CG High Court Becomes the First to Grant Protection under the New RCO Notification

Background

AKP Law successfully represented the Chhattisgarh Sponge Iron Manufacturers Association and MSP Steel and Power Limited before the Hon’ble High Court of Chhattisgarh in a challenge to the Ministry of Power, Government of India notification dated 27 September 2025 prescribing new minimum consumption norms for designated consumers under the Energy Conservation Act, 2001.

The impugned notification substantially altered the benefits that were earlier available to Waste-Heat Based Co-generation Plants under the State Commission’s Renewable Purchase Obligation (RPO) Regulations, 2021 issued under Section 181 of the Electricity Act, 2003. Under the earlier regime, such plants were permitted to account energy produced through waste-heat recovery towards meeting their RPO targets, a benefit that was assured to continue till at least 2030.

The new notification replaced this mechanism and excluded power generated through waste-heat based co-generation from being counted towards RPO compliance. This change imposed an unexpected and heavy burden on industries that had made long-term investments relying on the 2021 Regulations. It also introduced penal consequences without any detailed guidelines for implementation.

Key Issues before the High Court

The petitions raised important questions of law, including:

• Whether an executive notification issued under the Energy Conservation Act can override Regulations framed under the Electricity Act, 2003.
• Whether penal provisions can be enforced retrospectively in absence of implementation guidelines.
• Whether delegated legislation under an older statute can nullify rights created under a later statute containing a non-obstante clause.
• Legality of replacing the RPO regime with the new RCO framework without stakeholder safeguards.

Final Ruling

The Hon’ble Chhattisgarh High Court took note of the serious concerns raised by the petitioners and granted interim protection, directing that no coercive action shall be taken against co-generation plants pursuant to the impugned notification until effective guidelines are framed.

This is the first and only order of its kind in India on the RCO–RPO transition and provides immediate relief to several industries operating waste-heat recovery units.

The matter was argued by Abhinav Kardekar, Founding Partner, AKP Law, assisted by Ayush Singh Solanki, Principal Associate.  (WPC No. 5655 of 2025 and WPC No. 6184 of 2025).

Significance

The order safeguards investor confidence in the power sector and reinforces that policy changes cannot defeat accrued rights without due process. The judgment is expected to influence similar disputes across other states where industries face uncertainty under the new regime.