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. We deem it appropriate to set out the following guidelines: “2.1 These guidelines are being issued under the provisions of Section 63 of the Electricity Act, 2003 for procurement of electricity by distribution licensees (Procurer) for: (a) long-term procurement of electricity for a period of 7 years and above; (b) Medium term procurement for a period of upto 7 years but exceeding 1 year.
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It reads as follows: “3.2 For long-term procurement from hydro electric projects or for projects for which pre-identified sites are to be utilized (Case 2), the following activities should be completed by the procurer or authorized representative of the procurer, before commencing the bid process: – Site identification and land acquisition required for the project – Environmental clearance – Fuel linkage, if required (may also be asked from bidder) – Water linkage – Requisite Hydrological, geological, meteorological and seismological data necessary for preparation of Detailed Project Report (DPR), where applicable. 5 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. There is a guideline which deals with arbitration and it was contained in guideline 5.17: “5.17 The procurer will establish an Amicable Dispute Resolution (ADR) mechanism in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996. 345,CC-I] 4.7 Any change in law impacting cost or revenue from the business of selling electricity to the procurer with respect to the law applicable on the date which is 7 days before the last date of RFP bid submission shall be adjusted separately. 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. The Selected Bidder shall be responsible for ensuring that the Seller undertakes development, finance, ownership, design, engineering procurement, construction, commissioning, operation and maintenance of the Project as per the terms of the RFP Project Documents. issue of certificate by Ministry of Power, Government of India extending the benefits to power generation projects under Mega Power Policy upto the Scheduled COD of the Power Station by Government of India at least thrity (30) days prior to Bid Deadline; It may be noted that noe of the Procurers, Authorised Representative and PfC, nor their directors, 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 made in the water intake study report and Project Report, or the accuracy, completeness or reblility of information contained therein, and shallia 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. 10 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. Non-awareness of these laws or such information shall not be a reason for the Bidder to request for extension of the Bid Deadline. Out of this, about 2000 acres of land has been identified for main plant, about 1100 acres for ash disposal/dyke and 400 acres for colony.
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. Since this was a case of competitive bidding, leading to the finding out of the lowest bidder, but faced with the regime under Section 63 of the Act which stood attracted, after the PPA was entered into, a petition was moved before the Commission for adopting the rates as contemplated in the PPA. It is submitted that the following Changes in Law have occurred during the Construction Period of the Project which have caused the Capital Cost of the Project to increase substantially: a) Increase in Declared price of Land for the Project which includes the land for the Power Station, the Moher, Moher-Amlohri Extension and Chhatrasal captive coal blocks; b) Increase in cost of implementation of the Resettlement and Rehabilitation Plan (“R&R Plan”) for the Moher, Moher-Amlohri Extension and Chhatrasal captive coal blocks; c) Increase in cost of Geological Reports for the Moher, Moher-Amlohri Extension and Chhatrasal captive coal blocks; d)
Increase in cost of compensatory afforestation for the Moher, Moher-Amlohri Extension and Chhatrasal captive coal blocks; e) Increase in cost of Water Intake system due to an incorrect assessment of conditions in the original report supplied to the bidders at the RFP stage; f) Levy of excise duty on cement and steel used in the Project; and g) Levy of Customs Duty on mining equipment 15 imported for the Project.” (12) Since, 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. 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.” The estimated increase in cost of the water intake system due to the change in location of the water intake system is Rs.152 Crores.
As per Notification 21 of 2002-Customs dated 01.03.2002 issued by the Ministry of Finance, Government of India, the customs duty on goods required for setting up mega power projects has been prescribed as nil meaning thereby that no customs duty will be levied on goods imported for setting up a mega power project. 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 other equipment such as power plants of the Project. The decision of the Ministry of Power detailed in its office memorandum dated 17.06.2011 and refusal by Energy Department, Goverment of Madhya Pradesh to provide recommendation letter to import mining equipments for Sasan UMPP under nil custom duty amounts to a Change in Law under Article 13.1 of the PPA and Petitioner is entitled to be compensated for the same.” In this regard, the Petitioner is claiming the following reliefs: (a) In relation to the Changes in Law where the additional Capital Cost has already been incurred, this Hon’ble Commission may direct the Procurers to compensate the Petitioner for such increase in Capital Cost; and (b) In relation to the Changes in Law for 20 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. (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. (e) The PPA envisages the adjustment of 21 tariff by this Hon’ble Commission to restore/restitute the party adversely affected (the Petitioner in the present case).” “90. (b) Section 79(1)(f) of the Act which gives this Hon’ble Commission the power to adjudicate upon disputes involving the Petitioner. 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.
It is further submitted that the Petitioner not being allowed to import mining equipment under nil customs duty as is granted for the other equipment such as power plants of the Project qualifies as Change in Law under Article 13.1 of the PPA.” “108.
It is submitted that due to the increase in distance, submergence area along the route and construction time there has been considerable increase in cost of the water intake system. The estimated increase in cost of the water intake system due to the change in location of the water intake system is Rs.152 Crores.” “It is further submitted that since the water pipeline corridor is part of the Power Station Land and the water intake pipeline 25 is an integral part of the Power Station, any change in the indicative cost of the water intake system will be covered under Change in Law.” “120. While Article 13 of the PPA envisages tariff adjustment in the event of “Change in Law”, Article 17 of the PPA provides for dispute resolution, by the Hon’ble Commission in case of claim made by any party for any change in or determination of tariff or any matter related to tariff or claims made by any party, which partly or wholly relate to any change in the tariff or determination of any such claims could result in change in tariff.”
Since we are in these appeals to be detained only by two aspects, we notice the following findings: “30. 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. 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). However, it is concluded that the cost has been incurred by the petitioner and exceeds the estimates given by the procurer’s authorized representative prior to bid submission. As against the indicative cost of 92.40 crore, the cost for the construction of water system for the new 30 location is 244 crore out of the aforesaid amount, a sum of 185 crore has already been incurred and balance of 59 crore is to be spent. 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.
The petitioner having failed to do so, the increase in cost on account of this head is not admissible.” (14) As far as the question relating to imposition of customs duty on mining equipment is concerned, the same is dealt with in paragraphs 40 and 41. 118(E), dated the 1st March, 2002.
In the said notification,- (I) in the Table, against S.No.400, for the entry in column (3), the following entry shall be substituted, namely:- “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 inter-state thermal power plant of a capacity of 700MW or more, located in the States of Jammu and Kashmir, Sikkim, Arunachal 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 49/2006-Customs dated 26.5.2006, the import of capital equipment would be free of customs duty for these projects.” It is to be considered whether under the notification as stated above, mining equipments were exempted from customs duty. In view of the foregoing discussion, the submission of the petitioner that the decision of the Ministry of Power detailed in its office memorandum dated 17.06.2011 and refusal by Energy Department, Government of Madhya Pradesh to provide recommendation letter to import mining equipments for Sasan UMPP under nil custom duty amounts to a “Change in Law” under Article 13.1 of the PPA and the petitioner is entitled to be compensated for the same is not acceptable and hence no compensation would be available in this regard.” 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. 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. 7 It is submitted that due to the change in location, cost for water intake system has increased on following counts: (a) While the route length itself increased to 23 kms, the increase in piping length increased from 24 km (2 Pipe Lines each of 12 Kms) to 59.5 km (2 Pipe Lines each of 8 km & 3 Pipes each of 14.5 km) (b) Increased cost due to deeper Pump House. 9
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It is further submitted that since the water pipeline corridor is part of the Land for the Power Station and the water intake pipeline is an integral part of the Power Station, any change in the indicative cost of the water intake system is covered under Change in Law in terms of Article 13 of the PPA since it amounts to change in cost of land of the Project.
This included the power plant area, the fuel transport system land, the water pipeline corridor and the ash pipeline corridor.” 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. It is submitted that the disclaimers contained in Para 2.7.2.1 and Para 4 of the RFQ ought not to be considered absolute in nature so as to prevent loading of costs which are incurred by the Appellant as a direct result of omission or error on part of the Procurers in providing information during the pre-bid stage. It is submitted that as per Notification 21 of 2022- Customs dated 01.03.2002 issued by the Ministry of Finance, Government of India, the customs duty on goods required for setting up mega projects has been prescribed as nil meaning thereby that no customs duty will be levied on goods imported for setting up a mega power project. 35 It is submitted that the Appellant has set up an ultra-mega power project which comprises of captive coal mines.
After due consideration of the rival contentions of both the parties, what emerges is that after being declared as the 42 successful bidder, the SPL with a view to affirm the technical suitability of the preliminary report of the WAPCOS on Water Intake System, re-engaged the same agency for finalization of the said report. The Appellant has further reiterated that para 2.7.2.1 and para 4 of RFP which were relied upon by the Respondent procurers cannot be taken as obsolute in nature so as to absolve procurers of their responsibility for providing grossly incorrect information leading to substantial increase in cost of Water Intake System. 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 noted from the contentions of the Respondent procurers that such an issue has not been dealt with either in the PPA or in the competitive bidding guidelines issued by Ministry of Power under Section 63 of the Act, however, in view of the criticality of such situation, we opine that the matter needs afresh re-look for suitable redressal. After careful consideration and critical evaluation of the same, the key question arises for consideration, whether the equipment required for captive coal mines allocated to UMPP should be considered at par with the equipment required for setting up the power plants as far as exemption from the custom duty is concerned. 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. 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.
Umapathy, learned senior counsel, assisted by Mr. Shubham Arya, learned counsel appearing on behalf of the appellant in one of the appeals.
(22) He would submit that as far as the finding 48 given by the Tribunal in regard to the water intake system being located at a different place, is concerned, the Tribunal agreed with the Commission that there was no change in law. Nothing prevented the first respondent from carrying out inspection of the site and verifying for itself the information which was provided through the report of the WAPCOS.
Chidambaram, learned senior counsel, further pointed out that a perusal of the second WAPCOS report, which is the sole basis for the huge claim raised by the first respondent, would show that the second report does not, in any manner, rubbish the first report. On the other hand, our attention is drawn to the decision of the Advance ruling authority which has gone into the issue and found that goods in question were not exempt. It is not as if any authority which is 52 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. It is not as if in such a contract, the matters are fixed with reference to the point of time when the contract is entered into.
It is contended, in other words, that a perusal of the various clauses of the PPA would show that the procurers (the appellants) were obliged under the contract to provide initial consent. 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. (2019) 5 SCC 325, Gujarat Urja Vikas Nigam Ltd. Oil and Natural Gas Commission of India (2010) 11 SCC 296, Nabha Power Limited v. (2010) 10 SCC 458, State of Punjab & Ors. The amended provisions are found in 17.3.1 and 13.1.1 (31) Amended Guideline 4.7 is reflected in 13.1.1 whereas amended guideline 5.17 is reflected in Article 17.3.1. Amit Kapoor, learned counsel, who supplemented the submissions of Mr.Sajjan Poovayya, learned senior counsel, would draw our attention to Section 61 of the Act. 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 highly flawed.
The appellants would be compelled to buy power from outside and finally the end consumer would have to bear the brunt of the loss. (36) Upon being queried as to what would be the position at law outside of the PPA and of the jurisdiction of the Commission and if the matter were to be considered with reference to the law of contract, Shri Amit Kapoor drew our attention to Sections 18 and 19 of the Indian Contract Act, 1872. Section 19 contemplates that the party 62 whose consent is obtained by misrepresentation within the meaning of Section 18 can insist upon the other side to perform the contact. Ramachandran, learned senior counsel, would point out that the observations relating to the power under Section 92 must be understood as confined to the situation obtaining under Section 61 read with Section 62 of the Act. Ramachandran, learned senior counsel, would submit that Section 61 may not be entirely inapplicable. (39) He would, however, contend that in no circumstances can the power under regulation 92 of 64 1999 regulations apply when parties have after competitive bidding and approval of the tariff under Section 63 become bound by a long term contract under the PPA. (41) Article 13 deals with change in law. 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 66 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 change in the (a) Declared Price of Land for the Project or (b) the cost of implementation of the resettlement and rehabilitation package of the land for the Project mentioned in RFP or (c) the cost of implementing Environmental Management Plan for (43) Article 13.2 provides for the actual application and the principles for computing the impact of change in law. a) Construction Period As a result of any Change in Law, the impact of increase/decrease of Capital Cost of the Project in the Tariff shall be governed by the formula given below: For every cumulative increase/decrease of each Rupees Fifty crores (Rs.50 crores) in the Capital Cost over the term of this Agreement, the increase/decrease in No 68 Escalable Capacity Charges shall be an amount equal to zero point two six seven (0.267%) of the No Escalable Capacity Charges. It reads as follows: “13.4.2 The payment for Changes in Law shall be through Supplementary Bill as mentioned in Article 11.8. It reads: – “Where any Dispute arises from a claim made by any Party for any change in or determination of the Tariff or any matter related to Tariff or claims made by any Party which partly or wholly relate to any change in the Tariff or determination of any of such claims could result in change in the Tariff or (ii) relates to any matter agreed to be referred to the Appropriate Commission under Articles 4.7.1, 13.2, 18.1 or clause 10.1.3 of Schedule l 7 hereof, such Dispute shall be submitted to adjudication by the Appropriate Commission. 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. We notice that the pleadings which we have set out, position before the Commission and what is more, even before the Tribunal, do not reveal that the first respondent has taken such a stand. (53) Thirdly, we may notice that the first respondent has not independently challenged the finding rendered by the Tribunal holding that there is no change in law. It is further stated in para 110 that there was considerable increase in the cost of water due to the water intake system. 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 that it submits, and copy/ies of each consent/approval/license which it obtains. For the avoidance of doubt, it is clarified that the Seller shall also be responsible for maintaining/renewing the Initial Consents and for fulfilling all conditions specified therein.” (57) It is true that the procurers were to secure certain initial consents whereas the vast majority of the consents were to be procured by the seller. (ii) The water intake study report and Project Report including geo-technical study, topographical survey, area drainage study, socio-economic study and EIA (rapid), were provided on 3 August, 2006.” (58) While on this document, we may also notice the following in regard to the declared price of land contemplated in the RFP under clause 1.4 (ii): 77 “2. It is this water linkage for the reasonable project requirements which was contemplated to be fulfilled from the water source Govind Ballabh Pant 78 Sagar(Rihand Reservoir). In the PPA, it is indicated that the procurers have completed the initial studies as contained in the project report and obtained initial consent required for the project which are set out in Part I of Schedule 2 and have been made available to the seller on the date of the PPA except two matters: (1) Forest clearance and the declaration under Section 6 of the Land Acquisition Act.
(63) The question would then arise as to whether the delay in the performance of the task which has been characterised on its performance within the time as a deemed initial consent would lead to a change in law within the meaning of Article 13.1.1. 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 81 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. In addition, the Performance Guarantee of the Seller shall also be released forthwith.” (65) A perusal of the aforesaid articles would reveal that the parties have provided for the consequences of failure on the part of the procurers to make available land as contemplated in Article 3.1.2A. This would mean 83 that as the consequences of failure to perform the task having been provided in the contract in the manner provided, we should not ordinarily tarry further to ask as to whether this would provide the premise for a change in law as contemplated under Article 13.1.1. (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 84 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. Secondly, this is not a case where the procurers brought about any change in law in the study on their own or they persuaded or compelled the first respondent to change the corridor for the route for laying of the pipeline. (68) Article 13.3.1 reads as follows: “13.3.1 If the Seller is affected by a Change in Law in accordance with Article 13.2 and wishes to claim a Change in Law under this Article, it shall give notice to the Procurers of such Change in Law as soon as reasonably practicable after becoming aware of the same or should reasonably have known of the Change in Law.” 86 (69) Thus, the PPA contemplates that if the seller is affected by change in law and wishes to claim change in law, it has to notify the procurers of the change in law as soon as is reasonably practicable after becoming aware of the same.
In this regard 87 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. (71) No doubt, Shri Amit Kapur, learned counsel for the first respondent, did attempt to draw inspiration from the Minutes of the Meeting which took place on 20.03.2013 as per which the lead procurer appears to have agreed to the change. In this regard, we may notice the following clause in the PPA: “5.2 The Site The Seller acknowledges that, before entering into this Agreement, it has had sufficient opportunity to investigate the Site and accepts full responsibility for its condition (including but not limited to its geological condition, on the Site, the adequacy of the road and rail links to the Site and the availability of adequate supplies of water) and agrees that it shall not be relieved from any of its obligations under this Agreement or be entitled to any extension of time or financial compensation by reason of the unsuitability of the Site for whatever reason. 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 90 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. The second WAPCOS report apart from it being prepared without reference to the procurers as we have noticed does not appear to say anything which is critical of the first WAPCOS report.
All that even clause 4.2.2 indicates is that the first respondent intimated that the acquisition for the pipeline corridor was in its final stages and thereafter it is indicated that during the detailed survey, it was found sufficient depth is not available. Note 4 of the RFP indicates that the procurers apart from their Directors, employees must not be treated as having made any representation or warranting whatsoever in respect of any statements or omissions or the accuracy, completeness or reliability of information contained therein. 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. At least we are not shown anything which stood in the way of the bidder conducting its own study and being convinced by the correctness of the report. This means that having regard to clause 1.4 of the RFP, no bidder could possibly come forward with the claim that the contents of the WAPCOS report must be treated as sacrosanct and infallible and that it should not be taken without a generous pinch of salt as it stands. We have already adverted to Article 13.2. When we read the words ‘to the extent contemplated in this Article 13’ as part of the Article 13.2, it necessarily brings in clause (a) and (b) of Article 13.2. (84)
In other words, the effect of change in law during the construction period is captured by 99 13.2(a). Article 13.2 is an in-built restitutionary principle which compensates 1 Uttar Haryana Bijli Vitran Nigam Ltd. (2019) 5 SCC 325 100 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. A reading of Article 13 as a whole, therefore, leads to the position that subject to restitutionary principles contained in Article 13.2, the adjustment in monthly tariff payment, in the facts of the present case, has to be from the date of withdrawal of exemption which was done by administrative orders dated 6-4-2015 and 16- 2-2016.
This being the case, the restitutionary principle contained in Article 13.2 would kick in for the simple reason that it is only after the order dated 4-5-2017 [ Adani Power Ltd. 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 102 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) Secondly, unlike Section 62 read with Sections 61 and 64, the appropriate Commission does not “determine” tariff but only “adopts” tariff already determined under Section 63. It must adopt the tariff which has been determined through a transparent process of bidding, but this can only be done in accordance with the guidelines issued by the Central Government. This regulatory power is a general one, and it is very difficult to state that when the Commission adopts tariff under Section 63, it functions dehors its general regulatory power under Section 79 b(1)( ).
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 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. The argument of the first respondent is that even de hors the terms of the contract, there is general regulatory power available under Section 79 of the Act. When the Commission is asked to exercise power under Section 63, it is beholden to the guidelines as it cannot depart from the same.
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? (92) We notice this for the reason that the first respondent has a case that what is provided in Article 13.2(a) (since we are dealing with the case of alleged change in law during the construction period) does not do justice to the parties or that it is incapable of producing a fair result and therefore, the Tribunal would necessarily be clothed with power bearing in mind its regulatory nature. Section 18 of the Contract Act deals with the effect of representation or rather misrepresentation by a party made to another party to the contract. 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. In PTC India Limited, 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 4 PTC India Limited v. Such decision- making under Section 79(1) is not dependent upon making of regulations under Section 178 by the Central Commission. However, if there is a regulation under Section 178 in that regard then the order levying fees under Section 79(1)( g ) has to be in consonance with such regulation.” (95) We are unable to see how the said judgment can advance the case of the first respondent. 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.
Such subordinate legislation can even override the existing contracts 114 including power purchase agreements which have got to be aligned with the regulations under Section 178 and which could not have been done across the board by an order of the Central Commission under Section 79(1)( j ).” (96) While it may be open as indicated therein for a regulation to extricate a party from its contractual obligations, in the course of its adjudicatory power it may not be open to the Commission by using the nomenclature regulation to usurp this power to disregard the terms of the contract. Clauses 4.7 and 5.17 came to be, however, modified before the PPA was entered into and even prior to the RFP and therefore, the PPA and Article 17.3 therein has been cast in the widest terms. Therefore, the argument is raised on behalf of the first respondent that the opening words of Article 17.3.1 are designedly broad to cater to situations such as are represented by the facts of this case. (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. (100) Here, we must notice finally, that substantially, the claim in regard to the water intake system was founded on the reliance placed on the first WAPCOS report and on the strength of the second WAPCOS report.
As far as the question relating to the OM dated 17.06.2011 providing the premise for change in law claim is concerned, we are of the view that the claim may not have merit in it. Indian Governmental Instrumentality is defined as follow: – “Indian Governmental Instrumentality” means the GOI, Government of States where the Procurers and Project are located and any ministry or department of or board, agency or other regulatory or quasi-judicial authority controlled by GOI or Government of States where the Procurers and Project are located and includes the Appropriate 119 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) (108) The first respondent allegedly imported goods for the purpose of construction of the captive mining plant.
of Madhya Pradesh’s letter No 4468/13/2011/01 dated 24.05.2011 on the subject mentioned above and to say 121 that under Mega Power Policy, the Custom/Excise Duty exemption is given in respect of power equipment only. (110) In other words, in contrast with the law as it stood before the cut off date, by the issuance of the OM by the Joint Secretary in the Ministry of Power, a change in interpretation of the law is brought about. (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 123 exemption in a mega power plant but not for an ultra mega power project. In that policy document, it is stated that the “project of capacity of 1000 MW and more and catering power to more than one state should be considered as a mega project. Descripti on of goods Standa rd Rate Addition al Duty rate Conditi on No 288 A 9801 Goods required for setting up of any Mega Power Project specified in List33, if such Mega Power Project is- a.
an inter- state thermal power plant of a capacity of 1500MW or more; or b.
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.” an inter- state thermal power plant of a capacity of 1000MW or more; or b. an inter- State hydel power plant of a capacity of 500MW or more……… The Government now proposes to liberalise the mega power project policy further by extending all these benefits to any power project that fulfills the conditions already prescribed for mega power projects”. 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. The first respondent also relies upon no doubt, the notification dated 26.05.2006 wherein it is indicated as follows: “Notification No.49/2006-Customs In exercise of the poowers conferred by sub- section (1) of Section 25 of the Customs Act, 130 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest to do so, hereby makes the following further amendments in the notification of the Government of India in the Ministry of finance (Department of Revenue) No.21/2002- Customs, dated the 1st March, 2002, which was published in the Gazette of India, Extraordinary vide number G.S.R.
Case Title: HARYANA POWER PURCHASE CENTRE Vs. SASAN POWER LTD (2023 INSC 326)
Case Number: C.A. No.-011826 / 2018
