In the saga of evolving regulatory jurisprudence on restitution for change in law, Judgment dated 25.10.2024 by Appellate Tribunal for Electricity (“Hon’ble APTEL”) partly allowing Tata Power’s claims for increase in capital cost during construction period has added a nuance to bid disclaimers and contractual obligations. Tata’s claims included expenses incurred in obtaining additional land for the project. The Judgment characterised Change in Law mechanism as contractual risk allocation amongst parties to a contract. Hon’ble APTEL allowed the claim holding that water intake system is essential for operations of a thermal plant, while rejecting the Procurers’ objections that:
- Change in Law compensation must be limited to increase in cost of land identified in the PPA.
- Disclaimers in the RFP and/or the PPA mean that representation of the Procurers including on land requirement etc. cannot be relied upon by the bidders who assume complete risk on such aspects.
- Since land for the water intake and outfall systems was not part of the identified land as per the PPA, no compensation can be claimed for procuring land required for the same.
Hon’ble APTEL found that the judgement of Hon’ble Supreme Court in Haryana Power Purchase Centre vs. Sasan Power Limited & Ors. [2024 1 SCC 247] was not attracted due to difference in facts to hold that the bidder/generator is entitled to Change in Law compensation.
Hon’ble APTEL also allowed claims qua compensation for increase in rate of service tax on works contract; additional conditions imposed by Ministry of Environment, Forests and Climate Change, Govt. of India; and carrying cost.
Hon’ble APTEL rejected Procurers’ claims for expenses incurred for R&R since the same was found to have not been claimed/raised in the original proceedings before CERC or the Tribunal. It also rejected Tata Power’s claim for expenses incurred for excise duty re. procurement of civil material (steel and cement) for construction, and stamp duty for indenture of mortgage on the ground that the law existing prior to cut off date did not provide for exemption.
Mr. Amit Kapur argued the matter on behalf of Tata Power, assisted by Mr. Abhishek Munot, Mr. Malcolm Desai and Mr. Samikrith Rao.