Summary and Analysis of Nabha Power Limited vs Punjab State Power Corporation Limited & Others

1. Heading of the Judgment

NABHA POWER LIMITED vs. PUNJAB STATE POWER CORPORATION LIMITED & ORS.
CIVIL APPEAL NO. 8694 OF 2017 (Along with Civil Appeal No. 8739 of 2017)
Supreme Court of India
Date of Judgment: August 19, 2025
Coram: Hon'ble The Chief Justice B.R. Gavai and Hon'ble Mr. Justice Augustine George Masih

Citation: Nabha Power Limited vs. Punjab State Power Corporation Limited & Others, (2025) INSC 1002, Civil Appeal Nos. 8694 & 8739 of 2017 (SC).

2. Related Laws and Sections

The judgment interprets and applies the following laws and contractual provisions:

• The Power Purchase Agreement (PPA) dated 18.01.2010: Specifically, Article 13 which defines "Change in Law" and provides a mechanism for compensation.

• The Foreign Trade (Development & Regulation) Act, 1992: The enabling legislation for the Foreign Trade Policy.

• Foreign Trade Policy (FTP) 2009-2014: Particularly Chapter 8 (Paras 8.1 to 8.6) dealing with "Deemed Exports" and the benefits under Para 8.3.

• The Electricity Act, 2003: Specifically Section 63 which provides for tariff-based competitive bidding.

• The Customs Act, 1962: Particularly Section 25 under which customs duty exemptions are notified.

• The Central Excise Act, 1944: For definitions of "manufacture" and "goods".

• The General Clauses Act, 1897: Section 21 regarding the manner of publication of rules and notifications.

3. Basic Judgment Details

• Parties:
  Appellants: Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL). Both are Special Purpose Vehicles (SPVs) set up to develop thermal power projects in Punjab.
  Respondents: Punjab State Power Corporation Limited (PSPCL) and others. PSPCL is the state-owned power utility that entered into the PPA with the appellants.

• Origin of the Case: The appeals arose from a common judgment dated 04.07.2017 of the Appellate Tribunal for Electricity (APTEL), which had upheld the orders of the Punjab State Electricity Regulatory Commission (State Commission). The State Commission had rejected the appellants' claims for compensation.

• Core Dispute: The appellants claimed that the post-bid withdrawal of "deemed export" benefits under the Foreign Trade Policy (FTP) constituted a "Change in Law" under their PPA, entitling them to compensation for increased project costs. The respondents (PSPCL) argued these benefits were never available to an immovable power plant, and their withdrawal via administrative circulars did not qualify as a "Change in Law".

4. Explanation of the Judgment

The Supreme Court framed three core questions of law and addressed them sequentially.

Issue 1: Whether the Press Release of the Cabinet Decision (dated 01.10.2009) constituted a "Change in Law" under the PPA?

• Appellants' Argument: They argued that a Press Release dated 01.10.2009, which announced the Union Cabinet's decision to reduce the threshold for Mega Power Project (MPP) status, created a legitimate expectation that the benefits would be available. They contended this announcement itself was an "order" and thus a "Change in Law" as it swayed their bid calculations.

• Respondents' Argument: PSPCL argued that a press release is merely a policy announcement and has no legal force. The law only changed when formal Notifications Nos. 91/2009-Cus and 92/2009-Cus were issued on 11.12.2009 and 14.12.2009.

• Court's Reasoning and Decision: The Court relied heavily on its previous decision in Nabha Power Limited v. PSPCL & Anr. (2025) 5 SCC 353. It held that for an event to be a "Change in Law" under Article 13.1.1 of the PPA, it must be a duly enacted, amended, or repealed "Law". The PPA defines "Law" to include statutes, regulations, and notifications.
  The Court concluded that a press release is an administrative communication, not a legally binding instrument. It lacks the character of a law. Only duly promulgated notifications published in the Official Gazette have the force of law.
  Therefore, the Press Release dated 01.10.2009 did not amount to a "Change in Law". The law actually changed only in December 2009, after the bid submission date.

Issue 2: Whether deemed export benefits under Para 8.3 of the FTP were legitimately available to the Appellants as on the bid cut-off date?

This was the central and most detailed part of the judgment. The Court outlined five essential prerequisites under the FTP to claim deemed export benefits and held that the appellants failed to meet them.

• Prerequisite 1: The claim must relate exclusively to "Goods".
  Court's Reasoning: The Court analyzed various legal definitions and precedents (like Quality Steel Tubes, Delhi Cloth Mills) and held that "goods" under the FTP denote movable, marketable, tangible property. An entire thermal power plant, which is an immovable asset assembled and embedded on-site, does not qualify as "goods". While individual components (like turbines) are goods, the plant as a whole is not.

• Prerequisite 2: The goods must be "manufactured in India".
  Court's Reasoning: The FTP defines "manufacture" (Para 9.36) as processes that bring into existence a new product with a distinctive name, character, or use. Relying on precedents like CIT v. N.C. Budharaja & Co., the Court held that "manufacture" and "production" are associated with movable articles, not with the construction activity of building a massive, immovable power plant. The assembly and erection on-site do not constitute "manufacture" of a new good under the FTP.

• Prerequisite 3: There must be a "supply of goods" to the power project.
  Court's Reasoning: Para 8.2(g) of the FTP contemplates a supplier (contractor) supplying goods to a project. The appellants' argument was that the power plant itself was the good being supplied to itself, which is a logical impossibility and contrary to the scheme of the FTP.

• Prerequisite 4: The supply must be by a main contractor or sub-contractor.
  Court's Reasoning: The FTP mechanism requires a distinct entity (a contractor) to supply goods to the project developer. The appellants, who were developing the project for themselves, could not be both the supplier and the recipient.

• Prerequisite 5: Procurement must be through International Competitive Bidding (ICB).
  Court's Reasoning: Para 8.4.4(iv) mandates that ICB must be followed at the stage of procuring the goods (either at the main contractor or sub-contractor level). The appellants argued that the tariff-based competitive bidding used to select them as the project developer under Section 63 of the Electricity Act 2003 satisfied this condition.
  The Court rejected this, stating that the ICB requirement is for the supply of goods, not for the selection of the power developer. The two are distinct processes. The appellants provided no evidence that the procurement of plant components was done through ICB.

• Conclusion on Issue 2: The Supreme Court conclusively held that the appellants were never eligible for the deemed export benefits under Para 8.3 of the FTP as on the bid cut-off date or at any time, as their project did not fulfill the essential conditions of the policy.

Issue 3: If the answers to Issues 1 & 2 were positive, whether the appellants were entitled to compensation?

• Court's Decision: Since the Court answered the first two issues in the negative, this issue became academic and redundant. There was no "Change in Law" and no entitlement to benefits that could have been withdrawn. Therefore, the question of restitutionary relief or compensation did not arise.

Additional Observation on DGFT Notifications

The Court also noted that even if the DGFT's Public Notices (dated 27.04.2011, 28.04.2011, 28.12.2011, and 21.03.2012) that withdrew the benefits were considered, they were merely clarificatory in nature. They did not change the law but simply clarified the existing, correct interpretation that such benefits were not available for entire power plants. APTEL's finding on this point was upheld.

Final Outcome

The Supreme Court dismissed both appeals filed by NPL and TSPL. It upheld the Impugned Judgment of APTEL dated 04.07.2017, confirming that the appellants were not entitled to deemed export benefits and that no "Change in Law" event had occurred warranting compensation under the PPA. No order was made as to costs.