TaxTMI 
TaxTMI 
2023 (4) TMI 1425
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....Rajiv Srivastava, Adv. Mr. Nishant Sharma, Adv. Ms. Gargi Srivastava, Adv. Ms. Adviteeya, Adv. Ms. Aparna Bhat, AOR Mr. Sajan Povayya, Sr. Adv. Mr. Amit Kapur, Adv. Mr. Pukhrambam Ramesh Kumar, AOR Mr. Rahul Kinra, Adv. Mr. Aditya Ajay, Adv. Mr. Karun Shrama, Adv. Mr. Girdhar Gopal Khattar, Adv. Ms. Aliva Ahmed, Adv. Ms. Raksha Agrawal, Adv. Ms. Divyya Kaul, Adv. Mr. Hasan Murtaza, AOR Mr. K. V. Mohan, AOR JUDGMENT K. M. JOSEPH, J. (1) The six appeals with which we are concerned have been filed under Section 125 of the Electricity Act, 2003 (hereinafter referred to as 'Act' for brevity). The appeals are directed against the order passed by the Appellate Tribunal for Electricity (hereinafter referred to as 'Tribunal' for brevity) in an appeal carried by the first respondent under Section 111 of the Act. (2) The appeal before the Tribunal, in turn, was lodged against the order passed by the Central Electricity Regulatory Commission (hereinafter referred to as 'Commission' for brevity). The Commission passed the order purporting to be one under Section 79(b) inter alia of the Act in a petition filed by the first respondent. FACTS (3) It was decided to set up an Ultra....
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.... Water linkage - Requisite Hydrological, geological, meteorological and seismological data necessary for preparation of Detailed Project Report (DPR), where applicable. The bidder shall be free to verify geological data through his own sources, as the geological risk would lie with the project developer. The project site shall be transferred to the successful bidder at a declared price. Provided that for the projects from which more than one distribution licensees located in different States intend to procure power and if the preparations for such projects are being facilitated by the Central Government, the activities referred to above shall be initiated before the bidding process and should be completed before signing the power purchase agreement with the selected bidder. (6) Under the guidelines, tariff structure is contemplated which consists of capacity charges and energy charges which are dealt with in detail. It also deals with bidding process. The bidding process itself is divided into two stages, viz., a determination of the qualification by a prequalification system and thereafter submission and consideration of essentially what cons....
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....On 21.08.2006, a Request for Proposal, for short RFP, came to be issued. We deem it appropriate to refer to the following provisions of the RFP. "4. While this RFP has been prepared in good faith, neither the Procurers, Authorised Representative and Power Finance Corporation Limited (PFC) nor their directors or employees or advisors/consultants make any representation or warranty, express or implied, or accept any responsibility or liability, whatsoever, in respect of any statements or omissions herein, or the accuracy, completeness or reliability of information contained herein, and shall incur no liability under any law, statute, rules or regualations as to the accuracy, reliability or completeness of this RFP, even if any loss or damage is caused to the Bidder by any act or omission on their part. 1.3 The objective of the bidding process is to select a SuccessfulBidder for development of the Project as per the terms of the RFP. The Project will have a Contracted Capactiy of minimum of 3500 MW and maximum of 3800 MW in accordance witht he terms of the PPA. The Selected Bidder shall purchase the entire shareholding of the Authorised Representative from PFC and it....
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....iability, whatsoever, in respect of any statements or omissions made in the water intake study report and Project Report, or the accuracy, completeness or reliablility of information contained therein, and shal incur no liability under any law, statute, rules or regualtions as to the accuracy, reliability or completeness of such water intake study report and Project Report, even if any loss or damage is caused to the Selected Bidder by any act or omission on their part. The Ministry of Power and the State Government of Madhya Pradesh have expressed their support to the Seller, on best endeavour basis, in enabling the Seller to develop the Project. 2.7.2.1 The Bidder shall make independent enquiry and satisfy itself with respect to all the required information, inputs, conditions and cirumstances and factors that may have any effect on his Bid. In assessing the Bid, it is deemed that the Bidder has inspected and examined the site conditions and its surroundings, examined the laws and regulations in force in India, the transportation facilities available in India, the grid conditions, the conditions of roads, bridges, ports, etc. For unloading and/or transporting heavy piece....
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....ral Government). It was tasked with the project to ascertain about the availability of water inter alia. Water is an indispensable factor for the successful running of the power plant which was contemplated. WAPCOS made available its report on 03.08.2006. (10) Reliance Power Limited applied pursuant to the RFP. Though, initially, its bid was not the lowest, but on account of the fact that the lowest bidder was found to be not eligible, Reliance Power Limited emerged as the lowest bidder. In keeping with the conditions, Reliance Power Limited acquired 100 per cent share holding of the first respondent and it was favoured with the Letter of Intent on 01.08.2007. It entered into a Power Purchase Agreement (hereinafter referred to as 'PPA') on 07.08.2007. In the second week of December, 2007, it would appear that the first respondent which now stood transformed as a fully owned company of the successful bidder Reliance Power Limited, commissioned a new Study by WAPCOS. WAPCOS submitted its report on 04.04.2008. We must at this juncture notice that '21.07.2007' has been determined as the cut off date, the relevance of which will be unfolded in the later part of the judgment. (11) ....
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...., in this case, we are concerned only with two aspects, namely claims under clause(e) and clause(g) we deem it appropriate only to refer to the pleadings of the first respondent in regard to the same. Increase in cost of Water Intake System "65. As per Clause 1.4(v) of RFP for Sasan UMPP, the Procurers through the Authorized Representative had to provide water intake study report. WAPCOS (a premier Government of India agency) was appointed to conduct the water intake study. WAPCOS, as the expert agency identified the water intake pump house location and the pipeline route from the intake pump house to the power plant in its Report. This report was made available to all the bidders before bid submission so that the bidders could factor in the cost of the water intake system in preparation of their financial bid i.e., the tariff at which power would be supplied to the Procurers. The total estimated cost for the construction of water intake system for the location and route indicated in the report by WAPCOS was estimated to be approximately Rs.92 Crores. The WAPCOS Report along with the estimated cost are annexed herewith and marked as Annexure P24 (Colly)." ....
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....uty will be levied on goods imported for setting up a mega power project. A copy of Notification 21 of 2002-Customs is annexed herewith and marked as Annexure P-32." "77. Sasan UMPP was accorded in-principle mega power project status as per Ministry of Power's letter no. F.No. 12/18/2006-P&P dated 20.10.2006. The final certificate was issued on 21.09.2007." "78. Sasan UMPP is an integrated power project with captive coal mines viz. Moher, Moher Amlohri Extension and Chhatrasal Coal Blocks. The captive coal mines allocated for Sasan UMPP form an integral and essential part of the Project and any equipment imported in relation to the captive coal mines would therefore be treated as goods imported for setting up the Project." "79. The Petitioner was required to import mining equipment for setting up the captive coal mines from which coal will be sourced for the Project since the required mining equipments were not available in India." "80. On 05.05.2011, the Petitioner applied to the Energy Department, Government of Madhya Pradesh for recommendation letter to import mining equipments for Sasan UMPP under nil custom duty as is applicable for the ....
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....e Changes in Law for which the liability is yet to be incurred, the Petitioner is seeking a declaration from this Hon'ble Commission that the increased expenditure amounts to Change in Law. The actual payment will be claimed as and when it falls due." "89. From the above discussions and facts, it is clear that:- (a) One of the objectives of the National Electricity Policy and the Tariff Policy is to secure commercial viability of electricity sector while ensuring fair pricing and quality of supply. (b) Power procurement under Section 63 of the Act is governed by the statutory framework comprising (i) Section 63 of the Act, (ii) Government of India's Guidelines and (iii) standard documents being RFP and PPA. (c) In terms of Section 63 of the Act the successful bid must be selected consistent with the guiding principles under Section 61 of the Act meaning thereby that while adoption of tariff under Section 63 of the Act, the principles as laid down under Section 61 need to be complied. (d) Power procurement pursuant to the statutory framework constitutes a statutory contract in terms of the pre-approved and finalized PPA governed b....
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....tioner was required to import equipment for operation of the coal mine which is an integral part of the Project." "105. It is submitted that as per the said Notification, any entity which intended to claim the customs duty exemption was required to apply to the Sponsoring Authority for an exemption certificate. This was essential to claim the customs duty exemption. In this regard, the Petitioner wrote to the Government of Madhya Pradesh to recommend the Petitioner's case to the Commissioner of Customs on 5.5.2011 for nil custom duty on mining equipments." "106. It is submitted that vide an Office Memorandum dated 17.06.2011, the Ministry of Power intimated Government of Madhya Pradesh that the exemption for customs duty for UMPPs is given only with respect to power equipment. The total amount of customs duty paid by the Petitioner on mining equipments imported for Sasan UMPP is Rs.361.47 Crores till date. Total custom duty for mining equipments is estimated to be about Rs. 531 Crores." "107. It is submitted that the decision of the Ministry of Power amounts to a Change in Law under Article 13.1 of the PPA and the Petitioner is entitled to be compensated ....
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.... a composite scheme for generation and sale of electricity in more than one State; and (b) To adjudicate upon the disputes involving the distribution companies or transmission licensees with regard to the matters connected with regulation of tariff of generating companies." "128. It is submitted that the present case involves a situation where the compensatory mechanism under the PPA for compensation for Change in Law has failed. It does not meet the objective of restoring an affected party to the same economic condition as if the change in law had not occurred. Therefore, this is a fit case for this Hon'ble Commission to exercise its powers under Section 79 and devise a mechanism to uphold the objective and purpose of Article 13 - to provide economic restitution." "129. It is further submitted that PPA envisages a scenario where this Hon'ble Commission can interfere with the issues relating to the claim made by a party for any change and/or determination of the tariff or any matter relating to the tariff or claims made by any party which partly or wholly related to any change in the tariff or determination of any such claim which can result in change in ....
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....re. After RPower acquired the project, WAPCOS was appointed to confirm the technical feasibility as part of detailed engineering exercise. During this process, it was discovered that the water intake location as finalized by WAPCOS before the bidding was not an appropriate location and does not ensure reliable supply of water to the power plant. It was also found that the water intake at the original location indicated by WAPCOS in the pre-bid report would have resulted in shutdown of power plant for a considerable period during the lean season. Thereafter, WAPCOS conducted detailed bathymetric studies and recommended a new location for water intake, which was 23 km from the power plant as against 12.5 km initially indicated at the time of bidding (original location). It was highlighted that new location would ensure reliable water supply to the power plant. Due to increase in distance, submergence area along the route and construction time, there has been considerable increase in cost of the water intake system as per following details (Annexure P-26 of the petition) and as per the earlier report of WAPCOS:- S. No. Cost Item As per earlier WAPCOS Report Cur....
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....ions before preparing the bid and accordingly factored the possible estimates of water intake system while quoting the bid instead of relying on the indicative cost. In this connection, para 2.7.2.1 of the RfP document provides as under: "2.7.2.1 The Bidder shall make independent enquiry and satisfy itself with respect to all the required information, inputs, conditions and circumstances and factors that may have any effect on his Bid. In assessing the Bid, it is deemed that the Bidder has inspected and examined the site conditions of roads, bridges, ports etc. for unloading and/or transporting heavy pieces of material and has based its design, equipment size and fixed its price taking into account all such relevant conditions and also the risks, contingencies and other circumstances which may influence or affect supply of power." Further para 4 of the RfP document provides that the pricing and other details given in the bidding documents are by way of information only and it was for the bidders to conduct independent enquiry and verify the details and information. Para 4 are extracted as under: "4. While the RFP has been prepared in good faith, neither t....
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.... Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or (b) an inter-state thermal power plant of a capacity of 1000MW or more, located in States other than those specified in clause (a) above; or (c) an inter-state hydel power plant of a capacity of 350MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or (d) an inter-state hydel power plant of a capacity of 500MW or more, located in States other than those specified in clause (c) above"; (II) in the Annexure, in Condition No. 86, for sub-clauses (ii) and (iii) of clause (a), the following shall be substituted, namely:- "(ii) the power purchasing State undertakes, in principle, to privatize distribution in all cities, in that State, each of which has a population of more than one million, within a period to be fixed by the Ministry of Power.". [F.No.354/104/2003-TRU] It is noticed that the revised policy guidelines issued by Government of India, Ministry of Power vide its letter No. A118/2003-IPC dated 2.8.2006 has stated that an inter-State thermal power plan....
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....ission so that the bidders could factor in the cost of water intake system in preparation of their financial bids i.e., the tariff at which power be supplied to the Procurers. The total cost for the construction of water intake system for the location and route of indicated in the report by WAPCOS was estimated to be Rs.92 Crores. The water intake system is an integral part of the Project without with it is not possible to set up and operate the Project. The WAPCOS report along with estimated cost are annexed herewith and marked as Annexure A-14. 9.6 After RPower was declared the successful bidder and the Appellant Company was transferred to RPower, WAPCOS was reappointed to confirm the technical feasibility as part of the detailed engineering exercise. During this process, it emerged that the water intake location as finalized by WAPCOS vide its earlier report prepared for PFC/ Procurers and made available to all bidders prior to bid submission was not an appropriate location and does not ensure reliable supply of water to the power plant. It also emerged that the water intake at the original location indicated by WAPCOS in the pre-bid report would have resulted in shutdo....
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....ice of land is covered under "Change in Law". The procurers have also agreed that this item of expenditure is admissible under "Change in Law". The declared price of land for the Power Station was stated to be 190.677 crore. This has been verified from the communication dated 23.10.2006 from the representative of the procurers to the bidders. This included the power plant area, the fuel transport system land, the water pipeline corridor and the ash pipeline corridor." 9.11 It is submitted that pre-bid site visit and project reports were prepared and made available by Authorized Representative (Power Finance Corporation) to all bidders. The disclaimer, if at all applicable, will only apply to such instances where the bidders were able to identify any issues or liability with reasonable diligence. Based on the information and material provided, there was no indication that the water intake system proposed in the WAPCOS Report was unfeasible. Therefore, the disclaimer does not absolve the Procurers of their liability to compensate the Appellant for the increase in cost. It is submitted that due to the error in WAPCOS's report, the Appellant is faced with an additional burden ....
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....tified by an officer not below the rank of joint secretary to the Government of India in the Ministry of Power. 9.22 It is submitted that captive Coal Blocks being an integral part of the Project, the mining equipment would be covered under this provision as well. It is submitted that RFP clearly stated that Procurers through the Appellant (which was a wholly-owned subsidiary of PFC at that time) will procure a certificate from the Ministry of Power that the benefits of the Mega Power Policy would be extended to the Project till scheduled Commercial Operations Date of the Power Station. As per definition, Project includes captive mine and hence, it was Procurer's obligation to provide for the exemption to the coal mining equipment. 9.24 It may also noted that:- Xxx xxx xxx (b) PPA defines Project as power plant along with captive coal mines. 9.35 It is submitted that the Appellant has set up an ultra-mega power project which comprises of captive coal mines. It is not separately indulging in mining activities. Moreover, the coal from the Project is being used only for the Project. The entire capital cost of t....
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....ce before bidding and verifying the correctness of information provided in the bid documents rested with the bidders, at the same time, Respondent procurers cannot justify providing grossly erroneous report on Water Intake System taking shelter under the disclaimer in the bid document. As a matter of fact, the water availability for a thermal power station of this magnitude on regular, reliable and uninterrupted basis is essential and is a vital input for successful operation of the plant. It is noticed that the report of WAPCOS supplied to bidders at the time of bidding was deficient in ensuring adequate water supplies throughout the year uninterrupted and if the same would have been taken for construction and implementation, the same could have resulted into huge loss to the Respondent procurers being deprived of power supply for some period of the year due to less/ non-availability of water during the lean period. It is not in dispute that Sasan UMPP is supplying power to the Respondent procurer at one of the most competitive tariff in the country. It is noted from the contentions of the Respondent procurers that such an issue has not been dealt with either in the PPA or in the ....
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....exploitation would be permitted. Keeping these facts in view, we notice the glowing difference between an independent coal mines up for exploitation and selling coal on commercial lines and a captive coal mine set up to meet requirement of UMPP only to generate power for the ultimate benefit of the Respondent procurers and in turn, consumers for obtaining electricity at cheaper rates. The actual positions purported the assumption made by the Appellant that the customs duty exemptions will be available for import of the equipment for the entire project including captive mines and power plants. We find force in the argument of the learned counsel for the Appellant that being the integral and inseparable part of the UMPP, the custom duty rates applicable for stand alone coal mining projects would not be applicable in the present case and the exemption would need to be given effect to. We, thus opine that the Central Commission appears to have been mechanically guided by the mere description of the relevant entry (Sl.No.399 & 400) in the said custom duty notifications and has not appreciated that the captive coal mines being integral part of the UMPP cannot be equated to a stand alone ....
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....ce the party, viz., the first respondent went to the Commission complaining that there is a change in law and it was found that there is no change in law, there ended the jurisdiction of the Tribunal. Instead of terminating the lis, the Tribunal has clearly strayed outside its jurisdiction in granting relief on the basis that report of WAPCOS was grossly erroneous. In this regard, he enlisted in support of his contention, various clauses which unambiguously disclaimed any liability with the procurers on account of any inaccuracies which may be reflected in the WAPCOS report. A report submitted by WAPCOS which is a public sector body was only by way of providing information. The bidders were provided with the report well before they decided to put in their bids. Having regard to the various disclaimer clauses, it did not lie in their mouth to thereafter seek to construct a case based on the report being erroneous. In this regard, it is pointed out that the clauses clearly indicate that the bidder was to satisfy itself by conducting a study of the site. Nothing prevented the first respondent from carrying out inspection of the site and verifying for itself the information which was p....
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....overnmental authority within the meaning of clause 13.1.1. What we are concerned with is notification issued under Section 25 of the Customs Act. It is not as if any authority which is competent within the meaning of Article 13.1.1 has issued a notification or even an interpretation within the meaning of the said article which has resulted in a change in law within the meaning of Article 13.1.1. (26) We have also heard Shri Dhruv Mehta, as we have already stated. We have heard the other senior counsel who have essentially adopted the arguments which have been addressed by Mr. P.Chidambaram, learned senior counsel, and they are one in contending that the Tribunal has strayed outside the contours of its jurisdiction and this has resulted in an order which is clearly illegal and erroneous. SUBMISSIONS OF THE FIRST RESPONDENT (27) Per contra, Mr. Sajjan Poovayya, learned senior counsel for the first respondent, took us through the other side of the picture and projected a totally different scenario. He would point out, in the first place, that the Court may not view the PPA in question as an ordinary contract. He pointed out that what is at stake is the interpretation to be pl....
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....canvassed by the appellants. We are dealing with a case where a public sector unit viz., WAPCOS has given its report. Not unnaturally, the first respondent relied upon the same. It is factored in its price and once it is found that the report was entirely fallacious, no shelter can be sought by the appellants under the disclaimer clauses. Our attention was drawn to various judgments. They include Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017) 14 SCC 80, Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. v. Adani Power Limited & Ors. (2019) 5 SCC 325, Gujarat Urja Vikas Nigam Ltd. v. Essar Power (2008) 4 SCC 755, Skandia Insurance Co. Ltd. v. Kokilaben Chandravan & Ors. (1987) 2 SCC 654, DLF Universal Limited v. Director, Town and Country Planning Department, Haryana (2010) 14 SCC 1 and Sumitomo Heavy Industries v. Oil and Natural Gas Commission of India (2010) 11 SCC 296, Nabha Power Limited v. PSPCL (2018) 11 SCC 508. (29) The respondents have also relied upon the judgments of this Court which are detailed hereinafter essentially for the proposition that there is power under Order XLI Rule 22 and Rule 33: Prahlad & Ors. v. State of Maharashtra & Anr. (....
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....epresents a case 2 scenario under the RFP. This means that unlike a situation where the contractor is free to choose the site and the other facilities, in a case 2 situation which is the situation prevailing in this case, everything is dictated to by the employer viz., SPV. Expatiating the said point, it is pointed out that the bidders did not have a control over the water source from which water had to be taken. In other words, the water could not have been sourced from any other water body. This aspect is relevant for the purpose of considering the free play with the Commission in the matter of fixing tariff based on a situation which was created as are exemplified by two grounds which have been made out and which are the subject matter of the appeals. Another point which is projected is that in regard to geological matters, the bidders were warned that they would have to on their own make an assessment. But such a caveat was not entered with regard to pertinently the hydrological conditions. Since water intake system related to hydrology, it is not open to the appellants to ward off a just fixation of tariff based on the discovery of the fact that the first WAPCOS report was hig....
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....nt is obtained by misrepresentation within the meaning of Section 18 can insist upon the other side to perform the contact. But the wronged party retained the right to insist that it shall be put in the same position it would have occupied if there was no misrepresentation. Therefore, it is pointed out that there is foundation even in the law of contract for contending that the Commission armed with its powers under Section 79(b) could compensate the contractor in the situation we are concerned with. (37) The judgment of this Court reported in Uttar Pradesh Power Corporation Limited v. National Thermal Power Corporation Limited and Others (2009) 6 SCC 235 rendered by a Bench of three learned judges with Justice S. B. Sinha speaking for the Court had occasion to consider the impact of regulations made purporting to act under the Electricity Regulatory Commission Act, 1998. In the said judgment, it has been inter alia held that there is power under regulation 92, in particular, to revise the tariff (see para 35 read with 38 and 40) (38) Noticing this aspect, when we sought assistance from the learned counsel. We heard the following submissions. Mr. M. G. Ramachandran, learned s....
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....n period. It is at this point apposite to notice the relevant provisions under the PPA. (41) Article 13 deals with change in law. Article 13.1.1. defines what a change in law is. It reads as follows: "ARTICLE 13: CHANGE IN LAW 13.1 Definitions In this Article 13, the following terms shall have the following meanings: 13.1.1 "Change in Law" means the occurrence of any of the following events after the date, which is seven(7) days prior to the Bid Deadline: (i) the enactment, bringing into effect, adoption, promulgation, amendment, modification or repeal, of any Law or (ii) a change in the interpretation of any Law by a Competent Court of Law, tribunal or Indian Governmental Instrumentality provided such Court of Law, tribunal or Indian Governmental Instrumentality is final authority under law of such interpretation or (iii) change in any consents, approvals or licenses available or obtained for the Project, otherwise than for default of the Seller, which results in any change in any cost of or revenue from the business of selling electricity by the Seller to the Procurers under the terms of this Agreement, or (iv) any....
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....r establishing the impact of such Change in Law. In case of Dispute, Article 17 shall apply. It is clarified that the above mentioned compensation shall be payable to either Party, only with effect from the date on which the total increase/decrease exceeds amount of Rs. Fifty (50)crores. b) Operation Period As a result of Change in Law, the compensation for any increase/decrease in revenues or cost to the Seller shall be determined and effect from such date, as decided by the Central Electricity Regulatory Commission whose decision shall be final and binding on both the Parties, subject to rights of appeal provided under applicable Law. Provided that the above mentioned compensation shall be payable only if and for increase/decrease in revenues or cost to the seller is in excess of an amount equivalent to 1% of Letter of Credit in aggregate for a Contact Year. (44) Article 13.4.2 provides for the manner in which the payment for changes in law is to be effected. It reads as follows: "13.4.2 The payment for Changes in Law shall be through Supplementary Bill as mentioned in Article 11.8. However, in case of any change in Tariff by ....
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....ave noticed that the earlier guidelines which were formulated on 19.01.2005 contemplated a different regime both as regards change in law and also dispute resolution. The question would however be the extent to which the first respondent can derive benefit out of the same. As far as Article 13.1.1 is concerned, clauses 1 and 2 are clearly an inapplicable in regard to the claim based on the change brought about in the water intake system. (50) It is clause (iii) which is referred to and relied upon by Mr. Sajjan Povayya. It reads as follows: "(iii) change in any consents, approvals or licenses available or obtained for the Project, otherwise than for default of the Seller, which results in any change in any cost of or revenue from the business of selling electricity by the Seller to the Procurers under the terms of this Agreement." (51) It is the case of the first respondent that since in the schedule the initial consent which was, in fact, a deemed initial consent consisting of performing of the task of making available land for the power plant and for the pipeline and there is a change in the same in view of what transpired pursuant to the second report of the WAPCO....
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....er intake system was approximately Rs.92 crores. It is further stated in para 110 that there was considerable increase in the cost of water due to the water intake system. It is stated that it is on account of errors in the report. It is, however, no doubt, in para 111 stated that since water pipeline is part of the power station land and the water intake pipeline is an integral part of the power station, the indicative cost of the water intake system will be covered by change in law. In the appeal also, we have noticed the stand elaborately. (56) Initial consent, has been defined in the PPA as meaning the consents listed in Schedule 2. Article 5.5 of the PPA reads as follows: "5.5 Consents The Seller shall be responsible for obtaining all Consents (other than those required for the Interconnection and Transmission Facilities and the Initial Consents) required for developing, financing, constructing, operating and maintenance of the Project and maintaining/renewing all such Consents in order to carry out its obligations under this Agreement in general and this Article 5 in particular and shall supply to the Lead Procurer promptly with copies of each application....
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....ust notice that under the caption initial consent in Schedule 2, on behalf of the procurers, the SPV was expected to issue the notification under Section 6 of the Land Acquisition Act, obtain necessarily environmental and forest clearance for the power stations, allocate captive coal mines and finally, give the water linkage for the reasonable project requirements. It is this water linkage for the reasonable project requirements which was contemplated to be fulfilled from the water source Govind Ballabh Pant Sagar(Rihand Reservoir). The communication dated 23.10.2006 would indicate that the Central Water Commission had given its approval for sourcing the water need from the water body in question. In the said sense, the procurers had fulfilled their obligation as contemplated in RFP. (61) The RFP which preceded the PPA provided for certain conditions which we have already indicated. Clause 1.4 inter alia contained undertaking for providing the water linkage for the project with the requisite approval of the Central Water Commission at least 30 days prior to Bid deadline. In the PPA, it is indicated that the procurers have completed the initial studies as contained in the project....
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.... days, in writing to the other Party. Similarly, in case of inability of the Procurers to fulfil the conditions specified in Article 3.1.2A due to any Force Majeure event, the time period for fulfillment of the Condition subsequent as mentioned in Article 3.1.2 and Article 3.1.2A, shall be extended period of ten (10) Months, continuous or non-continuous in aggregate. Thereafter, this Agreement may be terminated by either the Procurers (jointly) or the Seller by giving a notice of at least seven (7) days, in writing to the other Party." (64) We must next notice Article 3.3.3A which follows: "3.3.3A In case of inability of the Procurers to perform the activities specified in Article 3.1.2A within the time period specified therein, otherwise than for the reasons directly attributable to the Seller or Force Majeure event, the Condition Subsequent as mentioned in Article 3.1.2 would be extended on a 'day for day' basis, equal to the additional time which may be required by the Procurers to complete the activities mentioned in Article 3.1.2A, subject to a maximum additional time of six (6) Months. Thereafter, this Agreement may be terminated by the Seller at its opti....
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.... manner of speaking by an attack lodged by the respondent in the appeal. This is not a case where the first respondent has made use of the land for the purpose of laying the pipeline through the corridor as contemplated and found that drawing water from the water intake system as contemplated would have resulted in water not being available in sufficient quantity through the length of the year. There is no such case. (66) The case of the first respondent, on the other hand, is that the PPA having been signed on 07.08.2007, in the second week of December of the very same year-2007, in order to confirm the availability of water through water intake system as contemplated in the first WAPCOS report, the second report was commissioned ironically through the very same consultant. There is no case, whatsoever, that having made attempts to draw water in terms of the first WAPCOS report and having found that such an effort failed, they were compelled to seek recourse to a second study albeit by the same body. No reasons are forthcoming as to what inspired the first respondent to commission the second study. Secondly, this is not a case where the procurers brought about any change in law....
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....st unit from the power plant was in fact commissioned in August, 2012. In fact, when we asked as to whether a notice was given in terms of Article 13.3.1, Shri Amit Kapur, learned counsel, could not point out to any such notice except the notice which was given on 15.12.2012. In this regard also, we may notice the contents of the said notice: "5.2 Additional expenditure incurred due to change in Declared Price of Land, cost of implementation of resettlement and rehabilitation package of land, change in customs duty on mining equipment, water intake system etc. (a) the actual expenditure incurred by SPL towards land, implementation of resettlement and rehabilitation package of land for the project, water intakes system, customs duty on mining equipment and excise duty on cement and steel." (70) Therein all that is indicated is that for the water intake the original cost was put Rs.92 crores whereas the estimated cost has been Rs.238 crores Contemporaneous with the change in law alleged and in keeping with Article 13.3.1, there is no notice brought to our notice. (71) No doubt, Shri Amit Kapur, learned counsel for the first respondent, did attempt to draw insp....
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....nsure that the State Government implements such R&R ensuring that land for different construction activities becomes available in time so as to ensure that the Power Station and each Unit is commissioned in a timely manner. Assistance of the Seller may be sought, which he will provide on best endeavour basis, in execution of those activities of the R&R package and as per estimated costs, if execution of such activities is in the interest of expeditious implementation of the package and is beneficial to the Project affected persons." (75) Moving on to the findings actually which have been rendered by the Tribunal, the Tribunal has, in the impugned order, found that the first report of the WAPCOS is grossly erroneous. We are at a loss to understand as to what was the basis for rendering such a finding. Without any material, it is a little inexplicable as to how the Tribunal could have rendered such a finding which has serious consequences as we have noticed. This is after finding undoubtedly that there is no change in law. Virtually, the Tribunal has brushed aside the disclaimer clauses. Before we go to the disclaimer clauses, we may also indicate that a perusal of the first WAPCO....
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....nter alia even if any loss or damage is caused to the bidder by any act or omission on their part. Again clause 1.4 of the RFP clearly indicated to the bidders that the procurers inter alia do not make any representation or accept any responsibility or liability in respect of any statements or omissions made in the water intake study report and the project report. There is a specific disclaimer also about the accuracy, completeness or reliability of information contained therein. This is even if any loss or damage is caused to the selected bidder by any act or omission on their part. Thus, in respect of the water intake study report, the prospective seller or the bidders were specifically told in no uncertain terms that any statements or omissions in water intake study report would not result in the procurers being visited with liability even if there was loss or damage caused to the selected bidder. This must be borne in mind at this juncture for the following reasons. (79) The first respondent has a case that water intake system goes to hydrology whereas in relation to geology, the first respondent was duty bound to make its own inquiries. Since the connect between hydrology a....
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....to satisfy itself with regard to the required information, inputs, conditions, circumstances, which may affect the bid. This is apart from the site as referred to in the PPA in clause 5.2 which we have already referred to. (82) With the wealth of disclaimer clauses which we have noticed, we are unable to subscribe to the reasoning adopted by the Tribunal. We are of the view that the Tribunal was wrong in brushing aside the specific and unambiguous disclaimers under which the procurers stood exonerated from liability. (83) One argument which we must notice at this stage is the effect of Article 13.2. We have already adverted to Article 13.2. Article 13.2, no doubt, indicates that while determining the consequence of change in law, the parties shall have due regard to the principle that the purpose of compensating the party affected by any change in law is to restore through monthly tariff payments the affected party to the same economic position as if such change has not occurred. We have tested the hypothesis by deliberately omitting a crucial part in Article 13.2 which are the words 'to the extent contemplated in this Article 13'. When we read the words 'to the extent contem....
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....d, we may refer to the judgment of this Court in Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. v. Adani Power Limited & Ors. (2019) 5 SCC 325 . In the said judgment, it has been relied upon understandably by the first respondent also and which also arose under the same clause (Article 13.2), this Court has held inter alia as follows: "10. Article 13.2 is an in-built restitutionary principle which compensates the party affected by such change in law and which must restore, through monthly tariff payments, the affected party to the same economic position as if such change in law has not occurred. This would mean that by this clause a fiction is created, and the party has to be put in the same economic position as if such change in law has not occurred i.e. the party must be given the benefit of restitution as understood in civil law. Article 13.2, however, goes on to divide such restitution into two separate periods. The first period is the "construction period" in which increase/decrease of capital cost of the project in the tariff is to be governed by a certain formula. However, the seller has to provide to the procurer documenta....
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.... read with the PPAs, this Court referred to Clause 13.2 as follows : (SCC p. 131, para 57) "57. ... This being so, it is clear that so far as the procurement of Indian coal is concerned, to the extent that the supply from Coal India and other Indian sources is cut down, the PPA read with these documents provides in Clause 13.2 that while determining the consequences of change in law, parties shall have due regard to the principle that the purpose of compensating the party affected by such change in law is to restore, through monthly tariff payments, the affected party to the economic position as if such change in law has not occurred." There can be no doubt from this judgment that the restitutionary principle contained in Clause 13.2 must always be kept in mind even when compensation for increase/decrease in cost is determined by CERC." (Emphasis supplied) (85) We are of the view that the view which we have taken does not in any way conflict with the view which has been laid down by this Court. (86) No doubt, in Energy Watchdog Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017) 14 SCC 80 again a judgment which is relied u....
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....his is not a correct way of reading the aforesaid statutory provisions. The first rule of statutory interpretation is that the statute must be read as a whole. As a concomitant of that rule, it is also clear that all the discordant notes struck by the various sections must be harmonised. Considering the fact that the non obstante clause advisedly restricts itself to Section 62, we see no good reason to put Section 79 out of the way altogether. The reason why Section 62 alone has been put out of the way is that determination of tariff can take place in one of two ways - either under Section 62, where the Commission itself determines the tariff in accordance with the provisions of the Act (after laying down the terms and conditions for determination of tariff mentioned in Section 61) or under Section 63 where the Commission adopts tariff that is already determined by a transparent process of bidding. In either case, the general regulatory power of the Commission under Section 79(1)(b) is the source of the power to regulate, which includes the power to determine or adopt tariff. In fact, Sections 62 and 63 deal with "determination" of tariff, which is part of "regulating" tariff. Wher....
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....nder Section 63, it is beholden to the guidelines as it cannot depart from the same. In a area where the guidelines do not occupy the field, undoubtedly, the Commission is clothed with power as a regulatory body to act in the best interest of all sides and to fix the tariff in a manner which is fair in the sense bearing in mind the paramount interest of increased generation of power, the interest of the consumer, as also ensuring of a fair return to the seller. So far so good. When the Commission exercises the power under Section 63, this power is not abridged when there are no guidelines holding the field. (90) We are not dealing with a case where the exercise of power of the Commission under Section 63 is under review. In a case where, however, the rates are approved under Section 63 and PPA is entered into, the question would undoubtedly arise as to whether there is a power which can be described in a manner of speaking to be plenary power with the Commission under Section 79? Can there be a power which can be christened as omnibus? Can the Tribunal, in other words, disregard the express words of the contract? Can it discover a new change in law which the parties have not con....
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....inciple. However, we have noticed the various clauses as contained in the disclaimer clauses. When a party to the contract states that what is contained in the first WAPCOS report and anything else as contemplated in the RFP and the PPA does not amount to a representation, we are unable to agree with the contention that it would still be considered as a representation within the meaning of Section 18 and thereby leading to a claim under Section 19 of the Contract Act. Therefore, we find that the contentions which the first respondent seeks to raise under the provisions of Section 18 and 19 untenable. (94) Reliance was placed on the judgment of this Court PTC India Limited v. Central Electricity Regulatory Commission (2010) 4 SCC 603. In PTC India Limited PTC India Limited v. Central Electricity Regulatory Commission (2010) 4 SCC 603, the actual question which arose was as to whether the appellate Tribunal under the Act has jurisdiction under Section 111 to examine the validity of regulations framed in exercise of power under Section 178 of the Act. The further question which arose was whether Parliament has conferred power of judicial review on the Tribunal under Section 121 of ....
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.... We are unable to see how the said judgment can advance the case of the first respondent. The question which fell for consideration and the opinion which has been rendered do not in any way detract from the view which we have taken. Substantially, it was held that the making of regulation was not a pre condition for levying a regulatory fee under Section 79(1)(g). It is no doubt true that Commission has an adjudicatory function. It is also empowered to give opinions. Power to frame regulations indicates that it also has legislative powers. The point is that since in this case we are concerned with the adjudicatory function of the Commission, we are concerned with the trammels to which it is subject in the form of the express terms of the contract. All that we are holding is that in a case where the matter is governed by express terms of the contract, it may not be open to the Commission even donning the garb of a regulatory body to go beyond the express terms of the contract. It is apposite that we notice para 58 reads as follows: "58. One must understand the reason why a regulation has been made in the matter of capping the trading margin under Section 178 of the Act. Ins....
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....erved, the power of revisiting of the rates is what is contemplated in the amended guideline which finds enshrinement in Article 17.3.1., it is contended. (99) In fact, when we notice the PPA, we find that apart from matters which are expressly referred to in Article 17.3.1, viz., Articles 4.7.1, Article 13.2, Article 18.1 or clause 10.1.3 of Schedule 17, there are other Articles in the PPA with which Article 17.3.1 can bear nexus with. They include apparently, Articles 4.5.2, 11.6.6 and 11.6.7. This is besides 12.7(e) which relates to enforcement of claims under Force Majeure. Therefore, it is not as if Article 17.3.1 is not to be understood without reference to the other parts of the contract. No Court should attempt to read a part of the contract in isolation. The draftsman of a contract of the nature we are dealing with would have not left any stone unturned in making the contract one to be construed with a great sense of harmony and care. Therefore, we do not accept the contention of the first respondent that the Commission, Tribunal and this Court must pour in meaning into the opening words of Article 17.3.1 so that in the facts, the first respondent can claim compensation....
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....the Appropriate Commission;" (106) Law as defined in the PPA is as follows: "Law" means, in relation to this Agreement, all laws including Electricity Laws in force in India and any statute, ordinance, regulation, notification or code, rule, or any interpretation of any of them by any Indian Governmental Instrumentality and having force of law and shall further include all applicable rules, regulations, orders, notifications by an Indian Govermental Instrumentatlity pursuant to or under any of them and shall include all rules, regulations, decisions and orders of the Appropriate Commission; (107) While the word 'competent Court' which can also be the source of a change in interpretation of any law is expressly defined in Article 13.1.1., when it comes to the Indian Governmental instrumentality which is the final authority, is concerned, there is no definition in the PPA. The controversy is this. (108) The first respondent allegedly imported goods for the purpose of construction of the captive mining plant. It is its case that the goods so imported were being used for construction of the mining plant which was in turn was utilised for the construction and operation....
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....contention of the procurers that the matter should have been taken before the appropriate forum by the first respondent on the basis that in law, actually, the import of goods was exempt if it was exempt and it was not open to the first respondent to pass on the burden without taking recourse to law. Thirdly, it is contended that the fact of the matter is that the position even before the cut off date was that goods in question were not exempt. (112) Since we are dealing with the notifications, we notice that the authority on Advance Ruling has gone into the history of the notifications and dealt with the same though in the context of the right to exemption in a mega power plant but not for an ultra mega power project. But we are of the view that as far as the history of the notifications go, it would continue to be relevant: "7.1 The Entry corresponding to the present Entry was introduced for the first time in 1999. As pointed out by the learned Sr. counsel for the applicant, the introduction of this Entry in the Customs notification seems to be a follow up to the policy decision taken by the Central Government as set out in the communication dated 10.11.1995 addressed....
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....ifications of the imported goods are certified by the Chairman and Managing Director of the said Central Public Sector Undertaking; and (c) In the case of imports by a Private Sector Project, the quantity, total value, description and specifications of the imported goods are certified by the Chief Executive Officer of such project". "7.3 List 33 specifies by name the thermal projects and hydel projects in respect of which exemption is made applicable. Then, under Customs Notification No. 100 of 99 dated 28/7/99, the capacity of thermal power project specified in the earlier notification was altered from 1500 to 1000 MW. As a result of this notification, 7 more thermal projects were added to the list." "7.4 Then, the next notifications in succession are Customs Notification No. 16 of 2000 and 17 of 2001 which are substantially the same excepting that the number of thermal and hydel projects specified in List 33 has gone down." "7.5 Then comes the Customs Notification No. 21 of 2002 dated 01.03.2002 which is material for our purpose. It reads as follows: - SL . No . Chapter/ heading/sub-head no. Description of goods Standard Rate Add....
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....ling Authority is dated 19.12.2008. No doubt, it is after the cut off date. The case of the first respondent is not based on the order of the Advance Ruling Authority. The case of the first respondent is specifically based only on the OM issued by the Joint Secretary in the Ministry of Power. We may notice that Joint Secretary in the Ministry of Power has a role in terms of the notification. The role assigned to him is contained in condition 82 to the notification 63/1999 and this condition has continued thereafter also. The condition as we have noticed is that it is stated that an officer not below the rank of a Joint Secretary is to certify the aspects which are mentioned in condition 82. (114) It is difficult, in fact, to describe the Joint Secretary in the Ministry of Power as the Governmental authority which is the final authority under the law. The final authority under the law would be the authority under the Customs Act which issues the exemption notification. But we would not wish to rest our findings on the said basis as we feel that the objection of the procurers can rest on surer foundations. The first respondent also relies upon no doubt, the notification dated 26.0....
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....view that the approach of the Tribunal cannot be upheld. There is no material, whatsoever, apart from the notifications to indicate that the goods in question were being treated as exempt before the cut off date. In other words, it was incumbent upon the first respondent to produce incontestable material establishing that the goods were exempt and were being treated so before the cut off date. The best material would have been examples of similar cases where goods were being treated as exempt. Even though, it is pointed out that the first respondent was the only ultra mega power plant, even then power plants including mega power plants were operational. It is difficult to conceive that there would not be a single case where similar inputs by way of examples of other power projects even if it is not ultra mega power projects would not have operated for the first respondent to draw from. (117) The word law has been defined as we have noticed. While the expression 'Indian Governmental Instrumentality' is used in the definition of the word law in Article 13.1.1, the change in interpretation of any law by an Indian governmental authority must be the final authority under the law for ....
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.... for the purpose of the Power project. In other words, as to whether the goods in question were goods which fell within one entry or the other is in this case a matter which is highly disputed and the premise of the first respondent viz., the OM of the Joint Secretary cannot be treated as being a sound foundation for making such a claim. (119) The parties indeed contemplated a project to be constructed and operated. The word 'project' we find has been used in many clauses in the contract. The word 'project' has been defined as follows: ""Project" means the Power Station and the Captive Coal Mine(s) undertaken for design, financing, engineering, procurement, construction, operation, maintenance, repair, refurbishment, development and insurance by the Seller in accordance with the terms and conditions of this Agreement;" (120) Since the word 'power station' has been used in word 'project', it is apposite that we advert to the definition of the words 'power station': "Power Station" means the: (a) coal fired power generation facility comprising of any or all the Units; (b) any associated fuel handling, treatment or storage facilities of the po....
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....t began with the policy issued in the year 1995. The exemptions had their origin with the notification issued in the year 1999. Thereafter there is Notification 21/2002 which was issued on 01.03.2002. Entry 400 in the said notification reads as follows: S.N o. Chapter or Heading or Sub-Heading Description of Goods Standard rate Additional Duty Rate Condition no. 400 98.01 "Goods required for setting up of any Mega Power Project, so certified by an officer not below the rank of a Joint Secretary to the Government of India in the Ministry of Power, that is to say - a) an interstate thermal power plant of a capacity of 700 MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or b an interstate thermal power plant of a capacity of 1000 MW or more, located in States other than those specified in clause (a) above; or c an interstate hydel power plant of a capacity of 350 MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; or d an interstate hydel power plant of a capacity of ....
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....ovided in Annexure 1A. (128) Undoubtedly, in view of the very purpose of having a coal mine which is to supply the requisite fuel for the operation of the power plant, there would be a certain measure of geographical contiguity. But the question for the consideration before this Court is whether that would decide the fate of the contents of a notification issued under the Customs Act. (129) We must notice that it is not as if the first respondent is the only person which had a right to claim the benefit of exemption on the basis that the goods which have been imported for the purpose of their captive mine must be treated as goods used in the power project. As the history of the notifications as captured in order of the Advance Ruling Authority would show over a period of time, there have been a number of power plants which have sprung up. All of them would also be using captive mines for the purpose of generating power. It is not as if there would be a dearth of examples of exemption being extended to imports made by them and claiming the benefit of exemption under the notification. Not a single instance of an exemption granted to any other project where goods imported for us....
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....or d) an inter-state hydel power plant of a capacity of 500 MW or more, located in States other than those specified in clause (c) above' Fiscal concessions/benefits available to the Mega Power Projects Zero Customs Duty: In terms of the notification of the Government of India in the Ministry of Finance(Department of Revenue) No. 21/2002-Customs dated 18 March, 2002 read together with No. 49/2006-Customs dated 26 May, 2006. the import of capital equipment would be free of customs duty for these projects." (132) The understanding of the Authority for Advance Ruling appears to be that as far as the entitlement to exemption under the notification is concerned a mega power project has to be understood as confined to what follows after the words 'that is to say'. In other words, though the use of the words power project in entry 400 would appear to suggest that it is capable of embracing within its scope a captive mine from which the fuel is generated to run the power plant, when it came to the actual beneficiary of entry 400, the maker of the notification has confined the exemption to the goods for the purpose of the power plant. In other words, the wo....
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....n No. 21/02 dated 1.3.2002. Entry 78 reads as follows: Sr. No. Chapter or Heading or subheading Descriptio n of goods Standard rate Additional rate Condition No. 78. 2714.90 All goods, for the purpose of power generation - Nil - (137) Shri Ramchandran, learned senior counsel, would point out that the said Entry relates to inputs for power generation. The case of the first respondent is also that Entry 399 actually specifically deals with the goods required for coal mining project under which the first respondent has been visited with customs duty. (138) The argument of Shri Amit Kapur is that first of all, Entry 78 if contrasted with Entry 400 would show that all goods needed for a power project understood in a larger sense as including a captive coal mine would also come within four walls of Entry 400. (139) Shri Amit Kapur, learned counsel, would point out that captive coal mine envisaged as such is one where the entire production of coal is to be utilised for the power plant in question which also would indicate that it is part of the power project. It is not in dispute that whatever may be the dist....