The Supreme Court held that press releases and administrative clarifications cannot be treated as a “Change in Law” under PPAs. Nabha Power and Talwandi Sabo’s appeals for compensation against PSPCL were dismissed.
New Delhi: On August 20, the Supreme Court of India ruled that government communications like press releases or administrative clarifications cannot be treated as a “Change in Law” under Power Purchase Agreements (PPAs).
A Division Bench consisting of Chief Justice of India BR Gavai and Justice Augustine George Masih dismissed appeals filed by Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL).
Both companies had asked for compensation from the Punjab State Power Corporation Limited (PSPCL), arguing that certain government pronouncements—especially a press release regarding “Mega Power Project” benefits and later decisions of the Directorate General of Foreign Trade (DGFT)—had changed the fiscal environment of their agreements, which they claimed amounted to a “Change in Law.”
The dispute goes back to the development of large thermal power projects in Punjab. NPL and TSPL, as Special Purpose Vehicles, had signed PPAs with PSPCL after competitive bidding based on tariffs.
Later, they argued that a press release dated October 1, 2009, about mega power policy benefits, along with subsequent clarifications, had changed the policy framework. On that basis, they sought extra compensation.
However, the Appellate Tribunal for Electricity (APTEL) and now the Supreme Court rejected their argument. APTEL had already ruled that press releases, notices, or clarifications without statutory or legislative backing cannot be considered a “Change in Law.”
Such measures are only administrative in nature and serve as guidance, not as instruments that alter legal rights or obligations.
The Supreme Court agreed with this position. It held that only legal instruments like statutes, rules, or notifications published in the Official Gazette can qualify as a “Change in Law” under PPAs. A press release, being only an administrative announcement, does not have the force of law.
The judgment, authored by Justice Masih, referred to the Court’s earlier ruling in Nabha Power Limited v. Punjab State Power Corporation Limited (2018), where it was clarified that only proper notifications issued under customs law would amount to “Change in Law” and not informal advisories or communications.
The Court clarified that the real “Change in Law” in this matter took place only on December 11 and 14, 2009, when customs notifications were officially issued granting the relevant benefits.
Since these notifications came after the date of submission of bids by the appellants, the companies could not validly claim that their expectations were based on the earlier October 1, 2009 press release.
The Court directly observed:
“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 would it thereby amount to ‘Change in Law’ as argued by Appellants in the instant Civil Appeals.”
Therefore, the Supreme Court decided against the appellants, ruling that their claims for compensation had no basis. The appeals of NPL and TSPL were dismissed.
While reasoning its decision, the Court further stated:
“… the instant case, as projected and pressed before us by the Appellants, would fall foul of the essentiality when 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 would be impossible when it comes to the concerned power plants in the instant set of Appeals.”
The Court also pointed out that another important requirement for availing deemed export benefits is the “supply of goods” to a power plant, under Para 8.2(g) of the Foreign Trade Policy (FTP). On this, the Court noted:
“However, from the original pleadings of the Appellants before the APTEL, it is established that they had made an unsuccessful attempt to argue that the whole power plant under their concerned Project fell within the ambit of definition of supply of ‘goods’. Contemplating their contention on the basis that the power plant falls within ‘capital goods’, 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 and refineries not covered in Para 8.2(f) which, in turn, deals with supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero customs duty.”
The Court further explained how entitlement to deemed export benefits works:
“However, it appears that before the forums of law below, and 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. Rather, a claim to seek the benefits in respect of the entire power plant was made. Such a situation of suo moto acclaimed manufacturing in the Project’s own right shall not stand the instant test.”
It also observed that the appellants had raised an incorrect argument by equating tariff-based competitive bidding for project developers with International Competitive Bidding (ICB) for supply of goods:
“Reliance on Tariff Based Competitive Bidding by the Appellants 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.”
Finally, the Court concluded:
“Considering the above contentions as raised before us albeit for the first time, 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, we do not find any reason to further deal with the contentions raised by the Appellants vis-à-vis other prerequisites as all the essential pre-conditions unless ticked would not render them eligible for the benefit claimed.”
The Court also remarked that even if one assumes the appellants’ case to be correct in law and that the notifications indeed amounted to a “Change in Law,” it would still make no difference because they did not fulfil the required conditions:
“…it is merely an academic exercise without any impact on the legal position of the Appellants and they were, and still are not, entitled to any deemed export benefits under the FTP for their inability to fulfil the concerned prerequisites.”
Accordingly, the Supreme Court dismissed the appeals and refused to interfere with the earlier judgment.
ALSO READ: PM & CMs Could Lose Office After 30 Days in Jail: Bill Tabled Today!
For Appellants – Senior Advocates C.S. Vaidyanathan, A.N.S. Nadkarni, AOR E.C. Agrawala, Advocates Mahesh Agarwal, Shri Venkatesh, Rohan Talwar, Shashwat Singh, Priya Dhankar, Naman Agarwal, Vishrov Mukerjee, and Pratyush Singh.
For Respondents – Senior Advocate M.G. Ramachandran, AORs K.V. Mohan, Sunieta Ojha, Advocates Poorva Saigal, Reeha Singh, Gargi Kumar, Pragati Bhatia, and Vasudha Priyansha.
Case Title:
Nabha Power Limited v. Punjab State Power Corporation Limited & Others (Neutral Citation: 2025 INSC 1002)
Click Here to Read More Reports on Parliament
FOLLOW US ON YOUTUBE FOR MORE LEGAL UPDATES
