# Nabha Power Limited & Anr v. Punjab State Power Coroporation Limited & Anr

- **Citation:** 2024 INSC 833
- **Court:** Supreme Court of India
- **Decided:** 2024-11-05
- **Case number:** Civil Appeal No. 8478 of 2014
- **Bench:** B.R. Gavai, Prashant Kumar Mishra, K.V. Viswanathan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nabha-power-limited-anr-v-punjab-state-power-coroporation-limited-anr-37818
- **Pages:** 44

## Headnote

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.
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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

## Text

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[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.
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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
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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;
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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.
No.
Chapter or
Heading
No. or
subheading
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
interState
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
G o v e r n m e n t
of India in the
Ministry of Power
Nil
Nil
86
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
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(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
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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.
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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.
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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
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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.
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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
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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
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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
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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
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Nabha Power Limited & Anr. v.
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(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
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)
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:-
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"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.
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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
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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.
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Nabha Power Limited & Anr.