NABHA POWER LIMITED versus PUNJAB STATE POWER CORPORATION LIMITED AND OTHERS (19/08/2025) — Supreme Court headnote

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Summary

Two power generators selected by tariff-based competitive bidding claimed that deemed export benefits under Para 8.3 of the Foreign Trade Policy 2009-14 were available to them on the bid cut-off date and that their subsequent withdrawal by the DGFT, and the Cabinet Press Release of 01.10.2009 on Mega Power Project thresholds, were 'Change in Law' events under Article 13 of their PPAs with PSPCL. Dismissing the appeals from APTEL, the Supreme Court held that the Press Release question was concluded by the three-Judge Bench decision in Nabha Power (only duly published notifications are 'law'), that an in-situ thermal power plant is neither 'goods' nor 'manufactured' and the appellants had shown no supply of goods under International Competitive Bidding, so no deemed export benefit was ever available, and that the DGFT notifications were merely clarificatory; no compensation was payable.

Issues

Whether deemed export benefits under Para 8.3 of the Foreign Trade Policy 2009-2014 were legitimately available to the appellants on the bid cut-off date, and whether the DGFT notifications withdrawing them amounted to 'Change in Law' under the PPA.
Whether the Press Release of the Cabinet decision of 01.10.2009 altering the Mega Power Project threshold constituted 'Change in Law' under the PPA.
Whether the appellants were entitled to restitutionary compensation.

Provisions considered

Article 13 (Change in Law), especially Article 13.1.1, Power Purchase Agreement dated 18.01.2010 between Nabha Power Ltd and PSPCLArticle 13.1.1 defines 'Change in Law' as the enactment, adoption, promulgation, amendment, modification or repeal of any Law, or a change in its interpretation by a final authority, after the date seven days before the bid deadline. Following the three-Judge Bench in Nabha Power (2025) 5 SCC 353 on the same PPA, the Court held that a Press Release is not 'law' or an 'order' under the PPA; only the duly published Customs Notifications of 11.12.2009 and 14.12.2009 were 'law', so no Change in Law occurred before those dates. Since no deemed export benefit was ever available, the question whether the DGFT notifications were a Change in Law was academic. (¶¶ 35, 40, 41, 42, 43, 44, 75, 76, 77)
Chapter 8, Paras 8.1, 8.2, 8.3, 8.4.4(iv) and 8.6 (Deemed Exports), Foreign Trade Policy 2009-2014 (notified under Section 5, Foreign Trade (Development and Regulation) Act, 1992)Quoting Chapter 8, the Court culled out five prerequisites for deemed export benefits: the claim must relate to 'goods' which do not leave the country; the goods must be manufactured in India; there must be a 'supply of goods' to the power project under Para 8.2(g); the supply must be by the main contractor or a sub-contractor (Para 8.6); and, for supplies under Paras 8.2(d) to (g), the supply must be made under International Competitive Bidding, which Para 8.4.4(iv) requires at the Independent Power Producer or EPC stage. The appellants, who claimed the benefit for the whole plant, satisfied none of them. (¶¶ 56, 57, 58, 68, 69, 70, 71, 72, 73, 74)
Paras 9.12 ('Capital Goods'), 9.14 ('Component') and 9.36 ('Manufacture'), Foreign Trade Policy 2009-2014'Goods' (undefined in the FTP) in common parlance denotes movable property that satisfies the marketability test; 'capital goods' under Para 9.12 covers only movable items, so a power plant of hundreds of megawatts embedded to earth cannot be capital goods. 'Manufacture' under Para 9.36 requires bringing into existence a new product with a distinctive name, character or use, an expression associated with movable articles and never with construction; erecting a power plant in situ is therefore not manufacture. (¶¶ 56, 59, 60, 61, 62, 63, 64, 65, 66, 67)
Sections 63 and 125, Electricity Act, 2003The appellants were selected as developers under Section 63 through tariff-based competitive bidding and appealed to the Supreme Court under Section 125. The Court held that tariff-based competitive bidding for selection of the developer cannot be equated with the ICB mandated by the FTP for the supply of goods to the project. (¶¶ 2, 4, 71, 72)
Section 25 and Notification No. 21/2002-Customs, Entry 400 (as amended by Notifications 91/2009-Cus and 92/2009-Cus), Customs Act, 1962The Cabinet decision of 01.10.2009 lowering the Mega Power Project threshold to 500 MW was given effect only by the Customs Notifications of 11.12.2009 and 14.12.2009 issued under Section 25. Relying on the earlier Nabha Power decision, the Court treated these duly published notifications, not the Press Release, as the point at which the benefits accrued. (¶¶ 7, 8, 9, 40, 42, 43, 44)

Held

Whether the Press Release of the Cabinet decision dated 01.10.2009 is a 'Change in Law' under the PPA is concluded by the three-Judge Bench decision in Nabha Power Ltd v. PSPCL, (2025) 5 SCC 353, arising from the same PPA: on the golden rule of contractual interpretation the Press Release is neither 'law' nor an 'order' (which requires a binding command); law, parliamentary or subordinate, must be published to take effect; and no legitimate expectation or promissory estoppel arises from a Press Release of a Central Government that is not party to the PPA. Only the Customs Notifications of 11.12.2009 and 14.12.2009 constituted 'law', so no Change in Law occurred before those dates. (¶¶ 40, 41, 42, 43, 44)
Eligibility for deemed export benefits under Chapter 8 of the FTP requires five cumulative prerequisites: (i) the claim relates exclusively to 'goods' that do not leave the country; (ii) the goods are manufactured in India; (iii) there is a 'supply of goods' to the power project; (iv) the supply is by the main contractor or a sub-contractor; and (v) the supply is made strictly under International Competitive Bidding. (¶¶ 57, 58)
'Goods' denotes movable items satisfying the marketability test and excludes immovable property; machinery embedded to earth fails that test. Although captive power plants have been recognised as 'capital goods' under later FTPs, those are movable importable products; an embedded power plant of hundreds of megawatts cannot qualify as 'capital goods' under Para 9.12. (¶¶ 59, 60, 61)
'Manufacture' under Para 9.36 of the FTP requires that a new product with a distinctive name, character or use be brought into existence; the expression is associated with movable articles and goods and cannot denote construction of a building, dam, bridge or, as here, a power plant assembled on site. (¶¶ 62, 63, 64, 65, 66, 67)
A power project cannot 'supply' a power plant to itself under Para 8.2(g); where the entire plant was treated as the capital goods, there was no distinct supply of goods by a main contractor or sub-contractor as Paras 8.2 and 8.6 require. (¶¶ 68, 69)
The ICB requirement in the proviso to Para 8.2 and in Para 8.4.4(iv) is mandatory for supplies under Paras 8.2(d) to (g) and must be met at the Independent Power Producer stage (main contractor's supply to the project) or the EPC stage (sub-contractor's supply). The limited relaxation for Mega Power Projects by the amendments of 14.01.2010 and 08.02.2010 was not available on the cut-off date. Tariff-based competitive bidding under Section 63 of the Electricity Act for selecting the developer is not ICB for procurement of goods; the appellants, who procured components directly from subsidiaries, joint ventures or related companies, produced no evidence of ICB, so they were not entitled to the benefits under Para 8.3. (¶¶ 70, 71, 72, 73, 74)
The DGFT notifications relied on as withdrawing the benefits were merely clarificatory, no interpretation having existed before the cut-off date that a developer could import goods to be assembled into a power plant and claim deemed export benefits on them; even if they amounted to a Change in Law, the question would be academic because the appellants never satisfied the prerequisites. (¶¶ 75, 76, 77)
As neither the entitlement to deemed export benefits nor a Change in Law was established, no question of restitutionary compensation by PSPCL arose. (¶¶ 78, 79)

Result

Both civil appeals dismissed as devoid of merit; APTEL's common judgment dated 04.07.2017 rejecting the Change in Law claims of Nabha Power Ltd and Talwandi Sabo Power Ltd upheld; no order as to costs; pending applications disposed of.