# Nabha Power Limited v. Punjab State Power Corporation Limited and Others

- **Citation:** 2025 INSC 1002
- **Court:** Supreme Court of India
- **Decided:** 2025-08-19
- **Case number:** Civil Appeal No. 8694 of 2017
- **Bench:** B.R. Gavai, Augustine George Masih
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nabha-power-limited-v-punjab-state-power-corporation-limited-and-others-38601
- **Pages:** 44

## Headnote

Issue arose whether deemed export benefits under Para 8.3 of
Foreign Trade Policy 2009-2014-FTP were legitimately available to
the appellants as of the bid cut-off date and would notifications by
Directorate General of Foreign Trade amount to "Change in Law"
under the Power Purchase Agreement dated 18.01.2010; whether
the Press Release of Cabinet Decision pertaining to change of
threshold of so-deemed export benefits would constitute a "Change
in Law" under the PPA; and if so, whether the appellants entitled
to restitutionary relief in the form of compensation.
Headnotes†
Electricity Act, 2003 - ss. 63, 125 - Foreign Trade (Development
& Regulation) Act, 1992 - s.5 read with Paragraph 1.2 of the
FTP - Customs Act, 1962 - Availability of benefits under the
Foreign Trade Policy to power plant as of the cut-off date -
Claim for Deemed Export Benefits, eligibility - Withdrawal
of Foreign Trade Policy Para 8.3 benefits, if constitutes
change in law - Appellants-NPL and TSPL, Special Purpose
Vehicles formulated to develop Mega Watt coal-fired power
project at Rajpura, Punjab, through Tariff-Based Competitive
Bidding, entered into a Power Purchase Agreement with
Punjab State Power Corporation Limited-PSPCL - NPL
sought concessions or exemption from payment of customs
duty while importing capital goods - FTP amended that
Terminal Excise Duty exemptions under the FTP would not
be available for the supplies made to a non-MPP (with cut-off
date being 01.10.2009) - Petition by NPL that the Mega Power
benefits were factored into the bid and hence did not warrant
pass-through to PSPCL, and compensation under Art. 13.1.1(ii)
* Author
[2025] 8 S.C.R.
1309
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
of the PPA for the withdrawal of FTP benefits post the cut off
date of 02.10.2009, alternatively - State Commission dismissed
the Petition holding that since the NPL had elected to avail
benefits under the MPP 2009, it was precluded from claiming
concurrent benefits under the FTP and withdrawal of benefits
by DGFT did not constitute as a "Change in Law" within the
meaning of Art. 13 of the PPA - Appellate tribunal also rejected
the claims by the NPL and primarily the challenge to the
post-bid withdrawal of fiscal incentives which were allegedly
available earlier under the FTP and their classification as a
"Change in Law" event under the PPA - Interference with:
Held: Not called for - Press Release dated 01.10.2009 would
neither amount to "law" within the meaning conceptualized in
the PPA, as it would only be the Notifications dated 11.12.2009
and 14.12.2009 that would have amounted to "law", nor it would
thereby amount to "Change in Law" - Essential prerequisites
that ought to be satisfied by the appellants in order to be eligible
for the deemed export benefits are the claim for Deemed Export
Benefits relates exclusively to "goods" and is inapplicable to any
other thing which is not "goods", such goods, though supplied,
do not physically exit the territorial boundaries of the country;
that the goods to be supplied must be "manufactured in India";
that there must be an act constituting "supply of goods" to the
power projects for the project to claim Deemed Export Benefits;
that the act of "supply of goods" is either by the main contractor
and/or the sub-contractor to the concerned power project; and the
supply is undertaken strictly in accordance with the procedural
framework prescribed under ICB - Embedded power plant of
hundreds of Mega Watts would not be able to qualify as "capital
goods" for entitlement of the appellants under the FTP for the
deemed export benefits - Para 9.36 of the FTP requires that the
manufactured good should have been brought into existence with
a distinctive name, character, or use, such a feasibility impossible
when it comes to the concerned power plants - Supply of goods"
to a power plant, as is contemplated u/Para 8.2(g) of the FTP
remains unfulfilled - Even at the time of bidding, the to-

## Text

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[2025] 8 S.C.R. 1308 : 2025 INSC 1002
Nabha Power Limited
v.
Punjab State Power Corporation Limited and Others
(Civil Appeal No. 8694 of 2017)
19 August 2025
[B.R. Gavai, CJI and Augustine George Masih,* J.]
Issue for Consideration
Issue arose whether deemed export benefits under Para 8.3 of
Foreign Trade Policy 2009-2014-FTP were legitimately available to
the appellants as of the bid cut-off date and would notifications by
Directorate General of Foreign Trade amount to "Change in Law"
under the Power Purchase Agreement dated 18.01.2010; whether
the Press Release of Cabinet Decision pertaining to change of
threshold of so-deemed export benefits would constitute a "Change
in Law" under the PPA; and if so, whether the appellants entitled
to restitutionary relief in the form of compensation.
Headnotes†
Electricity Act, 2003 - ss. 63, 125 - Foreign Trade (Development
& Regulation) Act, 1992 - s.5 read with Paragraph 1.2 of the
FTP - Customs Act, 1962 - Availability of benefits under the
Foreign Trade Policy to power plant as of the cut-off date -
Claim for Deemed Export Benefits, eligibility - Withdrawal
of Foreign Trade Policy Para 8.3 benefits, if constitutes
change in law - Appellants-NPL and TSPL, Special Purpose
Vehicles formulated to develop Mega Watt coal-fired power
project at Rajpura, Punjab, through Tariff-Based Competitive
Bidding, entered into a Power Purchase Agreement with
Punjab State Power Corporation Limited-PSPCL - NPL
sought concessions or exemption from payment of customs
duty while importing capital goods - FTP amended that
Terminal Excise Duty exemptions under the FTP would not
be available for the supplies made to a non-MPP (with cut-off
date being 01.10.2009) - Petition by NPL that the Mega Power
benefits were factored into the bid and hence did not warrant
pass-through to PSPCL, and compensation under Art. 13.1.1(ii)
* Author
[2025] 8 S.C.R.
1309
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
of the PPA for the withdrawal of FTP benefits post the cut off
date of 02.10.2009, alternatively - State Commission dismissed
the Petition holding that since the NPL had elected to avail
benefits under the MPP 2009, it was precluded from claiming
concurrent benefits under the FTP and withdrawal of benefits
by DGFT did not constitute as a "Change in Law" within the
meaning of Art. 13 of the PPA - Appellate tribunal also rejected
the claims by the NPL and primarily the challenge to the
post-bid withdrawal of fiscal incentives which were allegedly
available earlier under the FTP and their classification as a
"Change in Law" event under the PPA - Interference with:
Held: Not called for - Press Release dated 01.10.2009 would
neither amount to "law" within the meaning conceptualized in
the PPA, as it would only be the Notifications dated 11.12.2009
and 14.12.2009 that would have amounted to "law", nor it would
thereby amount to "Change in Law" - Essential prerequisites
that ought to be satisfied by the appellants in order to be eligible
for the deemed export benefits are the claim for Deemed Export
Benefits relates exclusively to "goods" and is inapplicable to any
other thing which is not "goods", such goods, though supplied,
do not physically exit the territorial boundaries of the country;
that the goods to be supplied must be "manufactured in India";
that there must be an act constituting "supply of goods" to the
power projects for the project to claim Deemed Export Benefits;
that the act of "supply of goods" is either by the main contractor
and/or the sub-contractor to the concerned power project; and the
supply is undertaken strictly in accordance with the procedural
framework prescribed under ICB - Embedded power plant of
hundreds of Mega Watts would not be able to qualify as "capital
goods" for entitlement of the appellants under the FTP for the
deemed export benefits - Para 9.36 of the FTP requires that the
manufactured good should have been brought into existence with
a distinctive name, character, or use, such a feasibility impossible
when it comes to the concerned power plants - Supply of goods"
to a power plant, as is contemplated u/Para 8.2(g) of the FTP
remains unfulfilled - Even at the time of bidding, the to-be then
constructed Power Plant itself was deemed as the concerned
capital goods for the deemed export benefits, implying that there
was no distinct supply of goods by either a main contractor or a
sub-contractor thereof - Such a situation of suo moto acclaimed
manufacturing in the Project's own right shall not stand the instant
1310
[2025] 8 S.C.R.
Supreme Court Reports
test - Appellants, failed to establish the procurement of "supply of
goods" as per the mandate of ICB either at the stage of Independent
Power Producer or Engineering Procurement Contract, owing
to the fact that such procurement of the components was done
through directly entering into contract with their subsidiaries or
joint venture or related companies - Thus, the appellants not
entitled to the deemed export benefits under Para 8.3 of the FTP
for their inability to fulfil the essentail prerequisites - Plea as to
the alleged withdrawal of the said benefits through notifications of
DGFT dated 28.12.2011 and 21.03.2012 collectively and whether
that would amount to a "Change in Law" as per Art. 13 of the PPA
not delved into - Said notifications issued through DGFT mere
clarificatory in nature - No interpretation of law was undertaken
prior to the cut-off date to the effect that a developer shall be
able to import goods to be assembled into a power plant and also
claim the deemed export benefits on those, thus, tribunal correctly
concluded the said circulars to be merely clarificatory and not as
something which has either changed or introduced something
new, being allegedly oppressive towards the appellants - In view
thereof, appellants not entitled to restitutionary relief in the form
of compensation. [Paras 44, 57-62, 67-80]
Case Law Cited
Nabha Power Limited and Another v. Punjab State Power
Corporation Limited and Another [2024] 11 SCR 445 : (2025) 5
SCC 353 - relied on.
Shivshankara and Another v. H.P. Vedavyasa Char [2023] 6 SCR
359 : (2023) 13 SCC 1; Haryana Power Purchase Centre v. Sasan
Power Limited and Others [2023] 8 SCR 1 : (2024) 1 SCC 247;
GMR Warora Energy Limited v. Central Electricity Regulatory
Commission (CERC) and Others [2023] 8 SCR 183 : (2023) 10
SCC 401; Nabha Power Limited (NPL) v. Punjab State Power
Corporation Limited (PSPCL) and Another [2017] 14 SCR 301 :
(2018) 11 SCC 508; Babu Verghese and Others v. Bar Council
of Kerala and Others [1999] 1 SCR 1121 : (1999) 3 SCC 422;
Vadilal Chemicals Ltd. v. State of A.P. and Others [2005] Supp. 2
SCR 1 : (2005) 6 SCC 292; MSCO. Pvt. Ltd. v. Union of India and
Others [1985] 1 SCR 1146 : (1985) 1 SCC 51; Trutuf Safety Glass
Industries v. Commissioner of Sales Tax, U.P. [2007] 8 SCR 860 :
(2007) 7 SCC 242; P.C. Cheriyan v. Mst. Barfi Devi [1980] 1 SCR
961 : (1980) 2 SCC 461; Quality Steel Tubes (P) Ltd v. Collector of
[2025] 8 S.C.R.
1311
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
Central Excise, U.P. [1994] Supp. 6 SCR 439 : (1995) 2 SCC 372;
Union of India and Another v. Delhi Cloth and General Mills Co. Ltd.
[1963] Supp. 1 SCR 586 : 1962 SCC OnLine SC 148; Collector
of Central Excise, Baroda v. Ambalal Sarabhai Enterprises (P)
Ltd. [1989] 3 SCR 784 : (1989) 4 SCC 112; Union Carbide India
Limited v. Union of India and Others [1986] 2 SCR 162 : (1986)
2 SCC 547; India Cine Agencies v. Commissioner of Income Tax,
Madras [2008] 15 SCR 1122 : (2008) 17 SCC 385; Commissioner
of Income Tax, Orissa and Others v. M/s N.C. Budharaja and
Company and Others [1993] Supp. 2 SCR 185 : (1994) Supp.
1 SCC 280; Moti Laminates Pvt. Ltd. and Others v. Collector of
Central Excise, Ahmedabad [1995] 2 SCR 81 : (1995) 3 SCC 23;
Union Carbide India (supra), Bhor Industries Limited, Bombay v.
Collector of Central Excise, Bombay [1989] 1 SCR 382 : (1989)
1 SCC 602; Hindustan Polymers v. Collector of Central Excise
[1989] 3 SCR 974 : (1989) 4 SCC 323 - referred to.
Commissioner of Income-Tax v. Geo Tech Foundation &
Constructions (2000) 241 ITR 90 : 1999 SCC OnLine Ker 341 -
referred to.
Books and Periodicals Cited
P. Ramanatha Aiyar's Advanced Law Lexicon Fifth Edition; Supreme
Court Words and Phrases by Surendra Malik and Sumit Malik
Third Edition - referred to.
List of Acts
Electricity Act, 2003; Foreign Trade (Development & Regulation)
Act, 1992; Customs Act, 1962; Central Excise Act, 1944.
List of Keywords
Deemed export benefits; Foreign Trade Policy; Bid; Cut-off date;
Notifications by Directorate General of Foreign Trade; Change
in Law; Power Purchase Agreement; Press Release of Cabinet
Decision; Restitutionary relief; Compensation; Special Purpose
Vehicles; Mega Watt coal-fired power project; Tariff-Based
Competitive Bidding; Punjab State Power Corporation LimitedPSPCL; Exemption from payment of customs duty; Importing
capital goods; Terminal Excise Duty exemptions; Drawback; Mega
Power benefits; Post-bid withdrawal; Fiscal incentives; Supply of
goods; "Capital goods".
1312
[2025] 8 S.C.R.
Supreme Court Reports
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8694 of 2017
From the Judgment and Order dated 04.07.2017 of the Appellate
Tribunal for Electricity at New Delhi in AN No. 47 of 2015
With
Civil Appeal No. 8739 of 2017
Appearances for Parties
Advs. for the Appellant:
C.S. Vaidyanathan, A.N.S. Nadkarni, Arvind Datar, Sr. Advs.,
Mahesh Agarwal, Shri Venkatesh, Rohan Talwar, Shashwat Singh,
Ms. Priya Dhankar, Naman Agarwal, E. C. Agrawala, Vishrov
Mukerjee, Pratyush Singh, Raghav Malhotra, Ms. Juhisenguttuvan,
Pranav Bansal, Rahul Khurana, Kumar Visalaksh, M/s. Trilegal.
Advs. for the Respondents:
M G Ramachandran, Balbir Singh, Sr. Advs., Mrs. Poorva Saigal,
K.V. Mohan, Mrs. Pallavi Saigal, Ms. Shirin Gupta, Rishabh Saxena,
Subhan Arya, Aneesh Bajaj, Ms. Srishti Khandaria, Ms. Sunieta
Ojha, Ms. Gargi Kumar.
Judgment / Order of the Supreme Court
Judgment
Augustine George Masih, J.
1.
These two appeals pertain to the following common questions of law:
(i)
Whether deemed export benefits under Para 8.3 of Foreign
Trade Policy 2009-2014 (hereinafter "FTP") were legitimately
available to the Appellants as of the bid cut-off date and would
notifications by Directorate General of Foreign Trade (hereinafter,
"DGFT") amount to "Change in Law" under the Power Purchase
Agreement dated 18.01.2010 (hereinafter, "PPA");
(ii)
Whether the Press Release of Cabinet Decision pertaining
to change of threshold of so-deemed export benefits would
constitute a "Change in Law" under the PPA; and
(iii) If so, whether Appellants are entitled to restitutionary relief in
the form of compensation.
[2025] 8 S.C.R.
1313
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
2.
The Civil Appeal No. 8694 of 2017 as filed by the Nabha Power
Limited (hereinafter, "NPL") under Section 125 of the Electricity Act,
2003 (hereinafter, "EA 2003"), arises from the Common Judgment
dated 04.07.2017 (hereinafter, "Impugned Judgment") in Appeal
No. 47 of 2015 passed by the Appellate Tribunal for Electricity,
New Delhi (hereinafter, "APTEL") owing to rejection of the claim(s)
moved by the NPL for relief under Article 13 of the PPA executed
by it with the Punjab State Power Corporation Limited (hereinafter
"PSPCL"), and primarily the challenge to the post-bid withdrawal of
fiscal incentives which were allegedly available earlier under the FTP
and their classification as a "Change in Law" event under the PPA.
3.
Similarly, Civil Appeal No. 8739 of 2017, filed by the Talwandi Sabo
Power Limited (hereinafter, "TSPL") also arises from the same
Impugned Judgment in Appeal No. 32 of 2015 by APTEL. Since
both of the aforesaid appeals before the APTEL involved common
issues, they were heard together. The prime grievance for both the
Appellants therein was that the Punjab State Electricity Regulatory
Commission at Chandigarh (hereinafter, "State Commission") had,
although vide separate orders, held them to be not eligible for the
aforementioned benefits and liable to pass on the same to PSPCL,
Respondent No. 01 herein.
4.
Both, NPL and TSPL, are Special Purpose Vehicles (hereinafter,
"SPVs") which were formulated to develop the concerned power
projects. This was done under Section 63 of the EA 2003 through
Tariff-Based Competitive Bidding. PSPCL is one of the successors
of the Punjab State Electricity Board (hereinafter, "PSEB") and is a
state-owned generating and distributing company in Punjab.
5.
Since both these appeals arise out of the same Impugned Judgment
with issues being common, the same are being dealt with together.
We shall refer and adopt facts from the Civil Appeal No. 8694 of
2017 as preferred by NPL, treating it to be the main appeal.
6.
The NPL was incorporated on 25.09.2007 by PSEB to develop
a dual 700 Mega Watt coal thermal power project at Rajpura in
Punjab (hereinafter, "Project"). While the PSEB was unbundled, 100
percent of the shares of the NPL were acquired by the Respondent
No. 03, being L&T Power Development Limited (hereinafter, "L&T")
through the bidding process initiated on 10.06.2009, with final date
of bid submission being 09.10.2009, and after an evaluation of the
1314
[2025] 8 S.C.R.
Supreme Court Reports
technical and financial bids by a committee chaired by the Principal
Secretary, Department of Power, Government of Punjab. Thereby,
NPL became a wholly owned subsidiary of L&T. Consequently, the
PPA was executed between NPL and PSPCL.
7.
In the interregnum, the Government of India, exercising its powers
under Section 5 of the Foreign Trade (Development & Regulation)
Act, 1992 (hereinafter "FTP Act 1992") read with Paragraph 1.2 of
the FTP, notified the Foreign Trade Policy, 2009-2014 (hereinafter,
"FTP"), on 27.08.2009. Moreover, the Union Cabinet vide its Decision
dated 01.10.2009 reduced the threshold qualification as a Mega
Power Project to 500 Mega Watt from 1,000 Mega Watt for single
location projects under the Mega Power Policy, 2006 (hereinafter,
"MPP 2006"). On the same date, there was a press release by
the Press Information Bureau that the Union Cabinet has taken a
decision that it is not mandatory for an inter-state sale of power from
a project to be eligible under the MPP 2006 (hereinafter, "Press
Release dated 01.10.2009").
8.
This Decision dated 01.10.2009 led to two changes:
(i)
Amendment of the existing eligibility criteria of being a MPP as
set out under Entry 400 of the Principal Customs Notification No.
21 of 2002 dated 01.03.2002 by the Department of Revenue,
Ministry of Finance, Government of India through its powers
under Section 25 of the Customs Act, 1962 (hereinafter, "CA
1962");
(ii)
Issuance of Memorandum No. A-118/2003-IPC modifying the
MPP (hereinafter, "MPP 2009").
9.
It is pertinent to note that it was only through Notifications Nos.
91/2009-Cus dated 11.12.2009 and 92/2009-Cus dated 14.12.2009
that the aforesaid benefits were brought into effect.
10. In pursuance of the same, NPL sought grant of status as a Mega
Power Project from Ministry of Power, Government of India, which
was granted to it on 30.07.2010.
11. For its application to obtain an Essentiality Certificate from the
Department of Energy, Government of Punjab, NPL sought a
recommendation from PSPCL to the effect that Essentiality Certificate
be issued to NPL for seeking concessions or exemption from payment
of customs duty while importing capital goods. Against this, NPL
[2025] 8 S.C.R.
1315
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
gave an undertaking vide Affidavit dated 23.05.2011 that any benefits
which shall accrue on NPL for its change of status to a Mega Power
Project, shall be passed on to PSPCL. The Essentiality Certificate
was thereafter issued on 13.06.2011.
12. Another agony came for the Appellant when the Directorate General of
Foreign Trade (hereinafter, "DGFT") convened a Policy Interpretation
Committee (hereinafter, "PIC") on 15.03.2011, which opined that
Terminal Excise Duty exemptions under the FTP would not be
available for the supplies made to a non-MPP (with cut-off date being
01.10.2009) and any such duty shall not be refunded in any manner
including as a drawback under Paragraph 8.3(b) of the FTP. It further
clarified that if a Bill of Entry is in the name of a project authority, the
deemed export benefits would not be made available. To effectuate
the same, Public Notices dated 27.04.2011 and 28.04.2011 were
issued under the FTP Act 1992, amending the FTP.
13. Since the legalities had made NPL ineligible for the assumed
benefits on their end, it moved Petition No. 30 of 2012 before the
State Commission seeking (a) a declaration that the Mega Power
benefits were factored into the bid and hence did not warrant passthrough to PSPCL, and (b) compensation under Article 13.1.1(ii) of
the PPA for the withdrawal of FTP benefits post the cut-off date of
02.10.2009, alternatively.
14. The State Commission, while dismissing the Petition vide Order
dated 12.11.2012 (hereinafter, "First Order of Commission"), held
that since the NPL had elected to avail benefits under the MPP
2009, it was precluded from claiming concurrent benefits under the
FTP. Moreover, withdrawal of benefits by DGFT did not constitute
as a "Change in Law" within the meaning of Article 13 of the PPA.
15. Assailing the findings of the State Commission, NPL moved Appeal
No. 29 of 2013 before APTEL, which, in its Order dated 30.06.2014
(hereinafter, "First Order of APTEL"), remanded the matter to the
State Commission for reconsideration of the issue on the FTP. It
directed the State Commission to also ascertain and opine as to
whether the benefits under the FTP were available to the NPL as
on the cut-off date.
16. On remand, the State Commission vide its majority opinion
culminating in its Order dated 16.12.2014 (hereinafter, "Second
Order of Commission") in Petition No. 30 of 2012 reiterated its earlier
1316
[2025] 8 S.C.R.
Supreme Court Reports
conclusions, observing that the benefits of the FTP were neither
available to NPL as on the cut-off date nor their withdrawal attract
the consequences of "Change in Law". It further went on to observe
that NPL had not produced contemporaneous DGFT endorsements
to substantiate its eligibility to claim FTP benefits under Para 8.3.
Not only that, but as per their own Affidavit dated 23.05.2011, NPL
was to mandatorily pass on the benefits accrued under the MPP
2009 to the PSPCL.
17. Aggrieved from the reaffirmation of the findings by the State
Commission in Second Order of Commission, the NPL again moved
APTEL in Appeal No. 47 of 2015. It asserted that at the time of
bidding, deemed export benefits were not only in force but also
factored into the financial modelling and tariff computation. Also,
that the said benefits were not withdrawn until the Public Notices of
April 2011 on behalf of DGFT, which postdated the bid submission
and execution of the PPA. Furthermore, relying on the DGFT's
Policy Circular No. 39 of 2000 and the minutes of the PIC meeting
dated 15.03.2011, it asserted that it had a legitimate expectation
that deemed export benefits under Para 8.3 of the FTP would be
available. Accordingly, NPL contended that the sudden withdrawal of
the said benefits arguably resulted in material escalation of project
costs and thereby fell within the "Change of Law" clause of the PPA.
18. On the other hand, PSPCL, challenging the above contentions of
the NPL, submitted that the benefits under FTP Para 8.3 were never
intended for immovable infrastructure like thermal power plants and
that the FTP, by its very nature, was framed to promote exports of
manufactured goods and, accordingly, extended benefits to goods that
were exported or supplied against foreign exchange earnings or to
specified projects under International Competitive Bidding (hereinafter,
"ICB"). Since a thermal power plant constructed in-situ did not meet
the definitional threshold of "goods" or "manufacture" under the FTP
or law(s) on central excise, therefore, NPL's reliance on deemed
export provisions was misplaced. PSPCL further contended that the
DGFT circulars did not carry the force of law and any withdrawal of
benefits thereunder did not amount to legislative change warranting
relief under Article 13 of the PPA.
19. The APTEL referred to the definitions of the terms "manufacture,"
"manufactured goods" and "deemed exports" under the FTP as
well as the Central Excise Act, 1944 (hereinafter, "CEA 1944") and
[2025] 8 S.C.R.
1317
Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
observed that the FTP was expressly designed to incentivize domestic
production of movable goods for export or deemed export and the
concept of "goods" under the statute denoted a tangible and movable
property, subject to classification under the Customs Tariff. Therefore,
a generating station, as in the instant case, comprising of turbines,
boilers, auxiliaries and associated civil works, was nevertheless an
integrated, immovable asset assembled on‐site and did not, as a
whole, constitute a manufactured good capable of being exported
under the FTP. An attempt to sever individual components to obtain
the relief of deemed export is inconsistent with the scheme of the
statute, requiring the final product shipped or deemed to be shipped
to a buyer outside the jurisdiction of India. Observing that the NPL's
reliance on Para 8.3 was based on misconstrued interpretation of
the letter as well as the spirit of the regime, it held that said fiscal
incentives were inherently inapplicable to an in‐situ coal‐based
thermal power plant.
20. To examine whether the Public Notices dated 27.04.2011 and
28.04.2011 constituted a "Change in Law" under Article 13 of the
PPA, APTEL while perusing the language of Article 13 clarified that
Article 13.1.1(ii) extended to "any change in law" affecting "taxes,
duties, cesses, levies, fees and charges" which altered the cost to
the seller of performing its obligations. The NPL had contended that
withdrawal of deemed export benefits, though effected by said Public
Notices rather than a parliamentary enactment, was indisputably
a change in the law or law‐making process, and that the resulting
increase in capital cost which engaged the "Change in Law" provision
was rejected by APTEL observing that the said clause had only
envisioned a legislation and/or a statutory enactment in form of
a regulation by a competent authority. Therefore, the said Public
Notices were merely administrative policy instruments, not meeting
the threshold of "Change in Law". It further opined that while the said
Notices might have affected the cost of NPL, the remedy doesn't lie
as a contractual relief under the PPA, but judicial review of the said
administrative action.
21. Reviewing the satisfaction of the procedural thresholds by NPL under
Article 13 of the PPA, namely, timely notice for the alleged "Change
in Law" event, and quantification of the impact on tariff owing to the
said event, APTEL observed that while NPL reserved its right vide
the Affidavit dated 23.05.2011, it never pursued any reference to
1318
[2025] 8 S.C.R.
Supreme Court Reports
confirmation of the eligibility of said benefits under the FTP, either by
the Central Government or by DGFT. Such a belated invocation of
Article 13 of the PPA, without a binding interpretation, would ascertain
that NPL failed to discharge the onus to demonstrate that a "Change
in Law" event had occurred. Furthermore, it is to be considered
that neither the claim for additional cost was substantiated nor PPA
envisaged restoration of benefits.
22. Apparently being disconsolate from the concurrent findings against
them, NPL moved the Civil Appeal No. 8694 of 2017 before this
Court. NPL has reiterated its grievances.
23. Primarily, NPL has asserted that APTEL erred in holding that the
deemed export benefits under Para 8.3 of the FTP were never
available to a coal‐based thermal power plant assembled in‐situ.
The grounds, as raised in the instant Civil Appeal plead that both
the statutory text and DGFT circulars envisaged relief on individual
capital‐goods components, which collectively form the "goods"
supplied to the project under ICB. It further submits that the APTEL's
narrow reading of "manufactured goods" contravenes the plain
language of the FTP and the FTP Act 1992, which defines "deemed
exports" by reference to supply to specified end‐users rather than
physical shipment of entire power stations abroad.
24. It went on to further contend that APTEL misconstrued the "Change
in Law" clause by restricting its scope to parliamentary enactments
and delegated legislation. The grounds elaborate that Article 13.1.1(ii)
expressly extends to "any change in any law," a phrase wide enough
to include executive notifications issued under statutory authority,
which alter duties, levies or benefits. Moreover, the Public Notice
dated 27.04.2011 and 28.04.2011, issued pursuant to powers under
the FTP Act 1992, are thus argued to be legislative in character and
binding, triggering contractual relief.
25. Additionally, NPL avers that Impugned Judgment overlooked its
legitimate expectation, cultivated by DGFT practice and minutes
of the PIC Meeting dated 15.03.2011, that deemed export benefits
under Para 8.3 of the FTP would subsist until formally rescinded. By
refusing to quantify loss on the basis of contemporaneous tariff models
and the record of actual procurement, the State Commission is also
said to have abdicated its duty to enforce the economic equilibrium
principle fundamental to Article 13. It also faults the APTEL's finding
[2025] 8 S.C.R.
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Nabha Power Limited v.
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on procedural non‐compliance, pointing out that timely notice was
given and that the quantification of incremental costs, derived from
pre‐bid financial schedules, was neither speculative nor premature.
26. Also, adopting their contentions before the State Commission and
APTEL, NPL has put forth that while formulating its bid, it had factored
in two critical streams of fiscal incentives available under distinct
schemes: (i) the Mega Power Policy, which promised concessional
customs duty and full exemption from excise duties for thermal power
projects exceeding 1,000 Mega Watt; and (ii) the benefits under Para
8.3 of the FTP were applicable to deemed exports, including Advance
Authorization, Deemed Export Drawback, and exemption from
Terminal Excise Duty on procurement of domestically manufactured
capital goods. While the former pertained specifically to recognized
MPPs, the latter applied to non-Mega Projects executing contracts
under ICB. As on the bid date, the Project did not have formal
MPP status, and hence, the bid was premised on the availability
of benefits under the FTP. Concluding, NPL, relying on the maxim
contemporanea expositio, referred to the benefits granted to others,
allegedly similarly placed Projects and contended that contemporary
interpretation should be adopted.
27. In its Counter Affidavit dated 12.09.2017, PSPCL comprehensively
refutes NPL's claim that the withdrawal of FTP Para 8.3 benefits
constitutes a "Change in Law" event warranting contractual
compensation. PSPCL first underscores that the FTP incentive
scheme was designed exclusively for "goods", being tangible,
movable items, as classifiable under the Customs Tariff Schedule,
and not for immovable assets such as power plants. Referring to the
legislative history of the FTP and definitions under the CEA 1944,
which repeatedly distinguish between supply of goods for export and
installation of infrastructure projects on-site, it sought to demonstrate
that policy makers never contemplated deemed export benefits for
entire power stations. It further emphasized that any interpretation
extending relief to generating assets would render incoherent the
statutory regime of export‐linked incentives.
28. Supplementing the aforesaid contentions, PSPCL asserts that
NPL's invocation of Article 13 is both contractually and procedurally
flawed, stressing that the PPA draws a clear line between benefits
under the MPP and those under the FTP, and that NPL's election
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to opt for concessions under the MPP 2009, confirmed by its own
Affidavit dated 23.05.2011, precludes a second bite at the cherry. The
Counter Affidavit additionally characterizes NPL's protest reservation
as mere lip service, asserting that no synchronous decision or order
by the DGFT had ever recognized NPL's eligibility to benefits under
Para 8.3 of the FTP.
29. On the "Change in Law" issue, PSPCL argues that only statutory
enactments or delegated legislation under the FTP Act 1992 qualify,
and that administrative notices, lacking the force of regulation,
cannot be contractual triggers. Finally, PSPCL submits that NPL's
cost‐impact calculations are hypothetical, relying on benefit rates
that were never certified by DGFT, and that benefits, if any, must
be sought through statutory appeals rather than by recourse to the
PPA's "Change in Law" clause.
30. In its Rejoinder dated 15.11.2017, NPL insists that the Counter
Affidavit dated 12.09.2017 misconceives both the factual matrix and
the legal contours of the "Change in Law" provision. It reiterates that
the statutory framework of the FTP contemplates deemed export
treatment for capital goods supplied under ICB, irrespective of physical
export, and that numerous circulars by DGFT and meetings of PIC
had long signalled such availability. The Rejoinder emphasizes that
the PIC meeting dated 15.03.2011 and the Public Notices dated
27.04.2011 and 28.04.2011 are legislative in character, having been
issued under rule‐making powers conferred by the Parliament, and
thus squarely fall within the ambit of Article 13.
31. Addressing PSPCL's argument on estoppel, it asserts that its Affidavit
dated 23.05.2011 was executed under protest and duress, simply to
obtain MPP status, and cannot be construed as a waiver of separate
FTP entitlements, further contending that it had repeatedly sought
clarification from DGFT, within the period between bid submission
and execution of the PPA, but was left in regulatory limbo until April
2011. Regarding quantification, NPL has provided detailed schedules
showing incremental capital cost computed at the exact FTP rates
in force on the cut‐off date, thereby demonstrating a concrete,
non‐speculative loss.
32. The Rejoinder dated 15.11.2017 also challenges PSPCL's attempt
to assert a narrow interpretation of "law", arguing that executive
notifications issued under statutory authority are binding legal
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Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
instruments and that contractual remedies for their withdrawal are
expressly provided in Article 13. Concluding, it also urged that
the sanctity of competitive bidding and the doctrine of equitable
adjustment demand that PSPCL bear the financial burden of a post‐bid
policy reversal for which NPL could not have planned.
33. Through detailed references, as raised by all the Senior Advocates
before us, we have been able to peruse all the submissions at
length, including all the material on record through their assistance,
inclusive of the Impugned Judgment.
34. We shall first deal with the issue as to whether the notifications by
Directorate General of Foreign Trade and Press Release of a Cabinet
Decision pertaining to change of threshold so-deemed export benefits
would constitute a "Change in Law" under the PPA.
35. Before we delve into the submission by the parties to this effect and
the analysis thereof, it is critical to refer the PPA as executed by
the parties, especially Article 13 of the PPA, which reads as follows:
"ARTICLE 13: 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
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under the terms of this Agreement or (iv) any
change in the (a) Declared Price of Land for
the Project or (b) the cost of implementation of
the resettlement and rehabilitation package of
the land for the Project mentioned in the RfP
or (c) the cost of implementing Environmental
Management Plan for the Power Station (d)
Deleted
but shall not include (i) any change in any
withholding tax on income or dividends
distributed to the shareholders of the Seller, or
(ii) change in respect of UI Charges or frequency
intervals by an Appropriate Commission.
13.1.2 'Competent Court' means:
The Supreme Court or any High Court or any
tribunal or any similar judicial or quasi-judicial
body in India that has jurisdiction to adjudicate
upon issues relating to the Project.
13.2. Application and Principals 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
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Nabha Power Limited v.
Punjab State Power Corporation Limited and Others
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.
Jn case of Dispute, Article 17 shall apply.
It is clarified that the above mentioned
compensation shall be payable to either Party,
only with effect from the date on which the total
increase/decrease exceeds amount of Rupees
16,50,00,000/- (Rupees Sixteen crore fifty
lakhs).
b) Operation Period
As a result of Change in Law, the compensation for
any increase/decrease in revenues or cost to the
Seller shall be determined and effective from such
date, as decided by the Appropriate Commission
whose decision shall be final and binding on both
the Parties, subject to rights of appeal provided
under applicable Law.
Provided that the above mentioned compensation
shall be payable only if and for increase/ decrease
in revenues or cost to the Seller is in excess of an
amount equivalent to 1% of the Letter of Credit in
aggregate for a Contract Year.
13.3. Notification of Change in Law
13.3.1. If the Seller is affected by a Change in Law
in accordance with Article 13.2 and wishes
to claim a Change in Law under this Article,
it shall give notice to the Procurer 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.
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13.3.2. Notwithstanding Article 13.3.1, the Seller
shall be obliged to serve a notice to the
Procurer under this Article 13.3.2 if it
is beneficially affected by a Change in
Law. Without prejudice to the factor of
materiality or other provisions contained in
this Agreement, the obligation to inform the
Procurer contained herein shall be material.
Provided that in case the Seller has not
provided such notice, the Procurer shall have
the right to issue such notice to the Seller.
13.3.3. Any notice served pursuant to this Article
13.3.2 shall provide, amongst other things,
precise details of:
(a) the Change in Law; and
(b) the effects on the Seller of the matters
referred to in Article 13.2.
13.4. Tariff Adjustment Payment on account of Change
in Law
13.4.1. Subject to Article 13.2, the adjustment in
Monthly Tariff Payment shall be effective
from:
(i) the date of adoption, promulgation,
amendment re-enactment or repeal of the
Law or Change in Law; or
(ii) the date of order/judgment of the
Competent Court or tribunal or 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
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Nabha Power Limited v.
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Agreement, the Monthly Invoice to be raised
by the Seller after such change in Tariff shall
appropriately reflect the changed Tariff."
36. A contention is raised on behalf of the learned Senior Advocates
for the Appellants that the Request for Proposal and the contractual
framework between the parties as a whole clearly set a cut-off date for
"Change in Law" under the Article 13 of the PPA and required them
to deem all the prevailing laws, regulations, and their interpretations
thereof to have been factored in the bidding process and the price
thereof. It is accordingly contended that "law" included not only the
statutory texts from the wisdom of the legislature but also any such
authoritative interpretations of the law by an "Indian Government
Instrumentality", which they press DGFT to be one.
37. Moreover, arguing that similar benefits were given under FTP to MPP
and non-MPP projects and to substantiate, reliance was placed on
equivalent benefits being given to 144 other projects, implying settled
nature of law. Alternatively, it is also argued that this interpretation
was altered through the PIC dated 15.03.2011, and subsequently,
led to withdrawing the benefits under Para 8.3(a) and (b) of the
FTP for non-MPP altogether. Such an act would, the Appellants
contend, constitute "Change in Law", owing to the modifications to
the existing entitlements.
38. Assailing the orders of the State Commission as well as the APTEL, it
is also pressed that those forums erroneously only dealt with whether
the Appellants satisfied the conditions under the FTP as opposed to
the legality as to whether the said benefits were available as on the
cut-off date, thereby committing of a jurisdictional error on their part by
expanding the scope of the remand, being in contradiction to the law
laid down in Shivshankara and Another v. H.P. Vedavyasa Char1.
Relying on the decision of this Court in Haryana Power Purchase
Centre v. Sasan Power Limited and Others2, it is further argued that
the best material to establish that whether a project was exempted
from the concerned duties as on the cut-off would be instances of
other similarly placed project where goods were also treated to be
exempt under the instant FTP.
1
(2023) 13 SCC 1
2
(2024) 1 SCC 247
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39. On the other hand, the Respondents had relied on decision of
this Court in GMR Warora Energy Limited v.