New Delhi: CM Devendra Fadnavis has urged PM Narendra Modi’s intervention after the apex appellate body for the power sector pulled up the Maharashtra Electricity Regulatory Commission (MERC) in a case related to Adani Power.
In a letter dated 21 August, Fadnavis alleged that rulings of the Appellate Tribunal for Electricity (APTEL) favour private developers over state power firms.
Though it did not mention any particular case, the letter came two days after the tribunal slammed the Maharashtra Electricity Regulatory Commission (MERC) for holding fresh hearings in settled issues.
Setting aside the MERC’s 2020 order, the tribunal directed the immediate issuance of tariff orders within six weeks on 19 August to ensure full compensation to the Adani Power Limited for domestic coal shortages at its Tiroda thermal power plant.
A statutory body under the Electricity Act, the APTEL hears appeals against orders from the Central Electricity Regulatory Commission (CERC), State Commissions (SERCs), and the Petroleum and Natural Gas Regulatory Board.
Operating under four Power Purchase Agreements (PPAs) signed with the Maharashtra State Electricity Distribution Company Limited (MSEDCL) between 2008 and 2013, Adani Power’s 3,300 MW coal-fired generating station suffered domestic coal supply shortages following shifts in national coal allocation policies.
Although the MERC initially approved the shortfall under the federal SHAKTI Policy as a ‘Change in Law’ event in February 2019, it heavily restricted the scope of relief, leading to a legal battle.
In September 2020, the APTEL ruled in favor of Adani Power, holding that restricting coal shortfall compensation to an arbitrary 25 percent cap ran “against the basic principles of restitution under the change in law provisions of the PPAs”.
The tribunal ordered that compensation be computed based on the “SHR (Station Heat Rate) specified in the MERC MYT Regulations, 2011 or the actual SHR whichever is lower and actual Gross Calorific Value (GCV) of coal as received as the plant site”.
It then sent the matter back to the MERC with a direct instruction to “issue the consequential orders as expeditiously as possible within a period of three months”.
When a remand is ‘mechanical, restrictive’
Rather than executing this directive, the tribunal order notes that the MERC launched a “fresh full-fledged hearing” upon receiving the case.
To analyse this overstep, APTEL’s judgment unpacked Order 41, Rules 23 and 23A of the Code of Civil Procedure, 1908 – which govern how appellate courts return cases to lower forums.
Judicial member Virender Bhat, in the judgement, categorised remand orders into three distinct legal frameworks: open remand – where an original decree is set aside, granting the lower court the power to “reopen the entire case, rehear the arguments and pass a completely fresh judgment”.
Second, limited remand – where the appellate court keeps the main appeal pending and sends “only a particular issue” back for a targeted hearing. And third, consequential remand – where the court remands a matter exclusively for passing a consequential order.
Under this highly restrictive third framework, the appellate court clarified, “the power of the lower court becomes more specific, mechanical and restrictive”.
“In that case, the lower court cannot rehear the arguments or re-examine the facts or alter the substantive findings already given by the appellate court.”
The MERC ignored these judicial boundaries. In its subsequent December 2020 order, the state regulator framed six brand-new issues, attempting to litigate questions that were never part of the original appellate remand.
Specifically, the MERC tried to deny compensation for any coal used for generation exceeding annual “normative PLF” (Plant Load Factor). It also sought to impose a degradation ceiling on the “as received” GCV of coal for periods after 1 April, 2020.
The APTEL ruled that the MERC had no authority to frame these issues. Since the question of capping compensation to normative generation was never raised in the original appeal, the tribunal stated that the Commission “ought not to have either framed such issue for its consideration or proceeded to give its findings on the same”.
“The Commission was only required to pass consequential orders in terms of the findings returned on the issues by this tribunal… and ought not to have conducted a fresh hearing thereby violating the judicial discipline,” it said, mincing no words regarding this breach of judicial hierarchy.
“The conduct in doing so is not only deplorable and reprehensible but also contemptuous in nature. The commission has totally disobeyed and disregarded the directions issued by this tribunal… In our considered opinion, the Commission has committed contempt of this tribunal.”
While judicial member Bhat chose to “refrain from initiating any contempt proceedings” in the hope that the Commission would adhere to judicial discipline in the future, it made its displeasure abundantly clear.
Setting aside the MERC’s non-compliant order, the tribunal ordered the state regulator to issue proper consequential orders in favour of Adani Power within a period of six weeks.
(Edited by Tony Rai)
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