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TMI Blog2024 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... pt 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subheading 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; (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or (b) an inter-state thermal power plant of a capacity of 1000 MW or more, located in States other than those specified in clause (a) above; or (c) an inter-state hydel power plant of a capacity of 350 MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or (d) an inter-state hydel power plant of a capacity of 500 MW or more, located in States other than those specified in clause (a) above. Fiscal concessions/benefits available to the Mega Power Projects Zero Customs Duty: In terms of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.21/2002-Customs dated 1st March, 2002 read 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term- Successful Bidder or Selected Bidder was to mean that the bidder selected pursuant to the RFP to set up the project and supply electrical output therefrom to the Procurer through the Seller as per the terms of the power purchase agreement (PPA) and other RFP project documents. Under Clause 2.7.2.1 and 2.7.2.2, the bidder was to make an independent enquiry and satisfy itself with respect to all the required information, inputs, conditions and circumstances and factors that may have any effect on the bid. Under the said clauses, it was deemed that while submitting the bid, the bidder was to have inspected and examined the site conditions, the laws and regulations in force. The bidder was to acknowledge that on being selected as the successful bidder and on acquisition of the special purpose vehicle (the seller) the seller shall not be relieved from any of its obligations under the RFP project documents nor shall the seller be entitled for any extension of time or financial compensation by reason of the unsuitability of the site. Clauses 2.7.2.1 and 2.7.2.2 read as under. 2.7.2.1 The Bidder shall make independent enquiry and satisfy itself with respect to all the required infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... REAU GOVERNMENT OF INDIA Press Release Thursday, October 01,2009 Modification of Mega Power Policy The Union Cabinet today approved modifications in the existing mega power policy. This would encourage setting up of mega power plants to take advantage of economies of scale and improve their viability. It will simplify the procedure for grant of mega certificate and encourage capacity addition. It will also encourage technology transfer and indigenous manufacturing in the field of super critical power equipments. The mega Power Policy was introduced in November 1995 for providing impetus to development of large size power projects in the country and derive benefit from economies of scale. These guidelines were modified in 1998 and 2002 and was last amended in April 2006 to encourage power development in Jammu Kashmir and the North Eastern region. In order to rationalize the Mega Power Policy and bring it in consonance with the National Electricity Policy 2005 and Tariff Policy 2006, the following modifications of the existing Mega Power Policy have been envisaged: (i) The existing condition of privatization of distribution by power purchasing states would be replaced by the conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible 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. (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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into a Power Purchase Agreement on 18.01.2010 with the respondent PSPCL. 16. According to the appellant, thereafter a series of correspondence ensued between appellant no. 1 and the respondent with regard to the issuance of Essentiality Certificate so that the customs authorities allow import at the concessional duty in terms of the amended entry 400, in the Notification of 11.12.2009. The appellant has a case that apart from the other documents the respondent asked for an affidavit indemnifying the respondent against adverse consequences arising out of wrong claim of benefits by the appellant and also an affidavit stating that the benefits of mega power status granted to the appellant project will be passed on to the respondent as per clause 13.3 of the PPA. 17. The appellant claims that while it furnished the other documents, with regard to the affidavit for passing on the benefits of the mega power status, it wrote to the respondent on 17.02.2011 stating that it had already factored in the benefits available in view of the Cabinet decision dated 01.10.2009 and thereafter there is no basis for submission of the affidavit as called for. 18. The respondent replied by its l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending that appellant no. 2 had considered and factored the benefits available to the project under the Mega Power Policy of 2009, on 09.10.2009 when they submitted the bid and had passed on such benefits to the respondent by way of the tariff it 23 quoted. The appellant contended that no change in law occurred in view of the notification of 11.12.2009 and 14.12.2009 and whatever change was there, happened on 01.10.2009 itself with the press release of the Cabinet decision. The following prayers were made in the claim petition : In light of the facts and circumstances as stated above, the Petitioners are respectfully praying before this Hon'ble Commission: (a) to declare that the Union Cabinet's decision dated 01.10.2009 modifying the Mega Policy 2006 reported vide Press Information Bureau on the same date does not amount to 'Change in Law' under Article 13 of the PPA; (b) following the declaratory relief sought by the Petitioners, to hold that consequential relief as set out under Article 13.2 of the PPA has not triggered and no consequential benefits under Article 13 have to be passed on to the Respondent by the Petitioner under the PPA on account of Union Cabinet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r held that the benefit of mega power status cannot be granted with effect from 01.10.2009 considering the fact that it was only after a gazette notification that the public at large were informed of the decisions of the Government and which gazette notification was issued only in December, 2009. That the press release itself provided a disclaimer that though all efforts have been made to ensure the accuracy and the currency and the content of the website of the Press Information Bureau, the same should not be construed as a statement of law or used for any legal purpose. On the FTP issue, it was held that the benefits under the FTP were never available to the appellant and if identical benefits were indeed available to them under the FTP, there was no need for them to claim the same benefit under the modified Mega Power Policy. It was further held that even if it was assumed for the sake of argument that the FTP benefits were available before the cutoff date, they have forfeited their right to these benefits by claiming similar benefits under the new Mega Power Policy. Proceedings before APTEL 23. After the Order of the State Commission, the appellant filed Appeal No. 29 of 2013 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior Counsel for the appellant contends that the effect of the Cabinet Decision must be seen with respect to the contours of the definition of law in the Power Purchase Agreement; that the definition includes any order of any Indian Government instrumentality and hence it cannot be said that the decision of the highest constitutionally entrusted body for formulating binding national policy is not law for the purpose of the PPA; that the appellant could not be expected to ignore the decision of the Cabinet dated 01.10.2009 announced through the press release being a prudent bidder/businessmen; that even the respondent concedes that the Cabinet Decision could lead to promissory estoppel against the Government; that clause 2.7.2.1 of the RFP deems that the bidders have factored in all Required information/factors that may have any effect on the bid and that the Cabinet Decision is at least an information/factor for bidding purposes. 30. Learned senior counsel contended that the appellant factored in the fiscal benefits accruing from the Mega Policy in view of the Cabinet Decision of 01.10.2009; that the appellant informed PSPCL by way of letters dated 02.10.2009 and 06.10.2009 about t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial assent is a prerequisite. Lastly, it is contended that as per Rule 50(13) of the Central Secretariat, Manual of Office Procedure, the Press Communique/Note is the approved formal procedure of communication. Learned senior counsel relied on a large number of precedents in support of his submissions. Submission of the Respondent 34. While stoutly defending the orders of the fora below, learned senior counsel for the respondent contends that change in law for the purpose of customs duty insofar as the appellant is concerned was brought into force only on 11.12.2009 with the issuance of customs notification under Section 25 of the Customs Act 1962; that Section 25(1) of the said Act provides for exemption from the payment of customs duty to be by notification; that Sub-Section 4 of Section 25 inter alia provides that every notification unless otherwise provided shall come into force on the date of its issue by the Central Government for publication in the Official Gazette and that Cabinet Decision by itself cannot therefore effect such a change without a notification under Section 25 since if something is specified to be done in a particular manner it needs to be done in that man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 03.12.2009 including an undertaking to be given by the State Government to the Government of India as a pre-condition. In view of this, learned senior counsel contends that the Cabinet Decision was not in complete form and it was only after the conditions were laid down by the Ministry of Power on 03.12.2009 that the notification dated 11.12.2009 and office memorandum of 14.12.2009 was issued by the Central Government providing for exemption to Mega Power Projects specifically stating that The Power Purchasing State shall undertake to carry out distribution reforms as laid down by the Ministry of Power . Learned senior counsel contends that the Mega Power Policy was issued only on 14.12.2009 with further additions. In view of the same, learned senior counsel for the respondents contend that there is no scope for interference with the concurrent judgments of the Courts below. Question for consideration: 37. In the above background, the question that arises for consideration is: Whether the press release of 01.10.2009 announcing the decision of the Union Cabinet about approval of certain modifications envisaged in the then existing mega power policy, is covered within the meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses available or obtained for the project, otherwise than for default of the seller, which results in any change in any cost of or revenue from the business of selling electricity by the seller to the procurer under the terms of this agreement or (iv) any change in the (a) declared price of land for the project or (b) the cost of implementation of the resettlement and rehabilitation package of the land for the project mentioned in the RFP or (c) the cost of implementing environmental management plan for the power station (d) deleted. but shall not include (i) any change in any withholding tax on income or dividends distributed to the shareholders of the Seller, or (ii) change in respect of UI Charges or frequency intervals by an Appropriate Commission. 13.1.2 Competent Court means: The Supreme Court or any High Court, or any tribunal or any similar judicial or quasi-judicial body in India that has jurisdiction to adjudicate upon issues relating to the Project. 13.2 Application and Principles for computing impact of Change in Law While determining the consequence of Change in Law under this Article 13, the Parties shall have due regard to the principle that the purpose of compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form 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 of Indian Governmental Instrumentality, if the Change in Law is on account of a change in interpretation of Law. 13.4.2 The payment for Changes in Law shall be through Supplementary Bill as mentioned in Article 11.8. However, in case of any change in Tariff by reason of Change in Law, as determined in accordance with this Agreement, the Monthly Invoice to be raised by the Seller after such change in Tariff shall appropriately reflect the changed Tariff. 41. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press release announcing the cabinet approval of certain modifications envisaged in the existing Mega Power Policy is not law as defined in Clause 1.1 of the PPA. Further, the press release does not enact, adopt, promulgate, amend, modify or repeal any existing law or bring into effect any law. This aspect has been elaborated hereinbelow. Hence, the appellant s would fail on the ground that the press release of 01.10.2009 is not law and as of 01.10.2009, the continuing legal regime was as per the notification of 01.03.2002 issued under Section 25 of the Customs Act and the Mega Power Policy of 07.08.2006 and there was no alteration of that legal regime on 01.10.2009. The change in law occurred only on 11.12.2009/14.12.2009, and the respondent no. 1 has rightly been held by the fora below to be entitled to the benefits, which ultimately will go to the consumers. 44. The argument feebly advanced by the appellant that no notice of change of law was issued by the respondent under Clause 13.3.1 and 13.3.2 does not impress us. The said clause expressly deals only with a seller having to issue the notice if it is beneficially affected by the change of law. In this case, PSPCL is the buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there was a change in law the question would be, did it result in any change in any cost or revenue from the business of selling electricity by the seller to the procurer under the terms of the agreement. 48. It is important to keep in mind the definition of law which has been defined to mean in relation to this Agreement, all laws including Electricity Laws in force in India and any statute, ordinance, regulation, notification or code, rule or any interpretation of any of them by an Indian Governmental instrumentality and having force of law and shall further include all applicable rules, regulations, orders, notification by an Indian Governmental instrumentality pursuant to or under any of them and shall include all rules, regulations, decisions and orders of the Appropriate Commission. We are convinced that the words shall include all rules, regulations, decisions and orders of the Appropriate Commission , only refer to the rules, regulations, decisions and orders of the Appropriate Commission. 49. It is important to bear in mind that law is one thing and change in law is another, in the sense that the two are two different concepts. For the case in question, we need to unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2009. 52. The exemption notification has to be read with the then extant policy of 07.08.2006 under which Mega Power Policy, to obtain a Mega Power Status, the plant had to be an inter-State power plant of the prescribed dimensions and if it were so, certain financial concessions/benefits were to be available to it under the policy document. Admittedly, that policy of 07.08.2006 was duly promulgated by the Government of India through Ministry of Power and there is no dispute on this score. 53. What the appellant contends is that with the press release on 01.10.2009 and they having received no positive response to the letters of 02.10.2009 and 06.10.2009 (since withdrawn), they in their bid of 09.10.2009 factored in the benefits that would be available in view of the Cabinet decision as announced in the press release of 01.10.2009. According to the appellants, as such, when the notifications for amendment were issued on 11.12.2009 and when the policy document was amended on 14.12.2009, there was no change in law because the legal regime stood altered on 01.10.2009 with the press release. Respondents contended that any clarification for the bid ought to have been sought before 25.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release is a summary of the Cabinet decision. Even the press release makes it clear that it was a proposal that was envisaged and which was to come into force in future. 58. Certainty is the hallmark of law. It is one of its essential attributes. It is an integral component of the rule of law. What was certain on 01.10.2009 in the context of our case was only the prevalent customs notification of 01.03.2002 issued under section 25, duly notified and gazetted as well as the Mega Power Policy document admittedly promulgated on 07.08.2006. 59. The press release summarizing the Cabinet decision and beset with several conditions created no vested rights on any party to the power purchase agreement vis-a-vis the other party on 01.10.2009. In fact, the press release itself contemplated certain contingencies. A right vests when all the facts have occurred which must by law occur in order for the person in question to have the right (see Salmond on Jurisprudence, Twelfth Edition P.J. Fitzgeral page 245). It is only when the right vests will there be a corelative duty on the other as far as nature of the right involved in the present case is concerned. 60. Accepting the argument would also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icitously the said principle, O. Chinnappa Reddy, J. speaking for this Court in B.K. Srinivasan and Others vs. State of Karnataka and Others, (1987) 1 SCC 658 ruled:- 15. There can be no doubt about the proposition that where a law, whether parliamentary or subordinate, demands compliance, those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the conscientious good man seeking to abide by the law or from the standpoint of Justice Holmes's unconscientious bad man seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all-pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission [CERC] and Others, (2023) 10 SCC 401, this Court found that busy season surcharge, development surcharge, and port congestion surcharge were increased by circular/notifications issued by the Ministry of Railways by virtue of the powers vested in them which were enforceable commands proprio vigore. Similarly, the letters carrying the decisions of Coal India on the aspect of charges for linkage coal and the direction to use beneficiated coal were held to be statutory documents having the force of law. The press release of 01.10.2009 does not enjoy the same legal characteristics for the reasons already set out hereinabove. 67. Equally, for the same reason, the judgment in Energy Watchdog vs. Central Electricity Regulatory Commission and Others, (2017) 14 SCC 80 will also not help the appellant. The appellant s main reliance has been on Lloyd Electric and Engineering Limited vs. State of Himachal Pradesh and Others, (2016) 1 SCC 560. In Lloyd Electric (supra), the appellant therein was already enjoying the concessional rate in CST @ 1% up to 31.03.2009. Not only this, after the Cabinet note, a policy decision was taken to extend the period of concession up to 31.03.2013 or til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Limited vs. Adani Power Maharashtra Limited and Others, (2023) 7 SCC 401. In the said case, neither the decision of the Cabinet Committee on Economic Affairs dated 06.02.2013 nor the Press Release of 21.06.2013 was considered as the relevant date for change in law and only 26.07.2013 which was the date on which the Office Memorandum was issued providing further instructions regarding the implementation of the New Coal Distributional Policy [NCDP] was considered as the change in law event. Pursuant to the Office Memorandum of 26.07.2013, the Ministry of Power issued a communication of 31.07.2013 setting out the decision taken. This case clearly supports the case of the respondent that the press release of 01.10.2009 on the facts herein could not have been the basis for the appellant to assume that a new legal regime had commenced in with effect from that date. 71. Though several judgments were cited, including Bachhittar Singh vs. The State of Punjab, [1962] Supp. 3 SCR 713, to contend that the press release of 01.10.2009 was not an order , we do not propose to examine them as we are otherwise convinced for the reason set out above that the 01.10.2009 Press Release is not law und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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