Case of Energy Watchdog Vs Central Electricity regulatory Commission ( famously known as

adani case) , citation : Energy Watchdog Vs Central Electricity Regulatory Commission and
others (2017) 14 SCC

In the recent case of Energy Watchdog vs Central Electricity Regulatory Commission and others,
the Supreme Court held that if the fundamental basis of the contract remains unchanged, other
changes in the contract wouldn't constitute a force majeure event and would not frustrate the
contract.

South East Asia Marine Engineering and Constructions Ltd (SEAMEC Ltd) v Oil India
Limited (Civil Appeal No. 673 of 2012)

the Supreme Court concluded that the Contract was premised on a fixed rate which SEAMEC
had entered into after mitigating the risk of an increase in prices of materials. As such, the
interpretation of the tribunal was not a possible one since it would render the terms of the
Contract otiose. Price fluctuations, such as in the instant case, could not be brought within the
meaning of Clause 23, i.e., "a change in law", in the absence of specific language indicating the
same.

The ruling in the case of Sumitomo Heavy Industries Ltd v Oil and Natural Gas
Corporation Ltd ((2010) 11 SCC 296), where the Supreme Court had interpreted an indemnity
clause to hold that an additional tax burden would be covered by it, was inapplicable to the facts
of the instant case, since it was based on the appreciation of evidence on record in that case. In
the instant case, the evidence did not suggest that the parties had agreed to a broad interpretation
of Clause 23 of the Contract.

Coastal Andhra Power Ltd. v. Andhra Pradesh Central Power Distribution Co. Ltd. It was held
that , any change in law in India would qualify without being limited to a specific industry
sector.
Similarly, in the case of Adani Power Maharashtra Ltd. v. MSEDCL, the Ministry of
Environment and Forest cancelling a term of reference that allocated the Lohara Coal Block to
Adani Power, was interpreted as a change in law inviting restitution.

It is noted, however, that the foregoing is limited to commercial agreements and does not extend
to taxation laws where the change in law must be substantive rather than clarificatory (Greatship
India v. Commissioner of Service Tax) and cannot be a mere change in opinion (State of Uttar
Pradesh v. Aryaverth Chawl Udyoug).

It was held in Bhanjadeo Constructions Vs State of Odisha & Others (Orissa High Court)
in view of the revised guidelines issued by the State Government, the Court asked the Petitioner
to make a comprehensive representation before the appropriate authority and directed the
authorities that if such representation is filed then the authority shall consider and dispose the
same in the light of the revised guidelines.

Using the broad approach of ‘change in all Indian laws’ given by the Supreme Court in Energy
Watchdog, many of agreements have a prima facie strong case for ‘change in law’ where such a
term is included in the contract.

Both the notifications issued by the government and the invocation of the EDA alongwith the
National Disaster Management Act, 2005 (NDMA) count as a change in Indian law that have
been notified in the Gazette. These also include the actions undertaken by the state governments
as amendments to the EDA and NDMA such as an ordinance promulgated by the Orissa
government increasing the fines for violation of epidemic regulations.

Further, those policy changes which do not fall in the broad category of ‘law’ such as cancelling
of permissions and licenses can also be claimed as a ‘change in law’ using the precedent of
Adani Power Maharashtra Ltd. v. MSEDCL, provided the contract terms are broad enough to
allow such construal.
Lastly, the Supreme Court and High Courts have themselves been pro-active with addressing
concerns of citizens although the same may come at costs to private businesses. These may range
from free testing by private entities to payment of minimum wage to migrant workers by
contractors whose projects have otherwise been placed on an indefinite halt.