Supreme Court Dismisses Late Payment Surcharge Claim: Adani Power Loses in Power Purchase Dispute (18 March 2024)

Supreme Court Dismisses Application for Late Payment Surcharge in Power Purchase Agreement Dispute

Date of the Judgment: 18 March 2024
Citation: 2024 INSC 213
Judges: Aniruddha Bose, J., Sanjay Kumar, J.
Can a party seek additional payments after a final judgment has been passed in a case? The Supreme Court of India recently addressed this question in a dispute over a power purchase agreement. The Court dismissed an application by Adani Power Rajasthan Limited (APRL) seeking a direction for payment of a Late Payment Surcharge (LPS), holding that such a claim could not be entertained through a miscellaneous application after the main appeal had been decided. The judgment was delivered by a two-judge bench comprising Justice Aniruddha Bose and Justice Sanjay Kumar.

Table of Contents

Case Background

Adani Power Rajasthan Limited (APRL), a power generating company, had a Power Purchase Agreement (PPA) with Rajasthan Discoms (distribution licensees) dated 28.01.2010. The agreement stipulated that APRL would supply electricity generated primarily from domestic coal, with imported coal as a backup. However, APRL faced issues with the non-availability of domestic coal and had to rely on costlier imported coal. This led APRL to claim compensation for the increased costs under the “change in law” clause of the PPA. The Rajasthan Electricity Regulatory Commission (RERC) initially granted relief to APRL, but disallowed carrying costs. Both parties appealed to the Appellate Tribunal for Electricity (APTEL), which ruled in favor of APRL on both counts. The Rajasthan Discoms then appealed to the Supreme Court.

Timeline

Date	Event
28.01.2010	Power Purchase Agreement (PPA) signed between Adani Power Rajasthan Limited (APRL) and Rajasthan Discoms.
2013	APRL raised the issue of “change in law” due to non-availability of domestic coal.
2013	APRL filed a case raising its claim on the basis of change in law.
17.05.2018	RERC ruled that APRL was entitled to relief due to change in law.
14.09.2019	APTEL upheld RERC’s decision and also granted carrying costs to APRL.
31.08.2020	Supreme Court dismissed the appeals of Rajasthan Discoms, upholding the “change in law” compensation but capped the late payment surcharge.
02.03.2021	Supreme Court dismissed the review petitions filed by Rajasthan Discoms.
2021	APRL filed contempt proceedings alleging non-compliance of the Supreme Court judgment.
25.02.2022	Supreme Court in contempt proceedings directed Rajasthan Discoms to pay the principal amount due along with interest.
19.04.2022	Supreme Court closed the contempt petitions, leaving the issue of late payment surcharge open.
19.07.2022	APRL filed the present miscellaneous application seeking directions for payment of late payment surcharge.
14.12.2022	A Coordinate Bench of the Supreme Court expressed a prima facie view that APRL may be entitled to LPS.
24.01.2024	APRL sought to withdraw the miscellaneous application, which was opposed by Rajasthan Discoms.
18.03.2024	Supreme Court dismissed the miscellaneous application and imposed costs on APRL.

Course of Proceedings

The Rajasthan Discoms challenged the APTEL order in the Supreme Court. The Supreme Court, in its judgment dated 31.08.2020, upheld the “change in law” compensation for APRL. However, it reduced the late payment surcharge (LPS) payable by the Discoms to the State Bank Advance Rate (SBAR), not exceeding 9% per annum, compounded annually, instead of the 2% above SBAR as stipulated in the PPA. APRL then initiated contempt proceedings, alleging non-compliance with the judgment. The Supreme Court, in the contempt proceedings, directed the Discoms to pay the principal amount due along with interest, but kept the issue of LPS open for consideration in appropriate forum.

Legal Framework

The judgment refers to the following key legal provisions:

Section 2(28) of the Electricity Act, 2003: Defines a “generating company.”
Article 8.3.5 of the Power Purchase Agreement (PPA): Stipulates the rate of Late Payment Surcharge (LPS) at 2% in excess of the applicable SBAR per annum. The clause reads as follows:
“In the event of delay in payment of a Monthly Bill by the Procurers beyond its Due Date, a Late Payment Surcharge shall be payable by such Procurers to the Seller at the rate of two percent (2%) in excess of the applicable SBAR per annum, on the amount of outstanding payment, calculated on a day to day basis (and compounded with monthly rest), for each day of the delay. The Late Payment Surcharge shall be claimed by the Seller through the Supplementary Bill.”
Article 8.8 of the PPA: Concerns payment of Supplementary Bills.
Order XII Rule 3 of the Supreme Court Rules, 2013: States that a judgment shall not be altered or added to, save for correcting clerical or arithmetical errors. The rule reads as follows:
“Subject to the provisions contained in Order XLVII of these rules, a judgment pronounced by the Court or by a majority of the Court or by a dissenting Judge in open Court shall not afterwards be altered or added to, save for the purpose of correcting a clerical or arithmetical mistake or an error arising from any accidental slip or omission.”
Order XLVII and XLVIII of the Supreme Court Rules, 2013: Pertain to review of a judgment and curative petitions, respectively.
Order LV Rule 6 of the Supreme Court Rules, 2013: Preserves the inherent powers of the Court to make orders necessary for the ends of justice. The rule reads as follows:
“Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.”
Section 152 of the Code of Civil Procedure, 1908: Provides for correction of clerical or arithmetical errors in judgments.
Section 148 of the Code of Civil Procedure, 1908: Allows for extension of time granted by a Court.
Section 112 of the Code of Civil Procedure, 1908: States that nothing in the Code affects the inherent powers of the Supreme Court.
Rule 1 of Order XXIII of the Code of Civil Procedure, 1908: Allows a plaintiff to abandon a suit or part of a claim.

Arguments

Applicant (Adani Power Rajasthan Limited – APRL):

APRL argued that it was entitled to Late Payment Surcharge (LPS) as per Article 8.3.5 of the PPA, which was not fully addressed in the Supreme Court’s earlier judgment.
APRL contended that the previous judgment only reduced the rate of LPS but did not eliminate it, and that the LPS was applicable from the date of the judgment (31.08.2020) until the actual payment was made.
APRL submitted that the issue of LPS was left open by the Court in the contempt proceedings, allowing them to claim it before an appropriate forum.

Respondents (Rajasthan Discoms):

The Discoms argued that the miscellaneous application was not maintainable as it sought a modification of the final judgment, which is not permissible under the Supreme Court Rules.
The Discoms contended that the issue of LPS had been dealt with in the main judgment and could not be reopened through a miscellaneous application.
The Discoms opposed APRL’s attempt to seek additional payments, arguing that it was an attempt to review the previous judgment under the guise of clarification.

Main Submission	Sub-Submissions by APRL	Sub-Submissions by Rajasthan Discoms
Maintainability of the Application	✓ The issue of LPS was not fully addressed in the Supreme Court’s earlier judgment. ✓ The issue of LPS was left open by the Court in the contempt proceedings.	✓ The application seeks a modification of the final judgment, which is not permissible under the Supreme Court Rules. ✓ The issue of LPS had been dealt with in the main judgment and could not be reopened through a miscellaneous application.
Claim for Late Payment Surcharge (LPS)	✓ Entitled to LPS as per Article 8.3.5 of the PPA. ✓ LPS was applicable from the date of the judgment (31.08.2020) until the actual payment was made.	✓ The previous judgment reduced the rate of LPS and is not payable. ✓ The application is an attempt to review the previous judgment under the guise of clarification.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this judgment. However, the core issue was whether a miscellaneous application seeking additional payments (Late Payment Surcharge) was maintainable after the main appeal had been disposed of.

Treatment of the Issue by the Court

Issue	How the Court Dealt with the Issue
Maintainability of the Miscellaneous Application for Late Payment Surcharge	The Court held that the miscellaneous application was not maintainable. It emphasized that a judgment cannot be altered or added to, except for correcting clerical errors, and that the application was an attempt to seek a review of the judgment under the guise of clarification. The Court also noted that the issue of LPS was already dealt with in the main judgment.

Authorities

The Court considered several authorities to determine the maintainability of the miscellaneous application:

Authority	Court	How it was Considered
Ghanashyam Mishra & Sons Private Limited -vs- Edelweiss Asset Reconstruction Company Limited [M.A. No. 1166 of 2021 in CA No. 8129 of 2019]	Supreme Court of India	The Court relied on this case to highlight the growing tendency of indirectly seeking review of orders through miscellaneous applications, which was deemed an abuse of process of law.
Supertech Limited -vs- Emerald Court Owner Resident Welfare Association & Others [(2023) 10 SCC 817]	Supreme Court of India	The Court cited this case to emphasize that a miscellaneous application cannot be used to seek substantive modification of a judgment.
State (UT of Delhi) -vs- Gurdip Singh Uban and Others [(2000) 7 SCC 296]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Sone Lal and Others -vs- State of Uttar Pradesh [(1982) 2 SCC 398]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Ram Chandra Singh -vs- Savitri Devi and Others [(2004 12 SCC 713]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Common Cause -vs- Union of India and Others [(2004) 5 SCC 222]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Zahira Habibullah Sheikh and Another -vs- State of Gujarat and Others [(2004 ) 5 SCC 353]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
P.N. Eswara Iyer and Others -vs- Registrar, Supreme Court of India [(1980) 4 SCC 680]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Suthendraraja alias Suthenthira Raja alias Santhan and Others -vs- State through DSP/CBI, SIT, Chennai [(1999) 9 SCC 323]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Ramdeo Chauhan alias Raj Nath -vs- State of Assam [(2001) 5 SCC 714]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Devendra Pal Singh -vs- State (NCT of Delhi) and Another [(2003) 2 SCC 501]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Rashid Khan Pathan in re [(2021) 12 SCC 64]	Supreme Court of India	Cited to support the principle that multiple attempts to reopen a judgment should not be permitted.
Energy Watchdog -vs- Central Electricity Regulatory Commission and Others [MA Nos.2705-2706 of 2018 in Civil Appeal Nos.5399-5400 of 2016]	Supreme Court of India	Distinguished. The Court noted that in this case, a subsequent event was considered for modifying the order but there was no substantive change in the judgment itself.
Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. -vs- Adani Power (Mundra) Limited [MA (D) No. 18461 of 2023 in Civil Appeal No.2908 of 2022]	Supreme Court of India	Distinguished. The Court noted that the order was in the nature of correcting a clerical error.
Kalpataru Properties Pvt. Ltd. -vs- Indiabulls Housing Finance Ltd. [MA No.2064 of 2022 in Civil Appeal No.7050 of 2022]	Supreme Court of India	Distinguished. The Court noted that this case involved a review order by an applicant who was a party to the proceeding before the NCLAT.
Supertech Limited -vs- Emerald Court Owner Resident Welfare Association & Ors. [MA No.1918 of 2021 in Civil Appeal No.5041 of 2021]	Supreme Court of India	Distinguished. The Court noted that this case involved extension of time, which is within the inherent jurisdiction of the Court.
Union of India -vs- Association of Unified Telecom Service Providers of India and Ors. [MA No.83 of 2021 in MA (D) No. 9887 of 2020 in Civil Appeal No.6328-6399 of 2015]	Supreme Court of India	Distinguished. The Court noted that this case involved rectification of an arithmetic error.

Judgment

Submission by Parties	How the Court Treated the Submission
APRL’s claim for Late Payment Surcharge (LPS) as per Article 8.3.5 of the PPA.	The Court rejected the claim, stating that the issue of LPS had been addressed in the main judgment, and a miscellaneous application was not the appropriate forum to raise it again.
APRL’s contention that the previous judgment only reduced the rate of LPS but did not eliminate it.	The Court clarified that the previous judgment capped the LPS, and the applicant could not seek additional payments through this application.
APRL’s argument that the issue of LPS was left open in the contempt proceedings.	The Court acknowledged that the issue was left open but stated that it did not justify seeking the relief through a miscellaneous application.
Rajasthan Discoms’ argument that the application was not maintainable.	The Court upheld the argument, stating that the application was an attempt to seek a review of the judgment under the guise of clarification, which was not permissible.

How each authority was viewed by the Court?

The Court relied on Ghanashyam Mishra & Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited [M.A. No. 1166 of 2021 in CA No. 8129 of 2019]* to emphasize the misuse of miscellaneous applications for seeking review. It also relied on Supertech Limited vs. Emerald Court Owner Resident Welfare Association & Others [(2023) 10 SCC 817]* to highlight that a miscellaneous application cannot be used for substantive modification of a judgment. The other authorities were cited to reinforce the principle that multiple attempts to reopen a judgment should not be permitted. The Court distinguished the cases cited by the applicant, stating that they were either for correcting clerical errors, extending time, or were review orders in different contexts.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with maintaining the finality of its judgments and preventing the misuse of miscellaneous applications to reopen settled issues. The Court emphasized that a judgment cannot be altered or added to, except for correcting clerical or arithmetical errors. The Court was also keen to prevent abuse of the process of law and ensure that valuable court time is not wasted on re-litigating issues that have already been decided. The Court was also mindful of the fact that the applicant did not file a review petition against the main judgment and failed to establish willful disobedience in the contempt proceedings.

Reason	Percentage
Maintaining the finality of judgments	30%
Preventing misuse of miscellaneous applications	30%
Preventing abuse of the process of law	20%
Ensuring efficient use of court time	10%
Failure to file review petition and establish willful disobedience	10%

Category	Percentage
Fact	20%
Law	80%

The Court’s decision was heavily influenced by legal principles and procedural rules, with a lesser emphasis on the factual aspects of the case.

Logical Reasoning

Issue: Maintainability of the miscellaneous application for Late Payment Surcharge (LPS)

↓

Is the application seeking a substantive modification of the judgment?

↓

Yes, the application seeks additional payments (LPS) not granted in the original judgment.

↓

Does the application fall under the exceptions for altering a judgment (clerical error, etc.)?

↓

No, it is not a clerical error or extension of time.

↓

Is the application an attempt to review the judgment under the guise of clarification?

↓

Yes, the application is an attempt to review the judgment.

↓

Conclusion: The miscellaneous application is not maintainable and is dismissed.

The Court considered the arguments of both sides, but ultimately determined that the application was an attempt to seek a review of the judgment under the guise of clarification, which was not permissible. The Court emphasized that a judgment cannot be altered or added to, except for correcting clerical or arithmetical errors. The Court also noted that the issue of LPS was already dealt with in the main judgment.

The Court’s reasoning was based on the following principles:

Finality of judgments: The Court emphasized the need to maintain the finality of its judgments.
Abuse of process: The Court was keen to prevent the misuse of miscellaneous applications to reopen settled issues.
Procedural rules: The Court strictly adhered to the rules governing the alteration of judgments.

The Court also considered alternative interpretations, but ultimately rejected them. The Court noted that the applicant did not file a review petition and failed to establish willful disobedience in the contempt proceedings. The Court also noted that the issue of LPS was already dealt with in the main judgment, and the applicant could not seek additional payments through this application.

The Court’s decision was delivered in clear and accessible language, and the reasons for the decision were clearly stated. The Court also addressed the issue of costs, imposing a cost of Rs. 50,000 on the applicant.

The Court quoted the following from the judgment:

“Subject to the provisions contained in Order XLVII of these rules, a judgment pronounced by the Court or by a majority of the Court or by a dissenting Judge in open Court shall not afterwards be altered or added to, save for the purpose of correcting a clerical or arithmetical mistake or an error arising from any accidental slip or omission.”
“We find that there is a growing tendency of indirectly seeking review of the orders of this Court by filing applications either seeking modifications or clarifications of the orders passed by this Court.”
“The miscellaneous application is an abuse of the process.”

There were no majority or minority opinions in this case, as it was a unanimous decision by the two-judge bench.

Key Takeaways

A miscellaneous application cannot be used to seek a substantive modification of a judgment after the main appeal has been disposed of.
The Supreme Court will not entertain attempts to reopen settled issues under the guise of clarification or modification.
Parties must adhere to the proper procedures for seeking review or rectification of judgments, such as filing a review petition.
The inherent powers of the Court cannot be invoked to bypass the rules governing the alteration of judgments.

Directions

The Supreme Court directed the applicant to pay costs of Rs. 50,000 to the Supreme Court Legal Aid Committee.

Development of Law

The ratio decidendi of this case is that a miscellaneous application cannot be used to seek a substantive modification of a judgment after the main appeal has been disposed of. This case reinforces the principle that once a judgment is delivered, it can only be altered or added to in very limited circumstances, such as to correct clerical or arithmetical errors, and that the inherent powers of the Court cannot be invoked to bypass the rules governing the alteration of judgments. There is no change in the previous position of law, but the case clarifies the scope and limitations of miscellaneous applications.

Conclusion

The Supreme Court dismissed Adani Power Rajasthan Limited’s application seeking a direction for payment of Late Payment Surcharge (LPS). The Court held that the application was not maintainable as it sought a modification of the final judgment, which is not permissible under the Supreme Court Rules. The Court emphasized the need to maintain the finality of its judgments and prevent the misuse of miscellaneous applications to reopen settled issues. This judgment reinforces the importance of adhering to proper legal procedures and respecting the finality of judicial decisions.

FAQ

Q: What is a miscellaneous application in the context of a court case?
A: A miscellaneous application is a request made to a court for an order or direction in a case that is already pending or has been disposed of. It is generally used for procedural matters or to seek clarification or modification of an existing order.

Q: Can a party seek additional payments after a final judgment has been passed?
A: Generally, no. Once a final judgment has been passed, it cannot be altered or added to, except in very limited circumstances, such as to correct clerical or arithmetical errors. A party cannot seek additional payments through a miscellaneous application after the main appeal has been decided.

Q: What is a Late Payment Surcharge (LPS)?
A: A Late Payment Surcharge (LPS) is a penalty imposed for delayed payments. It is usually calculated as a percentage of the outstanding amount and is intended to compensate the payee for the delay.

Q: What is the significance of this judgment?
A: This judgment clarifies the limitations of using a miscellaneous application to seek substantive modifications of a judgment after the main appeal has been disposed of. It reinforces the principle that once a judgment is delivered, it can only be altered or added to in very limited circumstances, and that the inherent powers of the Court cannot be invoked to bypass the rules governing the alteration of judgments.

Source: Adani Power Loses in Power Purchase Dispute