
[(1986) 3 SCC 360] , a Bench of this Court held that: (SCC
Headone P.360)
“High Court cannot set aside findings of fact of first G
appellate court and come to a different conclusion on
reappraisal of evidence.”
10. There are innumerable subsequent decisions of this
Court which have held that concurrent findings of fact of
trial court and first appellate court cannot be interfered with H
1128 SUPREME COURT REPORTS [2021] 5 S.C.R.

A by the High Court in exercise of its jurisdiction under Section
100 of Civil Procedure Code. (See: Kamala Devi Budhia v.
Hem Prabha Ganguli [(1989) 3 SCC 145] , Jahejo Devi v.
Moharam Ali [(1988) 1 SCC 372] , P. Velayudhan v. Kurungot
Imbichia Moidu’s son Ayammad [1990 Supp SCC 9] , etc.)
B 11. We are of the view that in interfering with the
concurrent findings of facts of the lower courts, the learned
Single Judge of the High Court acted in excess of the
jurisdiction vested in him under Section 100 of Civil
Procedure Code. The learned Judge totally erred in his
approach to the entire question and in reappraising and
C reappreciating the entire evidence and in considering the
probabilities of the case, to hold that the judgments of the
courts below are ‘perverse’ and that the plaintiff is entitled to
the declaration of title to suit property and recovery of
possession.
D 157. In Navaneethammal v. Arjuna Chetty36, this Court held
that interference with concurrent findings of the courts below must be
avoided under Section 100 of the CPC unless warranted by compelling
reasons. In any case, this Court is not expected to reappreciate the
evidence.
E 158. The questions of law raised by Mr. Vikas Singh, which have
been set forth hereinabove in Paragraph 15, would not have a material
bearing on the decision in this appeal, for the reasons discussed
hereinafter.
159. The only issue in this appeal is, whether the change applicable
F in respect of interest charged by banks and financial institutions from
the Prime Lending Rate to Base Rate and then to MCLR amounts to
change in law in terms of the Power Purchase Agreement, and if so,
whether there is any substantial question of law involved in this appeal,
as argued by Mr. Singh, on behalf of the Appellant. It is not for this
G Court to reanalyze evidence adduced before the forums below or to sit
in appeal over concurrent findings of facts.
160. There can be no doubt that a notification issued by the Reserve
Bank of India constitutes law. A Reserve Bank of India notification which
alters, modifies, cancels or replaces an earlier notification would
36
H (1996) 6 SCC 166
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1129
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

tantamount to a change in law. However the notification relating to A
alteration of the lending rates chargeable by banks and financial institutions
are not laws which relate to the Power Purchase Agreements in question,
and therefore do not attract, as the case may be, Article 13 of the Stage
1 Agreements or Article 10 of the Stage 2 Agreements.
161. The RBI circulars/guidelines referred to above are admittedly B
instructions issued to banks and financial institutions and are not applicable
to the Appellant or to the Respondent-Power Generating Companies,
who are engaged in the business of production, sale/purchase and/or
distribution of electricity and not of advancing loans. Moreover, SBAR
as defined in the Power Purchase Agreements is admittedly not linked
to any RBI guidelines or circulars. The guidelines/circulars are thus not C
relevant to the issues involved in this appeal.
162. As rightly argued by the counsels appearing for the Power
Generating Companies, the RBI circulars/guidelines to banks, advising
the banks to follow certain norms, while setting their benchmark reference
rates for loans, and the amendments thereto, have no legal consequence D
on the contract between the parties. This has been correctly appreciated
by both the forums below.
163. In B.O.I. Finance Limited v. Custodian and Ors. (supra)
this Court held that the RBI Circulars/Instructions/Guidelines could not
result in invalidation of a contract even between a bank and a third party E
and the consequence for violation is penalty as provided for in Section
46 of the Banking Regulation Act. The RBI Circulars/Guidelines cannot
therefore vary or modify a contract between two parties.
164. As pointed out by Counsel appearing on behalf of the
Respondent- Power Generating Companies and admitted on behalf of F
the Appellant, SBI has been notifying and continues to notify Prime
Lending Rates for its loans. The Appellant itself has given the average
PLR notified by SBI from 2010 till date in its application being I.A. No.
69796 of 2021. Therefore, Late Payment Surcharge as per the Power
Purchase Agreement has been calculated at the rate of 2% in excess of G
the SBI notified Prime Lending Rate.
165. From paragraph 12 of the impugned judgment and order of
the APTEL, it appears that the Appellant conceded before the APTEL
that the SBI continues to issue the PLR rates till date. The relevant part
of the impugned judgment and order is reproduced hereinbelow:-
H
1130 SUPREME COURT REPORTS [2021] 5 S.C.R.

A “....It is fairly conceded that SBI continues to issue the PLR
rates till date…”
166. The definition of SBAR is clear and has been correctly applied
by both the forums below. There are concurrent findings of fact that the
SBI PLR (i.e. the benchmark reference rate mentioned in the PPA) is
B still being published and is available. The Court cannot, at this stage of a
second appeal under Section 125 of the Electricity Act reopen the factual
question of whether at all PLR rates were being notified by SBI for
short term loans.
167. Therefore, as submitted on behalf of the Respondent-Power
C Generating Companies, there is no substantial question of law involved
in this appeal filed under section 125 of the Electricity Act, 2003.
168. As argued by Mr. Singhvi, Mr. Rohatgi and other Counsel,
the definition of SBAR in the Power Purchase Agreements is clear.
SBAR is the Prime Lending Rate per annum fixed by the State Bank of
D India (SBI) from time to time for loans with one year maturity. LPS is to
be calculated at the rate of 2% in excess of the PLR for loans with 1
year maturity, as fixed from time to time by SBI. Moreover, the parties
have consciously agreed that in the absence of such rate, the LPS rate
shall be mutually agreed to by the Parties.
E 169. As argued by Mr. Rohatagi, Mr. Singhvi and Mr. Mukherjee,
the purpose for which the Guidelines/Circulars have been issued by the
Reserve Bank of India or their impact on the rates of interest on loans
and advances, are not relevant to this appeal.
170. The provision in the Power Purchase Agreement, whereby
F the parties are to mutually agree on a rate of interest, in case there is no
SBI Prime Lending Rate, in itself excludes the applicability of the general
provision for Change in Law contained in Article 13 of the Power
Purchase Agreement to Late Payment Surcharge.
171. In Adani Power (Mundra) Ltd. v. Gujarat Electricity
G Regulatory Commission (supra), this Court found :-
“38. In the present case, the perusal of various Articles would
reveal that the provisions under Article 14 are general in
nature. The provision under Article 3.4.2 is specific, only to
be invoked in the case of non-compliance with any of the
H conditions as provided under Article 3.1.2…..”
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1131
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

172. The APTEL correctly found that:- A
“13.... On the contrary, there is a conscious exclusion
regarding any suo moto change in the rate to be applied while
calculating LPS, it being incorrect to argue on the assumption
that the contract permits automatic change in system.”
173. This Court is unable to accept Mr. Singh’s submission that B
the conclusion of APTEL that LPS is not tariff is erroneous. The meaning
of the expression tariff has to be considered, and has rightly been
considered by APTEL in the context of the relevant provision of the
Power Purchase Agreements. The dictionary meaning of tariff may be
charge. However, in Article 13 of the Stage 1 and Article 10 of the C
Stage 2 Power Purchase Agreements, tariff means monthly tariff and
tariff adjustment consequential to change in law, is of monthly tariff in
respect of supply of electricity.
174. As argued by the Respondent- Power Generating Companies
appearing through Mr. Rohatagi, Mr. Singhvi, Mr. Mukherjee and Ms. D
Anand respectively, LPS is only payable when payment against monthly
bills is delayed and not otherwise.
175. The object of LPS is to enforce and/or encourage timely
payment of charges by the procurer, i.e. the Appellant. In other words,
LPS dissuades the procurer from delaying payment of charges. The E
rate of LPS has no bearing or impact on tariff. Changes in the basis of
the rates of LPS do not affect the rate at which power was agreed to be
sold and purchased under the Power Purchase Agreements. The principle
of restitution under the Change in Law provisions of the Power Purchase
Agreements are attracted in respect of tariff.
F
176. LPS cannot be equated with carrying cost or actual cost
incurred for the supply of power. The Appellant has a contractual
obligation to make timely payment of the invoices raised by the Power
Generating Companies, subject, of course, to scrutiny and verification of
the same. Mr. Mukul Rohatgi has a point that if the funding cost was so
much lesser than the rate of LPS, as contended by the Appellant, the G
Appellant could have raised funds at a lower rate of interest, made timely
payment of the invoices raised by the Power Generating Companies,
and avoided LPS.
177. The proposition that Courts cannot rewrite a contract mutually
executed between the parties, is well settled. The Court cannot, through H
1132 SUPREME COURT REPORTS [2021] 5 S.C.R.

A its interpretative process, rewrite or create a new contract between the
parties. The Court has to simply apply the terms and conditions of the
agreement as agreed between the parties, as observed by this Court in
Shree Ambica Medical Stores and Ors. v. Surat People’s Co-
operative Bank (supra), cited by Ms. Divya Anand. This appeal is an
attempt to renegotiate the terms of the PPA, as argued by Ms. Divya
B
Anand as also other Counsel. It is well settled that Courts cannot substitute
their own view of the presumed understanding of commercial terms by
the parties, if the terms are explicitly expressed. The explicit terms of a
contract are always the final word with regard to the intention of the
parties, as held by this Court in Nabha Power Ltd. (NPL) vs. Punjab
C State Power Corporation Ltd. (supra) cited by Ms. Anand.
178. There is substance in Ms. Anand’s argument that the Appellant
is obliged to seek amendment of the provisions of the Power Purchase
Agreement only in accordance with the agreed procedure for amendment
of the terms thereof. The agreed rate of Late Payment Surcharge can
D only be amended in the absence of SBI PLR and that too with the mutual
consent of the parties to the Power Purchase Agreement.
179. The argument that the Power Generating Companies are
availing loans at a lesser rate of interest, but charging LPS on the basis
of a higher rate of interest, leading to unjust enrichment, is untenable in
E law. LPS under the Power Purchase Agreements do not correspond to
the actual interest paid by the Power Generating Companies for funds
raised by them. The payment of Late Payment Surcharge LPS penalty
suffered by the Procurer, that is, the Appellant, on account of default in
timely payment.

F 180. As observed above, the Parties to the Power Purchase
Agreements have mutually and consciously agreed to the incorporation
of the PLR as notified by SBI from time to time, as the rate for levy of
LPS. Therefore, by virtue of the doctrine of incorporation, the PLR as
notified by SBI each year gets incorporated in the Power Purchasing
Agreements, as binding between the parties. Thus, any other system
G notified by the Reserve Bank of India by its circulars has no bearing on
the terms of the Power Purchase Agreement and cannot be deemed to
be incorporated in the Power Purchase Agreement, except in case of
mutual agreement between the parties, in the event of absence of SBI
PLR, and approved by the MERC.
H
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1133
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

181. As argued by Ms. Anand, conceptually, PLR, Base Rate and A
MCLR are not comparable. The submission that the definition of SBAR
should be read in the context of MCLR instead of PLR, is therefore not
tenable. PLR is the internal benchmark rate for charging of interest on
floating rate loans, calculated on the basis of average cost of funds and
the loans were offered at a discount on their existing PLR. However,
B
Base Rate is the lending rate calculated based on the total cost of funds
of the banks and is the minimum interest rate at which a bank can lend,
except for loans to its own employees, its retired employees and against
bank’s own deposits. MCLR is a lending rate calculated on the cost of
raising new funds for the bank which include the cost of maintaining
CRR/SLR (Credit Reserve Ratio/Statutory Liquidity Ratio), operating C
costs of banks and tenor premium. MCLR is the lowest interest rate
that a bank or lender can offer. Thus, loans are offered at a markup on
the MCLR. Thus, the basis of both the rates are different and cannot be
compared, as has been sought to be done by the Appellant. When PLR,
Base Rate and MCLR are compared side by side. The difference is that
D
very stark. Loans are advanced at a mark-up over Base Rate and MCLR,
while during the PLR regime, loans were offered at a discount on PLR.
182. In any case, the Appellant cannot contend that the Reserve
Bank of India circulars are to be considered as Change in Law, since
Article 13.3.1 of the Stage 1 agreements corresponding to Article 10.4.1
of the Stage 2 agreements provides that notices of Change in Law events E
are to be issued by the affected party, as soon as reasonably practicable,
after the affected party becomes aware of Change in Law event or
when it should reasonably have known of the Change in Law.
183. In this case, the changes cited by the Appellant were effected
by RBI from July 2010 and April 2016 and notified in advance. The F
Appellant issued notices of Change in Law as late as in September
2016, more than six years after the Reserve Bank of India introduced
the base rate system in place of the BPLR system. Furthermore, while
the guidelines on the base rate system were published on 9 th April 2010
and introduced with effect from 01.07.2010, the Appellant entered into G
Power Purchase Agreements with the Respondent No. 2 on 9 th August
2010 and on 16th February 2013 incorporating PLR as the Late Payment
Surcharge rate for supply of contracted quantum of electricity to the
Appellant.

H
1134 SUPREME COURT REPORTS [2021] 5 S.C.R.

A 184. Significantly, the Appellant charges interest from its consumers
for delay in payment @ 1.25% per month and/or in other words 15%
per annum as per the MYT Regulations of MERC. This also shows that
interest rate is not co-related to the actual interest rate on loans taken by
the Appellant or by Power Generating Companies. According to the
Respondent- Power Generating Companies, no other distribution licencee
B
other than the Appellant has raised the claim of Change in Law. All
other Distribution Licencees procuring electricity from producers of
electricity pay LPS in accordance with the respective Power Purchase
Agreements.
185. In Halliburton Offshore Services Inc. v. Vedanta Limited
C & Anr., O.M.P (I) (COMM.) No. 88/2020, decided on 29.05.2020
to which reference was made by Ms. Anand, the Delhi High Court aptly
remarked that the outbreak of a pandemic cannot be used as an excuse
for non-performance of a contract for which the deadlines were much
before the outbreak itself. In the aforesaid case, the Delhi High Court
D rightly observed that the Court, while considering the plea of non
performance of the condition due to outbreak of the COVID-19 pandemic,
ought to examine factors such as the conduct of the parties prior to the
outbreak.
186. Admittedly, the Appellant has landed itself in its present
E predicament, due to delay in making timely payments to the Respondent
Power Generating Companies. There was no pandemic at the time of
filing of the petition before the MERC in 2017 and the Appeal before the
APTEL in 2018. It, cannot, therefore be said that the Appellant defaulted
in payment of bills by reason of its financial predicament as a result of
the outbreak of COVID 19 in India, which was in March 2020.
F
187. Extensive submissions have been made by Mr. Singh, to
impress upon the Court, that the Appellant committed default in payment
of the bills raised by the Power Generating Companies on account of
various circumstances, beyond its control. The various circumstances
mentioned by the Appellant, which allegedly impacted the financial
G position of the Appellant, have no bearing on the merits of the Appeal.
Mr. Rohatgi, Mr. Singhvi, Mr. Mukerjee and Ms. Anand submitted in
one voice that the delays in payment and/or non-payment of the invoices
raised by the Power Generating Companies for the supply of power to
the Appellant, had put the Respondent-Power Generating Companies
H under immense financial stress, as their source of revenue is from the
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1135
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

sale and supply of power generated from their power plants. The A
Respondent Power Generating Companies cannot be burdened with the
consequences of the Appellant’s defaults.
188. The judgment of this Court in M/s Kailash Nath Associates
v. Delhi Development Authority (supra) cited by Mr. Singh is clearly
distinguishable since this Court found that there had been no breach of B
contract by the Appellant (Para 44). Further, the Court did not accept
the view of the Division Bench, that the fact that DDA had made a
profit from re-auction was irrelevant, since compensation for breach of
a contract can be given for damage or loss suffered. If no damage is
suffered by reason of the breach, the law does not provide for a windfall.
C
189. In this case, the Appellant admittedly did not pay the bills
raised by the Power Generating Companies within time. The Power
Purchase Agreements provided for Late Payment Surcharge on the
presumption that delayed payment of bills causes prejudice and loss to
the seller whose bill remains outstanding. Accordingly, the Appellant also
imposes delayed payment charges on its consumers, who pay their bills D
after the stipulated due date for payment of the bills at the rate of 1.5%
per month and/or in other 18% per annum. LPS rate of 2% above the
SBAR is neither unreasonably exorbitant nor arbitrary. It cannot be said
that the LPS agreed upon is not a genuine pre estimate of damages.
190. The issues raised in this appeal are almost identical to the E
issues involved in Union of India v. Association of Unified Telecom
Service Providers of India & Ors.37 where this Court was considering
an identical interest clause in a contract which is reproduced hereinbelow:
“In re: Levy of interest, penalty, and interest on penalty. Para
182. Levy of licence fee is provided in Clause 20.2. In case F
of any delay in payment of licence fee beyond the stipulated
period would attract penalty at the rate, which would be 2%
above the prime lending rate (PLR) of State Bank of India. As
per Clauses 20.5 and 20.8, if the licensee does not pay the
demand, consequences would follow. The clauses are G
extracted hereunder:
“20.5. Any delay in payment of licence fee payable or any
other dues payable under the Licence beyond the stipulated
period will attract interest at a rate which will be 2% above
37
2020 (3) SCC 525 H
1136 SUPREME COURT REPORTS [2021] 5 S.C.R.

A the prime lending rate (PLR) of State Bank of India existing
as on the beginning of the financial year (namely 1st April)
in respect of the licence fees pertaining to the said financial
year. The interest shall be compounded monthly and a part of
the month shall be reckoned as a full month for the purposes
of calculation of interest. A month shall be reckoned as an
B
English calendar month.”
191. In the aforesaid case, the licensee had contended that under
Section 74 of the Contract Act, compensation has to be reasonable
compensation. This Court after considering Hindustan Steel Ltd. v.
State of Orissa38, Akbar Badrudin Giwani v. Collector of Customs39,
C Jaiprakash Industries Ltd. v. Commissioner of Central Excise,
Chandigarh40, Tecumseh Products (India) Ltd. v. Commissioner of
Central Excise, Hyderabad41, J.K. Synthetics Ltd. v. Commercial
Taxes Officer 42, Kailash Nath Associates v. Delhi Development
Authority and Another43 and Central Bank of India v. Ravindra and
D Others44. This Court after considering the above- mentioned judgments
of this Court cited on behalf of the licensee held that none of the decisions
would come to the aid of the licensee. This Court held:
“192....The ratio of the case, it is not attracted for the reason
that in the instant matter, it is the contractual rate of interest
E and penalty agreed to which cannot be said to be arduous in
any manner. The rate of interest has been agreed and
particularly since it is a revenue sharing regime, and the
licensees have acted in conscious disregards of their
obligation. Thus on the anvil of the decision above also, they
are liable to pay the dues with interest and penalty……
F
…… There is no such discretion available when the parties
have agreed in default what amount is to be paid. It
automatically follows that it is not to be determined by the
licensor once over again. Parties (licensor and licensees) are
bound by the terms and conditions of the contract. There is
G 38
1969 (2) SCC 627
39
1990 (2) SCC 203
40
2003 (1) SCC 67
41
2004 (6) SCC 30
42
1994 (4) SCC 276
43
2015 (4) SCC 136
44
H 2002 (1) SCC 367
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1137
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

no enabling clause to vary either the rate of interest or the A
penalty provided therein and even if permissible, it is not called
for to vary interest or penalty fixed under the agreement in
the facts and circumstances of the case……
197. It is not levy of penal interest which is involved in the
instant case. Thus, based on the decision mentioned above, B
we find that when there is contractual stipulation, the interest
can be levied and compounded”
192. It would perhaps be pertinent to note that stereotype Power
Purchase Agreements containing identical terms and conditions are
executed by the Appellant with different Power Generating Companies. C
It is patently obvious that the Power Generating Companies only agree
to terms and conditions of an agreement prepared by the Appellant. It is
difficult to accept that the Appellant should incorporate in their stereotype
Power Purchase Agreements, a provision for payment of LPS at a rate
2% higher than the SBAR, in case of late payment of invoices/bills,
without any pre estimation of the loss likely to be suffered by a Power D
Generating Company, by reason of non payment of bills in time, more so
when the Late Payment Surcharge is linked to the rate of interest in
respect of specific types of loan, charged by a leading nationalised bank
with the largest numbers of branches spread all over the country including
in mofussil and rural areas. E
193. In any case, in this second appeal under Section 125 of the
Electricity Act 2003, which is only to be heard on a substantial question
of law, this Court would not embark upon the exercise of making a
factual enquiry into the mode and manner in which the Power Generating
Companies meet their working capital requirements and interest that F
individual Power Generating Companies pay to their lenders.
194. It is axiomatic that the Power Purchase Agreements provide
for computation of Late Payment Surcharge in a particular manner to
avoid the time consuming exercise of assessing the losses of individual
Power Generating Companies by reason of late payment of their bills.
G
The SBAR has been made the bench mark for computation of Late
Payment Surcharge, irrespective of whether the Power Generating
Companies are financed by the State Bank of India or any of its
subsidiaries. The LPS provision is in the nature of a caution to arrange
their affairs and finances keeping the upper limit of LPS of 2% above
H
1138 SUPREME COURT REPORTS [2021] 5 S.C.R.

A the SBAR in view, so that the Power Generating Company desists from
borrowing at uneconomic rate of interest.
195. There being no dispute in the present case with regard to the
principal sums due under the monthly bills, interest on delayed payment
at 2% in excess of SBI PLR cannot be said to be arbitrarily high. There
B is no reason for this Court to reduce the contractual rate of interest and
thereby alter or modify the contract between the parties, in exercise of
its powers under Article 142 of the Constitution of India.
196. We need not go into the question whether or not the Appellant
has funds to clear its interest liability. The Appellant cannot continue to
C get supply of electricity without having appropriate funds. Appellant would
necessarily have to raise funds to clear its contractual obligations.
197. Even assuming that the burden of interest would have to be
passed on to the consumers, that cannot be the ground for the Appellant
to resile from its contractual commitment to the Power Generating
Companies. The Appellant cannot pass on the burden for delay in making
D
payment to the Power Generating Companies. In any case the claims as
argued by Mr. Singhvi pertains to a period of three years before filing of
the petition before the MERC on 2nd December, 2016 and therefore
barred by limitation.
198. Reliance by the Appellant, upon the tariff regulations framed
E by MERC for determination of tariff for Power Generating Companies
under Section 62 of the Electricity Act 2003, is untenable since the Tariff
Regulations have no application in this case where PPAs have been
executed pursuant to a bidding process, under Section 63 of the Electricity
Act.
F 199. MERC, rightly rejected the claim of the Appellant by its order
dated 16.11.2017, holding:
“12 .................................... However, the LPS provision is
attracted only when the
payments are not made by MSEDCL against the Monthly Bills
G of the Seller within the time stipulated in the PPA’s. Any changes
in the basis of the LPS rates, consequent to revisions by the
RBI do not affect in any manner, the rates at which the power
was agreed to be sold and purchased under the PPA’s and in
the consequent financial implication for either party resulting
H in a liability to compensate the affected party “
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1139
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

200. The APTEL, concurred with the finding of MERC and held:- A
“16. Having regard to the terms of the contract (PPA) as a
whole, there is no doubt that provision for compensation to
the affected party for a Change in Law event is essential with
regard to tariff only. The rate of LPS has no bearing or impact
on tariff. Any possible changes in the basis of the LPS rates B
consequent to revisions by the RBI, or for that matter, SBI
would not affect the rate at which power was agreed to be
sold and purchased under the PPAs and consequently there
is no financial implications on expenditure or income for either
Party. The LPS only recompenses what was lost in terms of
real value of money due to delay in payment.” C

201. The decision of this Court in Jaipur Vidyut Vitran Nigam
Ltd. (supra) is distinguishable on facts. In Jaipur Vidyut Vitran Nigam
Ltd. (supra), there were change in law claims for cost of imported
coal, made by the Power Generating Company which were disputed
by the distribution licensee on the ground that the bid submitted by D
the Generating Company was premised on imported coal. Since the
principal claim was disputed by the distribution licensee in the first
instance, the Generating Company could not raise any
supplementary bills, for change in law compensation.
202. In this case, the bills, payment of which has been delayed, E
are energy bills, pertaining to energy supplied to the Appellant; and supplied
further by the Appellant to its consumers against payment of retail tariff.
Secondly, the energy bills in question, raised by the respondent Power
Generating Companies have never been disputed by the Appellant, as
noticed by the APTEL in the impugned judgment and order, the relevant F
part whereof is extracted hereunder:-
“24. It is submitted by the contesting respondents (generators)
that LPS liability of the appellant on account of defaults in
timely payments for the period between 01.07.2010 and
31.03.2017 had crystallised and the dispute as to rate of LPS G
was raised to vex it further. It is not denied that the appellant
had not disputed any of the Monthly Bills or Supplementary
Bills as per the procedure prescribed under the PPA. This
renders the demands to have become final and conclusive.
The notice based on plea of CIL was issued in 2016, the issue
having remained pending for five years, depriving the H
1140 SUPREME COURT REPORTS [2021] 5 S.C.R.

A generators of the recompense for the loss suffered. Payment
of LPS is triggered only when there is a default by MSEDCL.
LPS is levied under the PPAs which were duly executed by
MSEDCL. In these circumstances, it is inappropriate to project
the outstanding liability towards LPS as an additional burden
being placed upon MSEDCL..”
B
203. Mr. Singh’s challenge to the impugned judgment and order
on the ground of the directions on the Appellant to make payment of the
LPS found due and payable, within a stipulated date, is also not sustainable.
204. APTEL is not bound by the procedure laid down in the Civil
C Procedure Code, as argued by Mr. Mukerjee. Directions for time bound
payment within a prescribed time frame are in conformity with the
judgment of this Court in Jaipur Vidyut Vitran Nigam Ltd. v. Adani
Power (supra) which has been upheld by this Court. Moreover, one of
the objectives of the Electricity Act is time bound disposal of matters.
This is evident from various provisions of the said Act including in
D particular Section 111(5) of the Act. Since APTEL and MERC are not
bound by the procedure as laid down in the Civil Procedure Code, it was
open to APTEL to pass such orders as would finally put an end to litigation.
205. It is now well settled by various decisions of this Court that
an Electricity Regulatory Commission such as MERC constituted under
E the Electricity Act, 2003 has all the trappings of a Court. The MERC is
a substitute for a Civil Court in respect of all disputes between licensees
and Power Generating Companies. This proposition finds support from
the judgments of this Court in Tamil Nadu Generation & Distribution
Corporation Ltd. v. PPN Power Generating Co. Pvt. Ltd. 45, Andhra
F Pradesh Power Coordination Committee & Ors. v. Lanco Kondapalli
Power Ltd. & Others.46 and Gujarat Urja Vikas Nigam Limited v.
Amit Kumar & Others47 cited by Mr. Vishrov Mukerjee.
206. As held by this Court in State of Karnataka v.
Vishwabharathi House Building Cooperative Society and Others 48,
cited by Mr. Mukerjee, Courts have the power to execute their own
G
order. The impugned judgment and order cannot, therefore, be faulted
for giving directions for payment of the outstanding dues of the Appellant.
45
(2014) 11 SCC 53
46
(2016) 3 SCC 468
47
(2021) SCC OnLine 194
48
H (2003) 2 SCC 412 (Paras 59-62)
MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COM. 1141
LTD. v. MERC & ORC. [INDIRA BANERJEE, J. ]

Moreover, State Regulatory Commissions exercise continuous regulatory A
supervision as affirmed by this Court in All India Power Engineering
Federation & Ors. v. Sasan Power Limited & Others49, cited by Mr.
Mukerjee.
207. MERC acted within the scope of its power of regulatory
supervision in directing the Appellant to make payment of LPS within B
the time stipulated in the order of MERC. The APTEL rightly upheld
the direction. In any case, such a direction cannot be interfered with in
exercise of powers under Section 125 of the Electricity Act which
corresponds to the power of Second Appeal under Section 100 of the
CPC, since the sine qua non for entertaining an appeal is the existence
of a substantial question of law. C
208. After the the hearing of this appeal was concluded and the
appeal was reserved for judgment, the Appellant filed an application to
bring on record additional facts and documents in the form of queries
under the Right to Information Act, 2005 made by one Alka Mehta to
the State Bank of India and the responses thereto in an attempt to show D
that PLR would not apply to short term loans advanced by SBI after
transition to the Base Rate/MCLR system. This Court cannot take note
of any documents sought to be introduced after the conclusion of hearing.
In any case, as observed above, this Court cannot in a second appeal
under Section 125 of the Electricity Act, 2003 interfere with concurrent
factual findings arrived at by MERC and APTEL on the basis of facts E
admitted by the Appellant. The Appellant had been accepting the invoices
raised by the Respondent–Power Generating companies and accounts
had duly been reconciled by the Appellant. The LPS charged by the
Respondent Power Generating Companies was never disputed. Further
more, this Court cannot look into documents introduced for the first time F
in this second appeal, which were not tendered in evidence before the
MERC or the APTEL. Even otherwise, queries made by one Alka Mehta,
a rank outsider as late as on 12th July 2021 or replies thereto cannot be
relied upon in evidence, by the Appellant.
209. For the reasons discussed above, we find no grounds to
G
interfere with the judgment and order of the learned APTEL confirming
the judgment and order passed by MERC. The appeal is accordingly
dismissed.
Nidhi Jain Appeal dismissed.
9
(2017) 1 SCC 487 (Para 31)
H