In Brief
Maharashtra State Electricity Distribution Company sought to reduce Late Payment Surcharge (LPS) rates payable to power generators, arguing that RBI notifications changing interest-rate systems from Prime Lending Rate (PLR) to Base Rate (2010) and Marginal Cost of Funds Based Lending Rate (2016) constituted a "Change in Law" under Power Purchase Agreements, justifying rate recalculation. The Supreme Court dismissed the appeal, holding no substantial question of law existed. RBI notifications apply only to banks, not the PPAs between power generators and the distribution company; SBAR (State Bank Advance Rate) is defined separately; the parties expressly provided for mutual agreement on alternative rates only if SBI PLR ceased (implicitly excluding the general Change in Law provision); and SBI continues notifying PLR. LPS is compensatory contractual penalty for delayed payment, not tariff, hence rate methodology changes do not trigger Change in Law provisions affecting tariff.
The lawyer headnote and full judgment text are available to registered users.