The Supreme Court of India has partly allowed appeals filed by West Bengal State Electricity Distribution Co. Ltd. (WBSEDCL), while upholding compensation in favour of Adhunik Power & Natural Resource Ltd. (APNRL) arising from “Change in Law” events following the cancellation of coal blocks in 2014.
Upholding APTEL on the Change in Law issue, the bench of Chief Justice Of India Surya Kant, Justice B.V. Nagarathna and Justice Joymalya Bagchi ruled that the cancellation of coal blocks pursuant to its 2014 decision, coupled with the new statutory framework, clearly fell within the contractual definition of Change in Law. These events fundamentally altered APNRL’s right to procure coal from its captive source, forcing it to rely on costlier alternatives. The Court held that WBSEDCL could not invoke Article 2.5 to shield itself from liability once a Change in Law event was triggered.
The controversy stemmed from a Power Supply Agreement (PSA) executed in January 2011 between WBSEDCL and PTC India Ltd. for supply of 100 MW of power for 25 years, backed by a corresponding Power Purchase Agreement (PPA) between APNRL and PTC. Although the PPA/PSA did not expressly name a coal source, contemporaneous records showed that power was to be generated using coal from the Ganeshpur captive coal block in Jharkhand, allotted to APNRL in joint venture with Tata Steel.
Due to delays in operationalising the captive coal block, APNRL initially relied on tapering linkage coal and subsequently procured coal through e-auction and imports, incurring higher costs. WBSEDCL, however, refused to allow pass-through of these additional costs, relying on Article 2.5 of the PPA/PSA, which barred escalation in energy charges where coal was sourced from alternatives to the designated captive source.
The legal landscape shifted dramatically after the Supreme Court’s 2014 judgment cancelling coal block allocations and the subsequent enactment of the Coal Mines (Special Provisions) Act, 2015. APNRL contended that these developments amounted to “Change in Law” under Article 10 of the PPA/PSA, materially affecting its ability to source coal and justifying compensation.
While the Central Electricity Regulatory Commission (CERC) accepted APNRL’s claim only in part, the Appellate Tribunal for Electricity (APTEL) went further, holding that both the cancellation of the coal block and the new coal allocation regime constituted Change in Law events, entitling APNRL to compensation with carrying costs from 25 August 2014 onwards.
However, the Court drew a clear line regarding compensation claims prior to 25 August 2014. It set aside APTEL’s direction allowing pass-through of additional coal costs incurred due to shortfall in tapering linkage before the coal block cancellation. The bench noted that delays in operationalising the captive coal block could not be used to dilute the indemnity protection granted to WBSEDCL under Article 2.5 in the absence of a Change in Law.
The Supreme Court upheld compensation to APNRL for Change in Law events with effect from 25 August 2014, including carrying costs until actual payment, but denied compensation for higher coal costs incurred prior to that date. It directed CERC to modify its consequential order accordingly within four weeks.
Case Details
Case Title: West Bengal State Electricity Distribution Co. Ltd. Versus Adhunik Power & Natural Resource Ltd. & Ors.
Citation: JURISHOUR-142-SC-2026
Case No.: CIVIL APPEAL NOS.2584-2585 OF 2026
Date: 27/02/2026
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