Supreme Court of India
NABHA POWER LIMITED & ANR.versusPUNJAB STATE POWER COROPORATION LIMITED & ANR.
- Citation
- 2024 INSC 833
- Decided
- 5 November 2024
- Disposal
- Dismissed
Holding
The 01‑Oct‑2009 press release is not law under Clause 1.1; the change in law occurred only on 11‑Dec‑2009/14‑Dec‑2009, so the appellant’s claim of a change in law on 01‑Oct‑2009 fails.
Summary
The appellants, Nabha Power Ltd. and its associate, bid for a mega‑power project under a Request for Proposal (RFP) that required bidders to consider the law as defined in Clause 1.1 of the Power Purchase Agreement (PPA). They argued that a press release dated 01‑Oct‑2009 announcing Cabinet approval of modifications to the Mega Power Policy constituted a change in law, allowing them to factor fiscal benefits into their bid. The respondents, Punjab State Power Corporation, contended that the press release was merely a proposal and that the actual legal change occurred only with the customs notification of 11‑Dec‑2009 and the revised policy memorandum of 14‑Dec‑2009. The Supreme Court examined the definition of “law” in the contract, the statutory requirement for notifications under the Customs Act, and principles of contract interpretation. It held that the press release did not meet the legal criteria of an “order” or “law” and that the change in law took effect only on the later notifications. Consequently, the appellant’s claim of a change in law on 01‑Oct‑2009 was rejected and the appeal dismissed.
Issues considered
- The press release of 01‑Oct‑2009, announcing Cabinet approval of modifications to the Mega Power Policy, whether it falls within the definition of “law” under Clause 1.1 of the Request for Proposal/Power Purchase Agreement.
- Whether a change in law occurred on 01‑Oct‑2009 or only on the subsequent customs notification of 11‑Dec‑2009 and the revised Mega Power Policy memorandum of 14‑Dec‑2009.
- The applicability of the “change in law” provisions of Article 13 of the PPA to the appellant’s claim for tariff adjustment.
Legislation cited
- Customs Acts. 21, s. 25
- Electricity Acts. 63
- General Clauses Acts. 21
Subjects
Press release of 01.10.2009Mega power policyLaw as defined in Clause 1.1 of Request For Proposal/Power Purchase AgreementRequest For ProposalPower Purchase AgreementMega Power Policy of 2006Change in lawNotification dated 01.03.2002Tariff‑based bidding processProcurement of power from power stationSuccessful bidderModification of Mega Power PolicyAmendment to Notification dated 11.12.2009Thermal plantInter‑State thermal plantRevised Mega Power PolicyEssentiality CertificateCustoms duty exemptions
Judgment
[2024] 11 S.C.R. 445 : 2024 INSC 833
Nabha Power Limited & Anr.
v.
Punjab State Power Coroporation Limited & Anr.
(Civil Appeal No. 8478 of 2014)
05 November 2024
[B.R. Gavai, Prashant Kumar Mishra
and K.V. Viswanathan,* JJ.]
Issue for Consideration
Issue arose as to whether the press release of 01.10.2009
announcing the decision of the Union Cabinet about approval of
certain modifications envisaged in the then existing mega power
policy, is covered within the meaning of the expression “law as
defined in Clause 1.1 of the Request For Proposal-RFP/Power
Purchase Agreement-PPA and if so did the extant legal regime as
on 01.10.2009 undergo a change from the said date.
Headnotes†
Electricity Act, 2003 – s. 63 – Customs Act – s. 25 – Mega Power
Policy of 2006 – Press release 01.10.2009 – Effect – Change
in law, when – Notification dated 01.03.2002 whereby goods
imported for setting up a Mega Power Project granted certain
exemptions from customs duty – Issuance of Request For
Proposal (RFP) by appellant no. 1 for selection of developers
through tariff-based bidding process for procurement of
power from the power station to be set up – Second appellant
emerged as successful bidder – Meanwhile issuance of Press
Release of 1.10.2009 under the heading “Modification of Mega
Power Policy” – Thereafter, on 11.12.2009, an amendment
to Notification dated 01.03.2002 issued – Entry 400 from
the notification of 2002 was substituted wherein there
was no reference to the thermal plant being an inter-State
thermal plant – Thereafter, on 14.12.2009, issuance of office
memorandum under the subject “revised Mega Power Policy”–
Power purchase agreement between the appellants and the
respondent – Series of correspondences ensued regarding
the issuance of Essentiality Certificate to allow customs duty
exemptions based on the amended entry in the notification
* Author
446 [2024] 11 S.C.R.
Digital Supreme Court Reports
dated 11.12.2009 – Disputes between the parties regarding
the passing on the benefits – Appellant’s case, that with the
press release on 01.10.2009, a new legal regime commences
and on that basis, the appellant in its bid of 09.10.2009
factored the altered position including the fiscal benefits due
to customs duty exemptions – Respondent’s case that the
press release of 01.10.2009 only sets out the proposal for
modification and the real modification happened on 11.12.2009
and 14.12.2009; and since the change of law having happened
on 11.12.2009/14.12.2009 the benefits that have accrued to the
appellant ought to be passed on:
Held: 01.10.2009 Press Release not law under Clause 1.1 of the
PPA – Press release did not alter/amend/repeal the existing law
as on 01.10.2009 – It was at best the announcement of a proposal
approved by the Cabinet which had to be given shape after fulfilment
of the conditions mentioned therein – Notifications constituting
change in law happened on 11.12.2009 and 14.12.2009 and thus
no basis in the contention that on 01.10.2009 the old legal regime
had given way – Press release of 01.10.2009 certainly does not fulfil
the meaning of the word “order” as understood in legal parlance –
Press Release with all its future eventualities and conditionalities is
only a proposal and it is only after the undertakings were agreed to
be given by the State Government that a final shape was given in
the form of a customs notification on 11.12.2009 and by the policy
document of 14.12.2009 – Press release announcing the cabinet
approval of certain modifications envisaged in the existing Mega
Power Policy is not law as defined in Clause 1.1 – Change in law
occurred only on 11.12.2009/14.12.2009, and the respondent no. 1
rightly held entitled to the benefits, which ultimately would go to
the consumers – Words of clause 13.1.1 read with the definition
of law in Clause 1.1 are plain and clear – For a change in law to
occur, the certain events ought to have happened seven days prior
to the bid deadline – Law, as it stood prior to the press release
of 01.10.2009 insofar as the financial implications for the matter is
concerned, was the notification issued on 01.03.2002 and entry 400
thereof – That notification, subject to the conditions mentioned
thereon in entry 400 granted exemption from customs duty for
import of goods required for setting up of any Mega Power project
if such Mega Power project was an inter-State power plant and if
it fulfilled the other conditions mentioned in the notification – For
an exemption under the Customs Act to operate thereon there has
[2024] 11 S.C.R. 447
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
to be a notification issued in the manner provided by the Customs
Act and duly published in the official gazette – There was no duly
constituted amendment notifications as on 01.10.2009 – Thus,
interference with the concurrent judgments of courts below not
called for. [Paras 43, 45, 50, 51, 55, 64, 71]
Electricity laws – Mega Power Policy – Press release
of 01.10.2009, under the heading “Modification of Mega Power
Policy”, if ordained a new legal regime:
Held: Press release is a summary of the Cabinet decision – Press
release makes it clear that it was a proposal that was envisaged and
which was to come into force in future – Certainty is the hallmark
of law, one of the essential attributes and an integral component
of the rule of law – What was certain on 01.10.2009 was only the
prevalent customs notification of 01.03.2002, duly notified and
gazetted as well as the Mega Power Policy document promulgated
on 07.08.2006 – Press release summarizing the Cabinet decision
and beset with several conditions created no vested rights on any
party to the power purchase agreement vis-a-vis the other party
on 01.10.2009 – In fact, the press release itself contemplated certain
contingencies – Right vests when all the facts have occurred which
must by law occur in order for the person in question to have the
right – It is only when the right vests will there be a co-relative
duty on the other as far as nature of the right involved – Clauses
in the Request For Proposal obligate the bidder to satisfy itself
about the extant legal regime and those clauses cannot operate as
a crutch to elevate the press release of 01.10.2009 to the status
of law u/Clause 1.1. [Paras 57-59, 63-65]
Interpretation – Interpretation of contract – Golden rule of
interpretation – Business efficacy test – Invocation of:
Held: Words of a contract should be construed in their grammatical
and ordinary sense, except to the extent that some modification is
necessary in order to avoid absurdity, inconsistency or repugnancy –
Similarly, any invocation of the business efficacy test would arise
only if the terms of the contract are not explicit and clear – Business
efficacy test cannot contradict any express term of the contract
and is invoked only if by a plain and literal interpretation of the
term in the agreement or the contract, it is not possible to achieve
the result or the consequence intended by the parties acting as
prudent businessmen. [Para 41]
448 [2024] 11 S.C.R.
Digital Supreme Court Reports
Case Law Cited
Maharashtra State Electricity Distribution Company Limited v. Adani
Power Maharashtra Limited and Others [2023] 8 SCR 85 : (2023) 7
SCC 401; Babu Verghese and Others v. Bar Council of Kerala
and Others [1999] 1 SCR 1121 : (1999) 3 SCC 422 – relied on.
Uttar Haryana Bijli Vitran Nigam Limited and Another v. Adani
Power (Mundra) Limited and Another [2023] 4 SCR 1095 :
(2023) 7 SCC 623; Burn Standard Company Limited v. McDermott
International INC and Anr. [1991] 2 SCR 67 : (1991) 2 SCC 669 –
held inapplicable.
Nabha Power Limited (NPL) v. Punjab State Power Corporation
Limited (PSPCL) and Another [2017] 14 SCR 301 : (2018) 11
SCC 508; Adani Power (Mundra) Limited v. Gujarat Electricity
Regulatory Commission and Others [2019] 8 SCR 1017 : (2019) 19
SCC 9; Nazir Ahmad v. King Emperor, AIR 1936 PC 253; B.K.
Srinivasan and Others v. State of Karnataka and Others [1987] 1
SCR 1054 : (1987) 1 SCC 658; GMR Warora Energy Limited v.
Central Electricity Regulatory Commission [CERC] and Others
[2023] 8 SCR 183 : (2023) 10 SCC 401; Energy Watchdog v. Central
Electricity Regulatory Commission and Others [2017] 3 SCR 153 :
(2017) 14 SCC 80; Lloyd Electric and Engineering Limited v. State
of Himachal Pradesh and Others [2015] 10 SCR 362 : (2016) 1
SCC 560; Bachhittar Singh v. The State of Punjab [1962] Supp. 3
SCR 713 – referred to.
Taylor vs. Taylor (1875) 1 C h D 426 – referred to.
Books and Periodicals Cited
Kim Lewison, The interpretation of Contracts, 3rd Edition; Black’s
Law Dictionary; Salmond on Jurisprudence, Twelfth Edition P.J.
Fitzgeral page 245; Lord Bingham of Cornhill in his locus classicus
‘The Rule of Law’.
List of Acts
Electricity Act, 2003; Customs Act, 1962; General Clauses Act, 1897.
List of Keywords
Press release of 01.10.2009; Mega power policy; Law as
defined in Clause 1.1 of Request For Proposal/Power Purchase
Agreement; Request For Proposal; Power Purchase Agreement;
Mega Power Policy of 2006; Change in law; Notification
dated 01.03.2002; Tariff- based bidding process; Procurement
[2024] 11 S.C.R. 449
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
of power from power station; Successful bidder; Modification of
Mega Power Policy; Amendment to Notification dated 01.03.2002;
Thermal plant; Inter-State thermal plant; Revised Mega Power
Policy; Essentiality Certificate; Customs duty exemptions;
Notification dated 11.12.2009; Fiscal benefits; Word “order”; Enact,
adopt, promulgate, amend, modify or repeal any existing law or
bring into effect any law; Legal regime; Continuing legal regime;
Change in cost with the reduction of customs duty; Press release;
Cabinet decision; Certainty, hallmark of law; Rule of law; Vested
rights; Business efficacy test; Interpretation of contract; Golden
rule of interpretation.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8478 of 2014
From the Judgment and Order dated 30.06.2014 of the Appellate
Tribunal for Electricity, New Delhi in Appeal No. 29 of 2013
Appearances for Parties
C.S. Vaidyanathan, ANS Nadkarni, Dama Sheshadari Naidu, Arvind
Datar, Sr. Advs., Mahesh Agarwal, Shri Venkatesh, Rohan Talwar,
Shashwat Singh, Avishkar Singhvi, Ms. Priya Dhankar, Keshav
Dhingra, Salvador Santosh Rebello, Ms. Deepti Arya, Ms. Arzu
Paul, Naved Ahmed, Nikunj Bhatnagar, Adarsh Singh, Rishikesh
Haridas, Ms. Himanshi Nagpal, Ms. Manisha Gupta, Siddharth
Nigotia, Yanthanshan, Siddharth Nigotia, E.C. Agrawala, Bharat Vinod
Sharma, Vishrov Mukerjee, Pratyush Singh, Yashaswi Kant, Girik
Bhalla, Raghav Malhotra, Ms. Juhisenguttuvan (for M/s. Trilegal),
Advs. for the Appellants.
Balbir Singh, A.S.G., M.G. Ramachandran, Sr. Adv., K. V. Mohan,
Mrs. Poorva Saigal, Shubham Arya, Mrs. Pallavi Saigal, Devyanshu
Sharma, Ms. Shirin Gupta, Sakesh Kumar, Ms. Gitanjali N Sharma,
Ms. Alpha M. Prasad, Ms. Anuradha Mutatkar, Ms. Sunieta Ojha,
Ms. Gargi Kumar, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
K.V. Viswanathan, J.
1. The present appeal arises from the judgment dated 30.06.2014 of
the Appellate Tribunal for Electricity (for short the “APTEL”) in Appeal
450 [2024] 11 S.C.R.
Digital Supreme Court Reports
No. 29 of 2013. By the said judgement, the APTEL dismissed the
appeal of the appellant and confirmed the order dated 12.11.2012
of the Punjab State Electricity Regulatory Commission (for short
the “State Commission”), insofar as issue no. 1 discussed therein
was concerned. That issue concerned the aspect of Mega Power
Policy and the effect of the Press Release of 01.10.2009. We are
only concerned with the said issue in this Appeal.
FACTS OF THE CASE: -
A) Customs Notification No. 21/2002 dated 01.03.2002.
2. To appreciate the issues involved, certain background facts need
to be set out. Goods imported for setting up a Mega Power Project
had, under a notification issued under Section 25 of the Customs Act
dated 01.03.2002, been granted certain exemptions from customs
duty. It will be useful to set out the relevant part of the 01.03.2002
notification.
“Exemption and effective rates of basic and additional
duty for specified goods of Chapters 1 to 99. - In
exercise of the powers conferred by sub-section (1) of
section 25 of the Customs Act, 1962 (52 of 1962) and
in supersession of the notification of the Government of
India in the Ministry of Finance (Department of Revenue),
No. 17 /2001- Customs, dated the 1st March, 2001
[G.S.R. 116(E), dated the 1st March, 2001], the Central
Government, being satisfied that it is necessary in the
public interest so to do, hereby exempts the goods of the
description specified in column (3) of the Table below or
column (3) of the said Table read with the relevant List
appended hereto, as the case may be, and falling within the
Chapter, heading or sub-heading of the First Schedule to
the Customs Tariff Act, 1975 (51 of 1975) as are specified
in the corresponding entry in column (2) of the said Table,
when imported into India, -
(a) from so much of the duty of customs leviable thereon
under the said First Schedule as is in excess of the amount
calculated at the rate specified in the corresponding entry
in column (4) of the said Table;
[2024] 11 S.C.R. 451
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
(b) from so much of the additional duty leviable thereon
under sub-section (1) of section 3 of the said Customs
Tariff Act, as is in excess of the rate specified in the
corresponding entry in column (5) of the said Table,
Subject to any of the conditions, specified in the Annexure
to this notification, the condition No. of which is mentioned
in the corresponding entry in column (6) of the said Table :
S. Chapter or Description of Standard Additional Condition
No. Heading goods rate dduty rate no.
No. or
sub-
heading
No.
400 98.01 Goods required Nil Nil 86
for setting up of
any Mega Power
Project specified
in List 42, if such
Mega Power
Project is –
(a) an inter-
State thermal
power plant of a
capacity of 1000
MW or more; or
(b) an inter-State
hydel power plant
of a capacity of
500 MW or more,
as certified by an
officer not below
the rank of a Joint
Secretary to the
Government
of India in the
Ministry of Power
86. (a) If an officer not below the rank of a Joint Secretary
to the Government of India in the Ministry of Power certifies
that-
(i) the power purchasing State has constituted the
Regulatory Commission with full powers to fix tariffs;
452 [2024] 11 S.C.R.
Digital Supreme Court Reports
(ii) the power purchasing State undertakes, in principle,
to privatise distribution in all cities, in that State, each
of which has a population of more than one million,
within a period to be fixed by the Ministry of Power; and
(iii) the power purchasing State has agreed to provide
recourse to that State’s share of Central Plan
allocations and other devolutions towards discharge
of any outstanding payment in respect of purchase
of power;
(b) In the case of imports by a Central Public Sector
Undertaking, the quantity, total value, description and
specifications of the imported goods are certified by the
Chairman and Managing Director of the said Central Public
Sector Undertaking; and
(c) In the case of imports by a Private Sector Project, the
quantity, total value, description and specifications of the
imported goods are certified by the Chief Executive Officer
of such project.”
B) Mega Power Policy of 2006
3. On 10.06.2009, when competitive bidding was initiated by the
respondent, what was in vogue was the Mega Power Policy, 2006.
If a thermal plant was covered as a Mega Power Project under the
Mega Power Policy of 2006, it was entitled to the benefit of certain
exemptions under the customs notification dated 01.03.2002 extracted
hereinabove.
4. The Mega Power Policy, 2006 prescribed the following conditions to
be fulfilled by the developer for grant of mega power status:-
“MEGA POWER PROJECTS: REVISED POLICY
GUIDELINES
The following conditions are required to be fulfilled by the
developer for grant of mega project status:-
(a) an inter-state thermal power plant of a capacity of
700 MW or more, located in the States of Jammu
and Kashmir, Sikkim, Arunachal Pradesh, Assam,
Meghalaya, Manipur, Mizoram, Nagaland and
Tripura; or
[2024] 11 S.C.R. 453
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
(b) an inter-state thermal power plant of a capacity of
1000 MW or more, located in States other than those
specified in clause (a) above; or
(c) an inter-state hydel power plant of a capacity of
350 MW or more, located in the States of Jammu
and Kashmir, Sikkim, Arunachal Pradesh, Assam,
Meghalaya, Manipur, Mizoram, Nagaland and
Tripura; or
(d) an inter-state hydel power plant of a capacity of
500 MW or more, located in States other than those
specified in clause (a) above.
Fiscal concessions/benefits available to the Mega Power
Projects
Zero Customs Duty: In terms of the notification of the
Government of India in the Ministry of Finance (Department
of Revenue) No.21/2002-Customs dated 1st March, 2002
read together with No.49/2006-Customs dated 26th May,
2006, the import of capital equipment would be free of
customs duty for these projects.
Deemed Export Benefits: Under Chapter 8(f) of the
Foreign Trade Policy, Deemed Export Benefits is available
to domestic bidders for projects both under public and
private sector on following the stipulations prescribed
therein.
Pre-conditions for availing the benefits: Goods required
for setting up of any mega power project, qualify for the
above fiscal benefits after it is certified by an officer not
below the rank of a Joint Secretary to the Govt. of India
in the Ministry of Power that-
(i) the power purchasing States have constituted the
Regulatory Commissions with full powers to fix tariffs;
(ii) the power purchasing States undertakes, in principle,
to privatize distribution in all cities, in that State, each
of which has a population of more than one million,
within a period to be fixed by the Ministry of Power.
454 [2024] 11 S.C.R.
Digital Supreme Court Reports
Price preference to domestic PSUs bidders: In order to
ensure that domestic bidders are not adversely affected,
price preference of 15% would be given for the projects
under public sector. The domestic bidders would be allowed
to quote in US Dollars or any other foreign currency of
their choice.
Income Tax benefits: In addition, the income-tax holiday
regime as per Section 80-IA of the Income Tax Act 1961
can also be availed.”
What is important is the phrase “Inter-State Thermal Power Plant”
employed in the policy.
C) Request For Proposal
5. It was when this legal regime was in force that on 10.06.2009, the
erstwhile Punjab State Electricity Board [now after unbundling-the
distribution being known as Punjab State Power Corporation Limited
(PSPCL)] through its then wholly owned subsidiary and a special
purpose vehicle, appellant no. 1-Nabha Power Limited issued a
Request For Proposal (RFP). The RFP was for selection of developers
through tariff-based bidding process under Section 63 of the Electricity
Act 2003, for procurement of power on long-term basis from the
power station to be set up at village Nalash, near Rajpura, District
Patiala, Punjab. This was as per the Guidelines for Determination of
Tariff by Bidding Process for Procurement of Power by Distribution
Licencees issued by the Ministry of Power, Government of India. In
terms of RFP, the bidders were required to quote the Capacity Charge
(i.e. capital cost component) and Station Heat Rate (i.e. amount of
heat required by the plant to generate one unit of electrical energy/
efficiency of the plant) to convert the heat energy for the project and
based on these components, a levelized tariff for each bidder was
to be worked out. The bidder with the lowest levelized tariff was to
be selected for the development of the project.
6. The term- “Successful Bidder or Selected Bidder” was to mean that
the bidder selected pursuant to the RFP to set up the project and
supply electrical output therefrom to the Procurer through the Seller
as per the terms of the power purchase agreement (PPA) and other
RFP project documents. Under Clause 2.7.2.1 and 2.7.2.2, the bidder
was to make an independent enquiry and satisfy itself with respect
[2024] 11 S.C.R. 455
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
to all the required information, inputs, conditions and circumstances
and factors that may have any effect on the bid. Under the said
clauses, it was deemed that while submitting the bid, the bidder was
to have inspected and examined the site conditions, the laws and
regulations in force. The bidder was to acknowledge that on being
selected as the successful bidder and on acquisition of the special
purpose vehicle (the seller) the seller shall not be relieved from any
of its obligations under the RFP project documents nor shall the seller
be entitled for any extension of time or financial compensation by
reason of the unsuitability of the site. Clauses 2.7.2.1 and 2.7.2.2
read as under.
“2.7.2.1 The Bidder shall make independent enquiry and
satisfy itself with respect to all the required information,
inputs, conditions and circumstances and factors that
may have any effect on his Bid. While submitting the
Bid the Bidder shall be deemed to have inspected and
examined the site conditions (including but not limited to its
surroundings, its geological condition, the adequacy of the
road and rail links to the Site and the availability of adequate
supplies of water), examined the laws and regulations
in force in India, the transportation facilities available in
India, the grid conditions, the conditions of roads, bridges,
ports, etc. for unloading and/or transporting heavy pieces
of material and has based fts design, equipment size
and fixed its price taking into account all such relevant
conditions and also the risks, contingencies and other
circumstances which may influence or affect the supply
of power. Accordingly, the Bidder acknowledges that, on
being selected as Successful Bidder and on acquisition
of the Seller, the Seller shall not be relieved from any of
its obligations under the RFP Project Documents nor shall
the Seller be entitled to any extension of time or financial
compensation by reason of the unsuitability of the Site
for whatever reason.
2.7.2.2 In their own interest, the Bidders are requested
to familiarize themselves with the Electricity Act, 2003,
the Income Tax Act 1961, the Companies Act, 1956, the
Customs Act, the Foreign Exchange Management Act,
IEGC, the regulations framed by regulatory commissions
456 [2024] 11 S.C.R.
Digital Supreme Court Reports
and all other related acts, laws, rules and regulations
prevalent in India. The Procurer/Authorised Representative
shall not entertain any request for clarifications from the
Bidders regarding the same. Non-awareness of these laws
or such information shall not be a reason for the Bidder
to request for extension of the Bid Deadline. The Bidder
undertakes and agrees that before submission of its Bid all
such factors, as generally brought out above, have been
fully investigated and considered while submitting the Bid.”
Press Release of 1.10.2009
7. When the matter stood thus, a Press Release was issued by the
Press Information Bureau, Government of India under the heading
“Modification of Mega Power Policy”. It will be safer to extract the
entire Press Release as this is the fulcrum on which the entire case
of the appellant revolves. The Press Release with certain portions
emphasized by us, is extracted hereinbelow:
“PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
Press Release
Thursday, October 01, 2009
Modification of Mega Power Policy
The Union Cabinet today approved modifications in the
existing mega power policy. This would encourage setting
up of mega power plants to take advantage of economies
of scale and improve their viability. It will simplify the
procedure for grant of mega certificate and encourage
capacity addition. It will also encourage technology transfer
and indigenous manufacturing in the field of super critical
power equipments.
The mega Power Policy was introduced in November 1995
for providing impetus to development of large size power
projects in the country and derive benefit from economies
of scale. These guidelines were modified in 1998 and
2002 and was last amended in April 2006 to encourage
power development in Jammu & Kashmir and the North
Eastern region.
[2024] 11 S.C.R. 457
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
In order to rationalize the Mega Power Policy and bring
it in consonance with the National Electricity Policy 2005
and Tariff Policy 2006, the following modifications of the
existing Mega Power Policy have been envisaged:
(i) The existing condition of privatization of distribution
by power purchasing states would be replaced by the
condition that power purchasing states shall undertake to
carry out distribution reforms as laid down by the Ministry
of Power.
(ii) The conditions requiring inter-state sale of power for
getting mega power status would be removed.
(iii) The present dispensation of 15% price preference
available to the domestic bidders in case of cost plus
projects of PSUs would continue. However, the price
preference will not apply to tariff based competitively bid
projects of PSUs. A Committee would be set up under
the Planning Commission, with DHI, MoP and DoR as
members which would suggest options and modalities to
take care of the disadvantages suffered by the domestic
industry related to power sector keeping all factors in view.
(iv) The benefits of Mega Power Policy will also be extended
to supercritical projects to be awarded through ICB with the
mandatory condition of setting up indigenous manufacturing
facility provided they meet the eligibility criteria.
(v) The requirement of undertaking international competitive
bidding (ICB) by the developers for procurement of
equipment for mega power projects would not be
mandatory, if the requisite quantum of power has been tied
up through tariff based competitive bidding or the project
has been awarded through tariff based competitive bidding.
(vi) A basic custom duty of 2.5% only would be applicable
on brown field expansion of existing mega projects. All
other benefits under mega power policy available to
Greenfield projects would also be available to expansion
unit(s) (Brownfield projects) even if the total capacity of
expansion unit(s) is less than the threshold qualifying
capacity, provided the size of the unit(s) is not less than
458 [2024] 11 S.C.R.
Digital Supreme Court Reports
that provided in the earlier phase of the project granted
mega power project certificate. All other conditions for
grant to the mega power status shall remain the same.
(vii) Mega Power Projects would be required to tie up power
supply to the distribution companies/utilities through long
term PPA(s) and may also sell power outside long term
PPA(s) in accordance with the National Electricity Policy
2005 and Tariff Policy 2006, as amended from time to
time, of Government of India.”
(Emphasis supplied)
The Cabinet decision, as such, is not on record and admittedly what
is available is the Press Release issued by the Press Information
Bureau.
8. The final bidding date was on 09.10.2009 and as per clause 13.1
from the Format-1 Annexure-3 annexed to the RFP, 02.10.2009 was
the cutoff date for consideration of change in law. Equally, under
clause 2.5.3, 25.09.2009 was the last date for seeking clarification.
Law is defined in Clause 1.1.
D) BID RESULTS
9. The second appellant L&T Power Development Limited emerged as
the successful bidder and a Letter of Intent was issued on 19.11.2009
and the L&T Power Development Limited acquired the first appellant.
The appellant contends that on 02.10.2009, the second appellant
had addressed a letter to Nabha (then owned by the respondent)
requesting an extension of the bid deadline to enable them to go
through the changes pursuant to the Press Release of 01.10.2009
and ascertain the impact of the bid. It was followed up with a
letter of 06.10.2009 setting out that the appellant had taken into
consideration the benefits associated with the mega power status in
evaluation of their project. According to the appellant, it was forced
to withdraw the letter before submitting the bid. According to the
respondent that letters were extraneous to the bid and were not
entertained.
E) Developments in December, 2009
10. Certain rapid developments happened in December, 2009.
On 3rd December, 2009, the Government of India in the Ministry of
[2024] 11 S.C.R. 459
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
Power addressed a letter to all the Principal Secretary/Secretary
Energy of all the States/Union Territories under the subject “Distribution
reforms under the modified Mega Power Policy”. It was set out in
the letter that in order to further liberalize the Mega Power Policy
as issued on 2nd August, 2006 and also remove such provisions
which had lost relevance, Government has made modifications in
the Mega Power Policy and the revised policy guideline was being
issued separately. It set out that one of the decisions taken in this
regard was that the existing condition of privatization of distribution
by power purchasing States would be replaced by the condition that
power purchasing States were to undertake to carry out distribution
reforms as laid down by the Ministry of Power. The letter proceeded
to State that in this regard the matter was examined in the Ministry
of Power and a follow up meeting was held on 28th October, 2009
with the representatives of State Power Departments. It was set out
that in the said meeting various measures for distribution reforms
that could be taken up by the State Governments were discussed
in detail and the letter annexed the summary of the minutes of the
meeting of 28.10.2009. An undertaking was to be taken from the
States in a prescribed format and the operative portion of the letter,
which is crucial, is extracted hereinbelow:
“Accordingly, in pursuance of the Cabinet decision
dated 1st October 2009 on the modification to the Mega
Power Policy, following four distribution reform measures
hereby laid down by the Ministry of Power required to
be undertaken by the states purchasing power from the
mega power projects:
a) Timely release of subsidy as per Section 65 of
Electricity Act 2003.
b) Ensure that Discoms approach SERC for approval
of annual revenue requirement/tariff determination in
time according to the SERC regulations.
c) Setting up special courts as provided in the Electricity
Act 2003 to tackle related cases.
d) Ring fencing of SLDCs.
An undertaking in the enclosed format (Annexure- II) may
be given to the Ministry of Power. The said undertaking
460 [2024] 11 S.C.R.
Digital Supreme Court Reports
needs to be given at least, once and would be considered
in all the cases where the concerned State Distribution
Utility ties up procurement of power from a power project
considered for grant of mega power state.
Receipt of this communication may please be acknowledged
and the undertaking in the enclosed format may be sent
to this Ministry at the earliest to facilitate processing of
the Mega Power Policy case(s).”
F) Amendment to the Customs Notification dated 11.12.2009
11. Thereafter, on 11.12.2009, an amendment to the customs notification
no. 21 of 2002 dated 01.03.2002 was issued. The notification is
extracted hereinbelow.
“In exercise of the powers conferred by sub-section (1)
of section 25 of the Customs Act 1962 (52 of 1962), the
Central Government, on being satisfied that it is necessary
in the public interest so to do, hereby makes the following
further amendments in the notification of the Government
of India in the Ministry of Finance (Department of Revenue)
No. 21/2002-Customs, dated the 1st March, 2002, which
was published in the Gazette of India, Extraordinary vide
number G.S.R. 118(E), dated the 1st March, 2002, namely:-
In the said notification, -
A. in the Table,
(i) against S.No. 400, for the entry in column (3), the
following entry shall be substituted namely:-
“Goods required for setting up of any Mega Power Project,
so certified by an officer not below the rank of a Joint
Secretary to the Government of India in the Ministry of
Power, that is to say -
(a) a thermal power plant of a capacity of 700 MW or
more, located in the States of Jammu and Kashmir,
Sikkim, Arunachal Pradesh, Assam, Meghalaya,
Manipur, Mizoram, Nagaland and Tripura: or
(b) a thermal power plant of a capacity of 1000 MWor
more, located in States other than those specified in
clause (a) above; or
[2024] 11 S.C.R. 461
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
(c) a hydel power plant of a capacity of 350MW or more,
located in the States of Jammu and Kashmir, Sikkim,
Arunachal Pradesh, Assam, Meghalaya, Manipur,
Mizoram, Nagaland and Tripura; or
(d) a hydel power plant of a capacity of 500MW or more,
located in States other than those specified in clause
(c) above”:
(ii) after S.No. 400 and the entries relating thereto, the
following S.No. and entries shall be inserted, namely :-
1 2 3 4 5 6
400A. 9801 Goods required for the 2.5% Nil 86
expansion of any existing
Mega Power Project so
certified by an officer
not below the rank of a
Joint Secretary to the
Government of India in
the Ministry of Power.
Explanation: for the
purposes of this exemption,
Mega Power project means
a project as defined in S.
No. 400 above.
B. in the Annexure, in Condition No. 86, for sub-clause (ii)
of clause (a), the following shall be substituted namely:
(ii) the power purchasing states shall undertake to carry
out distribution reforms as laid down by Ministry of Power.”
(Emphasis supplied)
12. It will be noticed that entry 400 from the notification of 2002 was
substituted and in the substituted clause there is no reference to the
thermal plant being an inter-State thermal plant.
Mega Power Policy of 14.12.2009
13. Close on the heels, on 14.12.2009, the Government of India and the
Ministry of Power issued an office memorandum under the subject
“revised Mega Power Policy”, which reads as under:-
462 [2024] 11 S.C.R.
Digital Supreme Court Reports
“No. A-118/2003-IPC
Government of India
Ministry of Power
Shram Shakti Bhavan, New Delhi
Dated 14th December, 2009
OFFICE MEMORANDUM
Subject : Revised mega power project policy.
Policy guidelines for setting up of mega power projects
were last revised and issued vide this Ministry’s letter
of even number dated 2nd August, 2006. The Government
of India has modified the Mega Power Policy to smoothen
the Procedures further. The modified Mega Power Policy
is as follows:
(i) The power projects with the following threshold capacity
shall be eligible for the benefit of mega power policy:
(a) A thermal power plant of capacity 1000 MW or more; or
(b) A thermal power plant of capacity of 700MW or more,
located in the States of J & K, Sikkim, Arunachal
Pradesh, Assam, Meghalaya, Manipur, Mizoram,
Nagaland and Tripura; or
(c) A hydel power plant of capacity of 500 MW or more; or
(d) A hydel power plant of a capacity of 350 MW or
more, located in the States of J&K, Sikkim, Arunachal
Pradesh, Assam, Meghalaya, Manipur, Mizoram,
Nagaland and Tripura;
(e) Government has decided to extend mega policy
benefits to brownfield (expansion) projects also.
In case of the brownfield (expansion) phase of the
existing mega project, size of the expansion units
would not be not less than that provided in the earlier
phase of the project granted mega power project
certificate.
(ii) Mandatory condition of Inter-State sale of power for
getting mega power status has been removed.
[2024] 11 S.C.R. 463
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
(iii) Goods required for setting up a mega power project,
would qualify for the fiscal benefits after it is certified
by an officer not below the rank of a Joint Secretary to
the Govt. of India in the Ministry of Power that (i) the
power purchasing States have constituted the Regulatory
Commissions with full powers to fix tariffs and (ii) power
purchasing states shall undertake to carry out distribution
reforms as laid down by Ministry of Power.
(iv) Mega Power Projects would be required to tie up power
supply to the distribution companies/utilities through long
term PPA(s) in accordance with the National Electricity
Policy 2005 and Tariff Policy 2006, as amended from time
to time, of Government of India.
(v) There shall be no further requirement of ICB for
procurement of equipment for mega projects if the
requisite quantum of power has been tied up or the
project has been awarded through tariff based competitive
bidding as the requirements of ICB for the purpose of
availing deemed export benefits under Chapter 8 of the
Foreign Trade Policy would be presumed to have been
satisfied. In all other cases, ICB for equipments shall be
mandatory.
(vi) The present dispensation of 15% price preference
available to the domestic bidders in case of cost-plus
projects of PSUs would continue. However, the price
preference will not apply to tariff based competitively bid
projects of PSUs.
3. This issues with the approval of Secretary (Power).
Sd/-
(Puneet K Goel)
To
Principal Sectary/Secretary/ Energy of all States/UTs.
Copy to:
(i) Chairman, CEA,
(ii) CMDs of all PSUs of MOP
464 [2024] 11 S.C.R.
Digital Supreme Court Reports
Copy for information to :-
PS to MOP/PS to MOS(P) / PS to Secretary(P) Sr. PPS to
AS(AK)/ PPS to AS(GBP)/ All Joint Secretaries/ Directors
in the Ministry of Power, Dir (PIB), MOP.
Copy also to Cabinet Secretariat, New Delhi
Copy for putting on website of Ministry of Power to NIC,
MOP.
Sd/-
(Puneet K Goel)
Director (IPC)”
(Emphasis Supplied)
14. It will be noticed that the mandatory conditions of inter-State sale of
power for getting mega power status was removed; it was decided
that goods required for setting up a Mega Power Project would
qualify for the fiscal benefits after it is certified by an officer not
below the rank of a Joint Secretary to the Government of India in
the Ministry of Power that (i) the Power purchasing States have
constituted the Regulatory Commissions with full powers to fix
tariffs and (ii) Power purchasing States shall undertake to carry
out distribution reforms as laid down by Ministry of Power apart
from certain other conditions.
Events Leading to the Dispute
15. The appellant no. 1 Nabha Power Limited, which was now owned
by appellant no. 2, entered into a Power Purchase Agreement
on 18.01.2010 with the respondent PSPCL.
16. According to the appellant, thereafter a series of correspondence
ensued between appellant no. 1 and the respondent with regard to
the issuance of Essentiality Certificate so that the customs authorities
allow import at the concessional duty in terms of the amended
entry 400, in the Notification of 11.12.2009. The appellant has a case
that apart from the other documents the respondent asked for an
affidavit indemnifying the respondent against adverse consequences
arising out of wrong claim of benefits by the appellant and also an
affidavit stating that the benefits of mega power status granted to
the appellant project will be passed on to the respondent as per
clause 13.3 of the PPA.
[2024] 11 S.C.R. 465
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
17. The appellant claims that while it furnished the other documents,
with regard to the affidavit for passing on the benefits of the mega
power status, it wrote to the respondent on 17.02.2011 stating
that it had already factored in the benefits available in view of the
Cabinet decision dated 01.10.2009 and thereafter there is no basis
for submission of the affidavit as called for.
18. The respondent replied by its letter of 04.03.2011 and insisted on
the affidavit as sought for by setting out the following reasons:
“(i) at the time of submission of bid, the Mega Policy
2006 was in vogue and therefore, the Project could
not have qualified as a MPP;
(ii) the Mega Policy 2009 was notified on 14.12.2009,
post submission of the bids and therefore, the benefits
could have only accrued post such notification;
(iii) the mega power status is granted to a project subject
to (a) project getting certified as a MPP from an
officer not below the rank of Joint Secretary to the
Ministry of Power; (b) the power purchasing States
having constituted the Regulatory Commissions with
full power to fix tariffs; (c) power purchasing States
undertaking to carry out distribution reforms as laid
down by the Ministry of Power;
(iv) the distribution reforms took place in Punjab in
April, 2010 and hence, the bidders could not have
considered benefits available under the Mega Policy
2009 prior to the submission of the bid; and
(v) in relation to the Project, the Petitioner No.1 had
applied to the Ministry of Power for grant of mega
power status to the Project on 11.05.2010 and the
Ministry of Power had granted the said status vide
its letter dated 30.07.2010.”
19. Ultimately, after a lengthy exchange of correspondence with each
party sticking to their respective position, the appellant no. 1 submitted
an undertaking in the specified format (the factum of the undertaking
being under protest and without prejudice as claimed by the appellant
is disputed by the respondent) in order to avoid further delay in the
466 [2024] 11 S.C.R.
Digital Supreme Court Reports
issuance of the Essentiality Certificate. The respondent replied by
stating that the non-escalable capacity charge would stand reduced in
terms of the Article 13 of PPA in proportion to the concession in custom
duty on the consignment value of the imported goods. Ultimately, the
appellant obtained the Essentiality Certificate on 16.06.2011. Similar
affidavits were furnished for the further imports and the respondent
granted Essentiality Certificate only on the condition that it would
have the right to seek appropriate reduction in tariff on account of
decrease in capital cost of the project.
20. On 22.05.2012, the appellants filed a Petition bearing Petition no. 30
of 2012 before the Punjab State Electricity Regulatory Commission,
Chandigarh under Section 86(1)(f) of the Electricity Act, 2003,
contending that appellant no. 2 had considered and factored the
benefits available to the project under the Mega Power Policy of 2009,
on 09.10.2009 when they submitted the bid and had passed on
such benefits to the respondent by way of the tariff it quoted. The
appellant contended that no change in law occurred in view of the
notification of 11.12.2009 and 14.12.2009 and whatever change
was there, happened on 01.10.2009 itself with the press release
of the Cabinet decision. The following prayers were made in the
claim petition:
“In light of the facts and circumstances as stated above,
the Petitioners are respectfully praying before this Hon’ble
Commission:
“(a) to declare that the Union Cabinet’s decision dated
01.10.2009 modifying the Mega Policy 2006 reported
vide Press Information Bureau on the same date
does not amount to ‘Change in Law’ under Article
13 of the PPA;
(b) following the declaratory relief sought by the
Petitioners, to hold that consequential relief as set
out under Article 13.2 of the PPA has not triggered
and no consequential benefits under Article 13
have to be passed on to the Respondent by the
Petitioner under the PPA on account of Union
Cabinet’s decision to change the Mega Policy 2006
dated 01.10.2009;
[2024] 11 S.C.R. 467
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
(c) in alternative, if reliefs sought under para (a) and (b)
above are not granted, then to direct and allow that
the Petitioners shall be entitled to claim ‘Change in
Law’ against the Respondent’s claim on the basis
of withdrawal of fiscal benefits which were available
to the Project under the FTP on the date of bidding
on standalone basis, without considering Mega
Policy, 2009;
(d) award cost in favour of the Petitioners;
(e) pass such other and further orders / directions as
the Hon’ble Commission may deem appropriate in
the facts and circumstances of the case.”
Though the prayer are not happily worded, the issue raised with
regard to the Mega Power Policy issue, as understood by both
parties, is whether the legal regime was altered on 01.10.2009 or
on 11.12.2009 and 14.12.2009 respectively.
21. The appellant’s claim before the Commission was founded on twin
basis. The main relief was on the aspect of the Mega Power Policy,
the contention of the appellant being that the legal regime was altered
on 01.10.2009, with the Cabinet Decision, as noticed in the Press
Release of 01.10.2009. The alternative plea was based on the Foreign
Trade Policy (in short ‘FTP’) and the appellants contention was that
in the alternative, the appellant was entitled to claim change in law
against the respondent on the basis of withdrawal of fiscal benefits
which were available to the project under the Foreign Trade Policy
on the date of bidding, on a standalone basis without considering
the Mega Power Policy of 2009.
Order of the State Commission
22. By its Order of 12.11.2012, the State Commission rejected both the
prayers. The State Commission held that the mega power status
was made available to a project only when the State in which the
project is being setup had undertaken the reforms mentioned in the
Ministry of Power’s letter dated 03.12.2009; that these reforms were
undertaken by the Government of Punjab only on 16.04.2010 and
intimated to the Central Government vide letter dated 30.04.2012;
that the detailing in respect of the modified policy was not available
in the press release dated 01.10.2009; that the same was covered
468 [2024] 11 S.C.R.
Digital Supreme Court Reports
only in the letter dated 03.12.2009 of the Ministry of Power addressed
to the States and in the notification of the Ministry of Power
dated 14.12.2009. The Commission further held that the benefit of
mega power status cannot be granted with effect from 01.10.2009
considering the fact that it was only after a gazette notification that
the public at large were informed of the decisions of the Government
and which gazette notification was issued only in December, 2009.
That the press release itself provided a disclaimer that though all
efforts have been made to ensure the accuracy and the currency
and the content of the website of the Press Information Bureau, the
same should not be construed as a statement of law or used for
any legal purpose. On the FTP issue, it was held that the benefits
under the FTP were never available to the appellant and if identical
benefits were indeed available to them under the FTP, there was no
need for them to claim the same benefit under the modified Mega
Power Policy. It was further held that even if it was assumed for
the sake of argument that the FTP benefits were available before
the cutoff date, they have forfeited their right to these benefits by
claiming similar benefits under the new Mega Power Policy.
Proceedings before APTEL
23. After the Order of the State Commission, the appellant filed Appeal
No. 29 of 2013 in the APTEL. The APTEL in the impugned judgment
denied benefits under the Mega Power Policy and confirmed the
order of the State Commission on the said issue. Insofar as the FTP
aspect was concerned, the issue was remanded to the Commission.
According to the APTEL, the State Commission in the order impugned
before it had not analyzed the question as to whether the benefits
under the FTP were available to the appellant as on the cutoff
date of 02.10.2009 and whether the subsequent withdrawal by the
Government of India would amount to change in law.
24. Pursuant to the remand, the Commission revived petition No. 30 of
2012 and issued notice for rehearing on the appellant’s alternative
claim based on FTP. By its judgment of 16.12.2014, the Commission
rejected the claim of the appellant based on the FTP by a majority
order.
25. Aggrieved by the same, the appellants filed Appeal No. 47 of 2015
before APTEL. By a judgment of 04.07.2017, the APTEL dismissed
the Appeal No. 47 of 2015 of the appellant. Against the said judgment
[2024] 11 S.C.R. 469
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
of APTEL dated 04.07.2017, appellant has filed Civil Appeal No. 8694
of 2017. We have in this judgment not touched upon the issues in
Civil Appeal No. 8694 of 2017.
26. Coming back to the order of the APTEL dated 30.06.2014, the APTEL
while dismissing the appeal insofar as the first issue of the Mega
Power Policy discussed therein was concerned held that the press
release did not indicate the terms and conditions on which the Mega
Power Status could be made available; that the press release cannot
be construed as a statement of law in view of the disclaimer; that
the notification dated 11.12.2009 modifying the customs duty and
specifying the terms and conditions for Mega Power is what is law
under the definition in the power purchase agreement and that the
Mega Power Status was received only on 30.07.2010. Certain other
findings have also been recorded which are not directly germane
in view of the decision that we have ultimately taken in this Appeal.
27. Aggrieved by the judgment of the APTEL on the issue of the Mega
Power Policy, the appellants have filed Civil Appeal No. 8478 of 2014.
Contentions:
28. In support of the appeal, we have heard Mr. C.S. Vaidyanathan,
learned Senior Advocate and in opposition thereof we have heard
Mr. M.G. Ramachandran, learned Senior Advocate for the respondent
no.1.
Submissions of the Appellant
29. Learned Senior Counsel for the appellant contends that the effect of
the Cabinet Decision must be seen with respect to the contours of the
definition of law in the Power Purchase Agreement; that the definition
includes “any order” of any Indian Government instrumentality and
hence it cannot be said that the decision of the highest constitutionally
entrusted body for formulating binding national policy is not law for
the purpose of the PPA; that the appellant could not be expected
to ignore the decision of the Cabinet dated 01.10.2009 announced
through the press release being a prudent bidder/businessmen; that
even the respondent concedes that the Cabinet Decision could lead
to promissory estoppel against the Government; that clause 2.7.2.1
of the RFP deems that the bidders have factored in all “Required
information/factors that may have any effect on the bid” and that the
Cabinet Decision is at least an information/factor for bidding purposes.
470 [2024] 11 S.C.R.
Digital Supreme Court Reports
30. Learned senior counsel contended that the appellant factored in the
fiscal benefits accruing from the Mega Policy in view of the Cabinet
Decision of 01.10.2009; that the appellant informed PSPCL by way
of letters dated 02.10.2009 and 06.10.2009 about the factoring in of
the benefits; that the Mega Power Policy 2006 amendments stood
approved on 01.10.2009 and hence the same amounted to law;
that the implementing actions that followed the Cabinet Decision
also accord the same understanding as would be clear from the
Ministry of Power letter dated 03.12.2009, the Minutes of meeting
dated 28.10.2009 annexed to the letter dated 03.12.2009, the
Memorandum dated 14.12.2009 and the fact that each department
was bound to carry out the policy in pursuance of the Cabinet
Decision dated 01.10.2009.
31. Learned Senior Counsel further contended that to claim change in
law (restitution), three essential ingredients are necessary namely
(a) The event must be after the cutoff date (b) it must be an event
stipulated in Article 13.1.1 (1 to 4) of the PPA and (c) it must result in
change in cost of or revenue from the business of selling electricity
under the PPA.
32. Learned Senior Counsel contends that the respondent to claim relief
under, ‘change in law’ must establish with documentary proof that
consequent to change in law there has been a decrease in capital
cost and since the appellant in its bid submitted on 09.10.2009 had
factored in the benefit derived from the Cabinet Decision in relation
to Mega projects, it received no economic benefit and there was no
change in the cost or revenue from the business of selling electricity
under the PPA in view of the issuance of the notification on 11.12.2009.
33. Learned senior counsel contended that there was no notice for
change in law issued by the respondent under Article 13.3.2; no
proof of reduction in capital cost and no issuance of supplementary
bill. Further, learned senior counsel contended that no petition
claiming change in law or any counter claim to the same effect was
filed by the respondent and it was the appellant which approached
the State Commission contending that the Cabinet Decision
dated 01.10.2009 is law as on the cutoff date and thus, there was
no change in law event enuring to the advantage of the respondent.
It is further contended for the appellant that the Mega Power Policy
issued in 2006 was issued by way of an executive decision and
[2024] 11 S.C.R. 471
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
that the present Cabinet Decision is also issued under Article 77 of
the Constitution of India; that the requirement to place the Cabinet
Decision before the President is only for information and on this
aspect no Presidential assent is a prerequisite. Lastly, it is contended
that as per Rule 50(13) of the Central Secretariat, Manual of Office
Procedure, the Press Communique/Note is the approved formal
procedure of communication. Learned senior counsel relied on a
large number of precedents in support of his submissions.
Submission of the Respondent
34. While stoutly defending the orders of the fora below, learned senior
counsel for the respondent contends that change in law for the purpose
of customs duty insofar as the appellant is concerned was brought
into force only on 11.12.2009 with the issuance of customs notification
under Section 25 of the Customs Act 1962; that Section 25(1) of
the said Act provides for exemption from the payment of customs
duty to be by notification; that Sub-Section 4 of Section 25 inter
alia provides that every notification unless otherwise provided shall
come into force on the date of its issue by the Central Government
for publication in the Official Gazette and that Cabinet Decision by
itself cannot therefore effect such a change without a notification
under Section 25 since if something is specified to be done in a
particular manner it needs to be done in that manner and in no other.
In view thereof, it was contended that it was the customs notification
dated 11.12.2009 which brought into force the ‘change in law’.
35. Learned senior counsel for the respondent contended that
without prejudice to the above submissions, the Cabinet Decision
dated 01.10.2009 was only the intent or proposal to implement
something in future and not to give effect to something on 01.10.2009
itself; the Cabinet Decision does not also provide that the benefits
therefrom will be effective from 01.10.2009; that the Cabinet Decision/
Press release by no means can be said to be a regulation, notification,
Code, Rule, or order having a force of law as specified in the definition
of the term “Law” in the PPA; that under the Rules of Business of
the Central Government, the decision taken in the Cabinet ought
to get implemented in the manner provided or under the relevant
statute such as by Notification, Rule, Regulation or Code in the case
of the plenary legislation, such as the Customs Act; in the absence
of any plenary legislation, the manner of implementation is provided
472 [2024] 11 S.C.R.
Digital Supreme Court Reports
under Article 77 by the issuance of an authenticated instrument in
the manner provided thereon; that the definition of the term “Law”
in the PPA and the expression “Decision” is limited only with regard
to the decision by the Appropriate Commission and not an Indian
Governmental instrumentality. Learned senior counsel contends
that there is no scope for the argument of the promissory estoppel
in inter-partes disputes between the appellant and the respondent
since the Union of India is not a party and the present proceeding
is not a proceeding where a promise is sought to be enforced by a
Court of law, against the promisor.
36. The learned senior counsel contends that the appellant under
Clauses 2.7.2.1 and 2.7.2.2 ought to have considered only the
applicable law. It is further contended that the Cabinet Decision
of 01.10.2009 did not decide all the aspects of the distribution
reforms to be undertaken by the concerned State Government to
entitle the intra-state power projects in the State to be eligible for
Mega Power benefits. To illustrate, it is contended that the Cabinet
Decision stated that “Power Purchasing States” shall undertake to
carry out distribution reforms as laid down by the Ministry of Power.
Learned senior counsel contends that Ministry of Power laid down the
conditions on 03.12.2009 including an undertaking to be given by the
State Government to the Government of India as a pre-condition. In
view of this, learned senior counsel contends that the Cabinet Decision
was not in complete form and it was only after the conditions were
laid down by the Ministry of Power on 03.12.2009 that the notification
dated 11.12.2009 and office memorandum of 14.12.2009 was issued
by the Central Government providing for exemption to Mega Power
Projects specifically stating that “The Power Purchasing State shall
undertake to carry out distribution reforms as laid down by the
Ministry of Power”. Learned senior counsel contends that the Mega
Power Policy was issued only on 14.12.2009 with further additions.
In view of the same, learned senior counsel for the respondents
contend that there is no scope for interference with the concurrent
judgments of the Courts below.
Question for consideration:
37. In the above background, the question that arises for consideration
is: Whether the press release of 01.10.2009 announcing the
decision of the Union Cabinet about approval of certain modifications
[2024] 11 S.C.R. 473
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
envisaged in the then existing mega power policy, is covered within
the meaning of the expression “law as defined in Clause 1.1 of the
RFP/PPA and if so did the extant legal regime as on 01.10.2009
undergo a change from the said date”?
Analysis and reasons:
38. The appellant’s case, as set out above, is that with the press release
on 01.10.2009, a new legal regime commences and on that basis,
it is contended that the appellant in its bid of 09.10.2009 factored
the altered position including the fiscal benefits due to customs
duty exemptions. The respondent’s case is that the press release
of 01.10.2009 only sets out the proposal for modification and the real
modification happened on 11.12.2009 and 14.12.2009 (preceded by
the letter of 03.12.2009). According to them, since the change of law
having happened on 11.12.2009/14.12.2009 the benefits that have
accrued to the appellant ought to be passed on. This is the simple
issue to be resolved.
39. To answer this question, certain clauses from RFP needs to be set
out. The RFP carried the format of the power purchase agreement
as Format 1 Annexure 3. There is no dispute that the same clauses
occurred in the power purchase agreement executed on 18.01.2010.
Clause 1.1 defines law as under :
“Law: means, in relation to this Agreement, all laws
including Electricity Laws in force in India and any statute,
ordinance, regulation, notification or code, rule, or any
interpretation of any of them by an Indian Governmental
Instrumentality and having force of law and shall
further include all applicable rules, regulations, orders
notifications by an Indian Governmental Instrumentality
pursuant to or under any of them and shall include all
rules, regulations, decisions and orders of the Appropriate
Commission.”
40. The relevant Clauses read as under:-
“13 ARTICLE 1.3 Change in Law
13.1 Definitions
In this Article 13, the following terms shall have the following
meanings.
474 [2024] 11 S.C.R.
Digital Supreme Court Reports
13.1.1 “ Change in Law” means the occurrence of any
of the following events after the date, which is seven (7)
days prior to the Bid Deadline;
(i) the enactment, bringing into effect, adoption,
promulgation, amendment, modification or repeal, of
any law or (ii) a change in interpretation of any law by a
competent court of law, tribunal or Indian Governmental
instrumentality provided such Court of law, tribunal or
Indian Governmental Instrumentality is final authority
under law for such interpretation or (iii) change in any
consents approvals or licenses available or obtained for
the project, otherwise than for default of the seller, which
results in any change in any cost of or revenue from the
business of selling electricity by the seller to the procurer
under the terms of this agreement or (iv) any change in
the (a) declared price of land for the project or (b) the cost
of implementation of the resettlement and rehabilitation
package of the land for the project mentioned in the RFP
or (c) the cost of implementing environmental management
plan for the power station (d) deleted.
but shall not include (i) any change in any withholding tax
on income or dividends distributed to the shareholders
of the Seller, or (ii) change in respect of UI Charges or
frequency intervals by an Appropriate Commission.
13.1.2 “Competent Court” means:
The Supreme Court or any High Court, or any tribunal or
any similar judicial or quasi-judicial body in India that has
jurisdiction to adjudicate upon issues relating to the Project.
13.2 Application and Principles for computing impact of
Change in Law
While determining the consequence of Change in Law
under this Article 13, the Parties shall have due regard to
the principle that the purpose of compensating the Party
affected by such Change in Law, is to restore through
Monthly Tariff payments, to the extent contemplated in
this Article 13, the affected Party to the same economic
position as if such Change in Law has not occurred.
[2024] 11 S.C.R. 475
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
a) Construction Period
As a result of any Change in Law, the impact of
increase/decrease of Capital Cost of the Project in the
Tariff shall be governed by the formula given below:
For every cumulative increase/decrease of each
Rupees 16,50,00,000/-
(Rupees Sixteen crore fifty lakhs) in the Capital Cost
over the term of this Agreement, the increase/decrease
in Non Escalable Capacity Charges shall be an amount
equal to 0.267% (percentage zero point two six seven)
of the Non Escalable Capacity Charges. Provided that
the Seller provides to the Procurer documentary proof of
such increase/decrease in Capital Cost for establishing
the impact of such Change in Law. In case of Dispute,
Article 17 shall apply:
It is clarified that the above mentioned compensation shall
be payable to either Party, only with effect from the date
on which the total increase/decrease exceeds amount of
Rupees 16,50,00,000/- (Rupees Sixteen crore fifty lakhs).
b) Operation Period
As a result of Change in Law, the compensation for any
increase/decrease in revenues or cost to the Seller shall
be determined and effective from such date, as decided
by the Appropriate Commission whose decision shall be
final and binding on both the Parties, subject to rights of
appeal provided under applicable Law.
Provided that the above mentioned compensation shall be
payable only if and for increase/decrease in revenues or
cost to the Seller is in excess of an amount equivalent to
1% of the Letter of Credit in aggregate for a Contract Year.
13.3 Notification of Change in Law
13.3.1 If the Seller is affected by a Change in Law in
accordance with Article 13.2 and wishes to claim a Change
in Law under this Article, it shall give notice to the procurer
476 [2024] 11 S.C.R.
Digital Supreme Court Reports
of such Change in Law as soon as reasonably practicable
after becoming aware of the same or should reasonably
have known of the Change in Law.
13.3.2 Notwithstanding Article 13.3.1, the Seller shall
be obliged to serve a notice to the Procurer under this
Article 13.3.2 if it is beneficially affected by a Change in
Law. Without prejudice to the factor of materiality or other
provisions contained in this Agreement, the obligation to
inform the Procurer contained herein shall be material.
Provided that in case the Seller has not provided such
notice, the Procurer shall have the right to issue such
notice to the Seller.
13.3.3 Any notice served pursuant to this Article 13.3.2
shall provide, amongst other things, precise details of:
(a) the Change in Law; and
(b) the effects on the Seller of the matters referred to in
Article 13.2.
13.4. Tariff Adjustment Payment on account of Change
in Law
13.4.1 Subject to Article 13.2., the adjustment in Monthly
Tariff Payment shall be effective from:
(i) the date of adoption, promulgation, amendment, re-
enactment or repeal of the Law or Change in Law; or
(ii) the date of order/judgment of the Competent Court
or tribunal of Indian Governmental Instrumentality, if the
Change in Law is on account of a change in interpretation
of Law.
13.4.2 The payment for Changes in Law shall be
through Supplementary Bill as mentioned in Article 11.8.
However, in case of any change in Tariff by reason of
Change in Law, as determined in accordance with this
Agreement, the Monthly Invoice to be raised by the Seller
after such change in Tariff shall appropriately reflect the
changed Tariff.”
[2024] 11 S.C.R. 477
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
41. The golden rule of interpretation is that the words of a contract
should be construed in their grammatical and ordinary sense,
except to the extent that some modification is necessary in order to
avoid absurdity, inconsistency or repugnancy. (See para 5.01 Kim
Lewison, The interpretation of Contracts, 3rd Edition). Similarly,
any invocation of the business efficacy test as canvassed would
arise only if the terms of the contract are not explicit and clear. The
business efficacy test cannot contradict any express term of the
contract and is invoked only if by a plain and literal interpretation
of the term in the agreement or the contract, it is not possible to
achieve the result or the consequence intended by the parties acting
as prudent businessmen. [See Nabha Power Limited (NPL) vs.
Punjab State Power Corporation Limited (PSPCL) and Another
(2018) 11 SCC 508 (para 49) and Adani Power (Mundra) Limited
vs. Gujarat Electricity Regulatory Commission and Others
(2019) 19 SCC 9 (para 24).
42. The law as defined in Clause 1.1 was validly promulgated vide the
notification of 01.03.2002 and the policy document dated 07.08.2006.
The appellant seeks to contend that the press release of 01.10.2009
announcing the Cabinet decision approving the modified Mega Power
Policy as envisaged tantamounts to “law” as defined in Clause 1.1 of
the Request For Proposal. The appellant contends that qua the Power
Purchase Agreement (PPA), the press release of 01.10.2009 would be
an order and covered by the phrase “and shall include all applicable
rules, regulations, orders, notifications by an Indian Governmental
Instrumentality”. We are unable to accept this submission. First of all,
the commonly understood meaning of the word “order” as defined
in Black’s Law Dictionary is as follows:-
“Order – A command, direction or instruction. See
MANDATE (1) 2. a written direction or command delivered
by a government official, esp. a court or judge.”
43. The press release of 01.10.2009 certainly does not fulfil the
meaning of the word “order” as understood in legal parlance. As
explained earlier, the Press Release with all its future eventualities
and conditionalities is only a proposal and it is only after the
undertakings were agreed to be given by the State Government
that a final shape was given in the form of a Section 25 customs
notification on 11.12.2009 and by the policy document of 14.12.2009.
478 [2024] 11 S.C.R.
Digital Supreme Court Reports
The press release announcing the cabinet approval of certain
modifications envisaged in the existing Mega Power Policy is not
law as defined in Clause 1.1 of the PPA. Further, the press release
does not enact, adopt, promulgate, amend, modify or repeal any
existing law or bring into effect any law. This aspect has been
elaborated hereinbelow. Hence, the appellant’s would fail on the
ground that the press release of 01.10.2009 is not law and as
of 01.10.2009, the continuing legal regime was as per the notification
of 01.03.2002 issued under Section 25 of the Customs Act and the
Mega Power Policy of 07.08.2006 and there was no alteration of
that legal regime on 01.10.2009. The change in law occurred only
on 11.12.2009/14.12.2009, and the respondent no. 1 has rightly
been held by the fora below to be entitled to the benefits, which
ultimately will go to the consumers.
44. The argument feebly advanced by the appellant that no notice of
change of law was issued by the respondent under Clause 13.3.1
and 13.3.2 does not impress us. The said clause expressly deals
only with a seller having to issue the notice if it is beneficially affected
by the change of law. In this case, PSPCL is the buyer. Further,
post the change in law on 11.12.2009/14.12.2009 there is a change
in cost with the reduction of customs duty which will enure to the
benefit the appellant-seller and under 13.1.1. the benefit ought to
be passed on to the respondent.
45. The words of clause 13.1.1 read with the definition of law in Clause 1.1
are plain and clear. For a change in law to occur, the following events
ought to have happened seven days prior to the bid deadline that
is on 02.10.2009 in our case; (i) the enactment brining into effect,
adoption, promulgation, amendment, modification or repeal of any
law or (ii) a change in interpretation of any law by a competent court
of law, Tribunal or Indian Governmental instrumentality provided such
court of law, Tribunal or Indian Governmental instrumentality is the
final authority under law for such interpretation or (iii) change in any
consents, approvals or licences available or obtained for the project,
otherwise than for default of the seller, which results in any change
in any cost or revenue from the business of selling electricity by the
seller to the procurer under the terms of this agreement or (iv) any
change in the (a) declared price of land for the project or (b) the cost
of implementation of the resettlement and rehabilitation package of the
land for the project mentioned in RFP or (c) the cost of implementing
[2024] 11 S.C.R. 479
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
environmental management plan for the power station but shall not
include (i) any change in any withholding tax on income or dividends
distributed to the shareholders of the Seller, or (ii) change in respect
of UI Charges or frequency intervals by an Appropriate Commission.
46. Considering the facts of the case and the arguments, we are very
clear that the case of the parties is not based on any change in
interpretation or change in consent, approval or licence so these
sub clauses of the opening part of 13.1.1 is ruled out. Equally,
the latter part dealing with price of land for the project and cost
of implementation and rehabilitation package of land or cost of
implementing environmental management plan is also not attracted.
47. The question that remains is the applicability of sub clause (i) of
clause 13.1.1 namely, when did the change in law happen? For 13.1.1.
(i) to be attracted there has to be an enactment, bringing into effect,
adoption, promulgation, amendment, modification or repeal of any
law. Further, if there was a change in law the question would be,
did it result in any change in any cost or revenue from the business
of selling electricity by the seller to the procurer under the terms of
the agreement.
48. It is important to keep in mind the definition of law which has been
defined to mean in relation to this Agreement, all laws including
Electricity Laws in force in India and any statute, ordinance, regulation,
notification or code, rule or any interpretation of any of them by an
Indian Governmental instrumentality and having force of law and shall
further include all applicable rules, regulations, orders, notification
by an Indian Governmental instrumentality pursuant to or under
any of them and shall include all rules, regulations, decisions and
orders of the Appropriate Commission. We are convinced that the
words “shall include all rules, regulations, decisions and orders of
the Appropriate Commission”, only refer to the rules, regulations,
decisions and orders of the Appropriate Commission.
49. It is important to bear in mind that ‘law’ is one thing and ‘change in
law’ is another, in the sense that the two are two different concepts.
For the case in question, we need to understand what the extant
law was on 01.10.2009 and then decide whether there was a legal
regime alteration as defined under 13.1.1 on the said date.
480 [2024] 11 S.C.R.
Digital Supreme Court Reports
50. The law, as it stood prior to the press release of 01.10.2009
insofar as the financial implications for the matter is concerned,
was the notification under Section 25 of the Customs Act issued
on 01.03.2002 and entry 400 thereof, extracted in the earlier
part of this judgment. That notification, subject to the conditions
mentioned thereon in entry 400 granted exemption from customs
duty for import of goods required for setting up of any Mega Power
project if such Mega Power project was an inter-State power plant
and if it fulfilled the other conditions mentioned in the notification.
Section 25(1) of the Customs Act under which the notification is
issued reads as under:
“25. Power to grant exemption from duty.- (1) If the
Central Government is satisfied that it is necessary in
the public interest so to do, it may, by notification in the
Official Gazette, exempt generally either absolutely or
subject to such conditions (to be fulfilled before or after
clearance), as may be specified in the notification goods
of any specified description from the whole or any part of
duty of customs leviable thereon.”
51. It will be very clear that for an exemption under the Customs Act
to operate thereon there has to be a notification issued in the
manner provided by the Customs Act and duly published in the
official gazette. It is so well settled that if a certain thing has to
be done in a certain manner, it shall be done in that manner or
not at all. [See Babu Verghese and Others vs. Bar Council of
Kerala and Others (1999) 3 SCC 422, relying on Taylor vs. Taylor
(1875) 1 C h D 426 and Nazir Ahmad vs. King Emperor, AIR 1936
PC 253]. Further, Section 21 of the General Clauses Act, 1897 clearly
prescribes as under:-
“21. Power to issue, to include power to add to,
amend, vary or rescind, notifications, orders, rules or
bye-laws.—Where, by any Central Act or Regulation, a
power to issue notifications, orders, rules, or bye-laws is
conferred, then that power includes a power, exercisable
in the like manner and subject to the like sanction and
conditions (if any) to add to, amend, vary or rescind any
notifications, orders, rules or bye-laws so issued.”
(Emphasis Supplied)
[2024] 11 S.C.R. 481
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
There was no duly constituted amendment notification as
on 01.10.2009.
52. The exemption notification has to be read with the then extant policy of
07.08.2006 under which Mega Power Policy, to obtain a Mega Power
Status, the plant had to be an inter-State power plant of the prescribed
dimensions and if it were so, certain financial concessions/benefits
were to be available to it under the policy document. Admittedly, that
policy of 07.08.2006 was duly promulgated by the Government of
India through Ministry of Power and there is no dispute on this score.
53. What the appellant contends is that with the press release
on 01.10.2009 and they having received no positive response to the
letters of 02.10.2009 and 06.10.2009 (since withdrawn), they in their
bid of 09.10.2009 factored in the benefits that would be available
in view of the Cabinet decision as announced in the press release
of 01.10.2009. According to the appellants, as such, when the
notifications for amendment were issued on 11.12.2009 and when the
policy document was amended on 14.12.2009, there was no change
in law because the legal regime stood altered on 01.10.2009 with the
press release. Respondents contended that any clarification for the
bid ought to have been sought before 25.09.2009 and independent
of that they also contend that press release of 01.10.2009 does
not tantamount to law and that the change in law happened only
on 11.12.2009/14.12.2009.
54. The scenario that emerges is that there was a legal regime operating,
which continued to have force since there was no repeal of the
notification of 01.03.2002 or the supersession of the Mega Power
Policy document of 07.08.2006 on 01.10.2009. The press release
clearly mentioned as to what was envisaged and the conditions that
were to be replaced and removed.
55. In our considered opinion, the press release did not alter/amend/
repeal the existing law as on 01.10.2009. It was at best the
announcement of a proposal approved by the Cabinet which had to
be given shape after fulfilment of the conditions mentioned therein.
Some of the conditions were that the power purchasing States were
to undertake to carry out distribution reforms as laid down by the
Ministry of Power and admittedly in that regard there was a meeting
held on 28.10.2009; an undertaking was sought from the States in
the prescribed formats and the four distribution reform measures
482 [2024] 11 S.C.R.
Digital Supreme Court Reports
required to be undertaken were part of the undertaking. Those four
measures are (a) timely release of subsidy as per Section 65 of the
Electricity Act, 2003 (b) Ensure that discoms will approach SERC
for approval of annual revenue requirement/tariff determination in
time according to SERC regulations (c) Setting up of Special Courts
as provided in the Electricity Act, 2003 to tackle the related cases
and (d) ring fencing of SLDCs.
56. It was thereafter on 11.12.2009 in due compliance with the provisions
of Section 25 of the Customs Act that the amendment notifications
were issued which expressly specified the condition that the
power purchasing States ought to have undertaken to carryout
distribution reforms as laid out by the Ministry of Power. It is only
with the promulgation of the 11.12.2009 notification that entry 400
of the 01.03.2002 notification issued earlier in 2002 was substituted
to cover goods required for setting up of any Mega Power Project
(as now defined and set out in the notification of 11.12.2009 and
elaborated in the policy document of 14.12.2009) did the ‘change
in law’ happen.
57. Could the appellant has assumed that the Press Release of 01.10.2009
ordained a new legal regime? We think not and we hold accordingly.
The press release is a summary of the Cabinet decision. Even the
press release makes it clear that it was a proposal that was envisaged
and which was to come into force in future.
58. Certainty is the hallmark of law. It is one of its essential attributes.
It is an integral component of the rule of law. What was certain
on 01.10.2009 in the context of our case was only the prevalent
customs notification of 01.03.2002 issued under section 25, duly
notified and gazetted as well as the Mega Power Policy document
admittedly promulgated on 07.08.2006.
59. The press release summarizing the Cabinet decision and beset with
several conditions created no vested rights on any party to the power
purchase agreement vis-a-vis the other party on 01.10.2009. In fact,
the press release itself contemplated certain contingencies. A right
vests when all the facts have occurred which must by law occur in
order for the person in question to have the right (see Salmond on
Jurisprudence, Twelfth Edition P.J. Fitzgeral page 245). It is only
when the right vests will there be a corelative duty on the other as
far as nature of the right involved in the present case is concerned.
[2024] 11 S.C.R. 483
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
60. Accepting the argument would also create tremendous uncertainties
in the law. In the absence of any repeal of 01.03.2002 notification
and the 07.08.2006 Mega Power Policy, between 01.10.2009
and 11.12.2009/14.12.2009 there will be two legal regime operating.
61. Lord Bingham of Cornhill in his locus classicus ‘The Rule of Law’
rightly identifies as one of the facets of rule of law, the following –
“the law must be accessible and so far as possible intelligible, clear
and predictable.” The second and third reason given to support
the principle makes for fascinating reading and are reproduced
hereinbelow.
“The second reason is rather similar, but not tied to the
criminal law. If we are to claim the rights which the civil
(that is, non-criminal) law gives us, or to perform the
obligations which it imposes on us, it is important to know
what our rights or obligations are. Otherwise we cannot
claim the rights or perform the obligations. It is not much
use being entitled to, for example, a winter fuel allowance
if you cannot reasonably easily discover your entitlement,
and how you set about claiming it. Equally, you can only
perform a duty to recycle different kinds of rubbish in
different bags if you know what you are meant to do.
The third reason is rather less obvious, but extremely
compelling. It is that the successful conduct of trade,
investment and business generally is promoted by a body
of accessible legal rules governing commercial rights
and obligations. No one would choose to do business,
perhaps involving large sums of money, in a country
where the parties’ rights and obligations were vague or
undecided. This was a point recognized by Lord Mansfield,
generally regarded as the father of English commercial law,
around 250 years ago when he said: The daily negotiations
and property of merchants ought not to depend upon
subtleties and niceties; but upon rules easily learned and
easily retained, because they are the dictates of common
sense, drawn from the truth of the case.”1 In the same
vein he said: ‘In all mercantile transactions the great
1 Hamilton vs. Mendes (1761) 3 Burr 1198, 1214
484 [2024] 11 S.C.R.
Digital Supreme Court Reports
object should be certainty: and therefore, it is of more
consequence that a rule should be certain, than whether
the rule is established one way or the other. Because
speculators [meaning investors and businessmen] then
know what ground to go upon.”2
62. Explaining felicitously the said principle, O. Chinnappa Reddy, J.
speaking for this Court in B.K. Srinivasan and Others vs. State of
Karnataka and Others (1987) 1 SCC 658 ruled:-
“15. There can be no doubt about the proposition that
where a law, whether parliamentary or subordinate,
demands compliance, those that are governed must be
notified directly and reliably of the law and all changes and
additions made to it by various processes. Whether law
is viewed from the standpoint of the “conscientious good
man” seeking to abide by the law or from the standpoint
of Justice Holmes›s “unconscientious bad man” seeking
to avoid the law, law must be known, that is to say, it must
be so made that it can be known. We know that delegated
or subordinate legislation is all-pervasive and that there is
hardly any field of activity where governance by delegated
or subordinate legislative powers is not as important if
not more important, than governance by parliamentary
legislation. But unlike parliamentary legislation which is
publicly made, delegated or subordinate legislation is
often made unobtrusively in the chambers of a Minister,
a Secretary to the Government or other official dignitary.
It is, therefore, necessary that subordinate legislation, in
order to take effect, must be published or promulgated
in some suitable manner, whether such publication or
promulgation is prescribed by the parent statute or not.
It will then take effect from the date of such publication
or promulgation. Where the parent statute prescribes the
mode of publication or promulgation that mode must be
followed.…”
(Emphasis supplied)
2 Vallejo vs. Wheeler (1774) 1 Cowp 143, 153
[2024] 11 S.C.R. 485
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
63. The appellant has relied upon RFP to contend that the Press release
of 01.10.2009 could not have been ignored by them. We do not
find merit in this submission. Those clauses in the RFP obligate
the bidder to satisfy itself about the extant legal regime and those
clauses cannot operate as a crutch to elevate the press release
of 01.10.2009 to the status of law under Clause 1.1. of the PPA.
64. We have also found that the terms of the contract to be clear and
hence there is no scope for applying any business efficacy test to
interpret the contract as was sought to be contended for the appellant.
65. One of the arguments advanced by the learned senior counsel for
the appellants is based on the doctrine of promissory estoppel. The
argument need not detain us since the respondent PSPCL which
is the party to power purchase agreement is not the promisor,
even if we assume the press release of 01.10.2009 as holding out
the promise. The Union of India has not been arrayed in any duly
constituted litigation to enforce the promise. The argument also belies
the primary contention of the appellant since even according to their
understanding, it was at best a promise by the Union of India and
not any alteration of the law proprio vigore (by its own force). In any
case, no steps have been taken to enforce the so-called promise
and there is no order of any court of law enforcing the promise
as on 02.10.2009. The appellant contends that since the promise
was duly complied with, there was no need to enforce the promise.
This is also an argument which cuts at the root of appellants main
submission. The notifications constituting change in law happened
on 11.12.2009 and 14.12.2009 and hence there is no basis in the
contention that on 01.10.2009 the old legal regime had given way.
66. The judgments cited by learned Senior Counsel for the appellant
also do not in any manner support the case of the appellant. In
GMR Warora Energy Limited vs. Central Electricity Regulatory
Commission [CERC] and Others (2023) 10 SCC 401, this Court
found that busy season surcharge, development surcharge, and port
congestion surcharge were increased by circular/notifications issued
by the Ministry of Railways by virtue of the powers vested in them
which were enforceable commands proprio vigore. Similarly, the
letters carrying the decisions of Coal India on the aspect of charges
for linkage coal and the direction to use beneficiated coal were held
to be statutory documents having the force of law. The press release
486 [2024] 11 S.C.R.
Digital Supreme Court Reports
of 01.10.2009 does not enjoy the same legal characteristics for the
reasons already set out hereinabove.
67. Equally, for the same reason, the judgment in Energy Watchdog
vs. Central Electricity Regulatory Commission and Others
(2017) 14 SCC 80 will also not help the appellant. The appellant’s
main reliance has been on Lloyd Electric and Engineering
Limited vs. State of Himachal Pradesh and Others (2016) 1 SCC
560. In Lloyd Electric (supra), the appellant therein was already
enjoying the concessional rate in CST @ 1% up to 31.03.2009.
Not only this, after the Cabinet note, a policy decision was taken to
extend the period of concession up to 31.03.2013 or till CST was
phased out. The Department of Industries had issued a notification
extending concessions from 01.04.2009 to 31.03.2013 or till the
time CST is phased out. The dispute arose because the Excise and
Taxation Department issued a notification of 18.06.2009 granting
benefit with immediate effect for the period ending 31.03.2013. It
was in that context that this Court held that the State Government
cannot speak in two voices and gave effect to the notification of the
Industries Department so as to maintain continuity in exemption
from 01.04.2009 and set aside the judgment of the High Court which
denied exemption from 01.04.2009 till 18.06.2009 which was the date
on which the Excise Department issued the notification. Unlike in
Lloyd Electric (supra), in this case, there is only one voice of the
government which has given the customs duty exemption for goods
imported for use in thermal power plants, (without the requirement of
the plant being an interstate power plant) with effect from 11.12.2009.
The policy document also came on 14.12.2009. The press release
of 01.10.2009 could not have been the basis for the appellant to have
assumed that the notification of 01.03.2002 would stand amended
and they would have the benefit from 01.10.2009 itself.
68. In Uttar Haryana Bijli Vitran Nigam Limited and Another vs.
Adani Power (Mundra) Limited and Another (2023) 7 SCC 623,
this Court held that the communication of 19.06.2013 in that case
effected a modification to the mutual Fuel Supply Agreement and by
force of the communication, transfer of coal, which was not allowed
till then, was allowed between power plants. This Court held that
the communication reflected the decision of the Coal India Limited
which was an instrumentality of the Government of India. The said
case has no application to the facts of the present case.
[2024] 11 S.C.R. 487
Nabha Power Limited & Anr. v.
Punjab State Power Coroporation Limited & Anr.
69. The judgment in Burn Standard Company Limited Vs. McDermott
International INC and Anr. (1991) 2 SCC 669 also does not advance
the case of the appellant. That case dealt with permission granted to
an individual entity and whether on the facts of that case there existed
a valid permission by the Reserve Bank of India. The issue involved
in the present case is vastly different and we find the judgment in
Burn Standard (Supra) of no relevance to this case.
70. The judgment closer to our facts is Maharashtra State Electricity
Distribution Company Limited vs. Adani Power Maharashtra
Limited and Others (2023) 7 SCC 401. In the said case, neither
the decision of the Cabinet Committee on Economic Affairs
dated 06.02.2013 nor the Press Release of 21.06.2013 was
considered as the relevant date for change in law and only 26.07.2013
which was the date on which the Office Memorandum was issued
providing further instructions regarding the implementation of the New
Coal Distributional Policy [NCDP] was considered as the change in
law event. Pursuant to the Office Memorandum of 26.07.2013, the
Ministry of Power issued a communication of 31.07.2013 setting
out the decision taken. This case clearly supports the case of the
respondent that the press release of 01.10.2009 on the facts herein
could not have been the basis for the appellant to assume that a
new legal regime had commenced in with effect from that date.
71. Though several judgments were cited, including Bachhittar Singh
vs. The State of Punjab [1962] Supp. 3 SCR 713, to contend that
the press release of 01.10.2009 was not an “order”, we do not
propose to examine them as we are otherwise convinced for the
reason set out above that the 01.10.2009 Press Release is not law
under Clause 1.1. Equally, for that reason, we have not discussed
the cases on Article 77 of the Constitution of India, dealing with
authentication of orders.
72. The State Commission while rejecting the contention of the appellant
has rightly recorded the following operative findings:-
“In view of the above findings, the Commission holds
that since the Mega Power Status was granted to the
Project under the Mega Power Policy by the Ministry of
Power on 30.07.2010 on the application dated 11.05.2010
filed by the respondent no.1, having become eligible
on 16.04.2010, the benefits, if any, accruing thereunder
488 [2024] 11 S.C.R.
Digital Supreme Court Reports
to the Project would be applicable only from 30.07.2010
and not from any prior date, notwithstanding that the
decision for granting the Mega Power Status was taken/
announced on 01.10.2009 or the notifications in respect
of the said decision of the Union Cabinet were issued
by the concerned Ministries of the Government of India
on 11.12.2009 and 14.12.2009.”
73. For the reasons set out hereinabove, we find no reason to interfere
with the concurrent judgments of the courts below. The Civil Appeal
is dismissed. No order as to costs.
Result of the case: Appeal dismissed.
†
Headnotes prepared by: Nidhi Jain
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Press release of 01.10.2009"Sign in to search