In Brief
Maharashtra State Electricity Distribution Company Limited challenged orders by the Maharashtra Electricity Regulatory Commission and the Appellate Tribunal for Electricity requiring it to pay Late Payment Surcharge (LPS) to power generators at rates tied to the State Bank of India's Prime Lending Rate (PLR). The Company argued that Reserve Bank of India's 2010 and 2016 notifications introducing the Base Rate and Marginal Cost of Funds Based Lending Rate systems constituted a 'Change in Law' under the Power Purchase Agreements, entitling it to pay LPS at lower RBI-notified rates. The Supreme Court dismissed the appeal, holding that RBI notifications applicable to banks are not applicable to electricity distribution companies; that SBI continues to notify PLR rates, which remain available under the contracts; and that the parties consciously agreed to PLR-based LPS calculation, with any change requiring mutual agreement only if PLR ceased to exist—a circumstance not present here.
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