Kiran Raj

The Supreme Court of India Division Bench of Chief Justice B. R. Gavai and Justice Augustine George Masih dismissed two connected civil appeals concerning claims to “deemed export” benefits under the Foreign Trade Policy 2009–2014 and alleged “Change in Law” under a power purchase agreement. The Court held that the appellants were not entitled to the claimed benefits and that reliance on a cabinet press release could not ground contractual relief. It recorded that the impugned appellate judgment required no interference and issued clear operative directions: “These Appeals are dismissed being devoid of merit,” with “no order as to costs,” and all pending applications disposed.

Two appeals under Section 125 of the Electricity Act, 2003 were preferred from a common judgment dated 4 July 2017 of the Appellate Tribunal for Electricity (APTEL). The principal controversy concerned (i) availability, as on the bid cut-off date, of “deemed export” benefits under Para 8.3 of the Foreign Trade Policy 2009–2014 (FTP); (ii) whether a cabinet press release changing the threshold of deemed export benefits constituted “Change in Law” under a power purchase agreement (PPA) dated 18 January 2010; and (iii) any restitutionary compensation.

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Nabha Power Limited (NPL) filed Civil Appeal No. 8694 of 2017; Talwandi Sabo Power Limited (TSPL) filed Civil Appeal No. 8739 of 2017. Both arose from APTEL decisions involving common issues. The appellants had been held not eligible for the FTP benefits and liable to pass them to the procurer-utility, the Punjab State Power Corporation Limited (PSPCL).

NPL was incorporated on 25 September 2007 to develop a 2×700 MW coal-based thermal power project at Rajpura, Punjab. Following the unbundling of the erstwhile Punjab State Electricity Board, 100% of NPL’s shares were acquired by L&T Power Development Limited through a bidding process initiated on 10 June 2009, with a final bid submission date of 9 October 2009. Technical and financial bids were evaluated by a committee chaired by the Principal Secretary, Department of Power, Government of Punjab.

Before the regulator, NPL sought relief under Article 13 of the PPA alleging post-bid withdrawal of fiscal incentives that had been available under the FTP, asserting that such withdrawal constituted “Change in Law.” The State Commission rejected the claim. On appeal, APTEL initially remanded the matter to ascertain whether the FTP benefits were available as on the cut-off date; on remand, the State Commission reiterated its conclusions in its order dated 16 December 2014, noting inter alia the absence of contemporaneous DGFT endorsements and recording that NPL, by its own affidavit dated 23 May 2011, was to pass on Mega Power Policy benefits to the buyer.

In the ensuing APTEL appeal, NPL argued that deemed export benefits were in force at bidding and had been factored into tariff computation; that those benefits were not withdrawn until the DGFT public notices issued in April 2011; and that DGFT Policy Circular No. 39 of 2000 and minutes of the Policy Interpretation Committee (PIC) meeting dated 15 March 2011 supported a legitimate expectation of benefits under Para 8.3. It claimed the sudden withdrawal escalated project costs, thereby engaging Article 13 of the PPA.

PSPCL countered that the FTP incentive scheme applied to tangible, movable “goods,” not to immovable infrastructure like thermal power plants; that the FTP was designed to promote export/deemed export of manufactured goods; and that DGFT circulars did not carry the force of law so that any withdrawal thereunder would not trigger “Change in Law” compensation under the PPA.

APTEL examined the definitions under the FTP and the Central Excise Act, 1944 and found that a generating station assembled in situ did not, as a whole, constitute a manufactured good capable of export under the FTP; attempts to sever individual components to obtain deemed export relief were inconsistent with the statute’s scheme. It treated the public notices as administrative, not meeting the “Change in Law” threshold. APTEL also held that NPL did not establish the necessary procedural thresholds under Article 13 for timely notice and quantification.

Before the Supreme Court, the appellants pressed that Article 13.1.1(ii) extended to “any change in any law,” wide enough to include executive notifications altering duties, levies, or benefits; that the DGFT public notices were legislative in character; and that PIC minutes, DGFT circulars, and similar benefits allegedly granted to others established a settled interpretation. They further contended that the PPA’s cut-off structure required factoring prevailing “laws” and their authoritative interpretations by an “Indian Government Instrumentality.”

The respondents relied on Supreme Court authority to contend that only duly promulgated notifications, not press releases or communications, can amount to “Change in Law,” and invoked decisions on what constitutes “goods” and “manufacture,” emphasizing marketability and movability. The judgment refers to jurisprudence distinguishing movable manufactured goods from on-site construction, including exposition that goods must be brought into existence with a “distinctive name, character, or use” and be marketable; this was found inapplicable to integrated thermal power plants.

The Bench then turned to the appellants’ claim that International Competitive Bidding (ICB) requirements under Para 8.4.4(iv) were satisfied by tariff-based competitive bidding at the developer-selection stage. It noted, however, that the essence of deemed export benefits lay in “supply of goods” to projects, and that evidence of ICB for procurement of such goods—either at the Independent Power Producer stage or the Engineering Procurement Contract stage—had not been produced; reliance on tariff-based competitive bidding for developer selection could not be equated with ICB for supply of goods.

Having addressed the three framed questions, the Court ultimately concluded that the appellants were not entitled to deemed export benefits; that the invoked press release could not be treated as “law” or as “Change in Law”; that the later DGFT notifications were clarificatory; and that no restitutionary relief was available. The appeals were dismissed without costs; pending applications were disposed.

The Bench set out the governing contractual and legal framework in precise terms: “while Article 1.1 of the PPA elaborated ‘law’ to include statutes, regulations, notifications, orders, and interpretations, the Article 13.1.1. defined ‘Change in Law’ as an enactment, amendment or repeal after 02.10.2009.”

Addressing whether a cabinet press release could qualify as “law” or “Change in Law,” the Court stated: “the 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’ as argued by Appellants in the instant Civil Appeals.”

In that context, the Court noted why an “order” must meet a binding-command threshold: “the Press Release dated 01.10.2009 amounts to an ‘order’ was held to have failed, while also referring its meaning in the Black’s Law Dictionary, which required a binding command. However, such notifications only emerged on 11.12.2009 and 14.12.2009.”

Turning to the FTP scheme, the Court recorded that APTEL’s approach to “goods” and “manufacture” was anchored in statutory text and excise jurisprudence: “excise duty can only be applied to the produced goods which are usable, movable, saleable, and marketable… goods ought to be known in the market and should be capable of being sold.”

Applying those principles, the Bench recorded the implications for integrated power plants: “the manufactured good should have been brought into existence with a distinctive name, character, or use. Such a feasibility would be impossible when it comes to the concerned power plants in the instant set of Appeals.”

On the statutory precondition of “supply of goods” under Para 8.2(g), the Court recorded: “it would neither be permissible nor viable to supply a power plant to itself as per the mandate of the FTP and especially, in the light of Para 8.2(g) of the FTP contemplating categorization of ‘supply of goods’ to power projects.”

The Court then analyzed the ICB requirement in Para 8.4.4(iv) of the FTP and its application stages: “the essence of deemed export benefits lay in the supply of goods to power projects, not in power procurement arrangements… mandate of ICB… when in relation to a ‘supply of goods’ as per Para 8.2(g) of the FTP… Reliance on Tariff-Based Competitive Bidding… for selection of the power project developer cannot be equated with the mandate of the ICB for supply of goods and is, therefore, a misnomer and a misplaced plea raised on their part.”

Summarizing why the appellants did not meet the prerequisites, the Court recorded: “the Appellants… have clearly 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(s) with their subsidiaries or joint venture or related companies.”

On the appellants’ reliance on DGFT circulars/notices, the Court stated the nature and effect of those instruments: “the aforesaid notifications issued through DGFT were mere clarificatory in nature… not as something which has either changed or introduced something new, being allegedly oppressive towards the Appellants.”

The Bench then addressed the hypothetical scenario even if a “Change in Law” were assumed: “even assuming… that notification(s) would indeed amount to a ‘Change in Law’, it is merely an academic exercise without any impact on the legal position of the Appellants. They were, and still are not, entitled to any deemed export benefits under the FTP for their inability to fulfil the concerned prerequisites.”

With the first two issues answered against the appellants, the Court recorded the consequence for restitutionary relief: “there cannot arise any question for compensation to the Appellants by the PSPCL as a means of restitutionary relief.”

Finally, the Bench noted its overall conclusion on interference: “we find no ground to interfere with the Impugned Judgment and order dated 04.07.2017 passed by the Appellate Tribunal for Electricity, New Delhi.”

In relation to entitlement under the FTP, it stated: “The instant issue is answered against the Appellants to the effect that they were not entitled to the deemed export benefits under Para 8.3 of the FTP.” This definitive conclusion on eligibility resolved the principal controversy and governed the outcome of the connected claims.

Regarding the characterization of instruments relied upon for “Change in Law,” the Court recorded that “the Press Release dated 01.10.2009 would neither amount to ‘law’ within the meaning conceptualized in the PPA… nor it would thereby amount to ‘Change in Law’ as argued by Appellants in the instant Civil Appeals.” It further recorded that the relevant DGFT notifications “were mere clarificatory in nature,” and thus did not alter legal entitlements in a manner triggering contractual compensation. These directions settled that no contractual relief under Article 13 was available on the bases asserted.

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Consequently, the Bench addressed the appellants’ restitutionary prayer: “there cannot arise any question for compensation to the Appellants by the PSPCL as a means of restitutionary relief.” With the predicate issues answered against the appellants, the Court’s directive foreclosed any monetary adjustment or tariff restoration claim premised on the pleaded events.

On the disposition, the Court declared: “These Appeals are dismissed being devoid of merit.” It then directed on costs and applications: “There shall be no order as to costs.” and “Pending application(s), if any, also stand disposed of.” These final orders comprehensively concluded the proceedings and related applications.

Case Title: Nabha Power Limited v. Punjab State Power Corporation Limited and Others; with Talwandi Sabo Power Limited v. Punjab State Power Corporation Limited

Neutral Citation: 2025 INSC 1002

Case Number: Civil Appeal No. 8694 of 2017; Civil Appeal No. 8739 of 2017

Bench: Chief Justice B. R. Gavai, Justice Augustine George Masih