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SC revives a 2009 dispute over power supply between Adani company & Gujarat power body

The order came on GUVNL’s curative petition that challenged the 2019 judgment and after it was circulated among the bench members internally, in accordance with SC rules.

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New Delhi: More than two years after a Supreme Court bench ruled in favor of a company belonging to the Adani group, another bench has last week reopened the dispute over the Power Purchase Agreement (PPA) between Adani Power Mundra Limited and Gujarat Urja Vikas Nigam (GUVNL).

The Chief Justice of India N.V. Ramana headed the five-judge bench that issued notices on a GUVNL’s curative petition, filed in November 2019, after noting that the plea raises significant questions of law. The other members of the bench are Justices UU Lalit, AM Khanwilkar, BR Gavai and Surya Kant.

Justices Gavai and Surya Kant were also members of the 2019 bench, then led by Justice Arun Mishra, now retired. This bench had upheld the notice of termination of the PPA given by Adani Power Mundra Limited to GUVNL in 2009, declaring it legal and valid.

“We have gone through the Curative Petition and the relevant documents. In our prima facie opinion, there are substantial questions of law raised in this Curative Petition, which require consideration,” CJI-led bench ordered on 16 September, as it fixed 30 September to hear the matter in open court.

Apart from Adani Power (Mundra), notices have also gone to Gujarat Electricity Regulatory Commission (GERC) and an NGO, Consumer Education and Research Society.

The order came on GUVNL’s curative petition that challenged the 2019 judgment and after it was circulated among the bench members internally, in accordance with the Supreme Court rules.

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The significance of the SC ruling

The development is significant on two grounds. First, it is very rare for the top court to issue notice on a curative petition, which is the last legal remedy for a litigant whose matter reaches the apex court.

And, second, the judgment had courted controversy with the former president of Supreme Court Bar Association and senior advocate Dushyant Dave writing a letter to the then Chief Justice of India Ranjan Gogoi and all Supreme Court judges, taking strong exception to the constitution of benches during the 2019 summer vacations led by senior judges, including the CJI himself.

In the letter, Dave had also pointed to the “systematic assignment” of matters to particular benches, which also included listing of the Adani Power Mundra Limited’s appeal before Justice Mishra’s court. According to Dave, it was a departure from the norms set out in the circulars on listing of urgent cases.

A curative petition can only be filed after a review petition is dismissed. It was in 2002 that the top court evolved the concept of curative petition, seen as a relief to which an aggrieved person is entitled to against the final judgment or order of the SC, even after dismissal of a review petition.

This 2002 verdict drew support from Article 137 of the Constitution that says in the matter of laws and rules, made under Article 145, the Supreme Court has the power to review any judgment pronounced. A curative can only be entertained if it is established that there was a violation of the principles of natural justice and that the aggrieved party was not heard by the court before passing an order.

Genesis of the dispute

Adani Power Mundra Limited had moved the court after losing the case against GUVNL in Gujarat Electricity Regulatory Commission (CERC) and Appellate Tribunal for Electricity.

The genesis of the dispute dates back to 2007 when two parties signed a PPA under which Adani Power Mundra Limited promised supply of 1,000 MW power at Rs 2.35/unit from its power project situated in Korba in Chhattisgarh. Gujarat Mineral Development Corporation (GMDC) had agreed to supply 4 million tonne of coal a year to Adani by developing the Naini coal block.

Later, however, another PPA was signed after Adani said he would not supply power from Mundra port in Gujarat, instead of Korba, since GMDC was lagging in coal production. But, according to Adani, as the coal production never began, despite repeated reminders, it terminated the PPA in 2009 and fulfilled the condition of payment of liquidated damages, as was stipulated in the agreement.

GUVNL challenged this termination before the Gujarat Electricity Regulatory Commission (GERC) which in 2010 declared Adani’s termination decision as illegal.

This decision was held that Adani Power illegally terminated the PPA. This decision was upheld by the Appellate Tribunal for Electricity, leading to the appeal before the Supreme Court by Adani group.

On 2 July, 2019, the SC bench reversed the findings of GERC and the Appellate Tribunal and further allowed Adani to seek a compensatory rate for the electricity it had alternatively supplied to Gujarat from its Korba power project in Chhattisgarh.

Central Electricity Regulatory Commission (CERC) was told to fix the compensatory rate for Adani Power within three months from the date the latter approaches it. GUVNL was then asked to make payment to Adani within three months of CERC’s decision.

GUVNL assailed the judgment by way of a review petition filed on 27 July, 2019.

However, it was dismissed on 3 September, 2019 by the same bench, prompting the Nigam to file a curative, which was done on 21 November, 2019. The petition got registered only on 30 January, 2020, and finally got heard now, on 16 September. Meanwhile, Justice Mishra retired in September 2020.

Dave’s letter written in August 2019 to the CJI and other judges pointed out how Justice Mishra’s bench entertained mentioning of an early hearing application related to the dispute between Adani and GUVNL.

Upon its mentioning on 23, May, 2019, the bench agreed to hear the matter a day later. It then went on to reserve the case for judgment on 25 May, 2019.

According to Dave, the case was last heard on 1 February, 2017, before a bench led by the then judge, Justice J.M. CHelameswar. It was then adjourned with a direction to list the matter within a week.

“For some reasons, it was never listed thereafter, before any bench,” Dave’s letter noted.

It was Dave’s contention that the application for early hearing should not be entertained during the 2019 summer vacation because it did not fall within the ambit of circulars issued by the secretary-general of the top court.

The hearing, Dave’s letter claimed, was allowed overruling GUVNL’s objection. GUVNL had requested the bench not to list the matter during that period because the senior counsel representing it in the matter was available at that time.

In response to Dave’s letter, Adani Group had then denied the allegations, terming the senior lawyer’s views as “unfortunate, misconceived and malicious”.

(Edited by Paramita Ghosh)

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