2024 INSC 833 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8478 OF 2014

NABHA POWER LIMITED & ANR. …Appellant (s)

Versus

PUNJAB STATE POWER

COROPORATION LIMITED & ANR. ...Respondent(s)

J U D G M E N T

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 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

2

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, -

3

(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;

(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.No. Chapter or

Heading

No. or sub-

heading

No.

Description of

goods

Standard

rate

Additional

dduty rate

Condition

no.

400 98.01 Goods required

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

Nil Nil 86

4

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; ·

(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

5

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

(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

6

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.

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

7

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.

8

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 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

9

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 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

10

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.

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

11

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 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)

12

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

13

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

3

rd

December, 2009, the Government of India in the Ministry of

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 2

nd

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

14

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 28

th

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 1

st

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 needs

to be given at least, once and would be considered in all the

cases where the concerned State Distribution Utility ties up

15

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 1

st

March, 2002, which was published in the Gazette of India,

Extraordinary vide number G.S.R. 118(E), dated the 1

st

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

16

(b) a thermal power plant of a capacity of 1000 MWor more,

located in States other than those specified in clause (a) above; or

(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. 980

1

Goods required for the

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.

2.5% Nil 86

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)

17

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:-

“No. A-118/2003-IPC

Government of India

Ministry of Power

Shram Shakti Bhavan, New Delhi

Dated 14

th

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 2

nd

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;

18

(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.

(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.

19

Copy to:

(i) Chairman, CEA,

(ii) CMDs of all PSUs of MOP

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.

20

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.

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

21

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

22

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 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

23

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;

(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.”

24

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

25

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 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

26

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.

27

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 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

28

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

29

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.

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

30

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.

31

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 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.

32

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

33

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 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

34

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

35

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 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”?

36

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

37

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.

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.

38

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.

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

39

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 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.

40

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.”

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, 3

rd

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

41

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:-

42

“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. 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

43

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

44

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

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

45

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,

46

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.

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

47

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

48

sanction and conditions (if any) to add to, amend, vary or rescind

any notifications, orders, rules or bye-laws so issued.”

(Emphasis Supplied)

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

49

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

50

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 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

51

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

52

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.

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

53

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 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

1

Hamilton vs. Mendes (1761) 3 Burr 1198, 1214

2

Vallejo vs. Wheeler (1774) 1 Cowp 143, 153

54

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 parliamen-

tary legislation. But unlike parliamentary legislation which is pub-

licly made, delegated or subordinate legislation is often made un-

obtrusively in the chambers of a Minister, a Secretary to the Gov-

ernment 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)

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

55

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

56

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

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

57

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.

58

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.

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

59

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

60

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 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 and14.12.2009.”

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.

……….………………J.

(B.R. Gavai)

.…...…………………J.

(Prashant Kumar Mishra)

.…...…………………J.

(K.V. Viswanathan)

New Delhi;

5

th

November, 2024.