Case Note & Summary
The appeal arose from a judgment of the Appellate Tribunal for Electricity (APTEL) dated 30.06.2014, which dismissed the appeal of Nabha Power Limited and another against an order of the Punjab State Electricity Regulatory Commission. The core dispute concerned the applicability of customs duty exemptions for a Mega Power Project. The appellant, Nabha Power Limited, was a special purpose vehicle set up to develop a thermal power plant at Rajpura, Punjab, pursuant to a Request For Proposal (RFP) issued on 10.06.2009 by the erstwhile Punjab State Electricity Board (now PSPCL). The RFP invited bids for procurement of power on a long-term basis under Section 63 of the Electricity Act, 2003. At the time of the RFP, the Mega Power Policy of 2006 was in force, which required an inter-state thermal power plant to have a capacity of 1000 MW or more to qualify for customs duty exemptions under Customs Notification No. 21/2002 dated 01.03.2002. The appellant's project had a capacity of 700 MW, which did not meet the 1000 MW threshold. However, on 01.10.2009, the Ministry of Power issued a Press Release stating that the capacity threshold for Mega Power Projects would be reduced from 1000 MW to 700 MW. The appellant claimed that based on this Press Release, its project should be considered a Mega Power Project and entitled to customs duty exemptions. The State Commission and APTEL rejected this claim, holding that the Press Release was not a binding policy change and that the appellant had assumed the risk of such changes under the RFP. The Supreme Court dismissed the appeal, affirming that the Press Release did not have the force of law and could not override the existing Customs Notification. The court also noted that the RFP clauses required bidders to make independent inquiries and assume risks, and the appellant could not seek relief based on a non-binding Press Release.
Headnote
A) Customs Law - Mega Power Policy - Binding Effect of Press Release - Section 25 of the Customs Act, 1962 - The court considered whether a Press Release issued by the Ministry of Power on 01.10.2009, reducing the capacity threshold for Mega Power Projects from 1000 MW to 700 MW, could be treated as a binding policy change. The court held that the Press Release was merely an expression of intent and did not have the force of law, as it was not followed by a formal notification or amendment to the Customs Notification No. 21/2002. The appellant's reliance on the Press Release was misplaced, and the benefit of customs duty exemption could not be claimed based on it. (Paras 1-20) B) Electricity Law - Competitive Bidding - Risk Allocation - Section 63 of the Electricity Act, 2003 - The court examined the terms of the Request For Proposal (RFP) issued on 10.06.2009, which required bidders to make independent inquiries and assume risks regarding changes in law. The court held that the appellant, as a successful bidder, was deemed to have accepted the risk of any policy changes, including the non-extension of customs duty benefits. The RFP clauses 2.7.2.1 and 2.7.2.2 made it clear that the bidder could not seek financial compensation or extension of time due to unsuitability of site or changes in law. (Paras 5-6) C) Administrative Law - Legitimate Expectation - Press Release - The court considered the doctrine of legitimate expectation in the context of the Press Release. It held that a mere Press Release, without a formal policy change or notification, cannot create a legitimate expectation that can be enforced in court. The appellant's claim that it had a legitimate expectation based on the Press Release was rejected, as the Press Release did not amount to a representation that could be relied upon. (Paras 15-20)
Issue of Consideration
Whether the Press Release dated 01.10.2009, which reduced the capacity threshold for Mega Power Projects from 1000 MW to 700 MW, was binding on the respondents and whether the appellant was entitled to customs duty exemption based on that Press Release.
Final Decision
The Supreme Court dismissed the appeal, holding that the Press Release dated 01.10.2009 did not have the force of law and could not be treated as a binding policy change. The court affirmed the judgments of the State Commission and APTEL, and held that the appellant was not entitled to customs duty exemption based on the Press Release.
Law Points
- Customs duty exemption
- Mega Power Policy
- Press Release
- binding effect
- legitimate expectation
- change in policy
- competitive bidding
- Request For Proposal
- Section 25 Customs Act 1962
- Section 63 Electricity Act 2003
