9911796707
TMI Blog2024 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... e "State Commission"), insofar as issue no. 1 discussed therein was concerned. That issue concerned the aspect of Mega Power Policy and the effect of the Press Release of 01.10.2009. We are only concerned with the said issue in this Appeal. FACTS OF THE CASE : - A) Customs Notification No. 21/2002 dated 01.03.2002. 2. To appreciate the issues involved, certain background facts need to be set out. Goods imported for setting up a Mega Power Project had, under a notification issued under Section 25 of the Customs Act dated 01.03.2002, been granted certain exemptions from customs duty. It will be useful to set out the relevant part of the 01.03.2002 notification. "Exemption and effective rates of basic and additional duty for specified goods of Chapters 1 to 99. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 17 /2001- Customs, dated the 1st March, 2001 [G.S.R. 116(E), dated the 1st March, 2001], the Central Government, being satisfied that it is necessary in the public interest so to do, hereby ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported goods are certified by the Chairman and Managing Director of the said Central Public Sector Undertaking; and (c) In the case of imports by a Private Sector Project, the quantity, total value, description and specifications of the imported goods are certified by the Chief Executive Officer of such project." B) Mega Power Policy of 2006 3. On 10.06.2009, when competitive bidding was initiated by the respondent, what was in vogue was the Mega Power Policy, 2006. If a thermal plant was covered as a Mega Power Project under the Mega Power Policy of 2006, it was entitled to the benefit of certain exemptions under the customs notification dated 01.03.2002 extracted hereinabove. 4. The Mega Power Policy, 2006 prescribed the following conditions to be fulfilled by the developer for grant of mega power status:- "MEGA POWER PROJECTS: REVISED POLICY GUIDELINES The following conditions are required to be fulfilled by the developer for grant of mega project status:- (a) an inter-state thermal power plant of a capacity of 700 MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distribution being known as Punjab State Power Corporation Limited (PSPCL)] through its then wholly owned subsidiary and a special purpose vehicle, appellant no. 1- Nabha Power Limited issued a Request For Proposal (RFP). The RFP was for selection of developers through tariff-based bidding process under Section 63 of the Electricity Act 2003, for procurement of power on long-term basis from the power station to be set up at village Nalash, near Rajpura, District Patiala, Punjab. This was as per the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licencees issued by the Ministry of Power, Government of India. In terms of RFP, the bidders were required to quote the Capacity Charge (i.e. capital cost component) and Station Heat Rate (i.e. amount of heat required by the plant to generate one unit of electrical energy/efficiency of the plant) to convert the heat energy for the project and based on these components, a levelized tariff for each bidder was to be worked out. The bidder with the lowest levelized tariff was to be selected for the development of the project. 6. The term- "Successful Bidder or Selected Bidder" was to mean th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... themselves with the Electricity Act, 2003, the Income Tax Act 1961, the Companies Act, 1956, the Customs Act, the Foreign Exchange Management Act, IEGC, the regulations framed by regulatory commissions and all other related acts, laws, rules and regulations prevalent in India. The Procurer/Authorised Representative shall not entertain any request for clarifications from the Bidders regarding the same. Non-awareness of these laws or such information shall not be a reason for the Bidder to request for extension of the Bid Deadline. The Bidder undertakes and agrees that before submission of its Bid all such factors, as generally brought out above, have been fully investigated and considered while submitting the Bid." Press Release of 1.10.2009 7. When the matter stood thus, a Press Release was issued by the Press Information Bureau, Government of India under the heading "Modification of Mega Power Policy". It will be safer to extract the entire Press Release as this is the fulcrum on which the entire case of the appellant revolves. The Press Release with certain portions emphasized by us, is extracted hereinbelow: "PRESS INFORMATION BUREAU GOVERNMENT OF INDIA Press Release Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the project has been awarded through tariff based competitive bidding. (vi) A basic custom duty of 2.5% only would be applicable on brown field expansion of existing mega projects. All other benefits under mega power policy available to Greenfield projects would also be available to expansion unit(s) (Brownfield projects) even if the total capacity of expansion unit(s) is less than the threshold qualifying capacity, provided the size of the unit(s) is not less than that provided in the earlier phase of the project granted mega power project certificate. All other conditions for grant to the mega power status shall remain the same. (vii) Mega Power Projects would be required to tie up power supply to the distribution companies/utilities through long term PPA(s) and may also sell power outside long term PPA(s) in accordance with the National Electricity Policy 2005 and Tariff Policy 2006, as amended from time to time, of Government of India." (Emphasis supplied) The Cabinet decision, as such, is not on record and admittedly what is available is the Press Release issued by the Press Information Bureau. 8. The final bidding date was on 09.10.2009 and as per clause 13.1 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nments were discussed in detail and the letter annexed the summary of the minutes of the meeting of 28.10.2009. An undertaking was to be taken from the States in a prescribed format and the operative portion of the letter, which is crucial, is extracted hereinbelow: "Accordingly, in pursuance of the Cabinet decision dated 1st October 2009 on the modification to the Mega Power Policy, following four distribution reform measures hereby laid down by the Ministry of Power required to be undertaken by the states purchasing power from the mega power projects: a) Timely release of subsidy as per Section 65 of Electricity Act 2003. b) Ensure that Discoms approach SERC for approval of annual revenue requirement/tariff determination in time according to the SERC regulations. c) Setting up special courts as provided in the Electricity Act 2003 to tackle related cases. d) Ring fencing of SLDCs. An undertaking in the enclosed format (Annexure- II) may be given to the Ministry of Power. The said undertaking needs to be given at least, once and would be considered in all the cases where the concerned State Distribution Utility ties up procurement of power from a power project con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t means a project as defined in S. No. 400 above. 2.5% Nil 86 B. in the Annexure, in Condition No. 86, for sub-clause (ii) of clause (a), the following shall be substituted namely: (ii) the power purchasing states shall undertake to carry out distribution reforms as laid down by Ministry of Power." (Emphasis supplied) 12. It will be noticed that entry 400 from the notification of 2002 was substituted and in the substituted clause there is no reference to the thermal plant being an inter-State thermal plant. Mega Power Policy of 14.12.2009 13. Close on the heels, on 14.12.2009, the Government of India and the Ministry of Power issued an office memorandum under the subject "revised Mega Power Policy", which reads as under:- "No. A-118/2003-IPC Government of India Ministry of Power Shram Shakti Bhavan, New Delhi Dated 14th December, 2009 OFFICE MEMORANDUM Subject : Revised mega power project policy. Policy guidelines for setting up of mega power projects were last revised and issued vide this Ministry's letter of even number dated 2nd August, 2006. The Government of India has modified the Mega Power Policy to smoothen the Procedures further. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference will not apply to tariff based competitively bid projects of PSUs. 3. This issues with the approval of Secretary (Power). Sd/- (Puneet K Goel) To Principal Sectary/Secretary/ Energy of all States/UTs. Copy to: (i) Chairman, CEA, (ii) CMDs of all PSUs of MOP Copy for information to :- PS to MOP/PS to MOS(P) / PS to Secretary(P) Sr. PPS to AS(AK)/ PPS to AS(GBP)/ All Joint Secretaries/ Directors in the Ministry of Power, Dir (PIB), MOP. Copy also to Cabinet Secretariat, New Delhi Copy for putting on website of Ministry of Power to NIC, MOP. Sd/- (Puneet K Goel) Director (IPC)" (Emphasis Supplied) 14. It will be noticed that the mandatory conditions of inter-State sale of power for getting mega power status was removed; it was decided that goods required for setting up a Mega Power Project would qualify for the fiscal benefits after it is certified by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power that (i) the Power purchasing States have constituted the Regulatory Commissions with full powers to fix tariffs and (ii) Power purchasing States shall undertake to carry out di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of the bid; and (v) in relation to the Project, the Petitioner No.1 had applied to the Ministry of Power for grant of mega power status to the Project on 11.05.2010 and the Ministry of Power had granted the said status vide its letter dated 30.07.2010." 19. Ultimately, after a lengthy exchange of correspondence with each party sticking to their respective position, the appellant no. 1 submitted an undertaking in the specified format (the factum of the undertaking being under protest and without prejudice as claimed by the appellant is disputed by the respondent) in order to avoid further delay in the issuance of the Essentiality Certificate. The respondent replied by stating that the non-escalable capacity charge would stand reduced in terms of the Article 13 of PPA in proportion to the concession in custom duty on the consignment value of the imported goods. Ultimately, the appellant obtained the Essentiality Certificate on 16.06.2011. Similar affidavits were furnished for the further imports and the respondent granted Essentiality Certificate only on the condition that it would have the right to seek appropriate reduction in tariff on account of decrease in capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on twin basis. The main relief was on the aspect of the Mega Power Policy, the contention of the appellant being that the legal regime was altered on 01.10.2009, with the Cabinet Decision, as noticed in the Press Release of 01.10.2009. The alternative plea was based on the Foreign Trade Policy (in short 'FTP') and the appellants contention was that in the alternative, the appellant was entitled to claim change in law against the respondent on the basis of withdrawal of fiscal benefits which were available to the project under the Foreign Trade Policy on the date of bidding, on a standalone basis without considering the Mega Power Policy of 2009. Order of the State Commission 22. By its Order of 12.11.2012, the State Commission rejected both the prayers. The State Commission held that the mega power status was made available to a project only when the State in which the project is being setup had undertaken the reforms mentioned in the Ministry of Power's letter dated 03.12.2009; that these reforms were undertaken by the Government of Punjab only on 16.04.2010 and intimated to the Central Government vide letter dated 30.04.2012; that the detailing in respect of the modified po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.07.2017, the APTEL dismissed the Appeal No. 47 of 2015 of the appellant. Against the said judgment of APTEL dated 04.07.2017, appellant has filed Civil Appeal No. 8694 of 2017. We have in this judgment not touched upon the issues in Civil Appeal No. 8694 of 2017. 26. Coming back to the order of the APTEL dated 30.06.2014, the APTEL while dismissing the appeal insofar as the first issue of the Mega Power Policy discussed therein was concerned held that the press release did not indicate the terms and conditions on which the Mega Power Status could be made available; that the press release cannot be construed as a statement of law in view of the disclaimer; that the notification dated 11.12.2009 modifying the customs duty and specifying the terms and conditions for Mega Power is what is law under the definition in the power purchase agreement and that the Mega Power Status was received only on 30.07.2010. Certain other findings have also been recorded which are not directly germane in view of the decision that we have ultimately taken in this Appeal. 27. Aggrieved by the judgment of the APTEL on the issue of the Mega Power Policy, the appellants have filed Civil Appeal No. 8478 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Senior Counsel contends that the respondent to claim relief under, 'change in law' must establish with documentary proof that consequent to change in law there has been a decrease in capital cost and since the appellant in its bid submitted on 09.10.2009 had factored in the benefit derived from the Cabinet Decision in relation to Mega projects, it received no economic benefit and there was no change in the cost or revenue from the business of selling electricity under the PPA in view of the issuance of the notification on 11.12.2009. 33. Learned senior counsel contended that there was no notice for change in law issued by the respondent under Article 13.3.2; no proof of reduction in capital cost and no issuance of supplementary bill. Further, learned senior counsel contended that no petition claiming change in law or any counter claim to the same effect was filed by the respondent and it was the appellant which approached the State Commission contending that the Cabinet Decision dated 01.10.2009 is law as on the cutoff date and thus, there was no change in law event enuring to the advantage of the respondent. It is further contended for the appellant that the Mega Power Policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification, Rule, Regulation or Code in the case of the plenary legislation, such as the Customs Act; in the absence of any plenary legislation, the manner of implementation is provided under Article 77 by the issuance of an authenticated instrument in the manner provided thereon; that the definition of the term "Law" in the PPA and the expression "Decision" is limited only with regard to the decision by the Appropriate Commission and not an Indian Governmental instrumentality. Learned senior counsel contends that there is no scope for the argument of the promissory estoppel in inter-partes disputes between the appellant and the respondent since the Union of India is not a party and the present proceeding is not a proceeding where a promise is sought to be enforced by a Court of law, against the promisor. 36. The learned senior counsel contends that the appellant under Clauses 2.7.2.1 and 2.7.2.2 ought to have considered only the applicable law. It is further contended that the Cabinet Decision of 01.10.2009 did not decide all the aspects of the distribution reforms to be undertaken by the concerned State Government to entitle the intra-state power projects in the State to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion, certain clauses from RFP needs to be set out. The RFP carried the format of the power purchase agreement as Format 1 Annexure 3. There is no dispute that the same clauses occurred in the power purchase agreement executed on 18.01.2010. Clause 1.1 defines law as under : "Law: means, 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 notifications 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." 40. The relevant Clauses read as under:- "13 ARTICLE 1.3 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, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Cost for establishing the impact of such Change in Law. In 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL) vs. Punjab State Power Corporation Limited (PSPCL) and Another, (2018) 11 SCC 508, (para 49) and Adani Power (Mundra) Limited vs. Gujarat Electricity Regulatory Commission and Others, (2019) 19 SCC 9 (para 24). 42. The law as defined in Clause 1.1 was validly promulgated vide the notification of 01.03.2002 and the policy document dated 07.08.2006. The appellant seeks to contend that the press release of 01.10.2009 announcing the Cabinet decision approving the modified Mega Power Policy as envisaged tantamounts to "law" as defined in Clause 1.1 of the Request For Proposal. The appellant contends that qua the Power Purchase Agreement (PPA), the press release of 01.10.2009 would be an order and covered by the phrase "and shall include all applicable rules, regulations, orders, notifications by an Indian Governmental Instrumentality". We are unable to accept this submission. First of all, the commonly understood meaning of the word "order" as defined in Black's Law Dictionary is as follows:- "Order - A command, direction or instruction. See MANDATE (1) 2. a written direction or command delivered by a government official, esp. a court or judge." 43. The press release of 01.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Governmental instrumentality is the final authority under law for such interpretation or (iii) change in any consents, approvals or licences available or obtained for the project, otherwise than for default of the seller, which results in any change in any cost 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 RFP or (c) the cost of implementing environmental management plan for the power station 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. 46. Considering the facts of the case and the arguments, we are very clear that the case of the parties is not based on any change in interpretation or change in consent, approval or licence so these sub clauses of the opening part of 13.1.1 is ruled out. Equally, the latter part dealing with price of land for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) of the Customs Act under which the notification is issued reads as under: "25. Power to grant exemption from duty.- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon." 51. It will be very clear that for an exemption under the Customs Act to operate thereon there has to be a notification issued in the manner provided by the Customs Act and duly published in the official gazette. It is so well settled that if a certain thing has to be done in a certain manner, it shall be done in that manner or not at all. [See Babu Verghese and Others vs. Bar Council of Kerala and Others, (1999) 3 SCC 422, relying on Taylor vs. Taylor, (1875) 1 C h D 426 and Nazir Ahmad vs. King Emperor, AIR 1936 PC 253]. Further, Section 21 of the General Clauses Act, 1897 clearly prescribes as under:- "21. Power to issue, to include power to add to, amend, vary or res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. Those four measures are (a) timely release of subsidy as per Section 65 of the Electricity Act, 2003 (b) Ensure that discoms will approach SERC for approval of annual revenue requirement/tariff determination in time according to SERC regulations (c) Setting up of Special Courts as provided in the Electricity Act, 2003 to tackle the related cases and (d) ring fencing of SLDCs. 56. It was thereafter on 11.12.2009 in due compliance with the provisions of Section 25 of the Customs Act that the amendment notifications were issued which expressly specified the condition that the power purchasing States ought to have undertaken to carryout distribution reforms as laid out by the Ministry of Power. It is only with the promulgation of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves us, or to perform the obligations which it imposes on us, it is important to know what our rights or obligations are. Otherwise we cannot claim the rights or perform the obligations. It is not much use being entitled to, for example, a winter fuel allowance if you cannot reasonably easily discover your entitlement, and how you set about claiming it. Equally, you can only perform a duty to recycle different kinds of rubbish in different bags if you know what you are meant to do. The third reason is rather less obvious, but extremely compelling. It is that the successful conduct of trade, investment and business generally is promoted by a body of accessible legal rules governing commercial rights and obligations. No one would choose to do business, perhaps involving large sums of money, in a country where the parties' rights and obligations were vague or undecided. This was a point recognized by Lord Mansfield, generally regarded as the father of English commercial law, around 250 years ago when he said: The daily negotiations and property of merchants ought not to depend upon subtleties and niceties; but upon rules easily learned and easily retained, because they are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses cannot operate as a crutch to elevate the press release of 01.10.2009 to the status of law under Clause 1.1. of the PPA. 64. We have also found that the terms of the contract to be clear and hence there is no scope for applying any business efficacy test to interpret the contract as was sought to be contended for the appellant. 65. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Excise Department issued the notification. Unlike in Lloyd Electric (supra), in this case, 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. 68. In Uttar Haryana Bijli Vitran Nigam Limited and Another vs. Adani Power (Mundra) Limited and Another, (2023) 7 SCC 623, this Court held that the communication of 19.06.2013 in that case effected a modification to the mutual Fuel Supply Agreement and by force of the communication, transfer of coal, which was not allowed till then, was allowed between power plants. This Court held that the communication reflected the decision of the Coal India Limited which was an instrumentality of the Government of India. The said case has no application to the facts of the present case. 69. The judgment in Burn ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
