2024 (11) TMI 216 - SC - Customs

Press release announcing policy modification proposal does not constitute change in law under power purchase agreement

The SC held that a press release dated 01.10.2009 announcing Union Cabinet's decision to modify the Mega Power Policy 2006 did not constitute 'change in ... Change in Law - definition of 'Law' in the RFP/PPA - press release as executive announcement versus statutory notification - notification under Section 25 of the Customs Act as mode of granting customs exemption - certainty and promulgation as essential attributes of lawChange in Law - definition of 'Law' in the RFP/PPA - press release as executive announcement versus statutory notification - notification under Section 25 of the Customs Act as mode of granting customs exemption - Press Release dated 01.10.2009 is not 'law' under Clause 1.1 of the RFP/PPA and did not effect a change in the extant legal regime on 01.10.2009; the change in law occurred only on issuance of the statutory/administrative instruments of 11.12.2009 and 14.12.2009 and the Mega Power benefits crystallised only thereafter (and, as found below, the project received Mega Power status on 30.07.2010). - HELD THAT: - The Court examined the contractual definition of 'Law' in Clause 1.1 and Article 13 (Change in Law) of the RFP/PPA and applied standard principles of contractual and statutory interpretation. A press release announcing a Cabinet decision is an announcement of a proposal or intention and, on the facts, did not enact, adopt, promulgate, amend or bring into effect any law. Where the parent statute prescribes the mode of giving effect to a measure (here, Section 25 of the Customs Act), that mode must be followed; subordinate or delegated measures effectuate law only when published/promulgated in the prescribed manner. The Customs exemption and the modified Mega Power Policy became operative only when the amendment to the customs notification was gazetted on 11.12.2009 and the Office Memorandum/Policy was issued on 14.12.2009; it was only thereafter that the legal regime was altered and any fiscal benefit crystallised. The press release could not be elevated to a binding 'order' or statutory instrument within the meaning of the contract, nor could bidders treat it as replacing the formally promulgated instruments. The contractual change-in-law mechanism (Article 13) therefore operates from the dates on which the statutory/administrative instruments took effect, and any benefit arising from those instruments would have to be dealt with in accordance with the PPA (including passing on reduction in capital cost). [Paras 43, 56, 72]The press release dated 01.10.2009 is not 'law' for the purposes of the RFP/PPA; the change in law occurred on 11.12.2009/14.12.2009 and the fora below were right in denying effect to 01.10.2009; appeal dismissed.Final Conclusion: The Supreme Court dismissed the appeal, holding that the Press Information Bureau press release of 01.10.2009 did not constitute 'law' under the RFP/PPA and that the change in law occurred only upon the statutory/administrative instruments of 11.12.2009 and 14.12.2009 (with Mega Power status in the project materialising on 30.07.2010), and affirmed the concurrent decisions below. Issues Involved:1. Whether the press release of 01.10.2009 announcing the decision of the Union Cabinet about modifications in the Mega Power Policy constitutes 'law' as defined in Clause 1.1 of the RFP/PPA.2. Whether the legal regime was altered on 01.10.2009 or on 11.12.2009 and 14.12.2009, impacting the fiscal benefits under the Mega Power Policy.Issue-wise Detailed Analysis:1. Definition of 'Law' and the Press Release of 01.10.2009:The central issue was whether the press release of 01.10.2009, which announced the Union Cabinet's decision to modify the Mega Power Policy, could be considered 'law' under the Power Purchase Agreement (PPA). The court examined the definition of 'law' in Clause 1.1 of the PPA, which includes statutes, ordinances, regulations, notifications, codes, rules, and orders by an Indian Governmental Instrumentality with the force of law. The court concluded that a press release does not fulfill the criteria of an 'order' or 'law' in legal parlance, as it does not enact, adopt, promulgate, amend, modify, or repeal any existing law. The press release was deemed a proposal or announcement of intent, not a legally binding directive.2. Timing of the Change in Legal Regime:The court addressed whether the legal regime was altered on 01.10.2009 or later on 11.12.2009 and 14.12.2009. The appellant argued that the press release constituted a change in law, allowing them to factor in fiscal benefits in their bid. The court, however, found that the legal regime remained unchanged as of 01.10.2009. The change in law occurred only with the customs notification on 11.12.2009 and the policy document on 14.12.2009, which provided the necessary legal framework for the fiscal benefits under the Mega Power Policy. The court emphasized that certainty and clarity in law are essential, and a press release lacking formal legal status could not alter the existing legal regime.Conclusion:The court upheld the decisions of the lower forums, confirming that the press release of 01.10.2009 did not constitute a change in law under the PPA. The legal regime alteration occurred with the customs notification on 11.12.2009 and the policy document on 14.12.2009. Consequently, the benefits of the Mega Power Policy were applicable only from these dates, and the appellant's contention of factoring in benefits based on the press release was unfounded. The appeal was dismissed, affirming the lower courts' judgments.