2024 (11) TMI 216 - SC - Customs

Mega Power Policy and the effect of the Press Release of 01.10.2009 -competitive bidding was initiated by the respondent, what was in vogue was the Mega Power Policy, 2006. Petitioners praying before this Hon'ble Commission to declare that the Union Cabinet's decision dated 01.10.2009 modifying the Mega Policy 2006 reported vide Press Information Bureau on the same date does not amount to 'Change in Law' under Article 13 of the PPA Whether the press release of 01.10.2009 announcing the decision of the Union Cabinet about approval of certain modifications envisaged in the then existing mega power policy, is covered within the meaning of the expression law as defined in Clause 1.1 of the RFP/PPA and if so did the extant legal regime as on 01.10.2009 undergo a change from the said date ? - HELD THAT - The golden rule of interpretation is that the words of a contract should be construed in their grammatical and ordinary sense, except to the extent that some modification is necessary in order to avoid absurdity, inconsistency or repugnancy. (See para 5.01 Kim Lewison, The interpretation of Contracts, 3rd Edition). Similarly, any invocation of the business efficacy test as canvassed would arise only if the terms of the contract are not explicit and clear. The business efficacy test cannot contradict any express term of the contract and is invoked only if by a plain and literal interpretation of the term in the agreement or the contract, it is not possible to achieve the result or the consequence intended by the parties acting as prudent businessmen. The press release did not alter/amend/repeal the existing law as on 01.10.2009. It was at best the announcement of a proposal approved by the Cabinet which had to be given shape after fulfilment of the conditions mentioned therein. Some of the conditions were that the power purchasing States were to undertake to carry out distribution reforms as laid down by the Ministry of Power and admittedly in that regard there was a meeting held on 28.10.2009; an undertaking was sought from the States in the prescribed formats and the four distribution reform measures required to be undertaken were part of the undertaking. The press release summarizing the Cabinet decision and beset with several conditions created no vested rights on any party to the power purchase agreement vis-a-vis the other party on 01.10.2009. In fact, the press release itself contemplated certain contingencies. A right vests when all the facts have occurred which must by law occur in order for the person in question to have the right (see Salmond on Jurisprudence, Twelfth Edition P.J. Fitzgeral page 245). It is only when the right vests will there be a corelative duty on the other as far as nature of the right involved in the present case is concerned. Accepting the argument would also create tremendous uncertainties in the law. In the absence of any repeal of 01.03.2002 notification and the 07.08.2006 Mega Power Policy, between 01.10.2009 and 11.12.2009/14.12.2009 there will be two legal regime operating. Lord Bingham of Cornhill in his locus classicus The Rule of Law rightly identifies as one of the facets of rule of law, the following the law must be accessible and so far as possible intelligible, clear and predictable. One of the arguments advanced by the learned senior counsel for the appellants is based on the doctrine of promissory estoppel. The argument need not detain us since the respondent PSPCL which is the party to power purchase agreement is not the promisor, even if we assume the press release of 01.10.2009 as holding out the promise. The Union of India has not been arrayed in any duly constituted litigation to enforce the promise. The argument also belies the primary contention of the appellant since even according to their understanding, it was at best a promise by the Union of India and not any alteration of the law proprio vigore (by its own force). In any case, no steps have been taken to enforce the so-called promise and there is no order of any court of law enforcing the promise as on 02.10.2009. The appellant contends that since the promise was duly complied with, there was no need to enforce the promise. This is also an argument which cuts at the root of appellants main submission. The notifications constituting change in law happened on 11.12.2009 and 14.12.2009 and hence there is no basis in the contention that on 01.10.2009 the old legal regime had given way. There is only one voice of the government which has given the customs duty exemption for goods imported for use in thermal power plants, (without the requirement of the plant being an interstate power plant) with effect from 11.12.2009. The policy document also came on 14.12.2009. The press release of 01.10.2009 could not have been the basis for the appellant to have assumed that the notification of 01.03.2002 would stand amended and they would have the benefit from 01.10.2009 itself. Though several judgments were cited, including Bachhittar Singh vs. The State of Punjab 1962 (3) TMI 84 - SUPREME COURT to contend that the press release of 01.10.2009 was not an order , we do not propose to examine them as we are otherwise convinced for the reason set out above that the 01.10.2009 Press Release is not law under Clause 1.1. Equally, for that reason, we have not discussed the cases on Article 77 of the Constitution of India, dealing with authentication of orders. State Commission while rejecting the contention of the appellant has rightly recorded that Commission holds that since the Mega Power Status was granted to the Project under the Mega Power Policy by the Ministry of Power on 30.07.2010 on the application dated 11.05.2010 filed by the respondent no.1, having become eligible on 16.04.2010, the benefits, if any, accruing thereunder to the Project would be applicable only from 30.07.2010 and not from any prior date, notwithstanding that the decision for granting the Mega Power Status was taken/announced on 01.10.2009 or the notifications in respect of the said decision of the Union Cabinet were issued by the concerned Ministries of the Government of India on 11.12.2009 and 14.12.2009.

Summary

Issues Involved:
1. Whether the press release of 01.10.2009 announcing the decision of the Union Cabinet about modifications in the Mega Power Policy constitutes "law" as defined in Clause 1.1 of the RFP/PPA.
2. Whether the legal regime was altered on 01.10.2009 or on 11.12.2009 and 14.12.2009, impacting the fiscal benefits under the Mega Power Policy.

Issue-wise Detailed Analysis:

1. Definition of "Law" and the Press Release of 01.10.2009:
The central issue was whether the press release of 01.10.2009, which announced the Union Cabinet's decision to modify the Mega Power Policy, could be considered "law" under the Power Purchase Agreement (PPA). The court examined the definition of "law" in Clause 1.1 of the PPA, which includes statutes, ordinances, regulations, notifications, codes, rules, and orders by an Indian Governmental Instrumentality with the force of law. The court concluded that a press release does not fulfill the criteria of an "order" or "law" in legal parlance, as it does not enact, adopt, promulgate, amend, modify, or repeal any existing law. The press release was deemed a proposal or announcement of intent, not a legally binding directive.

2. Timing of the Change in Legal Regime:
The court addressed whether the legal regime was altered on 01.10.2009 or later on 11.12.2009 and 14.12.2009. The appellant argued that the press release constituted a change in law, allowing them to factor in fiscal benefits in their bid. The court, however, found that the legal regime remained unchanged as of 01.10.2009. The change in law occurred only with the customs notification on 11.12.2009 and the policy document on 14.12.2009, which provided the necessary legal framework for the fiscal benefits under the Mega Power Policy. The court emphasized that certainty and clarity in law are essential, and a press release lacking formal legal status could not alter the existing legal regime.

Conclusion:
The court upheld the decisions of the lower forums, confirming that the press release of 01.10.2009 did not constitute a change in law under the PPA. The legal regime alteration occurred with the customs notification on 11.12.2009 and the policy document on 14.12.2009. Consequently, the benefits of the Mega Power Policy were applicable only from these dates, and the appellant's contention of factoring in benefits based on the press release was unfounded. The appeal was dismissed, affirming the lower courts' judgments.