Summary
The Supreme Court held that a Press Information Bureau release announcing the Union Cabinet's approval of modifications to the Mega Power Policy was not 'law' under the power purchase agreement and did not change the legal regime on its date. The change in law occurred only with the customs exemption notification of 11.12.2009 and the revised policy of 14.12.2009, after the bid cut-off date, so the resulting customs duty benefit had to be passed on to the procurer.
Issues
- Whether the press release of 01.10.2009 announcing the Union Cabinet's approval of modifications to the Mega Power Policy was 'law' within Clause 1.1 of the RFP/PPA.
- Whether the legal regime governing mega power status and customs duty exemption changed on 01.10.2009, before the cut-off date of 02.10.2009, or only on 11.12.2009/14.12.2009, so as to constitute a Change in Law under Article 13.1.1 of the PPA.
- Whether the business efficacy test, the RFP clauses on bidders' due diligence, or promissory estoppel assisted the generator.
Provisions considered
- Section 25(1), Customs Act, 1962An exemption from customs duty operates only through a notification in the Official Gazette; since the exemption notification of 01.03.2002 was amended only on 11.12.2009, the press release could not alter the exemption regime. (¶¶ 34, 50, 51, 56)
- Section 21, General Clauses Act, 1897The power to amend a notification is exercisable only in the like manner and subject to the like conditions as the power to issue it; no amending notification existed on 01.10.2009. (¶ 51)
- Clause 1.1 (definition of Law), Power Purchase Agreement / RFPRead in its plain sense; the press release, being only a proposal with future conditions, was not a statute, notification, rule or 'order' having force of law. The words on decisions and orders of the Appropriate Commission refer only to that Commission. (¶¶ 39, 42, 43, 48)
- Article 13.1.1 (Change in Law) and Article 13.3, Power Purchase Agreement / RFPA Change in Law requires, after seven days before the bid deadline, the enactment, amendment or repeal of law resulting in a change in cost or revenue; this occurred on 11.12.2009/14.12.2009. The notice obligation in Article 13.3.2 binds the seller, not the procurer. (¶¶ 40, 44, 45, 46, 47, 56)
- Clauses 2.7.2.1 and 2.7.2.2, Power Purchase Agreement / RFPThese clauses oblige bidders to satisfy themselves about the existing legal regime and cannot elevate the press release to the status of law. (¶¶ 6, 63)
- Section 63, Electricity Act, 2003Noted as the provision under which the tariff-based competitive bidding for the project was conducted. (¶ 5)
Held
- Contract terms are construed in their ordinary grammatical sense; the business efficacy test applies only where express terms are unclear and cannot contradict them. The definition of 'law' and of 'Change in Law' in the PPA being clear, there was no room for that test. (¶¶ 41, 45, 64)
- The press release of 01.10.2009 was a summary of a Cabinet decision approving a proposal that had to be given shape after fulfilment of conditions such as States' undertakings on distribution reforms; it was not an 'order' and did not enact, amend or repeal any law. The existing notification of 01.03.2002 and the 2006 Mega Power Policy continued to govern on that date. (¶¶ 42, 43, 54, 55, 57)
- Where a statute requires a thing to be done in a particular manner, it must be done that way or not at all; a customs exemption could be changed only by a gazetted Section 25 notification, so the change in law occurred on 11.12.2009, followed by the policy of 14.12.2009, and the procurer was entitled to the resulting benefit, which would go to consumers. (¶¶ 43, 50, 51, 56)
- Certainty is an essential attribute of law and of the rule of law; the press release created no vested rights between the parties, and treating it as law would produce two parallel legal regimes between 01.10.2009 and December 2009. Subordinate legislation must be published in the prescribed manner to take effect. (¶¶ 58, 59, 60, 61, 62)
- Promissory estoppel was unavailable because the procurer was not the promisor, the Union of India was not a party to any proceeding to enforce the alleged promise, and the plea itself conceded that the press release was at most a promise and not a change in law by its own force. (¶ 65)
- Precedents treating railway circulars or Coal India communications as enforceable commands were distinguished, and the case was found closer to the decision holding that a Cabinet committee decision and press release were not the change in law event but the later office memorandum was. The State Commission's finding that mega power benefits applied only from the grant of mega power status on 30.07.2010 was approved. (¶¶ 66, 67, 68, 69, 70, 72)
Result
Appeal dismissed; the concurrent decisions of the State Commission and APTEL on the Mega Power Policy issue upheld. No order as to costs. The connected Foreign Trade Policy issue, pending in a separate civil appeal, was not decided.