Changes via circulars qualify as 'change of law' eligible for relief: SC

The Supreme Court on Thursday held that all changes effected through notifications, orders or circulars by state-run entities such as Coal India and the Indian Railways qualify as a 'change in law' eligible for compensatory tariff or relief.

The court's order is seen streamlining cost recovery for power generators, besides reducing litigation and helping clear dues stuck on this issue.

"All such additional charges which are payable on account of orders, directions, notifications, regulations, etc., issued by the instrumentalities of the state, after the cut-off date, will have to be considered to be 'change in law' events," the top court said in its ruling on a batch of petitions.


"The generators would be entitled to compensation on the restitutionary principle on such changes occurring after the cut-off date," said the court.

Levies such as busy season surcharge, development surcharge on transportation of coal, and port congestion surcharge by the railways, add-on premium on cancellation of captive coal blocks and evacuation facility charges, and forest tax on coal mined and transported, among others, will be considered 'change in law', according to the ruling.

A bench led by Justice BR Gavai upheld the Appellate Tribunal for Electricity's findings that the revision of charges paid on these levies from time to time would come within the ambit of 'change in law'.

The court was hearing a batch of petitions arising out of the interpretation of 'change in law' clause.

Article 12 of power purchase agreements provides for 'change in law' compensation, wherein the adversely impacted party is eligible for compensation from the other party.

The bench reiterated its earlier view also covering the shortfall of domestic coal under the 'change in law' provision.